EXHIBIT 10.10
NONSTANDARDIZED ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN
SPONSORED BY
DIVERSIFIED INVESTMENT ADVISORS INC.
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Plan Document #01.
I. EMPLOYER INFORMATION
IF MORE THAN ONE EMPLOYER IS ADOPTING THE PLAN, COMPLETE THIS SECTION
BASED ON THE LEAD EMPLOYER. ADDITIONAL EMPLOYERS WHO ARE MEMBERS OF THE
SAME CONTROLLED GROUP OR AFFILIATED SERVICE GROUP MAY ADOPT THIS PLAN
BY COMPLETING AND EXECUTING SECTION XX(A) OF THE ADOPTION AGREEMENT.
A. NAME AND ADDRESS:
FelCor Lodging Trust, Inc.
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545 East John Carpenter Freeway
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Suite 1300
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Irving, TX 75062-3933
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B. TELEPHONE NUMBER: 972-444-4900
C. EMPLOYER'S TAX ID NUMBER: 75-2541756
D. FORM OF BUSINESS:
[ ] 1. Sole Proprietor [ ] 4. S Corporation
[ ] 2. Partnership [ ] 5. Limited Liability Company
[X] 3. Corporation [ ] 6.
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E. IS THE EMPLOYER PART OF A CONTROLLED GROUP? [X] YES [ ] NO
PART OF AN AFFILIATED SERVICE GROUP? [ ] YES [X] NO
F. NAME OF PLAN: FelCor Lodging Trust Incorporated Savings and
Retirement Plan
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G. THREE DIGIT PLAN NUMBER: 001
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H. EMPLOYER'S TAX YEAR END: DECEMBER 31
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I. EMPLOYER'S BUSINESS CODE: 721110
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1
II. EFFECTIVE DATE
A. NEW PLAN:
This is a new Plan having an Effective Date of _____.
B. AMENDMENT OR RESTATEMENT:
This is an amendment or restatement of an existing Plan. The
initial Effective Date of the Plan was _______. The Effective
Date of this amendment or restatement is _____.
C. AMENDMENT OR RESTATEMENT FOR GUST:
This is an amendment or restatement of an existing Plan to
comply with GUST [The Uruguay Round Agreements, Pub. L.
103-465 (GATT); The Uniformed Services Employment and
Reemployment Rights Act of 1994, Pub. L. 105-34 (USERRA); The
Small Business Job Protection Act of 1996, Pub. L. 104-188
(SBJPA) [including Section 414(u) of the Internal Revenue
Code]; The Tax Reform Act of 1997 (TRA'97)]. The initial
Effective Date of the Plan was January 1, 1995. Except as
provided for in the Plan, the Effective Date of this amendment
or restatement is June 1, 2001. (The restatement date should
be no earlier than the first day of the current Plan Year. The
Plan contains appropriate retroactive Effective Dates with
respect to provisions of GUST.)
D. EFFECTIVE DATE FOR ELECTIVE DEFERRALS:
If different from above, the Effective Date for the Elective
Deferral provisions shall be ____.
PURSUANT TO CODE SECTION 411(d)(6) AND THE REGULATIONS ISSUED
THEREUNDER, AN EMPLOYER CANNOT REDUCE, ELIMINATE OR MAKE SUBJECT TO
EMPLOYER DISCRETION ANY CODE SECTION 411(d)(6) PROTECTED BENEFIT. WHERE
THIS PLAN DOCUMENT IS BEING ADOPTED TO AMEND ANOTHER PLAN THAT CONTAINS
A PROTECTED BENEFIT NOT PROVIDED FOR IN THE BASIC PLAN DOCUMENT #01,
THE EMPLOYER MAY COMPLETE SCHEDULE A AS AN ADDENDUM TO THIS ADOPTION
AGREEMENT. SCHEDULE A DESCRIBES SUCH PROTECTED BENEFITS AND SHALL
BECOME PART OF THIS PLAN. IF A PRIOR PLAN DOCUMENT CONTAINS A PLAN
FEATURE NOT PROVIDED FOR IN THE BASIC PLAN DOCUMENT #01, THE EMPLOYER
MAY ATTACH SCHEDULE B DESCRIBING SUCH FEATURE. PROVISIONS LISTED ON
SCHEDULE B ARE NOT COVERED BY THE IRS OPINION LETTER ISSUED WITH
RESPECT TO THE BASIC PLAN DOCUMENT #01.
III. DEFINITIONS
A. "COMPENSATION"
Select the definition of Compensation, the Compensation
Computation Period, any Compensation Dollar Limitation and
Exclusions from Compensation for each Contribution Type from
the options listed below. Enter the letter of the option
selected on the lines provided below. Leave the line blank if
no election needs to be made.
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<Table>
<Caption>
COMPENSATION
EMPLOYER COMPENSATION COMPUTATION COMPENSATION
CONTRIBUTION TYPE DEFINITION PERIOD DOLLAR LIMITATION EXCLUSIONS
- ----------------- ------------ ------------ ----------------- ----------
All Contributions d a $ d,g
------------ ------------ ------ ----------
Discretionary $
------------ ------------ ------ ----------
Non-Safe Harbor Match
Formula 1 $
------------ ------------ ------ ----------
QNEC/QMAC $
------------ ------------ ------ ----------
Elective Deferrals $
------------ ------------ ------ ----------
Voluntary After-Tax $
------------ ------------ ------ ----------
Required After-Tax $
------------ ------------ ------ ----------
Safe Harbor $
------------ ------------ ------ ----------
Non-Safe Harbor Match
Formula 2 $
------------ ------------ ------ ----------
</Table>
<Table>
<Caption>
ANTIDISCRIMINATION COMPENSATION COMPENSATION COMPENSATION
TESTS DEFINITION COMPUTATION PERIOD DOLLAR LIMITATION
- ------------------ ------------ ------------------ -----------------
ADP/ACP f a $
------------ ------------------ -----------------
</Table>
COMPENSATION COMPUTATION PERIODS MUST BE CONSISTENT FOR ALL CONTRIBUTION TYPES,
EXCEPT DISCRETIONARY. IF DIFFERENT COMPUTATION PERIODS ARE SELECTED, THE
SELECTION FOR ADP/ACP TESTING WILL BE DEEMED TO BE THE ELECTION FOR ALL
PURPOSES, EXCEPT FOR DISCRETIONARY CONTRIBUTIONS.
1. Compensation Definition:
a. Code Section 3401(a) - W-2 Compensation subject to
income tax withholding at the source.
b. Code Section 3401(a) - W-2 Compensation subject to
income tax withholding at the source, with all
pre-tax contributions added.
c. Code Section 6041/6051 - Income reportable on Form
W-2.
d. Code Section 6041/6051 - Income reportable on Form
W-2, with all pre-tax contributions added.
e. Code Section 415 - All income received for services
performed for the Employer.
f. Code Section 415 - All income received for services
performed for the Employer, with all pre-tax
contributions added.
The Code Section 415 definition will always apply with respect
to sole proprietors and partners.
2. Compensation Computation Period:
a. Compensation paid during a Plan Year while a
Participant.
b. Compensation paid during the entire Plan Year.
c. Compensation paid during the Employer's fiscal year.
d. Compensation paid during the calendar year.
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3. Compensation dollar limitation: The dollar limitation section
does not need to be completed unless Compensation of less than
the Code Section 401(a)(17) limit of $160,000 (as indexed) is
to be used.
4. Exclusions from Compensation (non-integrated plans only):
a. There will be no exclusions from Compensation under
the Plan.
b. Any amount included in a Participant's gross income
due to the application of Code Sections 125,
402(h)(1)(B), 402(e) or 403(b) will be excluded from
the definition of Compensation under the Plan.
c. Overtime
d. Bonuses
e. Commissions
f. Exclusion applies only to Participants who are Highly
Compensated Employees.
g. Other: car allowances, housing allowances, relocation
pay, amounts paid in the form of a non-qualified
profit sharing distribution arrangement, or other
allowances as designated on a non-discriminatory
basis by the employer.
B. "DISABILITY"
[X] 1. As defined in paragraph 1.26 of the Basic Plan Document #01.
[ ] 2. Disability will be defined as: _____.
C. "HIGHLY COMPENSATED EMPLOYEES - TOP PAID GROUP ELECTION" Complete only
if this is a new Plan. For amended and restated Plans, complete
Schedule C outlining the preamendment operation of the Plan.
IF THE FOLLOWING ELECTIONS ARE MADE, SUCH ELECTIONS SHALL APPLY TO ALL
PLANS MAINTAINED BY THE EMPLOYER.
[ ] 1. Top-Paid Group election:
In determining who is a Highly Compensated Employee, the
Employer makes the Top-Paid Group election. The effect of this
election is that an Employee (who is not a 5% owner at any
time during the determination year or the look-back year) who
earned more than $80,000, as indexed for the look-back year,
is a Highly Compensated Employee if the Employee was in the
Top-Paid Group for the look-back year. This election is
applicable for the Plan Year in which this Plan is effective.
[ ] 2. Calendar Year Data election:
If the Plan Year is not the calendar year, the prior year
computation period for purposes of determining if an Employee
earned more than $80,000, as indexed, is the calendar year
beginning in the prior Plan Year. This election is applicable
for the Plan Year in which this Plan is effective.
D. "HOUR OF SERVICE"
Hours shall be determined by the method selected below. Only one method
may be selected. The method selected shall be applied to all Employees
covered under the Plan as follows:
[ ] 1. Not applicable. For all purposes under the Plan, a Year of
Service (Period of Service) is defined as Elapsed Time.
[X] 2. On the basis of actual hours for which an Employee is paid or
entitled to payment.
[ ] 3. On the basis of days worked. An Employee shall be credited
with ten (10) Hours of Service if the Employee would be
credited with at least one (1) Hour of Service during the day.
[ ] 4. On the basis of weeks worked. An Employee shall be credited
with forty-five (45) Hours of Service if the Employee would be
credited with at least one (1) Hour of Service during the
week.
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[ ] 5. On the basis of semi-monthly payroll periods. An Employee
shall be credited with ninety-five (95) Hours of Service if
the Employee would be credited with at least one (1) Hour of
Service during the semi-monthly payroll period.
[ ] 6. On the basis of months worked. An Employee shall be credited
with one-hundred-ninety (190) Hours of Service if the Employee
would be credited with at least one (1) Hour of Service during
the month.
E. "INTEGRATION LEVEL"
[X] 1. Not applicable. The Plan's allocation formula is not
integrated with Social Security.
[ ] 2. The maximum earnings considered wages for the Plan Year for
Social Security withholding purposes without regard to
Medicare.
[ ] 3. _____% (not more than 100%) of the amount considered wages for
such Plan Year for Social Security withholding purposes
without regard to Medicare.
[ ] 4. $______, provided that such amount is not in excess of the
amount determined under paragraph (E)(2) above.
[ ] 5. One dollar over 80% of the amount considered wages for such
Plan Year for Social Security withholding purposes without
regard to Medicare.
[ ] 6. 20% of the maximum earnings considered wages for such Plan
Year for Social Security withholding purposes without regard
to Medicare.
F. "LIMITATION YEAR"
Unless elected otherwise below, the Limitation Year shall be the Plan
Year.
The 12-consecutive month period commencing on and ending on ___________
and ending on ___________.
If applicable, there will be a short Limitation Year commencing on
___________________ and ending on __________________. Thereafter, the
Limitation Year shall end on the date specified above.
G. "NET PROFIT"
[X] 1. Not applicable. Employer contributions to the Plan are not
conditioned on profits.
[ ] 2. Net Profits are required for some or all Employer
contributions and are defined as follows:
[ ] a. As defined in paragraph 1.61 of the Basic Plan
Document #01.
[ ] b. Net Profits shall be defined as: .
[ ] 3. Net Profits are not required for the following contributions:
[ ] a. Employer Non-Safe Harbor Match Formula 1.
[ ] b. Employer Non-Safe Harbor Match Formula 2.
[ ] c. Employer QNEC and QMAC.
[ ] d. Employer Discretionary.
ELECTIVE DEFERRALS CAN ALWAYS BE CONTRIBUTED REGARDLESS OF PROFITS.
TOP-HEAVY MINIMUMS ARE REQUIRED REGARDLESS OF PROFITS.
H. "PLAN YEAR"
The 12-consecutive month period commencing on January 1 and ending on
December 31.
If applicable, there will be a short Plan Year commencing on __________
and ending on _____________. Thereafter, the Plan Year shall end on the
date specified above.
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I. "QDRO PAYMENT DATE"
[X] 1. The date the QDRO is determined to be qualified.
[ ] 2. The statutory age 50 requirement applies for purposes of
making distribution to an alternate payee under the provisions
of a QDRO.
J. "QUALIFIED JOINT AND SURVIVOR ANNUITY"
[X] 1. Not applicable. The Plan is not subject to Qualified Joint and
Survivor Annuity rules. The Safe Harbor provisions of
paragraph 8.7 of the Basic Plan Document #01 apply. The normal
form of payment is a lump sum, and annuities are not offered
under the Plan.
[ ] 2. The normal form of payment is a lump sum. The Plan does
provide for annuities as an optional form of payment at
Section XVIII(C) of the Adoption Agreement. Joint and Survivor
rules are avoided unless the Participant elects to receive his
or her distribution in the form of an annuity.
[ ] 3. The Joint and Survivor Annuity Rules are applicable and the
survivor annuity will be _____% (50%, 66-2/3%, 75% or 100%) of
the annuity payable during the lives of the Participant and
his or her Spouse. If no selection is specified, 50% shall be
deemed elected.
K. "QUALIFIED PRERETIREMENT SURVIVOR ANNUITY"
DO NOT COMPLETE THIS SECTION IF PARAGRAPH (J)(1) WAS ELECTED.
[ ] 1. The Qualified Preretirement Survivor Annuity shall be 100% of
the Participant's Vested Account Balance in the Plan as of the
date of the Participant's death.
[ ] 2. The Qualified Preretirement Survivor Annuity shall be 50% of
the Participant's Vested Account Balance in the Plan as of the
date of the Participant's death.
IF NO SELECTION IS MADE, THE QUALIFIED PRERETIREMENT SURVIVOR ANNUITY
SHALL BE 50%.
L. "VALUATION OF PLAN ASSETS"
The assets of the Plan shall be valued as specified in the Basic Plan
Document #01 and on the following Valuation Date(s):
[ ] 1. There are no other mandatory Valuation Dates.
[X] 2. The Valuation Date for all contributions shall be the same as
set forth below.
[ ] 3. The Valuation Dates are applicable for the contribution type
specified below:
CONTRIBUTION TYPE VALUATION DATE
----------------- --------------
All Contributions a
--------------
Discretionary
--------------
Non-Safe Harbor Match Formula 1
--------------
Non-Safe Harbor Match Formula 2
--------------
QNEC
--------------
QMAC
--------------
Elective Deferrals
--------------
Voluntary After-tax
--------------
Required After-tax
--------------
Safe Harbor
--------------
a. Daily valued.
b. The last day of the month.
c. The last day of each quarter in the Plan Year.
d. The last day of each semi-annual period in the Plan
Year.
e. At the discretion of the Plan Administrator.
f. Other: _________.
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IV. ELIGIBILITY REQUIREMENTS
Complete the following using the eligibility requirements as specified
for each contribution type. To become a Participant in the Plan, an
Employee must satisfy the following eligibility requirements.
<Table>
<Caption>
ELIGIBILITY
MINIMUM SERVICE CLASS COMPUTATION ENTRY
CONTRIBUTION TYPE AGE REQUIREMENT EXCLUSIONS PERIOD DATE
- ----------------- ------- ----------- ---------- ----------- -----
All Contributions 1 2 1,6,8 1 1
------- ----------- ---------- ----------- -----
Elective Deferrals
------- ----------- ---------- ----------- -----
Voluntary After-tax
------- ----------- ---------- ----------- -----
Required After-tax
------- ----------- ---------- ----------- -----
Non-Safe Harbor
Match Formula 1
------- ----------- ---------- ----------- -----
Employer
Discretionary
------- ----------- ---------- ----------- -----
QNECs
------- ----------- ---------- ----------- -----
QMACs
------- ----------- ---------- ----------- -----
Safe Harbor*
------- ----------- ---------- ----------- -----
Non-Safe Harbor
Match Formula 2
------- ----------- ---------- ----------- -----
</Table>
* IF ANY AGE OR SERVICE REQUIREMENT SELECTED IS MORE RESTRICTIVE THAN THAT WHICH
IS IMPOSED ON ANY EMPLOYEE CONTRIBUTION, THAT GROUP OF EMPLOYEES WILL BE SUBJECT
TO THE ADP AND/OR ACP TESTING AS PRESCRIBED UNDER IRS NOTICES 98-52, 2000-3 AND
ANY APPLICABLE IRS REGULATIONS.
A. Age:
1. No age requirement.
2. Minimum age is ____ (may not be greater than
21).
B. Service:
1. No Service requirement.
2. 3 months of Service (insert number of months
applicable to the specified contribution
type).
3. 1 Year of Service or Period of Service.
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4. 2 Years of Service or Periods of Service.
5. 1 Expected Year of Service. May enter after
six (6) months of actual Service.
6. 1 Expected Year of Service. May enter after
____ months of actual Service [must be less
than one (1) Year].
7. Completion of ____ Hours of Service within
the ____ month(s) time period following an
Employee's commencement of employment.
NO MORE THAN 83 1/3 HOURS OF SERVICE MAY BE
REQUIRED DURING EACH SUCH MONTH; PROVIDED,
HOWEVER, THAT HE OR SHE SHALL BECOME A
PARTICIPANT NO LATER THAN UPON THE
COMPLETION OF 1,000 HOURS OF SERVICE WITHIN
A 12 CONSECUTIVE MONTH PERIOD AND THE
ATTAINMENT OF THE MINIMUM AGE REQUIREMENT.
The maximum Service requirement for Elective
Deferrals and Top-Heavy minimum contributions is 1
year. For all other contributions, the maximum is 2
years. If a Service requirement greater than 1 year
is selected, Participants must be 100% vested in that
contribution.
A Year of Service for eligibility purposes is defined
as follows (choose one):
DO NOT ENTER THIS DEFINITION IN THE TABLE ABOVE.
[ ] 8. Not applicable. There is no Service
requirement.
[X] 9. Not applicable. The Plan is using Expected
Year of Service or has a Service requirement
of less than one year.
[ ] 10. Hours of Service method. A Year of Service
will be credited upon completion of ____
Hours of Service. A Year of Service for
eligibility purposes may not be less than 1
Hour of Service nor greater than 1,000 hours
by operation of law. If left blank, the Plan
will use 1,000 hours.
[ ] 11. Elapsed Time method.
C. Employee Class Exclusions:
1. Employees included in a unit of Employees
covered by a collective bargaining agreement
between the Employer and Employee
Representatives, if benefits were the
subject of good faith bargaining.
2. Employees who are non-resident aliens
[within the meaning of Code Section
7701(b)(1)(B)] 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)].
3. Employees compensated on an hourly basis.
4. Employees compensated on a salaried basis.
5. Employees compensated on a commission basis.
6. Leased Employees.
7. Highly Compensated Employees.
8. The Plan shall exclude from participation
any nondiscriminatory classification of
Employees determined as follows: Independent
contractors, college interns, seasonal
employees.
D. Eligibility Computation Period: The initial
Eligibility Computation Period shall commence on the
date on which an Employee first performs an Hour of
Service and the first anniversary thereof. Each
subsequent Computation Period shall commence on:
1. Not applicable. The Plan has a Service
requirement of less than one (1) year or
uses the Elapsed Time method to determine
eligibility.
8
2. The anniversary of the Employee's employment
date and each subsequent 12-consecutive
month period thereafter.
3. The first day of the Plan Year following the
Employee's employment date and each
subsequent 12-consecutive month period
thereafter.
E. Entry Date Options:
1. The first day of the month coinciding with
or next following the date on which an
Employee meets the eligibility requirements.
2. The first day of the payroll period
coinciding with or next following the date
on which an Employee meets the eligibility
requirements.
3. The earlier of the first day of the Plan
Year, or the first day of the fourth,
seventh or tenth month of the Plan Year
coinciding with or next following the date
on which an Employee meets the eligibility
requirements.
4. The earlier of the first day of the Plan
Year or the first day of the seventh month
of the Plan Year coinciding with or next
following the date on which an Employee
meets the eligibility requirements.
5. The first day of the Plan Year following the
date on which the Employee meets the
eligibility requirements. If this election
is made, the Service waiting period cannot
be greater than one-half year and the
minimum age requirement may not be greater
than age 20 1/2.
6. The first day of the Plan Year nearest the
date on which an Employee meets the
eligibility requirements. THIS OPTION CAN
ONLY BE SELECTED FOR EMPLOYER RELATED
CONTRIBUTIONS.
7. The first day of the Plan Year during which
the Employee meets the eligibility
requirements. THIS OPTION CAN ONLY BE
SELECTED FOR EMPLOYER RELATED CONTRIBUTIONS.
8. The Employee's date of hire.
9. Other; specify Entry Date: ________________.
F. Employees on Effective Date:
[X] 1. All Employees will be required to satisfy
both the age and Service requirements
specified above.
[ ] 2. Employees employed on the Plan's Effective
Date do not have to satisfy the age
requirement specified above.
[ ] 3. Employees employed on the Plan's Effective
Date do not have to satisfy the Service
requirement specified above.
V. RETIREMENT PROVISIONS
A. NORMAL RETIREMENT:
[X] 1. Normal Retirement Age shall be age 65 (not to exceed
65).
[ ] 2. Normal Retirement Age shall be the later of attaining
age ____ (not to exceed age 65) and/or the ____ (not
to exceed the 5th) anniversary of the first day of
the first Plan Year in which the Participant
commenced participation in the Plan.
[X] 3. The Normal Retirement Date shall be:
[X] a. as of the date the Participant attains
Normal Retirement Age.
[ ] b. the first day of the month next following
the Participant's attainment of Normal
Retirement Age.
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B. EARLY RETIREMENT:
[X] 1. Not Applicable.
[ ] 2. The Plan shall have an Early Retirement Age of ____
(not less than age 55) and completion of ____ Years
of Service.
[ ] 3. The Early Retirement Date shall be:
[ ] a. as of the date the Participant attains Early
Retirement Age.
[ ] b. the first day of the month next following
the Participant's attainment of Early
Retirement Age.
VI. EMPLOYEE CONTRIBUTIONS
[X] A. ELECTIVE DEFERRALS:
[ ] 1. Up to ____%.
[X] 2. Participants shall be permitted to make Elective
Deferrals in any amount from a minimum of 1% to a
maximum of 20% of their Compensation or a flat dollar
amount from a minimum of $____ to a maximum of $____,
not to exceed ____% or $____ of their Compensation.
[ ] 3. The maximum dollar limitation allowable under the
law.
B. BONUS OPTION:
[X] 1. Not applicable. Bonuses are not included in the
definition of Compensation.
[ ] 2. Bonuses paid by the Employer ARE included in the
definition of Compensation, and the Employer permits
a Participant to amend their deferral election to
defer to the Plan, an amount not to exceed ____% or
$____ of any bonus received by the Participant for
any Plan Year. IF THIS OPTION IS NOT ELECTED, THE
PARTICIPANT'S NORMAL DEFERRAL ELECTION PERCENTAGE OR
DOLLAR AMOUNT WILL AUTOMATICALLY BE WITHHELD FROM THE
BONUS.
[ ] C. AUTOMATIC ENROLLMENT: The Employer elects the Automatic
Enrollment provisions as follows:
[ ] 1. NEW EMPLOYEES. Employees who have not met the
eligibility requirements shall have Elective
Deferrals withheld in the amount of ____% of
Compensation or $____ of Compensation upon entering
the Plan.
[ ] 2. CURRENT PARTICIPANTS. Current Participants who are
deferring at a percentage less than the amount
selected herein shall have Elective Deferrals
withheld in the amount of ____% of Compensation or
$____ of Compensation.
[ ] 3. CURRENT EMPLOYEES. Employees who are eligible to
participate but are not deferring shall have Elective
Deferrals withheld in the amount of ____% of
Compensation or $____ of Compensation upon entering
the Plan.
Employees and Participants shall have the right to amend the
stated automatic Elective Deferral percentage or receive cash
in lieu of deferral into the Plan.
D. VOLUNTARY AFTER-TAX CONTRIBUTIONS:
[X] 1. The Plan does not permit Voluntary After-tax
Contributions.
[ ] 2. Participants may make Voluntary After-tax
Contributions in any amount from a minimum of ____%
to a maximum of ____% of their Compensation or a flat
dollar amount from a minimum of $____ to a maximum of
$____.
IF RECHARACTERIZATION OF ELECTIVE DEFERRALS HAS BEEN ELECTED
AT SECTION XII(D) IN THIS ADOPTION AGREEMENT, VOLUNTARY
AFTER-TAX CONTRIBUTIONS MUST BE PERMITTED IN THE PLAN BY
COMPLETING THE SECTION ABOVE.
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E. REQUIRED AFTER-TAX CONTRIBUTIONS (THRIFT SAVINGS PLANS ONLY):
[X] 1. The Plan does not permit Required After-tax
Contributions.
[ ] 2. Participants shall be required to make Required
After-tax contributions as follows:
[ ] a. ____% of Compensation.
[ ] b. A percentage determined by the Employee.
F. ROLLOVER CONTRIBUTIONS:
[ ] 1. The Plan does not accept Rollover Contributions.
[X] 2. Participants may make Rollover Contributions after
meeting the eligibility requirements for
participation in the Plan.
[ ] 3. Employees may make Rollover Contributions prior to
meeting the eligibility requirements for
participation in the Plan.
G. ELECTIVE PLAN TO PLAN TRANSFER CONTRIBUTIONS:
[ ] 1. The Plan does not accept Transfer Contributions.
[X] 2. Participants may make Transfer Contributions after
meeting the eligibility requirements for
participation in the Plan.
[ ] 3. Employees may make Transfer Contributions prior to
meeting the eligibility requirements for
participation in the Plan.
H. CHANGES TO ELECTIVE DEFERRALS:
Participants shall be permitted to terminate their Elective
Deferrals at any time upon proper and timely notice to the
Employer. Modifications to Participants' Elective Deferrals
will become effective on a prospective basis as provided for
below:
[X] 1. On a daily basis.
[ ] 2. Upon ____ (not to exceed 90) days notice to the Plan
Administrator.
[ ] 3. On the first day of each quarter.
[ ] 4. On the first day of the next month.
[ ] 5. The beginning of the next payroll period.
[ ] 6. Other: ____.
I. REINSTATEMENT OF ELECTIVE DEFERRALS:
Participants who terminate their Elective Deferrals shall be
permitted to reinstate their Elective Deferrals on a
prospective basis as provided for below:
[X] 1. On a daily basis.
[ ] 2. Upon ____ (not to exceed 90) days notice to the Plan
Administrator.
[ ] 3. On the first day of each quarter.
[ ] 4. On the first day of the next month.
[ ] 5. The beginning of the next payroll period.
[ ] 6. Other: ____.
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VII. SAFE HARBOR PLAN PROVISIONS
[ ] The Employer elects to comply with the Safe Harbor Cash or Deferred
Arrangement provisions of Article XI of Basic Plan Document #01 and
elects one of the following contribution formulas:
A. SAFE HARBOR TESTS:
[ ] 1. Only the ADP and not the ACP Test Safe Harbor
provisions are applicable.
[ ] 2. Both the ADP and ACP Test Safe Harbor provisions are
applicable. If both ADP and ACP provisions are
applicable:
a. No additional Matching Contributions will be
made in any Plan Year in which the Safe
Harbor provisions are used.
b. The Employer may make Matching Contributions
in addition to any Safe Harbor Matching
Contributions elected below. (Complete
provisions in Article VIII regarding
Matching Contributions that will be made in
addition to those Safe Harbor Matching
Contributions made below.)
[ ] B. DESIGNATION OF ALTERNATE PLAN TO RECEIVE SAFE HARBOR
CONTRIBUTION:
If the Safe Harbor Contribution, as elected below, is not
being made to this Plan, the name of the other plan that will
receive the Safe Harbor Contribution is: ____.
[ ] C. BASIC MATCHING CONTRIBUTION FORMULA:
Matching Contributions will be made on behalf of Participants
in an amount equal to 100% of the amount of the Eligible
Participant's Elective Deferrals that do not exceed 3% of the
Participant's Compensation and 50% of the amount of the
Participant's Elective Deferrals that exceed 3% of the
Participant's Compensation but that do not exceed 5% of the
Participant's Compensation.
[ ] D. ENHANCED MATCHING CONTRIBUTION FORMULA:
[ ] Matching Contributions will be made in an amount equal to the
sum of:
[ ] 1. ____% (may not be less than 100%) of the
Participant's Elective Deferrals that do not exceed
____% (if more than 6% or if left blank, the ACP Test
will apply) of the Participant's Compensation, plus
2. ____% of the Participant's Elective Deferrals that
exceed ____% of the Participant's Compensation but do
not exceed ____% (if more than 6% or if left blank
the ACP Test will apply) of the Participant's
Compensation.
This section must be completed so that at any rate of Elective
Deferrals, the Matching Contribution is at least equal to the
Matching Contribution received if the Employer used the Basic
Matching Contribution Formula. The rate of match cannot
increase as Elective Deferrals increase. If an additional
discretionary match is made, it may not exceed 4% of the
Participant's Compensation.
[ ] E. GUARANTEED NON-ELECTIVE CONTRIBUTION FORMULA:
The Employer shall make a Non-Elective Contribution equal to
____% (not less than 3%) of the Compensation of each Eligible
Participant.
[ ] F. FLEXIBLE NON-ELECTIVE CONTRIBUTION FORMULA:
This provision provides the Employer with the ability to amend
the Plan to comply with the Safe Harbor provisions during the
Plan Year. To provide such option, the Employer must amend the
Plan and indicate the Safe Harbor Contribution to be made for
the Plan Year on Schedule D. Such election must be made no
later than 30 days before the last day of the Plan Year for
which such
12
election will apply. To use this option the Employer must
provide a notice that it is considering making such a
contribution not later that 30 days prior to the beginning of
the Plan Year and confirming that it is making such
contribution not later than 30 days prior to the end of the
Plan Year.
ADDITIONAL CONTRIBUTIONS MAY BE MADE TO THE PLAN (SEE SECTION
VIII); REFER TO IRS NOTICES 98-52 AND 2000-3.
[ ] G. LIMITATIONS ON SAFE HARBOR MATCHING CONTRIBUTIONS:
If a Safe Harbor Matching Contribution is made to the Plan:
[ ] 1. The Employer will annualize Safe Harbor Matching
Contributions.
[ ] 2. The Employer will not annualize Safe Harbor Matching
Contributions and elects to match actual Elective
Deferrals made:
[ ] a. on a payroll basis.
[ ] b. on a monthly basis.
[ ] c. on a Plan Year quarterly basis.
If no election is made, the payroll period method will be
used. If one of the Matching Contribution calculation periods
at Section VII(G)(2) above is selected, Matching Contributions
must be deposited to the Plan, not later than the last day of
the calendar quarter next following the quarter following to
which they relate.
IF THE SAFE HARBOR PLAN PROVISIONS ARE ELECTED, THE ANTIDISCRIMINATION
TESTS AT ARTICLE XI OF THE BASIC PLAN DOCUMENT #01 ARE NOT APPLICABLE.
SAFE HARBOR CONTRIBUTIONS MADE ARE SUBJECT TO THE WITHDRAWAL
RESTRICTIONS OF CODE SECTION 401(k)(2)(B) AND TREASURY REGULATIONS
SECTION 1.401(k)-1(d); SUCH CONTRIBUTIONS (AND EARNINGS THEREON) MUST
NOT BE DISTRIBUTABLE EARLIER THAN SEPARATION FROM SERVICE, DEATH,
DISABILITY, AN EVENT DESCRIBED IN CODE SECTION 401(k)(10), OR IN THE
CASE OF A PROFIT-SHARING OR STOCK BONUS PLAN, THE ATTAINMENT OF AGE
59 1/2. SAFE HARBOR CONTRIBUTIONS ARE NOT AVAILABLE FOR HARDSHIP
WITHDRAWALS.
THE ACP TEST SAFE HARBOR IS AUTOMATICALLY SATISFIED IF THE ONLY
MATCHING CONTRIBUTION TO THE PLAN IS EITHER A BASIC MATCHING
CONTRIBUTION OR AN ENHANCED MATCHING CONTRIBUTION THAT DOES NOT PROVIDE
A MATCH ON ELECTIVE DEFERRALS IN EXCESS OF 6% OF COMPENSATION.
EMPLOYEES ELIGIBLE TO MAKE ELECTIVE DEFERRALS TO THIS PLAN MUST BE
ELIGIBLE TO RECEIVE THE SAFE HARBOR CONTRIBUTION IN THE PLAN LISTED
ABOVE, TO THE EXTENT REQUIRED BY IRS NOTICES 98-2 AND 2000-3.
FOR PLANS THAT ALLOW AFTER-TAX CONTRIBUTIONS, THE ACP TEST IS
APPLICABLE WITH REGARD TO SUCH CONTRIBUTIONS.
VIII. EMPLOYER CONTRIBUTIONS
The Employer shall make contributions to the Plan in accordance with
the formula or formulas selected below. The Employer's contribution
shall be subject to the limitations contained in Articles III and X.
For this purpose, a contribution for a Plan Year shall be limited by
Compensation earned in the Limitation Year which ends with or within
such Plan Year.
Do not complete this Section of the Adoption Agreement if the Plan only
offers a Safe Harbor Contribution. A Plan that offers both a Safe
Harbor Matching Contribution as well as an additional Matching
Contribution which is specified below, must complete both Sections VII
and VIII of the Adoption Agreement.
13
A. MATCHING EMPLOYER CONTRIBUTION:
Select the Matching Contribution Formula, Computation Period
and special Limitations for each contribution type from the
options listed below. Enter the letter of the option(s)
selected on the lines provided. Leave the line blank if no
election is required.
<Table>
<Caption>
NON-SAFE NON-SAFE
HARBOR MATCHING HARBOR MATCHING
TYPE OF MATCHING COMPUTATION MATCHING COMPUTATION
CONTRIBUTION FORMULA 1 PERIOD LIMITATIONS FORMULA 2 PERIOD LIMITATIONS
- ------------ --------- ----------- ----------- --------- ----------- -----------
Elective
Deferrals c d
--------- ----------- ----------- --------- ----------- -----------
Voluntary
After-tax
--------- ----------- ----------- --------- ----------- -----------
Required
After-tax
--------- ----------- ----------- --------- ----------- -----------
403(b)
Deferrals
--------- ----------- ----------- --------- ----------- -----------
</Table>
If any election is made with respect to "403(b) Deferrals"
above, this Plan is used to fund any Employer Contributions to
an existing 403(b) plan sponsored by the Employer.
Name of corresponding 403(b) plan: _____.
1. MATCHING CONTRIBUTION FORMULAS:
ELECTIVE DEFERRAL MATCHING CONTRIBUTION FORMULAS:
a. PERCENTAGE OF DEFERRAL MATCH: The Employer
shall contribute to each eligible
Participant's account an amount equal to
____% of the Participant's Elective
Deferrals up to a maximum of ____% or $____
of Compensation.
b. UNIFORM DOLLAR MATCH: The Employer shall
contribute to each eligible Participant's
account $____ if the Participant contributes
at least ____% or $____ of Compensation. The
Employer's contribution will not exceed
____% of Compensation or $__________ for any
Participant.
c. DISCRETIONARY MATCH: The Employer's Matching
Contribution shall be determined by the
Employer with respect to each Plan Year. The
Matching Contribution shall be contributed
to each eligible Participant in accordance
with the nondiscriminatory formula
determined by the Employer. If this Plan is
also utilizing a Safe Harbor Contribution,
pursuant to Section VII of this Adoption
Agreement, Discretionary Matching
Contributions may not exceed 4% of
Compensation.
d. TIERED MATCH: The Employer shall contribute
to each eligible Participant's account an
amount equal to:
______% of the first _____% of the
Participant's Compensation contributed, and
______% of the next _____% of the
Participant's Compensation contributed, and
______% of the next _____% of the
Participant's Compensation contributed.
The Employer's contribution will not exceed
______% of Compensation, or $______for any
Participant.
THE PERCENTAGES SPECIFIED ABOVE MAY NOT
INCREASE AS THE PERCENTAGE OF PARTICIPANT'S
CONTRIBUTION INCREASES.
14
e. PERCENTAGE OF COMPENSATION MATCH: The
Employer shall contribute to each eligible
Participant's account _____% of Compensation
if the eligible Participant contributes at
least _____% of Compensation.
The Employer's contribution will not exceed
_____% of Compensation or $______for any
Participant.
f. PROPORTIONATE COMPENSATION MATCH: The
Employer shall contribute to each eligible
Participant who defers at least _____% of
Compensation, an amount determined by
multiplying such Employer Matching
Contribution by a fraction, the numerator of
which is the Participant's Compensation and
the denominator of which is the Compensation
of all Participants eligible to receive such
an allocation.
The Employer's contribution will not exceed
_____% of Compensation or $______for any
Participant.
g. LENGTH OF SERVICE MATCH: The Employer shall
make Matching Contributions equal to the
formula determined under the following
schedule:
<Table>
<Caption>
Participant's Total Matching
Years of Service Contribution Formula
------------------- --------------------
----- -----
----- -----
----- -----
</Table>
EACH SEPARATE MATCHING PERCENTAGE
CONTRIBUTION MUST SATISFY CODE SECTION
401(a)(4) NONDISCRIMINATION REQUIREMENTS AND
THE ACP TEST.
VOLUNTARY AFTER-TAX MATCHING CONTRIBUTION FORMULAS:
h. PERCENTAGE OF DEFERRAL MATCH: The Employer
shall contribute to each eligible
Participant's account an amount equal to
_____% of the Participant's Voluntary
After-tax Deferrals up to a maximum of
_____% or $______ of Compensation.
i. UNIFORM DOLLAR MATCH: The Employer shall
contribute to each eligible Participant's
account $______if the Participant
contributes at least _____% or $______of
Compensation. The Employer's contribution
will not exceed _____% of Compensation or
$______for any Participant.
j. DISCRETIONARY MATCH: The Employer's Matching
Contribution shall be determined by the
Employer with respect to each Plan Year. The
Matching Contribution shall be contributed
to each eligible Participant in accordance
with the nondiscriminatory formula
determined by the Employer.
REQUIRED AFTER-TAX MATCHING CONTRIBUTION FORMULAS:
k. PERCENTAGE OF DEFERRAL MATCH: The Employer
shall contribute to each eligible
Participant's account an amount equal to
_____% of the Participant's Required
After-tax Deferrals up to a maximum of
_____% or $______of Compensation.
l. UNIFORM DOLLAR MATCH: The Employer shall
contribute to each eligible Participant's
account $______ if the Participant
contributes at least _____% of Compensation.
The Employer's contribution will not exceed
_____% of Compensation or $______ for any
Participant.
m. DISCRETIONARY MATCH: The Employer's Matching
Contribution shall be determined by the
Employer with respect to each Plan Year. The
Matching Contribution shall be contributed
to each eligible Participant in accordance
with the nondiscriminatory formula
determined by the Employer.
15
IF THE MATCHING CONTRIBUTION FORMULA SELECTED BY THE
EMPLOYER IS 100% VESTED AND MAY NOT BE DISTRIBUTED TO
THE PARTICIPANT BEFORE THE EARLIER OF THE DATE THE
PARTICIPANT SEPARATES FROM SERVICE, RETIRES, BECOMES
DISABLED, ATTAINS 59 1/2, OR DIES, IT MAY BE TREATED
AS A QUALIFIED MATCHING CONTRIBUTION.
403(b) MATCHING CONTRIBUTION FORMULAS:
n. PERCENTAGE OF DEFERRAL MATCH: The Employer
shall contribute to each eligible
Participant's account an amount equal to
_____% of the Participant's 403(b) Deferrals
up to a maximum of _____% or $______ of
Compensation.
o. UNIFORM DOLLAR MATCH: The Employer shall
contribute to each eligible Participant's
account $______ if the Participant
contributes at least _____% of Compensation.
The Employer's contribution will not exceed
_____% of Compensation or $______for any
Participant.
p. DISCRETIONARY MATCH: The Employer's Matching
Contribution shall be determined by the
Employer with respect to each Plan Year. The
Matching Contribution shall be contributed
to each eligible Participant in accordance
with the nondiscriminatory formula
determined by the Employer.
2. MATCHING CONTRIBUTION COMPUTATION PERIOD: The
Compensation or any dollar limitation imposed in
calculating the match will be based on the period
selected below. Matching Contributions will be
calculated on the following basis:
a. Weekly e. Quarterly
b. Bi-weekly f. Semi-Annually
c. Semi-monthly g. Annually
d. Monthly h. Payroll Based
The calculation of Matching Contributions based on
the Computation Period selected above has no
applicability as to when the Employer remits Matching
Contributions to the Trust.
3. LIMITATIONS ON MATCHING FORMULAS:
a. ANNUALIZATION OF MATCHING CONTRIBUTIONS. The
Employer elects to annualize Matching
Contributions made to the Plan.
IF NO ELECTION IS MADE, MATCHING
CONTRIBUTIONS WILL NOT BE ANNUALIZED.
b. CONTRIBUTIONS TO PARTICIPANTS WHO ARE NOT
HIGHLY COMPENSATED EMPLOYEES: Contribution
of the Employer's Matching Contribution will
be made only to eligible Participants who
are non-Highly Compensated Employees.
c. DEFERRALS WITHDRAWN PRIOR TO THE END OF THE
MATCHING COMPUTATION PERIOD: Matching
Contributions (whether or not Qualified)
will not be made on Employee contributions
withdrawn prior to the end of the [ ]
Matching Computation Period, or [ ] Plan
Year.
If elected, this requirement [ ] shall [ ]
shall not apply in the event of a withdrawal
occurring as the result of a termination of
employment for reasons other than
retirement, Disability or death.
d. Other, specify: _____.
16
4. QUALIFIED MATCHING CONTRIBUTIONS (QMAC):
[ ] a. For purposes of the ADP or ACP Test, all
Matching Contributions made to the Plan will
be deemed "Qualified" for purposes of
calculating the Actual Deferral Percentage
and/or Actual Contribution Percentage. All
Matching Contributions must be fully vested
when made and are not available for
in-service withdrawal.
[ ] b. For purposes of the ADP or ACP Test, only
Matching Contributions made to the Plan that
are needed to meet the Actual Deferral
Percentage or Actual Contribution Percentage
Test be deemed "Qualified" for purposes of
calculating the Actual Deferral Percentage
and/or Actual Contribution Percentage. All
such Matching Contributions used must be
fully vested when made and are not available
for in-service withdrawal.
5. QUALIFIED NON-ELECTIVE CONTRIBUTIONS (QNEC):
[ ] a. For purposes of the ADP or ACP Test, all
Non-Elective Contributions made to the Plan
will be deemed "Qualified" for purposes of
calculating the Actual Deferral Percentage
and/or Actual Contribution Percentage. All
Non-Elective Contributions must be fully
vested when made and are not available for
in-service withdrawal.
[ ] b. For purposes of the ADP or ACP Test, only
the Non-Elective Contributions made to the
Plan that are needed to meet the Actual
Deferral Percentage or Actual Contribution
Percentage Test be deemed "Qualified" for
purposes of calculating the Actual Deferral
Percentage and/or Actual Contribution
Percentage. All such Non-Elective
Contributions used must be fully vested when
made and are not available for in-service
withdrawal.
B. QUALIFIED MATCHING (QMAC) AND QUALIFIED NON-ELECTIVE (QNEC)
EMPLOYER CONTRIBUTION FORMULAS:
[ ] 1. QMAC CONTRIBUTION FORMULA: The Employer may
contribute to each eligible Participant's Qualified
Matching account an amount equal to $______or _____%
of the Participant's Elective Deferrals or $______or
_____% of the Participant's Voluntary After-tax
Contributions or ___$ or _____% of the Participant's
Required After-Tax Contributions. This part of the
Employer's contribution shall be fully vested when
made.
[ ] 2. DISCRETIONARY QMAC CONTRIBUTION FORMULA: The Employer
shall have the right to make a discretionary QMAC
contribution. The Employer's Matching Contribution
shall be determined by the Employer with respect to
each Plan Years' eligible Participants. This part of
the Employer's contribution shall be fully vested
when made.
[ ] 3. DISCRETIONARY PERCENTAGE QNEC CONTRIBUTION FORMULA:
The Employer shall have the right to make a
discretionary QNEC contribution which shall be made
to each eligible Participant in proportion to his or
her Compensation as a percentage of the Compensation
of all eligible Participants. This part of the
Employer's contribution shall be fully vested when
made. This contribution will be made to:
[ ] a. All eligible Participants.
[ ] b. Only eligible Participants who are
non-Highly Compensated Employees.
[ ] 4. DISCRETIONARY UNIFORM DOLLAR QNEC CONTRIBUTION
FORMULA: The Employer shall have the right to make a
discretionary QNEC contribution which shall be
contributed to each eligible Participant in a uniform
dollar amount to be determined by the Employer and
allocated in a nondiscriminatory manner. This part of
the Employer's contribution shall be fully vested
when made and not available for in-service
withdrawal. This contribution will be made to:
[ ] a. All eligible Participants.
[ ] b. Only eligible Participants who are
non-Highly Compensated Employees.
[X] 5. CORRECTIVE QNEC CONTRIBUTION FORMULA: The Employer
shall have the right to make a QNEC contribution in
the amount necessary to pass the ADP/ACP Test or the
maximum permitted under Code Section 415. This
contribution will be allocated to some or all
Non-Highly Compensated Participants designated by the
Plan Administrator. The allocation will be the lesser
of the amount required to pass the ADP/ACP Test, or
the maximum permitted under Code Section 415 and not
available for in-service withdrawal. This part of the
Employer's contribution shall be fully vested when
made.
17
[X] C. DISCRETIONARY EMPLOYER CONTRIBUTION - NON-INTEGRATED FORMULA:
The Employer shall have the right to make a discretionary
contribution. The Employer's contribution for the Plan Year
shall be made to the accounts of eligible Participants as
follows:
[ ] 1. _____% of the Employer's Net Profit.
[ ] 2. _____% of Compensation of eligible Participants for
the Plan Year.
[X] 3. An amount fixed by an appropriate action of the
Employer as of the time prescribed by law.
[ ] 4. Such contribution shall be allocated equally (a
uniform dollar amount) to each eligible Participant.
[ ] D. DISCRETIONARY EMPLOYER CONTRIBUTION - EXCESS INTEGRATED
ALLOCATION FORMULA: The Employer shall have the right to make
a discretionary contribution. The Employer's contribution for
the Plan Year shall be allocated to the accounts of eligible
Participants as follows:
ONLY ONE PLAN MAINTAINED BY THE EMPLOYER MAY BE INTEGRATED
WITH SOCIAL SECURITY. ANY PLAN UTILIZING A SAFE HARBOR FORMULA
PROVIDED IN SECTION VII OF THIS ADOPTION AGREEMENT MAY NOT
APPLY THE SAFE HARBOR CONTRIBUTION TO THE INTEGRATED
ALLOCATION FORMULA. IF THE PLAN IS NOT TOP-HEAVY OR IF THE
TOP-HEAVY MINIMUM CONTRIBUTION OR BENEFIT IS PROVIDED UNDER
ANOTHER PLAN COVERING THE SAME EMPLOYEES, PARAGRAPHS 1 AND 2
BELOW MAY BE DISREGARDED AND 5.7%, 5.4% OR 4.3% MAY BE
SUBSTITUTED FOR 2.7%, 2.4% OR 1.3% WHERE IT APPEARS IN
PARAGRAPH 3 BELOW.
1. Step One: To the extent contributions are sufficient,
all Participants will receive an allocation equal to
3% of their Compensation.
2. Step Two: Any remaining Employer contributions will
be allocated up to a maximum of 3% of excess
Compensation of all Participants to Participants who
have Compensation in excess of the Integration Level
(excess Compensation). Each such Participant will
receive an allocation in the ratio that his or her
excess Compensation bears to the excess Compensation
of all Participants. If Employer contributions are
insufficient to fund to this level, the Employer must
determine the uniform allocation percentage to
allocate to those Participants who have Compensation
in excess of the Integration Level. To determine this
uniform allocation percentage, the Employer must take
the remaining contribution and divide that amount by
the total excess Compensation of Participants.
3. Step Three: Any remaining Employer contributions will
be allocated to all Participants in the ratio that
their Compensation plus excess Compensation bears to
the total Compensation plus excess Compensation of
all Participants. Participants may only receive an
allocation of up to 2.7% of their Compensation plus
excess Compensation, under this allocation step. If
the Integration Level defined at Section III(E) is
less than or equal to the greater of $10,000 or 20%
of the maximum, the 2.7% need not be reduced. If the
amount specified is greater than the greater of
$10,000 or 20% of the maximum Taxable Wage Base, but
not more than 80%, 2.7% must be reduced to 1.3%. If
the amount specified is greater than 80% but less
than 100% of the maximum Taxable Wage Base, the 2.7%
must be reduced to 2.4%. If Employer contributions
are insufficient to fund to this level, the Employer
must determine the uniform allocation percentage to
allocate to those Participants who have Compensation
up to the Integration Level and excess Compensation.
To determine this uniform allocation percentage, the
Employer must take the remaining contribution and
divide that amount by the total Compensation
including excess Compensation of Participants.
4. Step Four: Any remaining Employer contributions will
be allocated to all Participants in the ratio that
each Participant's Compensation bears to all
Participants' Compensation.
[ ] E. DISCRETIONARY EMPLOYER CONTRIBUTION - BASE INTEGRATED
ALLOCATION FORMULA: The Employer shall have the right to make
a discretionary contribution. To the extent that such
contributions are sufficient, they shall be allocated as
follows:
18
_____% of each eligible Participant's Compensation, plus
_____% of Compensation in excess of the Integration Level
defined at Section III(E) hereof.
The percentage of excess Compensation may not exceed the
lesser of (i) the amount first specified in this paragraph or
(ii) the greater of 5.7% or the percentage rate of tax under
Code Section 3111(a) as in effect on the first day of the Plan
Year attributable to the Old Age (OA) portion of the OASDI
provisions of the Social Security Act. If the Employer
specifies an Integration Level in Section III(E) which is
lower than the Taxable Wage Base for Social Security purposes
(SSTWB) in effect as of the first day of the Plan Year, the
percentage contributed with respect to excess Compensation
must be adjusted. If the Plan's Integration Level is greater
than the larger of $10,000 or 20% of the SSTWB but not more
than 80% of the SSTWB, the excess percentage is 4.3%. If the
Plan's Integration Level is greater than 80% of the SSTWB but
less than 100% of the SSTWB, the excess percentage is 5.4%.
ONLY ONE PLAN MAINTAINED BY THE EMPLOYER MAY BE INTEGRATED
WITH SOCIAL SECURITY. ANY PLAN UTILIZING A SAFE HARBOR FORMULA
AS PROVIDED IN SECTION VII OF THIS ADOPTION AGREEMENT MAY NOT
APPLY THE SAFE HARBOR CONTRIBUTIONS TO THE INTEGRATED
ALLOCATION FORMULA.
[ ] F. UNIFORM POINTS ALLOCATION FORMULA: The allocation for each
eligible Participant will be determined on a uniform points
method. Each eligible Participant's allocation shall bear the
same relationship to the Employer contribution as the
Participant's total points bears to all points awarded. Each
eligible Participant will receive points for each of the
following:
[ ] 1. _____ year(s) of age.
[ ] 2. _____ Year(s) of Service determined:
[ ] a. In the same manner as determined for
eligibility.
[ ] b. In the same manner as determined for
vesting.
[ ] c. Points will not be awarded with respect to
Year(s) of Service in excess of ___________.
[ ] 3. $______ (not to exceed $200) of Compensation.
[ ] 4. Other (explain): ____.
[ ] G. ADDITIONAL ADOPTING EMPLOYERS:
[ ] 1. All participating Employer's contributions and
forfeitures under Section VIII entitled "Employer
Contributions" above and forfeitures attributable to
each specific contribution source shall be pooled
together and allocated uniformly among all eligible
Participants.
[ ] 2. Each participating Employer's contribution under
Section VIII above and forfeitures attributable to
each specific contribution source made by such
Employer shall be allocated only to eligible
Participants of the participating Employer.
WHERE CONTRIBUTIONS AND FORFEITURES ARE TO BE ALLOCATED TO
ELIGIBLE PARTICIPANTS BY PARTICIPATING EMPLOYERS, EACH SUCH
EMPLOYER MUST MAINTAIN DATA DEMONSTRATING THAT THE ALLOCATIONS
BY GROUP SATISFY THE NONDISCRIMINATION RULES UNDER CODE
SECTION 401(a)(4).
H. MINIMUM EMPLOYER CONTRIBUTION FORMULA UNDER TOP-HEAVY PLANS:
For any Plan Year during which the Plan is Top-Heavy, the sum
of the contributions and forfeitures (excluding Elective
Deferrals and/or Matching Contributions) allocated to non-Key
Employees shall not be less than the amount required under the
Basic Plan Document #01. The eligibility of a Participant to
receive Top-Heavy Contributions mirrors the eligibility for
any contribution with the earliest Entry Date. Top-Heavy
minimums will be allocated to:
19
[ ] 1. all eligible Participants.
[X] 2. only eligible non-Key Employees who are Participants.
IX. ALLOCATIONS TO PARTICIPANTS
A. THIS IS A SAFE HARBOR PLAN:
[ ] Employer Non-Elective and/or Matching Contributions will be
made to all Employees who have satisfied the Safe Harbor
eligibility requirements.
B. ALLOCATION ACCRUAL REQUIREMENTS:
A Year of Service for eligibility to receive an allocation of
Employer contributions will be determined on the basis of the:
[ ] 1. Elapsed Time method.
[X] 2. Hours of Service method. A Year of Service will be
credited upon completion of the requirements below. A
Year of Service for allocation accrual purposes
cannot be less than 1 Hour of Service nor greater
than 1,000 hours by operation of law. If left blank,
the Plan will use 1,000 hours. ENTER WHOLE DIGIT
NUMBERS ONLY.
a. Active Participants:
<Table>
<Caption>
CONTRIBUTION TYPE HOURS OF SERVICE REQUIREMENT
----------------- ----------------------------
All contributions
----------------------------
Non-Safe Harbor Match Formula 1
----------------------------
Employer Discretionary 1000
----------------------------
QNECs
----------------------------
QMACs
----------------------------
Non-Safe Harbor Match Formula 2
----------------------------
</Table>
b. Terminated Participants:
<Table>
<Caption>
CONTRIBUTION TYPE HOURS OF SERVICE REQUIREMENT
----------------- ----------------------------
All contributions
----------------------------
Non-Safe Harbor Match Formula 1
----------------------------
Employer Discretionary 1000
----------------------------
QNECs
----------------------------
QMACs
----------------------------
Non-Safe Harbor Match Formula 2
----------------------------
</Table>
20
C. ALLOCATION OF CONTRIBUTIONS TO PARTICIPANTS:
Employer contributions for a Plan Year will be
allocated to all active Participants who have met the
allocation accrual requirements at Section
IX(B)(2)(a) above and those terminated Participants
who have met the allocation accrual requirement at
Section IX(B)(2)(b) above and have met the following
requirements (check all applicable boxes):
IF NO PROVISION IS SELECTED BELOW, PARTICIPANTS WILL
NOT BE REQUIRED TO COMPLETE A YEAR OF SERVICE OR BE
EMPLOYED ON THE LAST DAY OF THE PLAN YEAR TO RECEIVE
AN ALLOCATION.
1.
<Table>
<Caption>
Non-Safe Non-Safe
Harbor Harbor
Match Match
Formula 1 Formula 2 QNEC QMAC Discretionary
--------- --------- ---- ---- -------------
Employment on the
last day of the Plan
Year is Required for:
a. All employees [ ] [ ] [ ] [ ] [ ]
b. Termination [ ] [ ] [ ] [ ] [ ]
c. Retirement [ ] [ ] [ ] [ ] [ ]
d. Disability [ ] [ ] [ ] [ ] [ ]
e. Death [ ] [ ] [ ] [ ] [ ]
f. Other: [ ] [ ] [ ] [ ] [ ]
--------------
</Table>
2.
A Year of Service
will be required for:
<Table>
a. All employees [ ] [ ] [ ] [ ] [ ]
b. Termination [ ] [ ] [ ] [ ] [X]
c. Retirement [ ] [ ] [ ] [ ] [X]
d. Disability [ ] [ ] [ ] [ ] [ ]
e. Death [ ] [ ] [ ] [ ] [ ]
f. Other: Active [ ] [ ] [ ] [ ] [X]
</Table>
[ ] D. CONTRIBUTIONS TO DISABLED PARTICIPANTS:
The Employer will continue to make contributions on behalf of
a Participant who is permanently and totally disabled. These
contributions will be based on the Compensation each such
Participant would have received for the Limitation Year if the
Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled.
Such imputed Compensation for the disabled Participant may be
taken into account only if the Participant is not a Highly
Compensated Employee. These contributions will be 100% vested
when made.
21
[X] E. CORRECTION OF COVERAGE TESTING:
The Employer shall suspend accrual requirements for eligible
Employees who are Participants beginning first with the
Employee(s) employed on the last day of the Plan Year, then
the eligible Employees who have the latest separation from
Service date during the Plan Year, and continuing to suspend
in descending order the accrual requirements for each eligible
Employee who incurred an earlier separation from Service date,
until the Plan satisfies the coverage test.
If after application of the preceding paragraph, the coverage
requirements are still not satisfied, the Employer shall apply
the same procedure as outlined in the preceding paragraph to
an otherwise excludable class of Employees.
F. LEASED EMPLOYEES:
[X] 1. Not applicable. Leased Employees do not participate
in this Plan.
[ ] 2. A Leased Employee of the Employer is a Participant in
the Plan and also participates in a plan maintained
by the leasing organization.
[ ] G. OFFSET OF CONTRIBUTION:
A Participant's allocation of Employer Contributions otherwise
made under Section VIII will be reduced by the Participant's
allocation under the following qualified plan(s) maintained by
the Employer:
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
22
X. DISPOSITION OF FORFEITURES
[X] A. NOT APPLICABLE. All contributions are fully vested.
If (A) is selected, do not complete (B) or (C) below.
B. FORFEITURE ALLOCATION ALTERNATIVES:
Select the method in which forfeitures associated with the
contribution type will be allocated (number each item in order
of use).
<Table>
<Caption>
Employer Contribution Type
--------------------------------
All Non- All
Safe Harbor Other
Disposition Method Match Contributions
------------------ ----------- -------------
1. Restoration of Participant's forfeitures. ------- -------
2. Used to offset Plan expenses. ------- -------
3. Used to reduce the Employer's contribution
under the Plan. ------- -------
4. Used to reduce the Employer's Matching
Contribution under the Plan. ------- -------
5. Added to the Employer's contributions under the
Plan. ------- -------
6. Added to the Employer's Matching
Contributions under the Plan. ------- -------
7. Allocate to all Participants eligible to share
in the allocations in the same proportion
that each Participant's Compensation for the
year bears to the Compensation of all other
Participant's for such year. ------- -------
8. Allocate to all NHCEs eligible to share in the
allocations in proportion to each such Participant's
Compensation for the year. ------- -------
9. Allocate to all NHCEs eligible to share in the
allocations in proportion to each such Participant's
Elective Deferrals for the year. ------- -------
10. Allocate to all Participants eligible to share in the
allocations in the same proportion that each
Participant's Elective Deferrals for the year bears
to the Elective Deferrals of all Participants for
such year. ------- -------
Participants eligible to share in the allocation of other Employer Contributions
under Section VIII shall be eligible to share in the allocation of forfeitures
except where allocations are only to Non-Highly Compensated Employees.
</Table>
23
C. TIMING OF ALLOCATION OF FORFEITURES:
If no distribution or deemed distribution has been made to a
former Participant, nonvested portions shall be forfeited at
the end of the Plan Year during which the former Participant
incurs his or her fifth consecutive one-year Break in Service.
If a former Participant has received the full amount of his or
her vested interest, the nonvested portion of his or her
account shall be forfeited and shall be disposed of:
[ ] 1. during the Plan Year following the Plan Year in which
the forfeiture arose.
[ ] 2. as of any Valuation or Allocation Date during the
Plan Year (or as soon as administratively feasible
following the close of the Plan Year) in which the
former Participant receives full payment of his or
her vested benefit.
[ ] 3. at the end of the Plan Year during which the former
Participant incurs his or her _____ (1st, 2nd, 3rd,
4th or 5th) consecutive one-year Break in Service.
[ ] 4. as of the end of the Plan Year during which the
former Participant received full payment of his or
her vested benefit.
[ ] 5. as of the earlier of the first day of the Plan Year,
or the first day of the seventh month of the Plan
Year following the date on which the former
Participant has received full payment of his or her
vested benefit.
[ ] 6. as of the next Allocation Date following the date on
which the former Participant receives full payment of
his or her vested benefit.
XI. MULTIPLE PLANS MAINTAINED BY THE EMPLOYER, LIMITATIONS ON ALLOCATIONS,
AND TOP-HEAVY CONTRIBUTIONS
A. PLANS MAINTAINED BY THE EMPLOYER:
[X] 1. This is the only Plan the Employer maintains. In the
event that the allocation formula results in an
Excess Amount, such excess, after distribution of
Employee contributions pursuant to paragraph 10.2 of
the Basic Plan Document #01, shall be:
[X] a. Placed in a suspense account for the benefit
of the Participant without the crediting of
gains or losses for the benefit of the
Participant.
[ ] b. Reallocated as additional Employer
contributions to all other Participants to
the extent that they do not have any Excess
Amount.
IF NO METHOD IS SPECIFIED, THE SUSPENSE ACCOUNT METHOD WILL BE
USED.
[ ] 2. The Employer does maintain another Plan [including a
Welfare Benefit Fund or an individual medical account
as defined in Code Section 415(l)(2)], under which
amounts are treated as Annual Additions and has
completed the proper sections below.
[ ] a. If the Participant is covered under another
qualified Defined Contribution Plan
maintained by the Employer, other than a
Master or Prototype Plan:
[ ] i. The provisions of Article X of the
Basic Plan Document #01 will apply
as if the other plan were a Master
or Prototype Plan.
[ ] ii. The Employer has specified below
the method under which the plans
will limit total Annual Additions
to the Maximum Permissible Amount,
and will properly reduce any Excess
Amounts in a manner that 35
Section 401(k) Plan AA #010
precludes Employer discretion. ___.
EMPLOYERS WHO MAINTAINED A QUALIFIED DEFINED BENEFIT
PLAN, PRIOR TO JANUARY 1, 2000, SHOULD COMPLETE
SCHEDULE C TO DOCUMENT THE PREAMENDMENT OPERATION OF
THE PLAN.
24
[ ] b. Allocation of Excess Annual Additions: In
the event that the allocation formula
results in an Excess Amount, such excess,
after distribution of Employee contributions
pursuant to paragraph 10.2 of the Basic Plan
Document #01, shall be:
[ ] i. Placed in a suspense account for
the benefit of the Participant
without the crediting of gains or
losses for the benefit of the
Participant.
[ ] ii. Reallocated as additional Employer
contributions to all other
Participants to the extent that
they do not have any Excess Amount.
IF NO METHOD IS SPECIFIED, THE SUSPENSE ACCOUNT
METHOD WILL BE USED.
B. TOP-HEAVY PROVISIONS:
In the event the Plan is or becomes Top-Heavy, the minimum
contribution or benefit required under Code Section 416
relating to Top-Heavy Plans shall be satisfied in the elected
manner:
[X] 1. This is the only qualified retirement Plan maintained
by the Employer. The minimum contribution will be
satisfied by this Plan.
[ ] 2. The Employer does maintain another Defined
Contribution Plan. The minimum contribution will be
satisfied by:
[ ] a. this Plan.
[ ] b. .
----------------------------------------
(Name of other qualified plan)
[ ] 3. The Employer maintains a Defined Benefit Plan. A
method is stated below under which the minimum
contribution and benefit provisions of Code Section
416 will be satisfied. Such method precludes Employer
discretion. Interest and mortality assumptions used
in the Top-Heavy Ratio must be stated.
----------------
XII. ANTIDISCRIMINATION TESTING
COMPLETE ONLY IF THIS IS A NEW PLAN OR AN EXISTING PLAN WHICH HAS
PREVIOUSLY BEEN AMENDED OR RESTATED FOR GUST. FOR AMENDED AND RESTATED
PLANS, PLEASE COMPLETE SCHEDULE C OUTLINING THE PREAMENDMENT OPERATION
OF THE PLAN. SAFE HARBOR PLANS ARE AUTOMATICALLY DEEMED TO HAVE MADE
THE CURRENT YEAR TESTING ELECTION.
[ ] A. NOT APPLICABLE FOR PLAN YEARS BEGINNING IN 2000. The Plan is
not subject to ADP or ACP testing. The Plan does not offer
Voluntary After-tax Contributions or Required After-tax
contributions and it either meets the Safe Harbor provisions
of Section VII of this Adoption Agreement, or it does not
benefit any Highly Compensated Employees.
[ ] B. TESTING ELECTIONS:
[ ] 1. This Plan is using the Prior Year testing method for
purposes of the ADP and ACP Tests.
[ ] 2. This Plan is using the Current Year testing method
for purposes of the ADP and ACP Tests.
IF NO ELECTION IS MADE, THE PLAN WILL USE THE CURRENT YEAR
TESTING METHOD.
25
This election cannot be rescinded for a Plan Year unless (1)
the Plan has been using the Current Year testing method for
the preceding 5 Plan Years, or, if lesser, the number of Plan
Years the Plan has been in existence; or (2) the Plan
otherwise meets one of the conditions specified in IRS Notice
98-1 (or other superseding guidance) for changing from the
Current Year testing method.
A PROTOTYPE PLAN MUST USE THE SAME TESTING METHOD FOR BOTH THE
ADP AND ACP TESTS FOR PLAN YEARS BEGINNING ON OR AFTER THE
DATE THE EMPLOYER ADOPTS ITS GUST-RESTATED PLAN DOCUMENT.
[ ] C. TESTING ELECTIONS FOR THE FIRST PLAN YEAR:
COMPLETE ONLY WHEN PRIOR YEAR TESTING METHOD ELECTION IS MADE.
[ ] 1. If this is not a successor Plan, then, for the first
Plan Year this Plan permits any Participant to make
Employee Contributions, provides for Matching
Contributions or both, the ACP used in the ACP test
for Participants who are Non-Highly Compensated
Employees shall be such first Plan Year's ACP. DO NOT
SELECT THIS OPTION IF THE EMPLOYER IS USING THE
"DEEMED 3% " RULE.
[ ] 2. If this is not a successor Plan, then, for the first
Plan Year this Plan permits any Participant to make
Elective Deferrals, the ADP used in the ADP test for
Participants who are Non-Highly Compensated Employees
shall be such first Plan Year's ADP. DO NOT SELECT
THIS OPTION IF THE EMPLOYER IS USING THE "DEEMED 3% "
RULE.
[ ] D. RECHARACTERIZATION:
Elective Deferrals may be recharacterized as Voluntary
After-tax Contributions to satisfy the ADP Test. The Employer
must have elected to permit Voluntary After-tax Contributions
in the Plan for this election to be operable.
XIII. VESTING
Participants shall always have a fully vested and nonforfeitable
interest in their Employee Contributions (including Elective Deferrals,
Required After-tax and Voluntary After-tax Contributions), Qualified
Matching Contributions ("QMACs"), Qualified Non-Elective Contributions
("QNECs") or Safe Harbor Matching or Non-Elective Contributions and
their investment earnings.
Each Participant shall acquire a vested and nonforfeitable percentage
in his or her account balance attributable to Employer contributions
and their earnings under the schedule(s) selected below except in any
Plan Year during which the Plan is determined to be Top-Heavy. In any
Plan Year in which the Plan is Top-Heavy, the Two-twenty vesting
schedule [option (B)(4)] or the three-year cliff schedule [option
(B)(3)] shall automatically apply unless the Employer has elected a
faster vesting schedule. If the Plan is switched to option (B)(4) or
(B)(3), because of its Top-Heavy status, that vesting schedule will
remain in effect even if the Plan later becomes non-Top-Heavy until the
Employer executes an amendment of this Adoption Agreement.
A. VESTING COMPUTATION PERIOD:
[X] A Year of Service for vesting will be determined on the basis
of the (choose one):
[ ] 1. Not applicable. All contributions are fully vested.
[ ] 2. Elapsed Time method.
3. Hour of Service method. A Year of Service will be
credited upon completion of Hours of Service. A Year
of Service for vesting purposes will not be less than
1 Hour of Service nor greater than 1,000 hours by
operation of law. If left blank, the Plan will use
1,000 hours.
26
The computation period for purposes of determining Years of
Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account
balance derived from Employer contributions:
[X] 4. shall not be applicable since Participants are always
fully vested.
[ ] 5. shall not be applicable, as the Plan is using Elapsed
Time.
[ ] 6. shall commence on the date on which an Employee first
performs an Hour of Service for the Employer and each
subsequent 12-consecutive month period shall commence
on the anniversary thereof.
[ ] 7. shall commence on the first day of the Plan Year
during which an Employee first performs an Hour of
Service for the Employer and each subsequent
12-consecutive month period shall commence on the
anniversary thereof.
For Plans not using Elapsed Time, a Participant shall receive
credit for a Year of Service if he or she completes the number
of hours specified above at any time during the 12-consecutive
month computation period. A Year of Service may be earned
prior to the end of the 12-consecutive month computation
period and the Participant need not be employed at the end of
the 12-consecutive month computation period to receive credit
for a Year of Service.
B. VESTING SCHEDULES:
Select the option and complete any blank vesting percentages
from the list below and insert the option number in the
vesting schedule chart below.
<Table>
<Caption>
Years of Service
-----------------------------------------------------------------------
1 2 3 4 5 6 7
--- --- --- --- --- --- ---
[X] 1. Full and immediate vesting
[ ] 2. % 100%
-----
[ ] 3. % % 100%
----- -----
[ ] 4. % 20% 40% 60% 80% 100%
-----
[ ] 5. % % 20% 40% 60% 80% 100%
----- -----
[ ] 6. 10% 20% 30% 40% 60% 80% 100%
[ ] 7. % % % % 100%
----- ----- ----- -----
[ ] 8. % % % % % % 100%
----- ----- ----- ----- ----- -----
</Table>
THE PERCENTAGES SELECTED FOR SCHEDULE (8) MAY NOT BE LESS FOR
ANY YEAR THAN THE PERCENTAGES SHOWN AT SCHEDULE (5).
<Table>
<Caption>
Vesting Schedule Chart Employer Contribution Type
---------------------- --------------------------
1 All Employer Contributions
---
1 Safe Harbor Contributions (Matching or Non-Elective)
---
1 QMACs and QNECs
---
Non-Safe Harbor Match - Formula 1
---
Non-Safe Harbor Match - Formula 2
---
Match on Voluntary After-tax Contributions
---
Match on Required After-tax Contributions
---
Discretionary Contributions
---
Top-Heavy Minimum Contributions
---
Other Employer Contribution
---
</Table>
27
C. SERVICE DISREGARDED FOR VESTING:
[X] 1. Not Applicable. All Service is recognized.
[ ] 2. Service prior to the Effective Date of this
Plan or a predecessor plan is disregarded
when computing a Participant's vested and
nonforfeitable interest.
[ ] 3. Service prior to a Participant having
attained age 18 is disregarded when
computing a Participant's vested and
nonforfeitable interest.
28
XIV. SERVICE WITH PREDECESSOR ORGANIZATION
[X] A. Not applicable. The Plan does not recognize Service with any
predecessor organization.
[ ] B. The Plan will recognize service with all predecessor
organizations.
[ ] C. Service with the following organization(s) will be recognized
for the Plan purpose indicated:
<Table>
<Caption>
Allocation
Eligibility Accrual Vesting
----------- ---------- -------
------------------------------------------- [ ] [ ] [ ]
------------------------------------------- [ ] [ ] [ ]
Attach additional pages as necessary.
</Table>
XV. IN-SERVICE WITHDRAWALS
A. IN-SERVICE WITHDRAWALS:
[ ] 1. In-service withdrawals are not permitted in the Plan.
[X] 2. In-service withdrawals are permitted in the Plan.
Participants may withdraw the following contribution
types after meeting the following requirements
(select one or more of the following options):
<Table>
<Caption>
WITHDRAWAL RESTRICTIONS
CONTRIBUTION TYPES A B C D E F
------------------ --------------------------------------
a. All Contributions [ ] [ ] [ ] [ ] [ ] [ ]
b. Voluntary After-tax [ ] [ ] [ ] [ ] [ ] [ ]
c. Required After-tax [ ] [ ] [ ] [ ] [ ] [ ]
d. Rollover [ ] [X] [ ] [ ] [ ] [ ]
e. Transfer [ ] [X] [ ] [ ] [ ] [ ]
f. Elective Deferrals [ ] n/a n/a [ ] [X] n/a
g. Qualified Non-Elective [ ] n/a n/a [ ] [ ] n/a
h. Qualified Matching [ ] n/a n/a [ ] [ ] n/a
i. Safe Harbor Matching [ ] n/a n/a [ ] [ ] n/a
j. Safe Harbor Non-Elective [ ] n/a n/a [ ] [ ] n/a
k. Vested Non-Safe Harbor
Matching Formula 1 [X] [ ] [ ] [ ] [ ] [ ]
l. Vested Non-Safe Harbor
Matching Formula 2 [ ] [ ] [ ] [ ] [ ] [ ]
m. Vested Discretionary [X] [ ] [ ] [ ] [ ] [ ]
</Table>
29
WITHDRAWAL RESTRICTION KEY
A. Not available for in-service withdrawals.
B. Available for in-service withdrawals.
C. Participants having completed five years of
Plan participation may elect to withdraw all
or any part of their Vested Account Balance.
D. Participants may withdraw all or any part of
their Account Balance after having attained
the Plan's Normal Retirement Age.
E. Participants may withdraw all or any part of
their Vested Account Balance after having
attained age 59 1/2 (not less than age
59 1/2).
F. Participants may elect to withdraw all or
any part of their Vested Account Balance
which has been credited to their account for
a period in excess of two years.
B. HARDSHIP WITHDRAWALS:
[ ] 1. Hardship withdrawals are not permitted in the Plan.
[X] 2. Hardship withdrawals are permitted in the Plan and
will be taken from the Participant's account as
follows (select one or more of these options):
[X] a. Participants may withdraw Elective
Deferrals.
[X] b. Participants may withdraw Rollover
Contributions plus their earnings.
[X] c. Participants may withdraw fully vested
Employer contributions plus their earnings.
[X] d. Participants may withdraw vested Non-Safe
Harbor Matching Formula 1 Contributions plus
their earnings.
[ ] e. Participants may withdraw vested Non-Safe
Harbor Matching Formula 2 Contributions plus
their earnings.
[ ] f. Participants may withdraw Qualified Matching
Contributions and Qualified NonElective
Contributions plus their earnings, and the
earnings on Elective Deferrals which have
been credited to the Participant's account
as of a date that is no later than December
31, 1988 (or, if later, the end of the last
Plan Year ending before July 1, 1989).
XVI. LOAN PROVISIONS
[X] A. Participant loans are permitted in accordance with the
Employer's established loan procedures.
[X] B. Loan payments will be suspended under the Plan as permitted
under Code Section 414(u) in compliance with the Uniformed
Services Employment and Reemployment Rights Act of 1994.
30
XVII. INVESTMENT MANAGEMENT
A. INVESTMENT MANAGEMENT RESPONSIBILITY:
[ ] 1. The Employer shall appoint a discretionary Trustee to
manage the assets of the Plan.
[ ] 2. The Employer shall direct the investments with
respect to Plan assets.
[X] 3. The Employer shall appoint a nondiscretionary Trustee
or Custodian. By selecting a box, the Employer is
making a designation as to whom will have authority
to issue investment directives with respect to the
specified contribution type (check all applicable
boxes):
<Table>
<Caption>
Named
Investment
Fiduciary Employer Participant
---------- -------- -----------
a. All Contributions [ ] [ ] [X]
b. Employer Contributions [ ] [ ] [ ]
c. Elective Deferrals [ ] [ ] [ ]
d. Voluntary After-tax [ ] [ ] [ ]
e. Required After-tax [ ] [ ] [ ]
f. Safe Harbor Contributions [ ] [ ] [ ]
g. Non-Safe Harbor Match Formula 1 [ ] [ ] [ ]
h. Non-Safe Harbor Match Formula 2 [ ] [ ] [ ]
i. QMACs [ ] [ ] [ ]
j. QNECs [ ] [ ] [ ]
k. Rollover Contributions [ ] [ ] [ ]
l. Transfer Contributions
</Table>
TO THE EXTENT THAT PARTICIPANT SELF-DIRECTION WAS PREVIOUSLY
PERMITTED, THE EMPLOYER SHALL HAVE THE RIGHT TO EITHER MAKE
THE ASSETS PART OF THE GENERAL FUND, OR LEAVE THEM AS
SELF-DIRECTED SUBJECT TO THE PROVISIONS OF THE BASIC PLAN
DOCUMENT #01.
B. LIMITATIONS ON PARTICIPANT DIRECTED INVESTMENTS:
[X] 1. Participants are permitted to invest among only those
investment alternatives made available by the
Employer under the Plan.
[ ] 2. Participants are permitted to invest in any
investment permitted under the Basic Plan Document
#01.
[ ] C. INSURANCE:
The Plan permits insurance as an investment alternative.
[ ] D. ERISA SECTION 404(c):
The Employer intends to be covered by the fiduciary liability
provisions with respect to Participant directed investments
under ERISA Section 404(c).
[ ] E. VOTING RIGHTS:
Voting rights on Employer securities will be passed through to
Participants.
31
XVIII. DISTRIBUTION OPTIONS
A. TIMING OF DISTRIBUTIONS [both (1) and (2) must be completed]:
1. Distributions payable as a result of termination for
death, Disability or retirement shall be paid c
[select from the list at (A)(3) below].
2. Distributions payable as a result of termination for
reasons other than death, Disability or retirement
shall be paid c [select from the list at (A)(3)
below].
3. Distribution Options:
a. As soon as administratively feasible on or
after the Valuation Date on which a
distribution is requested or is otherwise
payable.
b. As soon as administratively feasible
following the close of the Plan Year during
which a distribution is requested or is
otherwise payable.
c. As soon as administratively feasible
following the date on which a distribution
is requested or is otherwise payable. (This
option is recommended for Daily Valuation
Plans).
d. As soon as administratively feasible after
the close of the Plan Year during which the
Participant incurs ______ (cannot be more
than 5) consecutive one-year Breaks in
Service. [This formula can only be used in
(A)(1).]
e. As soon as administratively feasible after
the close of the Plan Year during which the
Participant incurs ______ (cannot be more
than 5) consecutive one-year Breaks in
Service. [This formula can only be used in
(A)(2).]
f. Only after the Participant has achieved the
Plan's Normal Retirement Age or Early
Retirement Age, if applicable.
g. Other (please specify):______.
B. REQUIRED BEGINNING DATE:
The Required Beginning Date of a Participant with respect to a
Plan is (select one from below):
[ ] 1. The April 1 of the calendar year following the
calendar year in which the Participant attains age
70 1/2.
[ ] 2. The April 1 of the calendar year following the
calendar year in which the Participant attains age
70 1/2 except that distributions to a Participant
(other than a 5% owner) with respect to benefits
accrued after the later of the adoption of this Plan
or Effective Date of the amendment of this Plan must
commence no later than the April 1 of the calendar
year following the later of the calendar year in
which the Participant attains age 70 1/2 or the
calendar year in which the Participant retires.
[X] 3. The later of the April 1 of the calendar year
following the calendar year in which the Participant
attains age 70 1/2 or retires except that
distributions to a 5% owner muST commence by the
April 1 of the calendar year following the calendar
year in which the Participant attains age 70 1/2.
Except that such Participant [X] may [ ] may not
elect to begin receiving distributions as of April
1st of the calendar year following the calendar year
in which the Participant attains age 70 1/2. Any
distributions made pursuant to such an election will
not be considered required minimum distributions.
Such distributions will be considered in service
distributions and as such, will be subject to
applicable withholding.
32
PLANS WHICH ARE AN AMENDMENT OR RESTATEMENT OF AN EXISTING
PLAN WHICH PROVIDED FOR THE PROVISIONS OF CODE SECTION
401(a)(9) CURRENTLY IN EFFECT PRIOR TO THE AMENDMENT OF THE
SMALL BUSINESS JOB PROTECTION ACT OF 1996 MUST COMPLETE
SCHEDULE C.
C. FORMS OF PAYMENT (select all that apply):
[X] 1. Lump sum.
[X] 2. Installment payments.
[ ] 3. Partial payments; the minimum amount will be $_____ .
[ ] 4. Life annuity.
[ ] 5. Term certain annuity with payments guaranteed for
years (not to exceed 20).
[ ] 6 Joint and [ ] 50%, [ ]66-2/3%, [ ]75% or [ ] 100%
survivor annuity.
[ ] 7. The default form of payment will be a direct rollover
into an individual retirement account or annuity for
any "cash out" distribution made pursuant to Code
Sections 411(a)(7), 411(a)(11) and 417(e)(1).
[X] 8. Cash.
[ ] 9. Employer securities.
[ ] 10. Other marketable securities.
[ ] 11. Other: ______.
THE NORMAL FORM OF PAYMENT IS DETERMINED AT SECTION III(J) OF
THIS ADOPTION AGREEMENT.
D. RECALCULATION OF LIFE EXPECTANCY:
[ ] 1. Recalculation is not permitted.
[X] 2. Recalculation is permitted. When determining
installment payments in satisfying the minimum
distribution requirements under the Plan, and life
expectancy is being recalculated:
[ ] a. only the Participant's life expectancy shall
be recalculated.
[X] b. both the Participant and Spouse's life
expectancy shall be recalculated.
[ ] c. the Participant will determine whose life
expectancy is recalculated.
33
XIX. SPONSOR INFORMATION AND ACCEPTANCE
This Plan may not be used and shall not be deemed to be a Prototype
Plan unless an authorized representative of the Sponsor has
acknowledged the use of the Plan. Such acknowledgment that the Employer
is using the Plan does not represent that the Adoption Agreement (as
completed) and Plan have been reviewed by a representative of the
Sponsor or constitute a qualified retirement plan.
Acknowledged and accepted by the Sponsor this _______ day of ______ ,
______ .
Name:
-----------------------------------------------------
Title:
-----------------------------------------------------
Signature:
-----------------------------------------------------
Questions concerning the language contained in and qualification of the
Prototype should be addressed to:
- ----------------------------------------------------
(Position): (Phone Number):
-------- --------
In the event that the Sponsor amends, discontinues or abandons this Prototype
Plan, notification will be provided to the Employer's address provided on the
first page of this Adoption Agreement.
34
XX. SIGNATURES
IT IS RECOMMENDED THAT THE EMPLOYER CONSULT WITH ITS LEGAL COUNSEL
AND/OR TAX ADVISOR BEFORE EXECUTING THIS ADOPTION AGREEMENT.
A. EMPLOYER:
This Adoption Agreement and the corresponding provisions of
Basic Plan Document #01 are adopted by the Employer this
______ day of ______ , _____.
Name of Employer: FelCor Lodging Trust, Inc.
--------------------------------
Executed on behalf of the
Employer by:
--------------------------------
Title:
--------------------------------
Signature:
--------------------------------
Name and address of Employer if different than specified in
Section I above.
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
PARTICIPATING EMPLOYER:
This Adoption Agreement and the corresponding provisions of
Basic Plan Document #01 are adopted by the Participating
Employer this ______ day of ______ , ____.
Name of Participating Employer:
-------------------------------
Executed on behalf of the
Participating Employer by:
-----------------------------------
Title:
--------------------------------
Signature:
--------------------------------
Attach additional signature pages as necessary.
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
EMPLOYER'S RELIANCE: The adopting Employer may not rely on the
Opinion Letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under
Code Section 401. In order to obtain reliance with respect to
Plan qualification, the Employer must apply to Employee Plans
Determinations of the Internal Revenue Service Key District
Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #01.
35
B. TRUSTEE:
Trust Agreement:
[ ] Not applicable. Plan assets will be invested in Group
Annuity Contracts. There is no Trustee and the terms
of the contract(s) will apply.
[ ] The Trust provisions used will be as contained in the
Basic Plan Document #01.
[X] The Trust provisions used will be as contained in the
accompanying executed Trust Agreement between the
Employer and the Trustee attached hereto.
Complete the remainder of this section only if the Trust
provisions used are as contained in the Basic Plan Document
#01.
Name and address of Trustee:
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
The assets of the Plan shall be invested in accordance with
paragraph 13.10 of the Basic Plan Document #01. The Employer's
Plan and Trust as contained herein is accepted by the Trustee
this day ______ of ______, ____.
Accepted on behalf of the
Trustee by: --------------------------------
Title:
--------------------------------
Signature:
--------------------------------
Accepted on behalf of the
Trustee by: --------------------------------
Title:
--------------------------------
Signature:
--------------------------------
Accepted on behalf of the
Trustee by: --------------------------------
Title:
--------------------------------
Signature:
--------------------------------
36
C. CUSTODIAN:
Custodial Agreement:
[X] Not applicable. There is no Custodian.
[ ] Not applicable. Plan assets will be invested in Group
Annuity Contracts. There is no Custodian and the
terms of the contract(s) will apply.
[ ] The Custodial provisions used will be as contained in
Basic Plan Document #01.
[ ] The Custodial provisions used will be as contained in
the accompanying executed Custodial Agreement between
the Employer and the Custodian attached hereto.
Complete the remainder of this section only if the custodial
provisions used are as contained in the Basic Plan Document
#01.
Name and address of Custodian:
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
The assets of the Plan shall be invested in accordance with
paragraph 13.13 of the Basic Plan Document #01. The Employer's
Plan and Custodial Account as contained herein are accepted by
the Custodian this ______ day of ______, ____.
Accepted on behalf of the
Custodian by: --------------------------------
Title:
--------------------------------
Signature:
--------------------------------
37
SCHEDULE A
PROTECTED BENEFITS
This Schedule includes any prior Plan protected benefits which are not available
in Basic Plan Document #01. Complete as applicable.
1. PLAN PROVISION:
--------
EFFECTIVE DATE:
--------
2. PLAN PROVISION:
--------
EFFECTIVE DATE:
--------
3. PLAN PROVISION:
--------
EFFECTIVE DATE:
--------
4. PLAN PROVISION:
--------
EFFECTIVE DATE:
--------
5. PLAN PROVISION:
--------
EFFECTIVE DATE:
--------
38
SCHEDULE B
PRIOR PLAN PROVISIONS
This Schedule should be used if a prior plan contains provisions not found in
Basic Plan Document #01, or where the Employer wishes to document transactions
or historical provisions of the Employer's Plan.
1. PLAN PROVISION:
---------
EFFECTIVE DATE:
---------
2. PLAN PROVISION:
---------
EFFECTIVE DATE:
---------
3. PLAN PROVISION:
---------
EFFECTIVE DATE:
---------
4. PLAN PROVISION:
---------
EFFECTIVE DATE:
---------
5. PLAN PROVISION:
---------
EFFECTIVE DATE:
---------
39
SCHEDULE C
PREAMENDMENT OPERATION OF THE PLAN
The following are the adopting Employer's elective Plan provisions which conform
the terms of this Prototype Plan to the preamendment operation of the Plan
during the transition period between the earliest effective date under GUST (as
defined below) and the effective date of adoption of this Prototype Plan and
Trust which takes into account all of the changes in the qualification
requirements made by the following: The Uruguay Round Agreements, Pub. L.
103-465 (GATT); The Small Business Job Protection Act of 1996, Pub. L. 104-188
(SBJPA) [including Section 414(u) of the Internal Revenue Code]; The Uniformed
Services Employment and Reemployment Rights Act of 1994, Pub. L. 105-34
(USERRA); The Tax Reform Act of 1997 (TRA'97); and The Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206 (IRSRRA), hereinafter
referred to collectively as GUST.
Complete as applicable and appropriate.
I. PLAN PROVISION: HIGHLY COMPENSATED EMPLOYEES
For Plan Years beginning after 1996, the Employer may elect a "Top-Paid
Group" election and the Calendar Year Data election to determine the
definition of Highly Compensated Employee (HCE):
[ ] A. Top-Paid Group Election: A Participant (who is not a
5% owner at any time during the determination year or
the look-back year) who earned more than $80,000 as
indexed for the look-back year is a Highly
Compensated Employee if the Employee was in the
Top-Paid Group for the look-back year. The election
is applicable for:
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
[ ] B. Calendar Year Election: In determining who is a
Highly Compensated Employee (other than a 5 percent
owner) the Employer makes a calendar year data
election. The look-back year is the calendar year
beginning with or within the look-back year. The
election is applicable for:
[ ] 1. 1998 Plan Year.
[ ] 2. 1999 Plan Year.
[ ] 3. 2000 Plan Year.
[ ] 4. 2001 Plan Year.
If the elections above are made, such election shall apply to
all Plans maintained by the Employer.
[ ] C. Calendar Year Calculation Election (for 1997 Plan
Year only): Indicate below whether the Calendar Year
calculation election was made for Plan Years
beginning in 1997:
[ ] Yes [ ] No
II. PLAN PROVISION: FAMILY AGGREGATION
Did the Pre-SBJPA Family Aggregation rules of Code Sections
401(a)(17)(a) and 414(q)(6), both in effect for Plan Years beginning
before January 1, 1997, continue to apply for any purpose for Plan
Years beginning after 1996?
[X] No
[ ] Yes; explain the application: ______.
If this rule was subsequently discontinued, indicate when rule no
longer applied: _______.
EMPLOYERS WHO ADOPT THIS PROTOTYPE PLAN MAY NOT ELECT TO CONTINUE TO
APPLY THE PRE-SBJA FAMILY AGGREGATION RULES.
40
III. PLAN PROVISION: COMBINED PLAN LIMIT OF CODE SECTION 415(e)
Did the Employer maintain a Defined Benefit Plan prior to January 1,
2000?
[ ] Yes [X] No
Did the Plan continue to apply the combined Plan limit of Code Section
415(e) (as in effect for Limitation Years beginning before January 1,
2000) in limitation years beginning after December 31, 1999, to the
extent that such election conforms to the Plan's operation?
[ ] Yes [ ] No
If yes, specify provisions below that will satisfy the 1.0 limitation
of Code Section 415(e). Such language must preclude Employer
discretion. The Employer must also specify the interest and mortality
assumptions used in determining Present Value in the Defined Benefit
Plan.
----.
EMPLOYERS WHO ADOPT THIS PROTOTYPE PLAN MAY NOT ELECT TO CONTINUE TO
APPLY THE COMBINED PLAN LIMIT OF CODE SECTION 415(e) IN YEARS BEGINNING
AFTER THE DATE THE EMPLOYER ADOPTS THIS PLAN.
IV. PLAN PROVISION: NONDISCRIMINATION TESTING
The Small Business Job Protection Act permits the Employer to use the
ADP and/or ACP of Non-Highly Compensated Employees for the prior year
or current year in determining whether the plan satisfied the
nondiscrimination tests.
Employers who adopt this Prototype Plan must use the same testing
method for both the ADP and ACP tests for Plan Years beginning on or
after the date the Employer adopts this GUST-restated Plan. This
restriction does not apply with respect to Plan Years beginning before
the date the Employer adopts this GUST-restated plan.
1. ADP TESTING ELECTION:
[ ] a. Current year data for all Participants will be used.
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
[X] b. Prior year data for Participants who are Non-Highly
Compensated Employees will be used.
[X] 1. 1997 Plan Year.
[X] 2. 1998 Plan Year.
[X] 3. 1999 Plan Year.
[X] 4. 2000 Plan Year.
[X] 5. 2001 Plan Year.
41
2. ACP TESTING ELECTION:
[ ] a. Current year data for all Participants will be used.
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
[X] b. Prior year data for Participants who are Non-Highly
Compensated Employees will be used.
[X] 1. 1997 Plan Year.
[X] 2. 1998 Plan Year.
[X] 3. 1999 Plan Year.
[X] 4. 2000 Plan Year.
[X] 5. 2001 Plan Year.
42
V. PLAN PROVISION: FIRST PLAN YEAR TESTING ELECTIONS
For a new 401(k) Plan, the Employer could use either the current or
prior year testing methods as well as a rule that deems the prior year
ADP/ACP to be 3%.
1. ADP TESTING ELECTION:
[ ] a. Current year data for all Participants will be used.
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
[ ] b. Current year data for Participants who are HCE's will
be used. The ADP for Participants who are Non-Highly
Compensated Employees is assumed to be 3% or the
actual ADP if greater.
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
2. ACP TESTING ELECTION:
[ ] a. Current year data for all Participants will be used.
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
[ ] b. Current year data for Participants who are HCE's will
be used. The ACP for Participants who are Non-Highly
Compensated Employees is assumed to be 3% or the
actual ACP if greater.
[ ] 1. 1997 Plan Year.
[ ] 2. 1998 Plan Year.
[ ] 3. 1999 Plan Year.
[ ] 4. 2000 Plan Year.
[ ] 5. 2001 Plan Year.
VI. PLAN PROVISION: DISTRIBUTION ALTERNATIVES FOR PARTICIPANTS WHO ARE NOT
A MORE THAN 5% OWNER
Select (A), (B), (C) and/or (D), whichever is applicable. Subsection
(D) must be selected to the extent that there would otherwise be an
elimination of a pre-retirement age 70 1/2 distribution option fOR
Employees other than those listed above.
[ ] A. Any Participant who has not had a separation from
Service who had attained age 70 1/2 in years after
1995 may elect by April 1 of the calendar year
following the year in which the Participant attained
age 70 1/2 (or by December 31, 1997 in the case of a
Participant attaining age 70 1/2 in 1996) to defer
distributions until the calendar year in which the
Participant retires. If no such election is made, the
Participant will begin receiving distributions by the
April 1 of the calendar year following the year in
which the Participant attained age 70 1/2 (or by
December 31, 1997 in tHE case of a Participant
attaining age 70 1/2 in 1996).
[X] B. Any Participant who has not had a separation from
Service and is currently in benefit payment status
because of attainment of age 70 1/2 in years prior to
1997 may elect to stoP distributions and recommence
by the April 1 of the calendar year in which the
Participant 55 retires. There is either (select one):
[X] 1. a new Annuity Starting Date upon
recommencement, or
[ ] 2. no new Annuity Starting Date upon
recommencement.
43
[ ] C. Any Participant who has not had a separation from
Service, and is currently in benefit payment status
because of attainment of age 70 1/2 in 1997 or in a
later year (or attained age 70 1/2 in 1996, but had
not commenced required minimum distributions in 1996)
may elect to stop distributions and recommence by the
April 1 of the calendar year in which the Participant
retires. There is either (select one):
[ ] 1. a new Annuity Starting Date upon
recommencement, or
[ ] 2. no new Annuity Starting Date upon
recommencement.
[ ] D. The pre-retirement distribution option is only
eliminated with respect to Employees who reach age
70 1/2 in or after a calendar year that begins after
the later of December 31, 1998, OR the adoption of
the amendment to the Plan. The pre-retirement age
70 1/2 distribution option is AN optional form of
benefit under which benefits are payable in a
particular distribution form (including any
modifications that maybe elected after benefit
commencement) and commencing at a time during the
period that begins on or after January 1 of the
calendar year in which an Employee attains age 70 1/2
and ends April 1 of the immediately following
calendar year.
VII. PLAN PROVISION: MANDATORY CASH-OUT RULE
[X] For Plan Years beginning after August 9, 1997, the $3,500
cash-out limit is increased to $5,000.
VIII. PLAN PROVISION: 30-DAY WAIVER PERIOD
For Plan Years beginning after December 31, 1996, if the Plan is
subject to the Joint and Survivor rules did the Plan provide
distributions prior to the expiration of the 30-day waiting period?
[ ] Yes [ ] No
IX. PLAN PROVISION: SUSPENSION OF LOAN REPAYMENTS
On or after December 12, 1994, did the Employer permit the suspension
of loan repayments due to qualified military leave?
[X] Yes [ ] No
Effective Date: January 1, 1995
X. PLAN PROVISION: HARDSHIP DISTRIBUTIONS TREATED AS ELIGIBLE ROLLOVER
DISTRIBUTIONS
The Employer had the option with respect to Hardship distributions made
after December 31, 1998 to treat as eligible rollover distributions, or
to delay the Effective Date until January 1, 2000. Hardship
distributions were not treated as eligible rollover distributions
effective as of:
[X] January 1, 1999
[ ] January 1, 2000
[ ] Other (specify date): ________________________
XI. PLAN PROVISION: SAFE HARBOR PROVISIONS
For Plan Years beginning after 1998, the Employer may implement safe
harbor provisions under Code Sections 401(k)(11) and 401(k)(12). Did
the Plan elect safe harbor status?
[ ] Yes
[X] No
44
If yes, enter the formulas below:
<Table>
<Caption>
DATE PLAN YEAR BEGINS SECTION 401(k) SECTION 401(m)
--------------------- -------------- --------------
/ /99
--------------------- -------------- --------------
/ /00
--------------------- -------------- --------------
/ /01
--------------------- -------------- --------------
</Table>
XII. OTHER PLAN PROVISIONS:
----------
EFFECTIVE DATE:
-----
45
SCHEDULE D
SAFE-HARBOR ELECTIONS FOR FLEXIBLE NON-ELECTIVE CONTRIBUTION
The following elections are made with regard to the Plan's Safe Harbor status
pursuant to Section VII herein. For Plan Years indicated below, the Plan hereby
invokes a Safe Harbor status in accordance with IRS Notices 98-52 and 2000-3.
For all Plan Years in which this Safe Harbor election is being made, the
limitations and restrictions found in Section VII herein apply.
1. For the Plan Year beginning ______ and ending ______, the Employer hereby
invokes a Safe Harbor status as provided in IRS Notice 2000-3. The Safe
Harbor Contribution will be an amount equal to _____% (not less than 3%) of
Compensation. This election is made on this ______ day of ______ ,
____(date may not be later than 30 days prior to the end of the Plan Year
in which such election is being made).
2. For the Plan Year beginning ______ and ending ______, the Employer hereby
invokes a Safe Harbor status as provided in IRS Notice 2000-3. The Safe
Harbor Contribution will be an amount equal to _____% (not less than 3%) of
Compensation. This election is made on this day______ day of ______ ,______
(date may not be later than 30 days prior to the end of the Plan Year in
which such election is being made).
3. For the Plan Year beginning ______ and ending ______, the Employer hereby
invokes a Safe Harbor status as provided in IRS Notice 2000-3. The Safe
Harbor Contribution will be an amount equal to _____% (not less than 3%) of
Compensation. This election is made on this ______ day of ______ , ______
(date may not be later than 30 days prior to the end of the Plan Year in
which such election is being made).
4. For the Plan Year beginning ______ and ending ______, the Employer hereby
invokes a Safe Harbor status as provided in IRS Notice 2000-3. The Safe
Harbor Contribution will be an amount equal to _____% (not less than 3%) of
Compensation. This election is made on this ______ day of ______ , ______
(date may not be later than 30 days prior to the end of the Plan Year in
which such election is being made).
5. For the Plan Year beginning ______ and ending ______, the Employer hereby
invokes a Safe Harbor status as provided in IRS Notice 2000-3. The Safe
Harbor Contribution will be an amount equal to _____% (not less than 3%) of
Compensation. This election is made on this ______ day of ______ , ______
(date may not be later than 30 days prior to the end of the Plan Year in
which such election is being made).
6. For the Plan Year beginning ______ and ending ______, the Employer hereby
invokes a Safe Harbor status as provided in IRS Notice 2000-3. The Safe
Harbor Contribution will be an amount equal to _____% (not less than 3%) of
Compensation. This election is made on this ______ day of ______ , ______
(date may not be later than 30 days prior to the end of the Plan Year in
which such election is being made).
46
SCHEDULE E
COLLECTIVE AND COMMINGLED FUNDS
The Trustee is authorized to invest all or any part of the Fund in the following
Collective and Commingled Funds as provided at paragraph 13.10(b) of the Basic
Plan Document #01:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
47
PROTOTYPE DEFINED CONTRIBUTION PLAN
SPONSORED BY
DIVERSIFIED INVESTMENT ADVISORS, INC.
BASIC PLAN DOCUMENT #01
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. ITS USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
TABLE OF CONTENTS
<Table>
<Caption>
PARAGRAPH PAGE
--------- ----
ARTICLE I
DEFINITIONS
1.1 Actual Contribution Percentage (ACP) 1
1.2 Actual Deferral Percentage (ADP) 1
1.3 Adoption Agreement 2
1.4 Aggregate Limit 2
1.5 Allocation Date(s) 2
1.6 Annual Additions 2
1.7 Annuity Starting Date 3
1.8 Applicable Calendar Year 3
1.9 Applicable Life Expectancy 3
1.10 Average Annual Compensation 3
1.11 Average Contribution Percentage (ACP) 3
1.12 Average Deferral Percentage (ADP) 4
1.13 Beneficiary 4
1.14 Break In Service 4
1.15 Code 4
1.16 Compensation 5
1.17 Covered Compensation 8
1.18 Custodian 8
1.19 Davis-Bacon Act 8
1.20 Defined Benefit Plan 8
1.21 Defined Benefit (Plan) Fraction 8
1.22 Defined Contribution Dollar Limitation 8
1.23 Defined Contribution Plan 9
1.24 Defined Contribution (Plan) Fraction 9
1.25 Direct Rollover 9
1.26 Disability 9
1.27 Distribution Calendar Year 9
1.28 Early Retirement Age 9
1.29 Early Retirement Date 9
1.30 Earned Income 10
1.31 Effective Date 10
1.32 Election Period 10
1.33 Elapsed Time 10
1.34 Elective Deferrals 10
1.35 Eligible Employee 10
1.36 Eligible Employer 10
1.37 Eligible Participant 11
1.38 Eligible Retirement Plan 11
1.39 Eligible Rollover Distribution 11
1.40 Employee 11
1.41 Employer 12
1.42 Entry Date 12
1.43 ERISA 12
</Table>
<Table>
1.44 Excess Aggregate Contributions 12
1.45 Excess Annual Additions 12
1.46 Excess Contribution 13
1.47 Excess Elective Deferrals 13
1.48 Expected Year Of Service 13
1.49 First Distribution Calendar Year 13
1.50 Hardship 13
1.51 Highest Average Compensation 13
1.52 Highly Compensated Employee 13
1.53 Hour Of Service 14
1.54 Integration Level 14
1.55 Key Employee 15
1.56 Leased Employee 15
1.57 Limitation Year 15
1.58 Master Or Prototype Plan 15
1.59 Matching Contribution 15
1.60 Maximum Permissible Amount 15
1.61 Net Profit 16
1.62 Normal Retirement Age 16
1.63 Normal Retirement Date 16
1.64 Owner-Employee 16
1.65 Paired Plans 16
1.66 Participant 16
1.67 Participant's Benefit 16
1.68 Period Of Severance 16
1.69 Permissive Aggregation Group 16
1.70 Plan 16
1.71 Plan Administrator 16
1.72 Plan Sponsor 17
1.73 Plan Year 17
1.74 Present Value 17
1.75 Prior Plan Year 17
1.76 Prior Safe Harbor Plan 17
1.77 Projected Annual Benefit 17
1.78 Projected Participation 17
1.79 Qualified Domestic Relations Order (QDRO Or Order) 18
1.80 Qualified Early Retirement Age 18
1.81 Qualified Joint And Survivor Annuity (QJSA) 18
1.82 Qualified Matching Contributions (QMACs) 18
1.83 Qualified Non-Elective Contributions (QNECs) 18
1.84 Qualified Plan 18
1.85 Qualified Pre-Retirement Survivor Annuity 18
1.86 Qualified Voluntary Contribution 18
1.87 Required Aggregation Group 19
1.88 Required Beginning Date 19
1.89 Required After-tax Contributions 19
1.90 Rollover Contribution 19
1.91 Salary Deferral Agreement 19
1.92 Savings Incentive Match Plan For Employees (SIMPLE) 19
1.93 Self-Employed Individual 19
1.94 Service 19
1.95 Severance Date 20
1.96 Severance Period 20
1.97 Service Provider 20
</Table>
<Table>
1.98 Shareholder Employee 20
1.99 Simplified Employee Pension Plan 20
1.100 Sponsor 20
1.101 Spouse 20
1.102 Stated Benefit Formula 20
1.103 Super Top-Heavy Plan 20
1.104 Taxable Wage Base 20
1.105 Top-Heavy Determination Date 20
1.106 Top-Heavy Plan 20
1.107 Top-Heavy Ratio 21
1.108 Top-Paid Group 22
1.109 Transfer Contribution 22
1.110 Trust 22
1.111 Trustee 22
1.112 Uniformed Services Employment And Reemployment
Rights Act Of 1994 (USERRA) 22
1.113 Valuation Date 22
1.114 Vested Account Balance 22
1.115 Voluntary After-tax Contribution 22
1.116 Welfare Benefit Fund 23
1.117 Year Of Service 23
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Eligibility 26
2.2 Determination Of Eligibility 26
2.3 Change In Classification Of Employment 26
2.4 Participation 27
2.5 Employment Rights 27
2.6 Service With Controlled Groups 27
2.7 Leased Employees 27
2.8 Thrift Plan 28
2.9 Target Benefit Plan 28
2.10 Davis-Bacon Plan 28
2.11 Waiver Of Participation 28
2.12 Omission Of Eligible Employee 28
2.13 Inclusion Of Ineligible Employee 29
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Contribution Amount 30
3.2 Contribution Amount For A SIMPLE 401(k) Plan 30
3.3 Responsibility For Contributions 31
3.4 Return Of Contributions 31
3.5 Merger Of Assets From Another Plan 31
3.6 Coverage Requirements 32
3.7 Eligibility For Contribution 32
3.8 Target Benefit Plan Contribution 33
3.9 Davis-Bacon Plan Contribution 34
3.10 Uniform Dollar Contribution 34
3.11 Uniform Points Contribution 34
3.12 403(b) Matching Contribution 34
</Table>
<Table>
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary After-tax Contributions 35
4.2 Required After-tax Contributions 35
4.3 Qualified Voluntary Contributions 35
4.4 Rollover Contributions 35
4.5 Plan To Plan Transfer Contributions 36
4.6 Voluntary Direct Transfers Between Plans 36
4.7 Elective Deferrals In A 401(k) Plan 37
4.8 Elective Deferrals In A SIMPLE 401(k) Plan 38
4.9 Automatic Enrollment 39
4.10 Make-Up Contributions Under USERRA 40
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts 41
5.2 Valuation Date 41
5.3 Allocations To Participant Accounts 42
5.4 Allocating Employer Contributions 42
5.5 Allocating Investment Earnings And Losses 43
5.6 Allocation Adjustments 43
5.7 Participant Statements 44
5.8 Changes In Method And Timing Of Valuing Participants' Accounts 44
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits 45
6.2 Early Retirement Benefits 45
6.3 Benefits On Termination Of Employment 45
6.4 Restrictions On Immediate Distributions 46
6.5 Normal And Optional Forms Of Payment 47
6.6 Commencement Of Benefits 48
6.7 Transitional Rules For Cash-Out Limits 49
6.8 In-Service Withdrawals 50
6.9 Hardship Withdrawals 52
6.10 Direct Rollover Of Benefits 53
6.11 Participant's Notice 53
6.12 Assets Transferred From Money Purchase Pension Plans 54
6.13 Assets Transferred From A Code Section 401(k) Plan 54
</Table>
<Table>
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements 55
7.2 Minimum Distribution Requirements 55
7.3 Limits On Distribution Periods 55
7.4 Required Distributions On Or After The Required Beginning Date 55
7.5 Required Beginning Date 56
7.6 Transitional Rules 58
7.7 Designation Of Beneficiary 58
7.8 Beneficiary 59
7.9 Distribution Beginning Before Death 59
7.10 Distribution Beginning After Death 59
7.11 Distribution Of Excess Elective Deferrals 60
7.12 Distribution Of Excess Contributions 61
7.13 Distribution Of Excess Aggregate Contributions 61
7.14 Distributions To Minors And Individuals Who Are Legally Incompetent 62
7.15 Unclaimed Benefits 62
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 Applicability Of Provisions 64
8.2 Payment Of Qualified Joint And Survivor Annuity 64
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity 64
8.4 Qualified Election 64
8.5 Notice Requirements For Qualified Joint And Survivor Annuity 65
8.6 Notice Requirements For Qualified Pre-Retirement Survivor Annuity 65
8.7 Special Safe Harbor Exception For Certain Profit-Sharing Or 401(k) Plans 66
8.8 Transitional Joint And Survivor Annuity Rules 67
8.9 Automatic Joint And Survivor Annuity And Early Survivor Annuity 67
8.10 Annuity Contracts 68
ARTICLE IX
VESTING
9.1 Employee Contributions 69
9.2 Employer Contributions 69
9.3 Vesting Of Employer Contributions In A SIMPLE 401(k) Plan 69
9.4 Computation Period 69
9.5 Requalification Prior To Five Consecutive One-Year Breaks In Service 69
9.6 Requalification After Five Consecutive One-Year Breaks In Service 69
9.7 Calculating Vested Interest 69
9.8 Forfeitures 70
9.9 Amendment Of Vesting Schedule 70
9.10 Service With Controlled Groups 71
9.11 Compliance With Uniformed Services Employment And
Reemployment Rights Act Of 1994 71
</Table>
<Table>
ARTICLE X
LIMITATIONS ON ALLOCATIONS
10.1 Participation In This Plan Only 72
10.2 Disposition Of Excess Annual Additions 72
10.3 Participation In Multiple Defined Contribution Plans 73
10.4 Disposition Of Excess Annual Additions Under Two Plans 73
10.5 Participation In This Plan And A Defined Benefit Plan 73
ARTICLE XI
ANTIDISCRIMINATION TESTING
11.1 General Testing Requirements 74
11.2 ADP Testing Limitations 74
11.3 Special Rules Relating To The Application Of The ADP Test 75
11.4 Calculation And Distribution Of Excess Contributions
And Excess Aggregate Contributions 75
11.5 Qualified Non-Elective And/Or Matching Contributions 76
11.6 ACP Testing Limitations 76
11.7 Special Rules Relating To The Application Of The ACP Test 77
11.8 Recharacterization 78
11.9 Nondiscrimination Tests In A SIMPLE 401(k) Plan 78
11.10 Safe Harbor Rules Of Application 78
11.11 Safe Harbor Definitions 80
11.12 Required Restrictions On Safe Harbor Contributions 80
11.13 ADP Test Safe Harbor 81
11.14 ACP Test Safe Harbor 81
11.15 Safe Harbor Status 81
11.16 Safe Harbor Notice Requirement 82
11.17 Satisfying Safe Harbor Contribution Requirements
Under Another Defined Contribution Plan 83
ARTICLE XII
ADMINISTRATION
12.1 Plan Administrator 85
12.2 Persons Serving As Plan Administrator 86
12.3 Action By Employer 86
12.4 Responsibilities Of The Parties 86
12.5 Allocation Of Investment Responsibility 86
12.6 Appointment Of Investment Manager 86
12.7 Participant Investment Direction 87
12.8 Application Of ERISA Section 404 (c) 88
12.9 Participant Loans 88
12.10 Insurance Policies 90
12.11 Determination Of Qualified Domestic Relations Order
(QDRO Or Order) 92
12.12 Receipt And Release For Payments 93
12.13 Resignation And Removal 93
12.14 Claims and Claims Review Procedure 93
12.15 Bonding 94
</Table>
<Table>
ARTICLE XIII
TRUST PROVISIONS
13.1 Establishment Of The Trust 95
13.2 Control Of Plan Assets 95
13.3 Discretionary Trustee 95
13.4 Nondiscretionary Trustee 96
13.5 Provisions Relating To Individual Trustees 96
13.6 Investment Instructions 96
13.7 Fiduciary Standards 97
13.8 Powers Of The Trustee 97
13.9 Appointment Of Additional Trustee And Allocation Of
Responsibilities 99
13.10 Compensation, Administrative Fees And Expenses 100
13.11 Records 100
13.12 Limitation On Liability And Indemnification 101
13.13 Custodian 103
13.14 Investment Alternatives Of The Custodian 103
13.15 Prohibited Transactions 104
13.16 Exclusive Benefit Rules 104
13.17 Assignment And Alienation Of Benefits 104
13.18 Liquidation Of Assets 104
13.19 Resignation and Removal 105
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules 106
14.2 Minimum Contribution 106
14.3 Minimum Vesting 106
14.4 Limitations On Allocations 107
14.5 Use Of Safe Harbor Contributions To Satisfy
Top-Heavy Contribution Rules 107
14.6 Top-Heavy Rules For SIMPLE 401(k) Plans 107
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor 108
15.2 Amendment By Employer 108
15.3 Protected Benefits 108
15.4 Plan Termination 108
15.5 Distribution Restrictions Under A Code Section 401(k) Plan 109
15.6 Qualification Of Employer's Plan 109
15.7 Mergers And Consolidations 109
15.8 Qualification Of Prototype 109
</Table>
<Table>
ARTICLE XVI
GOVERNING LAW
16.1 Governing Law 110
16.2 State Community Property Laws 110
IRS MODEL AMENDMENT 111
EGTRRA MODEL AMENDMENT
</Table>
PROTOTYPE DEFINED CONTRIBUTION PLAN
SPONSORED BY
DIVERSIFIED INVESTMENT ADVISORS, INC.
The Sponsor hereby establishes this Plan for use by its clients who wish to
adopt a qualified retirement plan. This Plan shall be interpreted in a manner
consistent with the intention of the adopting Employer that this Plan satisfy
Internal Revenue Code Sections 401 and 501. Any Plan and Trust established
hereunder shall be so established for the exclusive benefit of Plan Participants
and their Beneficiaries and shall be administered under the following terms and
conditions:
ARTICLE I
DEFINITIONS
1.1 ACTUAL CONTRIBUTION PERCENTAGE (ACP) The ratio (expressed as a percentage
and calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined
at (c)-(f)] for a Plan Year, to
(b) the Participant's Compensation for such Plan Year. [Unless
otherwise specified in the Adoption Agreement, Compensation
will only include amounts for the period during which the
Employee was eligible to participate.]
Contribution Percentage Amounts on behalf of any Participant shall include:
(c) the amount of Voluntary After-tax Contributions, Required
After-tax Contributions, Matching Contributions (except to the
extent such Matching Contributions may be disregarded in
accordance with IRS Notice 98-1), and Qualified Matching
Contributions (to the extent not taken into account for
purposes of the ADP test) made under the Plan on behalf of the
Participant,
(d) forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which
shall be taken into account in the year in which such
forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective
Contributions, and
(f) the Employer may elect to use Elective Deferrals in the
Contribution Percentage Amounts as long as the ADP test is met
before the Elective Deferrals are used in the ACP test and
continues to be met following the exclusion of those Elective
Deferrals that are used to meet the ACP test.
Contribution amounts shall not include Matching Contributions, whether or not
Qualified, that are forfeited either to correct Excess Aggregate Contributions,
or because the contributions to which they relate are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions.
1.2 ACTUAL DEFERRAL PERCENTAGE (ADP) The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the amount of Employer contributions [as defined at (c) - (d)]
actually contributed to the Trust on behalf of such
Participant for a Plan Year, to
(b) the Participant's Compensation for such Plan Year. [Unless
otherwise specified in the Adoption Agreement, Compensation
will only include amounts received for the period during which
the Employee was eligible to participate.]
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Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's
Salary Deferral Agreement, including Excess Elective Deferrals
of Highly Compensated Employees, but excluding Excess Elective
Deferrals distributed to Non-Highly Compensated Employees and
Elective Deferrals that are either taken into account in the
Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Elective
Deferrals) or are returned as excess Annual Additions,
(d) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an eligible Employee who
fails to make Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
1.3 ADOPTION AGREEMENT The document attached to this Plan by which an Employer
who adopts a Plan elects the terms and conditions of a Qualified Plan
established under this Basic Plan Document #01.
1.4 AGGREGATE LIMIT The sum of:
(a) 125% of the greater of the Average Deferral Percentage of the
Non-Highly Compensated Employees for the Prior Plan Year or
the Average Contribution Percentage of Non-Highly Compensated
Employees under the 401(k) Plan subject to Code Section 401(m)
for the Plan Year beginning with or within the Prior Plan
Year, and
(b) the lesser of 200% or two percent plus the lesser of such ADP
or ACP.
Alternatively, the Aggregate Limit can be determined by substituting "the lesser
of 200% or two percent plus" for "125% of" in (a) above, and substituting "125%
of" for "the lesser of 200% or two percent plus" in (b) above if it would result
in a larger Aggregate Limit.
If the Employer has elected in the Adoption Agreement to use the Current Year
Testing Method, then, in calculating the Aggregate Limit for a particular Plan
Year, the Non-Highly Compensated Employees' ADP and ACP for that Plan Year,
instead of the prior Plan Year, is used.
1.5 ALLOCATION DATE(S) The date or dates on which Participant recordkeeping
accounts are adjusted to reflect account activity including but not limited to
contributions, loans distributions, Hardship withdrawals, as well as earnings
activity including but not limited to income, capital gains or market
fluctuations in accordance with Article V hereof. Unless the Plan Administrator
in a uniform and nondiscriminatory manner designates otherwise, all allocations
for a particular Plan Year will be made as of the Valuation Date of that Plan
Year.
1.6 ANNUAL ADDITIONS The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer contributions (under Article III),
(b) Employee contributions (under Article IV),
(c) forfeitures,
(d) Employer allocations under a Simplified Employee Pension Plan,
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(e) 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
(these amounts are treated as Annual Additions to a Defined
Contribution Plan though they arise under a Defined Benefit
Plan), and
(f) amounts derived from contributions paid or accrued after 1985,
in taxable years ending after 1985, which are either
attributable to post-retirement medical benefits allocated to
the account of a Key Employee or to a Welfare Benefit Fund
maintained by the Employer. For purposes of this paragraph, an
Employee is a Key Employee if he or she meets the requirements
of paragraph 1.55 at any time during the Plan Year or any
preceding Plan Year.
For purposes of applying the limitations of Code Section 415, the transfer of
funds from one Qualified Plan to another is not considered an Annual Addition.
The following are not Employee contributions for the purposes of Annual
Additions:
(g) Rollover Contributions [as defined in Code Sections 402(e)(6),
403(a)(4), 403(b)(8) and 408(d)(3)];
(h) repayments of loans made to a Participant from the Plan;
(i) repayments of distributions received by an Employee pursuant
to Code Section 411(a)(7)(B) (cash-outs);
(j) repayments of distributions received by an Employee pursuant
to Code Section 411(a)(3)(D) (mandatory contributions); and
(k) Employee contributions to a Simplified Employee Pension Plan
excludible from gross income under Code Section 408(k)(6).
Employee and Employer make-up contributions under USERRA received during the
current Limitation Year shall be treated as Annual Additions with respect to the
Limitation Year to which the make-up contributions are attributable. Excess
Amounts applied in a Limitation Year to reduce Employer contributions will be
considered Annual Additions for such Limitation Year, pursuant to the provisions
of Article X.
1.7 ANNUITY STARTING DATE The first day of the first period for which an amount
is paid as an annuity or in any other form.
1.8 APPLICABLE CALENDAR YEAR The First Distribution Calendar Year, and in the
event of the recalculation of life expectancy, such succeeding calendar year. If
payments commence in accordance with paragraph 7.4(d) before the Required
Beginning Date, the Applicable Calendar Year is the year such payments commence.
If distribution is in the form of an immediate annuity purchased after the
Participant's death with the Participant's remaining interest, the Applicable
Calendar Year is the year of purchase.
1.9 APPLICABLE LIFE EXPECTANCY The life expectancy or joint and last survivor
expectancy calculated using the attained age of the Participant or Beneficiary
as of the Participant's or Beneficiary's birthday in the Applicable Calendar
Year, reduced by one for each calendar year which has elapsed since the date
life expectancy was first calculated. If life expectancy is being recalculated,
the Applicable Life Expectancy shall be the life expectancy as so recalculated.
The life expectancy of a non-Spouse Beneficiary may not be recalculated.
1.10 AVERAGE ANNUAL COMPENSATION The average of a Participant's annual
Compensation as defined in paragraph 1.16 of this Basic Plan Document #01, over
the three (3) consecutive Plan Year period ending in either the current year or
any prior year that produces the highest average. If the Participant has fewer
than three (3) years of participation in this Plan, Compensation is averaged
over the Participant's total period of participation.
1.11 AVERAGE CONTRIBUTION PERCENTAGE (ACP) The average of the Actual
Contribution Percentages for the eligible Participants in a specified group of
Participants for a Plan Year.
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1.12 AVERAGE DEFERRAL PERCENTAGE (ADP) The average of the Actual Deferral
Percentages for Participants in a specified group of Participants for a Plan
Year.
1.13 BENEFICIARY A "Beneficiary" is any person other than the Participant and an
estate or trust who by operation of law, or under the terms of the Plan is
entitled to receive any Vested Account Balance of a Participant under the Plan.
A "Designated Beneficiary" is any individual designated or determined in
accordance with Code Section 401(a)(9) and the Regulations issued thereunder,
except that it shall not include any person who becomes a beneficiary by virtue
of the laws of inheritance or intestate succession.
1.14 BREAK IN SERVICE
(a) If the Hours of Service method is used in determining either
an Employee's initial or continuing eligibility to participate
in the Plan, or the nonforfeitable interest in the Employee's
account balance derived from Employer contributions, a Break
in Service is a twelve (12) consecutive month period during
which the Employee has not completed more than five hundred
(500) Hours of Service.
(b) For purposes of determining whether a Break in Service has
occurred in a particular computation period, an Employee who
is absent from work for maternity or paternity reasons shall
receive credit for Hours of Service which would otherwise have
been credited to such Employee but for such absence, or in any
case in which such hours cannot be determined, with eight (8)
Hours of Service per day of such absence. The Hours of Service
to be so credited shall be credited in the computation period
in which the absence begins if the crediting is necessary to
prevent a Break in Service in that period or, in all other
cases, in the following computation periods.
(c) With respect to determinations based on the Elapsed Time
method, a severance period of not less than twelve (12)
consecutive months. In the case of an Employee who is absent
from work for maternity or paternity reasons, the twelve (12)
consecutive month period beginning on the first anniversary of
the first day of such absence shall not constitute a Break in
Service.
(d) Notwithstanding the foregoing, in the case of an Employee who
is absent from work beyond the first anniversary of the first
day of absence from work for maternity or paternity reasons,
such period begins on the second anniversary of the first day
of such absence. The period between the first and second
anniversaries of said first day of absence from work is
neither a Period of Service for which the Employee will
receive credit nor is such period a Break in Service. For
purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (1) by reason of the
pregnancy of the Employee, (2) by reason of the birth of a
child of the Employee, (3) by reason of the placement of a
child with the Employee in connection with the adoption of
such child by such Employee, or (4) for purposes of caring for
such child for a period beginning immediately following such
birth or placement.
(e) An Employer adopting the Elapsed Time method is required to
credit periods of Service and, under the Service spanning
rules, certain periods of severance of twelve (12) months or
less. Under the first Service spanning rule, if an Employee
severs from Service as a result of resignation, discharge or
retirement and then returns to Service within twelve (12)
months, the Period of Severance is required to be taken into
account. A situation may arise in which an Employee is absent
from Service for any reason other than resignation, discharge,
retirement and during the absence a resignation, discharge or
retirement occurs. The second Service spanning rule provides
that, under such circumstances, the Plan is required to take
into account the period of time between the severance from
Service date (i.e., the date of resignation, discharge or
retirement) and the first anniversary of the date on which the
Employee was first absent, if the Employee returns to Service
on or before such first anniversary date.
1.15 CODE The Internal Revenue Code of 1986, including any amendments thereto.
Reference to any section or subsection of the Code, includes reference to any
comparable or succeeding provisions of any legislation which
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amends, supplements or replaces such section or subsection, and also includes
reference to any Regulation issued pursuant to or with respect to such section
or subsection.
1.16 COMPENSATION The Employer may select one of the following three safe harbor
definitions of Compensation in the Adoption Agreement. The definition of
Compensation (for Employers who adopt) under standardized plans, plans that
provide permitted disparity (other than the CODA portion of these plans), Target
Benefit Plans and for Employers determining top-heavy minimum contributions must
be one of the three safe harbor definitions of Compensation. In a
Nonstandardized Adoption Agreement, the Employer may modify the definition of
Compensation provided that such definition, as modified, satisfies the
provisions of Code Sections 414(s) and 401(a)(4). Compensation will also include
Compensation by the Employer through another employer or entity under the
provisions of Code Sections 3121 and 3306.
(a) CODE SECTION 3401(A) WAGES - All remuneration received by an
Employee for services performed for the Employer which are
subject to Federal income tax withholding at the source.
Unless elected otherwise in the Adoption Agreement,
Compensation shall include any amount deferred under a Salary
Deferral Agreement which is not includible in the gross income
of a Participant under Code Section 125 in connection with a
cafeteria plan, Code Section 402(e)(3) in connection with a
cash or deferred plan, Code Section 402(h)(1)(B) in connection
with a Simplified Employee Pension Plan, Code Section 401(k)
in connection with a SIMPLE Retirement Account, Code Section
457 in connection with a Plan maintained under said Section,
and Code Section 403(b) in connection with a tax-sheltered
annuity plan. Wages are determined without regard to any rules
that limit the remuneration included in wages based on the
nature or location of the employment or the services performed
[such as the exception for agricultural labor in Code Section
3401(a)(2)]. For Limitation Years beginning after December 31,
1997, for purposes of applying the limitations of this
paragraph, Compensation paid or made available during such
Limitation Year shall include any Elective Deferral [as
defined in Code Section 402(g)(3)], and any amount which is
contributed or deferred by the Employer at the election of the
Employee and which is not includible in the gross income of
the Employee by reason of Code Sections 125, 132(f)(4),
402(e)(3), 402(h)(1), or 403(b).
(b) CODE SECTIONS 6041, 6051 AND 6052 REPORTABLE WAGES - All
remuneration received by an Employee for services performed
for the Employer which are required to be reported on Form
W-2. Unless otherwise elected in the Adoption Agreement,
Compensation shall include any amount deferred under a Salary
Deferral Agreement which is not includible in the gross income
of a Participant under Code Section 125 in connection with a
cafeteria plan, Code Section 402(e)(3) in connection with a
cash or deferred plan, Code Section 402(h)(1)(B) in connection
with a Simplified Employee Pension Plan, and Code Section
403(b) in connection with a tax-sheltered annuity plan. A
Participant's wages includes remuneration defined at
subparagraph (a) above and all other remuneration paid to an
Employee by the Employer (in the course of the Employer's
trade or business) for which the Employer is required to
furnish the Employee a written statement under Code Sections
6041(d), 6051(a)(3) and 6052. Such amount must be determined
without regard to any rules that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed [such as the exception
for agricultural labor in Code Section 3401(a)(2)]. For
Limitation Years beginning after December 31, 1997, for
purposes of applying the limitations of this paragraph,
Compensation paid or made available during such Limitation
Year shall include any Elective Deferral [as defined in Code
Section 402(g)(3)], and any amount which is contributed or
deferred by the Employer at the election of the Employee and
which is not includible in the gross income of the Employee by
reason of Code Sections 125, 132(f)(4), 402(e)(3), 402(h)(1)
or 403(b).
(c) CODE SECTION 415 COMPENSATION - A Participant's Earned Income,
wages, salaries, and fees for professional services and other
amounts received, without regard to whether or not an amount
is paid in cash, for personal services actually rendered in
the course of employment with the Employer maintaining the
Plan. Compensation includes, but is not limited to,
commissions paid salesmen, Compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements or
other expense
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allowances under a nonaccountable plan [as described in
Regulation Section 1.62-2(c)]. For Limitation Years beginning
after December 31, 1997, for purposes of applying the
limitations of this paragraph, Compensation paid or made
available during such Limitation Year shall include any
Elective Deferral [as defined in Code Section 402(g)(3)], and
any amount which is contributed or deferred by the Employer at
the election of the Employee and which is not includible in
the gross income of the Employee by reason of Code Sections
125, 132(f)(4), 402(e)(3), 402(h)(1) or 403(b). Compensation
excludes the following:
(1) for Plan Years beginning before January 1, 1998,
Employer contributions made under the terms of a
Salary Deferral Agreement between an Employee and the
Employer to a plan of deferred compensation which are
not includible in the Employee's gross income for the
taxable year in which contributed. Such contributions
shall include any amount deferred under Code Section
125 in connection with a cafeteria plan, Code Section
402(e)(3) in connection with a cash or deferred plan,
Code Section 402(h)(1)(B) in connection with a
Simplified Employee Pension Plan, Code Section 402(k)
in connection with a SIMPLE Retirement Account, Code
Section 457 in connection with a Plan maintained
under said Section, and Code Section 403(b) in
connection with a tax-sheltered annuity plan,
(2) distributions received from a plan of deferred
compensation,
(3) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture,
(4) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option, and
(5) amounts deferred by an Employee under the terms of a
non-qualified deferred compensation plan.
Unless otherwise specified by the Employer in the Adoption Agreement,
Compensation shall be determined as provided in Code Section 3401(a) [paragraph
(a) above]. Notwithstanding the foregoing, the Compensation of a Participant who
is a sole proprietor, partner or a member of a limited liability corporation
(LLC) shall be determined under Code Section 415. Unless indicated otherwise in
the Adoption Agreement, the definition of Compensation used in nondiscrimination
testing (ADP/ACP Testing) will be determined by the Employer. Notwithstanding
any other provision to the contrary, if the Plan is an amendment and restatement
of a Qualified Plan, for Plan Years ending prior to the Plan Year in which the
amendment or restatement is adopted, Compensation shall have the meaning set
forth in the Qualified Plan prior to its amendment.
EXCLUSIONS FROM COMPENSATION A Participant's Compensation shall be determined in
accordance with paragraph (a), (b) or (c) above and shall not exclude any item
of income unless provided in the basic definition or elected by the Employer in
the Adoption Agreement.
ANNUAL ADDITIONS AND TOP-HEAVY RULES Except as elected on the Adoption
Agreement, for purposes of Article X and XIV, Compensation shall be Code Section
415 Compensation as described in paragraph 1.16(c). For Plan Years beginning
before January 1, 1998, Compensation excludes amounts deferred under a plan of
deferred Compensation as described at paragraph 1.16(c)(1). For Plan Years
beginning after December 31, 1997, Compensation includes amounts deferred under
a plan of deferred compensation as described at paragraph 1.16(c)(1). For
purposes of applying the limitations of Article X, Compensation for a Limitation
Year is the Compensation actually paid or made available during such Limitation
Year. For Limitation Years beginning after December 31, 1997, for purposes of
applying the limitations of this paragraph, Compensation paid or made available
during such Limitation Year shall include any Elective Deferral [as defined in
Code Section 402(g)(3)], and any amount which is contributed or deferred by the
Employer at the election of the Employee and which is not includible in the
gross income of the Employee by reason of Code Sections 125, 132(f)(4),
402(e)(3), 402(h)(1)(B) or 403(b).
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If the Plan is or becomes Top-Heavy in any Plan Year beginning after December
31, 1983, the provisions of Article XIV will supersede any conflicting
provisions in the Basic Plan Document #01 or Adoption Agreement.
CONTRIBUTIONS MADE ON BEHALF OF DISABLED PARTICIPANTS Compensation with respect
to a Participant in a Defined Contribution Plan who is permanently and totally
disabled [as defined in Code Section 22(e)(3)] is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled; for Limitation Years beginning before January
1, 1997, but not for Limitation Years beginning after December 31, 1996, such
imputed Compensation for the disabled Participant may be taken into account only
if the Participant is not a Highly Compensated Employee (defined at paragraph
1.52) and contributions made on behalf of such Participant are nonforfeitable
when made. Compensation will mean Compensation as that term is defined in this
paragraph.
HIGHLY COMPENSATED AND KEY EMPLOYEES For purposes of paragraphs 1.52 and 1.55,
Compensation shall be Code Section 415 Compensation as described in paragraph
1.16(c). Such definition shall include any amount deferred under Code Section
125 in connection with a cafeteria plan, Code Section 402(e)(3) in connection
with a cash or deferred plan, Code Section 402(h)(1)(B) in connection with a
Simplified Employee Pension Plan, Code Section 402(k) in connection with a
SIMPLE Retirement Account (SIMPLE), Code Section 457 in connection with a Plan
maintained under said Section, and Code Section 403(b) in connection with a
tax-sheltered annuity plan. The Employer, if elected in the Adoption Agreement,
may limit Compensation considered for purposes of the Plan for these
Participants.
COMPUTATION PERIOD The Plan Year, while eligible to participate, shall be the
computation period for purposes of determining a Participant's Compensation,
unless the Employer selects a different computation period in the Adoption
Agreement.
LIMITATION ON COMPENSATION The annual Compensation of each Participant which may
be taken into account for determining all benefits provided under the Plan for
any year, shall not exceed the limitation as imposed by Code Section 401(a)(17),
as adjusted under Code Section 401(a)(17)(B). If a Plan has a Plan Year that
contains fewer than twelve (12) calendar months, the annual Compensation limit
for that period is an amount equal to the limitation as imposed by Code Section
401(a)(17) as adjusted for the calendar year in which the Compensation period
begins, multiplied by a fraction, the numerator of which is the number of full
months in the short Plan Year and the denominator of which is twelve (12).
USERRA For purposes of Employee and Employer make-up contributions, Compensation
during the period of military service shall be deemed to be the Compensation the
Employee would have received during such period if the Employee were not in
qualified military service, based on the rate of pay the Employee would have
received from the Employer but for the absence due to military leave. If the
Compensation the Employee would have received during the leave is not reasonably
certain, Compensation will be equal to the Employee's average Compensation from
the Employer during the twelve (12) month period immediately preceding the
military leave or, if shorter, the Employee's actual period of employment with
the Employer.
DEFINITION OF COMPENSATION FOR PURPOSES OF SAFE HARBOR CODA PROVISIONS
Compensation for the purposes of a Safe Harbor CODA is defined in this paragraph
1.16 of this Basic Plan Document #01. No dollar limit other than the limit
imposed by Code Section 401(a)(17) applies to the Compensation of a Non-Highly
Compensated Employee. For purposes of determining the Compensation subject to a
Participant's salary deferral election, the Employer may use an alternative
definition to the one described above provided such alternative definition is a
reasonable definition within the meaning of Section 1.414(s)-1(d)(2) of the
Regulations and permits each Participant to contribute sufficient Elective
Deferrals to receive the maximum amount of Matching Contributions (determined
using the definition of Compensation described above) available to the
Participant under the Plan.
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DEFINITION OF COMPENSATION FOR PURPOSES OF 401(k) SIMPLE PROVISIONS For purposes
of paragraphs 1.36 and 3.2, of this Basic Plan Document #01, Compensation is the
sum of the wages, tips and other compensation from the Employer subject to
Federal income tax withholding [as described in Code Section 6051(a)(3)] and the
Employee's salary reduction contributions made under Code Section 125 in
connection with a cafeteria plan, Code Section 402(e)(3) in connection with a
cash or deferred plan, Code Section 402(h)(1)(B) in connection with a Simplified
Employee Pension Plan, Code Section 402(k) in connection with a SIMPLE
Retirement Account, Code Section 457 in connection with a plan maintained under
said Section and Code Section 403(b) in connection with a tax-sheltered annuity
plan, required to be reported by the Employer on Form W-2 [as described in Code
Section 6051(a)(8)]. For self-employed individuals, Compensation means net
earnings from self-employment determined under Code Section 1402(a) prior to
subtracting any contributions made to this Plan on behalf of any Employee. The
provisions of the Plan implementing the limit on Compensation under Code Section
401(a)(17) apply to the Compensation under paragraph 4.8 of Article IV.
1.17 COVERED COMPENSATION A Participant's Covered Compensation for a Plan Year
is the average (without indexing) of the Taxable Wage Bases in effect for each
calendar year in the thirty-five (35) year period ending with the calendar year
in which the Participant attains (or will attain) social security retirement
age. In determining a Participant's Covered Compensation for a Plan Year, the
Taxable Wage Base in effect for the current Plan Year and any subsequent Plan
Year will be assumed to be the same as the taxable wage base in effect as of the
beginning of the Plan Year for which the determination is being made. Covered
Compensation will be determined for the year designated by the Employer in
Section III(C) of the Target Benefit Plan Adoption Agreement.
A Participant's Covered Compensation for a Plan Year before the end of the
thirty-five (35) year period ending with the last day of the calendar year in
which the Participant attains social security retirement age is the Taxable Wage
Base in effect as of the beginning of the Plan Year. A Participant's Covered
Compensation for a Plan Year after such thirty-five (35) year period is the
Participant's Covered Compensation for the Plan Year during which the
thirty-five (35) year period ends.
1.18 CUSTODIAN The institution or institutions (who may be the Sponsor or an
affiliate) and any successors or assigns thereto, appointed by the Employer to
hold the assets of the Trust as provided at paragraph 13.2 herein.
1.19 DAVIS-BACON ACT 40 U.S.C. Section 276a et seq. as may be amended from time
to time.
1.20 DEFINED BENEFIT PLAN A plan under which a Participant's benefit is
determined by a formula contained in the plan and no Employee accounts are
maintained for Participants.
1.21 DEFINED BENEFIT (PLAN) FRACTION For Limitation Years beginning before
January 1, 2000, a fraction, the numerator of which is the sum of the
Participant's Projected Annual Benefits under all the Defined Benefit Plans
(whether or not terminated) maintained by the Employer, and the denominator of
which is the lesser of 125% of the dollar limitation determined for the
Limitation Year under Code Sections 415(b) and (d) or 140% of the Highest
Average Compensation, including any adjustments under Code Section 415(b).
TRANSITIONAL RULE If an Employee was a Participant as of the first day of the
first Limitation Year beginning after 1986, in one or more Defined Benefit Plans
maintained by the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125% of the sum of the annual
benefits under such Plans which the Participant had accrued as of the close of
the last Limitation Year beginning before 1987, disregarding any changes in the
terms and conditions of the Plan after May 5, 1986. The preceding sentence
applies only if the Defined Benefit Plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all Limitation Years
beginning before 1987.
1.22 DEFINED CONTRIBUTION DOLLAR LIMITATION Thirty thousand dollars ($30,000) as
adjusted by the Secretary of the Treasury for increases in the cost-of-living.
This limitation shall be adjusted by the Secretary at the same time and in the
same manner as under Code Section 415(d). Such increases will be in multiples of
five thousand dollars ($5,000).
1.23 DEFINED CONTRIBUTION PLAN A plan under which Employee accounts are
maintained for each Participant to which all contributions, forfeitures,
investment income and gains or losses, and expenses are credited or
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deducted. A Participant's benefit under such plan is based solely on the fair
market value of his or her account balance.
1.24 DEFINED CONTRIBUTION (PLAN) FRACTION For Limitation Years beginning before
January 1, 2000, a fraction, the numerator of which is the sum of the Annual
Additions to the Participant's account under all the Defined Contribution Plans
(whether or not terminated) maintained by the Employer for the current and all
prior Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible Employee contributions to all Defined Benefit Plans,
whether or not terminated, maintained by the Employer, and the Annual Additions
attributable to all Welfare Benefit Funds as defined in paragraph 1.116,
individual medical accounts as defined in Code Section 415(l)(2) and Simplified
Employee Pension Plans as defined in paragraph 1.99, maintained by the
Employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of Service with the
Employer (regardless of whether a Defined Contribution Plan was maintained by
the Employer). The maximum aggregate amount in the Limitation Year is the lesser
of 125% of the dollar limitation determined under Code Sections 415(b) and (d)
in effect under Code Section 415(c)(1)(A) or 35% of the Participant's
Compensation for such year.
TRANSITIONAL RULE If an Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Contribution Plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of the
excess of the sum of the fractions over 1.0 multiplied by the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before 1987, and
disregarding any changes in the terms and conditions of the Plan made after May
6, 1986, but using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition for
any Limitation Year beginning before 1987, shall not be re-computed to treat all
Employee contributions as Annual Additions.
1.25 DIRECT ROLLOVER A payment made by the Plan to an Eligible Retirement Plan
that is specified by the Participant or a payment received by the Plan from an
Eligible Retirement Plan on behalf of a Participant or an Employee, if selected
in the Adoption Agreement by the Employer.
1.26 DISABILITY Unless the Employer has elected a different definition in the
Adoption Agreement, Disability is defined as an illness or injury of a
potentially permanent nature, expected to last for a continuous period of not
less than 12 months or can be expected to result in death, certified by a
physician selected by or satisfactory to the Employer, which prevents the
Participant from engaging in any occupation for wage or profit for which the
Employee is reasonably fitted by training, education or experience. If elected
by the Employer in the Adoption Agreement, nonforfeitable contributions will be
made to the Plan on behalf of each disabled Participant who is not a Highly
Compensated Employee (as defined at paragraph 1.52). Compensation for purposes
of calculating the contribution will mean Compensation as defined at paragraph
1.16 herein.
1.27 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum distribution
is required.
1.28 EARLY RETIREMENT AGE The age set by the Employer in the Adoption Agreement,
not less than age fifty five (55), at which a Participant becomes fully vested
and is eligible to retire and receive his or her benefits under the Plan.
1.29 EARLY RETIREMENT DATE The date elected by the Employer in the Adoption
Agreement on which a Participant or former Participant has satisfied the Early
Retirement Age requirements. If no election is made on the Adoption Agreement,
it shall mean the date on which a Participant attains his or her Early
Retirement Age.
A former Participant who has separated from Service after satisfying any service
requirement but before satisfying the Early Retirement Age and who thereafter
reaches the age requirement elected on the Adoption Agreement shall be entitled
to receive benefits under the Plan (other than full vesting and any allocation
of Employer contributions) as though the requirements for Early Retirement Age
had been satisfied.
9
1.30 EARNED INCOME Net earnings from self-employment in the trade or business
with respect to which the Plan is established, determined without regard to
items not included in gross income and the deductions allocable to such items,
provided that personal services of the individual are a material
income-producing factor. Earned Income shall be reduced by contributions made by
an Employer to a Qualified Plan to the extent deductible under Code Section 404.
Net earnings shall be determined taking into account the deduction for one-half
of self-employment taxes allowed to the taxpayer under Code Section 164(f), to
the extent deductible for taxable years beginning after December 31, 1989.
1.31 EFFECTIVE DATE The date on which the Employer's Plan or amendment to such
Plan becomes effective. For amendments reflecting statutory and regulatory
changes contained in The Uruguay Round Agreements Act of the General Agreement
on Tariffs and Trade (GATT), The Uniformed Services Employment and Reemployment
Rights Act of 1994 (USERRA), The Small Business Job Protection Act of 1996
(SBJPA), The Taxpayer Relief Act of 1997 (TRA'97), The Internal Revenue Service
Restructuring and Reform Act of 1998 (IRSRRA), and the Community Renewal Tax
Relief Act of 2000 (CRA), the Effective Date(s) of the applicable provisions of
this legislation will be the earlier of the date upon which such amendment is
first administratively applied or the first day of the Plan Year following the
date of adoption of such amendment or adoption of the Basic Plan Document #01
and accompanying Adoption Agreement.
1.32 ELECTION PERIOD The period which begins on the first day of the Plan Year
in which the Participant attains age thirty-five (35) and ends on the date of
the Participant's death. If a Participant separates from Service prior to the
first day of the Plan Year in which age thirty-five (35) is attained, the
Election Period shall begin on the date of separation, with respect to the
account balance as of the date of separation.
1.33 ELAPSED TIME A method of determining an Employee's entitlement under the
Plan with respect to eligibility to participate, and/or vesting, which is not
based on the Employee's completion of a specified number of Hours of Service
during a consecutive twelve (12) month period, but rather with reference to the
total period of time which elapses during which the Employee is employed by the
Employer maintaining the Plan.
If the Employer is a member of an affiliated service group [under Code Section
414(m)], a controlled group of corporations [under Code Section 414(b)], a group
of trades or businesses under common control [under Code Section 414(c)] or any
other entity required to be aggregated with the Employer pursuant to Code
Section 414(o), Service will be credited for any employment for any period of
time for any other member of such group. Service will also be credited for any
individual required under Code Section 414(n) or Code Section 414(o) to be
considered an Employee of any Employer aggregated under Code Section 414(b), (c)
or (m).
1.34 ELECTIVE DEFERRALS Employer contributions in lieu of cash Compensation made
to the Plan on behalf of the Participant pursuant to a Salary Deferral Agreement
or other deferral mechanism. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on behalf of
such Participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in Code Section 401(k), any Simplified
Employee Pension Plan with a cash or deferred arrangement as described in Code
Section 408(k)(6), any SIMPLE IRA Plan described in Code Section 408(p), any
eligible deferred compensation plan under Code Section 457, any plan as
described under Code Section 501(c)(18), and any Employer contributions made on
behalf of a Participant for the purchase of an annuity contract under Code
Section 403(b) pursuant to a Salary Deferral Agreement. Elective Deferrals shall
not include any deferrals properly distributed as excess Annual Additions.
1.35 ELIGIBLE EMPLOYEE For purposes of the SIMPLE 401(k) Plan provisions, any
Employee who is entitled to make Elective Deferrals under the terms of the
SIMPLE 401(k) Plan.
1.36 ELIGIBLE EMPLOYER An Eligible Employer means with respect to any Plan Year,
an Employer who had no more than one hundred (100) Employees who received at
least $5,000 of Compensation from the Employer for the preceding year. In
applying the preceding sentence, all Employees of controlled groups of
corporations under Code Section 414(b), all Employees of trades or businesses
(whether incorporated or not) under common control under Code Section 414(c),
all Employees of affiliated service groups under Code Section 414(m), and Leased
Employees required to be treated as the Employer's Employees under Code Section
414(n), are taken into account.
10
An Eligible Employer that elects to have the SIMPLE 401(k) Plan provisions apply
to the Plan that fails to be an Eligible Employer for any subsequent year, is
treated as an Eligible Employer for the two (2) years following the last year
the employer was an Eligible Employer. If the failure is due to any acquisition,
disposition, or similar transaction involving an Eligible Employer, the
preceding sentence applies only if the provisions of Code Section
410(b)(6)(C)(I) are satisfied.
1.37 ELIGIBLE PARTICIPANT Any Employee who is eligible to make a Voluntary or
Required After-tax Contribution or an Elective Deferral (if the Employer takes
such contributions into account in the calculation of the Actual Contribution
Percentage), or to receive a Matching Contribution (including forfeitures) or a
Qualified Matching Contribution. If a Required After-tax Contribution is
required as a condition of participation in the Plan, any Employee who would be
a Participant in the Plan if such Employee made such a contribution shall be
treated as an Eligible Participant even though no Employee contributions are
made.
1.38 ELIGIBLE RETIREMENT PLAN An individual retirement account (IRA) as
described in Code Section 408(a), an individual retirement annuity (IRA) as
described in Code Section 408(b), an annuity plan as described in Code Section
403(a), or a qualified trust as described in Code Section 401(a), which accepts
Eligible Rollover Distributions. However, in the case of an Eligible Rollover
Distribution paid to a surviving Spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity.
1.39 ELIGIBLE ROLLOVER DISTRIBUTION An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an Eligible Rollover Distribution does not include:
(a) any distribution that is one of a series of substantially
equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the Participant or the
joint lives (or joint life expectancies) of the Participant
and the Participant's Beneficiary, or for a specified period
of ten (10) years or more,
(b) any distribution to the extent such distribution is required
under Code Section 401(a)(9),
(c) any Hardship withdrawals under Code Section
401(k)(2)(B)(i)(IV) received after December 31, 1998, (or if
elected by the Employer in accordance with IRS Notice 99-5,
received after December 31, 1999).
(d) the portion of any distribution that would not be includible
in gross income if paid to the Participant (determined without
regard to the exclusion for net unrealized appreciation with
respect to Employer securities),
(e) excess amounts which are returned to a Participant in
accordance with paragraphs 7.11, 7.12, 7.13, and 10.2,
(f) any other distribution(s) that is reasonably expected to total
less than $200 during a year,
(g) corrective distributions of Excess Elective Deferrals under
Code Section 402(g), and the income allocable thereto,
(h) Excess Contributions and Excess Aggregate Contributions under
Code Section 401(k) and Code Section 401(m), and the income
allocable thereto,
(i) PS 58 costs, and
(j) dividends paid on securities under Code Section 404(k).
1.40 EMPLOYEE A person employed by an Employer maintaining the Plan (including
Self-Employed Individuals and partners). The term Employee shall include
Employees of a member of an affiliated service group [as defined in Code Section
414(m)], all Employees of a controlled group of corporations [as defined in Code
11
Section 414(b)], all Employees of any incorporated or unincorporated trade or
business which is under common control [as defined in Code Section 414(c)],
Leased Employees [as defined in Code Section 414(n)], and any Employee required
to be aggregated by Code Section 414(o). All such Employees shall be treated as
employed by a single Employer.
Leased Employees shall not be Employees for purposes of participation in any
Plan established under a Nonstandardized Adoption Agreement, unless otherwise
elected by the Employer in the Adoption Agreement. Leased Employees [as defined
in Code Sections 414(n) or 414(o)] shall be considered Employees in a Plan
established under a standardized Adoption Agreement except as otherwise provided
in this paragraph. Exclusion under a standardized Adoption Agreement is
available only if Leased Employees do not constitute more than 20% of the
recipient Employer's non-highly compensated work force, and the Employer
complies with the requirements as outlined in paragraph 2.7, and so elects in
the Adoption Agreement.
An individual shall only be treated as an Employee if he or she is reported on
the payroll records of the Employer or an employer who is a member of the same
controlled group or affiliated service group as a common law employee. The term
does not include any other common law employee or any Leased Employee. It is
expressly intended that individuals not treated as common law employees by the
Employer or a member of the same controlled group or affiliated service group on
their payroll records, as identified by a specific job code or work status code,
are to be excluded from plan participation even if a court or administrative
agency subsequently determines that such individuals are common law employees
and not independent contractors.
1.41 EMPLOYER The Self-Employed Individual, partnership, corporation or other
organization which adopts this Plan including any entity that succeeds the
Employer and adopts this Plan. For purposes of Article X, Limitations on
Allocations, Employer shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code Section 414(b)
as modified by Code Section 415(h)], all commonly controlled trades or
businesses [as defined in Code Section 414(c) as modified by Code Section
415(h)] or affiliated service groups [as defined in Code Section 414(m)] of
which the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to Regulations under Code Section 414(o).
In addition to such required treatment, the Plan Sponsor may, in its discretion,
designate as an Employer any business entity which is not such a "common
control," "affiliated service group" or "predecessor" business entity which is
otherwise affiliated with the Employer, subject to such nondiscriminatory
limitations as the Employer may impose.
1.42 ENTRY DATE The date as of which an Employee who has satisfied the Plan's
eligibility requirements enters or reenters the Plan, as defined in the Adoption
Agreement.
1.43 ERISA The Employee Retirement Income Security Act of 1974, as amended and
any successor statute.
1.44 EXCESS AGGREGATE CONTRIBUTIONS The excess, with respect to any Plan Year,
of:
(a) the aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
(b) the maximum Contribution Percentage Amounts permitted by the
ACP test (determined hypothetically by reducing contributions
made on behalf of Highly Compensated Employees in order of
their Contribution Percentages beginning with the highest of
such percentages).
(c) Such determination shall be made after first determining
Excess Elective Deferrals pursuant to paragraph 1.47 and then
determining Excess Contributions pursuant to paragraph 1.46.
1.45 EXCESS ANNUAL ADDITIONS The excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
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1.46 EXCESS CONTRIBUTION With respect to any Plan Year, the excess of:
(a) the aggregate amount of Employer contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
(b) the maximum amount of such contributions permitted by the ADP
Test (determined by hypothetically reducing contributions made
on behalf of Highly Compensated Employees in order of the
ADPs, beginning with the highest of such percentages).
1.47 EXCESS ELECTIVE DEFERRALS Those Elective Deferrals that are includible in a
Participant's gross income under Code Section 402(g) to the extent such
Participant's Elective Deferrals for a taxable year exceed the dollar limitation
under Code Section 402(g). Excess Elective Deferrals shall be treated as Annual
Additions under the Plan, unless such amounts are distributed no later than the
first April 15 following the close of the Participant's taxable year.
1.48 EXPECTED YEAR OF SERVICE An eligibility computation period during which an
Employee in an eligible class is expected to complete a Year of Service. If an
Employee who is not expected to complete a Year of Service actually completes a
Year of Service during an applicable computation period, he shall be deemed to
have become an Employee in the eligible class as of the first day of the
eligibility computation period in which he first completes a Year of Service.
1.49 FIRST DISTRIBUTION CALENDAR YEAR For distributions beginning before the
Participant's death, the First Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the First Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.
1.50 HARDSHIP An immediate and heavy financial need of the Employee where such
Employee lacks other available financial resources to satisfy such financial
need.
1.51 HIGHEST AVERAGE COMPENSATION For Limitation Years beginning before January
1, 2000, the average Compensation for the three (3) consecutive Years of Service
with the Employer that produces the highest average. A Year of Service with the
Employer is the twelve (12) consecutive month period defined in the Adoption
Agreement, or, if not indicated in the Adoption Agreement, as defined in
paragraph 1.117.
1.52 HIGHLY COMPENSATED EMPLOYEE Effective for years after December 31, 1996,
the term Highly Compensated Employee means any Employee who: (1) is a 5% owner
at any time during the year or preceding year, or (2) for the preceding year had
Compensation from the Employer in excess of $80,000 and if the Employer so
elects in the Adoption Agreement, is in the Top-Paid Group for the preceding
year. The $80,000 amount is adjusted at the same time and in the same manner as
under Code Section 415(d), except that the base period is the calendar quarter
ending September 30, 1996.
For the determination of who is a Highly Compensated Employee, the applicable
year of the Plan for which a determination is being made is called a
determination year and the preceding twelve (12) month period is called a
look-back year. Employees who do not meet the Highly Compensated Employee
definition are considered Non-Highly Compensated Employees.
A Highly Compensated former Employee is based on the rules applicable to
determining Highly Compensated Employee status in effect for that determination
year, in accordance with Section 1.414(q)-1T, A-4 of the temporary Income Tax
Regulations and IRS Notice 97-45.
In determining whether an Employee is a Highly Compensated Employee for years
beginning in 1997, the amendments to Code Section 414(q) stated above are
treated as having been in effect for years beginning in 1996. In order to be
effective, a Top-Paid Group election or calendar year data election must apply
consistently to all plans of the Employer that begin with or within the same
calendar year.
13
1.53 HOUR OF SERVICE
(a) Unless otherwise specified in the Adoption Agreement, each
hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours
shall be credited to the Employee for the computation period
in which the duties are performed, and
(b) each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including Disability), layoff,
jury duty, military duty or leave of absence. No more than
five hundred and one (501) Hours of Service shall be credited
under this paragraph for any single continuous period (whether
or not such period need occur in a single computation period).
Hours under this paragraph shall be calculated and credited
pursuant to Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference,
and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under
paragraph (a) or paragraph (b), as the case may be, and under
this paragraph (c). These hours shall 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.
(d) Hours of Service shall be credited for employment with the
Employer and with other members of an affiliated service group
[as defined in Code Section 414(m)], a controlled group of
corporations [as defined in Code Section 414(b)], or a group
of trades or businesses under common control [as defined in
Code Section 414(c)] of which the adopting Employer is a
member, and any other entity required to be aggregated with
the Employer pursuant to Code Section 414(o) and the
Regulations thereunder. Hours of Service shall also be
credited for any individual considered an Employee for
purposes of this Plan under Code Section 414(n) or Code
Section 414(o) and the Regulations thereunder.
(e) Solely for purposes of determining whether a Break in Service,
as defined in paragraph 1.14, for participation and vesting
purposes has occurred in a computation period, an individual
who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such
absence. For purposes of this paragraph, an absence from work
for maternity or paternity reasons means an absence by reason
of the pregnancy of the individual, by reason of a birth of a
child of the individual, by reason of the placement of a child
with the individual in connection with the adoption of such
child by such individual, or for purposes of caring for such
child for a period beginning immediately following such birth
or placement. The Hours of Service credited under this
paragraph shall be credited in the computation period in which
the absence begins if the crediting is necessary to prevent a
Break in Service in that period, or in all other cases, in the
following computation period. No more than five hundred and
one (501) hours will be credited under this paragraph.
(f) Hours of Service shall be determined under the hours counting
method as elected by the Employer in the Adoption Agreement.
If no election is made, actual hours under the hours counting
method will be used.
1.54 INTEGRATION LEVEL The amount of Compensation specified in the Adoption
Agreement at or below which the rate of contributions or benefits (expressed in
each case as a percentage of such Compensation) provided under the Plan is less
than the rate of contributions or benefits (expressed in each case as a
percentage of such Compensation) provided under the Plan with respect to
Compensation above such level. The Adoption Agreement must specify an
Integration Level in effect for the Plan Year for each Participant. No
Integration Level in effect for a particular year may exceed the contribution
and benefit base ("Taxable Wage Base") under Section 230 [Code Section
3121(a)(1)] of the Social Security Act in effect on the first day of the Plan
Year.
14
1.55 KEY EMPLOYEE Any Employee or former Employee (and the Beneficiaries of such
Employee) who at any time during the determination period was:
(a) an officer of the Employer if such individual's annual
Compensation exceeds 50% of the dollar limitation under Code
Section 415(b)(1)(A) (the defined benefit maximum annual
benefit),
(b) an owner or an individual considered an owner under Code
Section 318 of one of the ten (10) largest interests in the
Employer if such individual's Compensation exceeds 100% of the
dollar limitation under Code Section 415(c)(1)(A) and such
ownership exceeds 1/2%,
(c) a more than 5% owner of the Employer, or
(d) a 1% owner of the Employer who has an annual Compensation of
more than $150,000.
The determination period is the Plan Year containing the Top-Heavy Determination
Date and the four (4) preceding Plan Years. The determination of Key Employee
status will be made in accordance with Code Section 416(i)(1) and the
Regulations thereunder.
1.56 LEASED EMPLOYEE Effective for Plan Years beginning after December 31, 1996,
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 the primary direction or control of the recipient Employer. If a
Leased Employee is treated as an Employee by reason of this paragraph 1.56,
"Compensation" includes Compensation from the leasing organization which is
attributable to services performed for the Employer.
1.57 LIMITATION YEAR The calendar year or such other twelve (12) consecutive
month period designated by the Employer in the Adoption Agreement for purposes
of determining the maximum Annual Additions to a Participant's account. All
Qualified Plans maintained by the Employer must use the same Limitation Year. If
the Limitation Year is amended to a different twelve (12) consecutive month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made. If no designation is made on the Adoption
Agreement, the Limitation Year will automatically default to the Plan Year.
1.58 MASTER OR PROTOTYPE PLAN A plan, the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
1.59 MATCHING CONTRIBUTION An Employer contribution made to this or any other
Defined Contribution Plan on behalf of a Participant on account of a Voluntary
or Required After-tax Contribution made by such Participant, or on account of a
Participant's Elective Deferral made by such Participant under a Plan maintained
by the Employer.
1.60 MAXIMUM PERMISSIBLE AMOUNT The maximum Annual Additions that may be
contributed or allocated to a Participant's account under the Plan for any
Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(a) 25% of the Participant's Compensation for the Limitation Year.
The Compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Sections 415(l)(1) or 419(d)(2). If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different twelve (12)
consecutive month period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by a fraction, the numerator
of which is the number of months in the short Limitation Year and the
denominator of which is twelve (12).
15
1.61 NET PROFIT The current and accumulated operating earnings of the Employer
after Federal and state income taxes, excluding nonrecurring or unusual items of
income, and before contributions to this and any other Qualified Plan of the
Employer, unless the Employer has elected a different definition in the Adoption
Agreement.
1.62 NORMAL RETIREMENT AGE The age set by the Employer in the Adoption
Agreement, not to exceed age sixty-five (65), at which a Participant becomes
fully vested and is eligible to retire and receive his or her benefits under the
Plan.
1.63 NORMAL RETIREMENT DATE The date on which the Participant attains the Normal
Retirement Age as elected in the Adoption Agreement. If no election is made on
the Adoption Agreement, it shall mean the date on which a Participant attains
his or her Normal Retirement Age.
1.64 OWNER-EMPLOYEE A sole proprietor or a partner owning more than 10% of
either the capital or profits interest of the partnership.
1.65 PAIRED PLANS Two (2) or more plans which are either a combination of two
(2) or more standardized Defined Contribution Plans or a combination of one (1)
or more standardized Defined Contribution Plan(s) and one (1) Defined Benefit
Plan offered by the same sponsor, which have been designed so that any single
Plan, or combination of Plans adopted by an Employer, where each Plan by itself
or the Plans together will meet the requirements of the antidiscrimination
rules, the contribution and benefit limitations, and the Top-Heavy provisions of
Code Sections 401(a)(4), 415 and 416.
1.66 PARTICIPANT Any current Employee who met the applicable eligibility
requirements and reached his or her Entry Date and, where the context so
requires, pursuant to the terms of the Plan, any living former Employee on whose
behalf an Account is maintained or former Employee who has met the eligibility
requirements.
1.67 PARTICIPANT'S BENEFIT With respect to required distributions pursuant to
paragraph 7.4, the account balance as of the last Valuation Date in the calendar
year immediately preceding the Distribution Calendar Year increased by the
amount of any contributions or forfeitures allocated to the account balance as
of the dates in the calendar year after the Valuation Date and decreased by
distributions made in the calendar year after the Valuation Date. A special
exception exists for the second Distribution Calendar Year. For purposes of this
paragraph, if any portion of the minimum distribution for the First Distribution
Calendar Year is made in the second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second Distribution Calendar Year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.
a) PERIOD OF SEVERANCE For Plans using Elapsed Time for purposes of
crediting Service:
(a) a Break in Service shall mean a Period of Severance of at
least twelve (12) months;
(b) a Period of Severance is a continuous period of time during
which the Employee is not employed by the Employer;
(c) a Period of Severance begins on the date the Employee retires,
quits, or is discharged, or if earlier, the twelve (12) month
anniversary of the date on which the Employee was otherwise
first absent from Service.
1.69 PERMISSIVE AGGREGATION GROUP The Required Aggregation Group of plans plus
any other plan or plans of the Employer which, when considered as a group with
the Required Aggregation Group, would continue to satisfy the requirements of
Code Sections 401(a)(4) and 410.
1.70 PLAN The Defined Contribution Plan of the Employer in the form of this
Prototype Defined Contribution Plan and the applicable Adoption Agreement
executed by the Employer as may be amended from time to time (which includes any
addendum thereto). The Plan shall have the name specified in the Adoption
Agreement.
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1.71 PLAN ADMINISTRATOR The Employer or individual(s) or entity(ies) appointed
by the Employer to administer the Plan as provided at paragraph 12.1 herein.
1.72 PLAN SPONSOR The Employer who adopts this Prototype Defined Contribution
Plan and accompanying Adoption Agreement.
1.73 PLAN YEAR The twelve (12) consecutive month period designated by the
Employer in the Adoption Agreement. If the Employer maintains Paired Plans under
Basic Plan Document #01, each Plan established thereunder must have the same
Plan Year.
1.74 PRESENT VALUE The actuarial equivalent of a Participant's accrued benefit
under a Defined Benefit Plan maintained by the Employer expressed in the form of
a lump sum. Actuarial equivalence shall be based on reasonable interest and
mortality assumptions determined in accordance with the Top-Heavy provisions of
the respective plan. Present Value is used for the purposes of the Top-Heavy
test and the determination with respect thereto.
1.75 PRIOR PLAN YEAR The Plan Year immediately preceding the current Plan Year.
1.76 PRIOR SAFE HARBOR PLAN A Target Benefit Plan that:
(a) was adopted and in effect on September 19, 1991,
(b) which on that date contained a Stated Benefit Formula
applicable to Target Benefit Plans that took into account
Service prior to that date, and
(c) satisfied the applicable nondiscrimination requirements for
Target Benefit Plans for those prior years. For purposes of
determining whether a plan satisfies the applicable
nondiscrimination requirements for Target Benefit Plans for
Plan Years beginning before January 1, 1994, no amendments
after September 19, 1991, other than amendments necessary to
satisfy Code Section 401(l), will be taken into account.
1.77 PROJECTED ANNUAL BENEFIT For Limitation Years beginning before January 1,
2000, the annual retirement benefit (adjusted to an actuarial equivalent
straight life annuity if such benefit is expressed in a form other than a
straight life annuity or Qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of a Defined Benefit Plan or
Plans, assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year
and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation
Years.
1.78 PROJECTED PARTICIPATION For purposes of determining a Participant's stated
benefit, a Participant's years of Projected Participation under the Plan is the
sum of (a) and (b), where
(a) is the number of years during which the Participant benefited
under this Plan beginning with the latest of:
(1) the first Plan Year in which the Participant
benefited under the Plan,
(2) the first Plan Year taken into account in the Stated
Benefit Formula, and
(3) any Plan Year immediately following a Plan Year in
which the Plan did not satisfy the safe harbor for
Target Benefit Plans in Regulations Section
1.401(a)(4)-8(b)(3), and ending with the last day of
the current Plan Year, and
17
(b) is the number of years if any, subsequent to the current Plan
Year through the end of the Plan Year in which the Participant
attains Normal Retirement Age.
For purposes of this definition of years of Projected Participation, if this
Plan is a Prior Safe Harbor Plan, the Plan is deemed to satisfy the safe harbor
for Target Benefit Plans in Regulations Section 1.401(a)(4)-8(b)(3) and a
Participant is treated as benefiting under the Plan in any Plan Year beginning
prior to January 1, 1994.
1.79 QUALIFIED DOMESTIC RELATIONS ORDER (QDRO ORDER) A Qualified Domestic
Relations Order (QDRO) is a signed domestic relations order issued by a state
court or agency which creates, recognizes or assigns to an alternate payee(s)
the right to receive all or part of a Participant's Plan benefit and which meets
the requirements of Code Section 414(p). An alternate payee is a Spouse, former
Spouse, child, or other dependent who is treated as a Beneficiary under the Plan
as a result of the QDRO. Unless elected otherwise by the Employer in the
Adoption Agreement, the earliest date for payment of a QDRO to an alternate
payee, is the date upon which the order is deemed qualified.
1.80 QUALIFIED EARLY RETIREMENT AGE For purposes of paragraph 8.9, Qualified
Early Retirement Age is the latest of:
(a) the earliest date under the Plan on which the Participant may
elect to receive retirement benefits, or
(b) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.81 QUALIFIED JOINT AND SURVIVOR ANNUITY (QJSA) An immediate annuity for the
life of the Participant with a survivor annuity for the life of the
Participant's Spouse which is at least 50% of but not more than 100% of the
annuity payable during the joint lives of the Participant and the Participant's
Spouse. The exact amount of the survivor annuity is to be specified by the
Employer in the Adoption Agreement. If not designated by the Employer, the
survivor annuity will be 50% of the amount paid to the Participant during his or
her lifetime. The Qualified Joint and Survivor Annuity will be the amount of
benefit which can be provided by the Participant's Vested Account Balance.
1.82 QUALIFIED MATCHING CONTRIBUTIONS (QMACS) Matching contributions which when
made are subject to the distribution and nonforfeitability requirements under
Code Section 401(k).
1.83 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (QNECS) Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the Employer
and allocated to Participants' accounts that the Participants may not elect to
receive in cash until distributed from the Plan, that are nonforfeitable when
made, and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.84 QUALIFIED PLAN Any pension, profit-sharing, stock bonus, or other plan
which meets the requirements of Code Section 401 and includes a trust exempt
from tax under Code Section 501(a) or any annuity plan described in Code Section
403(a).
a) QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY An annuity for the life of the
Surviving Spouse of a Participant the actuarial equivalent of which is not less
than 50% of the vested Participant's Account Balance as of the date of the
Participants' death, as elected by Employer in the Adoption Agreement. If no
election is made on the Adoption Agreement the Qualified Pre-Retirement Survivor
Annuity shall be 50% of the Participant's Vested Account Balance as of the date
of the death of the Participant, unless the Employer in a prior version of the
Adoption Agreement or Plan, had elected that the Qualified Pre-Retirement
Survivor Annuity be 100% of the Account Balance.
18
1.86 QUALIFIED VOLUNTARY CONTRIBUTION A tax-deductible Voluntary Employee
Contribution which was permitted to be made for the tax years 1982 through 1986.
This type of contribution is no longer permitted to be made by a Participant.
This Plan shall accept such type of contribution if made in a prior plan and an
appropriate recordkeeping account will be established on behalf of the
Participant.
1.87 REQUIRED AGGREGATION GROUP A group of plans including:
(a) each Qualified Plan of the Employer in which at least one (1)
Key Employee participates or participated at any time during
the determination period (regardless of whether the plan has
terminated), and
(b) any other Qualified Plan of the Employer which enables a plan
described in (a) to meet the requirements of Code Sections
401(a)(4) or 410.
1.88 REQUIRED BEGINNING DATE The date on which a Participant is required to take
his or her first minimum distribution under the Plan as elected by the Employer
in the Adoption Agreement. The rules regarding the determination of the Required
Beginning Date are set forth at paragraph 7.5 herein.
1.89 REQUIRED AFTER-TAX CONTRIBUTIONS Employee after-tax contributions required
as a condition of participation in the Plan.
1.90 ROLLOVER CONTRIBUTION A contribution made by a Participant of an amount
distributed to such Participant from another Qualified Plan in accordance with
Code Section 402(c).
1.91 SALARY DEFERRAL AGREEMENT An agreement between the Employer and an Employee
where the Employee authorizes the Employer to withhold a specified percentage or
dollar amount of his or her Compensation (otherwise payable in cash) for deposit
to the Plan on behalf of such Employee.
1.92 SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES (SIMPLE) A plan adopted by an
Eligible Employer under Code Section 401(k)(11) under which Eligible Employees
are permitted to make Elective Deferrals to a Qualified Plan established under
the SIMPLE 401(k) Plan Adoption Agreement.
1.93 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for the
taxable year from the trade or business for which the Plan is established
including an individual who would have had Earned Income but for the fact that
the trade or business had no Net Profit for the taxable year.
1.94 SERVICE The period of current or prior employment with the Employer
including any imputed period of employment which must be counted under USERRA.
If the Employer maintains a plan of a predecessor employer, service for such
predecessor shall be treated as Service for the Employer for the purpose(s)
specified in the Adoption Agreement. Service is determined under an hours
counting method or Elapsed Time method as selected by the Employer in the
Adoption Agreement.
If the Employer has elected to use the Elapsed Time method to determine
eligibility and/or vesting Service, the aggregate of the following (applied
without duplication and except for periods of Service that may be disregarded
under paragraph 9.6):
(a) Each period from an Employee's date of hire (or reemployment
date) to his next Severance Date; and
(b) If an Employee performs an Hour of Service within twelve (12)
months of a Severance Date, the period from such Severance
Date to such Hour of Service. Service shall be credited for
all periods whether the Employee is employed by an Employer or
an Affiliate.
Service shall be measured in whole years and fractions of a year in months. For
this purpose, (a) periods of less than a full year shall be aggregated on the
basis that twelve (12) months or three hundred and sixty five (365) days equals
a year, and (b) in aggregating days into months, thirty (30) days shall be
rounded up to the nearest whole month. For purposes of determining Service,
"Date of Hire" means the date on which an Employee first completes
19
an Hour of Service and "Reemployment Date" means the date on which an Employee
first completes an Hour of Service after a Severance Date. If the Employer is a
member of an affiliated service group [under Code Section 414(m)], a controlled
group of corporations [under Code Section 414(b)], a group of trades or
businesses under common control [under Code Section 414(c)] or any other entity
required to be aggregated with the Employer pursuant to Code Section 414(o),
Service will be credited for any employment for any period of time for any other
member of such group. Service will also be credited for any individual required
under Code Section 414(n) or Code Section 414(o) to be considered an Employee of
any Employer aggregated under Code Section 414(b), (c), or (m).
1.95 SEVERANCE DATE The date which is the earlier of:
(a) the date on which an Employee quits, retires, is discharged or
dies; or
(b) the first anniversary of the first date of a period in which
an Employee remains continuously absent from Service with an
Employer or affiliate (with or without pay) for any reason
other than quit, retirement, discharge or death.
1.96 SEVERANCE PERIOD Each period from an Employee's Severance Date to his next
Reemployment Date.
1.97 SERVICE PROVIDER An individual or business entity who is retained by the
Plan Administrator on behalf of the Plan to provide specified administrative
services to the Plan.
1.98 SHAREHOLDER EMPLOYEE An Employee or officer who owns [or is considered as
owning within the meaning of Code Section 318(a)(1)], on any day during the
taxable year of an electing small business corporation (S Corporation), more
than 5% of such corporation's outstanding stock.
1.99 SIMPLIFIED EMPLOYEE PENSION PLAN A plan under which the Employer makes
contributions for eligible Employees pursuant to a written formula.
Contributions are made to an individual retirement account which meets the
requirements of Code Section 408(k).
1.100 SPONSOR The institution or entity and any of its affiliates or any
successor or assigns thereto identified in the Adoption Agreement who makes this
Prototype Defined Contribution Plan available to adopting Employers.
1.101 SPOUSE The individual to whom a Participant is married, or was married in
the case of a deceased Participant who was married at the time of his or her
death. A former Spouse will be treated in the same manner as a Spouse to the
extent provided under a Qualified Domestic Relations Order as described in Code
Section 414(p).
1.102 STATED BENEFIT FORMULA The formula elected by the Employer in the Adoption
Agreement expressed in the form of a straight life annuity without a term
certain, refund feature or survivor benefit.
1.103 SUPER TOP-HEAVY PLAN A Plan described at paragraph 1.106 under which the
Top-Heavy Ratio exceeds 90%.
1.104 TAXABLE WAGE BASE For plans with an allocation formula which takes into
account the Employer's contribution under the Federal Insurance Contributions
Act (FICA), the contribution and benefit base in effect under the Social
Security Act (Section 203) at the beginning of the Plan Year.
1.105 TOP-HEAVY DETERMINATION DATE For the first Plan Year of the Plan, the last
day of the first Plan Year. For any Plan Year subsequent to the first Plan Year,
the last day of the preceding Plan Year.
1.106 TOP-HEAVY PLAN For any Plan Year, the Employer's Plan is Top-Heavy if any
of the following conditions exist:
(a) The Top-Heavy Ratio for the Employer's Plan exceeds 60% and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
20
(b) The Employer's Plan is a part of a Required Aggregation Group
of plans but not part of a Permissive Aggregation Group and
the Top-Heavy Ratio for the group of plans exceeds 60%.
(c) The Employer's Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group exceeds
60%.
1.107 TOP-HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution
Plans (including any Simplified Employee Pension Plan) and the
Employer has not maintained any Defined Benefit Plan which
during the five (5) year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone, or for the Required or Permissive
Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account
balances of all Key Employees as of the Determination
Date(s) [including any part of any account balance
distributed in the five year period ending on the
Determination Date(s)], and
(2) the denominator of which is the sum of all account
balances [including any part of any account balance
distributed in the five (5) year period ending on the
Determination Date(s)], both computed in accordance
with Code Section 416 and the Regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of
the Determination Date but which is required to be taken into
account on that date under Code Section 416 and the
Regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution
Plans (including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more Defined
Benefit Plans which during the five (5) year period ending on
the Determination Date(s) has or has had any accrued benefits,
the Top-Heavy Ratio for any Required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of which
is the sum of account balances under the aggregated Defined
Contribution Plan or Plans for all Key Employees, determined
in accordance with (a) above, and the Present Value of accrued
benefits under the aggregated Defined Benefit Plan or Plans
for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under
the aggregated Defined Contribution Plan or Plans for all
Participants, determined in accordance with (a) above, and the
Present Value of accrued benefits under the Defined Benefit
Plan or Plans for all Participants as of the Determination
Date(s), all determined in accordance with Code Section 416
and the Regulations thereunder. The accrued benefits under a
Defined Benefit Plan in both the numerator and denominator of
the Top-Heavy Ratio are increased for any distribution of an
accrued benefit made in the five (5) year period ending on the
Determination Date.
(c) For purposes of (a) and (b) above, the value of account
balances and the Present Value of accrued benefits will be
determined as of the most recent Valuation Date that falls
within or ends with the twelve (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. The account balances and accrued
benefits of a Participant who is not a Key Employee but who
was a Key Employee in a prior year, or who has not been
credited with at least one (1) Hour of Service with any
Employer maintaining the Plan at any time during the five (5)
year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code
Section 416 and the Regulations thereunder. Qualified
Voluntary Employee Contributions will not be taken into
account for purposes of computing the Top-Heavy Ratio. When
aggregating plans, the value of account balances and accrued
benefits will be
21
calculated with reference to the Determination Dates that fall
within the same calendar year. The accrued benefit of a
Participant other than a Key Employee shall be determined
under the method, if any, that uniformly applies for accrual
purposes under all Defined Benefit Plans maintained by the
Employer, or if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Code Section
411(b)(1)(C).
1.108 TOP-PAID GROUP The group consisting of the top 20% of Employees when
ranked on the basis of Compensation paid during such year. For purposes of
determining the number of Employees in the group (but not who is in it),
Employees identified in (a) through (d) may be excluded and Employees identified
in (e) through (f) shall be excluded:
(a) Employees who have not completed six (6) months of Service by
the end of the year;
(b) Employees who normally work less than seventeen and one-half
(17 1/2) hours per week by the end of the year;
(c) Employees who normally work not more than six (6) months
during any year;
(d) Employees who have not attained age twenty-one (21) by the end
of the year;
(e) Employees included in a collective bargaining unit, covered by
an agreement between Employee representatives and the
Employer, where retirement benefits were the subject of good
faith bargaining, if they constitute at least 90% of the
Employer's workforce and the Plan covers only non-union
Employees; and
(f) Employees who are nonresident aliens and who receive no Earned
Income which constitutes income from sources within the United
States.
1.109 TRANSFER CONTRIBUTION A non-taxable transfer of a Participant's benefit
directly from a Qualified Plan to this Plan. This type of transfer does not
constitute constructive receipt of plan assets.
1.110 TRUST The trust established in conjunction with the Plan, together with
any and all amendments thereto which holds assets of the Plan held by or in the
name of the Trustee or Custodian.
1.111 TRUSTEE An individual, individuals or corporation and any of its
affiliates or any successor or assigns (who may be the Sponsor or an affiliate)
who are appointed or assigned in the Adoption Agreement or any duly appointed
successor or assigns as provided for in paragraph 13.19.
1.112 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT OF 1994 (USERRA)
The Uniformed Services Employment and Reemployment Rights Act of 1994, as
amended. Notwithstanding any provision of the Plan to the contrary,
contributions, benefits, Plan loan repayment, suspensions and service credit
with respect to qualified military service will be provided in accordance with
Code Section 414(u).
1.113 VALUATION DATE The last day of the Plan Year and such other date(s) as
specified in the Adoption Agreement on which the fair market value of Plan
assets is determined. The Trustee and/or Custodian must also value the Trust on
such other Valuation Dates as directed by the Plan Administrator.
1.114 VESTED ACCOUNT BALANCE The aggregate value of the Participant's Vested
Account Balances derived from Employer and Employee contributions (including
Rollovers), whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The provisions of
Article VIII shall apply to a Participant who is vested in amounts attributable
to Employer contributions, Employee contributions (or both) at the time of death
or distribution.
22
1.115 VOLUNTARY AFTER-TAX CONTRIBUTION Any contribution made to the Plan by or
on behalf of a Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate account to which
earnings and losses are allocated.
1.116 WELFARE BENEFIT FUND Any fund that is part of a plan of the Employer, or
has the effect of a plan, through which the Employer provides welfare benefits
to Employees or their beneficiaries. For these purposes, Welfare Benefit means
any benefit other than those with respect to which Code Section 83(h) (relating
to transfers of property in connection with the performance of services), Code
Section 404 (relating to deductions for contributions to an Employees' trust or
annuity and Compensation under a deferred payment plan), Code Section 404A
(relating to certain foreign deferred compensation plans) apply. A "Fund" for
purposes of this paragraph, is any social club, voluntary employee benefit
association, supplemental unemployment benefit trust or qualified group legal
service organization described in Code Section 501(c)(7), (9), (17) or (20); any
trust, corporation, or other organization not exempt from income tax, or to the
extent provided in regulations, any account held for an Employer by any person.
1.117 YEAR OF SERVICE
(a) If elected in the Adoption Agreement, the hours counting
method will be used in determining either an Employee's
initial or continuing eligibility to participate in the Plan,
or the nonforfeitable interest in the Participant's account
balance derived from Employer contributions. A Year of Service
is a twelve (12) consecutive month period in which an Employee
has completed one-thousand (1,000) Hours of Service (or such
lower number as is specified in the Adoption Agreement).
(1) The eligibility computation period starts with the
day the Employee first performs an Hour of Service
and is a twelve (12) consecutive month period during
which the Employee has completed the number of Hours
of Service [not to exceed one-thousand (1,000)] as
elected in the Adoption Agreement.
(2) The vesting computation period is a twelve (12)
consecutive month period as elected by the Employer
in the Adoption Agreement during which the Employee
completed the number of Hours of Service [not to
exceed one-thousand (1,000)] as elected in the
Adoption Agreement. If no election is made, the Plan
Year shall be used provided that in the event the
Plan Year is changed, the "vesting computation
period" shall be the twelve (12) consecutive month
period determined in accordance with Department of
Labor Regulation Section 2530.203-2(c), the
provisions of which are incorporated herein by
reference.
(b) If elected in the Adoption Agreement, the Elapsed Time method
will be used in determining either an Employee's initial or
continuing eligibility to participate in the Plan, or the
nonforfeitable interest in the Participant's account balance
derived from Employer contributions. An Employee will receive
credit for the aggregate of all time period(s) commencing with
the Employee's first day of employment or reemployment and
ending on the date a Break in Service begins. The first day of
employment or reemployment is the first day the Employee
performs an Hour of Service for the Employer. An Employee will
also receive credit for any Period of Severance of less than
twelve (12) consecutive months. Fractional periods of a year
will be expressed in terms of days. Years of Service will be
determined in accordance with paragraph 1.94.
(1) A Break in Service under the Elapsed Time method is a
Period of Severance of at least twelve (12)
consecutive months. A Period of Severance is a
continuous period of time during which the Employee
is not employed by the Employer. The continuous
period begins on the date the Employee retires,
quits, is discharged or if earlier, the first twelve
(12) month anniversary of the date on which the
Employee is first absent from Service.
23
(2) In the case of an individual who is absent from work
for maternity or paternity reasons, the twelve (12)
consecutive month period beginning on the first
anniversary of the first date of such absence from
work for maternity or paternity reasons (a) by reason
of the pregnancy of the individual, (b) by reason of
the birth of the 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.
(a) Each Employee will share in Employer contributions for the
period beginning on the date the Employee commences
participation under the Plan and ending on the date on which
such Employee terminates employment with the Employer or is no
longer a member of an eligible class of Employees.
(b) If two (2) Years of Service are required as a condition of
eligibility, a Participant will only have completed two (2)
Years of Service for eligibility purposes upon the actual
completion of two (2) consecutive Years of Service.
(c) The Employer may elect in the Adoption Agreement for purposes
of determining a Participant's vested interest to disregard
Years of Service prior to:
(1) the time the Employer or any affiliate maintained the
Plan or any predecessor plan; and
(2) an Employee's attainment of a certain age, not to
exceed age eighteen (18).
(f) An Employee's Years of Service under this Plan may be
determined using the hours counting method or the Elapsed Time
method or both. Unless otherwise elected in the Adoption
Agreement, Years of Service shall be determined using the
hours counting method on the basis of actual hours worked.
(g) If the Plan determines Service for a given purpose on one
basis and an Employee transfers to Employment covered by this
Plan from Employment covered by another Qualified Plan which
determines Service for such purpose on the other basis, and if
the Employee's Service for the period during which he was
covered by such other plan is required to be taken into
consideration under this Plan for that purpose, then the
following rules shall apply:
(1) If such Service was determined under the other plan
using the hours counting method, then the period so
taken into consideration through the close of the
computation period in which such transfer occurs
shall be:
(i) the number of Years of Service credited to
the Employee for such purpose under such
other plan as of the start of such
computation period, and
(ii) for the computation period in which such
transfer occurs, the greater of:
(A) his Service for such period as of
the date of transfer determined
under the rules of such other plan,
or
(B) his Service for such period
determined under the Elapsed Time
rules of this Plan.
Service after the close of that computation period
shall be determined for such purpose solely under the
Elapsed Time rules of this Plan.
(2) If such Service was determined under the other plan
using the Elapsed Time method, then the period taken
into consideration shall be (1) the number of
one-year periods of
24
Service credited to the Employee under such other
plan as of the date of the transfer, and (2) for the
computation period which includes the date of
transfer, the Hours of Service equivalent to any
fractional part of a Year of Service credited to him
under such other plan. In determining such
equivalency, the Employee shall be credited with
one-hundred-ninety (190) Hours of Service for each
month or fraction thereof.
25
If this Plan is an amendment and continuation of another Qualified Plan or if
this Plan is amended and an effect of the amendment is to change the basis on
which Years of Service are determined, the foregoing rules shall be applied as
if each Employee had transferred employment on the effective date of such
amendment.
If no election is made on the Adoption Agreement, the Plan will define a Year of
Service as a twelve (12) consecutive month period in which an individual has
completed one-thousand (1,000) Hours of Service under the hours counting method.
26
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 ELIGIBILITY Employees who meet the eligibility requirements in the Adoption
Agreement on the Effective Date of the Plan shall become Participants as of the
Effective Date of the Plan. If elected in the Adoption Agreement, all Employees
employed on the Effective Date of the Plan may participate, even if they have
not satisfied the Plan's specified eligibility requirements. Employees hired
after the Effective Date of the Plan, upon meeting the eligibility requirements,
shall become Participants on the applicable Entry Date. For amended and restated
Plans, Employees who were Participants in the Plan prior to the Effective Date
will continue to participate in the Plan, regardless of whether the Employee
satisfies the eligibility requirements in the restated or amended Plan, unless
otherwise elected in the Adoption Agreement. If no age and Service requirement
are elected in the Adoption Agreement, an Employee will become a Participant on
the date the individual first performs an Hour of Service for the Employer. The
Employee must satisfy the eligibility requirements specified in the Adoption
Agreement and be employed on the Entry Date to become a Participant in the Plan.
(a) In the event that an Employee has satisfied the eligibility
requirements, but is not employed on the applicable Entry
Date, such Employee will become a Participant for the
purpose(s) for which an Employee had previously qualified upon
his or her rehire.
(b) Except as otherwise provided in the Adoption Agreement, all
Years of Service will be counted for purposes of determining
whether an Employee has satisfied the Plan's Service
eligibility requirement, if any. If a Participant has a Break
in Service or Period of Severance, Service before that Break
in Service or Period of Severance shall be reinstated as of
the date the Employee is credited with an Hour of Service
after incurring such Break in Service or Period of Severance.
(c) 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 shall participate immediately if such Employee has
satisfied the minimum age and Service requirements and would
have previously become a Participant had he or she been in an
eligible class.
(d) A former Participant shall be eligible to authorize Elective
Deferrals and may make other Employee Contributions as
permitted under the Plan as of the date on which the
individual is rehired. Such contributions shall resume
immediately (or as soon as administratively feasible) on or
after his or her date of rehire. A former Employee who had
become a Participant for the purpose of Employer contributions
shall again become a Participant with respect to Employer
Contributions on the date on which the individual is rehired.
(e) An Employee who has become a Participant under the Plan will
remain a Participant for as long as an account is maintained
under the Plan for his or her benefit, or until his or her
death, if earlier.
(f) Each Employee will share in Employer contributions for the
period beginning on the date the Employee commences
participation under the Plan and ending on the date on which
such Employee terminates employment with the Employer or is no
longer a member of an eligible class of Employees.
2.2 DETERMINATION OF ELIGIBILITY The Plan Administrator shall determine the
eligibility of each Employee for participation in the Plan based upon
information provided by the Employer. Such determination shall be conclusive and
binding on all individuals except as otherwise provided herein or by operation
of law.
2.3 CHANGE IN CLASSIFICATION OF EMPLOYMENT In the event a Participant becomes
ineligible to participate because he or she is no longer a member of an eligible
class of Employees (as elected by the Employer in the Adoption Agreement),
Elective Deferrals and/or other Employee contributions will cease as soon as
27
administratively practicable after the Participant becomes ineligible. Such
Participant shall participate for the purpose(s) for which the Participant had
previously qualified immediately (or as soon as administratively feasible) upon
his or her return to an eligible class of Employees.
2.4 PARTICIPATION A Year of Service for participation in the Plan is an
eligibility computation period during which an Employee completes the Hours of
Service requirement [one-thousand (1,000) hours or less] elected by the Employer
in the Adoption Agreement. If the Plan utilizes the Elapsed Time method of
crediting Service, an eligibility computation period for which the Employee
receives credit for a Year of Service will be determined under the Service
crediting rules of paragraph 1.117.
The initial eligibility computation period shall be the twelve (12) consecutive
month period beginning on the Employee's employment commencement date (the first
day an Employee completes an Hour of Service for the Employer). The Plan will
measure succeeding eligibility computation periods based on the Plan Year,
unless otherwise elected in the Adoption Agreement. Where the subsequent
computation periods are calculated on the basis of the Plan Year, an Employee
who receives credit for the required number of Hours of Service during the
initial computation period and then earns an additional Year of Service credit
during the Plan Year commencing during the subsequent twelve (12) month period
will be credited with two (2) Years of Service for purposes of eligibility to
participate.
An Employer may specify in the Adoption Agreement a Service requirement for
eligibility for participation in the Plan after completion of a specified number
of months or Hours of Service. Any Service requirement based on months of
Service may not require an Employee to complete more than one (1) Year of
Service [one-thousand (1,000) Hours of Service] in a twelve (12) consecutive
month period, or if applicable, two (2) Years of Service.
2.5 EMPLOYMENT RIGHTS Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it interfere with the Employer's
right to terminate the employment of any Employee at any time.
2.6 SERVICE WITH CONTROLLED GROUPS All Years of Service with other members of a
controlled group of corporations [as defined in Code Section 414(b)], trades or
businesses under common control [as defined in Code Section 414(c)], or members
of an affiliated service group [as defined in Code Section 414(m)] and any other
entity required to be aggregated with the Employer pursuant to Code Section
414(o) shall be credited for purposes of determining an Employee's eligibility
to participate.
2.7 LEASED EMPLOYEES A Leased Employee shall be treated as an Employee of the
recipient Employer. Notwithstanding the foregoing, a Leased Employee shall not
be considered an Employee of the recipient Employer for purposes of
participation in any Plan established under a Nonstandardized Adoption
Agreement, unless otherwise elected in the Adoption Agreement. Contributions or
benefits provided by the leasing organization which are attributable to services
performed for the recipient Employer shall be treated as provided by the
recipient Employer.
A Leased Employee shall not be considered an Employee of the recipient if such
Employee is covered by a money purchase pension plan sponsored by the leasing
organization providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation [as defined in Code Section 415(c)(3)], but
including amounts contributed pursuant to a salary reduction
agreement which are excludable from the Employee's gross
income under Code Sections 125, 132(f)(4), 402(e)(3),
402(h)(1)(B) or 403(b),
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more than
20% of the recipient's Non-Highly Compensated work force. The Plan Administrator
must apply this paragraph 2.7 consistent with Code Sections 414(n) and 414(o)
and the Regulations issued thereunder. The Employer must specify in an addendum
to the Adoption Agreement the manner in which the Plan will determine the
allocation of Employer contributions
28
and Participant forfeitures on behalf of a Participant if the Participant is a
Leased Employee covered by a plan maintained by the leasing organization.
2.8 THRIFT PLAN The Employer may make an election in the Adoption Agreement to
require Employee after-tax contributions (Required After-tax Contributions) as a
condition of participation in the Plan. The Employer shall notify each eligible
Employee of his or her eligibility for participation prior to the appropriate
Entry Date. The Employee shall indicate his or her intention to join the Plan by
authorizing the Employer to withhold a percentage of his or her Compensation as
provided in the Plan. Such authorization shall be returned to the Employer
within the time prescribed. The Employee may decline participation by so
indicating in accordance with the procedures prescribed by the Employer. If the
Employee declines to participate, such Employee shall be given the opportunity
to join the Plan on any subsequent Entry Date.
2.9 TARGET BENEFIT PLAN A Target Benefit Plan may be established by executing a
Target Benefit Plan Adoption Agreement. The Employer shall notify each eligible
Employee of his or her eligibility for participation prior to the appropriate
Entry Date. The Employer will make contributions for each Participant in level
annual contributions which will fund the Participant's target benefit at the
Plan's Normal Retirement Age.
2.10 DAVIS-BACON PLAN A Davis-Bacon Plan may be established by executing a
Davis-Bacon Plan Adoption Agreement. The Employer shall notify each Employee
covered by any Davis Bacon or prevailing wage contract of his or her eligibility
for participation prior to the appropriate Entry Date. The Employer will make
contributions for each Participant in accordance with the formula or any public
contract subject to the Davis-Bacon Act or to any other Federal, state or
municipal prevailing wage law as specified in the Adoption Agreement or the
schedule attached thereto.
For the purposes of this paragraph, Employees covered by a Davis Bacon or
prevailing wage contract will be those who are included in a unit of Employees
covered by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the Employees who are covered pursuant
to that agreement are professionals as defined in Section 1.410(b)-9 of the
Regulations. For this purpose, the term "Employee representatives" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer.
2.11 WAIVER OF PARTICIPATION A Plan established under a standardized Adoption
Agreement may not permit an otherwise eligible Employee or Participant to elect
not to participate in the Plan. A Plan established under a Nonstandardized
Adoption Agreement may treat Employees who waive participation in the Plan as a
nondiscriminatory class of Employees who are ineligible to participate therein
by making the proper designation in the Adoption Agreement. Waivers of Plan
participation must not constitute cash or deferred arrangements [within the
meaning of Code Section 401(k)] or they shall be ineffective. A waiver shall not
be considered a cash or deferred arrangement if it is irrevocable, applies to
all Plans maintained by the Employer, and is made prior to the date on which the
Employee is first eligible to participate in the Plan of the Employer. The Plan
Administrator shall establish uniform and nondiscriminatory procedures as it
deems necessary to carry out this provision including, but not limited to, rules
prescribing the timing and filing of elections not to participate. The Plan
Administrator shall determine the propriety of any such waiver.
An Employee or Participant continues to earn credit for each Year of Service for
eligibility or vesting purposes he or she completes and his or her account (if
any) will share in the gains or losses of the Plan during the periods he or she
elects not to participate.
2.12 OMISSION OF ELIGIBLE EMPLOYEE If, in any Plan Year, an 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 or her Employer for
the Plan Year has been made, the Employer shall make a subsequent contribution
so that the omitted Employee receives a total amount which the Employee would
have received had he or she 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.
29
2.13 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 Plan Year has been made, the Employer shall not be entitled
to recover the contribution made with respect to the ineligible individual
regardless of the deductibility of the contribution in question. The
contribution and any earnings made with respect to the ineligible person shall
be forfeited in the Plan Year in which the discovery is made. If any person made
Elective Deferrals erroneously, the Elective Deferrals and the associated
earnings shall be distributed to that individual in the Plan Year in which the
discovery was made. Alternatively, the Employer may determine if an alternative
correction method may be available and use said method to make the correction.
30
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 CONTRIBUTION AMOUNT
(a) The Employer will make periodic contributions to the Plan in
accordance with the contribution formula or formulas elected
in the Adoption Agreement.
(b) The Employer shall also make Matching, Top-Heavy minimum
contributions and any other Employer contribution for the
benefit of Participants who are covered by USERRA. Employer
Matching Contributions under USERRA shall be made in the Plan
Year for which the Participant exercises his or her right to
make-up Elective Deferrals and/or other Employee contributions
for prior years. Top-Heavy minimum contributions and other
Employer contributions for USERRA protected Service shall be
made during the Plan Year in which the individual returns to
employment with the Employer.
(a) Employer contributions required under USERRA are not increased
or decreased with respect to Plan investment earnings for the
period to which such contributions relate. The Employer's
contribution for any Plan Year shall be subject to the
limitations on allocations contained in Article X.
a) CONTRIBUTION AMOUNT FOR A SIMPLE 401(k) PLAN If the Employer has executed the
SIMPLE 401(k) Adoption Agreement the provisions of the following paragraphs
shall apply for a Plan Year if the Employer is an Eligible Employer and no
contributions are made or benefits accrued for services during the Plan Year on
behalf of any Eligible Employee under any other plan, contract, pension or trust
described in Code Section 219(g)(5)(A) or (B) maintained by the Employer.
(a) SIMPLE 401(k) MATCHING CONTRIBUTION FORMULA - For each Plan
Year, the Employer shall contribute and allocate to each
Eligible Employee's account an amount equal to the Employee's
Elective Deferral contribution up to a limit of 3% of the
Employee's Compensation for the full Plan Year. If the
Employer elects in the Adoption Agreement to make the
Non-Elective Contribution as specified in paragraph 3.2(b)
below, this Matching Contribution will not be made.
(b) SIMPLE 401(k) NON-ELECTIVE CONTRIBUTION FORMULA - For any Plan
Year, the Employer may elect to contribute a Non-Elective
Contribution of 2% of Compensation for the full Plan Year for
each Eligible Employee who received at least $5,000 of
Compensation (or such lesser amount as elected by the Employer
in the SIMPLE 401(k) Plan Adoption Agreement) for the Plan
Year. The allocation thereof shall be unrelated to any
Participant Elective Deferral contributions made hereunder. If
the Employer elects in the Adoption Agreement to make the
Non-Elective Contribution for a Plan Year, the Employer shall
not make the Matching Contribution described in paragraph
3.2(a) above with respect to the same Plan Year. The Employer
shall notify Eligible Employees within a reasonable period of
time (before the sixtieth day) prior to the beginning of each
Plan Year of its election to make the 2% Non-Elective
Contribution in lieu of the Matching Contribution.
(c) The provisions of the Plan implementing the limitations of
Code Section 415 apply to contributions made pursuant to
paragraphs 3.2(a) and (b).
(d) In the event that the contribution and allocation formula
above results in an Excess Annual Addition, such excess shall
be corrected as provided for at paragraph 10.2 of the Basic
Plan Document #01. The Employer's contribution for any Plan
Year shall be subject to the overall limitations on
allocations contained in Article X.
31
(e) No other Employer or Employee contributions may be made to the
SIMPLE 401(k) Plan for the Plan Year other than Elective
Deferrals described in paragraph 4.8, Matching or Non-Elective
Contributions described in paragraphs 3.2(a) and (b), and
Rollover Contributions described in Regulations Section
1.402(c)-2, Q&A1 (a).
(f) In the event the deduction of a contribution made by the
Employer is disallowed under Code Section 404, such
contribution (to the extent disallowed) must be returned to
the Employer within one year of the disallowance of the
deduction.
(g) All benefits attributable to contributions described in
paragraphs 3.2(a) and (b) are nonforfeitable at all times, and
all previous contributions made under the Plan provisions are
nonforfeitable as of the beginning of the Plan Year the SIMPLE
401(k) provisions apply.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS The Trustee, the Sponsor or the Custodian
shall not be required to determine if the Employer has made a contribution or if
the amount contributed from its general assets is in accordance with the Code
and the provisionS elected in the Adoption Agreement. The Employer shall have
sole responsibility in this regard. The Trustee shall be accountable solely for
contributions actually received within the limits of Article X.
3.4 RETURN OF CONTRIBUTIONS Contributions made to the Plan by the Employer shall
be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee or Custodian due to
a mistake of fact, provided that the contribution is returned
to the Employer within one year of the date of the
contribution. The Trustee will not increase the amount of the
Employer contribution returnable under this paragraph 3.3 for
any earnings attributable to the contribution but the Trustee
will reduce the amount returned to the Employer for any losses
incurred attributable to the excess contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Internal Revenue Code, any contribution dependent on the
initial qualification by the Employer must be returned to the
Employer within one year after the date the initial
qualification is denied, but only if the application for the
qualification is made by the time prescribed by law for filing
the Employer's return for the taxable year in which the Plan
is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) Contributions forwarded to the Trustee or Custodian are
presumed to be deductible and are conditioned on their
deductibility. Contributions which are determined by the
Internal Revenue Service to not be deductible will be returned
to the Employer.
3.5 MERGER OF ASSETS FROM ANOTHER PLAN
(a) The Employer may in its sole discretion direct the Trustee or
Custodian to accept assets from another Defined Contribution
Plan, or to transfer assets to another Defined Contribution
Plan, provided that such transfer satisfies the requirements
of Code Section 414(l) and the Regulations thereunder. The
Employer, Plan Administrator, Trustee or Custodian shall have
the right to refuse to accept or transfer assets for any
reason, provided that nothing in this paragraph 3.5 shall give
the Trustee or Custodian the right to refuse to make a direct
transfer of an Eligible Rollover Distribution if requested to
do so by a Participant in accordance with paragraph 6.10.
(b) When the transferor plan is a money purchase pension plan and
the transferee plan (the Plan established under this
document), is not a money purchase pension plan as set forth
in Code Section 401(a)(11)(B)(iii)(III), the Qualified Joint
and Survivor Annuity option may not be eliminated at least
with respect to the benefits which are transferred.
32
When the transferor plan is a profit-sharing, stock bonus or
cash or deferred arrangement [401(k) plan] which included the
Qualified Joint and Survivor Annuity provisions but was not
required to do so, upon the transfer of those assets, the
transferee plan may be amended to entirely eliminate the
annuity option.
3.6 COVERAGE REQUIREMENTS For purposes of coverage testing, a Participant is
treated as benefiting under the Plan for any Plan Year during which the
Participant received or is deemed to receive an allocation in accordance with
Code Section 1.410(b)-3(a). If the number of Participants who are eligible to
share in any contribution for a Plan Year is such that the Plan established
under a Nonstandardized Adoption Agreement would fail to meet the requirements
of Code Section 410(b)(1) or 410(b)(2)(A)(i), then the group of Participants
eligible to share in the contribution for the Plan Year will be increased to
include such minimum number of Participants who are not employed by the Employer
on the last day of the Plan Year and who did not meet the hours requirement, as
may be necessary to satisfy the applicable tests under the Code Sections
referenced above. The Participants who will become eligible to share in the
contribution will be those Participants when compared to Participants who are
similarly situated, are those who completed the greatest number of Hours of
Service in the Plan Year before the termination of their Service. If after such
allocation, the coverage requirements of the Code are still not satisfied,
allocation shall continue to be made to Participants with decreasing Hours of
Service until the coverage requirements of the ratio percentage test of Code
Section 410(b)(1)(A) are satisfied.
If after the application of the correction procedure in the preceding paragraph
the coverage requirements are still not satisfied, the Employer may apply the
same correction procedure to an otherwise excludable class of Employees until
the coverage requirements of the ratio percentage test of Code Section
410(b)(1)(A) are satisfied.
The preceding paragraph will not be construed to permit the reduction of any
Participant's account balance, and any amounts which were allocated to
Participants whose eligibility to share in the contribution did not result from
the application of the preceding paragraph will not be reallocated to satisfy
such requirements. Instead, the Employer will make an additional contribution
equal to the amount which the affected Participants would have received had they
been included initially in the allocation of the Employer's contribution, even
if it would cause the contributions of the Employer for the applicable Plan Year
to exceed the amount which is deductible by the Employer for such Plan Year
under Code Section 404. Any adjustments pursuant to this paragraph will be
considered a retroactive amendment of the Plan which was adopted by the last day
of the Plan Year.
Specifically excluded from the Code Section 410(b) coverage tests are those
Employees who are excluded from participation in the Plan for the entire Plan
Year which includes those Employees whose retirement benefits are subject to a
collective bargaining agreement, nonresident aliens, those Employees excluded
from Plan participation by age and Service requirements imposed by the Plan and
those Employees who incur a Separation from Service during the applicable Plan
Year and for the Plan Year fail to complete more than five hundred (500) Hours
of Service or three (3) consecutive calendar months under the Elapsed Time
method.
3.7 ELIGIBILITY FOR CONTRIBUTION The Employer will determine on the Adoption
Agreement the conditions which Participants must meet in order to receive an
allocation of an Employer contribution and any forfeitures, subject to the
following:
(a) In a Plan established under a standardized Adoption Agreement,
a Participant who is employed on the last day of the Plan Year
will share in the allocation of the Employer contribution and
that Plan Year without regard to the Participant's Hours of
Service.
In a Plan established under a standardized Adoption Agreement,
a Participant who completed more than five hundred (500) Hours
of Service or three (3) consecutive calendar months under the
Elapsed Time method will share in the allocation of Employer
contributions for the Plan Year, regardless of whether
employed on the last day of the Plan Year.
33
(b) In a Plan established under a Nonstandardized Adoption
Agreement, the Employer will elect in the Adoption Agreement
whether any Employer contribution will be allocated to any
Participant who does not complete the necessary Hours of
Service or consecutive calendar months requirement elected in
the Adoption Agreement, subject to the Top Heavy minimum
contribution requirements, if applicable.
In a Plan established under a Nonstandardized Adoption
Agreement, the Employer will elect in the Adoption Agreement
whether a Participant will receive an allocation of the
Employer's contribution if not employed on the last day of the
Plan Year.
(c) The Employer may elect in the standardized or Nonstandardized
Adoption Agreement any other conditions a Participant must
meet to receive an allocation under the Plan.
3.8 TARGET BENEFIT PLAN CONTRIBUTION The Employer's annual contribution to a
Target Benefit Plan shall be determined by a Stated Benefit Formula and
corresponding factor tables contained in the Adoption Agreement and shall be
allocated to Participants as provided in paragraph 5.3. This notwithstanding,
the Employer's contribution for any Plan Year shall be subject to the
limitations on allocations contained in Article X and shall not be less than the
minimum contribution required at Article XIV for Top-Heavy Plans. The annual
Employer contribution necessary to fund the stated benefit with respect to a
Participant will be determined each year as follows:
(a) STEP 1: PRESENT VALUE OF BENEFIT - If the Participant has not
yet reached Normal Retirement Age, calculate the present value
of the stated benefit by multiplying the stated benefit by the
factor that is the product of (i) the applicable factor in
Table I [if attained age is less than sixty-five (65)] or
Table IA [if attained age is greater than or equal to
sixty-five (65)], multiplied by (ii) the applicable factor in
Table III. If the Participant is at or beyond Normal
Retirement Age, calculate the present value of the stated
benefit by multiplying the stated benefit by the factor in
Table IV corresponding to that Normal Retirement Age.
(b) STEP 2: THEORETICAL RESERVE - The Theoretical Reserve is
determined according to (1) and (2) below:
(1) Initial Theoretical Reserve. A Participant's
Theoretical Reserve as of the last day of the
Participant's first year of Projected Participation
(year 1) is zero. However, if this Plan is a Prior
Safe Harbor Plan with a Stated Benefit Formula that
takes into account Plan Years prior to the first Plan
Year and this Plan satisfies the safe harbor in
Regulations Section 1.401(a)(4)-8(b)(3)(C), the
Initial Theoretical Reserve is determined as follows:
(i) Calculate as of the last day of the Plan
Year immediately preceding year 1, the
present value of the stated benefit using
the actuarial assumptions, the provisions of
the Plan, and the Participant's Compensation
as of such date. For a Participant who is
beyond Normal Retirement Age during year 1,
the stated benefit will be determined using
the actuarial assumptions, the provisions of
the Plan, and the Participant's Compensation
as of such date, except that the straight
life annuity factor used in that
determination will be the factor applicable
for the Participant's Normal Retirement Age.
(ii) Calculate as of the last day of the Plan
Year immediately preceding year 1 the
present value of future Employer
contributions, i.e., the contributions due
each Plan Year using the actuarial
assumptions, the provisions of the Plan,
(disregarding those provisions of the Plan
providing for the limitations of Code
Section 415 or the minimum contributions
under Code Section 416), and the
Participant's Compensation as of such date,
beginning with year 1 through the end of the
Plan Year in which the Participant attains
Normal Retirement Age.
(iii) Subtract the amount determined in (ii) from
the amount determined in (i).
34
(2) Accumulate the Initial Theoretical Reserve determined
in (1) and the Employer contribution (as limited by
Code Section 415, without regard to any required
minimum contributions under Code Section 416) for
each Plan Year beginning in year 1 up through the
last day of the current Plan Year (excluding
contributions, if any, for the current Plan Year)
using the Plan's interest assumption in effect for
each such year. In any Plan Year following the Plan
Year in which the Participant attains Normal
Retirement Age, the accumulation is calculated
assuming an interest rate of 0%.
For purposes of determining the level of annual Employer
contribution necessary to fund the stated benefit, the
calculations in (1) and (2) above will be made as of the last
day of each Plan Year, on the basis of the Participant's age
on the Participant's last birthday, using the interest rate in
effect on the last day of the prior year.
(c) STEP 3: UNFUNDED AMOUNT - The excess, if any, of the amount
determined in Step 1 over the amount determined in Step 2.
(d) STEP 4: CONTRIBUTION - Amortize the result in Step 3 by
multiplying it by the applicable factor from Table II. For the
Plan Year in which the Participant attains Normal Retirement
Age and for any subsequent Plan Year, the applicable factor is
1.0.
3.9 DAVIS-BACON PLAN CONTRIBUTION The Employer will irrevocably contribute the
amount determined in accordance with the contribution formula or formulas
elected on the Davis-Bacon Adoption Agreement. An Employer may take credit for
purposes of the Davis-Bacon Act or other prevailing wage law at the hourly rate
specified in an addendum attached to the Davis-Bacon Adoption Agreement.
Contributions made by the Employer to a Davis-Bacon plan for the Davis-Bacon
work performed by the Employer's covered Employees during the Plan Year may be
used as an offset for any Employer contributions to be made to another Defined
Contribution Plan sponsored by the Employer. The Employer may make Qualified
Non-Elective Contributions to the Plan, designated as "Davis-Bacon or Prevailing
Wage Contributions", in order to satisfy the Employer's obligations under the
Davis-Bacon Act, or any other Federal, state or municipal Davis-Bacon or
prevailing wage law. Contributions made on behalf of Participants who do not
perform prevailing wage work cannot be used as a credit towards meeting the
Employer's obligation under the prevailing wage plan.
3.10 UNIFORM DOLLAR CONTRIBUTION The Employer's contribution to a plan utilizing
a uniform dollar allocation formula for a Plan Year shall be the same dollar
amount to each Participant regardless of Compensation, Years of Service, age or
any other variable set forth in the Adoption Agreement.
3.11 UNIFORM POINTS CONTRIBUTION The Employer's contribution to a Plan utilizing
a uniform points allocation formula for a Plan Year shall be in the same ratio
that each Participant's points, as elected in the Adoption Agreement, bears to
the total points awarded to all Participants for the Plan Year.
3.12 403(b) MATCHING CONTRIBUTION If a tax-exempt Employer elects in the 401(k)
Adoption Agreement to make a Matching Contribution based on the Employee's
Elective Deferral contributions under the Code Section 403(b) Plan, the Employer
shall make a Matching Contribution to the Matching Contribution Account of those
Participants who make Elective Deferrals (while an Employee and a Participant in
the Plan) and who are eligible under the Adoption Agreement to receive the
Matching Contribution. Any such Matching Contribution made to the Plan will be
allocated under the formula elected in the Adoption Agreement. In the event the
rate of Matching Contribution is determined to be discriminatory in favor of one
or more Highly Compensated Employees, that part of the Matching Contribution as
is necessary to make such rate nondiscriminatory shall be forfeited. Any such
amounted forfeited shall be disregarded under the Plan's provisions relating to
Code Sections 401(k)(3) and 401(m)(2).
35
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
A) VOLUNTARY AFTER-TAX CONTRIBUTIONS If elected by an Employer in the Adoption
Agreement, a Participant may make Voluntary After-tax Contributions to the Plan.
These contributions are not excludable from the Participant's gross income. Such
contributions must be made in a uniform and nondiscriminatory manner. Such
contributions are subject to the limitations on Annual Additions and are subject
to antidiscrimination testing. Any Voluntary After-tax Contribution will not be
a condition precedent to the contribution or allocation of any Employer
contribution to the Participant. Under any Plan which can be established
hereunder and if permitted in the Plan's loan policy document, a Participant may
repay a defaulted loan with after-tax dollars. The Employer may permit buy-back
of amounts previously forfeited with after-tax dollars even if Voluntary
After-tax Contributions are not permitted in the Plan. Any buy-back of amounts
previously forfeited must be subject to uniform and nondiscriminatory rules
which do not operate in favor of Highly Compensated Employees. Repayment of
loans made to a Participant and buy-backs of cash-outs as described in Code
Section 411(a)(7)(B) will not be considered Annual Additions as described in
Regulations Section 1.415-6(b)(6). These amounts are not subject to the
limitation contained in Code Section 401(m) in the year in which made, as they
are not considered Annual Additions pursuant to Code Section 415.
4.2 REQUIRED AFTER-TAX CONTRIBUTIONS If elected by the Employer in the Adoption
Agreement, each Eligible Participant shall be required to make Required
After-tax Contributions to the Plan as a condition of participation in the Plan.
Such contributions shall be withheld from the Employee's Compensation and shall
be transmitted by the Employer to the Trustee/Custodian. A Participant may
discontinue participation or change his or her contribution percentage in
accordance with either an election on the Adoption Agreement or uniform and
nondiscriminatory rules established by the Employer. If a Participant
discontinues his or her contributions, such Participant may not again authorize
such contributions until a change is permitted in accordance with uniform and
nondiscriminatory rules established by the Employer. The Employer may reduce a
Participant's contribution percentage if required to satisfy the ACP Test
described in Article XI.
4.3 QUALIFIED VOLUNTARY CONTRIBUTIONS A Participant may no longer make Qualified
Voluntary Contributions to the Plan. Amounts already contributed may remain in
the Plan until distributed to the Participant. Such amounts will be maintained
in a separate account which will be nonforfeitable at all times. The account
will share in the gains and losses of the Trust in the same manner as described
at paragraph 5.5 of the Plan. No part of the Qualified Voluntary Contribution
Plan account will be used to purchase life insurance. Subject to Article VIII,
Joint and Survivor Annuity Requirements (if applicable), the Participant may
withdraw any part of the Qualified Voluntary Contribution account by making
written application to the Plan Administrator.
4.4 ROLLOVER CONTRIBUTIONS Unless elected otherwise in the Adoption Agreement, a
Participant/Employee may make a Rollover Contribution to a Defined Contribution
Plan established hereunder of all or any part of an amount distributed or
distributable to him or her from a Qualified Plan or an individual retirement
account (IRA) qualified under Code Section 408 where the IRA was used as a
conduit from a Qualified Plan provided:
(a) the amount distributed to the Participant/Employee is
deposited to the Plan no later than the sixtieth day after
such distribution was received by the Participant/Employee,
(b) the amount distributed is not one of a series of substantially
equal periodic payments made for the life (or life expectancy)
of the Participant/Employee or the joint lives (or joint life
expectancies) of the Participant/Employee and the
Participant's/Employee's Beneficiary, or for a specified
period of ten (10) years or more,
(c) the amount distributed is not a required minimum distribution
under Code Section 401(a)(9),
36
(d) if the amount distributed included property, such property is
rolled over only upon the Trustee, Custodian and/or Employer's
approval, or if sold, the proceeds of such property may be
rolled over,
(e) the amount distributed would otherwise be includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities),
and
(f) the amount rolled over does not include any amounts
contributed on an after-tax basis by the Participant to the
Qualified Plan.
The Plan Administrator shall be held solely responsible for determining the tax
free status of any Rollover Contribution made to this Plan, and the
Trustee/Custodian shall have no responsibility for any such determination.
4.5 PLAN TO PLAN TRANSFER CONTRIBUTIONS
(a) If elected by the Employer in the Adoption Agreement, a
Participant or an Employee may arrange for the direct transfer
of his or her entire benefit from another Qualified Plan to
the Plan established hereunder. Such transfer shall be made
for any reason and may be in cash and/or in-kind. The Employer
and/or the Trustee/Custodian in their sole discretion shall
have the right to refuse to accept a transfer for any reason
including but not limited to if such assets do not comply
operationally, would result in a prohibited transaction, are
not readily marketable or are not compatible with the
Employer's investment policy objectives. If necessary, for
accounting and recordkeeping purposes, Transfer Contributions
shall be treated in the same manner as Rollover Contributions.
(b) The Employer may arrange for the direct transfer of a
Participant's/Employee's benefit from a Qualified Plan to this
Plan. If necessary, for accounting and recordkeeping purposes,
Transfer Contributions shall be treated in the same manner as
Rollover Contributions.
(c) In the event the Employer accepts a Transfer Contribution from
a Plan in which the Participant/Employee was directing the
investment of his or her account, the Employer may, if the
Employer determines that it is appropriate and not in
violation of the nondiscrimination rules under Regulation
Section 1.401(a)(4)-4, permit the Employee to continue to
direct his or her investments in accordance with paragraph
12.7 with respect only to such Transfer Contribution.
(d) Notwithstanding any provision of this Plan to the contrary, to
the extent that any optional form of benefit under the Plan
established hereunder permits a distribution prior to the
Employee's Normal Retirement Age, death, Disability, or
severance from employment, and prior to Plan termination, the
optional form of benefit is not available with respect to
benefits attributable to assets (including the post-transfer
earnings thereon) and liabilities that are transferred, within
the meaning of Code Section 414(1), to this Plan from a money
purchase pension plan qualified under Code Section 401(a)
(other than any portion of those assets and liabilities
attributable to Voluntary After-tax Contributions).
4.6 VOLUNTARY DIRECT TRANSFERS BETWEEN PLANS A Participant or Employee shall be
able to transfer his or her entire benefit between qualified Defined
Contribution Plans [other than a direct transfer described in Code Section
401(a)(31)] without regard to whether the Participant's benefit is immediately
distributable or results in the elimination or reduction of Code Section
411(d)(6) protected benefits. Such a transfer does not violate Code Section
411(d)(6) if the following requirements are met:
(a) The plan from which the benefits are transferred must provide
that the transfer is conditioned upon a voluntary, fully
informed election by the Participant to transfer his or her
entire benefit to another qualified Defined Contribution Plan.
As an alternative to the transfer, the Participant must be
offered the opportunity to retain the Participant's Code
Section 411(d)(6) protected benefits under the Plan [or if the
Plan is terminating, to receive any optional form of benefit
for which the Participant is eligible under the Plan as
required by Code Section 411(d)(6)].
37
(b) The transferring plan must be the same plan type as the Plan
sponsored by the Employer. When benefits are being transferred
from a qualified cash or deferred arrangement under Code
Section 401(k), the benefits must be transferred to a
qualified cash or deferred arrangement under Code Section
401(k). Money purchase pension plans must be transferred to
money purchase pension plans. Benefits transferred from a
profit-sharing plan other than a 401(k) plan or employee stock
ownership plan may be transferred to any type of Defined
Contribution Plan, even if the event is not one that allows a
distribution.
(c) The transfer must be made in connection with certain corporate
transactions such as an asset or stock acquisition, merger or
other similar transaction involving a change in Employer of
the Employees of a trade or business [i.e., an acquisition or
disposition within the meaning of Regulation Section
1.410(b)-2(f)] or in connection with the Participant's
transfer of employment to a different job for which Service
does not result in additional allocations under the transferor
plan.
(d) This type of elective transfer is only available for transfers
made on or after September 6, 2000, even if the transaction or
change of employment occurred prior to that date.
(e) If the conditions outlined in (a), (b), (c) and (d) above are
met, the Employer's Plan is not required to protect optional
forms of benefits available under the prior plan with respect
to any benefit transferred [except as required by the
Qualified Joint and Survivor Annuity requirements under Code
Sections 401(a)(11) and 417]. Such a transfer is not a
protected optional form of benefit, but rather is a "right or
feature" under Regulation Section 1.401(a)(4)-4(e).
4.7 ELECTIVE DEFERRALS IN A 401(K) PLAN
(a) A Participant may enter into a Salary Deferral Agreement with
the Employer authorizing the Employer to withhold a portion of
such Participant's Compensation not to exceed the dollar limit
under Code Section 402(g), as adjusted under Code Section
415(d), for the Applicable Calendar Year, or the percentage or
dollar amount of Compensation specified in the Adoption
Agreement.
(b) Any Salary Deferral Agreement may not be effective earlier
than the latest date of the following:
(1) The date of the Participant's entry (or reentry) into
the Plan;
(2) the execution of the Participant's Salary Deferral
Agreement;
(3) the date the Employer adopts the 401(k) Plan by
executing the Adoption Agreement;
(4) the Effective Date of the Elective Deferral
provisions as specified in the Adoption Agreement.
(c) Any such contribution shall be credited to the Employee's
Elective Deferral account. A Participant may terminate
deferrals at any time. A Participant may amend his or her
Salary Deferral Agreement to increase or decrease his or her
deferral percentage upon notice in accordance with the
provisions in the Adoption Agreement or such other uniform and
nondiscriminatory procedures. The Employer shall determine the
permitted frequency of such changes which shall be no less
frequently than once each calendar year. Any such election
will be effective as soon as practicable following the receipt
of the notification by the Employer in accordance with uniform
and nondiscriminatory procedures established and communicated
to the Participants. The Participant shall notify the Employer
of any change in his or her deferral election in writing or in
such other form or manner as permitted. The Employer may,
notwithstanding any limit to the contrary in the Adoption
Agreement, limit the maximum
38
deferral percentage for Highly Compensated Employees. If a
Participant terminates his or her agreement, such Participant
shall be permitted to put a new Salary Deferral Agreement into
effect as provided in the Adoption Agreement or any other
uniform and nondiscriminatory procedures established. The
Employer may also amend or terminate said agreement on notice
to the affected Participant, if required to maintain the
qualified status of the Plan.
(d) If permitted by the Employer, when a Participant who has not
authorized the Employer to withhold the maximum annual
deferral amount pursuant to Code Section 402(g) and desires to
increase the total amount withheld for a Plan Year, the
Participant may authorize the Employer to withhold a
supplemental amount up to 100% of his or her Compensation for
one or more pay periods. In no event may the amounts withheld
under the Salary Deferral Agreement plus any additional amount
deferred exceed the lesser of 25% of a Participant's
Compensation or any other limitation elected in the Adoption
Agreement by the Employer.
(e) If the Plan permits Voluntary After-tax Contributions and the
Employer has elected in the Adoption Agreement, all or any
portion of amounts previously withheld under any Salary
Deferral Agreement may be recharacterized as Voluntary
After-tax Contributions within the Plan Year.
(f) Elective Deferrals shall be deposited in the Plan's Trust as
soon as administratively feasible after being withheld from
the Participant's Compensation at the earliest date on which
the contributions can reasonably be segregated from the
Employer's general assets, but no later than the time
prescribed by the Code, ERISA or by applicable Treasury or
Department of Labor Regulations.
4.8 ELECTIVE DEFERRALS IN A SIMPLE 401(K) PLAN
(a) An Eligible Employee may enter into a Salary Deferral
Agreement with the Employer authorizing the Employer to
withhold a portion of such Eligible Employee's Compensation,
not to exceed $6,000 per calendar year, as adjusted to reflect
any annual cost-of-living increases announced by the Internal
Revenue Service. No Eligible Employee shall be permitted to
make Elective Deferrals under this Plan, or any other
Qualified Plan maintained by the Employer, during any taxable
year in excess of the dollar limitation contained in Code
Section 402(g) in effect in at the beginning of such taxable
year. The $6,000 limit may be reduced if an Eligible Employee
contributes pre-tax contributions to Qualified Plans of other
employers.
(b) In addition to any other election periods provided, each
Participant may make or modify his Salary Deferral Agreement
during the sixty (60) day election period immediately
preceding each January 1.
(c) For the Plan Year in which an Eligible Employee becomes
eligible to make Elective Deferrals under the SIMPLE 401(k)
Plan provisions, the sixty (60) day election period
requirement of paragraph 4.8(b) above is deemed satisfied if
the Eligible Employee may make or modify a Salary Deferral
Agreement election during a sixty (60) day period that
includes either the date the Employee becomes eligible, or the
day before.
(d) An Eligible Employee may amend his or her Salary Deferral
Agreement to increase or decrease the percentage upon proper
and timely notice to the Employer. The Employer shall
determine the permitted frequency of such changes. An Eligible
Employee may terminate his or her Salary Deferral Agreement at
any time during the Plan Year upon notice to the Employer. If
an Eligible Employee terminates his or her Salary Deferral
Agreement, such Eligible Employee will be permitted to execute
a new Salary Deferral Agreement in accordance with the
provisions elected in the Adoption Agreement or any other
uniform and nondiscriminatory procedure. The Employer may also
amend or terminate any Salary Deferral Agreement on notice to
the affected Eligible Employee, if required to maintain the
qualified status of the Plan.
39
(e) If permitted by the Employer, a Participant who has not
authorized the Employer to withhold at the maximum annual
deferral amount and desires to increase the total amount
withheld for a Plan Year, such Participant may authorize the
Employer to withhold an amount up to 100% of his or her
Compensation for one or more pay periods.
(f) Elective Deferrals shall be deposited in the Plan's Trust as
soon as administratively feasible after being withheld from
the Participant's Compensation at the earliest date on which
the contributions can reasonable be segregated from the
Employer's general assets but no later than the time
prescribed by the Code, ERISA or by applicable Treasury or
Department of Labor Regulations.
(g) The Employer will notify each Eligible Employee prior to the
sixty (60) day election period described in paragraph 4.8(b)
that he or she can make an Elective Deferral or modify a prior
election during that period.
(h) The notification described in this subparagraph 4.8(h) will
indicate whether the Employer will provide a Matching
Contribution described in paragraph 3.2(a) or a 2%
Non-Elective Contribution described in paragraph 3.2(b).
(i) The Plan is not treated as a Top-Heavy Plan under Code Section
416 for any Plan Year for which the SIMPLE 401(k) Plan
provisions apply.
4.9 AUTOMATIC ENROLLMENT
(a) If the Employer so elects in the Adoption Agreement, each
Employee eligible under the Employer's Code Section 401(k)
cash or deferred arrangement shall automatically become a
Participant in the Plan as of the first Entry Date after
satisfying the Plan's eligibility requirements. The Employer
may elect on the Adoption Agreement to apply the automatic
enrollment provisions to current Employees and Participants or
only to Employees hired on or after the Effective Date of the
adoption of or the amendment to the Plan providing for the
automatic enrollment provisions. If the Employer elects the
provision to apply to current Employees, the Employer will
apply the automatic enrollment provision to Employees and
Participants who are deferring at less than the amount elected
on the Adoption Agreement on or after the Effective Date of
the adoption of or the amendment to the Plan, except for those
Employees and Participants who make an affirmative election to
receive the Compensation in cash.
(b) After satisfying the Plan's eligibility requirements, each
Employee will have his or her Compensation automatically
reduced by the percentage elected in the Adoption Agreement.
These amounts will be contributed to the Plan. An election by
the Employee not to make Elective Deferrals or to contribute a
different percentage may be made at any time. The election is
effective for the first pay period and subsequent pay periods
(until superseded by a subsequent election) if filed when the
Employee is hired, or within a reasonable period thereafter
ending before the Compensation for the first pay period is
currently made available. In the event an Employee has
Elective Deferrals withheld pursuant to this provision and no
investment directive has been received, any cash received
shall be invested as provided for in paragraph 13.8 herein. If
an Employee elects to receive cash in lieu of Elective
Deferrals and the election is made when the Employee is hired
or within a reasonable period thereafter ending before the
Compensation is currently available, then no Elective
Deferrals for the first pay period or subsequent pay periods
are made on the Employee's behalf to the Plan until the
Employee makes a subsequent affirmative election to reduce his
or her Compensation. Elections filed at a later date are
effective for payroll periods beginning in the month next
following the date the election is filed.
(c) For those current Participants who are deferring at a
percentage or dollar amount less than the amount elected on
the Adoption Agreement, the Employer will in the first payroll
period after the effective date of the amendment reduce the
Participant's Compensation by the difference between the
Participant's current deferral election and the election as
stated on the Adoption Agreement.
40
(d) At the time an Employee is hired, the Plan Administrator shall
provide the Employee a notice that explains the automatic
enrollment provision. This notice will also explain the
Employee's right to elect to have no such Elective Deferrals
made to the Plan or to alter the amount of those
contributions. This notice will include the procedure for
exercising the right and the timing for implementation of any
such election. The Plan Administrator shall provide each
Participant in the Plan with an annual notice of his or her
Elective Deferral percentage and each Participant's right to
change the percentage, including the procedure for exercising
that right and the timing for implementation of any such
election. Prior to an Employee's automatic enrollment becoming
effective, the Plan Administrator will provide such Employee
with appropriate guidance as to the procedures then in effect,
for the Employee to make alternative elections referenced
above. Each Employee deferring Compensation pursuant to this
paragraph shall be deemed to have consented to an Elective
Deferral contribution in the amount specified by the Employer
in the Adoption Agreement, unless he/she has filed an election
to the contrary with the Plan Administrator pursuant to the
Plan's administrative procedures.
4.10 MAKE-UP CONTRIBUTIONS UNDER USERRA A Participant who has the right to
make-up Elective Deferrals, Voluntary After-tax Contributions and/or Required
After-tax Contributions under USERRA shall be permitted to increase his or her
Elective Deferral with respect to a make-up year without regard to any provision
limiting contributions for such Plan Year. Make-up contributions shall be
limited to the maximum amount permitted under the Plan and the statutory
limitations applicable with respect to the make-up year. Employee-related
make-up contributions must be made within the time period beginning on the date
of reemployment and continuing for the lesser of five (5) years or three (3)
times the period of military service.
41
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS The Plan Administrator or its agent shall establish a
separate recordkeeping account for each Participant showing the fair market
value of his or her Plan benefits. Each Participant's account may be separated
for recordkeeping purposes into the following sub-accounts:
(a) Employer contributions:
(1) Non Safe-Harbor Matching Contribution Formula 1
Contributions
(2) Non Safe-Harbor Matching Contribution Formula 2
Contributions
(3) Qualified Matching Contributions
(4) Qualified Non-Elective Contributions
(5) Discretionary Contributions
(6) Safe Harbor Matching Contributions
(7) Safe Harbor Non-Elective Contributions
(8) Davis-Bacon Contributions
(9) Target Benefit Contributions
(10) SIMPLE 401(k) Matching Contributions
(11) SIMPLE 401(k) Non-Elective Contributions
(12) Money Purchase Pension Plan Contributions
(b) Employee contributions:
(1) Voluntary After-tax Contributions
(2) Qualified Voluntary Contributions
(3) Elective Deferrals
(4) Required After-tax Contributions
(5) Rollover Contributions
(6) Transfer Contributions
(7) Elective Deferrals in a SIMPLE 401(k) Plan
a) VALUATION DATE The Trustee shall value the Trust at the fair market value as
of each Valuation Date and those Valuation Dates elected in the Adoption
Agreement or as directed in writing by the Plan Administrator.
(a) Plan Administrators utilizing a daily valuation system for
Participant recordkeeping purposes shall process any
contributions, distributions, investment income or loss, any
appreciation or depreciation, investment transactions
(including a purchase or sale of an investment alternative)
and any other transactions which affect a Participant on each
business day that securities are traded on the New York Stock
Exchange or any other national securities market. Individual
Participant recordkeeping accounts are updated in accordance
with paragraph 5.3 hereof as of
42
each Valuation Date specified in the Adoption Agreement or
such other date as elected by the Plan Administrator.
(b) Plan Administrators utilizing a balance forward valuation
system for Participant recordkeeping purposes will process
contributions, distributions, investment income or loss,
investment transactions (including a purchase or sale of an
investment alternative) and any other transactions at the Plan
level on the Valuation Date and those other Valuation Dates as
specified in the Adoption Agreement or any other date(s) as
the determined by the Plan Administrator. Individual
Participant recordkeeping accounts will be updated within the
allocation period on the date or dates determined by the Plan
Administrator with respect to contributions and distributions.
Investment earnings will be allocated at the end of the
valuation period. Any other transactions which affect
Participant accounts will be posted or allocated to individual
Participant accounts on the next following Valuation Date
unless the Plan Administrator elects, in a uniform and
nondiscriminatory manner, to allocate such transactions as
they occur. The Employer may utilize a daily valuation system
for a portion of the Plan and a balance forward valuation
system for the balance of the Plan.
All allocations for a particular Plan Year will be made as of the last Valuation
Date(s) of that Plan Year or such other dates determined by the Plan
Administrator.
5.3 ALLOCATIONS TO PARTICIPANT ACCOUNTS As of each Valuation Date elected by the
Employer in the Adoption Agreement and/or on any date within the allocation
period selected in writing by the Plan Administrator, each Participant's account
shall be adjusted to reflect:
(a) the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,
(b) any Employee contributions,
(c) any repayment of amounts previously distributed to a
Participant upon a separation from Service and repaid by the
Participant since the last Allocation Date,
(d) the Participant's proportionate share of any investment
earnings and increase in the fair market value of the Trust
since the last Allocation Date, and
(e) loan repayments of principal and interest.
The Employer shall deduct from each account:
(f) any withdrawals or payments made from the Participant's
account since the last Allocation Date,
(g) the Participant's proportionate share of any decrease in the
fair market value of the Trust since the last allocation Date,
and
(h) the Participant's proportionate share of any fees and expenses
paid from the Plan.
5.4 ALLOCATING EMPLOYER CONTRIBUTIONS
(a) The Employer must specify in the Adoption Agreement the manner
in which the Employer's contribution shall be allocated to
Participants including any minimum contribution for Top-Heavy
Plans. Employer contributions shall be allocated to all
Participants eligible to receive a contribution as provided in
the Adoption Agreement.
(b) Notwithstanding any provision of this Plan to the contrary,
Participants will accrue the right to share in allocations of
Employer contributions with respect to periods of qualified
military service as provided in Code Section 414(u).
(c) At the end of each Plan Year the Plan Administrator shall
redetermine any Matching Contribution for each Participant
based on his or her eligible annual Compensation in accordance
43
with the Matching Contribution formula elected by the Employer
in the Adoption Agreement. Any Participant for whom any
Matching Contribution has not been sufficiently made in
accordance with the Matching Contribution formula elected by
the Employer shall receive an additional Matching Contribution
so that the total annual deferrals (whether pre-tax or
after-tax) reflected as a percentage of eligible annual
Compensation are matched in accordance with the Matching
Contribution formula ("true-up" of Matching Contributions)
selected by the Employer in the Adoption Agreement. If no
election is made on the Adoption Agreement, no true-up of
Matching Contributions will occur.
5.5 ALLOCATING INVESTMENT EARNINGS AND LOSSES Account balances are adjusted to
reflect actual income and investment gains and losses from the period beginning
on the day following the last Valuation Date and ending on the current Valuation
Date. Each Participant's account shall receive a proportionate share of the
actual income and investment gains and losses during the period. The value of
accounts for allocation purposes shall be based on the value of all Participant
accounts (without regard to any portion of any such account attributable to
segregated investments) as of the last Valuation Date less withdrawals,
distributions and expenses plus any contributions including deferrals (whether
pre-tax or after-tax) if any, paid from the Trust since the last Valuation Date.
Investment gains and losses shall be credited to all Participant accounts having
a balance on the Valuation Date regardless of the vested status of such account
and regardless of the Participant's employment status. The Plan Administrator
shall also have the right to adopt an alternative procedure for allocating
income and investment gains and losses provided that such alternative procedure
is uniform and does not discriminate in favor of Highly Compensated Employees.
Any change in procedure shall be effective as of the next following Valuation
Date or such other date as agreed to by the Employer and the Plan Administrator.
Accounts with segregated investments shall receive the income or loss on such
segregated investments. Investment gains or losses are determined separately for
each investment alternative offered under the Plan.
(a) The value of a Participant's account invested in a mutual fund
(Registered Investment Company) will equal the value of a
share in such fund multiplied by the number of shares credited
to the Participant's account.
(b) In the case of any pooled investment vehicle, earnings, gains
or losses on the pooled investment vehicle will be allocated
among the Participant's accounts in proportion to the value of
each Participant's account invested in that investment vehicle
immediately prior to the Valuation Date. The gain or loss
attributed to each investment vehicle will be credited to or
charged against the Participants' account. Alternatively, the
Plan Administrator or his designate may establish unit values
for each pooled investment vehicle offered under the Plan in
accordance with uniform procedures established by the Plan
Administrator for this purpose. The value of the portion of a
Participant's account invested in a pooled investment vehicle
will equal the value of a unit in such investment vehicle
multiplied by the number of units credited to the account.
(c) In the case of any investment that is held specifically for a
Participant's account, any gain or loss on such investment
will be charged or credited to that Participant's account.
5.6 ALLOCATION ADJUSTMENTS The Plan Administrator or his designate, if
applicable, shall have the right to redetermine the value of Participant
accounts if a previous allocation or valuation was performed incorrectly. Such
redetermination shall be made without regard to the reason for the incorrect
allocation. Such reasons may include, but are not limited to, incorrect
contribution or Employee information provided by the Employer or representative
of the Employer, incorrect valuation of Plan assets, incorrect determination of
investment income and gains or losses, improper interpretation of the Plan's
allocation formulas or procedures, erroneous omission of Top-Heavy minimum
contributions and failure to transmit, receive or interpret amendments to the
allocation formulas, methods or procedures. Subject to express limits that may
be imposed under the Code, the Plan Administrator reserves the right to delay
the processing of any contribution, distribution or other transaction for any
legitimate business reason (including, but not limited to, failure of systems or
computer programs, failure of means of transmission of data, force majeure, the
failure of any Service Provider to timely receive values or prices, or to
correct for its errors omissions or the errors or omissions of any Service
Provider). After having made any necessary adjustments, the Plan Administrator
or his designate, if applicable, may issue either revised or adjusted statements
to Participants with an explanation of the allocation adjustments.
44
5.7 PARTICIPANT STATEMENTS The Plan Administrator shall prepare a statement for
each Participant not less frequently than annually. Statements may be prepared
more frequently as agreed between the Plan Administrator and the Service
Provider or other entity responsible for the maintenance of Plan records or for
valuing Plan assets. Each statement shall show the additions to and subtractions
from the Participant's account for the period since the last such statement and
shall show the fair market value of the Participant's account as of the current
statement date.
5.8 CHANGES IN METHOD AND TIMING OF VALUING PARTICIPANTS' ACCOUNTS If necessary
or appropriate, the Plan Administrator may establish different or additional
uniform and nondiscriminatory procedures for determining the fair market value
of Participant's accounts under the Plan.
45
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS A Participant shall be entitled to receive the
balance held in his or her account upon attaining his or her Normal Retirement
Age or at such earlier dates as the provisions of this Article VI may permit. If
a Participant elects to continue working past his or her Normal Retirement Age,
he or she will continue as an active Participant. Unless the Employer elects
otherwise in the Adoption Agreement, distribution shall be made to such
Participant at his or her request prior to his or her actual retirement.
Distribution shall be made in the normal form, or if elected, in one of the
optional forms of payment provided below.
6.2 EARLY RETIREMENT BENEFITS An Early Retirement benefit may be available if
elected in the Adoption Agreement to individuals who meet the age and Service
requirements specified in the Adoption Agreement. A Participant who attains his
or her Early Retirement Date will become fully vested, regardless of any vesting
schedule which otherwise might apply. If a Participant separates from Service
with a nonforfeitable benefit before satisfying the age requirements, but after
having satisfied the Service requirement, the Participant will be entitled to
elect an Early Retirement benefit upon satisfaction of the age requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal
Retirement Age, such Participant shall be entitled to receive
the vested balance held in his or her account payable at
Normal Retirement Age in the normal form, or if elected, in
one of the other forms of payment provided hereunder. If
applicable, the Early Retirement benefit provisions may be
elected. Notwithstanding the preceding, a former Participant
may, if allowed in the Adoption Agreement, make application to
the Employer requesting early payment of any deferred vested
and nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of the
Participant's Vested Account Balance is not greater than
$5,000, the Participant may receive a lump sum distribution of
the value of the entire vested portion of such account balance
and the nonvested portion will be treated as a forfeiture. The
Plan Administrator shall follow a consistent and
nondiscriminatory policy, as may be established, regarding
immediate cash-outs of Vested Account Balances.
(c) For purposes of this Article, if the value of a Participant's
Vested Account Balance is zero, the Participant shall be
deemed to have received a distribution of such Vested Account
Balance immediately following termination. If the Participant
is reemployed prior to incurring five (5) consecutive one (1)
year Breaks in Service or Periods of Severance, he or she will
be deemed to have immediately repaid such distribution.
Notwithstanding the above, if the Employer maintains or has
maintained a policy of not distributing any amounts until the
Participant's Normal Retirement Age, the Employer can continue
to uniformly apply such policy.
(d) If a Participant terminates employment with a Vested Account
Balance greater than $5,000, and elects (with his or her
Spouse's consent, if required) to receive 100% of the value of
his or her Vested Account Balance in a lump sum, the nonvested
portion will be treated as a forfeiture. The Participant (and
his or her Spouse, if required) must consent to any
distribution when the Vested Account Balance described above
exceeds $5,000.
(e) If a Participant who is not 100% vested receives or is deemed
to receive a distribution pursuant to this paragraph and
resumes employment covered under this Plan, the Participant
shall have the right to repay to the Plan the full amount of
the distribution attributable to both Employer contributions
and Elective Deferrals on or before the earlier of the date
the Participant incurs five (5) consecutive one (1) year
Breaks in Service following the date of distribution or five
(5) years after the first date on which the Participant is
subsequently reemployed. In such event, the Participant's
account shall be restored to the value thereof at the time the
distribution was made.
46
The account may be further increased by the Plan's income and
investment gains and/or losses on the undistributed amount
from the date of the distribution to the date of repayment.
(f) If the Participant's Vested Account Balance is greater than
$5,000, a Participant shall have the option to postpone
payment of his or her Plan benefits until his or her Required
Beginning Date. If elected in the Adoption Agreement, any
balance in a Participant's account resulting from his or her
Employee contributions listed at paragraph 5.1(b), hereof, not
previously withdrawn, may be withdrawn by the Participant
immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a result
of a Disability, such Participant shall have the right to make
an application for a disability retirement benefit payment.
The Participant's account balance will be deemed "immediately
distributable" as set forth in paragraph 6.4, and will be
fully vested pursuant to paragraph 9.2.
(h) If elected in the Adoption Agreement, when a terminating
Participant or Employee does not make a timely election with
respect to the cash out distribution of amounts greater than
$1,000 but less than or equal to $5,000, pursuant to Code
Sections 411(a)(7), 411(a)(11) and 417(e)(7), the Plan
Administrator will make a direct rollover into an individual
retirement account or annuity ("IRA"). The Plan Administrator
will select the IRA trustee or custodian, establish the IRA
and make the initial IRA investment selection.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part of
the account balance could be distributed to the Participant
(or Surviving Spouse) before the Participant attains (or would
have attained if not deceased) the later of the Normal
Retirement Age or age sixty-two (62).
(b) If payment in the form of a Qualified Joint and Survivor
Annuity is required and the value of a Participant's Vested
Account Balance exceeds $5,000, or there are remaining
payments to be made with respect to a particular distribution
option that previously commenced, and the account balance is
immediately distributable, the Participant and his or her
Spouse (or where either the Participant or the Spouse has
died, the survivor) must consent to any distribution of such
account balance.
(c) If payment in the form of a Qualified Joint and Survivor
Annuity is not required with respect to a Participant and the
value of a Participant's Vested Account Balance exceeds
$5,000, and the account balance is immediately distributable,
only the Participant must consent to any distribution of such
account balance.
(d) The consent of the Participant and/or the Spouse shall be
obtained in writing or in such other form accepted by the Plan
Administrator within the ninety (90) day period ending on the
Annuity Starting Date, which is the first day of the first
period for which an amount is paid as an annuity or in any
other form. The Plan Administrator shall notify the
Participant and the Participant's Spouse of the right to defer
any distribution until the Participant's account balance is no
longer immediately distributable. Such notification shall
include a general description of the material features, and an
explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would
satisfy the notice requirements of Code Section 417(a)(3), and
shall be provided no less than thirty (30) days and no more
than ninety (90) days prior to the Annuity Starting Date.
(e) If the distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distribution may commence less than
thirty (30) days after the notice required under Regulation
Section 1.411(a)-11(c) is given provided that:
47
(1) the Plan Administrator clearly informs the
Participant that the Participant has the right to a
period of at least thirty (30) days after receiving
the notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant after receiving the notice
affirmatively elects a distribution.
If a distribution is one to which Code Section 417 does apply,
the distribution may commence less than thirty (30) days, but
not less than seven (7) days after the notice required under
Regulations Section 1.411(a)-11(c) is given, provided that the
conditions of sub-paragraphs (1) and (2) above are satisfied
with regard to both the Participant and the Participant's
Spouse.
(f) Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the account balance
is immediately distributable. Furthermore, if payment in the
form of a Qualified Joint and Survivor Annuity is not required
with respect to the Participant pursuant to paragraph 8.7 of
the Plan, only the Participant need consent to the
distribution of an account balance that is immediately
distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or
Code Section 415 or constitutes Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions. In addition,
upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the
Participant's account balance may, without the Participant's
consent, be distributed to the Participant or transferred to
another Defined Contribution Plan [other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)]
within the same controlled group.
a) NORMAL AND OPTIONAL FORMS OF PAYMENT
(a) The normal form of payment for a profit sharing, 401(k) or
SIMPLE 401(k) plan satisfying the requirements of paragraph
8.7 herein shall be a lump sum.
(a) A Plan other than a money purchase pension plan, a target
benefit plan or a profit-sharing plan required to provide a
Joint and Survivor benefit may be amended to eliminate or
restrict optional payment forms provided that a single lump
sum payment options remains available, that is an otherwise
identical distribution form to the eliminated or restricted
option, except with respect to the timing of payments after
commencement. The form must have the same (or less
restrictive) timing of distribution, medium of distribution
and eligibility conditions that were available for the
eliminated forms of payment, and any such amendment will not
be effective until the earlier of ninety (90) days after the
date that Plan Participants are provided with the written
notice of the Plan amendment in the form of a summary of
material modification (SMM) or the first day of the second
Plan Year after the Plan Year in which the amendment is
adopted.
Each optional form of benefit provided under a standardized or
non-standardized safe-harbor plan (other than any that have
been prospectively eliminated) must be currently available to
all Employees benefiting under the Plan. This is the case
regardless of whether a particular form of benefit is the
actuarial equivalent of any other optional form of benefit
under the Plan. Code Section 411(d)(6) prevents a Plan from
being amended to eliminate or restrict optional forms of
benefits and any other Code Section 411(d)(6) protected
benefits with respect to benefits attributable to Service
before the amendments except as expressly provided under the
Regulations Section 1.411(d)-4.
(b) For money purchase and target benefit plans, the normal form
of payment hereunder shall be a Qualified Joint and Survivor
Annuity as provided under Article VIII. Effective January 1,
2002, the Employer may elect in the Adoption Agreement to
eliminate any periodic payment
48
options that are not required by the Qualified Joint and
Survivor Annuity rules such as but not limited to installment
payments.
(c) The normal form of payment shall be automatic, unless the
Participant files a written request with the Employer prior to
the date on which the benefit is automatically payable,
electing another option available under the Plan.
(d) A Participant whose Vested Account Balance exceeds $5,000
shall (with the consent of his or her spouse, if applicable)
have the right to receive his or her benefit in a single lump
sum or in installment payments. Installment payments need not
be equal or substantially equal until such time as the
individual reaches his or her Required Beginning Date.
Installment payments which are intended to be equal or
substantially equal can be made monthly, quarterly,
semi-annually or annually based on any period not extending
beyond the Joint and Survivor life expectancy of the
Participant and his or her Beneficiary.
(e) Benefits payable under the Plan may be distributed in cash or
in-kind as elected in the Adoption Agreement.
(f) The Employer may elect on the Adoption Agreement to limit a
Participant's right to receive distributions in the form of
marketable securities (other than Employer securities) and to
require distributions in the form of cash only. Only the right
to receive a distribution in the form of cash, Employer
securities and/or other property that is not marketable is
protected. Any such amendment to the Plan will not be
effective until the earlier of ninety (90) days after the date
that Plan Participants are provided with the written notice of
the Plan amendment in the form of a summary of material
modification (SMM) or the first day of the second Plan Year
after the Plan Year in which the amendment is adopted.
(g) A Plan that permits its Participants to receive in-kind
distributions may limit the available in-kind distributions to
the investments listed in the Adoption Agreement and only to
the extent the investments are held in the Participant's
account at the time of the distribution. A Plan may be amended
to limit the investments which will be distributed in-kind.
The amendment must include all investments (other than
marketable securities for which cash may be substituted) that
are held in a Participant's account at the time of the
amendment and for which the Plan, prior to such amendment,
allowed for distribution of those investments in kind. The
right to an in-kind distribution for investments held at the
time of the distribution would only have to be protected to
the extent such investment was in the Participant's account at
the time the amendment was adopted or effective, if later. Any
such amendment will not be effective until the earlier of
ninety (90) days after the date that Plan Participants are
provided with the written notice of the Plan amendment in the
form of a summary of material modification (SMM) or the first
day of the second Plan Year after the Plan Year in which the
amendment is adopted.
(h) Promissory notes of Participants may be distributed in-kind
pursuant to the Employer's loan policy document.
(i) Distribution of benefits payable in the form of installments
shall be paid in cash.
(f) The propriety, amount, and form of any distribution made under
the terms of this Plan shall be determined by the Plan
Administrator. Upon such determination, the Plan Administrator
shall direct the Trustee or Custodian in writing or by any
such other means as expressly agreed upon, to make such a
distribution.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the sixtieth day after the
close of the Plan Year in which the latest of the following
events occurs:
49
(1) the Participant attains age sixty-five (65) (or
Normal Retirement Age if earlier),
(2) the tenth anniversary of the year in which the
Participant commenced participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant
and Spouse (if necessary) to consent to a distribution while a
benefit is immediately distributable within the meaning of
paragraph 6.4 hereof, shall be deemed an election to defer
commencement of payment of any benefit sufficient to satisfy
this paragraph.
(c) If elected in the Adoption Agreement, if a terminating
Participant or Employee does not make a timely election with
respect to the cash-out distribution pursuant to Code Sections
411(a)(7), 411(a)(11) and 417(e)(1), the Plan Administrator
will make a direct rollover into an individual retirement
account or annuity (IRA). The Plan Administrator will select
the IRA trustee or custodian, establish the IRA account and
make the initial IRA investment selection.
6.7 TRANSITIONAL RULES FOR CASH-OUT LIMITS This paragraph provides transitional
rules with regard to the cash-out limits for distributions made prior to October
17, 2000.
(a) DISTRIBUTIONS SUBJECT TO CODE SECTION 417 - If payments in the
form of a Qualified Joint and Survivor Annuity are required
with regard to a Participant, the rules in this sub-paragraph
6.7(a) are substituted for the rule in the first sentence of
paragraph 6.4(b). If the value of the Participant's Vested
Account Balance exceeds $5,000 (or at the time of any
distribution (1) in Plan Years beginning before August 6,
1997, exceeded $3,500 or (2) in Plan Years beginning after
August 5, 1997, exceeded $5,000), and the account balance is
immediately distributable, the Participant and the
Participant's Spouse (or where either the Participant or the
Spouse has died, the survivor) must consent to any
distribution of such account balance.
(b) DISTRIBUTIONS NOT SUBJECT TO CODE SECTION 417 - If payment in
the form of a Qualified Joint and Survivor Annuity is not
required with respect to a Participant, the rules in this
subparagraph 6.7(b) are substituted for the rules in paragraph
6.4(c).
If the value of a Participant's Vested Account Balance derived
from Employer and Employee contributions:
(1) for Plan Years beginning before August 6, 1997,
exceeds $3,500 (or exceeded $3,500 at the time of any
prior distribution),
(2) for Plan Years beginning after August 5, 1997,
exceeds $3,500 (or exceeded $3,500 at the time of any
prior distribution),
(3) for Plan Years beginning after August 5, 1997 and for
a distribution made after March 21, 1999, that either
exceeds $5,000 or is a remaining payment under a
selected optional form of payment that exceeded
$5,000 at the time the selected payment began, and
the account balance is immediately distributable, the
Participant and the Participant's Spouse (or where
either the Participant or the Spouse had died, the
survivor) must consent to any distribution of such
account balance.
50
6.8 IN-SERVICE WITHDRAWALS If elected in the Adoption Agreement, an Employer may
elect to permit a Participant in the Plan to make an in-service withdrawal
subject to any limitation(s) specified in the Adoption Agreement.
(a) An Participant may withdraw all or any part of the fair market
value of his or her Voluntary or Required After-tax
Contributions as described in Article IV, other than Elective
Deferrals, upon request to the Plan Administrator unless
indicated otherwise on the Adoption Agreement. No amount will
be forfeited solely as a result of a Participant's withdrawal
of an amount pursuant to this paragraph 6.8. Employee Rollover
and Transfer Contributions and the income allocable to each
may be withdrawn at any time unless indicated otherwise on the
Adoption Agreement.
(b) Subject to Article VIII, Joint and Survivor Annuity
Requirements (if applicable) and pursuant to the Employer's
election in the Adoption Agreement, a Participant may be
eligible to withdraw any part of his or her Qualified
Voluntary Contribution account by making application to the
Plan Administrator. A request to withdraw amounts pursuant to
this paragraph must be consented to by the Participant's
Spouse unless the Plan satisfies the safe harbor under
paragraph 8.7 hereof. Spousal consent, if required, shall
comply with the requirements of paragraph 6.4 relating to
immediate distributions.
(c) A Participant may withdraw all or any part of the fair market
value of his or her pre-1987 Voluntary Contributions with or
without withdrawing the earnings attributable thereto.
Post-1986 Voluntary Contributions may only be withdrawn along
with a portion of the earnings thereon. The amount of the
earnings to be withdrawn is determined by using the formula:
DA [1-(V / V+E)], where DA is the distribution amount, V is
the amount of Voluntary Contributions and V+E is the amount of
Voluntary Contributions plus the earnings attributable
thereto. The aggregate value of the Participant's Vested
Account Balance derived from Employer and Employee
contributions (including Rollovers), whether vested before or
upon death, includes the proceeds of insurance contracts, if
any, on the Participant's life. The provisions of this Article
shall apply to a Participant who is vested in amounts
attributable to Employer contributions, Employee contributions
(or both) at the time of death or distribution.
(d) Under a Profit Sharing Plan to the extent that the Employer
elects in the Adoption Agreement, one of the following
conditions is required to withdraw all or any part of the
vested Non-Safe Harbor Matching Contributions and
discretionary contributions.
(1) An Employee who has been a Participant in the Plan
for at least five (5) years may, prior to separating
from Service with the Employer, elect to withdraw all
or any part of the vested Non-Safe Harbor Matching
Contributions, and discretionary contributions.
(2) An Employee who has been a Participant in the Plan
for at least two (2) years may, prior to separating
from Service with the Employer, elect to withdraw all
or any part of the vested Non-Safe Harbor Matching
Contributions and discretionary contributions.
(3) A Participant who had attained age 59 1/2 may, prior
to separation from Service, elect to withdraw all of
any part of the vested Non-Safe Harbor Matching
Contributions and discretionary contributions.
(e) Unless otherwise elected by the Employer in the Adoption
Agreement, Elective Deferrals, Qualified Non-Elective
Contributions, Safe Harbor Matching and Non-Elective
Contributions, and Qualified Matching Contributions, and
income allocable to each, are not distributable to a
Participant earlier than upon separation from Service, death,
or Disability. Such amounts may also be distributed upon:
51
(1) termination of the Plan without the establishment of
another Defined Contribution Plan other than an
employee stock ownership plan [as defined in Code
Section 4975(e)(7)] or a Simplified Employee Pension
Plan [as defined in Code Section 408(k)], or a SIMPLE
IRA plan [as defined in Code Section 408(p)],
(2) the disposition by a corporation to an unrelated
corporation 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, but only with respect to Employees who
continue employment with the corporation acquiring
such assets,
(3) the disposition by a corporation to an unrelated
entity of such corporation's interest in a subsidiary
[within the meaning of Code Section 409(d)(3)] if
such corporation continues to maintain this Plan, but
only with respect to Employees who continue
employment with such subsidiary,
(4) the attainment of age 59 1/2, or
(5) the hardship of a Participant as described in
paragraph 6.9.
(f) An in-service withdrawal shall not be eligible for redeposit
to the Trust. A withdrawal under this paragraph shall not
prohibit such Participant from sharing in any future Employer
contribution he or she would otherwise be eligible to receive.
(g) Money purchase pension plans and target benefit plans may not
allow in-service withdrawals prior to attainment of the Normal
Retirement Age as specified in the Adoption Agreement.
(h) Notwithstanding any provisions of the Plan to the contrary, to
the extent that any optional form of benefit under this Plan
permits a distribution prior to the Participant's retirement,
death, Disability, or separation from Service, and prior to
Plan termination, the optional form of benefits is not
available with respect to benefits attributable to assets
(including the post-transfer earnings thereon) and liabilities
that are transferred within the meaning of Code Section
414(l), to this Plan from a money purchase pension plan
qualified under Code Section 401(a) (other than any portion of
those assets and liabilities attributable to Voluntary
After-tax Contributions).
(i) A Participant may withdraw any amount attributable to
profit-sharing contributions, Elective Deferrals, Matching
Contributions, Rollover and Transfer Contributions, not in
excess of the vested amount of such contributions, if the
withdrawal is made after the Participant attains age 59 1/2,
as elected in the Adoption Agreement.
(j) PARTIALLY VESTED PARTICIPANTS - If a distribution is made at a
time when a Participant has a nonforfeitable right to less
than 100% of the account balance derived from Employer
contributions and the Participant may increase the
nonforfeitable percentage in the account:
(1) a separate account will be established for the
Participant's interest in the Plan as of the time of
the distribution, and
(2) at any relevant time the Participant's nonforfeitable
portion of the separate account will be equal to an
amount ("X") determined by the formula:
X = P [AB + D] - D
For purposes of applying the formula: "P" is the
nonforfeitable percentage at the relevant time, "AB" is the
account balance at the relevant time, "D" is the amount of the
distribution.
52
6.9 HARDSHIP WITHDRAWALS If elected in the Adoption Agreement, a Participant may
request a Hardship withdrawal as provided in this paragraph. If applicable,
Hardship withdrawals are subject to the spousal consent requirements in Code
Sections 401(a)(11) and 417. A request to withdraw amounts must be consented to
by the Participant's Spouse unless the Plan satisfies the safe harbor provisions
under paragraph 8.7 hereof. Spousal consent, if required, shall comply with the
requirements of paragraph 6.4 relating to immediate distributions.
If elected in the Adoption Agreement, a Participant shall be permitted to make a
Hardship withdrawal of any amount attributable to the vested portion of Elective
Deferral Contributions (and any earnings credited to a Participant's account as
of the later of December 31, 1988, and the end of the last Plan Year ending
before July 1, 1989). If elected in the Adoption Agreement, fully vested
profit-sharing contributions, Matching Contributions, Rollover Contributions,
Transfer Contributions and the income allocable to each (without regard to
attainment of age 59 1/2 or Disability) may be available for Hardship withdrawal
if the Participant establishes that an immediate and heavy financial need exists
and the withdrawal is necessary to satisfy such financial need. A Participant
may withdraw all or any part of the fair market value of his or her Voluntary or
Required After-tax Contributions due to a Hardship upon request to the Plan
Administrator. Such request shall be made in accordance with procedures adopted
by the Plan Administrator or his or her designate who shall have sole authority
to authorize and direct a Hardship withdrawal pursuant to the following rules:
(a) ADMINISTRATIVE REQUIREMENTS - A distribution will be
considered as necessary to satisfy an immediate and heavy
financial need of the Participant only if:
(1) The Participant has obtained all distributions, other
than Hardship distributions, and all nontaxable loans
under all plans maintained by the Employer.
(2) The Participant's Elective Deferrals, Voluntary
After-tax Contributions and Required After-tax
Contributions will be suspended for all plans
maintained by the Employer (other than benefits under
Code Section 125 plans) for twelve (12) months after
the receipt of the Hardship distribution.
(3) The distribution is not in excess of the amount of
the immediate and heavy financial need described at
paragraph (b) including amounts necessary to pay any
Federal, state or local income taxes or penalties
reasonably anticipated to result from the
distribution.
(4) All plans maintained by the Employer must provide
that a Participant may not make Elective Deferrals
for the Participant's taxable year immediately
following the taxable year of the Hardship
distribution in excess of the applicable limit under
Code Section 402(g) for such taxable year, less the
amount of such Participant's Elective Deferrals for
the taxable year during which the Hardship
distribution was received.
(b) EXCLUSIVE REASONS FOR HARDSHIP WITHDRAWAL - An immediate and
heavy financial need exists when the Hardship withdrawal will
be used to pay the following:
(1) expenses incurred or necessary for medical care
[described in Code Section 213(d)] of the
Participant, his or her Spouse, children and other
dependents,
(2) the cost directly related to the purchase (excluding
mortgage payments) of the principal residence of the
Participant,
(3) payment of tuition and related educational expenses
(including but not limited to expenses associated
with room and board) for the next twelve (12) months
of post-secondary education for the Participant, his
or her Spouse, children or other dependents, or
(4) the need to prevent eviction of the Participant from,
or a foreclosure on the mortgage of, the
Participant's principal residence.
53
(c) If a request for a Hardship withdrawal is approved by the Plan
Administrator, funds shall be withdrawn from the contribution
sources as elected in the Adoption Agreement unless provided
otherwise by the Plan Administrator in an administrative
procedure. Liquidation of a Participant's assets for the
purpose of a Hardship withdrawal will be allocated on a
pro-rata basis across all the investment alternatives in a
Participant's account, unless otherwise provided by
administrative procedure or by a directive from the Plan
Administrator or by the Plan Participant.
6.10 DIRECT ROLLOVER OF BENEFITS
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Participant's election under this
paragraph, for distributions made on or after January 1, 1993,
a Participant may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of
an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan or individual retirement account specified by
the Participant in a Direct Rollover. Any portion of a
distribution which is not paid directly to an Eligible
Retirement Plan or individual retirement account shall be
distributed to the Participant. For purposes of this
paragraph, a surviving Spouse or a Spouse or former Spouse who
is an alternate payee under a Qualified Domestic Relations
Order as defined in Code Section 414(p), will be permitted to
elect to have any Eligible Rollover Distribution paid directly
to an individual retirement account (IRA) or an individual
retirement annuity (IRA) or to another Qualified Plan in which
the alternate payee is a participant.
(b) If the entire Vested Account Balance is not eligible for a
Direct Rollover of benefits as described in (a) above, the
Participant may either make an elective transfer of the entire
Vested Account Balance pursuant to the procedure described at
paragraph 4.5 or a direct rollover of the portion which can be
rolled over as described in (a) above and an elective transfer
of the rest as described in paragraph 4.5 herein.
(c) After December 31, 2001, the elective transfer of
distributable benefits will be available only if the direct
rollover provisions of Code Section 401(a)(31) would not be
available to transfer the Participant's entire Vested Account
Balance to the transferee plan. This elective transfer option
will only be available in the following circumstances;
(1) The Plan does not have a single sum distribution
option available. The benefits are distributable only
in a periodic payment method.
(2) The distribution includes benefits that are not
eligible for rollover treatment, including benefits
attributable to After-tax Contributions, required
minimum distributions or other amounts that have
previously been included in income.
(d) Distributions that consist of the Participant's entire account
balance which is entirely eligible for rollover treatment will
be transferred as a direct rollover rather than an elective
transfer.
6.11 PARTICIPANT'S NOTICE In the event that a Participant's benefit becomes
payable under Plan terms or if a Participant requests distribution of his or her
benefit, the Plan Administrator shall provide such Participant with a notice
regarding distribution of such benefit. The notice shall describe any Plan
related information regarding the distribution including the Joint and Survivor
Annuity requirements provided at paragraph 6.4(d), if applicable, the normal and
optional forms of payment provided at paragraph 6.5, and the information
required in connection with an Eligible Rollover Distribution. Information in
connection with an Eligible Rollover Distribution shall include the right to
have the funds transferred directly to another Qualified Plan or individual
retirement account, the income tax withholding requirements, the rollover rules
with respect to amounts distributed to the Participant, the default direct
rollover provisions of Vested Account Balances greater than $1,000 but less than
or equal to $5,000 (any other appropriate information such as the name and
address, and telephone number of the IRA Trustee and information regarding IRA
maintenance and withdrawal fees and how the IRA funds will be invested) and the
general tax rules which apply to such distributions. Such notice shall be
provided to the Participant within the time period prescribed at paragraph
6.4(d) hereof or, if the safe harbor provisions of paragraph 8.7 are applicable,
54
not less than thirty (30) days prior to the Annuity Starting Date, subject to a
waiver period of a lesser number of days if elected by the Participant and if
applicable, their Spouse. A default direct rollover will occur not less than
thirty (30) days and not more than ninety (90) days after such notice with the
explanation of the default direct rollover is provided to the separating
Participant.
6.12 ASSETS TRANSFERRED FROM MONEY PURCHASE PENSION PLANS Notwithstanding any
provision of this Plan to the contrary, to the extent that any optional form of
benefit under this Plan permits a distribution prior to the Employee's
retirement, death, Disability, or severance from employment, and prior to Plan
termination, the optional form of benefit is not available with respect to
benefits attributable to assets (including the associated post-transfer
earnings) and liabilities that are transferred, within the meaning of Code
Section 414(l), to this Plan from a money purchase pension plan qualified under
Code Section 401(a) (other than any portion of those assets and liabilities
attributable to Voluntary After-tax Contributions).
6.13 ASSETS TRANSFERRED FROM A CODE SECTION 401(k) PLAN If the Plan receives a
direct transfer (by merger or otherwise) of Elective Deferrals (or amounts
treated as Elective Deferrals) under a Plan with a Code Section 401(k)
arrangement, the distribution restrictions of Code Sections 401(k)(2) and
401(k)(10) continue to apply to those transferred Elective Deferrals.
55
ARTICLE VII
DISTRIBUTION REQUIREMENTS
a) JOINT AND SURVIVOR ANNUITY REQUIREMENTS All distributions made under the
terms of this Plan must comply with the provisions of Article VIII including, if
applicable, the safe harbor provisions thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS All distributions required under this
Article shall be determined and made in accordance with the minimum distribution
requirements of Code Section 401(a)(9) and the Regulations issued thereunder,
including the minimum distribution incidental benefit rules found at Regulations
Section 1.401(a)(9)-2. The entire interest of a Participant must be distributed
or begin to be distributed no later than the Participant's Required Beginning
Date. Life expectancy and joint and last survivor life expectancies are computed
by using the expected return multiples found in Tables V and VI of Regulations
Section 1.72-9.
7.3 LIMITS ON DISTRIBUTION PERIODS As of the First Distribution Calendar Year,
distributions, if not made in a single sum, may only be made over one of the
following periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and their Beneficiary,
(c) a period certain not extending beyond the life expectancy of
the Participant, or
(d) a period certain not extending beyond the joint and last
survivor life expectancy of the Participant and their
Beneficiary.
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE
(a) If a Participant's benefit is to be distributed over (i) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of
the Participant and the Participant's Beneficiary or (ii) a
period not extending beyond the life expectancy of the
Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the First
Distribution Calendar Year, must at least equal the sum
obtained by dividing the Participant's benefit by the
Applicable Life Expectancy.
(b) For calendar years beginning before January 1, 1988, if the
Participant's Spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least 50%
of the Present Value of the amount available for the
distribution is paid within the life expectancy of the
Participant.
(c) For calendar years beginning after December 31, 1989, the
amount to be distributed each year beginning with
distributions for the First Distribution Calendar Year, shall
not be less than the quotient obtained by dividing the
Participant's Benefit by the lesser of (i) the Applicable Life
Expectancy or (ii) if the Participant's Spouse is not the
Beneficiary, the applicable divisor determined from the table
set forth in Q&A-4 of Regulations Section 1.401(a)(9)-2.
Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy as the
relevant divisor without regard to Regulations Section
1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the
Participant's Required Beginning Date. The minimum
distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the
Participant's Required Beginning Date occurs, must be made on
or before December 31 of that Distribution Calendar Year.
56
(e) If the Participant's Benefit is distributed in the form of an
annuity, distributions thereunder shall be made in accordance
with the requirements of Code Section 401(a)(9) and the
Regulations thereunder.
(f) Distributions made to a Participant and the Participant's
Beneficiary shall be made in accordance with the incidental
death benefit requirements of Code Section 401(a)(9) and the
Regulations issued thereunder.
(g) For purposes of determining the amount of the required
distribution for each Distribution Calendar Year, the account
balance to be used is the account balance determined as of the
last Valuation Date preceding the Distribution Calendar Year.
This balance will be increased by the amount of any
contributions or forfeitures allocated to the account balance
after the Valuation Date in such preceding calendar year. Such
balance will also be decreased by distributions made after the
Valuation Date in such preceding Calendar Year.
(h) For purposes of paragraph 7.4(g), if any portion of the
minimum distribution for the First Distribution Calendar Year
is made in the second Distribution Calendar Year on or before
the Required Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar Year
shall be treated as if it had been made in the immediately
preceding Distribution Calendar Year.
a) REQUIRED BEGINNING DATE If this Plan is an amendment or restatement of a Plan
which included the provisions of the minimum distribution rules as in effect
prior to the enactment of the Small Business Job Protection Act of 1996 (SBJPA),
the Employer may elect in the Adoption Agreement to substitute the minimum
distribution rules in effect after the enactment of SBJPA. The Employer, so
electing, must also elect in the Adoption Agreement those transitional rules
that shall apply to its Plan.
(a) The Required Beginning Date for a Participant who is a 5%
owner with respect to the Plan Year ending in the calendar
year in which the Participant attains age 70 1/2 is the April
1 of the calendar year following the calendar year in which
the Participant attains age 70 1/2. Once distributions have
begun to a 5% owner under this paragraph, they must continue
to be distributed even if the Participant ceases to be a 5%
owner in any subsequent year.
(b) Unless the Employer has elected to continue to operate the
provisions of the minimum required distribution in accordance
with the provisions prior to the enactment of the SBJPA, or if
elected otherwise in the Adoption Agreement or by operation of
the Plan, the Required Beginning Date for a Participant who is
not a 5% owner is no later than the April 1 of the calendar
year following the later of the calendar year in which the
Participant attains age 70 1/2 or the calendar year in which
the Participant retires.
(c) If the Employer has elected to continue under the prior
provisions of the law, then except as provided below, the
Required Beginning Date is the April 1 of the calendar year
following the calendar year in which a Participant attains age
70 1/2.
(1) A Participant who:
(i) is not a 5% owner,
(ii) has not had a Separation from Service,
(ii) had attained age 70 1/2 prior to 1997, and
(iii) had previously commenced required minimum
distributions under the distribution rules
(as then in effect) may elect to discontinue
receiving distributions under the Plan. A
Participant who makes such an election to
discontinue distributions must establish a
new Annuity Starting Date when benefits
recommence under the Plan. A married
Participant who is subject to the Qualified
Joint and Survivor Annuity
57
provisions of 8.9 must obtain spousal
consent to discontinue his or her
distributions if distributions are in the
form of a Qualified Joint and Survivor
Annuity and to recommence benefits in a form
other than a Qualified Joint and Survivor
Annuity. Any such election will be made
pursuant to the uniform and
nondiscriminatory procedures established by
the Plan Administrator.
(1) A Participant who:
(i) is not a more than 5% owner, and
(ii) had attained age 70 1/2 in 1997 or in a
later year (or attained age 70 1/2 in 1996,
but had not commenced required minimum
distributions in 1996) may elect to postpone
distribution of the required minimum
distributions until the Participant's
Required Beginning Date as established in
this paragraph. If a Participant attained
age 70 1/2 in 1996, he or she must have
elected under this paragraph to postpone
distribution by December 31, 1997. If the
Participant attains age 70 1/2 in 1997 or
later, he or she must elect to postpone
distributions under this paragraph not later
than April 1 of the year following the year
in which the Participant attained age
70 1/2.
(iii) Notwithstanding the foregoing, a Participant
who is not a more than 5% owner, has not had
a separation from service, and is currently
in benefit payment status because of
attainment of age 70 1/2 in 1997 or in a
later year (or attained age 70 1/2 in 1996)
may elect to discontinue receiving
distributions under the Plan and recommence
payments by April 1 of the calendar year in
which the Participant retires. A Participant
who makes such an election to discontinue
distributions must establish a new Annuity
Starting Date when benefits recommence under
the Plan. A married Participant who is
subject to the Qualified Joint and Survivor
Annuity provisions of paragraph 8.9 must
obtain spousal consent to discontinue his or
her distributions if distributions are in
the form of a Qualified Joint and Survivor
Annuity and to recommence benefits in the
form other than a Qualified Joint and
Survivor Annuity. Any such election will be
made pursuant to the uniform and
nondiscriminatory procedures established by
the Plan Administrator.
(3) The Required Beginning Date for a Participant who:
(i) had attained age 70 1/2 prior to January 1,
1998, and
(ii) was not a 5% owner at any time during the
Plan Year ending with or within the calendar
year in which the Participant attained age
66 1/2 or any subsequent Plan Year, is April
1 of the calendar year following the
calendar year in which the Participant
retires.
(3) Except as provided above, the Required Beginning Date
for a Participant who was a 5% owner at any time
during the five (5) Plan Year period ending in the
calendar year in which the Participant attained age
70 1/2 is April 1 of the calendar year following the
calendar year in which the Participant attained age
70 1/2. For a Participant who became a 5% owner
during any Plan Year after the calendar year in which
the Participant attained age 70 1/2, the Required
Beginning Date is April 1 of the calendar year in
which such subsequent Plan Year ends.
For purposes of this Article, the term 5% owner shall have the same meaning as
the term is defined under Code Section 416. A Participant is treated as a 5%
owner under this paragraph if such Participant is a 5% owner at any
58
time during the Plan Year ending with or within the calendar year the
Participant attains age 70 1/2. Once distributions have begun to a 5% owner
under this paragraph, they must continue to be distributed even if the
Participant ceases to be a 5% owner in a subsequent year.
7.6 TRANSITIONAL RULES
(a) Notwithstanding the other requirements of this Article and
subject to the requirements of Article VIII, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a 5% owner may be made in accordance with
all of the following requirements, regardless of when such
distribution commences:
(1) the distribution by the Trust is one which would not
have disqualified such Trust under Code Section
401(a)(9) as in effect prior to amendment by the
Deficit Reduction Act of 1984,
(2) the distribution is in accordance with a method of
distribution designated by the Participant whose
interest in the Trust is being distributed or, if the
Participant is deceased, by a Beneficiary of such
Participant,
(3) such designation was in writing, was signed by the
Participant or the Beneficiary, and was made before
January 1, 1984,
(4) the Participant had accrued a benefit under the Plan
as of December 31, 1983, and
(5) the method of distribution designated by the
Participant or the Beneficiary specifies the time at
which distribution will commence, the period over
which distributions will be made, and in the case of
any distribution upon the Participant's death, the
Beneficiaries of the Participant listed in order of
priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with respect
to the distributions to be made upon the death of the
Participant.
(c) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Participant or the
Beneficiary to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made, if the method of
distribution was specified in writing and the distribution
satisfies the requirements in subparagraphs (a)(1) through (5)
above.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) and the
Regulations thereunder. If a designation is revoked subsequent
to the date distributions are required to begin, the Plan must
distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount
not yet distributed which would have been required to have
been distributed to satisfy Code Section 401(a)(9) and the
Regulations thereunder, but for the Code Section 242(b)(2)
election of the Tax Equity and Fiscal Responsibility Act of
1982. For calendar years beginning after 1988, such
distributions must meet the minimum distribution incidental
benefit requirements in Section 1.401(a)(9)-2 of the Income
Tax Regulations. Any changes in the designation will be
considered to be a revocation of the designation. However, the
mere substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as
such substitution or addition does not alter the period over
which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is transferred
or rolled over from one plan to another plan, the rules in Q&A
J-2 and Q&A J-3 of the Regulations shall apply.
59
7.7 DESIGNATION OF BENEFICIARY Each Participant shall file a written designation
of Beneficiary with the Plan Administrator upon qualifying for participation in
this Plan. Such designation shall remain in force until revoked by the
Participant by filing a new Beneficiary designation form with the Employer. A
profit-sharing or 401(k) Plan satisfying the requirements of paragraph 8.7
requires the Beneficiary shall be the Participant's Spouse, if any, unless such
Spouse properly consents otherwise.
7.8 BENEFICIARY
(a) For purposes of the Plan, a Beneficiary is the person or
persons designated as such in accordance with Code Section
401(a)(9) and the Regulations thereunder by the Participant or
by the Participant's surviving Spouse if the Participant's
surviving Spouse is entitled to receive distributions under
the Plan. Such a designation by the Participant's surviving
Spouse, however, shall relate solely to the distributions to
be made under the Plan after the death of both the Participant
and the surviving Spouse. A Beneficiary designation shall be
communicated to the Plan Administrator on a form or other type
of communication acceptable to the Plan Administrator for use
in connection with the Plan, signed by the designating person,
and subject to the last sentence of this subparagraph (a),
filed with the Plan Administrator in accordance with this
paragraph 7.8 not later than thirty (30) days after the
designating person's death. The form may name individuals,
trusts or estates to take upon the contingency of survival and
may specify or limit the manner of distribution thereto. In
the event a Participant or the Participant's surviving Spouse,
as the case may be, fails to properly designate a Beneficiary
(including, as improper, a designation to which the
Participant's surviving Spouse did not properly consent) or in
the event that no properly designated Beneficiary survives the
Participant or the Participant's surviving Spouse, as
applicable, then the Beneficiary of such person shall be his
surviving Spouse or, if none, his issue per stirpes or, if no
issue, the Participant's surviving parents in equal shares, or
if no surviving parents, then to the Participant's estate.
The Beneficiary designation last accepted by the Plan
Administrator during the designating person's lifetime before
such distribution is to commence shall be controlling and,
whether or not fully dispositive of the vested portion of the
account of the Participant involved, thereupon shall revoke
all such forms previously filed by that person.
(b) Notwithstanding subparagraph (a) of this paragraph 7.8, the
designation by a married Participant of any Beneficiary other
than the Participant's Spouse, or the change of any such
Beneficiary to a new Beneficiary other than the Participant's
Spouse, shall not be valid unless made in writing and
consented to by the Participant's Spouse. The Spouse's consent
to such designation must be made in the manner described in
this paragraph 7.8.
(c) Any Beneficiary designation made and in effect under a
Qualified Plan immediately prior to that Plan's amendment and
continuation in the form of this Plan shall be deemed to be a
valid Beneficiary designation filed under this Plan to the
extent consistent with this Plan. If such Beneficiary
designation was made with respect to a Qualified Plan that
permitted the Participant to designate without spousal consent
a Beneficiary to receive 50% of the Participant's account
balance in the event of the Participant's death, with respect
to such Beneficiary designation under this Plan, paragraph 7.8
shall be applied by application of 50% of the vested portion
of the Participant's account toward the purchase of a
Qualified Pre-Retirement Survivor Annuity and the balance of
the Participant's account shall be paid to the designated
Beneficiary pursuant to the provisions of Article VIII. In
such event, the amount of Voluntary After-tax Contributions
applied to the purchase of the annuity shall be in the same
proportion as the Voluntary After-tax Contributions bear to
the entire Participant's account.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH This paragraph is applicable only after
the Participant's Required Beginning Date as elected by the Employer in the
Adoption Agreement. If the Participant dies after distribution of his or her
interest has begun, the remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of distribution being used
prior to the Participant's death.
60
a) DISTRIBUTION BEGINNING AFTER DEATH This paragraph is applicable before the
Participant's Required Beginning Date as elected by the Employer in the Adoption
Agreement, even if distributions have commenced from the Plan. If the
Participant dies before distribution of his or her interest begins, distribution
of the Participant's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant's death,
except to the extent that an election is made to receive distributions in
accordance with (a) or (b) below:
(a) if any portion of the Participant's interest is payable to a
Beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the
Beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year in which
the Participant died;
(b) if the Beneficiary is the Participant's surviving Spouse, the
date distributions are required to begin in accordance with
(a) above shall not be earlier than the later of (i) December
31 of the calendar year immediately following the calendar
year in which the Participant died or (ii) December 31 of the
calendar year in which the Participant would have attained age
70 1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Beneficiary must elect the
method of distribution no later than the earlier of (i) December 31 of the
calendar year in which distributions would be required to begin under this
section, or (ii) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
Beneficiary, or if the Beneficiary does not elect a method of distribution, then
distribution of the Participant's entire interest must be completed by December
31 of the calendar year containing the fifth anniversary of the Participant's
death. If the surviving Spouse dies after the Participant but before payments to
such Spouse begin, the provisions of this paragraph with the exception of
subparagraph (b) herein, shall be applied as if the surviving Spouse were the
Participant. For the purposes of this paragraph and paragraph 7.9, distribution
of a Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if the preceding sentence is applicable, the date
distribution is required to begin to the Surviving Spouse). If distribution in
the form of an annuity described in paragraph 7.4(d) irrevocably commences to
the Participant before the Required Beginning Date, the date distribution is
considered to begin is the date distribution actually commences.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
(a) No Participant shall be permitted to defer under this Plan
with respect to a calendar year more than the maximum dollar
amount permitted under Code Section 402(g), as indexed, for
such calendar year. If a Participant defers more than the
maximum allowed due to mistake of fact, such Excess Elective
Deferrals shall be distributed to the Participant no later
than April 15 following the calendar year to which the excess
is attributable. If a Participant who participates in this
Plan and in another plan which permits Elective Deferrals
defers more than the Code Section 402(g) maximum, such
Participant shall have the right to notify one or both plans
by March 1 of the calendar year following the year to which
the excess is attributable requesting a distribution of the
Excess Elective Deferral. A Participant is deemed to notify
the Plan Administrator of any Excess Elective Deferrals that
arise by taking into account only those Elective Deferrals
made to the Plan of the Employer. If distribution is
requested, the applicable plan(s) shall make distribution of
the Excess Elective Deferrals, plus any income and minus any
loss allocable thereto, no later than April 15 following the
calendar year to which the excess is attributable. Excess
Elective Deferrals which are distributed on a timely basis
shall not be considered Annual Additions for the Limitation
Year during which such amounts are deferred.
61
(b) Excess Elective Deferrals shall be adjusted for any income or
loss up to the date of distribution. The income or loss
allocable to Excess Elective Deferrals is the sum of (1)
income or loss allocable to the Participant's Elective
Deferral account for the taxable year multiplied by a
fraction, the numerator of which is such Participant's Excess
Elective Deferrals for the year and the denominator is the
Participant's account balance attributable to Elective
Deferrals without regard to any income or loss occurring
during such taxable year; and (2) ten percent (10%) of the
amount determined under (1) multiplied by the number of whole
calendar months between the end of the Participant's taxable
year and the date of the distribution, counting the month of
the distribution if the distribution occurs after the
fifteenth (15th) of such month.
(c) The amount a Participant receives as a distribution of his or
her Excess Elective Deferrals is includible in income with
respect to the taxable year to which the excess is
attributable.
(d) Any income attributable to the Excess Elective Deferrals
determined in (b) above shall be includible in income with
respect to the taxable year in which the excess is
distributed.
7.12 DISTRIBUTION OF EXCESS CONTRIBUTIONS
(a) Excess Contributions plus any income and minus any loss
allocable thereto, shall be distributed to affected
Participants no later than the last day of the Plan Year
following the Plan Year to which the Excess Contributions are
attributable. Excess Contributions are allocated to the Highly
Compensated Employees with the largest amounts of Employer
contributions taken into account in calculating the ADP Test
for the year in which the excess arose beginning with the
Highly Compensated Employee with the largest amount of such
Employer contributions and continuing in descending order
until all the Excess Contributions have been allocated. For
purposes of the preceding sentence, the "largest amount" is
determined after distribution of any Excess Contributions. If
such Excess Contributions are distributed more than two and
one-half (2 1/2) months after the last day of the Plan Year to
which the Excess Contributions are attributable, a 10% excise
tax will be imposed on the Employer maintaining the Plan with
respect to the principal amount of the excess.
(b) Excess Contributions, including any amount recharacterized as
a Voluntary After-tax Contribution, shall be treated as Annual
Additions with respect to the Plan Year to which the excess is
attributable.
(c) Excess Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable
to Excess Contributions allocated to each Participant is the
sum of (1) income or loss allocable to the Participant's
Elective Deferral account (and, if applicable, the Qualified
Nonelective Contribution Account or the Qualified Matching
Contribution Account or both) for the Plan Year multiplied by
a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator is the
Participant's account balance attributable to Elective
Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to
any income or loss occurring during such Plan Year; and (2)
ten percent (10%) of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if the distribution occurs after the
fifteenth (15th) of such month.
(d) Excess Contributions shall be distributed from the
Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP Test) for the
test year. Excess Contributions shall be distributed from the
Participant's Qualified Non-Elective Contribution account only
to the extent that such Excess Contributions exceed the
Participant's Elective Deferrals and Qualified Matching
Contributions account for the applicable test year.
62
(e) The return of an Excess Contribution under a Plan established
under a Davis-Bacon Adoption Agreement will be reported as
additional wages paid to the affected Participant.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) Notwithstanding any other provisions of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss
allocable thereto, shall be forfeited, if forfeitable or if
not forfeitable, distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan
Year. Excess Aggregate Contributions are allocated to the
Highly Compensated Employees with the largest Contribution
Percentage Amounts taken into account in calculating the ACP
test for the year in which the excess arose, beginning with
the Highly Compensated Employee with the largest amount of
such Contribution Percentage and continuing in descending
order until all the Excess Aggregate Contributions have been
allocated. For purposes of the preceding sentence, the
"largest amount" is determined after distribution of any
Excess Aggregate Contributions.
(b) If such Excess Aggregate Contributions are distributed more
than two and one-half (2 1/2) months after the last day of the
Plan Year in which such excess amount arose, a 10% excise tax
will be imposed on the Employer maintaining the Plan with
respect to those amounts. Excess Aggregate Contributions shall
be treated as Annual Additions for purposes of Article X,
Limitations On Allocations.
(c) Excess Aggregate Contributions shall be adjusted for any
income or loss up to the date of the distribution. The income
or loss allocable to the Excess Aggregate Contributions
allocated to each Participant is the sum of (1) income or loss
allocable to each Participant's Employee Contribution account,
Matching Contribution account, Qualified Matching Contribution
account (if any, and if all amounts therein are not used in
the ADP test) and, if applicable, Qualified Nonelective
Contribution account and the Elective Deferral account of the
Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for the year
end the denominator is the Participant's account balance(s)
attributable to Contribution Percentage amounts without regard
to any income or loss occurring during such Plan Year; and (2)
ten percent (10%) of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the
fifteenth (15th) of such month.
(d) Excess Aggregate Contributions shall be forfeited if
forfeitable, or distributed on a pro-rata basis, from the
Participant's Voluntary After-tax Contribution account,
Required After-tax Contribution account, Matching Contribution
account and Qualified Matching Contribution account (and if
applicable the Participant's Qualified Matching Contribution
account, and/or Elective Deferral account, or both).
(e) Forfeitures of Excess Aggregate Contributions may be
reallocated to the accounts of other Participants or applied
to reduce Employer contributions, or as otherwise elected by
the Employer in the Adoption Agreement.
7.14 DISTRIBUTIONS TO MINORS AND INDIVIDUALS WHO ARE LEGALLY INCOMPETENT
Benefits payable to either a minor or an individual who has been declared
legally incompetent shall be paid, at the direction of the conservator appointed
either under a court order or applicable state law which permits such an
individual to be a guardian for the benefit of said minor or incompetent.
7.15 UNCLAIMED BENEFITS
(a) If elected on the Adoption Agreement, the default form of
payment will be a direct rollover into an individual
retirement account or annuity for any cash out distribution of
amounts greater than $1,000 but less than or equal to $5,000
made pursuant to Code Sections 411(a)(7), 411(a)(11) and
417(e)(1). If an individual retirement account or annuity is
established, no amounts contributed to these accounts may be
forfeited under the Plan.
63
(b) The Plan Administrator shall notify Participants or
Beneficiaries by certified or registered mail sent to his or
her last known address of record with the Employer when their
benefits become distributable as provided at paragraph 6.11
hereof. If a Participant or Beneficiary does not respond to
the notice within ninety (90) days of the date of the notice,
the Plan Administrator may take reasonable steps to locate the
Participant or Beneficiary including, but not limited to,
requesting assistance from the Employer, Employees, Social
Security Administration and/or the Internal Revenue Service.
(c) If the Participant cannot be located after a period of twelve
(12) months, or such other period determined in a uniform and
nondiscriminatory manner by the Plan Administrator, the Plan
Administrator shall treat the benefit as a forfeiture pursuant
to paragraph 9.8. The forfeiture provisions of this
subparagraph 7.15(c) apply only to the Participant's or
Beneficiary's account balance which is less than $5,000. If
the Employer does not make a contribution for the Plan Year
during which the forfeiture takes place, such amount shall
first be applied to pay Plan expenses and, if there are no
such expenses, it shall then be allocated to eligible
Participant accounts as if the amount were the Employer's
contribution for such Plan Year.
(d) If a Participant or Beneficiary later makes a claim for such
benefit, the Plan Administrator shall validate such claim and
provide the Participant or Beneficiary with all notices and
other information necessary for the Participant or Beneficiary
to perfect the claim. If the Plan Administrator validates the
claim for benefits, the Participant's account balance shall be
restored to the benefit amount treated as a forfeiture. Such
benefit shall not be adjusted for investment earnings or
losses during the period beginning on the date of forfeiture
and ending on the date of restoration. The funds necessary to
restore the Participant's account will first be taken from
amounts eligible for reallocation or other disposition as
forfeitures with respect to the Plan Year. If such funds do
not exist or if such funds are insufficient, the Employer will
make a contribution prior to the date on which the benefit is
payable to restore such Participant's account. Such benefit
shall be paid or commence to be paid in the same manner as if
the benefit was eligible for distribution on the date the
claim for benefit is validated.
(e) The Plan Administrator shall follow the same procedure in
locating and subsequently treating as a forfeiture the benefit
of a Participant or Beneficiary whose benefit has been
properly paid under Plan terms but where the Participant or
Beneficiary has not negotiated the benefit check(s).
(f) Notwithstanding the foregoing, the Plan Administrator in his
discretion may establish alternative procedures for locating
and administering the benefits of missing Plan Participants.
64
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS The provisions of this Article shall apply to
any Participant who is credited with at least one (1) Hour of Service with the
Employer and such other Participants as provided in paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety (90) day
period ending on the Annuity Starting Date, a Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity. For
this purpose, a Qualified Joint and Survivor Annuity with respect to an
unmarried Participant's Vested Account Balance will be paid in the form of a
straight life annuity. A straight life annuity means an annuity payable in equal
installments for the life of the Participant that terminates upon the
Participant's death. The Participant may elect to have such annuity distributed
upon attainment of the Early Retirement Age under the Plan, if any.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY Unless an optional form
of benefit has been elected within the Election Period pursuant to a Qualified
Election, if a Participant dies before benefits have commenced then the
Participant's Vested Account Balance shall be paid in the form of a life annuity
for the life of the surviving Spouse. The surviving Spouse may elect to have
such annuity distributed within a reasonable period after the Participant's
death. If no election has been made within the Election Period prior to the
Participant's death, the surviving Spouse shall have the right to select an
optional form of benefit after the Participant's death. Such election will only
be permitted if the surviving Spouse is provided with a notice similar to that
required under paragraph 8.5 except that the notice will be modified to explain
a life annuity rather than a Qualified Joint and Survivor Annuity.
A Participant who does not meet the age thirty-five (35) requirement set forth
in the Election Period as of the end of any current Plan Year may make a special
qualified election to waive the Qualified Pre-Retirement Survivor Annuity for
the period beginning on the date of such election and ending on the first day of
the Plan Year in which the Participant will attain age thirty-five (35). Such
election shall not be valid unless the Participant receives a written
explanation of the Qualified Pre-Retirement Survivor Annuity in such terms as
are comparable to the explanation required under paragraph 8.5. Qualified
Pre-Retirement Survivor Annuity coverage will be automatically reinstated as of
the first day of the Plan Year in which the Participant attains age thirty-five
(35). Any new waiver on or after such date shall be subject to the full
requirements of this Article.
8.4 QUALIFIED ELECTION A Qualified Election is an election to either waive a
Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor
Annuity. Any such election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election,
(b) the election designates a specific Beneficiary, including any
class of Beneficiaries or any contingent Beneficiaries, which
may not be changed without spousal consent unless the Spouse
expressly permits designations by the Participant without any
further spousal consent,
(c) the Spouse's consent acknowledges the effect of the election,
and
(d) the Spouse's consent is witnessed by a Plan representative or
notary public.
A Participant's waiver of the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of benefit payment which may not
be changed without spousal consent unless the Spouse expressly permits
designations by the Participant without any further spousal consent. If it is
established to the satisfaction of the Plan Administrator that the Participant
is unmarried or that the Spouse cannot be located, a waiver will be deemed a
Qualified Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse cannot be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of
65
benefit where applicable, and that the Spouse voluntarily elects to relinquish
either or both of such rights. A revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before the
commencement of benefits. The number of revocations shall not be limited. No
consent obtained under this provision shall be valid unless the Participant has
received notice as provided in paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY In the case of
a Qualified Joint and Survivor Annuity, the Plan Administrator shall, no less
than thirty (30) days and no more than ninety (90) days prior to the Annuity
Starting Date, provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor
Annuity,
(b) the Participant's right to make and the effect of an election
to waive the Qualified Joint and Survivor Annuity form of
benefit,
(c) the rights of a Participant's Spouse, and
(d) the right to make and the effect of a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
The Annuity Starting Date may be less than thirty (30) days after and may be
before receipt of the written explanation described in the preceding paragraph
provided that:
(e) the Plan Administrator clearly informs the Participant and the
Participant's Spouse that they have a right to a period of at
least thirty (30) days after receiving the notice to consider
the decision of whether to waive the Qualified Joint and
Survivor Annuity and elect (with spousal consent) a form of
distribution other than a Qualified Joint and Survivor
Annuity; and
(f) the Participant is permitted to revoke any affirmative
distribution election at least until the Annuity Starting Date
or, if later, at any time prior to the expiration to the seven
(7) day period that begins the day after the explanation of
the Qualified Joint and Survivor Annuity is provided to the
Participant.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY In the
case of a Qualified Pre-Retirement Survivor Annuity as described in paragraph
8.3, the Plan Administrator shall provide each Participant within the applicable
period for such Participant a written explanation of the Qualified
Pre-Retirement Survivor Annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of paragraph
8.5 applicable to a Qualified Joint and Survivor Annuity. The applicable period
for a Participant is whichever of the following periods ends at the latest date:
(a) the period beginning with the first day of the Plan Year in
which the Participant attains age thirty-two (32) and ending
with the close of the Plan Year preceding the Plan Year in
which the Participant attains age thirty-five (35),
(b) a reasonable period ending after the individual becomes a
Participant, or
(c) a reasonable period ending after this article first applies to
the Participant.
(d) Notwithstanding the foregoing, notice must be provided within
a reasonable period ending after separation from Service in
the case of a Participant who separates from Service before
attaining age thirty-five (35). If such a Participant
subsequently returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
66
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two (2) year period
beginning one (1) year prior to the date the applicable event occurs, and ending
one (1) year after that date. In the case of a Participant who separates form
Service before the Plan Year in which age thirty-five (35) is attained, notice
shall be provided within the two (2) year period beginning one (1) year prior to
separation and ending one (1) year after separation.
8.7 SPECIAL SAFE HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING OR 401(K) PLANS
This paragraph shall apply to a Participant in a profit-sharing or 401(k) plan,
and to any distribution, made on or after the first day of the first Plan Year
beginning after 1988, from or under a separate account attributable solely to
Qualified Voluntary Contributions, as maintained on behalf of a Participant in a
money purchase pension plan or target benefit plan, if the following conditions
are satisfied:
(a) the Participant does not elect payments in the form of a life
annuity, and
(b) on the death of a Participant, the Participant's Vested
Account Balance will be paid to the Participant's Surviving
Spouse, but if there is no surviving Spouse, or if the
Surviving Spouse has consented to, in a manner conforming to a
Qualified Election, then to the Participant's Beneficiary.
(c) The surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the ninety (90) day
period following the date of the Participant's death. The
account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of account
balances for other types of distributions.
(d) If a Plan is otherwise exempt from the Qualified Joint and
Survivor Annuity requirements, the Qualified Joint and
Survivor Annuity requirements are not triggered unless the
Participant in the Plan actually elects a life annuity as a
distribution option.
(e) These safe harbor rules shall not be applicable to a
Participant in a profit-sharing or 401(k) plan if the Plan is
the recipient of a merger of assets from a plan which was
subject to the survivor annuity requirements of Code Sections
401(a)(11) and 417, and would therefore have a Qualified Joint
and Survivor Annuity as its normal form of benefit, unless
separate accounts or separate accounting was monitored for the
assets of the merged plan.
(f) Money purchase and target benefit plans are required to
include the Qualified Joint and Survivor Annuity option. These
Plans may eliminate any periodic payment options that are not
required by the Qualified Joint and Survivor Annuity rules
such as installment payments.
(g) The Participant may waive the spousal death benefit described
in this paragraph at any time provided that no such waiver
shall be effective unless it satisfies the conditions
(described in paragraph 8.4) that would apply to the
Participant's waiver of the Qualified Pre-Retirement Survivor
Annuity.
(h) Profit Sharing Plans satisfying all of the requirements of
this paragraph for a Participant such that the Plan is not
required to provide a Qualified Joint and Survivor Annuity for
the Participant, but that do provide such annuity (even if the
annuity is the normal form), may replace the Qualified Joint
and Survivor Annuity with payment in a single-sum distribution
form that is otherwise identical to such annuity in accordance
with the requirements under the Regulations Section
1.411(d)-4.
(i) If this paragraph 8.7 is operative, then all other provisions
of this Article VIII other than paragraph 8.8 are inoperative.
67
a) TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES Special transitional
rules apply to Participants who were not receiving benefits on August
23, 1984.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by the previous paragraphs of this Article, must be given the
opportunity to elect to have the prior paragraphs of this
Article apply if such Participant is credited with at least
one (1) Hour of Service under this Plan or a predecessor Plan
in a Plan Year beginning on or after January 1, 1976, and such
Participant had at least ten (10) Years of Service for vesting
purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one (1) Hour of Service
under this Plan or a predecessor plan on or after September 2,
1974, and who is not otherwise credited with any Service in a
Plan Year beginning on or after January 1, 1976, must be given
the opportunity to have his or her benefits paid in accordance
with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and
(b) above] must be afforded to the appropriate Participants
during the period commencing on August 23, 1984, and ending on
the date benefits would otherwise commence to said
Participants.
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY Any
Participant who has elected pursuant to paragraph 8.8(b) and any Participant who
does not elect under paragraph 8.8(a) or who meets the requirements of paragraph
8.8(a), except that such Participant does not have at least ten (10) years of
vesting Service when he or she separates from Service, shall have his or her
benefits distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity in accordance
with all of the following requirements:
(a) If benefits in the form of a life annuity become payable to a
married Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age, or
(2) dies on or after Normal Retirement Age while still
working for the Employer, or
(3) begins to receive payments on or after the Qualified
Early Retirement Age, or
(4) separates from Service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement
Age) and after satisfying the eligibility
requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive
such benefits, such benefits will be received under
this Plan in the form of a Qualified Joint and
Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election
Period must begin at least six (6) months before the
Participant attains Qualified Early Retirement Age
and end not more than ninety (90) days before the
commencement of benefits. Any election will be in
writing and may be changed by the Participant at any
time.
(b) A Participant who is employed after attaining the Qualified
Early Retirement Age will be given the opportunity to elect,
during the Election Period, to have a survivor annuity payable
on death. If the Participant elects the survivor annuity,
payments under such annuity must not be less than the payments
which would have been made to the Spouse under the Qualified
Joint and Survivor Annuity if the Participant had retired on
the day before his or her death. Any election under this
provision will be in writing and may be changed by the
Participant at any time. The Election Period begins on the
later of:
68
(1) the ninetieth day before the Participant attains the
Qualified Early Retirement Age, or
(2) the date on which participation begins, and ends on
the date the Participant terminates employment.
For purposes of this paragraph 8.9, Qualified Early Retirement Age is defined at
paragraph 1.80 herein.
8.10 ANNUITY CONTRACTS Any annuity contract distributed under this Plan must be
nontransferable. The terms of any annuity contract purchased and distributed by
the Plan to a Participant or Spouse shall comply with the requirements of this
Plan.
69
ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS A Participant shall always have a 100% vested and
nonforfeitable interest in his or her Elective Deferrals, Voluntary After-tax
Contributions, Qualified Voluntary Contributions, Required After-tax
Contributions, Qualified Non-Elective Contributions, Safe Harbor Matching
Contributions, Safe Harbor Non-Elective Contributions, SIMPLE 401(k), Qualified
Matching Contributions, Rollover and Transfer Contributions plus the earnings
thereon. No forfeiture of Employer contributions (including any minimum
contributions made under paragraph 15.2) will occur solely as a result of a
Participant's withdrawal of any Employee contributions.
9.2 EMPLOYER CONTRIBUTIONS A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the schedule selected in the Adoption
Agreement, provided that if a Participant is not already fully vested, he or she
shall become so upon attaining Normal Retirement Age, Early Retirement Age, on
death prior to normal retirement (provided the Participant has not terminated
employment prior to death), on retirement due to Disability, or on termination
of the Plan. Any contributions made on behalf of a Participant with a Disability
within the meaning of Code Section 22(e)(3) at the election of the Employer must
be fully vested when made.
9.3 VESTING OF EMPLOYER CONTRIBUTIONS IN A SIMPLE 401(K) PLAN A Participant
shall have a 100% vested and nonforfeitable interest in his or her account
attributable to any Employer contributions made under a SIMPLE 401(k) Plan.
9.4 COMPUTATION PERIOD A period used for determining Years of Service and Breaks
in Service used in calculating the vesting of a Participant. A Year of Service
means any twelve (12) consecutive month vesting computation period as elected in
the Adoption Agreement during which an Employee completes the number of Hours of
Service [not to exceed one-thousand (1,000)] as specified in the Adoption
Agreement. If the Plan utilizes the Elapsed Time method of crediting Service, a
vesting computation period for which the Employee receives credit for a Year of
Service will be determined under the Service crediting rules of paragraph 1.117.
9.5 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE Subject
to Article VI, the account balance of a Participant who is re-employed prior to
incurring five (5) consecutive one (1) year Breaks in Service or Periods of
Severance shall consist of any undistributed amount in his or her account as of
the date of re-employment plus any future contributions added to such account
plus the investment earnings on the account. The Vested Account Balance of such
Participant shall be determined by multiplying the Participant's account balance
(adjusted to include any distribution or redeposit made under paragraph 6.3) by
such Participant's vested percentage. All Service of the Participant, both prior
to and following the break, shall be counted when computing the Participant's
vested percentage.
9.6 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE Subject to
Article VI, if a Participant was not fully vested prior to termination of
employment and is re-employed after incurring five (5) consecutive one (1) year
Breaks in Service or Periods of Severance, a new account shall be established
for such Participant to separate his or her deferred vested and nonforfeitable
account, if any, from the account to which new allocations will be made. The
Participant's deferred account to the extent remaining shall be fully vested and
shall continue to share in earnings and losses of the Trust. When computing the
Participant's vested portion of the new account, all pre-break and post-break
Service shall be counted. However, notwithstanding this provision, no such
former Participant who has had five (5) consecutive one (1) year Breaks in
Service or Periods of Severance shall acquire a larger vested and nonforfeitable
interest in his or her prior account balance as a result of requalification
hereunder.
9.7 CALCULATING VESTED INTEREST A Participant's vested and nonforfeitable
interest, as determined by the Plan Administrator shall be calculated by
multiplying the fair market value of his or her account attributable to Employer
contributions on the Valuation Date concurrent with or preceding distribution by
the decimal equivalent of the vested percentage as of his or her termination
date. The amount attributable to Employer contributions for purposes of the
calculation includes amounts previously paid out pursuant to paragraph 6.3 and
not repaid. The Participant's vested and nonforfeitable interest, once
calculated above, shall be reduced to reflect those amounts previously paid out
to the Participant and not repaid by the Participant. The Participant's vested
and nonforfeitable interest so determined shall continue to share in the
investment earnings and any increase or decrease in the fair
70
market value of the Trust up to the Valuation Date preceding or coinciding with
payment.
a) FORFEITURES Any balance in the account of a Participant who has separated
from Service to which he or she is not entitled under the foregoing provisions,
shall be forfeited and applied as provided in the Adoption Agreement, or in
accordance with a uniform and nondiscriminatory policy established by the Plan
Administrator. The reallocation or other disposition of a nonvested benefit may
only occur if the Participant has received payment of his or her entire vested
benefit from the Plan or if the Participant has incurred five (5) consecutive
one (1) year Breaks in Service. To the extent that forfeitures are reallocated,
in the year in which the Participant terminates Service, a Participant shall not
share in the allocation of a forfeiture of any portion of his account balance or
of the forfeitures of any other Participant who has terminated Service in the
same or prior Plan Year(s). While awaiting reallocation or other disposition,
the Plan Administrator or his designate, if applicable, shall have the right to
leave the nonvested benefit in the Participant's account or may transfer the
nonvested benefit to a forfeiture suspense account. Amounts held in a forfeiture
suspense account may share in any increase or decrease in fair market value of
the assets of the Trust in accordance with Article V of the Plan. Such
determination shall be made by the Plan Administrator or his designate, if
applicable. If a Participant's account balance is forfeited prior to five
consecutive one-year Breaks in Service, the amount necessary to restore the
account balance to a Participant will be obtained from one of the following
sources; current Plan Year's forfeitures, an additional Employer contribution,
or earnings on investments for the applicable Plan Year, as determined by the
Plan Administrator. For purposes of this paragraph, if the value of a
Participant's Vested Account Balance is zero, the Participant shall be deemed to
have received a distribution of such Vested Account Balance. A Highly
Compensated Employee's Matching Contributions may be forfeited, even if vested,
if the contributions to which they relate are Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions. Benefits with respect to
Participants who cannot be located as provided at paragraph 7.15 hereof will be
treated in the same manner as a forfeiture.
9.9 AMENDMENT OF VESTING SCHEDULE No amendment to the Plan shall have the effect
of decreasing a Participant's Vested Account Balance determined without regard
to such amendment as of the later of the date such amendment is adopted or the
date it becomes effective. Further, if the vesting schedule of the Plan is
amended, or the Plan is amended in any way that directly or indirectly affects
the computation of any Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to or from a Top-Heavy vesting schedule,
each Participant with at least three (3) Years of Service with the Employer may
elect, during the election period defined herein, to have his or her
nonforfeitable percentage computed under the Plan without regard to such
amendment. For Participants who do not have at least one (1) Hour of Service in
any Plan Year beginning after 1988, the preceding sentence shall be applied by
substituting "five (5) Years of Service" for "three (3) Years of Service" where
such language appears. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the later of:
(a) sixty (60) days after the amendment is adopted,
(b) sixty (60) days after the amendment becomes effective, or
(c) sixty (60) days after the Participant is issued written notice
of the amendment by the Employer or the Trustee.
If the Trustee notifies the Participants involved, the Plan may be charged for
the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's account balance may be reduced to the extent permitted
under Code Section 412(c)(8) relating to financial hardships. For purposes of
this paragraph, a Plan amendment which has the effect of decreasing a
Participant's account balance with respect to benefits attributable to Service
before the amendment, shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of a Plan is amended, in the case of an
Employee who is a Participant as of the later of the date such amendment is
adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such Employee's Employer-derived accrued benefit
will not be less than the percentage computed under the Plan without regard to
such amendment.
71
No amendment to the Plan shall be effective to eliminate or restrict an optional
form of benefit. The preceding sentence shall not apply to a Plan amendment that
eliminates or restricts the ability of a Participant to receive payment of his
or her account balance under a particular form of benefit if the amendment
satisfies the conditions in (d) or (e) below:
(d) The amendment provides a single sum distribution form that is
otherwise identical to the optional form of benefit
restricted. For purposes of this condition, a single-sum
distribution form is otherwise identical only if it is
identical in all respects to the eliminated or restricted
optional form of benefit (or would be identical except that it
provides greater rights to the Participant) except with
respect to the timing of payments after commencement.
(e) The amendment is not effective unless it provides that the
amendment shall not apply to any distribution with an Annuity
Starting Date earlier than the earlier of (i) the ninetieth
(90th) day after the date the Participant receiving the
distribution has been furnished a summary that reflects the
amendment and that satisfies the ERISA requirements at 29 CFR
2520.104b-3 relating to a summary of material modifications or
(ii) the first day of the second Plan Year following the Plan
Year in which the amendment is adopted.
9.10 SERVICE WITH CONTROLLED GROUPS All Years of Service with all members of a
controlled group of corporations [as defined in Code Section 414(b) as modified
by Code Section 415(h)], all commonly controlled trades or businesses [as
defined in Code Section 414(c) as modified by Code Section 415(h)], or members
of an affiliated service group [as defined in Code Section 414(m)] of which the
Employer is a part, and any other entity required to be aggregated with the
Employer pursuant to Regulations under Code Section 414(o), shall be considered
for purposes of determining a Participant's nonforfeitable percentage.
9.11 COMPLIANCE WITH UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
OF 1994 Notwithstanding any provision of this Plan to the contrary, Years of
Service for vesting will be credited to Participants with respect to periods of
qualified military service as provided in Code Section 414(u).
72
ARTICLE X
LIMITATIONS ON ALLOCATIONS
a) PARTICIPATION IN THIS PLAN ONLY If the Participant does not participate in
and has never participated in another Qualified Plan, a Welfare Benefit Fund,
individual medical account as defined in Code Section 415(l)(2), or a Simplified
Employee Pension Plan maintained by the adopting Employer, which provides an
Annual Addition, the amount of Annual Additions which may be credited to the
Participant's account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount. Prior to determining the
Participant's actual Compensation for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on the basis of a
reasonable estimate of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year will be determined on the basis of
the Participant's actual Compensation for the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS If there is an Excess Annual
Addition due to an error in estimating a Participant's Compensation for a
Limitation Year under paragraph 10.1, an error in estimating the amount of
Elective Deferrals of the Participant, or as a result of the allocation of
forfeitures, the excess will be distributed to the affected Participant in the
order which follows:
(a) Any Voluntary or Required After-tax Contributions plus the
investment earnings thereon, to the extent they would reduce
the excess, shall be returned to the Participant.
(b) Simultaneously, with the return of any Voluntary or Required
After-tax Contributions (plus attributable earnings), any
associated Employer Matching Contribution(s) plus the
investment earnings thereon that relate to the returned
Voluntary or Required After-tax Contributions, to the extent
they would reduce the excess, will be held either unallocated
in a suspense account or forfeited in accordance with the
"spillover method" as elected in the Adoption Agreement.
(c) Elective Deferrals plus the investment earnings thereon shall
be returned to the Participant to the extent they would reduce
the excess.
(d) Simultaneously with the return of the Elective Deferrals (plus
attributable earnings), any associated Employer Matching
Contribution(s) plus the investment earnings thereon that
relate to the returned Elective Deferrals, to the extent they
would reduce the excess, will be either held unallocated in a
suspense account or forfeited in accordance with the
"spillover method" as elected in the Adoption Agreement.
(e) If, after the application of subparagraphs (a) through (d), an
excess still exists, the excess will be held either
unallocated in a suspense account or forfeited in accordance
with the "spillover method" as elected in the Adoption
Agreement.
(f) When the suspense account method is used, and the Participant
is not covered by the Plan at the end of the Limitation Year,
the Plan Administrator will apply the suspense account to
reduce future Employer contributions for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year until the Excess Annual Addition is
eliminated. If a suspense account is in existence at any time
during a Limitation Year, all amounts in the suspense account
must be allocated to Participant accounts before any Employer
contributions or any Employee contributions may be made to the
Plan for that Limitation Year. If a suspense account is in
73
existence at any time during a Limitation Year pursuant to
this paragraph, it will not participate in the allocation of
investment gains or losses.
10.3 PARTICIPATION IN MULTIPLE DEFINED CONTRIBUTION PLANS The Annual Additions
which may be credited to a Participant's account under this Plan for any
Limitation Year will not exceed the Maximum Permissible Amount. With respect to
this Plan, the Maximum Permissible Amount is reduced by the Annual Additions
credited to a Participant's account under any other qualified Master or
Prototype Defined Contribution plans, Welfare Benefit funds, individual medical
accounts as defined in Code Section 415(l)(2), and Simplified Employee Pension
Plans maintained by the Employer, which provide an Annual Addition for the same
Limitation Year. If the Annual Additions with respect to the Participant under
other Defined Contribution Plans, Welfare Benefit funds, individual medical
accounts and Simplified Employee Pension Plans maintained by the Employer are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated under this Plan will be
reduced so that the Annual Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other Defined Contribution
Plans and Welfare Benefit funds in the aggregate are equal to or greater than
the Maximum Permissible Amount, no amount will be contributed or allocated to
the Participant's account under this Plan for the Limitation Year. Prior to
determining the Participant's actual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount for a Participant in the
manner described in paragraph 10.1. As soon as administratively feasible after
the end of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year. If the Participant is covered under
another qualified Defined Contribution Plan maintained by the Employer which is
not a Master or Prototype Plan, Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will be limited in
accordance with this paragraph as though the other plan were a Master or
Prototype Plan unless the Employer specifies other limitations in the Adoption
Agreement.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS If a Participant's
Annual Additions under this Plan and such other plans as described in the
preceding paragraph would result in an Excess Annual Additions for a Limitation
Year due to an error in estimating a Participant's Compensation for a Limitation
Year under paragraph 10.3 or as a result of forfeitures, the Excess Annual
Additions will be deemed to consist of the Annual Additions last allocated
except that Annual Additions attributable to a Simplified Employee Pension Plan
will be deemed to have been allocated first and then Annual Additions to a
Welfare Benefit Fund or individual medical account as defined in Code Section
415(l)(2) will be deemed to have been allocated next regardless of the actual
Allocation Date. If an Excess Annual Addition was allocated to a Participant on
a Valuation or Allocation Date of this Plan which coincides with a valuation or
allocation date of another plan, the Excess Annual Additions attributed to this
Plan will be the product of:
(a) the total Excess Annual Additions allocated as of such date,
times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for
the Limitation Year as of such date under this Plan,
to
(2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date
under this and all the other qualified Master or
Prototype Defined Contribution Plans.
Any Excess Annual Additions attributed to this Plan will be disposed of in the
manner described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN If the Employer
maintains, or at any time maintained, a qualified Defined Benefit Plan (other
than Paired Plan #02001 or #02002) covering any Participant in this Plan, the
sum of the Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction will not exceed 1.0 in any Limitation Year. For any Plan Year
during which the Plan is Top-Heavy, the Defined Benefit and Defined Contribution
Plan Fractions shall be calculated in accordance with Code Section 416(h). The
Annual Additions which may be credited to the Participant's account under this
Plan for any Limitation Year will
74
be limited in accordance with the Adoption Agreement. This paragraph does not
apply for Limitation Years beginning on or after January 1, 2000.
75
ARTICLE XI
ANTIDISCRIMINATION TESTING
11.1 GENERAL TESTING REQUIREMENTS With respect to each Plan Year, an Employer's
Plan which offers a Code Section 401(k) cash or deferred arrangement and any
contributions made thereunder must satisfy the Average Deferral Percentage Test
("ADP Test") and, if applicable, the Average Contribution Percentage Test ("ACP
Test"). Under each of these tests, the Average Deferral Percentage (ADP) and the
Average Contribution Percentage (ACP) for Highly Compensated Employees may not
exceed the ADP and ACP for Non-Highly Compensated Employees by more than the
amount permitted by application of the basic limit or the alternative limit.
These limits are described at paragraphs 11.2 and 11.6 herein. If the ADP or ACP
for Highly Compensated Employees exceeds the basic limit or the alternative
limit, the applicable average for Highly Compensated Employees either must be
reduced to the maximum permitted under the most liberal limit or the average of
the Non-Highly Compensated Employees is increased.
The reduction in the average is determined in accordance with paragraph 11.4
herein. In lieu of reducing the applicable average for the Highly Compensated
Employees, the Employer may elect to make an additional Qualified Non-Elective
Contribution (QNEC) and/or a Qualified Matching Contribution (QMAC) for
Non-Highly Compensated Employees to increase their Average Deferral Percentage
and/or Average Contribution Percentage to the point where the Plan satisfies the
ADP and/or the ACP Test. These qualified contributions are described at
paragraph 11.5 herein.
If the Plan can only satisfy the ADP Test and the ACP Test by application of the
alternative limit, the Plan must apply the multiple use test as described at
paragraph 11.7(b) hereof. If the Plan fails to satisfy the multiple use test,
the Employer must either make correcting distributions to affected Highly
Compensated Employees or make QNEC and/or QMAC contributions for Non-Highly
Compensated Employees to the point where the Plan satisfies the multiple use
test.
11.2 ADP TESTING LIMITATIONS
(a) PRIOR YEAR TESTING - If elected by the Employer in the
Adoption Agreement, the ADP for a Plan Year for Participants
who are Highly Compensated Employees for each Plan Year and
the Prior Plan Year's ADP for Participants who were Non-Highly
Compensated Employees for the Prior Plan Year must satisfy the
basic limit set forth in (1) or the alternative limit set
forth at (2):
(1) The ADP for the Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the Prior Plan Year's ADP for Participants
who were Non-Highly Compensated Employees for the
Prior Plan Year multiplied by 1.25; or
(2) The ADP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the Prior Year's ADP for Participants who
were Non-Highly Compensated Employees for the Prior
Plan Year multiplied by 2.0, provided that the ADP
for Participants who are Highly Compensated Employees
does not exceed the ADP for Participants who were
Non-Highly Compensated Employees in the Prior Plan
Year by more than two (2) percentage points.
(b) For the first Plan Year of a Plan, where the Plan permits a
Participant to make Elective Deferrals and the Plan is not a
successor Plan, for purposes of the foregoing limits, the
Prior Plan Year's Non-Highly Compensated Employees' ADP shall
be 3%, unless the Employer has elected in the Adoption
Agreement to use the current Plan Year's ADP for these
Participants.
76
(c) CURRENT YEAR TESTING - If no election is made by the Employer
in the Adoption Agreement, the ADP limits in (1) and (2),
above, will be applied by comparing the current Plan Year's
ADP for Participants who are Highly Compensated Employees with
the current Plan Year's ADP for Participants who are
Non-Highly Compensated Employees. This election can only be
changed if the Plan meets the requirements for changing to
Prior Plan Year testing set forth in IRS Notice 98-1 (or
superseding guidance).
11.3 SPECIAL RULES RELATING TO APPLICATION OF THE ADP TEST
(a) A Participant is a Highly Compensated Employee for a
particular Plan Year if he or she meets the definition of a
Highly Compensated Employee in effect for that Plan Year.
Similarly, a Participant is a Non-Highly Compensated Employee
for a particular Plan Year if he or she does not meet the
definition of a Highly Compensated Employee in effect for that
Plan Year.
(b) The Actual Deferral Percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for
purposes of the ADP Test) allocated to his or her accounts
under two (2) or more arrangements described in Code Section
401(k), that are maintained by the Employer, shall be
determined as if such Elective Deferrals (and, if applicable,
such Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both) were made under a single
arrangement. If a Highly Compensated Employee participates in
two (2) or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending
with or within the same calendar year shall be treated as a
single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate if mandatorily
disaggregated under Regulations issued under Code Section
401(k).
(c) In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b) only if aggregated with
one (1) or more other plans, or if one (1) or more other plans
satisfy the requirements of such Code Sections only if
aggregated with this Plan, then this section shall be applied
by determining the Actual Deferral Percentage of Participants
as if all such plans were a single plan. Any adjustments to
the Non-Highly Compensated Employee ADP for the Prior Plan
Year will be made in accordance with IRS Notice 98-1 and any
superseding guidance, unless the Employer has elected in the
Adoption Agreement to use the current year testing method.
Plans may be aggregated in order to satisfy Code Section
401(k) only if they have the same Plan Year and use the same
ADP testing method.
(d) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP Test and the amount of Qualified
Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
(e) For purposes of the ADP Test, Elective Deferrals, Qualified
Non-Elective Contributions and Qualified Matching
Contributions must be made before the end of the twelve (12)
month period immediately following the Plan Year to which the
contributions relate.
11.4 CALCULATION AND DISTRIBUTION OF EXCESS CONTRIBUTIONS AND EXCESS AGGREGATE
CONTRIBUTIONS
(a) REDUCING THE AVERAGE FOR HIGHLY COMPENSATED EMPLOYEES - If
necessary, the ADP and/or ACP for Highly Compensated Employees
must be reduced to the maximum allowed by the applicable limit
at paragraph 11.2 and 11.6. The average is reduced on a
step-by-step leveling basis beginning by reducing the Actual
Deferral Percentage or the Actual Contribution Percentage for
the Highly Compensated Employee with the highest percentage
until the average is reduced to the maximum allowed or until
the Actual Deferral Percentage or Actual Contribution
Percentage for such Highly Compensated Employee is lowered to
that of the Highly Compensated Employee with the next highest
percentage. This process continues until the ADP and/or the
ACP is lowered to the maximum allowed for the Plan Year. The
excess dollar amount
77
attributable to each affected Highly Compensated Employee is
then totaled for purposes of correcting distributions
determined at paragraph (b) below.
(b) CORRECTING DISTRIBUTIONS TO HIGHLY COMPENSATED EMPLOYEES - The
total amount to be distributed as determined under paragraph
(a) is allocated to Highly Compensated Employees on the basis
of the dollar amount included for such Employee in the
numerator of the Actual Deferral Percentage or the Actual
Contribution Percentage, as applicable. The distribution for
each affected Highly Compensated Employee is determined on a
leveling basis similar to that described at paragraph (a)
except that the process is based on dollars rather than
percentages. Excess Contributions and Excess Aggregate
Contributions are allocated to the Highly Compensated
Employees with the largest amount of Employer contributions
taken into account in calculating the ADP or ACP Test for the
year in which the excess arose, beginning with the Highly
Compensated Employee with the largest amount of such Employer
contributions and continuing in descending order until all the
Excess Contributions and Excess Aggregate Contributions have
been allocated. For purposes of the preceding sentence, the
"largest amount" is determined after distribution of any
Excess Contribution and Excess Aggregate Contributions. After
correcting distributions are allocated, it is not necessary to
recompute the Highly Compensated Employee averages to
determine if they satisfy the ADP Test and/or the ACP Test.
Distributions of Excess Contributions and Excess Aggregate
Contributions are to be made in accordance with paragraphs
7.12 and 7.13 hereof.
11.5 QUALIFIED NON-ELECTIVE AND/OR MATCHING CONTRIBUTIONS The Employer may make
a Qualified Non-Elective Contribution (QNEC) or Qualified Matching Contribution
(QMAC) for Non-Highly Compensated Employees (whether or not so designated in the
Adoption Agreement) to increase the Average Deferral Percentage and/or Average
Contribution Percentage to the point where the Plan passes the ADP Test and/or
the ACP Test. The following rules apply with respect to such contributions:
(a) A QNEC or QMAC used in the ADP Test may not also be included
in the ACP Test.
(b) If testing is done on the basis of current Plan Year data,
QNECs and/or QMACs must be made and credited to Participant
accounts not later than the last day of the twelve (12)
consecutive month period following the end of the Plan Year
being tested.
(c) If testing is done on the basis of Prior Plan Year data for
Non-Highly Compensated Employees, QNECs and/or QMACs for such
Employees must be contributed not later than the last day of
the Plan Year being tested.
(d) If the Employer makes Non-Elective Contributions which are not
designated as Qualified Non-Elective Contributions at the time
of the contribution to the Plan, the Plan Administrator may
redesignate such contributions as Qualified Non-Elective
Contributions if the contributions otherwise satisfy the
requirements of a Qualified Non-Elective Contribution.
(e) The Employer's contribution will be allocated to a group of
Non-Highly Compensated Participants designated by the Plan
Administrator. The allocation will be the lesser of the amount
required to pass the ADP/ACP Test, or the maximum permitted
under Code Section 415.
11.6 ACP TESTING LIMITATIONS Employee contributions and Matching Contributions
must meet the nondiscrimination requirements of Code Section 401(a)(4) and the
Average Contribution Percentage (hereinafter ACP) Test of Code Section 401(m).
If Employee contributions (including any Elective Deferrals recharacterized as
Voluntary After-tax Contributions) or Matching Contributions are made in
connection with a cash or deferred arrangement, the ACP Test is in addition to
the ADP Test under Code Section 401(k). Qualified Matching Contributions and
Qualified Non-Elective Contributions used to satisfy the ADP test may not be
used to satisfy the ACP test.
78
(a) PRIOR YEAR TESTING - If elected by the Employer in the
Adoption Agreement, the ACP for a Plan Year for eligible
Participants who are Highly Compensated Employees for each
Plan Year and the prior Plan Year's ACP for eligible
Participants who were Non-Highly Compensated Employees for the
Prior Plan Year must satisfy one of the following tests:
(1) The ACP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the prior Plan Year's ACP for eligible
Participants who were Non-Highly Compensated
Employees for the Prior Plan Year multiplied by 1.25;
or
(2) The ACP for a Plan Year for Participants who are
Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ACP for eligible
Participants who were Non-Highly Compensated
Employees for the Prior Plan Year multiplied by 2.0,
provided that the ACP for eligible Participants who
are Highly Compensated Employees does not exceed the
ACP for eligible Participants who were Non-Highly
Compensated Employees in the Prior Plan Year by more
than two (2) percentage points.
(b) For the first Plan Year of a Plan, where this Plan permits any
eligible Participant to make Employee contributions, provides
for Matching Contributions, or both, and the Plan is not a
successor Plan, for purposes of the foregoing limits, the
Prior Plan Year's Non-Highly Compensated Employees' ACP shall
be 3% unless the Employer has elected in the Adoption
Agreement to use the current Plan Year's ACP for these
Participants.
(c) CURRENT YEAR TESTING - If no election is made by the Employer
in the Adoption Agreement, the ACP limits in (1) and (2),
above, will be applied by comparing the current Plan Year's
ACP for eligible Participants who are Highly Compensated
Employees for the Plan Year with the current Plan Year's ACP
for eligible Participants who are Non-Highly Compensated
Employees. This election can only be changed if the Plan meets
the requirements for changing to Prior Plan Year testing set
forth in IRS Notice 98-1 (or superseding guidance).
11.7 SPECIAL RULES RELATING TO THE APPLICATION OF THE ACP TEST
(a) A Participant is a Highly Compensated Employee for a
particular Plan Year if he or she meets the definition of a
Highly Compensated Employee in effect for that Plan Year.
Similarly, a Participant is a Non-Highly Compensated Employee
for a particular Plan Year if he or she does not meet the
definition of a Highly Compensated Employee in effect for that
Plan Year.
(b) If one or more Highly Compensated Employees participate in
both a cash or deferred arrangement and a plan subject to the
ACP Test maintained by the Employer and the sum of the ADP and
ACP of those Highly Compensated Employees subject to either or
both tests exceeds the Aggregate Limit, then the ADP or ACP of
those Highly Compensated Employees who also participate in a
cash or deferred arrangement will be reduced in accordance
with paragraph 11.4 so that the limit is not exceeded. The
amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as
an Excess Aggregate Contribution. The ADP and ACP of the
Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests and are
deemed to be the maximum permitted under such tests for the
Plan Year. Multiple use of the aggregate limit does not occur
if either the ADP and ACP of the Highly Compensated Employees
does not exceed 1.25 multiplied by the ADP and ACP of the
Non-Highly Compensated Employees.
(c) For purposes of this paragraph, the Actual Contribution
Percentage for any Participant who is a Highly Compensated
Employee and who is eligible to have Contribution Percentage
Amounts allocated to his or her account under two (2) or more
plans described in Code Section 401(a) or arrangements
described in Code Section 401(k) that are maintained by the
Employer, shall be determined as if the total of such
Contribution Percentage Amounts were made under a single plan.
If a Highly Compensated Employee participates in two (2) or
more cash or deferred arrangements that have different Plan
Years, all cash or deferred
79
arrangements ending with or within the same calendar year
shall be treated as a single arrangement. Notwithstanding the
foregoing, certain plans shall be treated as separate if
mandatory disaggregation under the Regulations issued under
Code Section 410(b) apply.
(d) In the event that this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(m), or 410(b) only if aggregated with
one (1) or more other plans, or if one (1) or more other plans
satisfy the requirements of such Code Sections only if
aggregated with this Plan, then this section shall be applied
by determining the Actual Contribution Percentage of Eligible
Participants as if all such plans were a single plan. Any
adjustments to the Non-Highly Compensated Employee ACP for the
Prior Plan Year will be made in accordance with IRS Notice
98-1 and any superseding guidance, unless the Employer has
elected in the Adoption Agreement to use the Current Year
testing method. Plans may be aggregated in order to satisfy
Code Section 401(m) only if the aggregated plans have the same
Plan Year and use the same ACP testing method.
(e) For purposes of the ACP Test, Employee contributions are
considered to have been made for the Plan Year in which
contributed to the Plan. Matching Contributions and Qualified
Matching and Non-Elective Contributions will be considered
made for a Plan Year if made no later than the end of the
twelve (12) month period beginning on the day after the close
of the Plan Year.
(f) The determination and treatment of the Actual Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
11.8 RECHARACTERIZATION If the Employer allows for Voluntary After-tax
Contributions in the Adoption Agreement, a Participant may treat his or her
Excess Contributions allocated to him or her as an amount distributed to the
Participant and then contributed by the Participant to the Plan. Recharacterized
amounts will remain nonforfeitable and subject to the same distribution
requirements as Elective Deferrals. Amounts may not be recharacterized by a
Highly Compensated Employee to the extent that such amount in combination with
other Employee contributions made by that Employee would exceed any stated limit
under the Plan on Voluntary After-tax Contributions.
Recharacterization must occur no later than two and one-half (2 1/2) months
after the last day of the Plan Year for which such Excess Contributions arose
and is deemed to occur no earlier than the date the last Highly Compensated
Employee is informed in writing of the amount recharacterized and the
consequences thereof. Recharacterized amounts will be taxable to the Participant
for the Participant's tax year in which the Participant would have received them
in cash.
11.9 NONDISCRIMINATION TESTS IN A SIMPLE 401(K) PLAN The ADP/ACP Tests described
this Article XI are treated as satisfied for any Plan Year for which the
Employer has adopted and complied with the provisions of the SIMPLE 401(k)
Adoption Agreement.
11.10 SAFE HARBOR RULES OF APPLICATION
(a) The Employer may elect in a cash or deferred adoption
agreement to apply the safe harbor plan provisions found in
paragraphs 11.10 through 11.17. Except as otherwise permitted,
an Employer must elect the Safe Harbor Plan provisions and
must satisfy the notice requirements of paragraph 11.16 prior
to the beginning of the Plan Year to which the Safe Harbor
provisions will be applied. The Employer must apply the Safe
Harbor provisions for the entire Plan Year, including any
short Plan Year. An Employer who elects in the Adoption
Agreement and operationally satisfies the Safe Harbor
provisions of paragraphs 11.10 through 11.17 is not subject to
the nondiscrimination requirements of 11.2. An Employer who
elects to provide additional Matching Contributions as set
forth in paragraph 11.14 will be subject to the
nondiscrimination provisions of paragraph 11.6, unless the
additional Matching Contributions satisfy the ACP test safe
harbor provisions in paragraph 11.14.
80
(b) The Employer may elect in the Adoption Agreement either to
make a Safe Harbor Non-Elective Contribution on behalf of each
eligible Employee who is eligible to participate in the Plan,
or to make a Safe Harbor Matching Contribution on behalf of
each eligible Employee who is eligible to participate in the
Plan and who is making Elective Deferrals.
(c) The Safe Harbor Non-Elective Contribution will be made on
behalf of each eligible Employee who is eligible to
participate in the Plan equal to at least 3% of the Employee's
Compensation.
(d) The Safe Harbor Matching Contribution shall be made under the
Basic Matching Formula or an Enhanced Matching Formula as
described below.
(e) A Plan intending to satisfy the requirements of Code Sections
401(k)(12) and 401(m)(11) [a "Safe Harbor CODA"] generally
must satisfy such requirements, including the notice
requirement, for the entire Plan Year. See Notice 98-52,
1988-46 I.R.B. 16, Notice 2000-3, 2000-4 I.R.B. 413, and
Revenue Procedure 2000-29, 2000-6 I.R.B. 553.
(1) BASIC MATCHING CONTRIBUTION FORMULA - The Basic
Matching Formula provides a Matching Contribution on
behalf of each eligible Employee who is making
Elective Deferrals to the Plan in an amount equal to
100% of the amount of the Employee's Elective
Deferrals that do not exceed 3% of the Employee's
Compensation and 50% of the amount of the Employee's
Elective Deferrals that exceed 3% of the Employee's
Compensation but do not exceed 5% of the Employee's
Compensation. A Plan satisfying the ADP Safe Harbor
using the Basic Matching Formula automatically
satisfies the ACP Test, if no After-tax or other
Matching Contribution is made under the Plan.
(2) ENHANCED MATCHING FORMULA - The Enhanced Matching
Formula provides a Matching Contribution on behalf of
each Eligible Employee who is making Elective
Deferrals to the Plan under a formula, that, at any
rate of Elective Deferrals, provides an aggregate
amount of Matching Contributions at least equal to
the aggregate amount of Matching Contributions that
would have been provided under the Basic Matching
Formula. In no event shall the aggregate amount of
Matching Contributions under an Enhanced Matching
Formula exceed 6% of an eligible Employee's
Compensation. Under the Enhanced Matching Formula,
the rate of Matching Contributions may not increase
as a Participant's rate of Elective Deferrals
increases. A Plan satisfying the ADP Safe Harbor
using the Enhanced Matching Formula under which
Matching Contributions made with respect to Elective
Deferrals are not made in excess of 6% of the
eligible Employee's Compensation, automatically
satisfies the ACP Test if no other Matching
Contribution is made under the Plan.
(3) ADDITIONAL DISCRETIONARY MATCHING CONTRIBUTION - An
Employer may elect in the Adoption Agreement for Plan
Years [beginning after January 1, 2000] to provide an
additional discretionary Matching Contribution. Any
such contribution cannot exceed 4% of a Participant's
Compensation. This is a limit on the total Matching
Contribution formula, and is not a limit on the
percentage of Compensation which is deferred and
taken into account under the matching formula.
(4) LIMITATION ON MATCHING CONTRIBUTIONS TO HIGHLY
COMPENSATED EMPLOYEES - The Matching Contribution
requirement will not be satisfied if, at any rate of
Elective Deferrals, the rate of Matching
Contributions that would apply with respect to any
Highly Compensated Employee who is making Elective
Deferrals under the Plan is greater than the rate of
Matching Contributions that would apply with respect
to any Non-Highly Compensated Employee who is making
Elective Deferrals to the Plan and who has the same
rate of Elective Deferrals.
81
a) SAFE HARBOR DEFINITIONS
(a) "ACP TEST SAFE HARBOR" is the method described in paragraph
11.14 for satisfying the ACP Test of Code Section 401(m)(2).
(b) "ACP TEST SAFE HARBOR MATCHING CONTRIBUTIONS" are Matching
Contributions described in paragraph 11.5.
(c) "ADP TEST SAFE HARBOR" is the method described in paragraph
11.13 for satisfying the ADP Test of Code Section 401(k)(3).
(d) "ADP TEST SAFE HARBOR CONTRIBUTIONS" are Matching
Contributions and Non-Elective Contributions described in
paragraph 11.10.
(e) "COMPENSATION" is defined in paragraph 1.16 with no dollar
limit other than the limit imposed by Code Section 401(a)(17)
as it applies to the Compensation of a Non-Highly Compensated
Employee. Solely for purposes of determining the Compensation
subject to a Participant's Salary Deferral Agreement, the
Employer may use an alternative definition to the one
described in the preceding sentence, provided such alternate
definition is a reasonable definition with the meaning of
Section 1.414(s)-1(d)(2) of the Regulations, and permits each
Participant to elect sufficient Elective Deferrals to receive
the maximum amount of Matching Contributions (determined using
the definition of Compensation described in the preceding
sentence) available to the Participant under this Plan.
(f) "ELIGIBLE EMPLOYEE" means an Employee eligible to make
Elective Deferrals under the Plan for any part of the Plan
Year or who would be eligible to make Elective Deferrals but
for a suspension due to a Hardship distribution described in
paragraph 6.9 of the Plan or to statutory limitations, such as
Code Sections 402(g) and 415.
(g) "MATCHING CONTRIBUTIONS" are contributions made by the
Employer on account of an Eligible Employee's Elective
Deferrals.
b) REQUIRED RESTRICTIONS ON SAFE HARBOR CONTRIBUTIONS
(a) Safe Harbor Matching Contributions and Safe Harbor
Non-Elective Contributions are Matching and Non-Elective
Contributions respectively, that are:
(1) nonforfeitable within the meaning of Treasury
Regulations Section 1.401(k)-1(c),
(2) are subject to the distribution restrictions of Code
Section 401(k)(2)(B) and Treasury Regulations Section
1.401(k)-1(d), and
(3) used to satisfy the Safe Harbor Contribution
requirements.
(b) Pursuant to Code Section 401(k)(2)(B) and Treasury Regulations
Section 1.401(k)-1(d), such contributions (and earnings
thereon) must not be distributable earlier than separation
from Service, death, Disability, an event described in Code
Section 401(k)(10), or in the case of a profit-sharing or
stock bonus plan, the attainment of age 59 1/2. Pursuant to
Code Section 401(k)(2)(B) and Treasury Regulations Section
1.401(k)-1(d)(2)(ii), these contributions shall not be
eligible for distribution for reasons of Hardship. A Plan
electing to use either of the Safe Harbor Matching or the
Non-Elective Contribution provisions shall not require that an
Employee be employed on the last day of the Plan Year or
impose an hourly requirement in order for the Employee to be
eligible to receive a Safe Harbor Non-Elective Contribution or
a Safe Harbor Matching Contribution.
82
(c) Such contributions must satisfy the ADP Test Safe Harbor
without regard to permitted disparity under Code Section
401(l).
(d) Safe Harbor Matching or Non-Elective Contributions cannot be
used to satisfy the Safe Harbor Contribution requirements with
respect to more than one (1) Plan.
(e) A Plan will fail to satisfy the ADP Test Safe Harbor or the
ACP Test Safe Harbor for a Plan Year unless the Plan Year is
twelve (12) months in duration or in the case of the first
Plan Year of a newly established Plan (other than a successor
Plan), the Plan Year is at least three (3) months in duration
(or any shorter period in the case of a newly established
Employer that establishes the Plan as soon as administratively
feasible after the Employer came into existence). If the
Employer amends an existing Defined Contribution Plan to offer
the Safe Harbor provisions, the 401(k) arrangement of the Plan
must be at least three (3) months in duration.
(f) If the Safe Harbor provisions are an amendment and restatement
of an existing Plan, any contributions made prior to the
adoption of the Safe Harbor provisions which are subject to a
vesting schedule will continue to vest according to the
vesting schedule in effect prior to the amendment or
restatement of the Plan.
11.13 ADP TEST SAFE HARBOR
(a) The Employer may elect in the Adoption Agreement to make Basic
Safe Harbor Matching Contributions, Enhanced Safe Harbor
Matching Contributions or Safe Harbor Non-Elective
Contributions.
(b) Notwithstanding the requirement in (a) above that the Employer
make the ADP Test Safe Harbor Contributions to the Defined
Contribution Plan indicated in the Adoption Agreement, such
contributions will not be made to this Plan unless the
requirements of paragraph 11.17 are met.
ACP TEST SAFE HARBOR The Employer maintaining a 401(k) Plan may elect in the
Adoption Agreement to make additional Matching Contributions in addition to the
Safe Harbor Matching Contributions made to the Plan. These additional Matching
Contributions may be subject to the ACP Test Safe Harbor requirements instead of
testing the contributions under paragraph 11.2. If the Employer elects using the
current year testing method to test the additional Matching Contributions for
nondiscrimination as set forth in paragraph 11.2, the ACP Test Safe Harbor will
be satisfied if the following conditions are met:
(a) no Matching Contribution may be made with respect to a
Participant's Elective Deferrals and/or Voluntary After-tax
Contributions which exceed 6% of Compensation;
(b) the amount of any discretionary Matching Contribution made
after the 1999 Plan Year may not exceed 4% of the
Participant's Compensation;
(c) the rate of Matching Contributions made to the Plan may not
increase as the rate of Elective Deferrals increase;
(d) no Highly Compensated Employee may receive a greater rate of
match than a Non-Highly Compensated Employee; and
(e) the Employer must elect in the Adoption Agreement the vesting
schedule distribution restrictions and eligibility to receive
an allocation of these additional Matching Contributions.
a) SAFE HARBOR STATUS The Employer may amend a profit-sharing or 401(k) plan
during a Plan Year to comply with the Safe Harbor provisions of this Article for
the Plan Year. In order to comply with these provisions, the Employer must:
(a) use the current year testing method;
83
(b) amend the Plan to add the Safe Harbor provisions no later than
thirty (30) days prior to the end of the Plan Year and apply
the Safe Harbor provisions for the entire Plan Year;
(c) satisfy the Safe Harbor contribution requirements using the
Safe Harbor Non-Elective Contribution;
(d) provide the Safe Harbor notice to Participants prior to the
beginning of the Plan Year for which the Plan amendment
applies which indicates the Employer will provide Basic or
Enhanced Matching Contributions or indicates that the Employer
may later amend the Plan to comply with the Safe Harbor
provisions by use of the Safe Harbor Non-Elective
Contribution;
(e) provide an additional notice to Participants at least thirty
(30) days prior to the end of the Plan Year only in the case
of Safe Harbor Non-Elective Contribution advising Participants
of the amendment; and
(f) actually provide the notice described in (e) above, should the
Employer amend the Plan to comply with the Safe Harbor
requirements.
A Safe Harbor 401(k) Plan may be amended during a Plan Year to reduce or
entirely eliminate on a prospective basis any safe harbor contribution which is
either a Basic or Enhanced Matching Contribution conditioned on the Employer
providing a notice to the Participants which explains the effect of the
amendment and specifies the following:
(g) informs the Participants they will have the opportunity to
amend their Salary Deferral Agreements;
(h) the effective date of the amendment is specified;
(i) Participants are given the opportunity prior to the effective
date of the amendment to amend their Salary Deferral
Agreement; and
(j) the amendment to the Plan does not take effect until the later
of thirty (30) days after the notice of the amendment is
provided to the Participant or the date the Employer adopts
the amendment.
An Employer who amends a Safe Harbor Plan to either reduce or eliminate the Safe
Harbor Matching Contribution under this paragraph or terminates the Plan during
the Plan Year, must continue to comply with all of the Safe Harbor requirements
of this paragraph until the amendment or Plan termination becomes effective. The
Plan must continue to use the current year testing method for the entire Plan
Year and satisfy the nondiscrimination test under paragraph 11.2, and if
applicable the nondiscrimination tests under paragraph 11.6.
11.16 SAFE HARBOR NOTICE REQUIREMENT The notice requirement is satisfied if each
Eligible Employee is given an annual written notice of the Employee's rights and
obligations under the Plan and the notice provided to the Employee satisfies the
content requirement and the timing requirement mandated under IRS Notices 98-52
and 2000-3.
(a) The notice shall be sufficiently accurate and comprehensive to
inform the Employee of the Employee's rights and obligations
under the Plan and written in a manner calculated to be
understood by the average Employee eligible to participate in
the Plan. The notice shall accurately describe:
(1) the Safe Harbor Matching or Non-Elective Contribution
Formula (including a description of the levels of
Matching Contributions, if any, available under the
Plan);
(2) any other contributions under the Plan (including the
potential for discretionary Matching Contributions)
and the conditions under which such contributions are
made;
84
(3) the Plan to which the Safe Harbor Contributions will
be made (if different than the Plan containing the
cash or deferred arrangement);
(4) the type and amount of Compensation that may be
deferred under the Plan;
(5) how to make cash or deferred elections, including any
administrative requirements that apply to such
elections;
(6) the periods available under the Plan for making cash
or deferred elections; and
(7) withdrawal and vesting provisions applicable to
contributions under the Plan.
(b) If the notice is provided to eligible Employees within a
reasonable period before the beginning of each Plan Year (or
in the Plan Year an Employee becomes eligible within a
reasonable period before the Employee becomes eligible), the
Plan shall satisfy the Safe Harbor notice requirements.
Notwithstanding the foregoing general rule, a notice shall
only be deemed to be provided in timely manner if the notice
is provided to each Employee who is eligible to participate in
the Plan for the Plan Year at least thirty (30) days [and no
more than ninety (90) days] before the beginning of the Plan
Year. If an Employee does not receive the notice because he or
she only becomes eligible to participate in the Plan after the
ninetieth day before the beginning of the Plan Year, the
requirement to give the notice will be satisfied if the notice
is provided not more than ninety (90) days before the Employee
becomes eligible to participate, but in no event later than
the date the Employee becomes eligible. The preceding sentence
shall apply in the case of any Employee eligible for the first
Plan Year in which an Employee becomes eligible under an
existing Code Section 401(k) cash or deferred arrangement.
(c) The Plan may provide the Safe Harbor notice in writing or by
electronic means. If provided electronically, the notice must
be no less understandable than a written paper document and at
the time of delivery of the electronic notice, the Employee is
advised that he or she may request to receive the notice in
writing at no additional charge. Supplemental notices may also
be given electronically under the same conditions.
(d) The Plan may also comply with the notice requirements by use
of the Summary Plan Description. The Safe Harbor notice must
cross-reference the applicable sections in the Summary Plan
Description. The information which may be contained in the
Summary Plan Description, as well as the notice, is the Safe
Harbor Contribution Formula, including a description of the
levels of Matching Contributions, if any, how to make Salary
Deferral elections, including any administrative requirements
that apply to such elections, and the periods available under
the Plan for making deferral elections.
11.17 SATISFYING SAFE HARBOR CONTRIBUTION REQUIREMENTS UNDER ANOTHER DEFINED
CONTRIBUTION PLAN
(a) GENERAL REQUIREMENTS - A Safe Harbor Matching or Non-Elective
Contribution may be made to this Plan or to another Defined
Contribution Plan maintained by the Employer that satisfies
Code Sections 401(a) or 403(a). The Employer electing this
option shall do so by identifying the plan that makes the Safe
Harbor Contribution in the Adoption Agreement. If the Safe
Harbor Contributions are made to another Defined Contribution
Plan, the Safe Harbor Contribution requirements must be
satisfied in the same manner as if the contributions were
being made to this Plan. A Safe Harbor Contribution made to
another Defined Contribution Plan shall not satisfy this Safe
Harbor requirement unless each Employee eligible to
participate in this Plan is eligible to participate in the
other Defined Contribution Plan under the same terms and
conditions.
(b) SAME PLAN YEAR REQUIREMENT - In order to satisfy the Safe
Harbor Contribution requirements, this Plan and the other
Defined Contribution Plan to which the Safe Harbor
Contribution is to be made must have the same Plan Year.
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(c) AGGREGATION AND DISAGGREGATION RULES - The rules that apply
for purposes of aggregating and disaggregating cash or
deferred arrangement and Plans under Code Sections 401(k) and
401(m) also apply for purposes of Code Sections 401(k)(12) and
401(m)(11), respectively. All cash or deferred arrangements
included in a Plan are treated as a single cash or deferred
arrangement that must satisfy the Safe Harbor Contribution and
notice requirements. Moreover, two (2) Plans within the
meaning of Regulations Section 1.410(b)-7(b) that are treated
as a single Plan pursuant to the permissive aggregation rules
of Treasury Regulations 1.410(b)-7(d) are treated as a single
Plan for purposes of the Safe Harbor requirements. Conversely,
a Plan [within the meaning of Code Section 414(l)] that
includes a cash or deferred arrangement covering both
collectively bargained employees and noncollectively bargained
employees is treated as two (2) separate Plans for purposes of
Code Section 401(k), and the ADP Safe Harbor need not be
satisfied with respect to both Plans in order for one (1) of
the Plans to take advantage of the ADP Test Safe Harbor.
Similarly, if, pursuant to Code Section 410(b)(4)(B), an
Employer applies Code Section 410(b) separately to the portion
of the Plan [within the meaning of Code Section 414(l)] that
benefits only Employees who satisfy age and Service conditions
under the Plan that are lower than the greatest minimum age
and Service conditions permitted under Code Section 410(a),
the Plan is treated as two (2) separate Plans for purposes of
Code Section 401(k), and the ADP Test Safe Harbor need not be
satisfied with respect to both plans in order for one (1) of
the Plans to take advantage of the ADP Test Safe Harbor.
86
ARTICLE XII
ADMINISTRATION
12.1 PLAN ADMINISTRATOR Unless otherwise provided in a separate Trust agreement,
the Plan shall be administered by the Plan Administrator who shall have the
authority to enforce the Plan on behalf of any persons having or claiming any
interest under the Plan and who shall be responsible for the operation of the
Plan in accordance with its terms. The Plan Administrator shall be the "named
fiduciary" for purposes of ERISA Section 402(a)(2) with the sole authority to
control and manage the operation and administration of the Plan, and will be
responsible for complying with the reporting and disclosure requirements of Part
1 of Subtitle B of Title I of ERISA and agent for service of legal process with
respect to the Plan. The Plan Administrator shall determine by rules of uniform
application all questions arising out of the administration, interpretation and
application of the Plan which determination(s) shall be conclusive and binding
on all parties. The Employer will serve as Plan Administrator unless an
individual or other entity (excluding the Trustee or Custodian, unless they are
the Employer sponsoring the Plan) is named to serve in such capacity. The Plan
Administrator may appoint or allocate the duties of the Plan Administrator among
several individuals or entities. The Plan Administrator's duties shall include:
(a) appointing the Plan's attorney, accountant, Service Provider,
actuary, Trustee, Custodian, investment manager, or any other
party needed to administer the Plan;
(b) directing the appropriate party with respect to payments from
the Trust;
(c) communicating with Employees regarding their participation and
benefits under the Plan, including the administration of all
claims procedures;
(d) maintaining all necessary records for the administration of
the Plan, antidiscrimination testing, and filing any returns
and reports with the Internal Revenue Service, Department of
Labor, or any other governmental agency;
(e) reviewing and approving any financial reports, investment
reviews, or other reports prepared by any party appointed by
the Employer under paragraph (a);
(f) establishing a funding policy and investment objectives
consistent with the purposes of the Plan and ERISA;
(g) construing and resolving any question of Plan interpretation
and questions of fact. The Plan Administrator's interpretation
of Plan provisions and resolution of questions of facts
including eligibility and amount of benefits under the Plan is
final and unless it can be shown to be arbitrary and
capricious, will not be subject to "de novo" review;
(h) monitoring the activities of the Trustee and the performance
of, and making changes when necessary to, the portfolio of the
Plan;
(i) obtaining a legal determination of the qualified status of all
domestic relations orders and complying with the requirements
of the law with regard thereto;
(j) administering the loan program including ensuring that any and
all loans made by the Plan are in compliance with the
requirements of the Internal Revenue Code and the Regulations
issued thereunder, and the Regulations issued by the
Department of Labor;
(k) determining from the records of the Employer, the
Compensation, Service, records, status, and the other facts
regarding Participants and Employees;
87
(l) to the extent provided in the Adoption Agreement, directing
the Trustee or Custodian with respect to the investments, in
the Plan Administrator's capacity as named fiduciary; and
(m) the right to employ others, including legal counsel who may,
but need not, be counsel to the Employer, to render advice
regarding any questions which may arise with respect to its
rights, duties and responsibilities under the Plan, and may
rely upon the opinions or certificates of any such person.
12.2 PERSONS SERVING AS PLAN ADMINISTRATOR Unless otherwise provided in a
separate Trust agreement, if the Employer is no longer in existence, and the
Plan or the Employer does not specify the person to take an action or otherwise
serve in the place of the Employer in connection with the operation of the Plan,
the Plan Administrator shall so act or serve, but if there is no person serving
as Plan Administrator, then a successor shall be designated in writing by a
majority of Participants whose accounts under the Plan have not yet been fully
distributed at such time. A majority of the legally competent Beneficiaries of a
deceased Participant then entitled to receive benefits may exercise the deceased
Participant's rights to participate in that designation and shall be considered
for that purpose to be one Participant, in the Participant's place.
12.3 ACTION BY EMPLOYER Action by the Employer under the Plan shall be carried
out by the sole proprietor, if the Employer is a sole proprietorship, by a
general partner of the Employer, if the Employer is a partnership, or by the
board of directors or a duly authorized officer of the Employer, if the Employer
is a corporation. If the Employer is no longer in existence, and the Plan does
not specify the person to take an action, or otherwise serve in the place of the
Employer, in connection with the operation of the Plan, the Plan Administrator
shall so act or serve, but if there is no person serving as Plan Administrator,
such action shall be taken by a person selected following the approach referred
to in paragraph 12.2. The Trustee/Custodian shall have, and assume, no
responsibility for inquiring into the authority of any person purporting to act
on behalf of an Employer.
12.4 RESPONSIBILITIES OF THE PARTIES Unless otherwise provided in a separate
Trust agreement:
(a) The Employer and the Plan Administrator shall cooperate with
each other in all respects, including the provision to each
other of records and other information relating to the Plan,
as may be necessary or appropriate for the proper operation of
the Plan or as may be required under the Code or ERISA.
(b) The Plan Administrator may delegate in writing all or any part
of the Plan Administrator's responsibilities under the Plan to
agents or others by written agreement communicated to the
delegate and to the Employer or, if the Employer is no longer
in existence, to such person or persons selected following the
approach in paragraph 12.2 and, in the same manner, may revoke
any such delegation of responsibility. Any action of a
delegate in the exercise of such delegated responsibilities
shall have the same force and effect for all purposes as if
such action had been taken by the Plan Administrator. The
delegate shall have the right, in such person's sole
discretion, by written instrument delivered to the Plan
Administrator, to reject and refuse to exercise any such
delegated authority. The Trustee/Custodian need not act on
instructions of such a delegate despite any knowledge of such
delegation, but may require the Plan Administrator to give the
Trustee/Custodian all instructions necessary under the Plan.
12.5 ALLOCATION OF INVESTMENT RESPONSIBILITY Unless otherwise provided in a
separate Trust agreement, responsibility with respect to the investment of the
Trust shall be as elected in the Adoption Agreement. The amounts allocated to
Participants' accounts shall be invested by the Trustee or Custodian pursuant to
the elections in the Adoption Agreement, Articles XII and XIII as applicable,
and in accordance with investment directions from authorized parties as provided
hereunder.
12.6 APPOINTMENT OF INVESTMENT MANAGER Unless otherwise provided in a separate
Trust agreement, the appointment of an investment manager shall be made in
accordance with this Article. If an investment manager is appointed, such entity
or individual must be registered as an investment manager under the Investment
Advisors Act of 1940 or under applicable state law, meet the requirements of
ERISA Section 3(38) or be a bank as defined in said Act or an insurance company
qualified under the laws of more than one state to perform investment management
services. An investment manager shall acknowledge in writing its appointment and
fiduciary status
88
hereunder and shall agree to comply with all applicable provisions of this
document. The investment manager shall have the investment powers granted the
Trustee in paragraph 13.8 except to the extent the investment manager's powers
are limited by the investment management agreement. A copy of the investment
management agreement (and any modifications or termination thereof) must be
provided to the Trustee or Custodian. Written notice of each appointment of an
investment manager shall be given to the Trustee or Custodian in advance of the
effective date of the appointment. Such notice or agreement shall specify what
portion of the Trust Fund will be subject to the investment manager's
discretion.
12.7 PARTICIPANT INVESTMENT DIRECTION Unless otherwise provided in a separate
Trust agreement, and if elected by the Employer in the Adoption Agreement,
Participants shall be given the option to direct the investment of such part of
their account balances as specified therein. The Employer or the Named
Investment Fiduciary from time to time shall select the investments to be made
available, including the appointment of any investment manager who meets the
requirements of ERISA Section 3(38) to manage the assets of any Participant's
account. The Employer or the Named Investment Fiduciary, independent of the
Trustee, shall be responsible for reviewing the performance of such investments.
The following administrative procedures shall apply to the administration of
investments selected by the Employer or the Employer's designated fiduciary:
(a) The Plan Administrator shall administer the program.
(b) At the time an Employee becomes eligible for the Plan, he or
she shall provide the Plan Administrator an investment
designation stating the percentage of his or her contributions
to be invested in the available investments.
(c) A Participant may change his or her election with respect to
future contributions by notifying the Employer,
Trustee/Custodian or other Service Provider, as they shall
mutually agree, in accordance with the procedures established
by the Plan Administrator.
(d) A Participant may transfer or exchange his or her balance from
one investment alternative to another by notifying the
Employer, Trustee/Custodian or other Service Provider, as they
shall mutually agree, in accordance with the procedures
established by the Plan Administrator.
(e) The investment alternatives offered under the Plan may be
limited in a uniform and nondiscriminatory manner. Investments
may be restricted to specific investment alternatives
selected, including but not limited to, certain mutual funds,
investment contracts, collective funds or deposit accounts. If
investments outside the alternatives selected are permitted,
Participants may not direct that investments be made in
collectibles other than U.S. Government or state issued gold
and silver coins.
(f) The Plan Administrator may permit, in a uniform and
nondiscriminatory manner, a Beneficiary of a deceased
Participant or alternate payee under a Qualified Domestic
Relations Order [as defined in Code Section 414(p)] to
individually direct their account in accordance with this
paragraph.
(g) Investment directions will be processed as soon as
administratively practicable after proper investment
directions are received from the Participant. The Employer,
Plan Administrator, Service Provider, Trustee and/or Custodian
cannot provide any guarantee of the timing of processing of
any investment directive. The Employer, Plan Administrator,
Service Provider, Trustee and/or Custodian reserve the right
not to value an investment alternative or a Participant's
account on any given Valuation Date for any reason deemed
appropriate by the Employer or Plan Administrator. The
Employer, Plan Administrator, Service Provider, Trustee and/or
Custodian further reserve the right to delay the processing of
any investment transaction for any legitimate business reason
including but not limited to failure of systems or computer
programs, failure of the means of the transmission of data,
force majeure, the failure of a Service Provider to timely
receive values or prices, to correct its errors or omissions
or the errors or omissions of any Service Provider.
89
(m) Notwithstanding the foregoing, and regardless of a
Participant's authority to direct the investment of assets
allocated to his or her account, the Named Investment
Fiduciary is authorized and empowered to direct the Trustee to
invest funds in short term investments pending other
investment instructions by the Plan Administrator.
12.8 APPLICATION OF ERISA SECTION 404(c) Unless otherwise provided in a separate
Trust agreement, if elected by the Employer in the Adoption Agreement, all
Participant accounts under the Plan shall be invested as elected by each
Participant in a broad range of investment options made available from time to
time by the Employer for this purpose. If the Employer further elects that the
Plan is intended to qualify as an "ERISA Section 404(c) Plan" within the meaning
of Regulations issued pursuant to such section, Participants shall have the
opportunity, at least once in any three (3) month period, to give investment
instructions (with an opportunity to obtain written confirmation of such
instructions) as to the investment of contributions made on his or her behalf
among the available investment options. The Plan Administrator shall be
obligated to comply with such instructions except as otherwise provided in the
Regulations issued under ERISA Section 404(c).
The Plan Administrator will provide or will make arrangement to provide each
Participant with a description of the investment alternatives available under
the Plan; and with respect to each designated investment alternative, a general
description of the investments objectives, risk and return characteristics of
each alternative, including information relating to the type and diversification
of assets comprising the investment portfolio.
The Plan Administrator by separate document may prescribe the form and the
manner in which such direction shall be made, as well as the frequency with
which such directions may be made or changed and the dates as of which they
shall be effective, in a manner consistent with the foregoing. The Plan
Administrator (or a person or entity so designated by the Employer) shall be the
fiduciary identified to furnish the information as contemplated by ERISA Section
404(c), but may designate on its behalf another person or entity to provide such
information or to perform any of the obligations of the Plan Administrator under
this paragraph.
Except as otherwise provided in this Basic Plan Document #01, the Trustee,
Custodian, the Employer, or any fiduciary of the Plan shall not be liable to the
Participant or any of his or her Beneficiaries for any loss resulting from
action taken at the direction of the Participant. All fiduciaries of the Plan
shall be relieved of their fiduciary liability with respect to the Participant
directing his or her investments pursuant to ERISA Section 404(c) if elected by
the Employer in the Adoption Agreement of its intention to comply with ERISA
Section 404(c).
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.
12.9 PARTICIPANT LOANS Unless otherwise provided in a separate Trust agreement,
if permitted by the Employer in the Adoption Agreement, a Plan Participant and
Beneficiaries who are parties-in-interest as defined in ERISA Section 3(14) may
make application to the Plan Administrator requesting a loan from the Plan. The
Plan Administrator shall have the sole right to approve or deny a Participant's
application provided that loans shall be made available to all Participants on a
reasonably equivalent basis. Loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made available to
other Participants. Any loan granted under the Plan shall be made in accordance
with the terms of a written loan policy adopted by the Employer which is hereby
incorporated by reference and made a part of this Basic Plan Document #01. The
loan policy may be amended in writing from time to time without the necessity of
amending this paragraph and shall be subject to the following rules to the
extent such rules are not inconsistent with such loan policy.
(a) No loan, when aggregated with any outstanding loan(s) to the
Participant, shall exceed the lesser of (i) $50,000 reduced by
the excess, if any, of the Participant's highest outstanding
balance of all loans on any day during the one (1) year period
ending on the day before the loan is made, over the
outstanding balance of loans from the Plan on the date the
Participant's loan is made or (ii) one-half of the fair market
value of the Participant's Vested Account Balance consisting
of contributions as specified in the loan policy. An election
may be made in the loan policy, that if the Participant's
Vested Account Balance is $20,000 or less, the maximum loan
shall not exceed the lesser of $10,000 or 100% of the
Participant's Vested Account Balance. For the purpose of the
above limitation, all loans from all plans of the Employer and
other members of a group of
90
employers described in Code Sections 414(b), 414(c), and
414(m) are aggregated. An assignment or pledge of any portion
of the Participant's interest in the Plan and a loan, pledge,
or assignment with respect to any insurance contract purchased
under the Plan, will be treated as a loan under this
paragraph.
(b) All applications must be in accordance with procedures adopted
by the Plan Administrator.
(c) Any loan shall bear interest at a rate reasonable at the time
of application, considering the purpose of the loan and the
rate being charged by representative commercial banks in the
local area for a similar loan unless the Plan Administrator
sets forth a different method for determining loan interest
rates in its written loan procedures. The loan agreement shall
also provide that the payment of principal and interest be
amortized in level payments not less frequently than
quarterly.
(d) The term of such loan shall not exceed a period of five (5)
years except in the case of a loan for the purpose of
acquiring any house, apartment, condominium, or mobile home
that is used or is to be used within a reasonable time as the
principal residence of the Participant. The Plan Administrator
in accordance with the Plan's loan policy shall determine the
term of such loan.
(e) The principal and interest paid by a Participant on his or her
loan shall be credited to the Plan in the same manner as for
any other Plan investment. Unless otherwise provided in the
loan policy, loans will be treated as segregated investments
of the individual Participant on whose behalf the loan was
made. This provision is not available if its election will
result in discrimination in the operation of the Plan.
(f) If the Plan Administrator approves a Participant's loan
request, it shall be evidenced by a note, loan agreement, and
assignment of up to 50% of his or her interest in the Trust as
collateral for the loan. The Participant, except in the case
of a profit-sharing plan satisfying the requirements of
paragraph 8.7, must obtain the consent of his or her Spouse,
if any, within the ninety (90) day period before the time his
or her account balance is used as security for the loan. A new
consent is required if the account balance is used for any
renegotiation, extension, renewal or other revision of the
loan, including an increase in the loan amount. The consent
must be written, must acknowledge the effect of the loan, and
must be witnessed by a Plan representative or notary public.
Such consent shall subsequently be binding with respect to the
consenting Spouse or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained in accordance
with (f), then, notwithstanding any other provision of this
Plan, the portion of the Participant's Vested Account Balance
used as a security interest held by the Plan by reason of a
loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account
balance payable at the time of death or distribution, but only
if the reduction is used as repayment of the loan. If less
than 100% of the Participant's Vested Account Balance
(determined without regard to the preceding sentence) is
payable to the surviving Spouse, then the account balance
shall be adjusted by first reducing the Vested Account Balance
by the amount of the security used as repayment of the loan,
and then determining the benefit payable to the surviving
Spouse.
(h) Any loan made hereunder shall be subject to the provisions of
a loan agreement, promissory note, security agreement, payroll
withholding authorization and, if applicable, financial
disclosure. Such documentation may contain additional loan
terms and conditions not specifically itemized in this section
provided that such terms and conditions do not conflict with
this section. Such additional terms and conditions may
include, but are not limited to, procedures regarding default,
a grace period for missed payments, and acceleration of a
loan's maturity date on specific events such as termination of
employment.
(i) No loans will be made to Owner-Employees or Shareholder
Employees, unless the Employer obtains a prohibited
transaction exemption from the Department of Labor.
91
(j) Liquidation of a Participant's assets for the purpose of the
loan will be allocated on a pro-rata basis across all the
investment alternatives in a Participant's account, unless
otherwise specified by the Participant, Plan Administrator, or
the Plan's loan policy.
(k) If a request for a loan is approved by the Plan Administrator,
funds shall be withdrawn from the recordkeeping subaccounts
specified by the Participant or in the absence of such a
specification, from the recordkeeping subaccounts in the order
specified in the loan policy.
(l) If a Plan permits loans to Participants, the Trustee/Custodian
may appoint the Employer as its agent, and if the Employer
accepts such appointment, agree to hold all notes and other
evidence of any loans made to Participants. If provided in the
loan policy, the Plan Administrator may also require
additional collateral in order to adequately secure the loan.
The Employer shall hold such notes and evidence under such
conditions of safekeeping as is prudent and as required by
ERISA. The Trustee/Custodian may account for all loans in the
aggregate so that all Participant loans will be shown
collectively as a single asset of the Plan.
(m) Unless otherwise elected in the Adoption Agreement, loan
payments will be suspended under this Plan as permitted under
Code Section 414(u).
12.10 INSURANCE POLICIES Unless otherwise provided in a separate Trust
agreement, if elected by the Employer in the Adoption Agreement and agreed to by
the Trustee or Custodian, Participants may purchase life insurance policies
under the Plan. Any life insurance premium paid for any Participant out of the
Employer contributions will be made on behalf of the Participant unless the
amount of such payment, plus all premiums previously paid on behalf of such
Participant is (a) with respect to ordinary life insurance policies, less than
fifty percent (50%) of the Employer Contributions and forfeitures allocated to
the Participant's account determined on the date the premium is paid, (b) with
respect to term and universal life policies, less than twenty-five percent (25%)
of such allocation amounts, or (c) a combination of ordinary life and term
and/or universal life insurance policies are purchased, the sum of the term and
universal life insurance premiums plus one-half of the ordinary life premiums
may not exceed twenty-five percent (25%) of such amounts allocated. Dividends
received on life insurance policies shall be considered a reduction of premiums
paid in such computations. If the Plan established is a profit sharing plan, the
incidental insurance benefit requirement is not applicable if the Plan purchases
life insurance benefits from only Employer contributions which have been
allocated to the Participant's account for at least two years.
(n) The Named Investment Fiduciary or its agent shall select the
insurance company and the policy and direct the Trustee (or
Custodian) as to the purchase of the insurance contract. Such
direction shall include but not be limited to the term, price
and the insurance company from which the policy should be
purchased.
(o) The Trustee, if the Plan is trusteed, or Custodian, if the
Plan has a custodial account, shall apply for and will be the
owner of any insurance contract and named beneficiary of any
policies purchased under the terms of this Plan. The insurance
contract(s) must provide that proceeds will be payable to the
Trustee (or Custodian, if applicable), however the Trustee (or
Custodian) shall be required to pay over all the proceeds of
the contract(s) to the Participant's designated Beneficiary in
accordance with the distributions provisions of this Plan. A
Participant's Spouse will be the designated Beneficiary of the
proceeds in all circumstances unless a qualified election has
been made in accordance with paragraph 8.4, Joint and Survivor
Annuity requirements, if applicable. Under no circumstances
shall the Trust (or custodial account) retain any part of the
proceeds. In the event of any conflict between the terms of
this Basic Plan Document #01 and the terms of any insurance
contract purchased hereunder, these Plan provisions shall
control. The Beneficiary of a deceased Participant shall
receive, in addition to the proceeds of the Participant's
policy or policies, the amount credited to such Participant's
account.
(p) A Participant who is uninsurable or insurable at substandard
rates may elect to receive a reduced amount of insurance, if
available, or may waive the purchase of any insurance.
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(q) All dividends or other returns received on any policy
purchased shall be applied to reduce the next premium due on
such policy, or if no further premium is due, such amount
shall be credited to the Trust as part of the account of the
Participant for whom the policy is held.
(r) If Employer contributions are inadequate to pay all premiums
on all insurance policies, the Trustee or Custodian may, at
the option of the Employer, utilize other amounts remaining in
each Participant's account to pay the premiums on his or her
respective policy or policies, allow the policies to lapse,
reduce the policies to a level at which they may be
maintained, or borrow against the policies on a prorated
basis, provided that the borrowing does not discriminate in
favor of the policies on the lives of Highly Compensated
Employees.
(s) On retirement or termination of employment of a Participant,
termination of the Plan, or the contract would but for the
sale, be surrendered by the Plan, the Employer shall direct
the Trustee or Custodian to surrender the Participant's policy
and credit the proceeds to his or her account for distribution
under the terms of the Plan. However, before so doing, the
Trustee or Custodian shall first offer to transfer ownership
of the policy to the Participant. Prior to such transfer, the
Participant may elect to make payment to the Trust of the cash
value of the policy. Such payment shall be credited to the
Participant's account for distribution under the terms of the
Plan. All distributions resulting from the application of this
paragraph shall be subject to the Joint and Survivor Annuity
Rules of Article VIII, if applicable.
(t) The Employer shall be solely responsible to ensure the
insurance provisions are administered properly and that if
there is any conflict between the provisions of this Plan and
any insurance contracts issued, the terms of this document
will control.
(u) Notwithstanding the above, in profit-sharing plans, the
limitations imposed herein with respect to the purchase of
life insurance shall not apply to any Participant who has
participated in this Plan for five (5) or more years or to the
portion of a Participant's Vested Account Balance, that would
be eligible for withdrawal under paragraph 6.8 whether or not
in-service withdrawals are actually allowed under the Plan,
that has accumulated for at least two (2) Plan Years. No
amount of Qualified Voluntary Contributions made to the Plan
may be used to purchase life insurance. In addition, under
such Plans, a Participant may, subject to the limitations set
forth in this subparagraph, elect to have keyman life
insurance purchased on the life of any Participant who is
considered essential to the success of the Employer's
business. In such case, the proceeds of such a life insurance
contract in excess of such contract's cash value as of the
date of death of such insured shall be paid to the
Beneficiaries named with respect to such contract. Death
benefits, including those in the previous sentence, payable
from a life insurance contract shall be paid in accordance
with paragraph 8.7, if this Plan meets the safe harbor
provisions in that paragraph, or in accordance with paragraph
8.2 or 8.3, whichever may be applicable. The cash value of the
contract shall be added to the Participant's Vested Account
Balance.
(v) No insurance contract will be purchased under the Plan unless
such contract or a separate definite written agreement between
the Employer and the insurer provides that no value under
contracts providing benefits under the Plan or credits
determined by the insurer (on account of dividends, earnings,
or other experience rating credits, or surrender or
cancellation credits) with respect to such contracts may be
paid or returned to the Employer or diverted to or used for
other than the exclusive benefit of the Participants or their
Beneficiaries. However, any contribution made by the Employer
because of a mistake of fact must be returned to the Employer
within one (1) year of the contribution.
(j) If this Plan is funded by individual contracts that provide a
Participant's benefit under the Plan, such individual
contracts shall constitute the Participant's account balance.
If this Plan is funded by group contracts, under the group
annuity or group insurance contract, premiums or other
consideration received by the insurance company must be
allocated to Participants' accounts under the Plan.
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(k) For Plans funded with individual or group annuity contracts,
no Trustee or Custodian is required to hold the assets of the
Plan. Accordingly, any references to the Trust, the Trust fund
or the fund collectively refers to any contracts issued by an
insurance company to fund a Plan established under this
document.
12.11 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO OR ORDER) Unless
otherwise provided in a separate Trust agreement, a domestic relations order
shall specifically state all of the following in order to be deemed a Qualified
Domestic Relations Order ("QDRO"):
(a) The name and last known mailing address (if any) of the
Participant and of each alternate payee covered by the QDRO.
However, if the QDRO does not specify the current mailing
address of the alternate payee, but the Plan Administrator has
independent knowledge of that address, the QDRO will still be
valid.
(b) The dollar amount or percentage of the Participant's benefit
to be paid by the Plan to each alternate payee, or the manner
in which the amount or percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific Plan (by name) to which the domestic relations
order applies.
The domestic relations order shall not be deemed a QDRO if it requires the Plan
to provide:
(e) any type or form of benefit or any option not already provided
for in the Plan;
(f) increased benefits or benefits in excess of the Participant's
vested rights;
(g) payment of a benefit earlier than allowed by the Plan's
earliest retirement provisions or, in the case of a
profit-sharing or 401(k) plan, prior to the first date on
which an in-service withdrawal is allowed; or
(h) payment of benefits to an alternate payee which are required
to be paid to another alternate payee under another QDRO.
Upon receipt of a domestic relations order ("Order") which may or may not be
"qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and forward either a copy
of this paragraph or other written QDRO policies and procedures. The Plan
Administrator shall establish written procedures to establish the qualified
status of a domestic relations order, which may include forwarding the Order to
the Plan's legal counsel for an opinion as to whether or not the Order is in
fact "qualified" as defined in Code Section 414(p). Within a reasonable time
after receipt of the Order, not to exceed sixty (60) days, the Plan
Administrator shall make a determination as to its "qualified" status and the
Participant and any alternate payee(s) shall be promptly notified in writing of
the determination.
If the "qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is resolved.
In such event, the Plan Administrator shall segregate the amount that would have
been payable to the alternate payee(s) if the Order had been deemed a QDRO. If
the Order is not qualified or the status is not resolved (for example, it has
been sent back to the court for clarification or modification) within eighteen
(18) months beginning with the date the first payment would have to be made
under the Order, the Plan Administrator shall pay the segregated amounts plus
interest to the person(s) who would have been entitled to the benefits had there
been no Order. If a determination as to the qualified status of the Order is
made after the eighteen (18) month period described above, then the Order shall
only be applied on a prospective basis. If the Order is determined to be a QDRO,
the Participant and alternate payee(s) shall again be notified promptly after
such determination. Once an Order is deemed a QDRO, the Plan Administrator shall
pay to the alternate payee(s) all the amounts due under the QDRO, including
segregated amounts plus earnings, if any, which may have accrued during a
dispute as to the Order's qualification.
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Unless specified otherwise in the Adoption Agreement or in a separate Trust
agreement, the QDRO retirement age with regard to the Participant against whom
the order is entered shall be the date the order is determined to be qualified.
These provisions will only allow distributions to the alternate payee(s) and not
the Participant.
12.12 RECEIPT AND RELEASE FOR PAYMENTS Unless otherwise provided in a separate
Trust agreement, 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 be in full
satisfaction of all claims hereunder against the Trustee, Employer or Plan
Administrator each of whom may require such Participant, legal representative,
Beneficiary, guardian or committee as a condition prior to such payment, to
execute a receipt and release in such form as shall be determined by the
Trustee, Employer or Plan Administrator.
12.13 RESIGNATION AND REMOVAL Unless otherwise provided in a separate Trust
agreement, an individual serving as Plan Administrator may resign by giving
written notice to the Employer, or if the Employer is no longer in existence, to
the Trustee/Custodian, not less than thirty (30) days before the effective date
of the individual's resignation. The Plan Administrator may be removed upon
thirty (30) days prior written notice to the Plan Administrator, with or without
cause, by the Employer, or if the Employer is no longer in existence, by a
majority of the Participants and Beneficiaries following the approach referred
to in paragraph 12.2. A notice period provided for in this paragraph 12.13 may
be waived or reduced if acceptable to the parties involved. The Employer, if in
existence, shall be the successor to the position involved, or the Employer may
appoint a successor to a person who has resigned or been removed as Plan
Administrator, but if the Employer is no longer in existence, the appointment
shall be made by a majority of the Participants and Beneficiaries following the
approach referred to in paragraph 12.2. When the Plan Administrator's
resignation or removal becomes effective, the Plan Administrator shall perform
all acts necessary to transfer all relevant records to its successor. A
successor Plan Administrator shall have all the rights and powers and all of the
duties and obligations of the original Plan Administrator but shall have no
responsibility for acts or omissions before the successor became Plan
Administrator.
12.14 CLAIMS AND CLAIMS REVIEW PROCEDURE Unless otherwise provided in a separate
Trust agreement, if any Employee, Participant, Beneficiary or any other person
claims to be entitled to benefits under the Plan, and the Plan Administrator
denies that claim in whole or in part, the Plan Administrator shall, in writing,
within ninety (90) days notify the claimant that his claim has been denied in
whole or in part, setting forth the specific reason or reasons for the denial,
specific reference to pertinent Plan provisions upon which the denial is based,
a description of any additional material or information which may be needed to
clarify the claim, including an explanation of why such information is
necessary, and shall refer to the claims review procedure as set forth in this
paragraph 12.14. Within sixty (60) days after the mailing or delivery by the
Plan Administrator of such notice, the claimant may request, by written notice
to the Plan Administrator, a review by the Employer of the decision denying the
claim. The claimant may examine documents pertinent to the review and may submit
written issues and comments to the Plan Administrator. If the claimant fails to
request such a hearing within such sixty (60) day period, it shall be
conclusively determined for all purposes of this Plan that the denial of such
claim is correct. If the claimant requests a review within the sixty (60) day
period, the Plan Administrator shall designate a time, which time shall be no
less than ten (10) nor more than forty-five (45) days from the date of receipt
by the Plan Administrator of the claimant's notice to the Plan Administrator,
and a place for such hearing, and shall promptly notify such claimant of such
time and place. Within forty-five (45) days after the conclusion of the hearing,
including any extensions of the date thereof mutually agreed to by the claimant
and the Plan Administrator, the Plan Administrator shall communicate to the
claimant the Plan Administrator's decision in writing, and if the Plan
Administrator confirms the denial, in whole or in part, the communication shall
set forth the specific reason or reasons for the decision and specific reference
to those Plan provisions upon which the decision is based.
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12.15 BONDING Every fiduciary, except for a bank, trust company or an insurance
company, unless otherwise exempted by ERISA and the Regulations issued
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 either acting alone or in concert with others. The
surety shall be a corporate surety company [as the term is used in ERISA 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 costs of such bonds
shall be an expense of and may, at the election of the Plan Administrator, be
paid from the Trust or by the Employer.
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ARTICLE XIII
TRUST PROVISIONS
a) ESTABLISHMENT OF THE TRUST
(a) The Employer shall appoint within the Adoption Agreement who
may be the Sponsor (or an affiliate) of this Basic Plan
Document #01 or an individual(s), institution or other party,
to serve as Trustee or Custodian (if applicable) of the Plan.
The Employer shall also have the right, but is not required,
to appoint a Custodian in the Adoption Agreement to have
custody of the Plan's assets. The Employer may execute a
separate trust or custodial agreement outlining the Trustee's
or Custodian's duties and responsibilities which shall be
incorporated by reference and made part of this Basic Plan
Document #01. No such ancillary agreement may conflict with
any provision(s) of this document. Any provision which would
jeopardize the tax-qualified status of this Plan shall be null
and void. Unless otherwise elected in the Adoption Agreement,
the Trust and/or Custodial provisions of this Article XIII and
Article XII, as applicable, of the Basic Plan Document #01
together with any such ancillary agreement shall be operative.
If the Sponsor is a bank, trust company or other financial
organization, a person or institution other than the Sponsor
or its affiliate may not serve as Trustee or Custodian of the
Plan without the express written consent of the Sponsor. If a
financial organization is the Sponsor, and is not named
Trustee, the Sponsor may serve as Custodian under the Plan as
provided at paragraph 13.13 herein. The Trustee shall invest
the Trust Fund in any of the investment alternatives as
provided in paragraph 13.8. If a Custodian is appointed, the
Trust Fund shall be invested in accordance with paragraph
13.14.
(b) The Employer establishes with the Trustee a Trust which shall
consist of all money and property received under Articles III
and IV of this document, increased by any income on or
increment in such value of assets and decreased by any
investment loss, expense, benefit payment, withdrawal or other
distribution by the Trustee in accordance with the provisions
of the Plan. The Trustee/Custodian shall hold the Trust fund
without distinction between principal and income. The Trust
fund will be held, invested, reinvested and administered by
the Trustee in accordance with this Article and any ancillary
documents as provided for in this Article.
b) CONTROL OF PLAN ASSETS The assets of the Trust or evidence of ownership shall
be held by the Trustee and/or the Custodian under the terms of the Basic Plan
Document #01. If the assets represent amounts transferred from another trustee
or custodian under a former plan, the Trustee and/or Custodian named hereunder
shall not be responsible for any actions of the prior fiduciary including the
propriety of any investment decision made by the prior trustee/custodian under
any prior plan. Instead, the Employer shall be responsible for such actions.
13.3 DISCRETIONARY TRUSTEE If the Employer elects in the Adoption Agreement, or
otherwise appoints the Trustee to act in the capacity of discretionary Trustee,
the Trustee shall invest the Trust in accordance with the Plan's investment
policy statement and the investment alternatives permitted at paragraph 13.8
herein. The Trustee will have the discretion and authority to invest, manage and
control those Plan assets except those assets which are subject to the
investment direction of a Participant (if Participant direction is permitted),
or an investment manager or Named Investment Fiduciary, or other agent properly
appointed by the Employer. The exercise of any investment direction hereunder
shall be consistent with the investment policy of the Plan. The Trustee shall
also perform custodial functions described at paragraph 13.14 hereof for the
Trust with respect to Plan assets over which the Trustee has investment
management responsibility. The Trustee may also perform custodial functions for
the Trust with respect to Plan assets the Trustee does not manage, to the extent
agreed to between the Trustee and the Employer, if the Trustee is appointed
Custodian for some or all of such assets in accordance with the terms of the
Plan. The Trustee may execute any additional documents as required which shall
be treated as an addendum to this Basic Plan Document #01. No such agreement may
conflict with any provision nor shall any provision in such an agreement
jeopardize the tax-qualified status of the Plan. Any such provision shall be
null and void. The Trustee's administrative duties shall be limited to those
agreed to between the parties.
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The Employer or its designate shall be responsible for other administrative
duties required under the Plan or by applicable law.
13.4 NONDISCRETIONARY TRUSTEE If the Employer elects in the Adoption Agreement
or as otherwise agreed to in writing, the Trustee may act in the capacity of a
nondiscretionary Trustee. In this capacity, the Trustee shall have no
discretionary authority to invest, manage or control Plan assets and is
authorized solely to make and hold investments only as directed pursuant to
paragraph 12.5. The nondiscretionary Trustee shall have the same rights, powers
and duties as the discretionary Trustee but exercises such authority in
accordance with the direction of the party which has the authority to manage and
control the investment of Plan assets. If directions are not provided to the
Trustee, the Employer will provide such necessary direction.
13.5 PROVISIONS RELATING TO INDIVIDUAL TRUSTEES
(a) Notwithstanding any other provisions of the Plan to the
contrary, the provisions of this paragraph shall apply if one
(1) or more individuals are named as Trustee(s) in the
Adoption Agreement and shall not apply to any institutional
Trustee named in the Adoption Agreement.
(b) If there shall be more than one individual acting in the
capacity of Trustee, they shall act by a majority of their
number, unless they unanimously decide that one (1) or more of
them may act on the matter or category of matters involved
without the approval of the others and they may authorize in
writing that one (1) or more of them shall act on their behalf
including but not limited to executing documents and
authorizing distributions on behalf of the Trustees.
(c) Any person may rely, without having to make further inquiry,
upon instructions appearing to be genuine instructions from
any individual serving as Trustee as being the will, intent
and action of all individuals so serving if no allocation of
duties has been made.
(d) The Trustee shall be paid such reasonable compensation for
services as shall from time to time be agreed upon in writing
by the Employer and the Trustee, provided that an individual
serving as Trustee who already receives full-time Compensation
from the Employer shall not receive compensation for serving
as such from the Plan.
13.6 INVESTMENT INSTRUCTIONS Any investment directive shall be made in writing
or such other form as agreed to by the Employer, Trustee/Custodian and the
investment manager. In the absence of such directive, cash shall be
automatically invested in such investment or investments as the Employer or
Named Investment Fiduciary shall select from the investments made available for
that purpose unless and until the person or persons responsible for giving
directions directs otherwise. Such automatic investment shall be made at regular
intervals and pursuant to procedures established by the parties (which
procedures may without limitation, provide for more frequent intervals only if
uninvested balances exceed a stated amount). Absent a contrary direction in
accordance with the preceding provisions of this paragraph 13.6, such
instructions regarding the delegation of investment responsibility shall remain
in force until revoked or amended in writing. Neither the Trustee nor the
Custodian shall be responsible for the propriety of any directed investment made
nor shall they be required to consult with or advise the Employer regarding the
investment quality of any directed investment held hereunder. If the Employer
fails to designate an investment manager, the Trustee shall have full investment
management authority as agreed upon in a duly authorized and executed investment
management agreement. If the Employer does not issue investment directions with
regard to specific assets held in the Trust, the Trustee shall have authority to
invest those assets in the Trust in its sole discretion subject to paragraph
13.8. While the Employer may direct the Trustee with respect to Plan
investments, the Employer may not:
(a) borrow from the Plan or pledge any of the assets of the Plan
as security for a loan,
(b) buy property or assets from or sell property or assets to the
Plan,
(c) charge any fee for services rendered to the Plan, or
(d) receive any services from the Plan on a preferential basis.
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13.7 FIDUCIARY STANDARDS Subject to paragraphs 13.6 and 13.8 hereof, the
Trustee, if discretionary, shall invest and reinvest principal and income of the
Trust in accordance with the funding policy and investment objectives
established by the Employer, provided that:
(a) such investments are prudent under ERISA, as amended, and the
Regulations thereunder,
(b) such investments are sufficiently diversified to minimize the
risk of large losses,
(c) such investments are made in accordance with the provisions of
this Plan and Trust document, and
(d) such investments are made with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character with like aims.
13.8 POWERS OF THE TRUSTEE The Trustee shall be responsible for the investment,
administration and safekeeping of assets held in the Trust Fund. The Trustee
shall have the following duties and responsibilities, in addition to powers
given by law:
(a) receiving contributions under the terms of the Plan;
(b) implementing an investment program based on the Employer's
investment policy statement, funding policy, investment
objectives and ERISA, as amended;
(c) invest the Trust in any form of property, including common and
preferred stocks, exchange-traded covered put and call
options, bonds, money market instruments, mutual funds
(including funds for which the Sponsor, Trustee or its
affiliates receive compensation for providing investment
advisory, custody, transfer agency or other services), savings
accounts, plan loans, certificates of deposit, securities
issued by the U.S. government or by governmental agencies,
insurance policies and contracts, or in any other property,
real or personal, having a ready market, including securities
issued by the Trustee and/or affiliates of the Trustee as
permitted by law. The Trustee may invest in time deposits
(including, if applicable, its own or those of affiliates)
which bear a reasonable interest rate. No portion of any
Qualified Voluntary Contribution, or the earnings thereon, may
be invested in life insurance contracts or, as with any
Participant-directed investment, in tangible personal property
characterized by the IRS as a collectible;
(d) invest any assets of the Trust in a group or collective trust
fund established to permit the pooling of funds of separate
pension and profit-sharing trusts, provided the Internal
Revenue Service has ruled such group or collective trust to be
qualified under Code Section 401(a) and exempt under Code
Section 501(a) (or the applicable corresponding provision of
any other Revenue Act) or to any other common, collective, or
commingled trust fund which has been or may hereafter be
established and maintained by the Trustee, affiliate(s) of the
Trustee, the Custodian or investment manager. Such commingling
of assets of the Trust with assets of other qualified trusts
is specifically authorized, and to the extent of the
investment of the Trust in such a group or collective trust,
the terms of the instrument establishing the group or
collective trust shall be a part hereof as though set forth
herein. The name of the group or collective trust fund shall
be specified in an addendum to the Adoption Agreement. The
Employer expressly understands and agrees that any such
collective fund may provide for the lending of its securities
by the collective fund trustee and that such collective fund's
trustee will receive compensation from such collective fund
for the lending of securities that is separate from any
compensation of the Trustee hereunder, or any compensation of
the collective fund trustee for the management of such
collective fund;
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(e) for collective investment purposes, may combine into one trust
fund the Trust created under this Plan with the Trust created
under any other qualified retirement plan the Employer
maintains. However, the Trustee must maintain separate records
of account for the assets of each Trust in order to reflect
properly each Participant's Vested Account Balance under the
Plan(s) in which he is a Participant;
(f) invest up to 100% of the Trust in the common stock, debt
obligations, or any other security issued by the Employer or
by an affiliate of the Employer within the limitations
provided under ERISA Sections 406, 407, and 408, as amended,
and further provided that such investment does not constitute
a prohibited transaction under Code Section 4975. Any such
investment in Employer securities shall only be made upon
written direction of the Employer who shall be solely
responsible for the propriety of such investment. Additional
directives regarding the purchase, sale, retention or valuing
of such securities may be addressed in an investment
management or trust agreement, which is incorporated by
reference. If there are any conflicts between this document
and the above referenced agreements, this document shall
govern;
(g) hold cash uninvested and deposit the same with any banking or
savings institution, including its own banking department or
the banking department of an affiliate;
(h) utilize a general disbursement account, i.e., in the form of a
demand deposit account and/or time deposit account, for
distributions from the Trust, without incurring any liability
for payment of interest thereon, notwithstanding the Trustee's
receipt of income with respect to float involving the
disbursement account;
(i) hold contributions in an omnibus account, i.e., in the form of
a demand deposit and/or time deposit account, maintained by
the Trustee for up to three (3) business days (or such longer
period as may result due to circumstances beyond the Trustee's
control), without liability for interest thereon. (The
Employer acknowledges that any float earnings associated with
the assets held in such omnibus account are retained by the
Trustee as part of its compensation for performing services
with respect to the allocation of contributions to
Participants' accounts);
(j) join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties,
including those in which it or its affiliates are interested
as Trustee, upon such terms as it deems advisable;
(k) hold investments in nominee or bearer form;
(l) exercise all ownership rights including the voting of proxies
and the exercise of tender offers but only with respect to
assets over which the Trustee has investment management
responsibility;
(m) to hold, manage and control all property forming part of the
Trust Fund and to sell, convey, transfer, exchange and
otherwise dispose of the same from time to time;
(n) to apply for and procure from an insurance company as an
investment of the Trust such annuity, or other contracts on
the life of any Participant as the Plan 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 any such annuity, or other contracts as
and when entitled to do so under the provisions thereof;
(o) unless otherwise provided by a directive as described by
paragraph 13.6, the Employer will pass through shareholder
rights (including voting rights) on Employer securities to
Plan Participants. If no directive is provided, the Trustee
shall exercise any shareholder rights (including voting
rights) with respect to any securities held, but only in
accordance with the instructions of the person or persons
responsible for the investment of such securities subject to
and as permitted by, any applicable rules of the Securities
and Exchange Commission and any national securities exchange.
Voting rights with respect to shares of registered investment
companies held in the Trust shall be directed by the Named
Investment Fiduciary responsible for selection of such
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registered investment companies as permissible investment
alternatives. In the event of any conflict with any other
provision of this Article or this Basic Plan Document #01, the
provision of this paragraph shall control. The Employer shall
be responsible for preparing and distributing all required
prospectuses for Employer securities and making such materials
available to Plan Participants;
(p) to retain and employ such attorneys, agents and servants as
may be necessary or desirable, in the opinion of the Trustee,
in the administration of the Plan, and to pay them such
reasonable compensation for their services as may be agreed
upon as an expense of administration of the Plan, including
power to employ and retain counsel upon any matter of doubt as
to the meaning or interpretation to be placed upon this Plan
or any provisions thereof with reference to any question
arising in the administration of the Plan or pertaining to the
rights and liabilities of the Trustee hereunder. The Trustee
in any such event, any act in reliance upon the advice,
opinions, records, statements and computations of any
attorneys and agents and on the records, statements and
computations of any servants so selected by it in good faith
and shall be released and exonerated of and from all liability
to anyone in so doing (except to the extent that liability is
imposed under ERISA);
(q) to institute, prosecute and maintain, or to defend, any
proceeding at law or in equity concerning the Plan or the
assets thereof or any claims thereto, or the interests of
Participants and Beneficiaries hereunder at the sole cost and
expense of the Plan or at the sole cost and expense of the
Participant that may be concerned therein or that may be
affected thereby, as, in its opinion, shall be fair and
equitable in each case, and to compromise, settle and adjust
all claims and liabilities asserted by or against the Plan or
asserted by or against it, or such terms as it, in each such
case, shall deem reasonable and proper. The Trustee shall be
under no duty or obligation to institute, prosecute, maintain
or defend any suit, action or other legal proceeding unless it
shall be indemnified to its satisfaction against all expenses
and liabilities (including without limitation, legal and other
professional fees) which it may sustain or anticipate by
reason thereof; and
(r) the Trustee is expressly authorized to the fullest extent
permitted by law to (1) retain the services of any
broker-dealer, registered investment advisor or other
financial services entity (including the Trustee and any of
its affiliates) and any future successors in interest thereto
collectively, for the purposes of this paragraph referred to
as the "Affiliated Entities"), to provide services to assist
or facilitate the purchase or sale of investments in the
Trust, (2) acquire as assets of the Trust shares of mutual
funds to which Affiliated Entities provide, for a fee,
services in any capacity and (3) acquire in the Trust any
other services or products of any kind or nature from the
Affiliated Entities regardless of whether the same or
dissimilar services or products are available from other
institutions. The Trust may pay directly or indirectly
(through mutual funds fees and charges for example) pay
management fees, transaction fees and other commissions to the
Affiliated Entities for the services or products provided to
the Trust and/or such mutual funds at such Affiliated
Entities' standard or published rates without offset (unless
required by law) from any fees charged by the Trustee for its
services as Trustee. The Trustee may also deal directly with
the Affiliated Entities regardless of the capacity in which it
is then acting, to purchase, sell, exchange or transfer assets
of the Trust even though the Affiliated Entities are receiving
compensation or otherwise profiting from such transaction or
are acting as principal in such transaction. Each of the
Affiliated Entities is authorized to effect transactions on
national securities exchanges for the Trust as directed by the
Trustee, and retain any transactional fees related thereto,
consistent with Section 11(a)(1) of the Securities and
Exchange Act of 1934, as amended and related Rule 11a2-2(T).
Included specifically, but not by way of limitation in the
transactions authorized by this provision, are transactions in
which any of the Affiliated Entities is serving as an
underwriting or member of an underwriting syndicate for a
security being purchased or is purchasing or selling a
security for its own account. In the event the Trustee is
directed by the Plan Administrator, any named fiduciary,
designated Investment Manager, Participant and/or Beneficiary,
as applicable hereunder (collectively referred to as for
purposes of this paragraph as the "Directing Party"), the
Directing Party shall be authorized, and expressly retains the
right hereunder, to direct the Trustee to retain the services
of, and conduct transactions with, Affiliated Entities fully
in the manner described above.
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13.9 APPOINTMENT OF ADDITIONAL TRUSTEE AND ALLOCATION OF RESPONSIBILITIES Assets
for which the Trustee is not serving in the capacity of Trustee may be held by a
second Trustee appointed by the Employer to hold specified investments. In the
event that an additional Trustee is appointed for the Plan to serve as the
Trustee of specific investments for which the Trustee is not acting in the
capacity of Trustee, the second Trustee shall have no responsibilities to these
assets other than as set forth herein. The Trustee shall have no duties with
respect to investment held by any other person including, without limitation,
any other Trustee for the Plan. Any other secondary Trustee of the Plan shall
have no duties with respect to assets held in the Plan by the Trustee.
13.10 COMPENSATION, ADMINISTRATIVE FEES AND EXPENSES All reasonable fees,
charges and expenses incurred by the Trustee or the Custodian in connection with
the administration of the Trust and all reasonable fees, charges and expenses
incurred by the Plan Administrator in connection with the administration of the
Plan (including such reasonable compensation to the Trustee/Custodian and the
Plan Administrator as may be agreed upon from time to time between the Employer,
the Trustee/Custodian and Plan Administrator) and fees for legal services
rendered to the Trustee/Custodian or Plan Administrator shall be paid from the
Trust unless:
(a) The payment of such expense would constitute a "prohibited
transaction" within the meaning of ERISA Section 406 or Code
Section 4975 for which no statutory or administrative
exemption is available.
(b) The Employer actually pays such expenses directly. Any and all
reasonable additional administrative expenses incurred to
effect investment directives made by the Participants and by
each Beneficiary under this Plan shall be paid by the Trust
and as determined by the Employer shall either be charged (in
accordance with such reasonable nondiscriminatory rules as the
Employer deems appropriate under the circumstances) to the
account of the individual issuing such directive, or treated
as a general expense of the Trust. If charged to a
Participant's account and if the assets of such account are
insufficient to satisfy such charges, the Employer shall pay
any deficit to the Trustee. Notwithstanding the foregoing,
nothing in this section shall prevent the Employer from paying
the administrative expenses of the Plan directly.
(c) All transaction related expenses incurred to effect a specific
investment for a Participant directed account (such as
brokerage commissions and other transaction related expenses),
shall, as determined by the Employer, either be paid from or
otherwise be charged directly to the account of the
Participant providing such direction or treated as a general
expense of the Trust.
(d) If there are insufficient liquid assets of the Trust to cover
the fees of the Trustee or the Custodian, then assets of the
Trust shall be liquidated to the extent necessary to cover
fees.
(e) Notwithstanding the foregoing, no compensation other than
reimbursement for expenses incurred shall be paid to a Plan
Administrator who is the Employer or Employee of the Employer.
(f) In the event any part of the Plan becomes subject to tax, all
taxes incurred will be paid from the Plan at the direction of
the Plan Administrator.
(g) Any investment gain or loss of the Trust that is not directly
attributable to the investment of the account of any
Participant (including, but not limited to, for example, any
"float" earned on the disbursement account established for the
Plan and not treated as part of the compensation of the
Trustee or paying agent for the Plan, and any 12b-1 or similar
fees paid to the Plan) will be applied to pay administrative
expenses of the Plan, with any excess remaining at the close
of the Plan Year being allocated among the Participant's
accounts in accordance with the procedure established by the
Plan Administrator for this purpose.
13.11 RECORDS Within ninety (90) days following the close of each Plan Year, or
at such other times as may be agreed to between the Employer and the Trustee,
and within ninety (90) days following its removal or resignation, the Trustee
shall file with the Employer a report of that part of the Trust under the
investment management of the Trustee during such year or from the end of the
preceding Plan Year to the date of removal or resignation. Such
102
report shall include a statement of receipts and disbursements, the net income
or loss of the Trust, the gains or losses realized by the Trust upon sale or
other disposition of the assets, the increase or decrease in the value of the
Trust, all payments and distributions made from the Trust since the date of its
last report, and shall contain a schedule of assets listing the fair market
value of investments held in the Trust as of the end of the Plan Year or the
date of removal or resignation, as applicable. The fair market value of
investments for which there is a ready market shall be determined using the most
recent price quoted on a national or other recognized securities exchange or
over-the-counter market. The fair market value of illiquid investments shall be
obtained by a valuation performed by an independent appraiser appointed by the
Trustee or appointed by the Employer and approved by the Trustee for this
purpose whose determination shall be final. The Employer shall review the
Trustee's report and notify the Trustee in the event of its disapproval of the
report within thirty (30) days, providing the Trustee with a written description
of the items in question. The Trustee shall have sixty (60) days to provide the
Employer with a written explanation of the items in question. If the Employer
again disapproves, the Trustee shall have the right to file its report in a
court of competent jurisdiction for audit and adjudication. In the event the
Employer fails to file a written objection to the Trustee's report within the
ninety (90) day period following receipt of the report, the Employer shall be
deemed to have approved the report. In such case, the Trustee shall be released
and discharged with respect to all matters contained in the report.
13.12 LIMITATION ON LIABILITY AND INDEMNIFICATION
(a) The Trustee shall have the authority to manage and govern the
Trust to the extent provided in this instrument, but does not
guarantee the Trust in any manner against investment loss or
depreciation in asset value, or guarantee the adequacy of the
Trust to meet and discharge all or any liabilities of the
Plan.
(b) The Trustee and/or Custodian shall not be liable for the
making, retention, or sale of any investment or reinvestment
made by it, as herein provided, or for any loss to, or
diminution of the Trust, or for any other loss or damage which
may result from the discharge of its duties hereunder except
to the extent it is judicially determined such loss or damage
is attributable to the Trustee/Custodian's breach of its
duties hereunder or under ERISA.
(c) An institution acting as a Custodian or nondiscretionary
Trustee shall have no discretion or investment management
responsibility, unless otherwise expressly agreed in writing
(pursuant to an investment management agreement, for example)
and shall only be responsible to perform the functions
described at paragraph 13.5 hereof. Neither the Custodian nor
Trustee (whether nondiscretionary or discretionary) shall have
any responsibility with respect to Plan investments and does
not guarantee the adequacy of the Trust to meet and discharge
any or all liabilities associated with the Plan.
(d) The Employer warrants that all directions issued to the
Trustee or Custodian by it or the Plan Administrator will be
in accordance with the terms of the Plan and the auxiliary
agreement and not contrary to the provisions of ERISA, as
amended, and the Regulations issued thereunder.
(e) Neither the Trustee nor the Custodian shall be answerable for
any action taken pursuant to any direction, consent,
certificate, or other paper or document in the belief that the
same is genuine. All directions by the Employer, Participant,
the Plan Administrator, Named Fiduciary or an investment
manager shall be made pursuant to pre-approved communication
procedures to which all such parties, as applicable, shall
have consented to in writing. The Employer shall deliver to
the Trustee and Custodian written notification identifying the
individual or individuals authorized to act on behalf the Plan
and shall deliver specimens of their signatures to the
Trustee/Custodian.
(f) The duties and obligations of the Trustee and the Custodian
shall be limited to those expressly imposed by this instrument
or subsequently agreed upon by the parties in writing.
Responsibility for administrative duties required under the
Plan or applicable law not expressly imposed upon or agreed to
by the Trustee or the Custodian shall rest solely with the
Employer.
103
(g) The Employer shall indemnify the Trustee/Custodian against,
and agrees to hold the Trustee/Custodian harmless from, all
liabilities and claims and expenses including attorney's fees
and expenses incurred in defending against such liability or
claims against the Trustee/Custodian, unless such liability or
claim results from the negligent action or inaction of the
Trustee/Custodian, or where the Trustee/Custodian is found to
have breached its duties under this Article or Part 4 of Title
I of ERISA by a final judgment of a court of competent
jurisdiction. Except as otherwise provided by the preceding
sentence, the Employer also shall indemnify the
Trustee/Custodian against and agrees to hold the
Trustee/Custodian harmless from all liabilities, claims and
expenses including attorney's fees and other expenses incurred
in defending against such liabilities or claims, arising from
any actions or breach of responsibility by any party other
than the Trustee/Custodian, including without limitation by
specification any acts of a prior Trustee or of another
Trustee or Custodian appointed by the Employer.
(h) Without limiting any provision in the prior paragraph, the
Employer expressly agrees to indemnify the Trustee/Custodian
against any liability or claim (including attorney's fees and
expenses in defending against such liabilities or claims)
arising as a result of any act taken or failure to act, in
accordance with the directions received from the Employer,
Plan Administrator, investment manager, Participant, or a
designee specified by the Employer directly or transmitted by
a designated Service Provider to the Plan and without
limitation by specification.
(i) The Trustee/Custodian will take all reasonable steps to assure
the security of any data received from the Employer in
connection with services provided to the Plan. The Employer
will be responsible for retaining duplicate copies of any such
data or materials it forwards to the Trustee/Custodian and for
taking all other reasonable and necessary precautions in event
such data or materials are lost or destroyed, regardless of
cause, or in the event reprocessing is needed for any reason.
The Trustee/Custodian will maintain records in connection with
the performance of services hereunder for the applicable
period as required by law, or if no period is required, for
such period as is reasonable under the law.
(j) No waiver of any breach of this agreement shall constitute a
waiver of any other breach, whether of the same or any other
covenant, term or condition. The subsequent performance of any
of the terms, covenants and conditions of this Article shall
not constitute a waiver of any preceding breach, nor shall any
delay or omission of any party's exercise of any rights
arising from any default effect or impair the party's rights
as to the same or future default.
(k) Neither the Trustee or the Custodian shall be responsible in
any way for any actions taken, or failure to act, by a prior
trustee/custodian. The Employer shall indemnify and hold
harmless the Trustee/Custodian for such prior
trustee/custodian's acts or inactions for any periods
applicable, including periods for which the Plan must
retroactively comply with any tax law or regulations
thereunder.
(l) A fiduciary with respect to the Plan shall not be liable for a
breach of fiduciary responsibility of another fiduciary with
respect to the Plan except to the extent that:
(1) it participates knowingly in, or knowingly undertakes
to conceal, an act or omission of such other
fiduciary, knowing such act or omission is a breach;
(2) by its failure to comply with ERISA Section 404(a)(1)
in the administration of its specific
responsibilities which give rise to its status as a
fiduciary, it has enabled such other fiduciary to
commit a breach; or
(3) it has knowledge of a breach by such other fiduciary,
unless it makes reasonable efforts under the
circumstances to remedy the breach.
104
(m) If the assets of the Plan are held by two (2) or more
Trustees, each Trustee will use reasonable care to prevent a
co-Trustee from committing a breach of duty under the Employee
Retirement Income Security Act of 1974, as amended, and they
shall jointly manage and control the assets of the Plan;
provided however, that such co-Trustee shall be authorized to
allocate specific responsibilities, obligations or duties
among the co-Trustees pursuant to a written agreement. If
co-Trustees do enter into such an agreement, then a Trustee to
whom certain responsibilities, obligations or duties have not
been allocated shall not be liable either individually or as
Trustee for any loss resulting to the Plan arising from the
acts or omissions on the part of another Trustee to which such
responsibilities, obligations or duties have been allocated.
13.13 CUSTODIAN If a discretionary Trustee has been appointed, the Employer may
appoint a Custodian as provided for in the Adoption Agreement. A Custodian shall
have the same rights, powers and duties as a nondiscretionary Trustee. Any
reference in the Plan to a Trustee is also a reference to the Custodian unless
the context indicates otherwise. Any limitation of the Trustee's liability in
the Plan shall act as a limitation of the Custodian's liability. Where a
discretionary Trustee has provided direction, any action taken by the Custodian
satisfies the requirement in the Plan referencing the Trustee taking that
action. The resignation or removal of the Custodian shall be made in accordance
with paragraph 13.19 as though the Custodian were the Trustee. The Custodian
shall be responsible for the holding and safekeeping of all or a portion of the
Plan's assets. One or more Custodian(s) appointed under this Plan may hold all
or any portion of the Plan's assets. Such separate assets shall be held pursuant
to the terms of a separate custodial agreement with such Custodian. The separate
custodial agreement shall be treated as an addendum and, as such, may not
conflict with any provision of this document. In addition, any provision of a
separate custodial agreement which would jeopardize the tax qualified status of
this Defined Contribution Plan shall be null and void. In addition to the
holding and safekeeping of Plan assets, the Custodian's duties shall include:
(a) receiving contributions under the terms of the Plan, but not
determining the amount or enforcing the payment thereof,
(b) making distributions from the Plan in accordance with
instructions received from the Plan Administrator or an
authorized representative of the Employer,
(c) keeping records reflecting its administration of the Trust or
the custodial account and making such records, statements and
reports available to the Employer for review and audit at such
times as agreed to between the Custodian, Plan Administrator,
and the Employer, and
(d) retaining and employing such attorneys, agents and servants as
may be necessary or desirable, in the opinion of the
Custodian, in the administration of the Plan, and to pay them
such reasonable compensation for their services as may be
agreed upon as an expense of administration of the Plan,
including power to employ and retain counsel upon any matter
of doubt as to the meaning or interpretation to be placed upon
this Plan or any provisions thereof with reference to any
question arising in the administration of the Plan or
pertaining to the rights and liabilities of the Trustee
hereunder. The Custodian in any such event, any act in
reliance upon the advice, opinions, records, statements and
computations of any attorneys and agents and on the records,
statements and computations of any servants so selected by it
in good faith shall be released and exonerated of and from all
liability to anyone in so doing (except to the extent that
liability is imposed under ERISA).
The Custodian's duties shall be limited to those as agreed to between the
Employer and the Custodian. The Employer shall be responsible for any other
administrative duties required under the Plan or by applicable law.
13.14 INVESTMENT ALTERNATIVES OF THE CUSTODIAN
(a) The Custodian shall hold any or all assets received from the
Trustee or its agents. If the Custodian holds title to Plan
assets and such ownership requires action on the part of the
registered owner, such action will be taken by the Custodian
only upon receipt of specific instructions from the Trustee,
or its designated agents or the Named Investment Fiduciary.
105
Proxies shall be voted by or pursuant to the express direction
of the Trustee its' authorized agent or the Named Investment
Fiduciary. The Custodian shall not render any investment
advice, including any opinion on the prudence of directed
investments. The Employer and Trustee and its agents thereof
assume all responsibility for adherence to fiduciary standards
under ERISA, as amended, and the Regulations issued
thereunder.
(b) Where the Sponsor serves as Custodian, the Trust shall only be
invested in investment alternatives the Custodian makes
available in the ordinary course of business unless the
Custodian is directed otherwise by the Employer, the Trustee
or any properly designated agent thereof. The Custodian under
applicable Federal or state laws, may limit the investment
alternatives including but not limited to savings accounts,
savings certificates, or in other savings instruments offered
by the Sponsor or its affiliates. Such investments shall be
made at the direction of the Employer or Trustee(s) or other
Named Investment Fiduciary and the Custodian shall have no
responsibility for the propriety of such investments.
13.15 PROHIBITED TRANSACTIONS The Trustee, Custodian, Employer, investment
manager, the Named Investment Fiduciary or Participant shall not knowingly enter
into any transaction, engage in any activity, or direct the purchase or
acquisition of any investment with respect to the Plan which would constitute a
prohibited transaction under ERISA or the Code for which a statutory or
administrative exemption is not available. The Trustee or Custodian shall not
receive any investment advisory or other fees from a regulated investment
company (a mutual fund) which duplicates investment management fees charged by
the Trustee. The Trustee or Custodian shall be permitted to receive fees from a
regulated investment company if the Trustee or Custodian has made a good faith
determination that the receipt of such fees is not a prohibited transaction
pursuant to any guidance or exemption issued by the Department of Labor from
time to time.
13.16 EXCLUSIVE BENEFIT RULES No part of the Trust shall be used for, or
diverted to, purposes other than for the exclusive benefit of Participants,
former Participants with a vested interest, and the Beneficiary or Beneficiaries
of deceased Participants who have in a vested interest in the Plan at death.
13.17 ASSIGNMENT AND ALIENATION OF BENEFITS Except as provided in paragraphs
12.9 or 12.11, no right or claim to, or interest in, any part of the Plan, or
any payment from the Plan, shall be assignable, transferable, or subject to
sale, mortgage, pledge, hypothecation, commutation, anticipation, garnishment,
attachment, execution, or levy of any kind. Neither the Trustee or Custodian
shall recognize any attempt to assign, transfer, sell, mortgage, pledge,
hypothecate, commute, or anticipate the same, except to the extent required by
law. The preceding sentences shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
Qualified Domestic Relations Order, as defined in Code Section 414(p), or any
domestic relations order entered before January 1, 1985 which the Plan's
attorney and Plan Administrator deem to be qualified.
Notwithstanding any provision of this paragraph 13.17 to the contrary, an offset
to a Participant's Vested Account Balance 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, shall
be permitted in accordance with Code Sections 401(a)(13)(C) and (D).
13.18 LIQUIDATION OF ASSETS If the Trustee and/or Custodian must liquidate
assets in order to make distributions, transfer assets, or pay fees, expenses or
taxes assessed against all or a part of the Trust, and the Trustee/Custodian is
not instructed as to the liquidation of such assets, assets will be liquidated
on a pro rata basis across all the investment alternatives in the Trust. The
Trustee and /or Custodian are expressly authorized to liquidate assets in order
to satisfy the Trust's obligation to pay the Trustee and /or Custodian's fees or
other compensation if such fees or compensation is not paid on a timely basis.
106
13.19 RESIGNATION AND REMOVAL The Trustee may resign upon thirty (30) days
written notice to the Employer. The Employer may remove the Trustee upon sixty
(60) days written notice to the Trustee, or such shorter period of time as may
be agreed to by the parties. The Employer may discontinue its participation in
this Prototype Defined Contribution Plan effective upon thirty (30) days written
notice to the Sponsor. In such event the Employer shall, prior to the effective
date thereof, amend the Plan to eliminate any reference to this Prototype
Defined Contribution Plan and appoint a successor trustee/custodian. The Trustee
shall deliver the Trust to its successor on the effective date of the
resignation or removal, or as soon thereafter as practicable, provided that this
shall not waive any lien the Trustee may have upon the Trust for its
compensation or expenses. Following the effective date of the notice of
termination, the Trustee shall have no further responsibility for providing
services to the Employer or the Plan. If the Employer fails to amend the Plan
and appoint a successor trustee/custodian within the said thirty (30) days, or
such longer period as the Trustee may specify in writing, the Plan shall be
deemed individually designed and the highest ranking officer of the Employer
shall be deemed the successor trustee or custodian as the case may be. In such
event, the Trustee may but shall not be required to continue to hold custody of
the assets of the Plan until such time as appropriate arrangements have been
made for the security of the Plan assets, but for a discretionary Trustee, upon
notification thereof to Plan Participants, shall no longer have any
responsibility for the investment of Plan assets.
107
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES If the Plan [except in the case of a SIMPLE 401(k)
Plan] is or becomes Top-Heavy in any Plan Year, the provisions of this Article
will supersede any conflicting provisions in the Basic Plan Document #01 and
accompanying Adoption Agreement.
14.2 MINIMUM CONTRIBUTION Notwithstanding any other provision in the Employer's
Plan, for any Plan Year in which the Plan is Top-Heavy, the aggregate Employer
contributions and forfeitures allocated on behalf of any Participant (without
regard to any Social Security contribution) under this Plan or a combination of
paired or non-paired Defined Contribution Plans and no Defined Benefit Plans
which are Top-Heavy, the Employer will contribute the lesser of 3% of such
Participant's Compensation or the largest percentage of the Employer
contributions and forfeitures, as a percentage of the Key Employee's
Compensation, up to a maximum permitted under Code Section 401(a)(17), as
indexed, allocated on behalf of any Key Employee for that year.
(a) In any Limitation Year prior to January 1, 2000, if the
Employer maintains or maintained a Defined Benefit Plan which
is not paired, the provisions of the "Limitations on
Allocations" section of the Adoption Agreement shall apply.
(b) Each Participant who is employed by the Employer on the last
day of the Plan Year shall be entitled to receive an
allocation of the Employer's minimum contribution for such
Plan Year. The minimum allocation applies even though under
other Plan provisions the Participant would not otherwise be
entitled to receive an allocation, or would have received a
lesser allocation for the year because the Participant fails
to make required contributions to the Plan, the Participant's
Compensation is less than a stated amount, or the Participant
fails to complete one-thousand (1,000) Hours of Service (or
such lesser number designated by the Employer in the Adoption
Agreement) during the Plan Year. A paired profit-sharing Plan
designated to provide the Top-Heavy minimum contribution must
do so regardless of profits. An Employer may elect in the
Adoption Agreement by resolution or by Plan amendment whether
the Top-Heavy minimum Contribution will be made to all
Participants or just non-Key Employees.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in the Adoption Agreement that the minimum allocation
or benefit requirements applicable to this Plan will be satisfied in the other
plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions credited to his or her account, a Top-Heavy minimum contribution
will be required for non-Key Employees who are Participants. For purposes of
satisfying the Top-Heavy minimum contribution requirement, Elective Deferrals
and Matching Contributions are not taken into account.
14.3 MINIMUM VESTING For any Plan Year during which this Plan is Top-Heavy, the
minimum vesting schedule selected by the Employer in the Adoption Agreement will
automatically apply to the Plan. If the vesting schedule elected by the Employer
in the Adoption Agreement is less liberal than the allowable schedule, the
schedule will automatically shift to a vesting schedule which satisfies the
Top-Heavy minimum requirements. If the vesting schedule under the Employer's
Plan shifts in or out of the Top-Heavy schedule for any Plan Year, such shift is
an amendment to the vesting schedule and the election in paragraph 9.9 of the
Basic Plan Document #01 applies. The minimum vesting schedule applies to all
accrued benefits within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including benefits accrued before the
effective date of Code Section 416 and benefits accrued before the Plan became
Top-Heavy. No reduction in vested benefits may occur in the event the Plan's
status as Top-Heavy changes for any Plan Year. This paragraph does not apply to
the account balances of any Employee who does not have one (1) Hour of Service
after the Plan initially becomes Top-Heavy and such Employee's account balance
attributable to Employer contributions and forfeitures will be determined
without regard to this paragraph.
108
14.4 LIMITATIONS ON ALLOCATIONS In any Limitation Year beginning prior to
January 1, 2000 in which the Top-Heavy Ratio exceeds 90% (i.e., the Plan becomes
Super Top-Heavy), the denominators of the Defined Benefit Fraction and Defined
Contribution Fraction shall be computed using 100% of the dollar limitation
instead of 125%.
14.5 USE OF SAFE HARBOR CONTRIBUTIONS TO SATISFY TOP-HEAVY CONTRIBUTION RULES If
elected in the Adoption Agreement, a 3% Safe Harbor Non-Elective Contribution
allocated to all eligible Employees may be used to satisfy the minimum
contribution requirement for a Top-Heavy Plan. A Safe Harbor Matching
Contribution may not be used to satisfy the minimum contribution requirement for
a Top-Heavy Plan.
14.6 TOP-HEAVY RULES FOR SIMPLE 401(K) PLANS A SIMPLE 401(k) Plan is not treated
as a Top-Heavy Plan under Code Section 416 for any year for which this article
applies.
109
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR The Sponsor may amend any or all provisions of this
Prototype Defined Contribution Plan at any time without obtaining the approval
or consent of any Employer which has adopted this Plan and Trust provided that
no amendment shall authorize or permit any part of the corpus or income of the
Plan to be used for or diverted to purposes other than for the exclusive benefit
of Participants and their Beneficiaries, or eliminate an optional form of
distribution. For purposes of Sponsor amendments, the mass submitter of this
Basic Plan Document #01 shall be recognized as the agent of the Sponsor. If the
Sponsor does not adopt the amendments made by the mass submitter, it will no
longer be identical to or a minor modifier of the mass submitter plan.
15.2 AMENDMENT BY EMPLOYER The Employer may amend any option in the Adoption
Agreement, and may include language as permitted in the Adoption Agreement to
satisfy Code Section 415 or to avoid duplication of minimums under Code Section
416 because of the required aggregation of multiple plans. The Employer may also
adopt certain model amendments published by the Internal Revenue Service which
specifically provide that their adoption will not cause the Plan to be treated
as an individually designed plan for which the Employer must obtain a separate
determination letter. An Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement under Code Section 412(d),
will no longer participate in this Prototype Plan program and will be considered
an individually designed Plan. In such event, all references to the institution
or company as Sponsor shall be deemed null and void.
15.3 PROTECTED BENEFITS An amendment (including the adoption of this Plan as a
restatement of an existing Plan) may not decrease a Participant's accrued
benefit or account balance except to the extent permitted under Code Section
412(c)(8), and may not reduce or eliminate a Code Section 411(d)(6) protected
benefit (except as provided by the Code or the Regulations issued thereunder)
determined immediately prior to the date of adoption, or if later, the Effective
Date of the amendment. Where this Plan is being adopted to amend another plan
that contains a protected benefit not provided for in this document, the
Employer may attach an addendum to the Adoption Agreement that describes such
protected benefit which shall be incorporated in the Plan.
15.4 PLAN TERMINATION The Employer shall have the right to terminate its Plan at
any time. The Sponsor of this Prototype Defined Contribution Plan is to be given
sixty (60) days notice in writing of the Employer's intent to terminate or
transfer the assets of the Plan. If the Plan is terminated, partially
terminated, or if there is a complete discontinuance of contributions under a
profit-sharing plan maintained by the Employer, all amounts credited to the
accounts of Participants shall vest and become nonforfeitable. In the event of a
partial termination, only those who are affected by such partial termination
shall be fully vested. In the event of termination, the Plan Administrator shall
direct the Trustee or the Custodian as applicable with respect to the
distribution of accounts to or for the exclusive benefit of Participants or
their Beneficiaries. Such distribution shall be made directly to Participants
or, at the direction of the Participant, may be transferred directly to another
Eligible Retirement Plan or individual retirement account. In the absence of an
election by a Participant who has received notice from the Plan Administrator
under paragraph 6.11, the Plan Administrator may direct the Trustee or Custodian
to transfer the Participant's benefit to another Defined Contribution Plan
maintained by the Employer, other than an employee stock ownership plan. If the
Employer does not maintain another Defined Contribution Plan, the Plan
Administrator may direct the Trustee or Custodian to transfer the Participant's
benefit to an individual retirement account with an institution selected by the
Plan Administrator, or make a distribution pursuant to paragraph 7.15. Prior to
making any distribution, the Plan Administrator shall establish in a manner
acceptable to the Trustee or Custodian, that the Plan has received a favorable
determination letter from the Internal Revenue Service approving the Plan
termination and authorizing the distribution of benefits to Plan Participants.
In the absence of such determination letter, the Trustee or Custodian may agree
to make distributions to Participants if the Plan Administrator represents that
the applicable requirements, if any, of ERISA and the Code governing the
termination of employee benefit plans have been or are being complied with or
that appropriate authorizations, waivers, exemptions, or variances have been or
are being obtained.
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15.5 DISTRIBUTION RESTRICTIONS UNDER A CODE SECTION 401(k) PLAN If the
Employer's Plan includes a cash or deferred arrangement or if transferred assets
described in paragraph 6.13 are subject to the distribution restrictions of Code
Sections 401(k)(2) and 401(k)(10), the special distribution provisions of this
paragraph apply. The portion of the Participant's Vested Account Balance
attributable to Elective Deferrals (or to amounts treated under the cash or
deferred arrangement as Elective Deferrals) is not distributable on account of
Plan termination, as described in this paragraph, unless:
(a) the Participant otherwise is entitled under the Plan to a
distribution of that portion of the Vested Account Balance, or
(a) the Plan termination occurs without the establishment of a
successor Plan. A successor Plan under subparagraph (b) is a
Defined Contribution Plan other than an employee stock
ownership plan [as defined in Code Section 4975(e)(7)], a
Simplified Employee Pension Plan [as defined in Code Section
408(k)], or a SIMPLE IRA Plan [as defined in Code Section
408(p)] maintained by the Employer (or by a related Employer)
at the time of the termination of the Plan or within the
period ending twelve (12) months after the final distribution
of assets. A distribution pursuant to this subparagraph (b),
must be part of a lump sum distribution(s) to the Participant
of his Vested account balance.
(b) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary [within the
meaning of Code Section 409(d)(3)] if such corporation
continues to maintain the Plan, but only with respect to the
Employees who continue employment with such subsidiary.
(d) In connection with the disposition by an Employer of less than
85% of the assets used by the Employer in a trade or business
to an unrelated entity, distribution of the entire Vested
Account Balance of an Participant who continues employment
with the acquirer will, if so agreed to by the Employer, be
made to the Participant in a single lump sum. This paragraph
shall apply if the acquirer does not maintain the Plan after
disposition and only if such Employee's change in employment
status constitutes a "separation from Service" within the
meaning of Code Section 401(k)(2)(b)(i)(I).
15.6 QUALIFICATION OF EMPLOYER'S PLAN If the adopting Employer fails to obtain
or retain applicable Internal Revenue Service qualification as a Prototype Plan,
such Employer's Plan shall no longer participate in this Prototype Defined
Contribution Plan and will be considered an individually designed plan.
15.7 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's
Plan with, or transfer of assets or liabilities of the
Employer's Plan to any other plan, Participants in the
Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer which
are equal to or greater than the benefits they would have been
entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which the Trustee, Custodian or any
successor thereto may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Trustee, Custodian or any successor
thereto may be a party, or any corporation to which all or
substantially all the business of the Trustee, Custodian or
any successor thereto may be transferred, shall automatically
be the successor without the filing of any instrument or
performance of any further act, before any court.
15.8 QUALIFICATION OF PROTOTYPE The Sponsor intends that this Prototype Defined
Contribution Plan will meet the requirements of the Code as a qualified Defined
Contribution Plan. Should the Commissioner of Internal Revenue or any delegate
of the Commissioner at any time determine that the Prototype Defined
Contribution Plan fails to meet the requirements of the Code, the Sponsor will
amend the Basic Plan Document #01 as necessary to maintain its qualified status.
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ARTICLE XVI
GOVERNING LAW
16.1 GOVERNING LAW Construction, validity and administration of the Prototype
Defined Contribution Plan and any Employer Plan established under the terms of
this Plan and accompanying Adoption Agreement, shall be governed by Federal law
to the extent applicable and to the extent not applicable by the laws of the
State or Commonwealth in which the principal office of the Prototype Sponsor or
its affiliate is located.
16.2 STATE COMMUNITY PROPERTY LAWS The terms and conditions of the Prototype
Defined Contribution Plan and any Employer's Plan established under the terms of
this Basic Plan Document #01 and accompanying Adoption Agreement shall be
applicable without regard to community property laws of any state.
112
IRS MODEL AMENDMENT
With respect to distributions under the Plan made for calendar years beginning
on or after:
[ ] January 1, 2001
[X] January 1, 2002
the Plan will apply the minimum distribution requirements of Code Section
401(a)(9) in accordance with the Regulations under Code Section 401(a)(9) that
were proposed on January 17, 2001, notwithstanding any provision of the Plan to
the contrary. This paragraph shall continue in effect until the end of the last
calendar year beginning before the effective date of the final Regulations under
Code Section 401(a)(9) or such other date as may be specified in guidance
published by the Internal Revenue Service.
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AMENDMENT
TO THE
PROTOTYPE DEFINED CONTRIBUTION PLAN
BASIC PLAN DOCUMENT #01
The Employer named in the Adoption Agreement hereby amends the Plan to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001 ("EGTRRA"). This amendment is intended as a good faith compliance with the
requirements of EGTRRA and is to be construed in accordance with EGTRRA and
guidance issued thereunder. This amendment shall supersede the provisions of the
Basic Plan Document #01 to the extent those provisions are inconsistent with the
provisions of this amendment. The Basic Plan Document #01 is hereby amended as
follows:
1. Paragraph 1.16 of the Basic Plan Document #01 entitled "Compensation",
under the paragraph entitled "Limitation on Compensation" is amended
effective for Plan Years beginning after December 31, 2001, by the
addition of the following three sentences at the end of the paragraph:
"The annual Compensation of each Participant taken into account in
determining allocations for any Plan Year beginning after December 31,
2001, shall not exceed $200,000, as adjusted for cost-of-living
increases in accordance with Code Section 401(a)(17)(B). Annual
Compensation means Compensation during the Plan Year or such other
consecutive 12-month period over which Compensation is otherwise
determined under the Plan (the determination period). The
cost-of-living adjustment in effect for a calendar year applies to
annual Compensation for the determination period that begins with or
within such calendar year."
2. Paragraph 1.55 of the Basic Plan Document #01 entitled "Key Employee",
is deleted in its entirety and replaced with the following for Plan
Years beginning after December 31, 2001:
"1.55 Key Employee Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan Year
that includes the determination date was an officer of the Employer
having annual Compensation greater than $130,000 [as adjusted under
Code Section 416(i)(1) for Plan Years beginning after December 31,
2002], a five percent (5%) owner of the Employer, or a one percent (1%)
owner of the Employer having annual Compensation of more than $150,000.
For this purpose, annual Compensation means Compensation within the
meaning of Code Section 415(c)(3). The determination of who is a Key
Employee will be made in accordance with Code Section 416(i)(1) and the
applicable Regulations and other guidance of general applicability
issued thereunder."
3. Paragraph 4.4 of the Basic Plan Document #01 entitled "Rollover
Contributions", is amended by the addition of the following paragraph
(g) which shall read as follows:
"(g) If elected by the Employer in the Adoption Agreement, the Plan
will accept Participant Rollover Contributions and/or Direct
Rollovers of distributions made after December 31, 2001, from
the types of plans specified in the Adoption Agreement,
beginning on the Effective Date specified in the Adoption
Agreement."
4. Paragraph 4.7 of the Basic Plan Document #01 entitled "Elective
Deferrals in a 401(k) Plan", is amended by the addition of three new
paragraphs (g), (h) and (i) which shall read as follows:
"(g) No Participant shall be permitted to have Elective Deferrals
made under this Plan, or any other Qualified Plan maintained
by the Employer during any taxable year, in excess of the
dollar limitation contained in Code Section 402(g) in effect
for such taxable year, except to the extent permitted under
subparagraph (h) below and Code Section 414(v), if applicable.
(h) If elected by the Employer in the Adoption Agreement, all
Employees who are eligible to make Elective Deferrals under
this Plan and who have attained age fifty (50) before the
close
114
of the Plan Year shall be eligible to make catch-up
contributions in accordance with, and subject to the
limitations of, Code Section 414(v). Such catch-up
contributions shall not be taken into account for purposes of
the provisions of the Plan implementing the required
limitations of Code Sections 402(g) and 415. The Plan shall
not be treated as failing to satisfy the provisions of the
Plan implementing the requirements of Code Sections 401(k)(3),
401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by
reason of the making of such catch-up contributions.
(i) Except to the extent permitted under subparagraph (h) above,
the Adoption Agreement, EGTRRA section 631 and Code Section
414(v), the maximum salary reduction contribution that can be
made to this Plan is the amount determined under Code Section
408(p)(2)(A)(ii) for the calendar year."
5. Effective as of the date set forth in the Adoption Agreement Section
entitled "Distribution Upon Severance from Employment", paragraph 6.3
of the Basic Plan Document #01 entitled "Benefits on Termination of
Employment " is amended by the addition of paragraphs (i) and (j) which
shall read as follows:
"(i) If elected by the Employer in the Adoption Agreement, this
paragraph shall apply for distributions and severances from
employment occurring after the dates specified in the Adoption
Agreement.
A Participant's Elective Deferrals, Qualified Non-Elective
Contributions, Qualified Matching Contributions, and earnings
attributable to these contributions shall be distributed on
account of the Participant's severance from employment.
However, such a distribution shall be subject to the other
provisions of the Plan regarding distributions, other than
provisions that require a separation from Service before such
amounts may be distributed.
(j) If elected by the Employer in the Adoption Agreement, the
value of a Participant's nonforfeitable account balance shall
be determined without regard to that portion of the account
balance that is attributable to rollover contributions (and
the earnings allocable thereto) within the meaning of Code
Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii) and
457(e)(16). If the value of the Participant's nonforfeitable
account balance as so determined is $5,000 or less, the Plan
shall immediately distribute the Participant's entire
nonforfeitable account balance."
6. Effective as of the date set forth in the Adoption Agreement Section
entitled "Distribution Upon Severance from Employment", paragraph 6.6
of the Basic Plan Document #01 entitled "Commencement of Benefits", is
amended by the addition of paragraph (d) which shall read as follows:
"(d) If elected by the Employer in the Adoption Agreement, this
paragraph shall apply for distributions and severances from
employment occurring after the dates specified in the Adoption
Agreement.
A Participant's Elective Deferrals, Qualified Non-Elective
Contributions, Qualified Matching Contributions, and earnings
attributable to these contributions shall be distributed on
account of the Participant's severance from employment.
However, such a distribution shall be subject to the other
provisions of the Plan regarding distributions, other than
provisions that require a separation from Service before such
amounts may be distributed."
7. The following new paragraph (c) is added to paragraph 6.7 of the Basic
Plan Document #01 entitled "Transitional Rules for Cash-Out Limits" and
shall apply if elected by the Employer in the Adoption Agreement and be
effective as specified in the Adoption Agreement.
"(c) If elected by the Employer in the Adoption Agreement, for
purposes of this paragraph 6.7, the value of a Participant's
nonforfeitable account balance shall be determined without
regard to that portion of the account balance that is
attributable to Rollover Contributions (and the earnings
allocable thereto) within the meaning of Code Sections 402(c),
403(a)(4), 403(b)(8),
115
408(d)(3)(A)(ii), and 457(e)(16). If the value of the
Participant's nonforfeitable account balance as so determined
is $5,000 or less, the Plan shall immediately distribute the
Participant's entire nonforfeitable account balance."
8. Paragraph 6.9 of the Basic Plan Document #01 entitled "Hardship
Withdrawals", is amended effective January 1, 2002 by the addition of
the following paragraph (d):
"(d) A Participant who receives a distribution after December 31,
2001, on account of Hardship shall be prohibited from making
Elective Deferrals and Voluntary After-tax Contributions under
this and all other Plans of the Employer for six (6) months
after receipt of the distribution. A Participant who receives
a distribution in calendar year 2001 on account of Hardship
shall be prohibited from making Elective Deferrals and
Voluntary After-tax Contributions under this and all other
Plans of the Employer for the period specified by the Employer
in the Adoption Agreement."
9. Paragraph 6.10 of the Basic Plan Document #01 entitled "Direct Rollover
of Benefits", is amended effective January 1, 2002 by the addition of
the following paragraph (e):
"(e) This paragraph shall apply only to distributions made after
December 31, 2001. For purposes of the Direct Rollover
provisions in paragraph 6.10 of the Plan, an Eligible
Retirement Plan shall also mean an annuity contract described
in Code Section 403(b) and an eligible plan under Code Section
457(b) which is maintained by a state, political subdivision
of a state, or any agency or instrumentality of a state or
political subdivision of a state which agrees to separately
account for amounts transferred into such plan from this Plan.
The definition of Eligible Retirement Plan shall also apply in
the case of a distribution to a surviving Spouse, or to a
Spouse or former Spouse who is the alternate payee under a
Qualified Domestic Relations Order, as defined in Code Section
414(p).
For purposes of the Direct Rollover provisions in paragraph
6.10 of the Plan, any amount that is distributed on account of
Hardship shall not be an Eligible Rollover Distribution and
the distributee may not elect to have any portion of such a
distribution paid directly to an Eligible Retirement Plan.
For purposes of the Direct Rollover provisions in paragraph
6.10 of the Plan, a portion of the distribution shall not fail
to be an Eligible Rollover Distribution merely because the
portion consists of Voluntary After-tax Contributions which
are not includible in gross income. However, such portion may
be transferred only to an individual retirement account or
annuity described in Code Section 408(a) or (b), or to a
qualified Defined Contribution Plan described in Code Section
401(a) or 403(a) that agrees to separately account for amounts
so transferred, including separately accounting for the
portion of such distribution which is includible in gross
income and the portion of such distribution which is not so
includible."
10. Article IX of Basic Plan Document #01 entitled "VESTING", is hereby
amended effective for the first Plan Year beginning after December 31,
2001, by adding a new paragraph 9.12 entitled "Vesting of Employer
Matching Contributions" which shall read as follows:
"9.12 VESTING OF EMPLOYER MATCHING CONTRIBUTIONS This section shall
apply to Participants with an account balance derived from Employer
Matching Contributions who complete an Hour of Service under the Plan
in a Plan Year beginning after December 31, 2001. If elected by the
Employer in the Adoption Agreement, this section shall also apply to
all other Participants with an account balance derived from Employer
Matching Contributions.
A Participant's account balance derived from Employer Matching
Contributions shall vest as provided in Section XIII(E) of the Adoption
Agreement if elected."
116
11. Article X of Basic Plan Document #01 entitled "LIMITATIONS ON
ALLOCATIONS", is amended by the addition of the following paragraph
10.6 entitled "Annual Additions" which shall read as follows:
"10.6 ANNUAL ADDITIONS Except to the extent permitted under Section
4.7(h) of Basic Plan Document #01 and under Code Section 414(v), the
Annual Addition that may be contributed or allocated to a Participant's
account under the Plan for any Limitation Year beginning after December
31, 2001 shall not exceed the lesser of:
(a) $40,000, as adjusted for increases in the
cost-of-living under Code Section 415(d), or
(b) 100% of the Participant's Compensation, within the
meaning of Code Section 415(c)(3), for the Limitation
Year.
The Compensation limit referred to in (b) above shall not apply to any
contribution for medical benefits after separation from Service [within
the meaning of Code Section 401(h) or Code Section 419A(f)(2)] which is
otherwise treated as an Annual Addition."
12. Effective for Plan Years beginning after December 31, 2001, paragraph
11.7(b) of the Basic Plan Document #01 is amended by the deletion of
this paragraph which outlines the multiple use test described in
Treasury Regulations Section 1.401(m)-2.
13. Paragraph 12.9 of the Basic Plan Document #01 entitled "Participant
Loans" is amended effective January 1, 2001 by deleting the language at
subsection (i) and replacing it with the following:
"(i) Effective for Plan loans made after December 31, 2001, Plan
provisions prohibiting loans to any Owner-Employee or
Shareholder Employee shall cease to apply."
14. Paragraph 14.2 of the Basic Plan Document #01 entitled "Minimum
Contribution" is amended for Plan Years beginning after December 31,
2001 by the addition of the following two new subparagraphs at the end
of the paragraph which shall read as follows:
"MATCHING CONTRIBUTIONS - Employer Matching Contributions shall be
taken into account for purposes of satisfying the minimum contribution
requirements of Code Section 416(c)(2). The preceding sentence shall
apply with respect to Matching Contributions under the Plan or, if the
Plan provides that the minimum contribution requirement shall be met in
another plan, such other plan. Employer Matching Contributions that are
used to satisfy the minimum contribution requirements shall be treated
as Matching Contributions for purposes of the Actual Contribution
Percentage Test and other requirements of Code Section 401(m).
CONTRIBUTIONS UNDER OTHER PLANS - The Employer may provide in the
Adoption Agreement that the minimum benefit requirement shall be met in
another plan, including another plan that consists solely of a cash or
deferred arrangement which meets the requirements of Code Section
401(k)(12) and Matching Contributions which meet the requirements of
Code Section 401(m)(11)."
15. The Top-Heavy requirements of Code Section 416 and Article XIV of the
Basic Plan Document #01 shall not apply in any Plan Year beginning
after December 31, 2001, in which the Plan established under the Basic
Plan Document #01 consists solely of a cash or deferred arrangement
which meets the requirements of Code Section 401(k)(12) and Matching
Contributions which meet the requirements of Code Section 401(m)(11).
This paragraph shall apply for purposes of determining whether the Plan
is a Top-Heavy Plan under Code Section 416(g) for Plan Years beginning
after December 31, 2001, and whether the Plan satisfies the minimum
benefits requirements of Code Section 416(c) for such years. This
section amends Article XIV of the Basic Plan Document #01 by adding
paragraph 14.7 entitled "Determination of Top-Heavy Status". The
paragraph shall read as follows:
117
"14.7 DETERMINATION OF TOP-HEAVY STATUS
(a) DETERMINATION OF PRESENT VALUES AND AMOUNTS - This
paragraph 14.7 shall apply for purposes of
determining the Present Values of accrued benefits
and the amounts of account balances of Employees as
of the Top-Heavy Determination Date.
(b) DISTRIBUTIONS DURING THE PLAN YEAR ENDING ON THE
TOP-HEAVY DETERMINATION DATE - The Present Value of
accrued benefits and the amounts of account balances
of an Employee as of the Top-Heavy Determination Date
shall be increased by the distributions made with
respect to the Employee under the Plan and any plan
aggregated with this Plan under Code Section
416(g)(2) during the 1-year period ending on the
Top-Heavy Determination Date. The preceding sentence
shall also apply to distributions under a terminated
plan which, had it not been terminated, would have
been aggregated with this Plan under Code Section
416(g)(2)(A)(i). In the case of a distribution made
for a reason other than separation from Service,
death, or Disability, this provision shall be applied
by substituting "5-year period" for "1-year period".
(C) EMPLOYEES NOT PERFORMING SERVICES DURING THE PLAN
YEAR ENDING ON THE TOP-HEAVY DETERMINATION DATE - The
accrued benefits and accounts of any individual who
has not performed services for the Employer during
the 1 -year period ending on the Top-Heavy
Determination Date shall not be taken into account."
118