EXHIBIT 4.1
WEST BANCORPORATION, INC.
EMPLOYEE SAVINGS AND
STOCK OWNERSHIP PLAN
Defined Contribution Plan 8.0
Restated October 1, 2004
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TABLE OF CONTENTS
INTRODUCTION
ARTICLE I FORMAT AND DEFINITIONS
Section 1.01 ----- Format
Section 1.02 ----- Definitions
ARTICLE II PARTICIPATION
Section 2.01 ----- Active Participant
Section 2.02 ----- Inactive Participant
Section 2.03 ----- Cessation of Participation
ARTICLE III CONTRIBUTIONS
Section 3.01 ----- Employer Contributions
Section 3.01A ----- Rollover Contributions
Section 3.02 ----- Forfeitures
Section 3.03 ----- Allocation
Section 3.04 ----- Contribution Limitation
Section 3.05 ----- Excess Amounts
Section 3.06 ----- Prohibited Allocations of Qualifying Employer Securities
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
Section 4.01 ----- Investment and Timing of Contributions
Section 4.02 ----- Investment in Qualifying Employer Securities
ARTICLE V BENEFITS
Section 5.01 ----- Retirement Benefits
Section 5.02 ----- Death Benefits
Section 5.03 ----- Vested Benefits
Section 5.04 ----- When Benefits Start
Section 5.05 ----- Withdrawal Benefits
Section 5.06 ----- Distributions Under Qualified Domestic Relations Orders
ARTICLE VI DISTRIBUTION OF BENEFITS
Section 6.01 ----- Automatic Forms of Distribution
Section 6.02 ----- Optional Forms of Distribution
Section 6.03 ----- Election Procedures
Section 6.04 ----- Notice Requirements
Section 6.05 ----- Forms of Distribution from ESOP Elective Deferral, Matching and Discretionary
Contribution Accounts
Section 6.05 ----- Put Option
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ARTICLE VII DISTRIBUTION REQUIREMENTS
Section 7.01 ----- Application
Section 7.02 ----- Definitions
Section 7.03 ----- Distribution Requirements
Section 7.04 ----- Transitional Rule
ARTICLE VIII TERMINATION OF THE PLAN
ARTICLE IX ADMINISTRATION OF THE PLAN
Section 9.01 ----- Administration
Section 9.02 ----- Expenses
Section 9.03 ----- Records
Section 9.04 ----- Information Available
Section 9.05 ----- Claim and Appeal Procedures
Section 9.06 ----- Delegation of Authority
Section 9.07 ----- Exercise of Discretionary Authority
Section 9.08 ----- Transaction Processing
Section 9.09 ----- Voting and Tender of Qualifying Employer Securities
ARTICLE X GENERAL PROVISIONS
Section 10.01 ----- Amendments
Section 10.02 ----- Direct Rollovers
Section 10.03 ----- Mergers and Direct Transfers
Section 10.04 ----- Provisions Relating to the Insurer and Other Parties
Section 10.05 ----- Employment Status
Section 10.06 ----- Rights to Plan Assets
Section 10.07 ----- Beneficiary
Section 10.08 ----- Nonalienation of Benefits
Section 10.09 ----- Construction
Section 10.10 ----- Legal Actions
Section 10.11 ----- Small Amounts
Section 10.12 ----- Word Usage
Section 10.13 ----- Change in Service Method
Section 10.14 ----- Military Service
ARTICLE XI TOP-HEAVY PLAN REQUIREMENTS
Section 11.01 ----- Application
Section 11.02 ----- Definitions
Section 11.03 ----- Modification of Vesting Requirements
Section 11.04 ----- Modification of Contributions
PLAN EXECUTION
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INTRODUCTION
The Primary Employer previously established a 401(k) savings plan on
January 1, 1965.
The Primary Employer is of the opinion that the plan should be changed. It
believes that the best means to accomplish these changes is to completely
restate the plan's terms, provisions and conditions. The restatement, effective
October 1, 2004, is set forth in this document and is substituted in lieu of the
prior document with the exception of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA) good faith compliance amendment and any
model amendment. Such amendment(s) shall continue to apply to this restated plan
until such provisions are integrated into the plan or such amendment(s) are
superseded by another amendment.
The restated plan continues to be for the exclusive benefit of employees
of the Employer. All persons covered under the plan on September 30, 2004, shall
continue to be covered under the restated plan with no loss of benefits.
It is intended that the Plan, as restated, shall consist of two
components. One component is intended to qualify as a qualified stock bonus plan
under Code Section 401(a), as an employee stock ownership plan under Code
Section 4975(e)(7) and includes a qualified cash or deferred arrangement under
Code Section 401(k). This component includes elective deferral contributions,
matching contributions and discretionary contributions invested in company
stock. The other component is intended to qualify as a profit sharing plan under
Code Section 401(a). The profit sharing component also includes a qualified cash
or deferred arrangement under Code Section 401(k). This component includes
elective deferral contributions, matching contributions and discretionary
contributions. The Plan provides for participant-directed investments and is
intended to comply with ERISA Section 404(c). The underlying Trust is intended
to be exempt from taxation under Code Section 501.
The purpose of this Plan is to offer Participants a systematic program for
accumulation of retirement and savings income, as well as a means to obtaining
beneficial interest of ownership in company stock. The ESOP component of the
Plan is intended to exclusively invest in common stock of the Employer.
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ARTICLE I
FORMAT AND DEFINITIONS
SECTION 1.01--FORMAT.
Words and phrases defined in the DEFINITIONS SECTION of Article I shall
have that defined meaning when used in this Plan, unless the context clearly
indicates otherwise.
These words and phrases have an initial capital letter to aid in
identifying them as defined terms.
SECTION 1.02--DEFINITIONS.
ACCOUNT means, for a Participant, his share of the Plan Fund. Separate
accounting records are kept for those parts of his Account that result
from:
(a) Elective Deferral Contributions
(b) ESOP Elective Deferral Contributions
(c) Matching Contributions
(d) ESOP Matching Contributions (other than cash dividends paid on
Qualifying Employer Securities and initially reinvested in
Qualifying Employer Securities at the election of the Participant).
(e) Other Employer Contributions
(f) ESOP Other Employer Contributions (other than cash dividends paid on
Qualifying Employer Securities and initially reinvested in
Qualifying Employer Securities at the election of the Participant.)
(g) Qualified Nonelective Contributions
(h) Rollover Contributions
(i) Diversification Amounts
(j) Cash dividends paid on shares of Qualifying Employer Securities
credited to the account maintained to reflect ESOP Elective
Deferral, ESOP Matching and ESOP Employer Other Contributions (with
a separate dividend source account for each such type of
contribution) that are initially reinvested in Qualifying Employer
Securities at the election of the Participant.
If the Participant's Vesting Percentage is less than 100% as to any of the
Employer Contributions, a separate accounting record will be kept for any
part of his Account resulting from such Employer Contributions and, if
there has been a prior Forfeiture Date, from such Contributions made
before a prior Forfeiture Date.
A Participant's Account shall be reduced by any distribution of his Vested
Account and by any Forfeitures. A Participant's Account shall participate
in the earnings credited, expenses charged, and any appreciation or
depreciation of the Investment Fund. His Account is subject to any minimum
guarantees applicable under the Annuity Contract or other investment
arrangement and to any expenses associated therewith.
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If a Participant makes a diversification election under Section 4.02(b),
such amount shall be credited to a Diversification Account, which is
maintained under the non-ESOP component of the Plan.
Accounts and subaccounts, in addition to those specified above, may also
be maintained if considered appropriate in the administration of the Plan.
ACCRUAL COMPUTATION PERIOD means a consecutive 12-month period ending on
the last day of each Plan Year, including corresponding consecutive
12-month periods before January 1, 1965.
ACP TEST means the nondiscrimination test described in Code Section
401(m)(2) as provided for in subparagraph (d) of the EXCESS AMOUNTS
SECTION of Article III.
ACTIVE PARTICIPANT means an Eligible Employee who is actively
participating in the Plan according to the provisions in the ACTIVE
PARTICIPANT SECTION of Article II.
ADP TEST means the nondiscrimination test described in Code Section
401(k)(3) as provided for in subparagraph (c) of the EXCESS AMOUNTS
SECTION of Article III.
AFFILIATED SERVICE GROUP means any group of corporations, partnerships or
other organizations of which the Employer is a part and which is
affiliated within the meaning of Code Section 414(m) and regulations
thereunder. Such a group includes at least two organizations one of which
is either a service organization (that is, an organization the principal
business of which is performing services), or an organization the
principal business of which is performing management functions on a
regular and continuing basis. Such service is of a type historically
performed by employees. In the case of a management organization, the
Affiliated Service Group shall include organizations related, within the
meaning of Code Section 144(a)(3), to either the management organization
or the organization for which it performs management functions. The term
Controlled Group, as it is used in this Plan, shall include the term
Affiliated Service Group.
ALTERNATE PAYEE means any spouse, former spouse, child, or other dependent
of a Participant who is recognized by a qualified domestic relations order
as having a right to receive all, or a portion of, the benefits payable
under the Plan with respect to such Participant.
ANNUAL COMPENSATION means, for a Plan Year, the Employee's Compensation
for the Compensation Year ending with or within the consecutive 12-month
period ending on the last day of the Plan Year.
Annual Compensation shall only include Compensation received while an
Active Participant for purposes of Employer Contributions other than
Elective Deferral Contributions.
ANNUITY CONTRACT means the annuity contract or contracts into which the
Trustee enters with the Insurer for guaranteed benefits, for the
investment of Contributions in separate accounts, and for the payment of
benefits under this Plan. The term Annuity Contract as it is used in this
Plan shall include the plural unless the context clearly indicates the
singular is meant.
ANNUITY STARTING DATE means, for a Participant, the first day of the first
period for which an amount is payable as an annuity or any other form.
BENEFICIARY means the person or persons named by a Participant to receive
any benefits under the Plan when the Participant dies. See the BENEFICIARY
SECTION of Article X.
CLAIMANT means any person who makes a claim for benefits under this Plan.
See the CLAIM AND APPEAL PROCEDURES SECTION of Article IX.
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CODE means the Internal Revenue Code of 1986, as amended.
COMPENSATION means, except for purposes of the CONTRIBUTION LIMITATION
SECTION of Article III and Article XI, the total earnings, except as
modified in this definition, paid or made available to an Employee by the
Employer during any specified period.
"Earnings" in this definition means wages within the meaning of Code
Section 3401(a) and all other payments of compensation to an Employee by
the Employer (in the course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a written statement under
Code Sections 6041(d), 6051(a)(3), and 6052. Earnings must be determined
without regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)). The amount reported in the
"Wages, Tips and Other Compensation" box on Form W-2 satisfies this
definition.
For any Self-employed Individual, Compensation means Earned Income.
Compensation shall exclude the following:
bonuses
commissions
For purposes of the EXCESS AMOUNTS SECTION of Article III, Compensation
shall not exclude those items listed above unless such Compensation is
nondiscriminatory in accordance with the regulations under Code Section
414(s).
Compensation shall also include elective contributions. For this purpose,
elective contributions are amounts contributed by the Employer pursuant to
a salary reduction agreement and which are not includible in the gross
income of the Employee under Code Section 125, 402(e)(3), 402(h)(1)(B), or
403(b). Elective contributions also include compensation deferred under a
Code Section 457 plan maintained by the Employer and employee
contributions "picked up" by a governmental entity and, pursuant to Code
Section 414(h)(2), treated as Employer contributions. For years beginning
after December 31, 1997, elective contributions shall also include amounts
contributed by the Employer pursuant to a salary reduction agreement and
which are not includible in the gross income of the Employee under Code
Section 132(f)(4).
For purposes of the EXCESS AMOUNTS SECTION of Article III, the Employer
may elect to use an alternative nondiscriminatory definition of
Compensation in accordance with the regulations under Code Section 414(s).
For Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account for determining all
benefits provided under the Plan for any determination period shall not
exceed $150,000, as adjusted for increases in the cost-of-living in
accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment
in effect for a calendar year applies to any determination period
beginning in such calendar year.
If a determination period consists of fewer than 12 months, the annual
limit is an amount equal to the otherwise applicable annual limit
multiplied by a fraction. The numerator of the fraction is the number of
months in the short determination period, and the denominator of the
fraction is 12.
If Compensation for any prior determination period is taken into account
in determining a Participant's contributions or benefits for the current
Plan Year, the Compensation for such prior determination period is subject
to the applicable annual compensation limit in effect for that
determination period. For this purpose, in
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determining contributions or benefits in Plan Years beginning on or after
January 1, 1994, the annual compensation limit in effect for determination
periods beginning before that date is $150,000.
Compensation means, for a Leased Employee, Compensation for the services
the Leased Employee performs for the Employer, determined in the same
manner as the Compensation of Employees who are not Leased Employees,
regardless of whether such Compensation is received directly from the
Employer or from the leasing organization.
COMPENSATION YEAR means the consecutive 12-month period ending on the last
day of each Plan Year, including corresponding periods before January 1,
1965.
CONTINGENT ANNUITANT means an individual named by the Participant to
receive a lifetime benefit after the Participant's death in accordance
with a survivorship life annuity.
CONTRIBUTIONS means
Elective Deferral Contributions
ESOP Elective Deferral Contributions
Matching Contributions
ESOP Matching Contributions
Qualified Nonelective Contributions
Discretionary Contributions
ESOP Discretionary Contributions
Rollover Contributions
as set out in Article III, unless the context clearly indicates only
specific contributions are meant.
CONTROLLED GROUP means any group of corporations, trades, or businesses of
which the Employer is a part that are under common control. A Controlled
Group includes any group of corporations, trades, or businesses, whether
or not incorporated, which is either a parent-subsidiary group, a
brother-sister group, or a combined group within the meaning of Code
Section 414(b), Code Section 414(c) and regulations thereunder and, for
purposes of determining contribution limitations under the CONTRIBUTION
LIMITATION SECTION of Article III, as modified by Code Section 415(h) and,
for the purpose of identifying Leased Employees, as modified by Code
Section 144(a)(3). The term Controlled Group, as it is used in this Plan,
shall include the term Affiliated Service Group and any other employer
required to be aggregated with the Employer under Code Section 414(o) and
the regulations thereunder.
DIRECT ROLLOVER means a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
DISCRETIONARY CONTRIBUTIONS means discretionary contributions made by the
Employer to fund this Plan. See the EMPLOYER CONTRIBUTIONS SECTION of
Article III.
DISTRIBUTEE means an Employee or former Employee. In addition, the
Employee's (or former Employee's) surviving spouse and the Employee's (or
former Employee's) spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Code Section
414(p), are Distributees with regard to the interest of the spouse or
former spouse.
EARNED INCOME means, for a Self-employed Individual, net earnings from
self-employment in the trade or business for which this Plan is
established if such Self-employed Individual's personal services are a
material income producing factor for that trade or business. Net earnings
shall be determined without regard to items not included in gross income
and the deductions properly allocable to or chargeable against such items.
Net
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earnings shall be reduced for the employer contributions to the Employer's
qualified retirement plan(s) to the extent deductible under Code Section
404.
Net earnings shall be determined with regard to the deduction allowed to
the Employer by Code Section 164(f) for taxable years beginning after
December 31, 1989.
ELECTIVE DEFERRAL CONTRIBUTIONS means contributions made by the Employer
to fund this Plan in accordance with elective deferral agreements between
Eligible Employees and the Employer.
Elective deferral agreements shall be made, changed, or terminated
according to the provisions of the EMPLOYER CONTRIBUTIONS SECTION of
Article III.
Elective Deferral Contributions shall be 100% vested and subject to the
distribution restrictions of Code Section 401(k) when made. See the WHEN
BENEFITS START SECTION of Article V.
ELIGIBILITY BREAK IN SERVICE means an Eligibility Computation Period in
which an Employee is credited with 500 or fewer Hours-of-Service. An
Employee incurs an Eligibility Break in Service on the last day of an
Eligibility Computation Period in which he has an Eligibility Break in
Service.
ELIGIBILITY COMPUTATION PERIOD means a consecutive 12-month period. The
first Eligibility Computation Period begins on an Employee's Employment
Commencement Date. Later Eligibility Computation Periods begin on
anniversaries of his Employment Commencement Date.
To determine an Eligibility Computation Period after an Eligibility Break
in Service, the Plan shall use the consecutive 12-month period beginning
on an Employee's Reemployment Commencement Date as if his Reemployment
Commencement Date were his Employment Commencement Date.
ELIGIBILITY SERVICE means, for purposes of Contributions other than
Elective Deferral Contributions, one year of service for each Eligibility
Computation Period that has ended and in which an Employee is credited
with at least 1,000 Hours-of-Service.
ELIGIBILITY SERVICE means, for purposes of Elective Deferral
Contributions, an Employee's Period of Service. Eligibility Service shall
be measured from his Employment Commencement Date to his most recent
Severance Date. Eligibility Service shall be reduced by any Period of
Severance that occurred prior to his most recent Severance Date, unless
such Period of Severance is included under the service spanning rule
below. This period of Eligibility Service shall be expressed as months (on
the basis that 30 days equal one month).
However, Eligibility Service is modified as follows:
Period of Military Duty included:
A Period of Military Duty shall be included as service with the
Employer to the extent it has not already been credited. For
purposes of crediting Hours-of-Service during the Period of Military
Duty, an Hour-of-Service shall be credited (without regard to the
501 Hour-of-Service limitation) for each hour an Employee would
normally have been scheduled to work for the Employer during such
period.
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Period of Severance included (service spanning rule):
A Period of Severance shall be deemed to be a Period of Service
under either of the following conditions:
(a) the Period of Severance immediately follows a period during
which an Employee is not absent from work and ends within 12
months; or
(b) the Period of Severance immediately follows a period during
which an Employee is absent from work for any reason other
than quitting, being discharged, or retiring (such as a leave
of absence or layoff) and ends within 12 months of the date he
was first absent.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while
both that firm and the Employer were members of the Controlled Group
shall be included as service with the Employer.
ELIGIBLE EMPLOYEE means any Employee of the Employer.
ELIGIBLE RETIREMENT PLAN means an individual retirement account described
in Code Section 408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section 403(a) or a
qualified trust described in Code Section 401(a), that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any
portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: (i) any distribution that
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated Beneficiary, or for a
specified period of ten years or more; (ii) any distribution to the extent
such distribution is required under Code Section 401(a)(9); (iii) any
hardship distribution described in Code Section 401(k)(2)(B)(i)(IV)
received after December 31, 1998; (iv) the portion of any other
distribution(s) that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities); and (v) any other distribution(s) that is reasonably
expected to total less than $200 during a year.
EMPLOYEE means an individual who is employed by the Employer or any other
employer required to be aggregated with the Employer under Code Sections
414(b), (c), (m), or (o). A Controlled Group member is required to be
aggregated with the Employer.
The term Employee shall include any Self-employed Individual treated as an
employee of any employer described in the preceding paragraph as provided
in Code Section 401(c)(1). The term Employee shall also include any Leased
Employee deemed to be an employee of any employer described in the
preceding paragraph as provided in Code Section 414(n) or (o).
EMPLOYER means, except for purposes of the CONTRIBUTION LIMITATION SECTION
of Article III, the Primary Employer, and any Controlled Group Member
which has adopted the Plan with consent from the Primary Employer. This
will also include any successor corporation or firm of the Employer which
shall, by written agreement, assume the obligations of this Plan or any
Predecessor Employer which maintained this Plan.
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EMPLOYER CONTRIBUTIONS means
Elective Deferral Contributions
ESOP Elective Deferral Contributions
Matching Contributions
ESOP Matching Contributions
Qualified Nonelective Contributions
Discretionary Contributions
ESOP Discretionary Contributions
as set out in Article III and contributions made by the Employer to fund
this Plan in accordance with the provisions of the MODIFICATION OF
CONTRIBUTIONS SECTION of Article XI, unless the context clearly indicates
only specific contributions are meant.
ESOP DISCRETIONARY CONTRIBUTIONS means Discretionary Contributions
contributed by the Employer or a Controlled Group Member in the form of
Qualifying Employer Securities, designated by the Employer to be invested
in Qualifying Employer Securities or designated to repay any outstanding
Exempt Loan. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.
ESOP ELECTIVE DEFERRAL CONTRIBUTIONS means contributions made by the
Employer in accordance with elective deferral agreements between Eligible
Employees and the Employer in the form of Qualifying Employer Securities
or designated by the Employer to be invested in Qualifying Employer
Securities. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.
ESOP MATCHING CONTRIBUTIONS means Matching Contributions contributed by
the Employer in the form of Qualifying Employer Securities, designated by
the Employer to be invested in Qualifying Employer Securities or
designated to repay any outstanding Exempt Loan. See the EMPLOYER
CONTRIBUTIONS SECTION of Article III.
EMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service.
ENTRY DATE means the date an Employee first enters the Plan as an Active
Participant. See the ACTIVE PARTICIPANT SECTION of Article II.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
EXEMPT LOAN means a loan or other extension of credit to the Plan to
enable the Plan to acquire shares of Qualifying Employer Securities, or to
refinance a prior Exempt Loan.
FISCAL YEAR means the Primary Employer's taxable year. The last day of the
Fiscal Year is December 31.
FORFEITURE means the part, if any, of a Participant's Account that is
forfeited. See the FORFEITURES SECTION of Article III.
FORFEITURE DATE means, as to a Participant, the date the Participant
incurs five consecutive Vesting Breaks in Service.
HIGHLY COMPENSATED EMPLOYEE means any Employee who:
(a) was a 5-percent owner at any time during the year or the preceding
year, or
(b) for the preceding year had compensation from the Employer in excess
of $80,000 and, if the Employer so elects, was in the top-paid group
for the preceding year. The $80,000 amount is adjusted at the
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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 this purpose the applicable year of the plan for which a determination
is being made is called a determination year and the preceding 12-month
period is called a look-back year. If the Employer makes a calendar year
data election, the look-back year shall be the calendar year beginning
with or within the look-back year. The Plan may not use such election to
determine whether Employees are Highly Compensated Employees on account of
being a 5-percent owner.
In determining who is a Highly Compensated Employee, the Employer does not
make a top-paid group election. In determining who is a Highly Compensated
Employee, the Employer does not make a calendar year data election.
Calendar year data elections and top-paid group elections, once made,
apply for all subsequent years unless changed by the Employer. If the
Employer makes one election, the Employer is not required to make the
other. If both elections are made, the look-back year in determining the
top-paid group must be the calendar year beginning with or within the
look-back year. These elections must apply consistently to the
determination years of all plans maintained by the Employer which
reference the highly compensated employee definition in Code Section
414(q), except as provided in Internal Revenue Service Notice 97-45 (or
superseding guidance). The consistency requirement will not apply to
determination years beginning with or within the 1997 calendar year, and
for determination years beginning on or after January 1, 1998 and before
January 1, 2000, satisfaction of the consistency requirement is determined
without regard to any nonretirement plans of the Employer.
The determination of who is a highly compensated former Employee is based
on the rules applicable to determining Highly Compensated Employee status
as in effect for that determination year, in accordance with section
1.414(q)-1T, A-4 of the temporary Income Tax Regulations and Internal
Revenue Service 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.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid
group, the compensation that is considered, and the identity of the
5-percent owners, shall be made in accordance with Code Section 414(q) and
the regulations thereunder.
HOUR-OF-SERVICE means, for the elapsed time method of crediting service in
this Plan, each hour for which an Employee is paid, or entitled to
payment, for performing duties for the Employer. Hour-of-Service means,
for the hours method of crediting service in this Plan, the following:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer during the applicable computation
period.
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer because of a period of time in 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.
Notwithstanding the preceding provisions of this subparagraph (b),
no credit will be given to the Employee:
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(1) for more than 501 Hours-of-Service under this subparagraph (b)
because of any single continuous period in which the Employee
performs no duties (whether or not such period occurs in a
single computation period); or
(2) for an Hour-of-Service for which the Employee is directly or
indirectly paid, or entitled to payment, because of a period
in which no duties are performed if such payment is made or
due under a plan maintained solely for the purpose of
complying with applicable worker's or workmen's compensation,
or unemployment compensation, or disability insurance laws; or
(3) for an Hour-of-Service for a payment which solely reimburses
the Employee for medical or medically related expenses
incurred by him.
For purposes of this subparagraph (b), a payment shall be deemed to
be made by, or due from the Employer, regardless of whether such
payment is made by, or due from the Employer, directly or indirectly
through, among others, a trust fund or insurer, to which the
Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer or other entity
are for the benefit of particular employees or are on behalf of a
group of employees in the aggregate.
(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 subparagraph (a)
or subparagraph (b) above (as the case may be) and under this
subparagraph (c). Crediting of Hours-of-Service for back pay awarded
or agreed to with respect to periods described in subparagraph (b)
above will be subject to the limitations set forth in that
subparagraph.
The crediting of Hours-of-Service above shall be applied under the rules
of paragraphs (b) and (c) of the Department of Labor Regulation
2530.200b-2 (including any interpretations or opinions implementing such
rules); which rules, by this reference, are specifically incorporated in
full within this Plan. The reference to paragraph (b) applies to the
special rule for determining hours of service for reasons other than the
performance of duties such as payments calculated (or not calculated) on
the basis of units of time and the rule against double credit. The
reference to paragraph (c) applies to the crediting of hours of service to
computation periods.
Hours-of-Service shall be credited for employment with any other employer
required to be aggregated with the Employer under Code Sections 414(b),
(c), (m), or (o) and the regulations thereunder for purposes of
eligibility and vesting. Hours-of-Service shall also be credited for any
individual who is considered an employee for purposes of this Plan
pursuant to Code Section 414(n) or (o) and the regulations thereunder.
Solely for purposes of determining whether a one-year break in service has
occurred for eligibility or vesting purposes, during a Parental Absence an
Employee shall be credited with the Hours-of-Service which otherwise would
normally have been credited to the Employee but for such absence, or in
any case in which such hours cannot be determined, eight Hours-of-Service
per day of such absence. 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.
INACTIVE PARTICIPANT means a former Active Participant who has an Account.
See the INACTIVE PARTICIPANT SECTION of Article II.
INSURER means Principal Life Insurance Company and any other insurance
company or companies named by the Trustee or Primary Employer.
13
INVESTMENT FUND means the total of Plan assets, excluding the guaranteed
benefit policy portion of any Annuity Contract and excluding any
Unallocated Reserve. All or a portion of these assets may be held under
the Trust Agreement.
The Investment Fund shall be valued at current fair market value as of the
Valuation Date. The valuation shall take into consideration investment
earnings credited, expenses charged, payments made, and changes in the
values of the assets held in the Investment Fund.
The Investment Fund shall be allocated at all times to Participants,
except as otherwise expressly provided in the Plan. The Account of a
Participant shall be credited with its share of the gains and losses of
the Investment Fund. That part of a Participant's Account invested in a
funding arrangement which establishes one or more accounts or investment
vehicles for such Participant thereunder shall be credited with the gain
or loss from such accounts or investment vehicles. The part of a
Participant's Account which is invested in other funding arrangements
shall be credited with a proportionate share of the gain or loss of such
investments. The share shall be determined by multiplying the gain or loss
of the investment by the ratio of the part of the Participant's Account
invested in such funding arrangement to the total of the Investment Fund
invested in such funding arrangement.
INVESTMENT MANAGER means any fiduciary (other than a trustee or Named
Fiduciary)
(a) who has the power to manage, acquire, or dispose of any assets of
the Plan;
(b) who (i) is registered as an investment adviser under the Investment
Advisers Act of 1940; (ii) is not registered as an investment
adviser under such Act by reason of paragraph (1) of section 203A(a)
of such Act, is registered as an investment adviser under the laws
of the state (referred to in such paragraph (1)) in which it
maintains its principal office and place of business, and, at the
time it last filed the registration form most recently filed by it
with such state in order to maintain its registration under the laws
of such state, also filed a copy of such form with the Secretary of
Labor, (iii) is a bank, as defined in that Act; or (iv) is an
insurance company qualified to perform services described in
subparagraph (a) above under the laws of more than one state; and
(c) who has acknowledged in writing being a fiduciary with respect to
the Plan.
LATE RETIREMENT DATE means the first day which is after a Participant's
Normal Retirement Date and on which retirement benefits begin. If a
Participant continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest day on or after the
date he ceases to be an Employee. An earlier or a later Retirement Date
may apply if the Participant so elects. An earlier Retirement Date may
apply if the Participant is age 70 1/2. See the WHEN BENEFITS START
SECTION of Article V.
LEASED EMPLOYEE means any person (other than an employee of the recipient)
who, pursuant to an agreement between the recipient and any other person
("leasing organization"), has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full time basis for a period of at
least one year, and such services are performed under primary direction or
control by the recipient. Contributions or benefits provided by the
leasing organization to a Leased Employee, which are attributable to
service performed for the recipient employer, shall be treated as provided
by the recipient employer.
14
A Leased Employee shall not be considered an employee of the recipient if:
(a) such employee is covered by a money purchase pension plan providing
(i) a nonintegrated employer contribution rate of at least 10
percent of compensation, as defined in Code Section 415(c)(3), but
for years beginning before January 1, 1998, including amounts
contributed pursuant to a salary reduction agreement which are
excludible from the employee's gross income under Code Sections 125,
402(e)(3), 402(h)(1)(B), or 403(b), (ii) immediate participation,
and (iii) full and immediate vesting, and
(b) Leased Employees do not constitute more than 20 percent of the
recipient's nonhighly compensated work force.
MATCHING CONTRIBUTIONS means contributions made by the Employer to fund
this Plan which are contingent on a Participant's Elective Deferral
Contributions. See the EMPLOYER CONTRIBUTIONS SECTION of Article III.
MONTHLY DATE means each Yearly Date and the same day of each following
month during the Plan Year beginning on such Yearly Date.
NAMED FIDUCIARY means the person or persons who have authority to control
and manage the operation and administration of the Plan.
The Named Fiduciary is the Employer.
NONHIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer who is
not a Highly Compensated Employee.
NONVESTED ACCOUNT means the excess, if any, of a Participant's Account
over his Vested Account.
NORMAL RETIREMENT AGE means the age at which the Participant's normal
retirement benefit becomes nonforfeitable if he is an Employee. A
Participant's Normal Retirement Age is 65.
NORMAL RETIREMENT DATE means the earliest day on or after the date the
Participant reaches his Normal Retirement Age. Unless otherwise provided
in this Plan, a Participant's retirement benefits shall begin on a
Participant's Normal Retirement Date if he has ceased to be an Employee on
such date and has a Vested Account. Even if the Participant is an Employee
on his Normal Retirement Date, he may choose to have his retirement
benefit begin on such date. See the WHEN BENEFITS START SECTION of Article
V.
OWNER-EMPLOYEE means a Self-employed Individual who, in the case of a sole
proprietorship, owns the entire interest in the unincorporated trade or
business for which this Plan is established. If this Plan is established
for a partnership, an Owner-employee means a Self-employed Individual who
owns more than 10 percent of either the capital interest or profits
interest in such partnership.
PARENTAL ABSENCE means an Employee's absence from work:
(a) by reason of pregnancy of the Employee,
(b) by reason of birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in
connection with adoption of such child by such Employee, or
15
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
PARTICIPANT means either an Active Participant or an Inactive Participant.
PERIOD OF MILITARY DUTY means, for an Employee
(a) who served as a member of the armed forces of the United States, and
(b) who was reemployed by the Employer at a time when the Employee had a
right to reemployment in accordance with seniority rights as
protected under Chapter 43 of Title 38 of the U. S. Code,
the period of time from the date the Employee was first absent from active
work for the Employer because of such military duty to the date the
Employee was reemployed.
PERIOD OF SERVICE means a period of time beginning on an Employee's
Employment Commencement Date or Reemployment Commencement Date (whichever
applies) and ending on his Severance Date.
PERIOD OF SEVERANCE means a period of time beginning on an Employee's
Severance Date and ending on the date he again performs an
Hour-of-Service.
A one-year Period of Severance means a Period of Severance of 12
consecutive months.
Solely for purposes of determining whether a one-year Period of Severance
has occurred for eligibility or vesting purposes, the consecutive 12-month
period beginning on the first anniversary of the first date of a Parental
Absence shall not be a one-year Period of Severance.
PLAN means the retirement and savings plan of the Employer set forth in
this document, including any later amendments to it. The portion of the
Plan that consists of the Qualifying Employer Securities Fund is a stock
bonus and employee stock ownership plan within the meaning of Code Section
4975(e)(7). The remaining portion of the Plan is a profit sharing plan
with a qualified cash or deferred arrangement under Code Section 401(k).
PLAN ADMINISTRATOR means the person or persons who administer the Plan.
The Plan Administrator is the Employer.
PLAN FUND means the total of the Investment Fund and the guaranteed
benefit policy portion of any Annuity Contract and any Unallocated
Reserve. The Investment Fund shall be valued as stated in its definition.
The guaranteed benefit policy portion of any Annuity Contract shall be
determined in accordance with the terms of the Annuity Contract and, to
the extent that such Annuity Contract allocates contract values to
Participants, allocated to Participants in accordance with its terms. The
total value of all amounts held under the Plan Fund shall equal the value
of the aggregate Participants' Accounts under the Plan.
PLAN YEAR means a period beginning on a Yearly Date and ending on the day
before the next Yearly Date.
PREDECESSOR EMPLOYER means a firm of which the Employer was once a part
(e.g., due to a spinoff or change of corporate status) or a firm absorbed
by the Employer because of a merger or acquisition (stock or asset,
including a division or an operation of such company).
16
PRIMARY EMPLOYER means West Bancorporation, Inc. Prior to this restatement
effective October 1, 2004, West Des Moines State Bank was the Primary
Employer of the Plan, of which West Bancorporation, Inc. has now taken
sponsorship of such Plan.
QUALIFIED NONELECTIVE CONTRIBUTIONS means contributions made by the
Employer to fund this Plan (other than Elective Deferral Contributions)
which are 100% vested and subject to the distribution restrictions of Code
Section 401(k) when made. See the EMPLOYER CONTRIBUTIONS SECTION of
Article III and the WHEN BENEFITS START SECTION of Article V.
QUALIFYING EMPLOYER SECURITIES means any security which is issued by the
Employer or any Controlled Group member and which meets the requirements
of Code Section 409(l) and ERISA Section 407(d)(5). This shall also
include any securities that satisfied the requirements of the definition
when these securities were assigned to the Plan.
QUALIFYING EMPLOYER SECURITIES FUND means that part of the assets of the
Trust Fund that are designated to be held primarily or exclusively in
Qualifying Employer Securities for the purpose of providing benefits for
Participants.
QUARTERLY DATE means each Yearly Date and the third, sixth, and ninth
Monthly Date after each Yearly Date which is within the same Plan Year.
REEMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs
an Hour-of-Service following
(a) an Eligibility Break in Service, for the hours method of crediting
service in this Plan, or
(b) a Period of Severance, for the elapsed time method of crediting
service in this Plan.
REENTRY DATE means the date a former Active Participant reenters the Plan.
See the ACTIVE PARTICIPANT SECTION of Article II.
RETIREMENT DATE means the date a retirement benefit will begin and is a
Participant's Normal or Late Retirement Date, as the case may be.
ROLLOVER CONTRIBUTIONS means the Rollover Contributions which are made by
an Eligible Employee or an Inactive Participant according to the
provisions of the ROLLOVER CONTRIBUTIONS SECTION of Article III.
SELF-EMPLOYED INDIVIDUAL means, with respect to any Fiscal Year, an
individual who has Earned Income for the Fiscal Year (or who would have
Earned Income but for the fact the trade or business for which this Plan
is established did not have net profits for such Fiscal Year).
SEVERANCE DATE means the earlier of:
(a) the date on which an Employee quits, retires, dies, or is
discharged, or
(b) the first anniversary of the date an Employee begins a one-year
absence from service (with or without pay). This absence may be the
result of any combination of vacation, holiday, sickness,
disability, leave of absence or layoff.
Solely to determine whether a one-year Period of Severance has occurred
for eligibility or vesting purposes for an Employee who is absent from
service beyond the first anniversary of the first day of a Parental
Absence,
17
Severance Date is the second anniversary of the first day of the Parental
Absence. The period between the first and second anniversaries of the
first day of the Parental Absence is not a Period of Service and is not a
Period of Severance.
TOTALLY AND PERMANENTLY DISABLED means the Participant, because of a
physical or mental disability, will be unable to perform the duties of his
customary position of employment (or is unable to engage in any
substantial gainful activity) for an indefinite period which the Plan
Administrator considers will be of long continued duration. A Participant
also is disabled if he incurs the permanent loss or loss of use of a
member or function of the body, or is permanently disfigured, and incurs a
Separation from Service. A Participant is disabled on the date the Plan
Administrator determines the Participant satisfies the definition of
Totally and Permanently Disabled. The Plan Administrator may require a
Participant to submit to a physical examination in order to confirm
Totally and Permanently Disabled. The Plan Administrator will apply this
definition in a nondiscriminatory, consistent and uniform manner.
TRUST AGREEMENT means an agreement or agreements of trust between the
Primary Employer and Trustee established for the purpose of holding and
distributing the Trust Fund under the provisions of the Plan. The Trust
Agreement may provide for the investment of all or any portion of the
Trust Fund in the Annuity Contract or any other investment arrangement.
TRUST FUND means the total funds held under an applicable Trust Agreement.
The term Trust Fund when used within a Trust Agreement shall mean only the
funds held under that Trust Agreement.
TRUSTEE means the party or parties named in the applicable Trust
Agreement. The term Trustee as it is used in this Plan is deemed to
include the plural unless the context clearly indicates the singular is
meant.
UNALLOCATED RESERVE means the portion of the Trust Fund that consists of
the proceeds of an Exempt Loan, the shares of Qualifying Employer
Securities that were acquired with the proceeds of an Exempt Loan and that
have not yet been allocated to Participant Accounts, the dividends and
other investment earnings on the assets held in the Unallocated Reserve,
and the proceeds from any sale of shares of Qualifying Employer Securities
held in the Unallocated Reserve.
VALUATION DATE means the date on which the value of the assets of the
Investment Fund is determined. The value of each Account which is
maintained under this Plan shall be determined on the Valuation Date. In
each Plan Year, the Valuation Date shall be the last day of the Plan Year.
At the discretion of the Plan Administrator, Trustee, or Insurer
(whichever applies), assets of the Investment Fund may be valued more
frequently. These dates shall also be Valuation Dates.
VESTED ACCOUNT means the vested part of a Participant's Account. The
Participant's Vested Account is determined as follows.
If the Participant's Vesting Percentage is 100%, his Vested Account equals
his Account.
If the Participant's Vesting Percentage is less than 100%, his Vested
Account equals the sum of (a), (b) and (c) below:
(a) The part of the Participant's Account that results from Employer
Contributions made before a prior Forfeiture Date and all other
Contributions which were 100% vested when made.
(b) The part of the Participant's Account that results from cash
dividends paid on shares of Qualifying Employer Securities credited
to the source account for ESOP Elective Deferral Contributions, ESOP
18
Matching Contributions, or ESOP Discretionary Contributions that are
initially reinvested in Qualifying Employer Securities at the
election of the Participant.
(c) The balance of the Participant's Account in excess of the amount in
(a) above multiplied by his Vesting Percentage.
If the Participant has withdrawn any part of his Account resulting from
Employer Contributions, other than the vested Employer Contributions
included in (a) above, the amount determined under this subparagraph (b)
shall be equal to P(AB + D) - D as defined below:
P The Participant's Vesting Percentage.
AB The balance of the Participant's Account in excess of the amount in
(a) above.
D The amount of the withdrawal resulting from Employer Contributions,
other than the vested Employer Contributions included in (a) above.
The Participant's Vested Account is nonforfeitable.
VESTING BREAK IN SERVICE means a Vesting Computation Period in which an
Employee is credited with 500 or fewer Hours-of-Service. An Employee
incurs a Vesting Break in Service on the last day of a Vesting Computation
Period in which he has a Vesting Break in Service.
VESTING COMPUTATION PERIOD means a consecutive 12-month period ending on
the last day of each Plan Year, including corresponding consecutive
12-month periods before January 1, 1965.
VESTING PERCENTAGE means the percentage used to determine the
nonforfeitable portion of a Participant's Account attributable to Employer
Contributions which were not 100% vested when made.
A Participant's Vesting Percentage is shown in the following schedule
opposite the number of whole years of his Vesting Service.
VESTING SERVICE VESTING
(whole years) PERCENTAGE
Less than 1 0
1 10
2 20
3 40
4 60
5 80
6 or more 100
The Vesting Percentage for a Participant who is an Employee on or after
the date he reaches Normal Retirement Age shall be 100%. The Vesting
Percentage for a Participant who is an Employee on the date he becomes
Totally and Permanently Disabled or dies shall be 100%.
Notwithstanding the above Vesting Percentage, in the event of an
elimination of a position or a reduction in force, as determined by the
Employer's Board of Directors, Participants whose employment with the
Employer are terminated as a result of such elimination of position or
reduction in force and are at least 40% Vested as of the end of the most
recently ended Plan Year prior to such termination of employment, shall
19
become 100% Vested upon termination of employment for such elimination of
position or reduction in force, as determined by the Employer's Board of
Directors. The Employer's Board of Directors shall make such determination
in a reasonable and nondiscriminatory manner.
If the schedule used to determine a Participant's Vesting Percentage is
changed, the new schedule shall not apply to a Participant unless he is
credited with an Hour-of-Service on or after the date of the change and
the Participant's nonforfeitable percentage on the day before the date of
the change is not reduced under this Plan. The amendment provisions of the
AMENDMENTS SECTION of Article X regarding changes in the computation of
the Vesting Percentage shall apply.
VESTING SERVICE means one year of service for each Vesting Computation
Period in which an Employee is credited with at least 1,000
Hours-of-Service.
However, Vesting Service is modified as follows: Period of Military Duty
included:
A Period of Military Duty shall be included as service with the
Employer to the extent it has not already been credited. For
purposes of crediting Hours-of-Service during the Period of Military
Duty, an Hour-of-Service shall be credited (without regard to the
501 Hour-of-Service limitation) for each hour an Employee would
normally have been scheduled to work for the Employer during such
period.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while
both that firm and the Employer were members of the Controlled Group
shall be included as service with the Employer.
YEARLY DATE means January 1, 1965, and the same day of each following
year.
YEARS OF SERVICE means an Employee's Vesting Service disregarding any
modifications which exclude service.
20
ARTICLE II
PARTICIPATION
SECTION 2.01--ACTIVE PARTICIPANT.
(a) For purposes of Elective Deferral Contributions, an Employee shall
first become an Active Participant (begin active participation in
the Plan) on the earliest Quarterly Date on which he is an Eligible
Employee and has met both of the eligibility requirements set forth
below. This date is his Entry Date. This Entry Date shall be used to
determine if a Participant is an Active Participant for purposes of
any minimum contribution or allocation under the MODIFICATION OF
CONTRIBUTIONS SECTION of Article XI.
(1) He has completed three months of Eligibility Service before
his Entry Date.
(2) He is age 21 or older.
For purposes of Contributions other than Elective Deferral
Contributions, an Employee shall first become an Active Participant
(begin active participation in the Plan) on the earliest Quarterly
Date on which he is an Eligible Employee and has met both of the
eligibility requirements set forth below. This date is his Entry
Date.
(1) He has completed one year of Eligibility Service before his
Entry Date.
(2) He is age 21 or older.
Each Employee who was an Active Participant under the Plan on
September 30, 2004, shall continue to be an Active Participant if he
is still an Eligible Employee on October 1, 2004, and his Entry Date
shall not change.
If a person has been an Eligible Employee who has met all of the
eligibility requirements above, but is not an Eligible Employee on
the date which would have been his Entry Date, he shall become an
Active Participant on the date he again becomes an Eligible
Employee. This date is his Entry Date.
In the event an Employee who is not an Eligible Employee becomes an
Eligible Employee, such Eligible Employee shall become an Active
Participant immediately if such Eligible Employee has satisfied the
eligibility requirements above and would have otherwise previously
become an Active Participant had he met the definition of Eligible
Employee. This date is his Entry Date.
(b) An Inactive Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again
performs an Hour-of-Service as an Eligible Employee. This date is
his Reentry Date.
Upon again becoming an Active Participant, he shall cease to be an
Inactive Participant.
(c) A former Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again
performs an Hour-of-Service as an Eligible Employee. This date is
his Reentry Date.
21
There shall be no duplication of benefits for a Participant under this
Plan because of more than one period as an Active Participant.
SECTION 2.02--INACTIVE PARTICIPANT.
An Active Participant shall become an Inactive Participant (stop accruing
benefits under the Plan) on the earlier of the following:
(a) the date the Participant ceases to be an Eligible Employee, or
(b) the effective date of complete termination of the Plan under Article
VIII.
An Employee or former Employee who was an Inactive Participant under the
Plan on September 30, 2004, shall continue to be an Inactive Participant on
October 1, 2004. Eligibility for any benefits payable to the Participant or on
his behalf and the amount of the benefits shall be determined according to the
provisions of the prior document, unless otherwise stated in this document.
SECTION 2.03--CESSATION OF PARTICIPATION.
A Participant shall cease to be a Participant on the date he is no longer
an Eligible Employee and his Account is zero.
22
ARTICLE III
CONTRIBUTIONS
SECTION 3.01--EMPLOYER CONTRIBUTIONS.
Employer Contributions shall be made without regard to current or
accumulated net income, earnings or profits of the Employer. Notwithstanding the
foregoing, the Plan shall continue to be designed to qualify as a profit sharing
plan for purposes of Code Sections 401(a), 402, 412, and 417; except that, the
portion of the Plan that consists of the Qualifying Employer Securities Fund is
designed to qualify as a stock bonus plan and employee stock ownership plan
under Code Section 4975(e)(7). Such Contributions shall be equal to the Employer
Contributions as described below:
(a) The amount of each Elective Deferral Contribution for a Participant
shall be equal to a portion of Compensation as specified in the
elective deferral agreement. An Employee who is eligible to
participate in the Plan may file an elective deferral agreement with
the Employer. The Participant shall modify or terminate the elective
deferral agreement by filing a new elective deferral agreement. The
elective deferral agreement may not be made retroactively and shall
remain in effect until modified or terminated.
The Participant may designate in the elective deferral agreement
that all or a part of each Elective Deferral Contribution shall be
invested in Qualifying Employer Securities. Such Elective Deferral
Contributions shall be referred to as ESOP Elective Deferral
Contributions and shall be part of the ESOP component of the Plan.
The elective deferral agreement to start or modify Elective Deferral
Contributions shall be effective on the first day of the first pay
period following the pay period in which the Participant's Entry
Date (Reentry Date, if applicable) or any following Quarterly Date
occurs. The elective deferral agreement must be entered into on or
before the date it is effective.
The elective deferral agreement to stop Elective Deferral
Contributions may be entered into on any date. Such elective
deferral agreement shall be effective on the first day of the pay
period following the pay period in which the elective deferral
agreement is entered into.
Elective Deferral Contributions and ESOP Elective Deferral
Contributions are fully (100%) vested and nonforfeitable. In
addition, the separate account maintained to reflect the cash
dividends paid on shares of Qualifying Employer Securities
attributable to Elective Deferral Contributions (and earnings
thereon) that are initially reinvested in Qualifying Employer
Securities under the Plan at the election of the Participant is
fully (100%) vested and nonforfeitable.
(b) The Employer may make discretionary Matching Contributions. The
percentage of Elective Deferral Contributions matched, if any, shall
be a percentage as determined by the Employer. Elective Deferral
Contributions which are over a percentage of Compensation won't be
matched. The percentage shall be determined by the Employer.
Matching Contributions are calculated based on Elective Deferral
Contributions and Compensation for the pay period. Matching
Contributions are made for all persons who were Active Participants
at any time during that pay period. Matching Contributions may be
made in the form of Qualifying Employer Securities or the Employer
may designate that Matching Contributions are to be invested in
Qualifying Employer Securities. Such Matching Contributions shall be
referred to as ESOP Matching Contributions and shall be part of the
ESOP component of the Plan.
23
Any percentage determined by the Employer shall apply to all
eligible persons for the entire Plan Year.
Matching Contributions are subject to the Vesting Percentage.
However, the separate account maintained to reflect the cash
dividends paid on shares of Qualifying Employer Securities
attributable to Matching Contributions (and earnings thereon) that
are initially reinvested in Qualifying Employer Securities under the
Plan at the election of the Participant is fully (100%) vested and
nonforfeitable.
(c) Qualified Nonelective Contributions may be made for each Plan Year
in an amount determined by the Employer.
Qualified Nonelective Contributions are 100% vested and subject to
the distribution restrictions of Code Section 401(k) when made.
(d) Discretionary Contributions may be made for each Plan Year in an
amount determined by the Employer.
The Participant may designate that all or any part of Discretionary
Contributions made for each Plan Year shall be invested in
Qualifying Employer Securities. Such Discretionary Contributions
shall be referred to as ESOP Discretionary Contributions and shall
be part of the ESOP component of the Plan.
Discretionary Contributions are subject to the Vesting Percentage.
ESOP Discretionary Contributions will be made for each Plan Year for
which a payment is due on an Exempt Loan. The amount of the ESOP
Discretionary Contribution for the Plan Year will be determined at
the sole discretion of the Primary Employer, but will not be less
than the minimum amount sufficient to enable the Trustee to make the
payment due on the Exempt Loan to the extent that such payment
cannot be satisfied from cash dividends paid on shares of Qualifying
Employer Securities held in the ESOP Discretionary Accounts (if the
Primary Employer directs that such dividends be applied to the
Exempt Loan), or cash dividends paid on shares of Qualifying
Employer Securities held in the Unallocated Reserve or other
investment earnings of the Unallocated Reserve.
Additional ESOP Discretionary Contributions may be made for each
Plan Year in an amount determined by the Employer.
ESOP Discretionary Contributions are subject to the Vesting
Percentage. However, the separate account maintained to reflect the
cash dividends paid on shares of Qualifying Employer Securities
attributable to ESOP Discretionary Contributions (and earnings
thereon) that are initially reinvested in Qualifying Employer
Securities under the Plan at the election of the Participant is
fully (100%) vested and nonforfeitable.
No Participant shall be permitted to have Elective Deferral Contributions,
as defined in the EXCESS AMOUNTS SECTION of this article, 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 at
the beginning of such taxable year.
An elective deferral agreement (or change thereto) must be made in such
manner and in accordance with such rules as the Employer may prescribe
(including by means of voice response or other electronic system under
circumstances the Employer permits) and may not be made retroactively.
Employer Contributions are allocated according to the provisions of the
ALLOCATION SECTION of this article.
24
A portion of the Plan assets resulting from Employer Contributions (but
not more than the original amount of those Contributions) may be returned if the
Employer Contributions are made because of a mistake of fact or are more than
the amount deductible under Code Section 404 (excluding any amount which is not
deductible because the Plan is disqualified). The amount involved must be
returned to the Employer within one year after the date the Employer
Contributions are made by mistake of fact or the date the deduction is
disallowed, whichever applies. Except as provided under this paragraph and
Article VIII, the assets of the Plan shall never be used for the benefit of the
Employer and are held for the exclusive purpose of providing benefits to
Participants and their Beneficiaries and for defraying reasonable expenses of
administering the Plan.
SECTION 3.01A--ROLLOVER CONTRIBUTIONS.
A Rollover Contribution may be made by an Eligible Employee or an Inactive
Participant if the following conditions are met:
(a) The Contribution is of amounts distributed from a plan that
satisfies the requirements of Code Section 401(a) or from a
"conduit" individual retirement account described in Code Section
408(d)(3)(A). In the case of an Inactive Participant, the
Contribution must be of an amount distributed from another plan of
the Employer, or a plan of a Controlled Group member, that satisfies
the requirements of Code Section 401(a).
(b) The Contribution is of amounts that the Code permits to be
transferred to a plan that meets the requirements of Code Section
401(a).
(c) The Contribution is made in the form of a direct rollover under Code
Section 401(a)(31) or is a rollover made under Code Section 402(c)
or 408(d)(3)(A) within 60 days after the Eligible Employee or
Inactive Participant receives the distribution.
(d) The Eligible Employee or Inactive Participant furnishes evidence
satisfactory to the Plan Administrator that the proposed rollover
meets conditions (a), (b), and (c) above.
A Rollover Contribution shall be allowed in cash only and must be made
according to procedures set up by the Plan Administrator.
If the Eligible Employee is not an Active Participant when the Rollover
Contribution is made, he shall be deemed to be an Active Participant only for
the purpose of investment and distribution of the Rollover Contribution.
Employer Contributions shall not be made for or allocated to the Eligible
Employee until the time he meets all of the requirements to become an Active
Participant.
Rollover Contributions made by an Eligible Employee or an Inactive
Participant shall be credited to his Account. The part of the Participant's
Account resulting from Rollover Contributions is fully (100%) vested and
nonforfeitable at all times. A separate accounting record shall be maintained
for that part of his Rollover Contributions consisting of voluntary
contributions which were deducted from the Participant's gross income for
Federal income tax purposes.
SECTION 3.02--FORFEITURES.
The Nonvested Account of a Participant shall be forfeited as of the
earlier of the following:
(a) the date the Participant dies (if prior to such date he had ceased
to be an Employee), or
(b) the Participant's Forfeiture Date.
25
All or a portion of a Participant's Nonvested Account shall be forfeited before
such earlier date if, after he ceases to be an Employee, he receives, or is
deemed to receive, a distribution of his entire Vested Account or a distribution
of his Vested Account derived from Employer Contributions which were not 100%
vested when made, under the RETIREMENT BENEFITS SECTION of Article V, the VESTED
BENEFITS SECTION of Article V, or the SMALL AMOUNTS SECTION of Article X. The
forfeiture shall occur as of the date the Participant receives, or is deemed to
receive, the distribution. If a Participant receives, or is deemed to receive,
his entire Vested Account, his entire Nonvested Account shall be forfeited. If a
Participant receives a distribution of his Vested Account from Employer
Contributions which were not 100% vested when made, but less than his entire
Vested Account from such Contributions, the amount to be forfeited shall be
determined by multiplying his Nonvested Account from such Contributions by a
fraction. The numerator of the fraction is the amount of the distribution
derived from Employer Contributions which were not 100% vested when made and the
denominator of the fraction is his entire Vested Account derived from such
Contributions on the date of distribution.
A Forfeiture shall also occur as provided in the EXCESS AMOUNTS SECTION of
this article.
Forfeitures shall be determined at least once during each Plan Year.
Forfeitures may first be used to pay administrative expenses. Forfeitures of
Matching Contributions which relate to excess amounts as provided in the EXCESS
AMOUNTS SECTION of this article, which have not been used to pay administrative
expenses, shall be allocated as provided in the EXCESS AMOUNTS SECTION of this
article. Any other Forfeitures which have not been used to pay administrative
expenses shall be allocated as of the last day of the Plan Year in which such
Forfeitures are determined as provided in the ALLOCATION SECTION of this
article. Upon their allocation to Accounts, Forfeitures shall be deemed to be
Employer Contributions.
Any portion of a Participant's nonvested account balance attributable to
Qualifying Employer Securities will become a Forfeiture only after the portion
of a Participant's account balance not attributable to Qualifying Employer
Securities is forfeited. Forfeitures of Qualifying Employer Securities held in
an ESOP Matching Contributions Account or ESOP Discretionary Contributions
Account may be used to satisfy any allocation of Qualifying Employer Securities
required under the ALLOCATIONS SECTION of this article.
If a Participant again becomes an Eligible Employee after receiving a
distribution which caused all or a portion of his Nonvested Account to be
forfeited, he shall have the right to repay to the Plan the entire amount of the
distribution he received (excluding any amount of such distribution resulting
from Contributions which were 100% vested when made). The repayment must be made
in a single sum (repayment in installments is not permitted) before the earlier
of the date five years after the date he again becomes an Eligible Employee or
the end of the first period of five consecutive Vesting Breaks in Service which
begin after the date of the distribution.
If the Participant makes the repayment above, the Plan Administrator shall
restore to his Account an amount equal to his Nonvested Account which was
forfeited on the date of distribution, unadjusted for any investment gains or
losses. If no amount is to be repaid because the Participant was deemed to have
received a distribution, or only received a distribution of Contributions which
were 100% vested when made, and he again performs an Hour-of-Service as an
Eligible Employee within the repayment period, the Plan Administrator shall
restore the Participant's Account as if he had made a required repayment on the
date he performed such Hour-of-Service. Restoration of the Participant's Account
shall include restoration of all Code Section 411(d)(6) protected benefits with
respect to that restored Account, according to applicable Treasury regulations.
Provided, however, the Plan Administrator shall not restore the Nonvested
Account if (i) a Forfeiture Date has occurred after the date of the distribution
and on or before the date of repayment and (ii) that Forfeiture Date would
result in a complete forfeiture of the amount the Plan Administrator would
otherwise restore.
The Plan Administrator shall restore the Participant's Account by the
close of the Plan Year following the Plan Year in which repayment is made.
Permissible sources for the restoration of the Participant's Account are
Forfeitures or special Employer Contributions. Such special Employer
Contributions shall be made without regard to profits. The
26
repaid and restored amounts are not included in the Participant's Annual
Additions, as defined in the CONTRIBUTION LIMITATION SECTION of this article.
SECTION 3.03--ALLOCATION.
A person meets the allocation requirements of this section if he is an
Active Participant on the last day of the Plan Year and has at least 1,000
Hours-of-Service during the latest Accrual Computation Period ending on or
before that date.
Elective Deferral Contributions (including ESOP Elective Deferral
Contributions) shall be allocated to Participants for whom such Contributions
are made under the EMPLOYER CONTRIBUTIONS SECTION of this article. Such
Contributions shall be allocated when made and credited to the Participant's
Account.
Matching Contributions (including ESOP Matching Contributions) shall be
allocated to the persons for whom such Contributions are made under the EMPLOYER
CONTRIBUTIONS SECTION of this article. Such Contributions shall be allocated
when made and credited to the person's Account.
Qualified Nonelective Contributions shall be allocated as of the last day
of the Plan Year to each person who meets the allocation requirements of this
section. Such Qualified Nonelective Contributions shall be allocated only to
Nonhighly Compensated Employees. The amount allocated to such person for the
Plan Year shall be equal to such Qualified Nonelective Contributions multiplied
by the ratio of such person's Annual Compensation for the Plan Year to the total
Annual Compensation of all such persons. This amount shall be credited to the
person's Account.
Discretionary Contributions (including ESOP Discretionary Contributions)
plus any Forfeitures shall be allocated as of the last day of the Plan Year
using Annual Compensation for the Plan Year. The amount allocated shall be
determined as follows:
STEP ONE: This step one shall only apply in years in which the Plan is a
Top-heavy Plan, as defined in the DEFINITIONS SECTION of Article XI, and the
minimum contribution under the MODIFICATION OF CONTRIBUTIONS SECTION of Article
XI is not being provided by other contributions to this Plan or another plan of
the Employer.
The allocation in this step one shall be made to each person meeting the
allocation requirements of this section and each person who is entitled to a
minimum contribution under the MODIFICATION OF CONTRIBUTIONS SECTION of Article
XI. Each such person's allocation shall be an amount equal to the Discretionary
Contributions plus any Forfeitures multiplied by the ratio of such person's
Annual Compensation to the total Annual Compensation of all such persons. Such
amount shall not exceed 3% of such person's Annual Compensation. The allocation
for any person who does not meet the allocation requirements of this section
shall be limited to the amount necessary to fund the minimum contribution.
STEP TWO: The allocation in this step two shall be made to each person meeting
the allocation requirements of this section. Each such person's allocation shall
be equal to any amount remaining after the allocation in step one multiplied by
the ratio of such person's Annual Compensation to the total Annual Compensation
of all such persons.
This amount shall be credited to the person's Account.
The ESOP Discretionary Contribution for the Plan Year (if any), together
with the cash dividends paid on Qualifying Employer Securities held in the ESOP
Discretionary Contribution Accounts (if the Primary Employer directs that such
dividends be applied to the Exempt Loan), cash dividends paid on Qualifying
Employer Securities held in the Unallocated Reserve and other investment
earnings of the Unallocated Reserve (if any), shall be applied to make
27
the payment due on any Exempt Loan for the Plan Year. The Qualifying Employer
Securities released from the Unallocated Reserve as a result of that payment
shall be allocated as of the last day of the Plan Year as follows:
STEP ONE: This step one shall apply only if the cash dividends paid on
Qualifying Employer Securities held in the ESOP Discretionary Contribution
Accounts are applied to the Exempt Loan.
The allocation in this step one shall be made to each person who received a cash
dividend on Qualifying Employer Securities held in his/her ESOP Discretionary
Contribution Account that was applied to the Exempt Loan.
The number of shares of Qualifying Employer Securities allocated under this step
one shall equal the number of shares with a value equal to the total cash
dividends paid on Qualifying Employer Securities held in the ESOP Discretionary
Contribution Accounts and applied to the Exempt Loan. The number of shares of
Qualifying Employer Securities allocated to each such person shall be determined
by multiplying the number of shares of Qualifying Employer Securities to be
allocated under this step one by a fraction, the numerator of which is the cash
dividends paid on Qualifying Employer Securities held in the ESOP Discretionary
Account of such person and applied to the Exempt Loan, and the denominator of
which is the total cash dividends paid on Qualifying Employer Securities held in
the ESOP Discretionary Accounts of all such persons and applied to the Exempt
Loan.
STEP TWO: The allocation in this step two shall be made among those persons who
meet the allocation requirements of this section, but subject to the PROHIBITED
ALLOCATION OF QUALIFYING EMPLOYER SECURITIES SECTION of this article.
The number of shares of Qualifying Employer Securities allocated to each such
person shall be determined by multiplying the number of shares of Qualifying
Employer Securities released from the Unallocated Reserve (and not allocated
under step one) by a fraction, the numerator of which is the Annual Compensation
of such person for the Plan Year, and the denominator of which is the aggregate
Annual Compensation of all such persons for the Plan Year. However, if the
aggregate amount of Qualifying Employer Securities that would be allocated under
this paragraph to Highly Compensated Employees exceeds one-third of the total
Qualifying Employer Securities allocated, then the amount of Qualifying Employer
Securities in excess of one-third shall be reallocated to the Nonhighly
Compensated Employees in proportion to each Nonhighly Compensated Employee's
Annual Compensation to the total Annual Compensation of all such Nonhighly
Compensated Employees.
If the ESOP Discretionary Contributions exceed the amount needed to make
the payment for the Exempt Loan for the Plan Year, or if there is no Exempt Loan
for the Plan Year in which the ESOP Discretionary Contribution is made, the ESOP
Discretionary Contribution shall be allocated in the same manner as
Discretionary Contributions.
If Leased Employees are Eligible Employees, in determining the amount of
Employer Contributions allocated to a person who is a Leased Employee,
contributions provided by the leasing organization which are attributable to
services such Leased Employee performs for the Employer shall be treated as
provided by the Employer. Those contributions shall not be duplicated under this
Plan.
SECTION 3.04--CONTRIBUTION LIMITATION.
(a) Definitions. For the purpose of determining the contribution
limitation set forth in this section, the following terms are
defined.
ANNUAL ADDITIONS means the sum of the following amounts credited to
a Participant's account for the Limitation Year:
(1) employer contributions; provided that, ESOP Discretionary
Contributions under this Plan that are applied to pay interest
on an Exempt Loan and/or Forfeitures will not be an Annual
Addition if no
28
more than one-third (1/3) of the ESOP Discretionary
Contribution that is applied to pay principal or interest on
an exempt Loan for the Plan Year is allocated to Highly
Compensated Employees. To the extent a Qualifying Employer
Securities are allocated to Participant's Accounts, the lesser
of fair market value of the Qualifying Employer Security
allocated or the employer contribution used to release such
share in the case of repayment of an Exempt Loan, shall be
used for purposes of measuring Annual Additions.
(2) employee contributions; and
(3) forfeitures.
Annual Additions to a defined contribution plan shall also include
the following:
(4) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2), which
are part of a pension or annuity plan maintained by the
Employer,
(5) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits,
allocated to the separate account of a key employee, as
defined in Code Section 419A(d)(3), under a welfare benefit
fund, as defined in Code Section 419(e), maintained by the
Employer; and
(6) allocations under a simplified employee pension.
For this purpose, any Excess Amount applied under (e) and (k) below
in the Limitation Year to reduce Employer Contributions shall be
considered Annual Additions for such Limitation Year.
COMPENSATION means wages within the meaning of Code Section 3401(a)
and all other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade or business) for
which the Employer is required to furnish the Employee a written
statement under Code Sections 6041(d), 6051(a)(3), and 6052.
Compensation must be determined without regard to any rules under
Code Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code
Section 3401(a)(2)). The amount reported in the "Wages, Tips and
Other Compensation" box on Form W-2 satisfies this definition.
For any Self-employed Individual, Compensation shall mean Earned
Income.
For purposes of applying the limitations of this section,
Compensation for a Limitation Year is the Compensation actually paid
or made available in gross income during such Limitation Year.
For Limitation Years beginning after December 31, 1997, for purposes
of applying the limitations of this section, 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 Section 125, 132(f)(4), or
457.
DEFINED CONTRIBUTION DOLLAR LIMITATION means, for Limitation Years
beginning after December 31, 1994, $30,000, as adjusted under Code
Section 415(d).
EMPLOYER means 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 415(c) as modified
by Code Section 415(h))
29
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).
EXCESS AMOUNT means the excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
LIMITATION YEAR means the consecutive 12-month period ending on the
last day of each Plan Year, including corresponding consecutive
12-month periods before January 1, 1965. If the Limitation Year is
other than the calendar year, execution of this Plan (or any
amendment to this Plan changing the Limitation Year) constitutes the
Employer's adoption of a written resolution electing the Limitation
Year. If the Limitation Year is amended to a different consecutive
12-month period, the new Limitation Year must begin on a date within
the Limitation Year in which the amendment is made.
MAXIMUM PERMISSIBLE AMOUNT means the maximum Annual Addition that
may be contributed or allocated to a Participant's Account under the
Plan for any Limitation Year. This amount shall not exceed the
lesser of:
(1) The Defined Contribution Dollar Limitation, or
(2) 25 percent of the Participant's Compensation for the
Limitation Year.
The compensation limitation referred to in (2) shall not apply to
any contribution for medical benefits (within the meaning of Code
Section 401(h) or 419A(f)(2)) which is otherwise treated as an
Annual Addition under Code Section 415(l)(1) or 419A(d)(2).
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different consecutive 12-month
period, the Maximum Permissible Amount will not exceed the Defined
Contribution Dollar Limitation multiplied by the following fraction:
Number of months in the short Limitation Year
12
(b) If the Participant does not participate in, and has never
participated in, another qualified plan maintained by the Employer
or a welfare benefit fund, as defined in Code Section 419(e),
maintained by the Employer, or an individual medical account, as
defined in Code Section 415(l)(2), maintained by the Employer, or a
simplified employee pension, as defined in Code Section 408(k),
maintained by the Employer, which provides an Annual Addition, the
amount of Annual Additions which may be credited to the
Participant's Account for any Limitation Year shall not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions for the Limitation Year to exceed
the Maximum Permissible Amount, the amount contributed or allocated
shall be reduced so that the Annual Additions for the Limitation
Year will equal the Maximum Permissible Amount.
(c) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
30
(d) 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.
(e) If as a result of the allocation of Forfeitures, a reasonable error
in estimating a Participant's Compensation for the Limitation Year,
a reasonable error in determining the amount of elective deferrals
(within the meaning of Code Section 402(g)(3)) that may be made with
respect to any individual under the limits of Code Section 415, or
under other facts and circumstances allowed by the Internal Revenue
Service, there is an Excess Amount, the excess will be disposed of
as follows:
(1) Any Elective Deferral Contributions that are not the basis for
Matching Contributions (plus attributable earnings), to the
extent they would reduce the Excess Amount, will be
distributed to the Participant.
(2) If after the application of (1) above an Excess Amount still
exists, any Elective Deferral Contributions that are the basis
for Matching Contributions (plus attributable earnings), to
the extent they would reduce the Excess Amount, will be
distributed to the Participant. Concurrently with the
distribution of such Elective Deferral Contributions, any
Matching Contributions which relate to any Elective Deferral
Contributions distributed in the preceding sentence, to the
extent such application would reduce the Excess Amount, will
be applied as provided in (3) or (4) below:
(3) If after the application of (2) above an Excess Amount still
exists, and the Participant is covered by the Plan at the end
of the Limitation Year, the Excess Amount in the Participant's
Account will be used to reduce Employer Contributions
(including any allocation of Forfeitures) for such Participant
in the next Limitation Year, and each succeeding Limitation
Year if necessary.
(4) If after the application of (2) above an Excess Amount still
exists, and the Participant is not covered by the Plan at the
end of the Limitation Year, the Excess Amount will be held
unallocated in a suspense account. The suspense account will
be applied to reduce future Employer Contributions for all
remaining Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary.
(5) If a suspense account is in existence at any time during a
Limitation Year pursuant to this (e), it will participate in
the allocation of investment gains or losses. If a suspense
account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participant's Accounts before any
Employer Contributions may be made to the Plan for that
Limitation Year. Excess Amounts held in a suspense account may
not be distributed to Participants or former Participants.
(f) This (f) applies if, in addition to this Plan, the Participant is
covered under another qualified defined contribution plan maintained
by the Employer, a welfare benefit fund maintained by the Employer,
an individual medical account maintained by the Employer, or a
simplified employee pension maintained by the Employer which
provides an Annual Addition during any Limitation Year. The Annual
Additions which may be credited to a Participant's Account under
this Plan for any such Limitation Year will not exceed the Maximum
Permissible Amount, reduced by the Annual Additions credited to a
Participant's account under the other qualified defined contribution
plans, welfare benefit funds, individual medical accounts, and
simplified employee pensions for the same Limitation Year. If the
Annual Additions with respect to the Participant under other
qualified defined contribution plans, welfare benefit funds,
individual medical accounts, and simplified employee pensions
maintained by the Employer are less than the Maximum Permissible
Amount, and the Employer Contribution that would otherwise be
contributed or allocated to the Participant's Account under this
Plan would cause the Annual Additions
31
for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual
Additions under all such plans and funds for the Limitation Year
will equal the Maximum Permissible Amount. If the Annual Additions
with respect to the Participant under such other qualified defined
contribution plans, welfare benefit funds, individual medical
accounts, and simplified employee pensions in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount
will be contributed or allocated to the Participant's Account under
this Plan for the Limitation Year.
(g) 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 (c) above.
(h) 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.
(i) If pursuant to (h) above or as a result of the allocation of
forfeitures or as a result of a reasonable error in determining the
amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any individual under the
limits of Code Section 415, a Participant's Annual Additions under
this Plan and such other plans would result in an Excess Amount for
a Limitation Year, the Excess Amount will be deemed to consist of
the Annual Additions last allocated, except that Annual Additions
attributable to a simplified employee pension will be deemed to have
been allocated first, followed by Annual Additions to a welfare
benefit fund or individual medical account, regardless of the actual
allocation date.
(j) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product
of:
(1) the total Excess Amount allocated as of such date, times
(2) the ratio of (i) the Annual Addition allocated to the
Participant for the Limitation Year as of such date under this
Plan to (ii) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all other qualified defined contribution plans.
(k) Any Excess Amount attributed to this Plan will be disposed of in the
manner described in (e) above.
SECTION 3.05--EXCESS AMOUNTS.
(a) Definitions. For the purposes of this section, the following terms
are defined:
ACP means the average (expressed as a percentage) of the
Contribution Percentages of the Eligible Participants in a group.
ADP means the average (expressed as a percentage) of the Deferral
Percentages of the Eligible Participants in a group.
AGGREGATE LIMIT means the greater of:
(1) The sum of:
(i) 125 percent of the greater of the ADP of the Nonhighly
Compensated Employees for the prior Plan Year or the ACP
of the Nonhighly Compensated Employees under the plan
32
subject to Code Section 401(m) for the Plan Year
beginning with or within the prior Plan Year of the cash
or deferred arrangement, and
(ii) the lesser of 200 percent or 2 percent plus the lesser
of such ADP or ACP.
(2) The sum of:
(i) 125 percent of the lesser of the ADP of the Nonhighly
Compensated Employees for the prior Plan Year or the ACP
of the Nonhighly Compensated Employees under the plan
subject to Code Section 401(m) for the Plan Year
beginning with or within the prior Plan Year of the cash
or deferred arrangement, and
(ii) the lesser of 200 percent or 2 percent plus the greater
of such ADP or ACP.
If the Employer has elected to use the current year testing method,
then, in calculating the Aggregate Limit for a particular Plan Year,
the Nonhighly Compensated Employees' ADP and ACP for that Plan Year,
instead of the prior Plan Year, is used.
CONTRIBUTION PERCENTAGE means the ratio (expressed as a percentage)
of the Eligible Participant's Contribution Percentage Amounts to the
Eligible Participant's Compensation for the Plan Year (whether or
not the Eligible Participant was an Eligible Participant for the
entire Plan Year). In modification of the foregoing, Compensation
shall be limited to the Compensation received while an Eligible
Participant. For an Eligible Participant for whom such Contribution
Percentage Amounts for the Plan Year are zero, the percentage is
zero.
CONTRIBUTION PERCENTAGE AMOUNTS means the sum of the Participant
Contributions and Matching Contributions (that are not Qualified
Matching Contributions taken into account for purposes of the ADP
Test) made under the Plan on behalf of the Eligible Participant for
the Plan Year. Such Contribution Percentage Amounts shall not
include Matching Contributions that are forfeited either to correct
Excess Aggregate Contributions or because the Contributions to which
they relate are Excess Elective Deferrals, Excess Contributions, or
Excess Aggregate Contributions. Under such rules as the Secretary of
the Treasury shall prescribe, in determining the Contribution
Percentage the Employer may elect to include Qualified Nonelective
Contributions under this Plan which were not used in computing the
Deferral Percentage. The Employer may also elect to use Elective
Deferral Contributions in computing the Contribution Percentage so
long as the ADP Test is met before the Elective Deferral
Contributions are used in the ACP Test and continues to be met
following the exclusion of those Elective Deferral Contributions
that are used to meet the ACP Test.
DEFERRAL PERCENTAGE means the ratio (expressed as a percentage) of
Elective Deferral Contributions under this Plan on behalf of the
Eligible Participant for the Plan Year to the Eligible Participant's
Compensation for the Plan Year (whether or not the Eligible
Participant was an Eligible Participant for the entire Plan Year).
In modification of the foregoing, Compensation shall be limited to
the Compensation received while an Eligible Participant. The
Elective Deferral Contributions used to determine the Deferral
Percentage shall include Excess Elective Deferrals (other than
Excess Elective Deferrals of Nonhighly Compensated Employees that
arise solely from Elective Deferral Contributions made under this
Plan or any other plans of the Employer or a Controlled Group
member), but shall exclude Elective Deferral Contributions that are
used in computing the Contribution Percentage (provided the ADP Test
is satisfied both with and without exclusion of these Elective
Deferral Contributions). Under such rules as the Secretary of the
Treasury shall prescribe, the Employer may elect to include
Qualified Nonelective Contributions and Qualified Matching
Contributions under this
33
Plan in computing the Deferral Percentage. For an Eligible
Participant for whom such contributions on his behalf for the Plan
Year are zero, the percentage is zero.
ELECTIVE DEFERRAL CONTRIBUTIONS means any employer contributions
made to a plan at the election of a participant, in lieu of cash
compensation, and shall include contributions made pursuant to a
salary reduction agreement or other deferral mechanism. With respect
to any taxable year, a participant's Elective Deferral Contributions
are 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 described in Code Section 401(k), any
salary reduction simplified employee pension plan 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 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 reduction agreement. Elective Deferral Contributions
shall not include any deferrals properly distributed as excess
annual additions.
ELIGIBLE PARTICIPANT means, for purposes of determining the Deferral
Percentage, any Employee who is otherwise entitled to make Elective
Deferral Contributions under the terms of the Plan for the Plan
Year. Eligible Participant means, for purposes of determining the
Contribution Percentage, any Employee who is eligible (i) to make a
Participant Contribution or an Elective Deferral Contribution (if
the Employer takes such contributions into account in the
calculation of the Contribution Percentage), or (ii) to receive a
Matching Contribution (including forfeitures) or a Qualified
Matching Contribution. If a Participant 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 on behalf of whom no
Participant Contributions are made.
EXCESS AGGREGATE CONTRIBUTIONS means, with respect to any Plan Year,
the excess of:
(1) 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
(2) The maximum Contribution Percentage Amounts permitted by the
ACP Test (determined by hypothetically reducing contributions
made on behalf of Highly Compensated Employees in order of
their Contribution Percentages beginning with the highest of
such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals and then determining Excess Contributions.
EXCESS CONTRIBUTIONS means, with respect to any Plan Year, the
excess of:
(1) The aggregate amount of employer contributions actually taken
into account in computing the Deferral Percentage of Highly
Compensated Employees for such Plan Year, over
(2) The maximum amount of such contributions permitted by the ADP
Test (determined by hypothetically reducing contributions made
on behalf of Highly Compensated Employees in the order of the
Deferral Percentages, beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess
Elective Deferrals.
EXCESS ELECTIVE DEFERRALS means those Elective Deferral
Contributions that are includible in a Participant's gross income
under Code Section 402(g) to the extent such Participant's Elective
Deferral
34
Contributions for a taxable year exceed the dollar limitation under
such Code section. Excess Elective Deferrals shall be treated as
Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION
of this article, under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the
Participant's taxable year.
MATCHING CONTRIBUTIONS means employer contributions made to this or
any other defined contribution plan, or to a contract described in
Code Section 403(b), on behalf of a participant on account of a
Participant Contribution made by such participant, or on account of
a participant's Elective Deferral Contributions, under a plan
maintained by the Employer or a Controlled Group member.
PARTICIPANT CONTRIBUTIONS means contributions made to the plan by or
on behalf of a participant that are included in the participant's
gross income in the year in which made and that are maintained under
a separate account to which the earnings and losses are allocated.
QUALIFIED MATCHING CONTRIBUTIONS means Matching Contributions which
are subject to the distribution and nonforfeitability requirements
under Code Section 401(k) when made.
QUALIFIED NONELECTIVE CONTRIBUTIONS means any employer contributions
(other than Matching Contributions) which an employee may not elect
to have paid to him in cash instead of being contributed to the plan
and which are subject to the distribution and nonforfeitability
requirements under Code Section 401(k) when made.
(b) Excess Elective Deferrals. A Participant may assign to this Plan any
Excess Elective Deferrals made during a taxable year of the
Participant by notifying the Plan Administrator in writing on or
before the first following March 1 of the amount of the Excess
Elective Deferrals to be assigned to the Plan. A Participant is
deemed to notify the Plan Administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective
Deferral Contributions made to this Plan and any other plan of the
Employer or a Controlled Group member. The Participant's claim for
Excess Elective Deferrals shall be accompanied by the Participant's
written statement that if such amounts are not distributed, such
Excess Elective Deferrals will exceed the limit imposed on the
Participant by Code Section 402(g) for the year in which the
deferral occurred. The Excess Elective Deferrals assigned to this
Plan cannot exceed the Elective Deferral Contributions allocated
under this Plan for such taxable year.
Notwithstanding any other provisions of the Plan, Elective Deferral
Contributions in an amount equal to the Excess Elective Deferrals
assigned to this Plan, plus any income and minus any loss allocable
thereto, shall be distributed no later than April 15 to any
Participant to whose Account Excess Elective Deferrals were assigned
for the preceding year and who claims Excess Elective Deferrals for
such taxable year.
The Excess Elective Deferrals shall be adjusted for income or loss.
The income or loss allocable to such Excess Elective Deferrals shall
be equal to the income or loss allocable to the Participant's
Elective Deferral Contributions for the taxable year in which the
excess occurred multiplied by a fraction. The numerator of the
fraction is the Excess Elective Deferrals. The denominator of the
fraction is the closing balance without regard to any income or loss
occurring during such taxable year (as of the end of such taxable
year) of the Participant's Account resulting from Elective Deferral
Contributions.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Elective Deferrals,
plus any income and minus any loss allocable thereto, shall be
forfeited. These Forfeitures shall be allocated as of the last day
of the Plan Year in which the excess arose. These Forfeitures shall
be allocated to each person who meets the allocation requirements of
the ALLOCATION SECTION of this article who does not have an excess
amount, using Annual
35
Compensation for the Plan Year, and shall be deemed to be Matching
Contributions. The amount allocated to such person shall be equal to
the Forfeitures multiplied by the ratio of such person's Annual
Compensation to the total Annual Compensation of all such persons.
This amount shall be allocated to the person's Account.
(c) ADP Test. As of the end of each Plan Year after Excess Elective
Deferrals have been determined, the Plan must satisfy the ADP Test.
The ADP Test shall be satisfied using the prior year testing method,
unless the Employer has elected to use the current year testing
method.
(1) Prior Year Testing Method. The ADP for a Plan Year for
Eligible Participants who are Highly Compensated Employees for
each Plan Year and the prior year's ADP for Eligible
Participants who were Nonhighly Compensated Employees for the
prior Plan Year must satisfy one of the following tests:
(i) The ADP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ADP for Eligible
Participants who were Nonhighly Compensated Employees
for the prior Plan Year multiplied by 1.25; or
(ii) The ADP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year:
A. shall not exceed the prior year's ADP for Eligible
Participants who were Nonhighly Compensated
Employees for the prior Plan Year multiplied by 2,
and
B. the difference between such ADPs is not more than
2.
If this is not a successor plan, for the first Plan Year the
Plan permits any Participant to make Elective Deferral
Contributions, for purposes of the foregoing tests, the prior
year's Nonhighly Compensated Employees' ADP shall be 3
percent, unless the Employer has elected to use the Plan
Year's ADP for these Eligible Participants.
(2) Current Year Testing Method. The ADP for a Plan Year for
Eligible Participants who are Highly Compensated Employees for
each Plan Year and the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year must satisfy
one of the following tests:
(i) The ADP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall
not exceed the ADP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year
multiplied by 1.25; or
(ii) The ADP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year:
A. shall not exceed the ADP for Eligible Participants
who are Nonhighly Compensated Employees for the
Plan Year multiplied by 2, and
B. the difference between such ADP's is not more than
2.
If the Employer has elected to use the current year testing
method, that election cannot be changed unless (i) the Plan
has been using the current year testing method for the
preceding five Plan Years, or if less, the number of Plan
Years the Plan has been in existence; or (ii) the Plan
36
otherwise meets one of the conditions specified in Internal
Revenue Service Notice 98-1 (or superseding guidance) for
changing from the current year testing method.
A Participant is a Highly Compensated Employee for a particular Plan
Year if he meets the definition of a Highly Compensated Employee in
effect for that Plan Year. Similarly, a Participant is a Nonhighly
Compensated Employee for a particular Plan Year if he does not meet
the definition of a Highly Compensated Employee in effect for that
Plan Year.
The Deferral Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Elective Deferral Contributions (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferral Contributions for purposes of the ADP
Test) allocated to his account under two or more arrangements
described in Code Section 401(k) that are maintained by the Employer
or a Controlled Group member shall be determined as if such Elective
Deferral Contributions (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions, or
both) were made under a single arrangement. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements
that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a
single arrangement. The foregoing notwithstanding, certain plans
shall be treated as separate if mandatorily disaggregated under the
regulations of Code Section 401(k).
In the event this Plan satisfies the requirements of Code Section
401(k), 401(a)(4), or 410(b) only if aggregated with one or more
other plans, or if one 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 Deferral Percentage of
Employees as if all such plans were a single plan. Any adjustments
to the Nonhighly Compensated Employee ADP for the prior year shall
be made in accordance with Internal Revenue Service Notice 98-1 (or
superseding guidance), unless the Employer has elected 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 testing method for the ADP Test.
For purposes of the ADP Test, Elective Deferral Contributions,
Qualified Nonelective Contributions, and Qualified Matching
Contributions must be made before the end of the 12-month period
immediately following the Plan Year to which the contributions
relate.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP Test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in
such test.
If the Plan Administrator should determine during the Plan Year that
the ADP Test is not being met, the Plan Administrator may limit the
amount of future Elective Deferral Contributions of the Highly
Compensated Employees.
Notwithstanding any other provisions of this Plan, Excess
Contributions, plus any income and minus any loss allocable thereto,
shall be distributed no later than the last day of each Plan Year to
Participants to whose Accounts such Excess Contributions were
allocated for the preceding Plan Year. 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
of 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 amounts are
distributed more than 2 1/2 months after the
37
last day of the Plan Year in which such excess amounts arose, a 10
percent excise tax shall be imposed on the employer maintaining the
plan with respect to such amounts.
Excess Contributions shall be treated as Annual Additions, as
defined in the CONTRIBUTION LIMITATION SECTION of this article.
The Excess Contributions shall be adjusted for income or loss. The
income or loss allocable to such Excess Contributions allocated to
each Participant shall be equal to the income or loss allocable to
the Participant's Elective Deferral Contributions (and, if
applicable, Qualified Nonelective Contributions or Qualified
Matching Contributions, or both) for the Plan Year in which the
excess occurred multiplied by a fraction. The numerator of the
fraction is the Excess Contributions. The denominator of the
fraction is the closing balance without regard to any income or loss
occurring during such Plan Year (as of the end of such Plan Year) of
the Participant's Account resulting from Elective Deferral
Contributions (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if such contributions are included
in the ADP Test).
Excess Contributions allocated to a Participant shall be distributed
from the Participant's Account resulting from Elective Deferral
Contributions. If such Excess Contributions exceed the balance in
the Participant's Account resulting from Elective Deferral
Contributions, the balance shall be distributed from the
Participant's Account resulting from Qualified Matching
Contributions (if applicable) and Qualified Nonelective
Contributions, respectively.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Contributions, plus
any income and minus any loss allocable thereto, shall be forfeited.
These Forfeitures shall be allocated as of the last day of the Plan
Year in which the excess arose. These Forfeitures shall be allocated
to each person who meets the allocation requirements of the
ALLOCATION SECTION of this article who does not have an excess
amount, using Annual Compensation for the Plan Year, and shall be
deemed to be Matching Contributions. The amount allocated to such
person shall be equal to the Forfeitures multiplied by the ratio of
such person's Annual Compensation to the total Annual Compensation
of all such persons. This amount shall be allocated to the person's
Account.
(d) ACP Test. As of the end of each Plan Year, the Plan must satisfy the
ACP Test. The ACP Test shall be satisfied using the prior year
testing method, unless the Employer has elected to use the current
year testing method.
(1) Prior Year Testing Method. The ACP for a Plan Year for
Eligible Participants who are Highly Compensated Employees for
each Plan Year and the prior year's ACP for Eligible
Participants who were Nonhighly Compensated Employees for the
prior Plan Year must satisfy one of the following tests:
(i) The ACP for the Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall
not exceed the prior year's ACP for Eligible
Participants who were Nonhighly Compensated Employees
for the prior Plan Year multiplied by 1.25; or
(ii) The ACP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year:
A. shall not exceed the prior year's ACP for Eligible
Participants who were Nonhighly Compensated
Employees for the prior Plan Year multiplied by 2,
and
38
B. the difference between such ACPs is not more than
2.
If this is not a successor plan, for the first Plan Year the
Plan permits any Participant to make Participant
Contributions, provides for Matching Contributions, or both,
for purposes of the foregoing tests, the prior year's
Nonhighly Compensated Employees' ACP shall be 3 percent,
unless the Employer has elected to use the Plan Year's ACP for
these Eligible Participants.
(2) Current Year Testing Method. The ACP for a Plan Year for
Eligible Participants who are Highly Compensated Employees for
each Plan Year and the ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year must satisfy
one of the following tests:
(i) The ACP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall
not exceed the ACP for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year
multiplied by 1.25; or
(ii) The ACP for a Plan Year for Eligible Participants who
are Highly Compensated Employees for the Plan Year:
A. shall not exceed the ACP for Eligible Participants
who are Nonhighly Compensated Employees for the
Plan Year multiplied by 2, and
B. the difference between such ACPs is not more than
2.
If the Employer has elected to use the current year testing
method, that election cannot be changed unless (i) the Plan
has been using the current year testing method for the
preceding five Plan Years, or if less, the number of Plan
Years the Plan has been in existence; or (ii) the Plan
otherwise meets one of the conditions specified in Internal
Revenue Service Notice 98-1 (or superseding guidance) for
changing from the current year testing method.
A Participant is a Highly Compensated Employee for a particular Plan
Year if he meets the definition of a Highly Compensated Employee in
effect for that Plan Year. Similarly, a Participant is a Nonhighly
Compensated Employee for a particular Plan Year if he does not meet
the definition of a Highly Compensated Employee in effect for that
Plan Year.
Multiple Use. 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 or a Controlled
Group member, 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 Contribution Percentage of those Highly
Compensated Employees who also participate in a cash or deferred
arrangement will be reduced in the manner described below for
allocating Excess Aggregate Contributions so that the limit is not
exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage 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 Test and ACP Test and are deemed to be the maximum permitted
under such tests for the Plan Year. Multiple use does not occur if
either the ADP or ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP, respectively, of the
Nonhighly Compensated Employees.
The Contribution Percentage for any Eligible Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to
have Contribution Percentage Amounts allocated to his account under
two or more plans described in Code Section 401(a) or arrangements
described in Code Section 401(k) that are maintained by the Employer
or a Controlled Group member shall be determined as if the total of
such Contribution Percentage Amounts was made under each plan. If a
Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different plan years, all
39
cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement. The
foregoing notwithstanding, certain plans shall be treated as
separate if mandatorily disaggregated under the regulations of Code
Section 401(m). In the event this Plan satisfies the requirements of
Code Section 401(m), 401(a)(4), or 410(b) only if aggregated with
one or more other plans, or if one 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
Contribution Percentage of Employees as if all such plans were a
single plan. Any adjustments to the Nonhighly Compensated Employee
ACP for the prior year shall be made in accordance with Internal
Revenue Service Notice 98-1 (or superseding guidance), unless the
Employer has elected to use the current year testing method. Plans
may be aggregated in order to satisfy Code Section 401(m) only if
they have the same plan year and use the same testing method for the
ACP Test.
For purposes of the ACP Test, Participant Contributions are
considered to have been made in the Plan Year in which contributed
to the Plan. Matching Contributions and Qualified Nonelective
Contributions will be considered to have been made for a Plan Year
if made no later than the end of the 12-month period beginning on
the day after the close of the Plan Year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP Test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in
such test.
Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if not vested, or distributed, if vested, 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 Amounts and continuing in descending order until all of
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. If such Excess
Aggregate Contributions are distributed more than 2 1/2 months after
the last day of the Plan Year in which such excess amounts arose, a
10 percent excise tax shall be imposed on the employer maintaining
the plan with respect to such amounts.
Excess Aggregate Contributions shall be treated as Annual Additions,
as defined in the CONTRIBUTION LIMITATION SECTION of this article.
The Excess Aggregate Contributions shall be adjusted for income or
loss. The income or loss allocable to such Excess Aggregate
Contributions allocated to each Participant shall be equal to the
income or loss allocable to the Participant's Contribution
Percentage Amounts for the Plan Year in which the excess occurred
multiplied by a fraction. The numerator of the fraction is the
Excess Aggregate Contributions. The denominator of the fraction is
the closing balance without regard to any income or loss occurring
during such Plan Year (as of the end of such Plan Year) of the
Participant's Account resulting from Contribution Percentage
Amounts.
Excess Aggregate Contributions allocated to a Participant shall be
distributed from the Participant's Account resulting from
Participant Contributions that are not required as a condition of
employment or participation or for obtaining additional benefits
from Employer Contributions. If such Excess Aggregate Contributions
exceed the balance in the Participant's Account resulting from such
Participant's Contributions, the balance shall be forfeited, if not
vested, or distributed, if vested, on a pro-rata basis from the
Participant's Account resulting from Contribution Percentage
Amounts. These Forfeitures shall
40
be allocated as of the last day of the Plan Year in which the excess
arose. These Forfeitures shall be allocated to each person who meets
the allocation requirements of the ALLOCATION SECTION of this
article who does not have an excess amount, using Annual
Compensation for the Plan Year, and shall be deemed to be Matching
Contributions. The amount allocated to such person shall be equal to
the Forfeitures multiplied by the ratio of such person's Annual
Compensation to the total Annual Compensation of all such persons.
This amount shall be allocated to the person's Account.
(e) Employer Elections. The Employer has not made an election to use the
current year testing method.
SECTION 3.06--PROHIBITED ALLOCATIONS OF QUALIFYING EMPLOYER SECURITIES
Notwithstanding any contrary provision of the Plan, Qualifying Employer
Securities will not be allocated under the following circumstances.
(a) Sale under Code Section 1042. Qualifying Employer Securities that
have been acquired by the Plan in a sale to which Code Section 1042
applies shall not be allocated during the non-allocation period
directly or indirectly under the Plan (or any qualified plan of any
Employer) to the Accounts of:
(1) The individual who makes the election under Code Section 1042.
(2) Any individual who is related (within the meaning of Code
Section 267(b)) to the individual who makes the election under
Code Section 1042. However, this paragraph shall not apply to
lineal descendents of the individual who makes the election
under Code Section 1042, provided that the aggregate amount
allocated to the benefit of such lineal descendents during the
non-allocation period does not exceed more than five percent
(5%) of the Qualifying Employer Securities (or amounts
allocated in lieu thereof) held by the Plan which are
attributable to a sale to the Plan by any person related to
such descendents (within the meaning of Code Section
267(c)(4)) in a transaction subject to Code Section 1042.
The "non-allocation period" is the period for this purpose beginning
on the date of the sale of the Qualifying Employer Securities to the
Plan and ending on the later of the date which is ten (10) years
after the date of sale or the date of the allocation attributable to
the final payment of an Exempt Loan incurred in connection with such
sale to the Plan.
Further, notwithstanding any contrary provision of the Plan,
Qualifying Employer Securities that have been acquired by the Plan
in a sale to which Code Section 1042 applies shall not be allocated,
during or after the non-allocation period, directly or indirectly
under the Plan (or any qualified plan of any Employer) to the
Account of any individual who owns (after application of the
aggregation rules of Code Section 318(a) applied without regard to
the employee trust exception in Code Section 318(a)(2)(B)(i)) more
than twenty-five percent (25%) of any class of outstanding stock of
any Employer, or the total value of any class of outstanding stock
of the Employer.
(b) S-Corporation Shareholders. For Plan Years beginning after December
31, 2004, if the Plan holds Qualifying Employer Securities of an S
Corporation, no allocations of such Qualifying Employer Securities
shall be made to disqualified persons during any nonallocation year.
The terms "disqualified person" and "nonallocation year" shall have
the meaning set forth under Code Section 409(p).
41
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION 4.01--INVESTMENT AND TIMING OF CONTRIBUTIONS.
The handling of Contributions is governed by the provisions of the Trust
Agreement, the Annuity Contract, and any other funding arrangement in which the
Plan Fund is or may be held or invested. To the extent permitted by the Trust
Agreement, Annuity Contract, or other funding arrangement, the parties named
below shall direct the Contributions to the guaranteed benefit policy portion of
the Annuity Contract, any of the investment options available under the Annuity
Contract, or any of the investment vehicles available under the Trust Agreement
and may request the transfer of amounts resulting from those Contributions
between such investment options and investment vehicles or the transfer of
amounts between the guaranteed benefit policy portion of the Annuity Contract
and such investment options and investment vehicles.
The Plan, other than the ESOP Elective Deferral Contribution Account, the
ESOP Matching Contribution Account and the ESOP Discretionary Contribution
Account, is intended to qualify under ERISA Section 404(c). Accordingly, a
Participant or Beneficiary (following the death of the Participant) generally
shall be allowed to direct the investment of his Contributions (other than his
ESOP Elective Deferral, Matching and Discretionary Contributions), and a
Participant, Beneficiary or Alternate Payee generally shall be allowed to direct
the investment of his Account (other than his ESOP Elective Deferral, Matching
and Discretionary Contribution Accounts) among the guaranteed benefit policy
portion of the Annuity Contract, any of the investment options available under
the Annuity Contract, or any of the investment vehicles available under the
Trust Agreement excluding the Qualifying Employer Securities Fund. Any
investment direction may be given in such percentage or dollar increments, in
such manner and in accordance with such other rules as may be prescribed for
this purpose by the Plan Administrator (including by means of a voice response
or other electronic system under circumstances so authorized by the Employer).
Investment directions will be processed as soon as administratively practicable
after proper investment directions are received from the Participant,
Beneficiary or Alternate Payee. The Plan provides no guarantee that investment
directions will be processed on a daily basis, and provides no guarantee in any
respect as to the processing time of an investment direction. Circumstances may
arise from time to time where investment direction is not available under the
Plan (for example, a "blackout period" may be imposed to facilitate account or
fund transitions). The Plan Administrator further reserves the right to delay
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 record keeper to
timely receive values or prices, to correct for its errors or omissions or the
errors or omissions of any record keeper or other service provider). With
respect to any investment transaction, the processing date of the transaction
will be considered the applicable Valuation Date for that transaction and will
be binding for all purposes of the Plan. All investment directions will be
complete as to the terms of the investment transaction and will remain in effect
until a new investment direction is filed by the Participant, Beneficiary or
Alternate Payee.
A Participant may not direct the Trustee or Insurer to invest the
Participant's Account in collectibles. Collectibles mean any work of art, rug or
antique, metal or gem, stamp or coin, alcoholic beverage, or other tangible
personal property specified by the Secretary of the Treasury. However, for tax
years beginning after December 31, 1997, certain coins and bullion as provided
in Code Section 408(m)(3) shall not be considered collectibles. To the extent
that a Participant who has investment direction fails to give timely direction,
the Primary Employer shall direct the investment of his Account. If the Primary
Employer has investment direction, such Account shall be invested ratably in the
guaranteed benefit policy portion of the Annuity Contract, the investment
options available under the Annuity Contract, or the investment vehicles
available under the Trust Agreement in the same manner as the Accounts of all
other Participants who do not direct their investments. The Primary Employer
shall have investment direction for amounts which have not been allocated to
Participants. To the extent an investment is no longer
42
available, the Primary Employer may require that amounts currently held in such
investment be reinvested in other investments.
At least annually, the Named Fiduciary shall review all pertinent Employee
information and Plan data in order to establish the funding policy of the Plan
and to determine appropriate methods of carrying out the Plan's objectives. The
Named Fiduciary shall inform the Trustee and any Investment Manager of the
Plan's short-term and long-term financial needs so the investment policy can be
coordinated with the Plan's financial requirements.
(a) Employer Contributions other than Elective Deferral Contributions,
ESOP Elective Deferral Contributions, ESOP Matching Contributions
and ESOP Discretionary Contributions: The Participant shall direct
the investment of such Employer Contributions and transfer of
amounts resulting from those Contributions.
(b) Elective Deferral Contributions other than ESOP Elective Deferral
Contributions: The Participant shall direct the investment of
Elective Deferral Contributions and transfer of amounts resulting
from those Contributions.
(c) Rollover Contributions: The Participant shall direct the investment
of Rollover Contributions and transfer of amounts resulting from
those Contributions.
(d) ESOP Elective Deferral Contributions, ESOP Matching Contributions
and ESOP Discretionary Contributions: These amounts shall be
invested in Qualifying Employer Securities. The Participant shall
direct the investment of such Contributions and transfer of amounts
resulting from those Contributions.
However, the Named Fiduciary may delegate to the Investment Manager
investment discretion for Contributions and amounts which are not subject to
Participant direction.
The Employer shall pay to the Insurer or Trustee, as applicable, the
Elective Deferral Contributions and Qualified Nonelective Contributions for each
Plan Year not later than the end of the 12-month period immediately following
the Plan Year for which they are deemed to be paid.
All Contributions are forwarded by the Employer to the Trustee to be
deposited in the Trust Fund or to the Insurer to be deposited under the Annuity
Contract, as applicable. Contributions that are accumulated through payroll
deduction shall be paid to the Trustee or Insurer, as applicable, by the earlier
of (i) the date the Contributions can reasonably be segregated from the
Employer's assets, or (ii) the 15th business day of the month following the
month in which the Contributions would otherwise have been paid in cash to the
Participant.
SECTION 4.02--INVESTMENT IN QUALIFYING EMPLOYER SECURITIES.
(a) ESOP Designation. The portion of the Plan that consists of the ESOP
Elective Deferral Contribution Accounts, the ESOP Matching
Contribution Accounts, the ESOP Discretionary Contribution Accounts
and the Unallocated Reserve is an employee stock ownership plan
(within the meaning of Code Section 4975(e)(7)) and is designed to
invest primarily in Qualifying Employer Securities. All shares of
Qualifying Employer Securities held under the Plan will be held in
the Trust Fund in the name of the Trustee or the nominee of the
Trustee.
(b) Statutory Diversification. Each Qualified Account Holder shall be
eligible to make a diversification election with respect to the
Qualifying Employer Securities
43
(1) Diversification Election: Each Qualified Account Holder may
make an election within ninety (90) days after the close of
each Plan Year during the Qualified Election Period to direct
the Trustee in writing as to the investment of 25 percent
(25%) of the number of shares of Qualifying Employer
Securities that have ever been credited to his ESOP Elective
Deferral, ESOP Matching and ESOP Discretionary Contribution
Accounts, reduced by the number of shares of Qualifying
Employer Securities that have previously been diversified
pursuant to either subsection (b) or this subsection (c).
(2) Final Election: For the last Plan Year in the Qualified
Election Period, 50 percent (50%) shall be substituted for 25
percent (25%), in paragraph (1) above.
(3) Procedures: The elections under this section must be made in
such manner and in accordance with such rules as may be
prescribed for this purpose by the Employer. If the Qualified
Account Holder elects to direct the Trustee as to the
investment of his ESOP Elective Deferral, ESOP Matching and
ESOP Discretionary Contribution Accounts, such direction shall
be effective no later than 180 days after the close of the
Plan Year to which such direction applies. Any amounts in the
ESOP Elective Deferral, ESOP Matching and ESOP Discretionary
Contribution Accounts with respect to which a Qualified
Account Holder elects to direct investment pursuant to this
Section shall be transferred to a diversification account and
invested as the Qualified Account Holder directs pursuant to
Section 4.01.
(4) Definition of Qualified Account Holder: For purposes of this
section, "Qualified Account Holder" means a Participant or
former Participant or the Beneficiary or Alternate Payee with
respect to such Participant or former Participant.
(5) Definition of Qualified Election Period: For purposes of this
section, "Qualified Election Period" means the six Plan Year
period beginning with the Plan Year in which the Participant
first becomes a Qualified Participant.
(c) Dividends. For purposes of determining dividends, shares of
Qualifying Employer Securities shall be deemed to be credited to the
ESOP Elective Deferral, Matching or Discretionary Contribution
Account of a Participant, Beneficiary or Alternate Payee as of the
record date of a dividend if they are credited to his ESOP Elective
Deferral, Matching or Discretionary Contribution Account as of the
close of the day prior to the ex-date of such dividend (or, if the
ex-date is after the record date, as of the close of the day prior
to the record date).
(1) Stock Dividend. In the event of any stock dividend or any
stock split, such dividend or split shall be credited to the
Accounts based on the number of shares of Qualifying Employer
Securities credited to each Account as of the payable date of
such dividend or split.
(2) Cash Dividend. As determined by the Employer, cash dividends
paid on shares of Qualifying Employer Securities credited to
an ESOP Elective Deferral, Matching or Discretionary
Contribution Account of a Participant, Beneficiary or
Alternate Payee as of the record date of such dividend will be
either (i) applied to repay an Exempt Loan then outstanding
(but only if such Qualifying Employer Security is attributable
to such Exempt Loan); (ii) made subject to the election
procedure described in paragraph (3) below; or (iii) retained
in the Trust and treated as net income of the Trust. The
Employer shall not direct that dividends paid on shares of
Qualifying Employer Securities held in the ESOP Elective
Deferral, Matching or Discretionary Contribution Accounts be
applied to repay an Exempt Loan, unless the shares of
Qualifying Employer Securities released from the Unallocated
Reserve will have a value at least sufficient to allow for the
full allocation required in step one under the allocation of
ESOP Discretionary
44
Contributions provisions of the ALLOCATIONS SECTION of Article
3 (the Employer may make ESOP Discretionary Contributions
necessary to allow for such full allocation).
In addition, dividends or S corporation distributions
attributable to Qualified Employer Securities held in the
Unallocated Suspense Account (as a result of an Exempt Loan)
shall be allocated to Participants' Accounts as earnings of
the Trust available to repay an Exempt Loan to the extent
allowed by ERISA. Such earnings shall be allocated in
proportion to the shares of Qualifying Employer Securities
held in a Participant's Account as of the Record Date of the
dividend or S corporation distribution.
(3) Cash Dividend Election. If the Employer elects, cash dividends
paid on shares of Qualifying Employer Securities credited to
an ESOP Elective Deferral, Matching, Discretionary
Contribution Account of a Participant, Beneficiary or
Alternate Payee as of the record date of such dividend will
be:
(A) Paid to the Participant, Beneficiary or Alternate Payee
if so elected under the procedure outlined below; or
(B) Otherwise, added to the balance of his Account as soon
as administratively practicable after such dividends are
paid into the Trust Fund.
A Participant, Beneficiary or Alternate Payee may elect to
have cash dividends on shares of Qualifying Employer
Securities credited to his ESOP Elective Deferral, ESOP
Matching and ESOP Discretionary Contribution Accounts either
paid to him in cash or added to the balance of his Account and
reinvested in Qualifying Employer Securities. Cash dividends
that the Participant, Beneficiary or Alternate Payee elects to
receive in cash will be paid on or as soon as administratively
practicable following the payable date of such dividend. Cash
dividends that the Participant, Beneficiary or Alternate Payee
elects to have reinvested in Qualifying Employer Securities
will be credited to a separate source account that reflects
only such cash dividends, and shall be reinvested in
additional shares of Qualifying Employer Securities on or as
soon as administratively practicable following the payable
date of such dividend.
Shares of Qualifying Employer Securities shall be deemed to be
credited to the ESOP Elective Deferral, ESOP Matching, ESOP
Discretionary Contribution Account of a Participant,
Beneficiary or Alternate Payee as of the record date of a
dividend if they are credited to his ESOP Elective Deferral,
ESOP Matching, ESOP Discretionary Contribution Account as of
the close of the day prior to the ex-date of such dividend
(or, if the ex-date is after the record date, as of the close
of the day prior to the record date).
An election hereunder must be made in such manner and in
accordance with such rules as may be prescribed for this
purpose by the Plan Administrator (including by means of a
voice response or other electronic system under circumstances
so authorized by the Plan Administrator). In the absence of an
affirmative election received by the deadline established for
this purpose by the Plan Administrator (which shall be no less
than thirty (30) days after notice of the dividend election is
provided), a Participant, Beneficiary or Alternate Payee will
be deemed to have elected to have cash dividends added to his
Account and reinvested in Qualifying Employer Securities. To
the extent so prescribed by the Plan Administrator, an
election hereunder will be "evergreen" - that is, it will
continue to apply until changed by the Participant,
Beneficiary or Alternate Payee. Under the rules prescribed by
the Plan Administrator, a Participant, Beneficiary or
Alternate Payee shall be allowed to revise his election no
less than once a year, and if there is a change in the terms
of the Plan governing the manner in which dividends are
45
paid or distributed, a Participant, Beneficiary or Alternate
Payee shall be allowed a reasonable opportunity to make a new
election.
The Account of a Participant, Beneficiary or Alternate Payee
may be charged with the distribution costs (for example, the
actual check-writing fee) of any distribution made at his
election under this Section.
(d) Authorization for Exempt Loan. The Employer may direct that the Plan
engage in an Exempt Loan that satisfies the following requirements:
(1) Lender. The Exempt Loan may be made by the Employer or any
lender acceptable to the Employer, and may be made or
guaranteed by a party in interest (as defined in ERISA Section
3(14)) or a disqualified person (as defined in Code Section
4975).
(2) Use of Loan Proceeds. The Exempt Loan must be used within a
reasonable time after receipt to acquire shares of Qualifying
Employer Securities for the Unallocated Reserve or to repay a
prior Exempt Loan (or for any combination of the foregoing
purposes).
(3) No Recourse Against Trust Fund. The Exempt Loan must be
without recourse against the Plan except that:
(i) The Qualifying Employer Securities acquired with the
proceeds of the Exempt Loan may be pledged or otherwise
used to secure repayment of the Exempt Loan, and the
Qualifying Employer Securities acquired with the
proceeds of a prior Exempt Loan which is repaid with the
proceeds of the Exempt Loan may be pledged or otherwise
used to secure repayment of the Exempt Loan, and
(ii) Any ESOP Discretionary Contributions that are made for
the purpose of satisfying the obligations under the
Exempt Loan (and earnings thereon) may be pledged or
otherwise used to secure repayment of the Exempt Loan,
and
(iii) The earnings attributable to shares of Qualifying
Employer Securities acquired with the proceeds of an
Exempt Loan may be used to repay that Exempt Loan or any
renewal or extension thereof, and
(iv) The earnings attributable to unallocated shares of
Qualifying Employer Securities that were acquired with
the proceeds of an Exempt Loan may be pledged or
otherwise used as security for another Exempt Loan.
(4) Term of Loan. The Exempt Loan must provide for principal and
interest to be paid over a specific term, and not payable upon
demand except in the event of default.
(5) Release of Shares from Unallocated Reserve. The number of
shares released each Plan Year shall equal "A" multiplied by
"B" where:
"A" = the number of shares held in the Unallocated Reserve
immediately before the release;
"B" = a fraction, the numerator of which is equal to the
principal and interest paid on the Exempt
Loan for the Plan Year and the denominator of which is
equal to the sum of the numerator and the total
principal and interest scheduled to be paid on the
Exempt Loan for all future Plan Years (without
consideration of possible extensions or renewal
periods).
46
If the interest rate under the Exempt Loan is variable, the
amount of interest to be paid in future Plan Years shall be
calculated by using the interest rate in effect on the last
day of the current Plan Year.
Alternatively, if the conditions of Treasury Regulation
54.4975-7(b)(8)(ii) are met, "B" may be calculated as a
fraction, the numerator of which is equal to the principal
paid on the Exempt Loan for the Plan Year and the denominator
of which is equal to the sum of the numerator and the total
principal scheduled to be paid on the Exempt Loan for all
future Plan Years (without consideration of possible
extensions or renewal periods).
If an Exempt Loan is repaid as a result of a refinancing by
another Exempt Loan, such repayment shall not be considered a
repayment under this subsection and the release of shares
thereafter shall be determined by aggregating principal and
interest on the loan and any refinancing of the loan.
(6) Interest Rate. The Exempt Loan must bear interest at a fixed
or variable rate that is not in excess of a reasonable rate of
interest considering all relevant factors (including, but not
limited to, the amount and duration of the loan, the security
given, the guarantees involved, the credit standing of the
Plan, the Employer, and the guarantors, and the generally
prevailing rates of interest).
(7) Default. The Exempt Loan must provide that, in the event of
default, the fair market value of Qualifying Employer
Securities and other assets which can be transferred in
satisfaction of the loan must not exceed the amount of the
loan. If the lender is a party in interest or disqualified
person, the loan must provide for a transfer of Plan assets
upon default only upon and to the extent of the failure of the
Plan to satisfy the payment schedule of the Exempt Loan.
(8) Restrictions. Unless required under Code Section 409(h), no
options, puts, call, rights of first refusal or other
restrictions on alienability will attach to any shares of
Qualifying Employer Securities acquired with the proceeds of
an Exempt Loan and held in the Trust Fund or distributed from
the Plan, whether or not this Plan continues to be an employee
stock ownership plan with the meaning of Code Section
4975(e)(7).
(e) Valuation of Qualifying Employer Securities. For purposes of
determining the annual valuation of the Plan, and for reporting to
Participants and regulatory authorities, the assets of the Plan
shall be valued at least annually on the Valuation Date which
corresponds to the last day of the Plan Year. The fair market value
of Qualifying Employer Securities shall be determined on such
Valuation Date. The prices of Qualifying Employer Securities as of
the date of the transaction shall apply for purposes of valuing
distributions and other transactions of the Plan to the extent such
value is representative of the fair market value of such securities
in the opinion of the Plan Administrator. The value of a
Participant's Account held in the Qualifying Employer Securities
Fund may be expressed in units.
If the Qualifying Employer Securities are not publicly traded, or if
an extremely thin market exists for such securities so that
reasonable valuation may not be obtained from the market place, then
such securities must be valued at least annually by an independent
appraiser who is not associated with the Employer, the Plan
Administrator, the Trustee, or any person related to any fiduciary
under the Plan. The independent appraiser may be associated with a
person who is merely a contract administrator with respect to the
Plan, but who exercises no discretionary authority and is not a plan
fiduciary.
If there is a public market for Qualifying Employer Securities of
the type held by the Plan, then the Plan Administrator may use as
the value of the securities the price at which such securities trade
in such
47
market. If the Qualifying Employer Securities do not trade on the
relevant date, or if the market is very thin on such date, then the
Plan Administrator may use for the valuation the next preceding
trading day on which the trading prices are representative of the
fair market value of such securities in the opinion of the Plan
Administrator.
(f) Purchases or Sales of Qualifying Employer Securities. The Plan
Administrator may direct the Trustee to sell, resell, or otherwise
dispose of Qualifying Employer Securities to any person, including
the Employer, provided that any such sales to any disqualified
person or party-in-interest, including the Employer, will be made at
not less than the fair market value and no commission will be
charged. Any such sale shall be made in conformance with ERISA
Section 408(e). If it is necessary to purchase Qualifying Employer
Securities for the Trust Fund, such purchase may be on the open
market or from the Employer or any member of the Controlled Group.
All purchases of Qualifying Employer Securities shall be made at a
price, or prices, which, in the judgement of the Plan Administrator,
do not exceed the fair market value of such securities. If shares
are purchase from or sold to the Employer or a member of the
Controlled Group, the purchase or sale will be made at the price
determined under paragraph (f) above.
In the event that the Trustee acquires Qualifying Employer
Securities by purchase from a "disqualified person" as defined in
Code Section 4975(e)(2) or from a "party-in-interest" as defined in
ERISA Section 3(14), the terms of such purchase shall contain the
provision that in the event there is a final determination by the
Internal Revenue Service, the Department of Labor, or court of
competent jurisdiction that the fair market value of such securities
as of the date of purchase was less than the purchase price paid by
the Trustee, then the seller shall pay or transfer, as the case may
be, to the Trustee an amount of cash or shares of Qualifying
Employer Securities equal in value to the difference between the
purchase price and such fair market value for all such shares. In
the event that cash or shares of Qualifying Employer Securities are
paid or transferred to the Trustee under this provision, such
securities shall be valued at their fair market value as of the date
of such purchase, and interest at a reasonable rate from the date of
purchase to the date of payment or transfer shall be paid by the
seller on the amount of cash paid.
(g) Compliance with Securities Laws. The Employer is responsible for
compliance with any applicable Federal or state securities law with
respect to all aspects of the Plan except for the Trustee's
obligation to report its ownership of Qualifying Employer
Securities. If the Qualifying Employer Securities or interest in
this Plan are required to be registered in order to permit
investment in the Qualifying Employer Securities Fund as provided in
this section, then such investment will not be effective until the
later of the effective date of the Plan or the date such
registration or qualification is effective. The Employer, at its own
expense, will take or cause to be taken any and all such actions as
may be necessary or appropriate to effect such registration or
qualification. Further, if the Trustee is directed to dispose of any
Qualifying Employer Securities held under the Plan under
circumstances which require registration or qualification of the
securities under applicable Federal or state securities laws, then
the Employer will, at its own expense, take or cause to be taken any
and all such action as may be necessary or appropriate to effect
such registration or qualification. The Employer is responsible for
all compliance requirements under Section 16 of the Securities Act.
48
ARTICLE V
BENEFITS
SECTION 5.01--RETIREMENT BENEFITS.
On a Participant's Retirement Date, his Vested Account shall be
distributed to him according to the distribution of benefits provisions of
Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.
SECTION 5.02--DEATH BENEFITS.
If a Participant dies before his Annuity Starting Date, his Vested Account
shall be distributed according to the distribution of benefits provisions of
Article VI and the provisions of the SMALL AMOUNTS SECTION of Article X.
SECTION 5.03--VESTED BENEFITS.
If an Inactive Participant's Vested Account is not payable under the SMALL
AMOUNTS SECTION of Article X, he may elect, but is not required, to receive a
distribution of his Vested Account after he ceases to be an Employee. A
distribution under this paragraph shall be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefits
provisions of Article VI.
A Participant may not elect to receive a distribution under the provisions
of this section after he again becomes an Employee until he subsequently ceases
to be an Employee and meets the requirements of this section.
If an Inactive Participant does not receive an earlier distribution, upon
his Retirement Date or death, his Vested Account shall be distributed according
to the provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS
SECTION of Article V.
The Nonvested Account of an Inactive Participant who has ceased to be an
Employee shall remain a part of his Account until it becomes a Forfeiture.
However, if he again becomes an Employee so that his Vesting Percentage can
increase, the Nonvested Account may become a part of his Vested Account.
SECTION 5.04--WHEN BENEFITS START.
(a) Unless otherwise elected, benefits shall begin before the 60th day
following the close of the Plan Year in which the latest date below
occurs:
(1) The date the Participant attains age 65 (or Normal Retirement
Age, if earlier).
(2) The 10th anniversary of the Participant's Entry Date.
(3) The date the Participant ceases to be an Employee.
Notwithstanding the foregoing, the failure of a Participant to
consent to a distribution while a benefit is immediately
distributable, within the meaning of the ELECTION PROCEDURES SECTION
of Article VI, shall be deemed to be an election to defer the start
of benefits sufficient to satisfy this section.
The Participant may elect to have his benefits begin after the
latest date for beginning benefits described above, subject to the
following provisions of this section. The Participant shall make the
election in writing. Such election must be made before his Normal
Retirement Date or the date he
49
ceases to be an Employee, if later. The election must describe the
form of distribution and the date benefits will begin. The
Participant shall not elect a date for beginning benefits or a form
of distribution that would result in a benefit payable when he dies
which would be more than incidental within the meaning of
governmental regulations.
Benefits shall begin on an earlier date if otherwise provided in the
Plan. For example, the Participant's Retirement Date or Required
Beginning Date, as defined in the DEFINITIONS SECTION of Article
VII.
(b) The Participant's Vested Account which results from Elective
Deferral Contributions and Qualified Nonelective Contributions may
not be distributed to a Participant or to his Beneficiary (or
Beneficiaries) in accordance with the Participant's or Beneficiary's
(or Beneficiaries') election, earlier than separation from service,
death, or disability. Such amount may also be distributed upon:
(1) Termination of the Plan, as permitted in Article VIII.
(2) The disposition by the Employer, if the Employer is 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 the Employer if the Employer
continues to maintain the Plan after the disposition, but only
with respect to Employees who continue employment with the
corporation acquiring such assets.
(3) The disposition by the Employer, if the Employer is a
corporation, to an unrelated entity of the Employer's interest
in a subsidiary, within the meaning of Code Section 409(d)(3),
if the Employer continues to maintain the Plan, but only with
respect to Employees who continue employment with such
subsidiary.
(4) The attainment of age 59 1/2 as permitted in the WITHDRAWAL
BENEFITS SECTION of this article.
(5) The hardship of the Participant as permitted in the WITHDRAWAL
BENEFITS SECTION of this article.
All distributions that may be made pursuant to one or more of the
foregoing distributable events will be a retirement benefit and
shall be distributed to the Participant according to the
distribution of benefit provisions of Article VI. In addition,
distributions that are triggered by (1), (2) and (3) above must be
made in a lump sum. A lump sum shall include a distribution of an
annuity contract.
(c) The Participant's Vested Account which results from ESOP Elective
Deferral Contributions, ESOP Matching Contributions and ESOP
Discretionary Contributions are subject to the following special
distribution rights:
(1) After a Participant attains age 62, the Participant, until he
retires, has a continuing right to elect to receive all of his
Vested ESOP Discretionary Contribution Account.
(2) Unless the Participant elects in writing to have the Trustee
apply other distribution provisions of the Plan, or unless
other distribution provisions of the Plan require earlier
distribution, the Trustee shall distribute the portion of the
Participant's ESOP Elective Deferral, Matching, and
Discretionary Contribution Accounts attributable to Qualifying
Employer Securities (the "Eligible Portion") no later that
time prescribed below:
50
(A) If the Participant terminated employment by reason of
the attainment of Normal Retirement Age, death or
disability, the Plan Administrator shall direct the
Trustee to distribute the Eligible Portion not later
than one year after the close of the Plan Year in which
that event occurs.
(B) If the Participant terminates employment for any other
reason, the Plan Administrator shall direct the Trustee
to distribute the Eligible Portion not later than one
year after the close of the Plan Year in which the
Participant terminated employment. If the Participant
resumes employment with an Employer on or before the
last day of the fifth Plan Year following the Plan Year
of his termination of employment, the distribution of
this subparagraph (B) do not apply.
For purposes of this paragraph (2), Qualifying Employer
Securities do not include any Qualifying Employer Securities
acquired with the proceeds of an Exempt Loan until the close
of the Plan Year in which the borrower repays the Exempt Loan
in full.
SECTION 5.05--WITHDRAWAL BENEFITS.
A Participant may withdraw any part of his Vested Account which results
from the following Contributions:
Elective Deferral Contributions
in the event of hardship due to an immediate and heavy financial need.
Withdrawals from the Participant's Account resulting from Elective Deferral
Contributions shall be limited to the amount of the Participant's Elective
Deferral Contributions plus income allocable thereto credited to his Account as
of December 31, 1988. Immediate and heavy financial need shall be limited to:
(i) expenses incurred or necessary for medical care, described in Code Section
213(d), of the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage
payments) of a principal residence for the Participant; (iii) payment of
tuition, related educational fees, and room and board expenses, for the next 12
months of post-secondary education for the Participant, his spouse, children, or
dependents; (iv) the need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the Participant's
principal residence; or (v) any other distribution which is deemed by the
Commissioner of Internal Revenue to be made on account of immediate and heavy
financial need as provided in Treasury regulations.
No withdrawal shall be allowed which is not necessary to satisfy such
immediate and heavy financial need. Such withdrawal shall be deemed necessary
only if all of the following requirements are met: (i) the distribution is not
in excess of the amount of the immediate and heavy financial need (including
amounts necessary to pay any Federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution); (ii) the Participant
has obtained all distributions, other than hardship distributions, and all
nontaxable loans currently available under all plans maintained by the Employer
(including currently available cash dividends on Qualifying Employer
Securities); (iii) the Plan, and all other plans maintained by the Employer,
provide that the Participant's elective contributions and participant
contributions will be suspended for at least 12 months after receipt of the
hardship distribution; and (iv) the Plan, and all other plans maintained by the
Employer, provide that the Participant may not make elective contributions for
the Participant's taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under Code Section
402(g) for such next taxable year less the amount of such Participant's elective
contributions for the taxable year of the hardship distribution. The Plan will
suspend elective contributions and participant contributions for 12 months and
limit elective deferrals as provided in the preceding sentence. A Participant
shall not cease to be an Eligible Participant, as defined in the EXCESS AMOUNTS
SECTION of Article III, merely because his elective contributions or participant
contributions are suspended.
51
A request for withdrawal shall be made in such manner and in accordance
with such rules as the Employer will prescribe for this purpose (including by
means of voice response or other electronic means under circumstances the
Employer permits). Withdrawals shall be a retirement benefit and shall be
distributed to the Participant according to the distribution of benefits
provisions of Article VI. A forfeiture shall not occur solely as a result of a
withdrawal.
SECTION 5.06--DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS.
The Plan specifically permits distributions to an Alternate Payee under a
qualified domestic relations order as defined in Code Section 414(p), at any
time, irrespective of whether the Participant has attained his earliest
retirement age, as defined in Code Section 414(p), under the Plan. A
distribution to an Alternate Payee before the Participant has attained his
earliest retirement age is available only if the order specifies that
distribution shall be made prior to the earliest retirement age or allows the
Alternate Payee to elect a distribution prior to the earliest retirement age.
Nothing in this section shall permit a Participant to receive a
distribution at a time otherwise not permitted under the Plan nor shall it
permit the Alternate Payee to receive a form of payment not permitted under the
Plan.
The benefit payable to an Alternate Payee shall be subject to the
provisions of the SMALL AMOUNTS SECTION of Article X if the value of the benefit
does not exceed $5,000.
The Plan Administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Plan Administrator shall promptly notify the Participant
and the Alternate Payee named in the order, in writing, of the receipt of the
order and the Plan's procedures for determining the qualified status of the
order. Within a reasonable period of time after receiving the domestic relations
order, the Plan Administrator shall determine the qualified status of the order
and shall notify the Participant and each Alternate Payee, in writing, of its
determination. The Plan Administrator shall provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations. The Plan
Administrator may treat as qualified any domestic relations order entered into
before January 1, 1985, irrespective of whether it satisfies all the
requirements described in Code Section 414(p).
If any portion of the Participant's Vested Account is payable during the
period the Plan Administrator is making its determination of the qualified
status of the domestic relations order, a separate accounting shall be made of
the amount payable. If the Plan Administrator determines the order is a
qualified domestic relations order within 18 months of the date amounts are
first payable following receipt of the order, the payable amounts shall be
distributed in accordance with the order. If the Plan Administrator does not
make its determination of the qualified status of the order within the 18-month
determination period, the payable amounts shall be distributed in the manner the
Plan would distribute if the order did not exist and the order shall apply
prospectively if the Plan Administrator later determines the order is a
qualified domestic relations order.
If a domestic relations order divides an Account that is invested in the
Qualifying Employer Securities Fund, and a cash dividend on Qualifying Employer
Securities becomes payable during the period the Plan Administrator is making
its determination of the qualified status of the domestic relations order then
the following will apply:
(a) If the division date specified in the order is prior to the ex-date
of such dividend, then so much of the dividend that is attributable
to the Alternate Payee's share of the investment in the Qualifying
Employer Security Fund shall be deemed to be earnings on the
Alternate Payee share. If the Participant has elected to receive the
dividend in cash, the Alternate Payee's portion of the dividend
shall be drawn from the remaining portion of the Account after
payment of the dividend to the Participant.
(b) If the division date specified in the order is on or after the
ex-date of such dividend, then no portion of the dividend shall be
attributed to the Alternate Payee.
52
The Plan shall make payments or distributions required under this section
by separate benefit checks or other separate distribution to the Alternate
Payee(s).
53
ARTICLE VI
DISTRIBUTION OF BENEFITS
SECTION 6.01--AUTOMATIC FORMS OF DISTRIBUTION.
Unless an optional form of benefit is selected pursuant to a qualified
election within the election period (see the ELECTION PROCEDURES SECTION of this
article), the automatic form of benefit payable to or on behalf of a Participant
is determined as follows:
(a) Retirement Benefits. The automatic form of retirement benefit for a
Participant who does not die before his Annuity Starting Date shall
be a single sum payment.
(b) Death Benefits. The automatic form of death benefit for a
Participant who dies before his Annuity Starting Date shall be a
single-sum payment to the Participant's Beneficiary.
SECTION 6.02--OPTIONAL FORMS OF DISTRIBUTION.
(a) Retirement Benefits. The optional forms of retirement benefit shall
be the following: (i) a fixed period installment option and (ii) a
fixed payment installment option. The fixed period and fixed payment
installment options shall not be available if the Participant has
not separated from service. A single sum payment is also available.
The fixed period installment option is an optional form of benefit
under which the Participant elects to receive substantially equal
annual payments over a fixed period of whole years. The annual
payment may be paid in annual, semi-annual, quarterly, or monthly
installments as elected by the Participant. The Participant may
elect to receive additional payments.
The fixed payment installment option is an optional form of benefit
under which the Participant elects to receive a specified dollar
amount each year. The annual payment may be paid in annual,
semi-annual, quarterly, or monthly installments as elected by the
Participant. The Participant may elect to receive additional
payments.
If the Plan is amended to eliminate or restrict an optional form of
distribution and the Plan provides a single sum distribution form
that is otherwise identical to the optional form of distribution
eliminated or restricted, the amendment shall not apply to any
distribution with an Annuity Starting Date earlier than the first
day of the second Plan Year following the Plan Year in which the
amendment is adopted.
Election of an optional form is subject to the qualified election
provisions of the ELECTION PROCEDURES SECTION of this article and
the distribution requirements of Article VII.
Any annuity contract distributed shall 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.
(b) Death Benefits. The optional forms of death benefit are a single-sum
payment and any annuity that is an optional form of retirement
benefit. However, the fixed period and fixed payment installment
options shall not be payable if the Beneficiary is not the spouse of
the deceased Participant.
Election of an optional form is subject to the qualified election
provisions of the ELECTION PROCEDURES SECTION of this article and
the distribution requirements of Article VII.
54
SECTION 6.03--ELECTION PROCEDURES.
The Participant or Beneficiary shall make any election under this section
in writing. The Plan Administrator may require such individual to complete and
sign any necessary documents as to the provisions to be made. Any election
permitted under (a) and (b) below shall be subject to the qualified election
provisions of (c) below.
(a) Retirement Benefits. A Participant may elect his Beneficiary and may
elect to have retirement benefits distributed under any of the
optional forms of retirement benefit available in the OPTIONAL FORMS
OF DISTRIBUTION SECTION of this article.
(b) Death Benefits. A Participant may elect his Beneficiary and may
elect to have death benefits distributed under any of the optional
forms of death benefit available in the OPTIONAL FORMS OF
DISTRIBUTION SECTION of this article.
If the Participant has not elected an optional form of distribution
for the death benefit payable to his Beneficiary, the Beneficiary
may, for his own benefit, elect the form of distribution, in like
manner as a Participant.
(c) Qualified Election. The Participant or Beneficiary may make an
election at any time during the election period. The Participant or
Beneficiary may revoke the election made (or make a new election) at
any time and any number of times during the election period. An
election is effective only if it meets the consent requirements
below.
(1) Election Period for Retirement Benefits. The Participant may
make an election as to retirement benefits at any time before
the Annuity Starting Date.
(2) Election Period for Death Benefits. A Participant may make an
election as to death benefits at any time before he dies. The
Beneficiary's election period begins on the date the
Participant dies and ends on the date benefits begin.
(3) Consent to Election. If the Participant's Vested Account
exceeds $5,000, any benefit which is immediately distributable
requires the consent of the Participant.
The consent of the Participant to a benefit which is
immediately distributable must not be made before the date the
Participant is provided with the notice of the ability to
defer the distribution. Such consent shall be made in writing.
The consent shall not be made more than 90 days before the
Annuity Starting Date. The consent of the Participant shall
not be required to the extent that a distribution is required
to satisfy Code Section 401(a)(9) or Code Section 415.
In addition, upon termination of this Plan, if the Plan does
not offer an annuity option (purchased from a commercial
provider), and if the Employer (or any entity within the same
Controlled Group) does not maintain another defined
contribution plan (other than an employee stock ownership plan
as defined in Code Section 4975(e)(7)), the Participant's
Account balance will, without the Participant's consent, be
distributed to the Participant. However, if any entity within
the same Controlled Group maintains another defined
contribution plan (other than an employee stock ownership plan
as defined in Code Section 4975(e)(7)) then the Participant's
Account will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent
to an immediate distribution.
55
A benefit is immediately distributable if any part of the
benefit could be distributed to the Participant before the
Participant attains the older of Normal Retirement Age or age
62.
Spousal consent is needed to name a Beneficiary other than the
Participant's spouse. If a Participant names a Beneficiary
other than his spouse, the spouse has the right to limit
consent only to a specific Beneficiary. The spouse can
relinquish such right. Such consent shall be in writing. The
spouse's consent shall be witnessed by a plan representative
or notary public. The spouse's consent must acknowledge the
effect of the election, including that the spouse had the
right to limit consent only to a specific Beneficiary and that
the relinquishment of such right was voluntary. Unless the
consent of the spouse expressly permits designations by the
Participant without a requirement of further consent by the
spouse, the spouse's consent must be limited to the
Beneficiary, class of Beneficiaries, or contingent Beneficiary
named in the election.
Spousal consent is not required, however, if the Participant
establishes to the satisfaction of the plan representative
that the consent of the spouse cannot be obtained because
there is no spouse or the spouse cannot be located. A spouse's
consent under this paragraph shall not be valid with respect
to any other spouse. A Participant may revoke a prior election
without the consent of the spouse. Any new election will
require a new spousal consent, unless the consent of the
spouse expressly permits such election by the Participant
without further consent by the spouse. A spouse's consent may
be revoked at any time within the Participant's election
period.
(d) Dividend Distributions. Cash dividends that are available to a
Participant, Beneficiary or Alternate Payee shall not be subject to
the distribution form and notice requirements of this Article. If a
Participant, Beneficiary or Alternate Payee elects to receive such
dividends, such dividends shall be payable in a lump-sum (and only a
lump-sum) in cash, and are payable without regard to any notice and
consent otherwise required under the Plan.
SECTION 6.04--NOTICE REQUIREMENTS.
Optional Forms of Retirement Benefit and Right to Defer. The Plan
Administrator shall furnish to the Participant a written explanation of the
optional forms of retirement benefit in the OPTIONAL FORMS OF DISTRIBUTION
SECTION of this article, including the material features and relative values of
these options, in a manner that would satisfy the notice requirements of Code
Section 417(a)(3) and the right of the Participant to defer distribution until
the benefit is no longer immediately distributable.
The Plan Administrator shall furnish the written explanation by a method
reasonably calculated to reach the attention of the Participant no less than 30
days, and no more than 90 days, before the Annuity Starting Date.
However, a distribution may begin less than 30 days after the notice
described in this subparagraph is given, provided the Plan Administrator clearly
informs the Participant that he has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to elect a
distribution (and if applicable, a particular distribution option), and the
Participant, after receiving the notice, affirmatively elects a distribution.
SECTION 6.05--FORMS OF DISTRIBUTION FROM ESOP ELECTIVE DEFERRAL, MATCHING AND
DISCRETIONARY CONTRIBUTION ACCOUNTS.
Notwithstanding any provision of this Article VI to the contrary,
distributions from a Participant's ESOP Elective Deferral, Matching and
Discretionary Contribution Accounts shall be governed by this Section 6.05 and
Section 6.06.
(a) Distribution in Cash. The part of a Participant's Vested ESOP
Elective Deferral, Matching, Discretionary and Diversification
Accounts will be distributed in cash unless the Participant
affirmatively elects under
56
paragraph (b) below to receive the distribution in the form of
Qualifying Employer Securities with cash in lieu of fractional
shares. The cash value of Qualifying Employer Securities shall be
equal to the fair market value of such stock determined as of the
last Valuation Date prior to the date of distribution.
(b) Distribution in Qualifying Employer Securities. Unless subsection
(c) applies, a Participant may elect to have the Participant's
Vested ESOP Elective Deferral, Matching and Discretionary
Contribution Accounts distributed in the form of Qualifying Employer
Securities with cash in lieu of fractional shares. Any cash or other
property in the Participant's Vested ESOP Elective Deferral,
Matching or Discretionary Contribution Account ("non-stock assets")
shall be used to acquire Qualifying Employer Securities for
distribution but only if such Participant further elects and only if
such Qualifying Employer Securities are available for purchase on
the open market.
(c) Distribution in Qualifying Employer Securities Prohibited. If the
Employer's corporate charter or by-law provisions restrict ownership
of substantially all outstanding Qualifying Employer Securities to
Employees or to a plan or trust described in Code Section 401(a),
then any distribution of a Participant's ESOP Elective Deferral,
ESOP Matching and ESOP Discretionary Accounts shall only be in cash.
For Plan Years beginning after December 31, 2004, if the Plan holds
Qualifying Employer Securities of an S Corporation, no distribution
of such Qualifying Employer Securities shall be made to disqualified
persons during any nonallocation year unless such distribution is
subject to an immediate put option to the Employer. The terms
"disqualified person" and "nonallocation year" for purposes of this
Article VI shall have the meaning set forth under Code Section
409(p).
SECTION 6.06--PUT OPTION.
If shares of Qualifying Employer Securities are distributed from the Fund,
and if such shares are not publicly traded when distributed or are subject to a
trading limitation when distributed, then such shares shall be subject to an
initial and second put option as follows:
(a) The put option shall be exercisable by the distributee (whether the
Participant or a Beneficiary), any person to whom shares of
Qualifying Employer Securities have passed by gift from the
distributee, or any person (including an estate or the distributee
from an estate) to whom the shares of Qualifying Employer Securities
passed upon the death of the distributee (hereinafter referred to as
the "holder").
(b) The initial put option must be exercised during the 60-day period
which begins on the date the shares of Qualifying Employer
Securities are distributed from the Fund. If not exercised during
that period, the initial put option shall lapse.
(c) As soon as is reasonably practicable following the last day of the
Plan Year in which the initial 60-day period expires, the Employer
shall notify all of the non-electing holders of the valuation of
such Qualifying Employer Securities as of the most recent Valuation
Date. During the 60-day period following the receipt of such
valuation notice, any such non-electing holder shall have a second
put option.
(d) The period during which the put option is exercisable shall not
include any time when a holder is unable to exercise the put option
because the Employer is prohibited from honoring the put option by
federal or state law. If the shares of Qualifying Employer
Securities are publicly traded without restriction when distributed
but cease to be traded within either of the 60-day periods described
herein after distribution, the Employer must notify each holder in
writing on or before the tenth day after the date the shares cease
to be so traded that for the remainder of the applicable 60-day
period the shares are subject to a put option. The number of days
between such tenth day and the date on which notice is actually
given,
57
if later than the tenth day, must be added to the duration of the
put option. The notice must inform the holders of the terms of the
put option.
(e) The put option may be exercised by written notice of exercise to the
Employer or its designee made on such form and in accordance with
such rules as may be prescribed for this purpose by the Plan
Administrator.
(f) Upon receipt of such notice, the Employer shall tender to the holder
the fair market value of the Qualifying Employer Securities (as
determined under Sections 4.02(e) and (f)) for such shares.
(i) If the Qualifying Employer Securities were distributed in a
total distribution then the Employer may pay either in a lump
sum or substantially equal installments (bearing a reasonable
rate of interest and providing adequate security to the
holder) over a period beginning within 30 days following the
date the put option is exercised and ending not more than five
years after the date the put option is exercised.
(ii) If the Qualifying Employer Securities were not distributed in
a total distribution then the Employer must pay the holder in
a single lump sum payment.
(iii) If payment is made in installments, the Employer shall, within
30 days of the date the holder exercises the put option, give
the holder a promissory note for the full unpaid balance of
the options price. Such note shall, at a minimum, provide
adequate security, state a rate of interest reasonable under
the circumstances (but at least equal to the imputed compound
rate in effect as of the exercise date pursuant to the
regulations promulgated under Code Sections 483 or 1274,
whichever shall be applicable) and provide that the full
amount of such note shall accelerate and become due
immediately in the event that the Employer defaults in the
payment of a scheduled payment.
(g) The Plan Fund is not bound to purchase shares of Qualifying Employer
Securities pursuant to the put option, but the Employer may direct
the Trustee to cause the Plan Fund to assume the Employer's rights
and obligations to acquire shares of Qualifying Employer Securities
under the put option.
(h) A "trading limitation" for this purpose means a restriction under
any federal or state securities law or under any agreement affecting
the shares that would make the shares not as freely tradable as
shares not subject to such restriction.
(i) A "total distribution" for this purpose means a distribution to a
Participant or Beneficiary within one taxable year of such recipient
to the entire balance to the credit of the Participant.
For Plan Years beginning after December 31, 2004, if the Plan makes a
distribution in Qualifying Employer Securities of an S Corporation to a
disqualified person in a nonallocation year, such distribution is subject to an
immediate put option to the Employer.
58
ARTICLE VII
DISTRIBUTION REQUIREMENTS
SECTION 7.01--APPLICATION.
The optional forms of distribution are only those provided in Article VI.
An optional form of distribution shall not be permitted unless it meets the
requirements of this article. The timing of any distribution must meet the
requirements of this article.
SECTION 7.02--DEFINITIONS.
For purposes of this article, the following terms are defined:
APPLICABLE LIFE EXPECTANCY means Life Expectancy (or Joint and Last
Survivor Expectancy) calculated using the attained age of the Participant
(or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one for
each calendar year which has elapsed since the date Life Expectancy was
first calculated. If Life Expectancy is being recalculated, the Applicable
Life Expectancy shall be the Life Expectancy so recalculated. The
applicable calendar year shall be the first Distribution Calendar Year,
and if Life Expectancy is being recalculated, such succeeding calendar
year.
DESIGNATED BENEFICIARY means the individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9) and
the regulations thereunder.
DISTRIBUTION CALENDAR YEAR means a calendar year for which a minimum
distribution is required. 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 (e)
of the DISTRIBUTION REQUIREMENTS SECTION of this article.
5-PERCENT OWNER means a 5-percent owner as defined in Code Section 416. A
Participant is treated as a 5-percent Owner for purposes of this article
if such Participant is a 5-percent Owner at any time during the Plan Year
ending with or within the calendar year in which such owner attains age 70
1/2.
In addition, a Participant is treated as a 5-percent Owner for purposes of
this article if such Participant becomes a 5-percent Owner in a later Plan
Year. Such Participant's Required Beginning Date shall not be later than
the April 1 of the calendar year following the calendar year in which such
later Plan Year ends.
Once distributions have begun to a 5-percent Owner under this article,
they must continue to be distributed, even if the Participant ceases to be
a 5-percent Owner in a subsequent year.
JOINT AND LAST SURVIVOR EXPECTANCY means joint and last survivor
expectancy computed using the expected return multiples in Table VI of
section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant and shall apply to all
subsequent years. The life expectancy of a nonspouse Beneficiary may not
be recalculated.
59
LIFE EXPECTANCY means life expectancy computed using the expected return
multiples in Table V of section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in (e)(2)(ii) of the DISTRIBUTION REQUIREMENTS
SECTION of this article) by the time distributions are required to begin,
life expectancy shall be recalculated annually. Such election shall be
irrevocable as to the Participant (or spouse) and shall apply to all
subsequent years. The life expectancy of a nonspouse Beneficiary may not
be recalculated.
PARTICIPANT'S BENEFIT means:
(a) The Account balance as of the last Valuation Date in the calendar
year immediately preceding the Distribution Calendar Year (valuation
calendar year) increased by the amount of any contributions or
forfeitures allocated to the Account balance as of the dates in the
valuation calendar year after the Valuation Date and decreased by
distributions made in the valuation calendar year after the
Valuation Date.
(b) Exception for Second Distribution Calendar Year. For purposes of (a)
above, if any portion of the minimum distribution for the first
Distribution Calendar Year is made in the second Distribution
Calendar Year on or before the Required Beginning Date, the amount
of the minimum distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the immediately
preceding Distribution Calendar Year.
REQUIRED BEGINNING DATE means, for a Participant who is a 5-percent Owner,
the April 1 of the calendar year following the calendar year in which he
attains age 70 1/2.
Required Beginning Date means, for any Participant who is not a 5-percent
Owner, the April 1 of the calendar year following the later of the
calendar year in which he attains age 70 1/2 or the calendar year in which
he retires.
The preretirement age 70 1/2 distribution option is only eliminated with
respect to Participants who reach age 70 1/2 in or after a calendar year
that begins after the later of December 31, 1998, or the adoption date of
the amendment which eliminated such option. The preretirement age 70 1/2
distribution is an optional form of benefit under which benefits payable
in a particular distribution form (including any modifications that may be
elected after benefits begin) begin at a time during the period that
begins on or after January 1 of the calendar year in which the Participant
attains age 70 1/2 and ends April 1 of the immediately following calendar
year.
The options available for Participants who are not 5-percent Owners and
attained age 70 1/2 in calendar years before the calendar year that begins
after the later of December 31, 1998, or the adoption date of the
amendment which eliminated the preretirement age 70 1/2 distribution shall
be the following. Any such Participant attaining age 70 1/2 in years after
1995 may elect by April 1 of the calendar year following the calendar year
in which he 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 following the calendar year in which he retires. Any such
Participant attaining age 70 1/2 in years prior to 1997 may elect to stop
distributions which are not purchased annuities and recommence by the
April 1 of the calendar year following the year in which he retires. There
shall be a new Annuity Starting Date upon recommencement.
60
SECTION 7.03--DISTRIBUTION REQUIREMENTS.
(a) General Rules.
(1) The requirements of this article shall apply to any
distribution of a Participant's interest and shall take
precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this article
apply to calendar years beginning after December 31, 1984.
(2) All distributions required under this article shall be
determined and made in accordance with the proposed
regulations under Code Section 401(a)(9), including the
minimum distribution incidental benefit requirement of section
1.401(a)(9)-2 of the proposed regulations.
(3) With respect to distributions under the Plan made on or after
June 14, 2001, for calendar years beginning on or after
January 1, 2001, 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 (the 2001 Proposed Regulations),
notwithstanding any provision of the Plan to the contrary. If
the total amount of required minimum distributions made to a
Participant for 2001 prior to June 14, 2001, are equal to or
greater than the amount of required minimum distributions
determined under the 2001 Proposed Regulations, then no
additional distributions are required for such Participant for
2001 on or after such date. If the total amount of required
minimum distributions made to a Participant for 2001 prior to
June 14, 2001, are less than the amount determined under the
2001 Proposed Regulations, then the amount of required minimum
distributions for 2001 on or after such date will be
determined so that the total amount of required minimum
distributions for 2001 is the amount determined under the 2001
Proposed Regulations. These provisions shall continue in
effect until the last calendar year beginning before the
effective date of final regulations under Code Section
401(a)(9) or such other date as may be published by the
Internal Revenue Service.
(b) Required Beginning Date. The entire interest of a Participant must
be distributed or begin to be distributed no later than the
Participant's Required Beginning Date.
(c) 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 combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a Designated Beneficiary,
(3) a period certain not extending beyond the Life Expectancy of
the Participant, or
(4) a period certain not extending beyond the Joint and Last
Survivor Expectancy of the Participant and a Designated
Beneficiary.
(d) Determination of Amount to be Distributed Each Year. If the
Participant's interest is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on or
after the Required Beginning Date:
(1) Individual Account.
61
(i) If a Participant's Benefit is to be distributed over
A. 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 Designated Beneficiary, or
B. a period not extending beyond the Life Expectancy
of the Designated Beneficiary,
the amount required to be distributed for each calendar
year beginning with the distributions for the first
Distribution Calendar Year, must be at least equal to
the quotient obtained by dividing the Participant's
Benefit by the Applicable Life Expectancy.
(ii) For calendar years beginning before January 1, 1989, if
the Participant's spouse is not the Designated
Beneficiary, the method of distribution selected must
assure that at least 50 percent of the present value of
the amount available for distribution is paid within the
Life Expectancy of the Participant.
(iii) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year
shall not be less than the quotient obtained by dividing
the Participant's Benefit by the lesser of:
A. the Applicable Life Expectancy, or
B. if the Participant's spouse is not the Designated
Beneficiary, the applicable divisor determined
from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the proposed regulations.
Distributions after the death of the Participant shall
be distributed using the Applicable Life Expectancy in
(1)(i) above as the relevant divisor without regard to
section 1.401(a)(9)-2 of the proposed regulations.
(iv) 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.
(2) Other Forms. If the Participant's Benefit is distributed in
the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the
requirements of Code Section 401(a)(9) and the proposed
regulations thereunder.
(e) Death Distribution Provisions.
(1) Distribution Beginning Before Death. If the Participant dies
after distribution of his 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.
(2) Distribution Beginning After Death.
(i) If the Participant dies before distribution of his
interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the
calendar year
62
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 Designated Beneficiary, distributions
may be made over the life or over a period certain
not greater than the Life Expectancy of the
Designated Beneficiary beginning on or before
December 31 of the calendar year immediately
following the calendar year in which the
Participant died;
B. if the Designated 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:
1. December 31 of the calendar year immediately
following the calendar year in which the
Participant died, or
2. December 31 of the calendar year in which
the Participant would have attained age
70 1/2.
(ii) If the Participant has not made an election pursuant to
this (e)(2) by the time of his death, the Participant's
Designated Beneficiary must elect the method of
distribution no later than the earlier of:
A. December 31 of the calendar year in which
distributions would be required to begin under
this subparagraph, or
B. December 31 of the calendar year which contains
the fifth anniversary of the date of death of the
Participant.
(iii) If the Participant has no Designated Beneficiary, or if
the Designated Beneficiary does not elect a method of
distribution, 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.
(3) For purposes of (e)(2) above, if the surviving spouse dies
after the Participant, but before payments to such spouse
begin, the provisions of (e)(2) above, with the exception of
(e)(2)(i)(B) therein, shall be applied as if the surviving
spouse were the Participant.
(4) For purposes of this (e), distribution of a Participant's
interest is considered to begin on the Participant's Required
Beginning Date (or if (e)(3) above is applicable, the date
distribution is required to begin to the surviving spouse
pursuant to (e)(2) above). If distribution in the form of an
annuity irrevocably begins to the Participant before the
Required Beginning Date, the date distribution is considered
to begin is the date distribution actually begins.
SECTION 7.04--TRANSITIONAL RULE.
(a) Notwithstanding the other requirements of this article, distribution
on behalf of any Participant, including a 5-percent Owner, may be
made in accordance with all of the following requirements
(regardless of when such distribution begins):
63
(1) The distribution by the Plan is one which would not have
disqualified such Plan 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 Plan 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 an accrued benefit under the Plan as of
December 31, 1983.
(5) The method of distribution designated by the Participant or
Beneficiary specifies the time at which distribution will
begin, 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 begins before January 1, 1984, but
continues after December 31, 1983, the Participant, or 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 (a)(1) and (5)
above.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) and the proposed
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 proposed regulations
thereunder, but for the section 242(b)(2) election. For calendar
years beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements in
section 1.401(a)(9)-2 of the proposed 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 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 J-3 in section
1.401(a)(9)-2 of the proposed regulations shall apply.
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ARTICLE VIII
TERMINATION OF THE PLAN
The Employer expects to continue the Plan indefinitely but reserves the
right to terminate the Plan in whole or in part at any time upon giving written
notice to all parties concerned. Complete discontinuance of Contributions
constitutes complete termination of the Plan.
The Account of each Participant shall be fully (100%) vested and
nonforfeitable as of the effective date of complete termination of the Plan. The
Account of each Participant who is included in the group of Participants deemed
to be affected by the partial termination of the Plan shall be fully (100%)
vested and nonforfeitable as of the effective date of the partial termination of
the Plan. The Participant's Account shall continue to participate in the
earnings credited, expenses charged, and any appreciation or depreciation of the
Investment Fund until his Vested Account is distributed.
A Participant's Account which does not result from the Contributions
listed below may be distributed to the Participant after the effective date of
the complete termination of the Plan:
Elective Deferral Contributions
Qualified Nonelective Contributions
A Participant's Account resulting from such Contributions may be distributed
upon complete termination of the Plan, but only if neither the Employer nor any
Controlled Group member maintain or establish a successor defined contribution
plan (other than an employer 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)) and such distribution is
made in a lump sum. A distribution under this article shall be a retirement
benefit and shall be distributed to the Participant according to the provisions
of Article VI. However, the fixed period and fixed payment installment options
shall not be available.
If a Participant or Beneficiary is receiving payments under the fixed
period or fixed payment installment options, the Account shall be paid to such
person in a single sum.
The Participant's entire Vested Account shall be paid in a single sum to
the Participant as of the effective date of complete termination of the Plan if
(i) the requirements for distribution of Elective Deferral Contributions in the
above paragraph are met and (ii) consent of the Participant is not required in
the ELECTION PROCEDURES SECTION of Article VI to distribute a benefit which is
immediately distributable. This is a small amounts payment. The small amounts
payment is in full settlement of all benefits otherwise payable.
Upon complete termination of the Plan, no more Employees shall become
Participants and no more Contributions shall be made.
The assets of this Plan shall not be paid to the Employer at any time,
except that, after the satisfaction of all liabilities under the Plan, any
assets remaining may be paid to the Employer. The payment may not be made if it
would contravene any provision of law.
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ARTICLE IX
ADMINISTRATION OF THE PLAN
SECTION 9.01--ADMINISTRATION.
Subject to the provisions of this article, the Plan Administrator has
complete control of the administration of the Plan. The Plan Administrator has
all the powers necessary for it to properly carry out its administrative duties.
Not in limitation, but in amplification of the foregoing, the Plan Administrator
has complete discretion to construe or interpret the provisions of the Plan,
including ambiguous provisions, if any, and to determine all questions that may
arise under the Plan, including all questions relating to the eligibility of
Employees to participate in the Plan and the amount of benefit to which any
Participant or Beneficiary may become entitled. The Plan Administrator's
decisions upon all matters within the scope of its authority shall be final.
Unless otherwise set out in the Plan or Annuity Contract, the Plan
Administrator may delegate recordkeeping and other duties which are necessary
for the administration of the Plan to any person or firm which agrees to accept
such duties. The Plan Administrator shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the consultant or actuary
appointed by the Plan Administrator and upon all opinions given by any counsel
selected or approved by the Plan Administrator.
The Plan Administrator shall receive all claims for benefits by
Participants, former Participants and Beneficiaries. The Plan Administrator
shall determine all facts necessary to establish the right of any Claimant to
benefits and the amount of those benefits under the provisions of the Plan. The
Plan Administrator may establish rules and procedures to be followed by
Claimants in filing claims for benefits, in furnishing and verifying proofs
necessary to determine age, and in any other matters required to administer the
Plan.
SECTION 9.02--EXPENSES.
Expenses of the Plan, to the extent that the Employer does not pay such
expenses, may be paid out of the assets of the Plan provided that such payment
is consistent with ERISA. Such expenses include, but are not limited to,
expenses for bonding required by ERISA; expenses for recordkeeping and other
administrative services; fees and expenses of the Trustee or Annuity Contract;
expenses for investment education service; and direct costs that the Employer
incurs with respect to the Plan.
SECTION 9.03--RECORDS.
All acts and determinations of the Plan Administrator shall be duly
recorded. All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator's
custody.
Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording, or other
forms of data compilation shall be acceptable means of keeping records.
66
SECTION 9.04--INFORMATION AVAILABLE.
Any Participant in the Plan or any Beneficiary may examine copies of the
Plan description, latest annual report, any bargaining agreement, this Plan, the
Annuity Contract or any other instrument under which the Plan was established or
is operated. The Plan Administrator shall maintain all of the items listed in
this section in its office, or in such other place or places as it may designate
in order to comply with governmental regulations. These items may be examined
during reasonable business hours. Upon the written request of a Participant or
Beneficiary receiving benefits under the Plan, the Plan Administrator shall
furnish him with a copy of any of these items. The Plan Administrator may make a
reasonable charge to the requesting person for the copy.
SECTION 9.05--CLAIM AND APPEAL PROCEDURES.
A Claimant must submit any required forms and pertinent information when
making a claim for benefits under the Plan.
If a claim for benefits under the Plan is denied, the Plan Administrator
shall provide adequate written notice to the Claimant whose claim for benefits
under the Plan has been denied. The notice must be furnished within 90 days of
the date that the claim is received by the Plan Administrator. The Claimant
shall be notified in writing within this initial 90-day period if special
circumstances require an extension of time needed to process the claim and the
date by which the Plan Administrator's decision is expected to be rendered. The
written notice shall be furnished no later than 180 days after the date the
claim was received by the Plan Administrator.
The Plan Administrator's notice to the Claimant shall specify the reason
for the denial; specify references to pertinent Plan provisions on which denial
is based; describe any additional material and information needed for the
Claimant to perfect his claim for benefits; explain why the material and
information is needed; inform the Claimant that any appeal he wishes to make
must be in writing to the Plan Administrator within 60 days after receipt of the
Plan Administrator's notice of denial of benefits and that failure to make the
written appeal within such 60-day period renders the Plan Administrator's
determination of such denial final, binding and conclusive.
If the Claimant appeals to the Plan Administrator, the Claimant (or his
authorized representative) may submit in writing whatever issues and comments
the Claimant (or his authorized representative) feels are pertinent. The
Claimant (or his authorized representative) may review pertinent Plan documents.
The Plan Administrator shall reexamine all facts related to the appeal and make
a final determination as to whether the denial of benefits is justified under
the circumstances. The Plan Administrator shall advise the Claimant of its
decision within 60 days of his written request for review, unless special
circumstances (such as a hearing) would make rendering a decision within the
60-day limit unfeasible. The Claimant must be notified within the 60-day limit
if an extension is necessary. The Plan Administrator shall render a decision on
a claim for benefits no later than 120 days after the request for review is
received.
SECTION 9.06--DELEGATION OF AUTHORITY.
All or any part of the administrative duties and responsibilities under
this article may be delegated by the Plan Administrator to a retirement
committee. The duties and responsibilities of the retirement committee shall be
set out in a separate written agreement.
SECTION 9.07--EXERCISE OF DISCRETIONARY AUTHORITY.
The Employer, Plan Administrator, and any other person or entity who has
authority with respect to the management, administration, or investment of the
Plan may exercise that authority in its/his full discretion, subject only to the
duties imposed under ERISA. This discretionary authority includes, but is not
limited to, the authority to make any and all factual determinations and
interpret all terms and provisions of the Plan documents relevant to the
67
issue under consideration. The exercise of authority will be binding upon all
persons; will be given deference in all courts of law; and will not be
overturned or set aside by any court of law unless found to be arbitrary and
capricious or made in bad faith.
SECTION 9.08--TRANSACTION PROCESSING.
Transactions (including, but not limited to, investment directions,
trades, loans, and distributions) shall be processed as soon as administratively
practicable after proper directions are received from the Participant or such
other parties. No guarantee is made by the Plan, Plan Administrator, Trustee,
Insurer, or Employer that such transactions will be processed on a daily or
other basis, and no guarantee is made in any respect regarding the processing
time of such transactions.
Notwithstanding any other provision of the Plan, the Employer, the Plan
Administrator, or the Trustee reserves the right to not value an investment
option on any given Valuation Date for any reason deemed appropriate by the
Employer, the Plan Administrator, or the Trustee.
Administrative practicality will be determined by legitimate business
factors (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, and correction for errors
or omissions or the errors or omissions of any service provider) and in no event
will be deemed to be less than 14 days. The processing date of a transaction
shall be binding for all purposes of the Plan and considered the applicable
Valuation Date for any transaction.
SECTION 9.09--VOTING AND TENDER OF QUALIFYING EMPLOYER SECURITIES.
Voting rights with respect to Qualifying Employer Securities will be
passed through to Participants. Participants will be allowed to direct the
voting rights of Qualifying Employer Securities for any matter put to the vote
of shareholders. Before each meeting of shareholders, the Employer shall cause
to be sent to each person with power to control such voting rights a copy of any
notice and any other information provided to shareholders and, if applicable, a
form for instructing the Trustee how to vote at such meeting (or any adjournment
thereof) the number of full and fractional shares subject to such person's
voting control. The Trustee may establish a deadline in advance of the meeting
by which such forms must be received in order to be effective.
Each Participant shall be entitled to one vote for each share credited to
his Account.
To the extent some or all of the Participants have not directed or have
not timely directed the Trustee on how to vote, then the Trustee shall vote such
Qualifying Employer Securities, plus the shares attributable to Qualifying
Employer Securities held unallocated in a Suspense Account as a result of and
Exempt Loan, in the same proportion as those shares of Qualifying Employer
Securities for which the Trustee has received proper direction for such matter.
Tender rights or exchange offers for Qualifying Employer Securities will
be passed through to Participants. As soon as practicable after the commencement
of a tender or exchange offer for Qualifying Employer Securities, the Employer
shall cause each person with power to control the response to such tender or
exchange offer to be advised in writing the terms of the offer and, if
applicable, to be provided with a form for instructing the Trustee, or for
revoking such instruction, to tender or exchange shares of Qualifying Employer
Securities, to the extent permitted under the terms of such offer. In advising
such persons of the terms of the offer, the Employer may include statements from
the board of directors setting forth its position with respect to the offer.
To the extent some or all of the Participants have not directed or have
not timely directed the Trustee on how to respond to such tender or exchange,
then the Trustee shall not tender or exchange such Qualifying Employer
Securities on which no direction was received. In addition, shares attributable
to Qualifying Employer Securities held
68
unallocated in a Suspense Account as a result of and Exempt Loan shall be
tendered or exchanged in the same proportion as those shares of Qualifying
Employer Securities that are allocated to Participants' Accounts.
If the tender or exchange offer is limited so that all of the shares that
the Trustee has been directed to tender or exchange cannot be sold or exchanged,
the shares that each Participant directed to be tendered or exchanged shall be
deemed to have been sold or exchanged in the same ratio that the number of
shares actually sold or exchanged bears to the total number of shares that the
Trustee was directed to tender or exchange.
The Trustee shall hold the Participant's individual directions with
respect to voting rights or tender decisions in confidence and, except as
required by law, shall not divulge or release such individual directions to
anyone associated with the Employer. The Employer may require verification of
the Trustee's compliance with the directions received from Participants by any
independent auditor selected by the Employer, provided that such auditor agrees
to maintain the confidentiality of such individual directions.
The Employer may develop procedures to facilitate the exercise of votes or
tender rights, such as the use of facsimile transmissions for the Participants
located in physically remote areas.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.01--AMENDMENTS.
The Employer may amend this Plan at any time, including any remedial
retroactive changes (within the time specified by Internal Revenue Service
regulations), to comply with any law or regulation issued by any governmental
agency to which the Plan is subject.
An amendment may not diminish or adversely affect any accrued interest or
benefit of Participants or their Beneficiaries nor allow reversion or diversion
of Plan assets to the Employer at any time, except as may be required to comply
with any law or regulation issued by any governmental agency to which the Plan
is subject.
No amendment to this Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. However, a Participant's
Account may be reduced to the extent permitted under Code Section 412(c)(8). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account with respect to benefits attributable to service before
the amendment shall be treated as reducing an accrued benefit. Furthermore, if
the vesting schedule of the 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 right to his employer-derived accrued benefit shall not be less
than his percentage computed under the Plan without regard to such amendment.
No amendment to the Plan shall be effective to eliminate or restrict an
optional form of benefit with respect to benefits attributable to service before
the amendment except as provided in the MERGERS AND DIRECT TRANSFERS SECTION of
this article and below:
(a) The Plan is amended to eliminate or restrict the ability of a
Participant to receive payment of his Account balance under a
particular optional form of benefit and the amendment satisfies the
condition in (1) and the Plan satisfies the condition in (2) below:
(1) The amendment provides a single sum distribution form that is
otherwise identical to the optional form of benefit eliminated
or restricted. For purposes of this condition (1), a single
sum distribution form is otherwise identical only if it is
identical in all respects to the eliminated or restricted
optional form of benefit (or would be identical except that it
provides greater rights to the Participant) except with
respect to the timing of payments after commencement.
(2) The Plan provides that the amendment shall not apply to any
distribution with an Annuity Starting Date earlier than the
earlier of:
(i) the 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.
(b) The Plan is amended to eliminate or restrict in-kind distributions
and the conditions in Q&A 2(b)(2)(iii) in section 1.411(d)-4 of the
regulations are met.
70
If, as a result of an amendment, an Employer Contribution is removed that
is not 100% immediately vested when made, the applicable vesting schedule shall
remain in effect after the date of such amendment. The Participant shall not
become immediately 100% vested in such Contributions as a result of the
elimination of such Contribution except as otherwise specifically provided in
the Plan.
An amendment shall not decrease a Participant's vested interest in the
Plan. If an amendment to the Plan, or a deemed amendment in the case of a change
in top-heavy status of the Plan as provided in the MODIFICATION OF VESTING
REQUIREMENTS SECTION of Article XI, changes the computation of the percentage
used to determine that portion of a Participant's Account attributable to
Employer Contributions which is nonforfeitable (whether directly or indirectly),
each Participant or former Participant
(c) who has completed at least three Years of Service on the date the
election period described below ends (five Years of Service if the
Participant does not have at least one Hour-of-Service in a Plan
Year beginning after December 31, 1988) and
(d) whose nonforfeitable percentage will be determined on any date after
the date of the change
may elect, during the election period, to have the nonforfeitable percentage of
his Account that results from Employer Contributions determined without regard
to the amendment. This election may not be revoked. If after the Plan is
changed, the Participant's nonforfeitable percentage will at all times be as
great as it would have been if the change had not been made, no election needs
to be provided. The election period shall begin no later than the date the Plan
amendment is adopted, or deemed adopted in the case of a change in the top-heavy
status of the Plan, and end no earlier than the 60th day after the latest of the
date the amendment is adopted (deemed adopted) or becomes effective, or the date
the Participant is issued written notice of the amendment (deemed amendment) by
the Employer or the Plan Administrator.
SECTION 10.02--DIRECT ROLLOVERS.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this section, a Distributee may
elect, at the time and in the manner prescribed by the Plan Administrator, to
have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
Any part of a distribution made under the SMALL AMOUNTS SECTION of this
article (or which is a small amounts payment made under Article VIII at complete
termination of the Plan) which is an Eligible Rollover Distribution, which is
equal to or more than $1,000, and for which the Distributee has not elected to
either have such distribution paid to him or to an Eligible Retirement Plan
shall be rolled over to an Individual Retirement Account (IRA) with an affiliate
of Principal Life Insurance Company. Such amounts shall be initially invested in
the Principal Investor Funds Money Market Fund. The Distributee shall have the
option to change the investment after the IRA has been established.
Any part of a distribution made under the SMALL AMOUNTS SECTION of this
article (or which is a small amounts payment made under Article VIII at complete
termination of the Plan) which is an Eligible Rollover Distribution, which is
less than $1,000, and for which the Distributee has not elected to either have
such distribution paid to him or to an Eligible Retirement Plan shall be paid to
the Distributee.
SECTION 10.03--MERGERS AND DIRECT TRANSFERS.
The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Participant
in the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit the Participant would have
71
been entitled to receive immediately before the merger, consolidation, or
transfer (if this Plan had then terminated). The Employer may enter into merger
agreements or direct transfer of assets agreements with the employers under
other retirement plans which are qualifiable under Code Section 401(a),
including an elective transfer, and may accept the direct transfer of plan
assets, or may transfer plan assets, as a party to any such agreement. The
Employer shall not consent to, or be a party to a merger, consolidation, or
transfer of assets with a plan which is subject to the survivor annuity
requirements of Code Section 401(a)(11) if such action would result in a
survivor annuity feature being maintained under this Plan.
Notwithstanding any provision of the Plan to the contrary, to the extent
any optional form of benefit under the 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 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 employee contributions).
The Plan may accept a direct transfer of plan assets on behalf of an
Eligible Employee. If the Eligible Employee is not an Active Participant when
the transfer is made, the Eligible Employee shall be deemed to be an Active
Participant only for the purpose of investment and distribution of the
transferred assets. Employer Contributions shall not be made for or allocated to
the Eligible Employee, until the time he meets all of the requirements to become
an Active Participant.
The Plan shall hold, administer, and distribute the transferred assets as
a part of the Plan. The Plan shall maintain a separate account for the benefit
of the Employee on whose behalf the Plan accepted the transfer in order to
reflect the value of the transferred assets.
Unless a transfer of assets to the Plan is an elective transfer as
described below, the Plan shall apply the optional forms of benefit protections
described in the AMENDMENTS SECTION of this article to all transferred assets.
A Participant's protected benefits may be eliminated upon transfer between
qualified defined contribution plans if the conditions in Q&A 3(b)(1) in section
1.411(d)-4 of the regulations are met. The transfer must meet all of the other
applicable qualification requirements.
A Participant's protected benefits may be eliminated upon transfer between
qualified plans (both defined benefit and defined contribution) if the
conditions in Q&A 3(c)(1) in section 1.411(d)-4 of the regulations are met.
Beginning January 1, 2002, if the Participant is eligible to receive an
immediate distribution of his entire nonforfeitable accrued benefit in a single
sum distribution that would consist entirely of an eligible rollover
distribution under Code Section 401(a)(31), such transfer will be accomplished
as a direct rollover under Code Section 401(a)(31). The rules applicable to
distributions under the plan would apply to the transfer, but the transfer would
not be treated as a distribution for purposes of the minimum distribution
requirements of Code Section 401(a)(9).
SECTION 10.04--PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.
The obligations of an Insurer shall be governed solely by the provisions
of the Annuity Contract. The Insurer shall not be required to perform any act
not provided in or contrary to the provisions of the Annuity Contract. Each
Annuity Contract when purchased shall comply with the Plan. See the CONSTRUCTION
SECTION of this article.
Any issuer or distributor of investment contracts or securities is
governed solely by the terms of its policies, written investment contract,
prospectuses, security instruments, and any other written agreements entered
into with the Trustee with regard to such investment contracts or securities.
72
Such Insurer, issuer or distributor is not a party to the Plan, nor bound
in any way by the Plan provisions. Such parties shall not be required to look to
the terms of this Plan, nor to determine whether the Employer, the Plan
Administrator, the Trustee, or the Named Fiduciary have the authority to act in
any particular manner or to make any contract or agreement.
Until notice of any amendment or termination of this Plan or a change in
Trustee has been received by the Insurer at its home office or an issuer or
distributor at their principal address, they are and shall be fully protected in
assuming that the Plan has not been amended or terminated and in dealing with
any party acting as Trustee according to the latest information which they have
received at their home office or principal address.
SECTION 10.05--EMPLOYMENT STATUS.
Nothing contained in this Plan gives an Employee the right to be retained
in the Employer's employ or to interfere with the Employer's right to discharge
any Employee.
SECTION 10.06--RIGHTS TO PLAN ASSETS.
An Employee shall not have any right to or interest in any assets of the
Plan upon termination of employment or otherwise except as specifically provided
under this Plan, and then only to the extent of the benefits payable to such
Employee according to the Plan provisions.
Any final payment or distribution to a Participant or his legal
representative or to any Beneficiaries or spouse of such Participant under the
Plan provisions shall be in full satisfaction of all claims against the Plan,
the Named Fiduciary, the Plan Administrator, the Insurer, the Trustee, and the
Employer arising under or by virtue of the Plan.
SECTION 10.07--BENEFICIARY.
Each Participant may name a Beneficiary to receive any death benefit that
may arise out of his participation in the Plan. The Participant may change his
Beneficiary from time to time. Unless a qualified election has been made, for
purposes of distributing any death benefits before the Participant's Retirement
Date, the Beneficiary of a Participant who has a spouse shall be the
Participant's spouse. The Participant's Beneficiary designation and any change
of Beneficiary shall be subject to the provisions of the ELECTION PROCEDURES
SECTION of Article VI. It is the responsibility of the Participant to give
written notice to the Insurer of the name of the Beneficiary on a form furnished
for that purpose.
With the Employer's consent, the Plan Administrator may maintain records
of Beneficiary designations for Participants before their Retirement Dates. In
that event, the written designations made by Participants shall be filed with
the Plan Administrator. If a Participant dies before his Retirement Date, the
Plan Administrator shall certify to the Insurer the Beneficiary designation on
its records for the Participant.
If there is no Beneficiary named or surviving when a Participant dies, the
Participant's Beneficiary shall be the Participant's surviving spouse, or where
there is no surviving spouse, the executor or administrator of the Participant's
estate.
SECTION 10.08--NONALIENATION OF BENEFITS.
Benefits payable under the Plan are not subject to the claims of any
creditor of any Participant, Beneficiary or spouse. A Participant, Beneficiary
or spouse does not have any rights to alienate, anticipate, commute, pledge,
encumber, or assign any of such benefits. The preceding sentences shall also
apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant according to a domestic relations order,
unless such order is determined by the Plan Administrator to be a qualified
domestic relations order, as defined in
73
Code Section 414(p), or any domestic relations order entered before January 1,
1985. The preceding sentences shall not apply to any offset of a Participant's
benefits provided under the Plan against an amount the Participant is required
to pay the Plan with respect to a judgement, order, or decree issued, or a
settlement entered into, on or after August 5, 1997, which meets the
requirements of Code Sections 401(a)(13)(C) or (D).
SECTION 10.09--CONSTRUCTION.
The validity of the Plan or any of its provisions is determined under and
construed according to Federal law and, to the extent permissible, according to
the laws of the state in which the Employer has its principal office. In case
any provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included.
In the event of any conflict between the provisions of the Plan and the
terms of any Annuity Contract issued hereunder, the provisions of the Plan
control.
SECTION 10.10--LEGAL ACTIONS.
No person employed by the Employer; no Participant, former Participant, or
their Beneficiaries; nor any other person having or claiming to have an interest
in the Plan is entitled to any notice of process. A final judgment entered in
any such action or proceeding shall be binding and conclusive on all persons
having or claiming to have an interest in the Plan.
SECTION 10.11--SMALL AMOUNTS.
If consent of the Participant is not required for a benefit which is
immediately distributable in the ELECTION PROCEDURES SECTION of Article VI, a
Participant's entire Vested Account shall be paid in a single sum as of the
earliest of his Retirement Date, the date he dies, or the date he ceases to be
an Employee for any other reason (the date the Employer provides notice to the
record keeper of the Plan of such event, if later). For purposes of this
section, if the Participant's Vested Account is zero, the Participant shall be
deemed to have received a distribution of such Vested Account. If a Participant
would have received a distribution under the first sentence of this paragraph
but for the fact that the Participant's consent was needed to distribute a
benefit which is immediately distributable, and if at a later time consent would
not be needed to distribute a benefit which is immediately distributable and
such Participant has not again become an Employee, such Vested Account shall be
paid in a single sum. This is a small amounts payment.
If a small amounts payment is made as of the date the Participant dies,
the small amounts payment shall be made to the Participant's Beneficiary. If a
small amounts payment is made while the Participant is living, the small amounts
payment shall be made to the Participant. The small amounts payment is in full
settlement of benefits otherwise payable.
No other small amounts payments shall be made.
SECTION 10.12--WORD USAGE.
The masculine gender, where used in this Plan, shall include the feminine
gender and the singular words, as used in this Plan, may include the plural,
unless the context indicates otherwise.
The words "in writing" and "written," where used in this Plan, shall
include any other forms, such as voice response or other electronic system, as
permitted by any governmental agency to which the Plan is subject.
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SECTION 10.13--CHANGE IN SERVICE METHOD.
(a) Change of Service Method Under This Plan. If this Plan is amended to
change the method of crediting service from the elapsed time method
to the hours method for any purpose under this Plan, the Employee's
service shall be equal to the sum of (1), (2), and (3) below:
(1) The number of whole years of service credited to the Employee
under the Plan as of the date the change is effective.
(2) One year of service for the applicable computation period in
which the change is effective if he is credited with the
required number of Hours-of-Service. If the Employer does not
have sufficient records to determine the Employee's actual
Hours-of-Service in that part of the service period before the
effective date of the change, the Hours-of-Service shall be
determined using an equivalency. For any month in which he
would be required to be credited with one Hour-of-Service, the
Employee shall be deemed for purposes of this section to be
credited with 190 Hours-of-Service.
(3) The Employee's service determined under this Plan using the
hours method after the end of the computation period in which
the change in service method was effective.
If this Plan is amended to change the method of crediting service
from the hours method to the elapsed time method for any purpose
under this Plan, the Employee's service shall be equal to the sum of
(4), (5), and (6) below:
(4) The number of whole years of service credited to the Employee
under the Plan as of the beginning of the computation period
in which the change in service method is effective.
(5) the greater of (i) the service that would be credited to the
Employee for that entire computation period using the elapsed
time method or (ii) the service credited to him under the Plan
as of the date the change is effective.
(6) The Employee's service determined under this Plan using the
elapsed time method after the end of the applicable
computation period in which the change in service method was
effective.
(b) Transfers Between Plans with Different Service Methods. If an
Employee has been a participant in another plan of the Employer
which credited service under the elapsed time method for any purpose
which under this Plan is determined using the hours method, then the
Employee's service shall be equal to the sum of (1), (2), and (3)
below:
(1) The number of whole years of service credited to the Employee
under the plan as of the date he became an Eligible Employee
under this Plan.
(2) One year of service for the applicable computation period in
which he became an Eligible Employee if he is credited with
the required number of Hours-of-Service. If the Employer does
not have sufficient records to determine the Employee's actual
Hours-of-Service in that part of the service period before the
date he became an Eligible Employee, the Hours-of-Service
shall be determined using an equivalency. For any month in
which he would be required to be credited with one
Hour-of-Service, the Employee shall be deemed for purposes of
this section to be credited with 190 Hours-of-Service.
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(3) The Employee's service determined under this Plan using the
hours method after the end of the computation period in which
he became an Eligible Employee.
If an Employee has been a participant in another plan of the
Employer which credited service under the hours method for any
purpose which under this Plan is determined using the elapsed time
method, then the Employee's service shall be equal to the sum of
(4), (5), and (6) below:
(4) The number of whole years of service credited to the Employee
under the other plan as of the beginning of the computation
period under that plan in which he became an Eligible Employee
under this Plan.
(5) The greater of (i) the service that would be credited to the
Employee for that entire computation period using the elapsed
time method or (ii) the service credited to him under the
other plan as of the date he became an Eligible Employee under
this Plan.
(6) The Employee's service determined under this Plan using the
elapsed time method after the end of the applicable
computation period under the other plan in which he became an
Eligible Employee.
If an Employee has been a participant in a Controlled Group member's plan
which credited service under a different method than is used in this Plan, in
order to determine entry and vesting, the provisions in (b) above shall apply as
though the Controlled Group member's plan were a plan of the Employer.
Any modification of service contained in this Plan shall be applicable to
the service determined pursuant to this section.
SECTION 10.14--MILITARY SERVICE.
Notwithstanding any provision of this Plan to the contrary, the Plan shall
provide contributions, benefits, and service credit with respect to qualified
military service in accordance with Code Section 414(u).
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ARTICLE XI
TOP-HEAVY PLAN REQUIREMENTS
SECTION 11.01--APPLICATION.
The provisions of this article shall supersede all other provisions in the
Plan to the contrary.
For the purpose of applying the Top-heavy Plan requirements of this
article, all members of the Controlled Group shall be treated as one Employer.
The term Employer, as used in this article, shall be deemed to include all
members of the Controlled Group, unless the term as used clearly indicates only
the Employer is meant.
The accrued benefit or account of a participant which results from
deductible employee contributions shall not be included for any purpose under
this article.
The minimum vesting and contribution provisions of the MODIFICATION OF
VESTING REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of this article
shall not apply to any Employee who is included in a group of Employees covered
by a collective bargaining agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers, including the Employer, if there is evidence that retirement benefits
were the subject of good faith bargaining between such representatives. 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.
SECTION 11.02--DEFINITIONS.
For purposes of this article the following terms are defined:
AGGREGATION GROUP means:
(a) each of the Employer's qualified plans in which a Key Employee is a
participant during the Plan Year containing the Determination Date
(regardless of whether the plan was terminated) or one of the four
preceding Plan Years,
(b) each of the Employer's other qualified plans which allows the
plan(s) described in (a) above to meet the nondiscrimination
requirement of Code Section 401(a)(4) or the minimum coverage
requirement of Code Section 410, and
(c) any of the Employer's other qualified plans not included in (a) or
(b) above which the Employer desires to include as part of the
Aggregation Group. Such a qualified plan shall be included only if
the Aggregation Group would continue to satisfy the requirements of
Code Section 401(a)(4) and Code Section 410.
The plans in (a) and (b) above constitute the "required" Aggregation
Group. The plans in (a), (b), and (c) above constitute the "permissive"
Aggregation Group.
COMPENSATION means compensation as defined in the CONTRIBUTION LIMITATION
SECTION of Article III. For purposes of determining who is a Key Employee
in years beginning before January 1, 1998, Compensation shall include, in
addition to compensation as defined in the CONTRIBUTION LIMITATION SECTION
of Article III, elective contributions. Elective contributions are amounts
excludible from the gross income of the Employee under Code Sections 125,
402(e)(3), 402(h)(1)(B), or 403(b), and contributed by the
77
Employer, at the Employee's election, to a Code Section 401(k)
arrangement, a simplified employee pension, cafeteria plan, or
tax-sheltered annuity. Elective contributions also include amounts
deferred under a Code Section 457 plan maintained by the Employer.
DETERMINATION DATE means as to any plan, for any plan year subsequent to
the first plan year, the last day of the preceding plan year. For the
first plan year of the plan, the last day of that year.
KEY EMPLOYEE means 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 percent of the dollar limitation under Code Section
415(b)(1)(A),
(b) an owner (or considered an owner under Code Section 318) of one of
the ten largest interests in the Employer if such individual's
annual Compensation exceeds 100 percent of the dollar limitation
under Code Section 415(c)(1)(A),
(c) a 5-percent owner of the Employer, or
(d) a 1-percent owner of the Employer who has annual Compensation of
more than $150,000.
The determination period is the Plan Year containing the Determination
Date and the four preceding Plan Years.
The determination of who is a Key Employee shall be made according to Code
Section 416(i)(1) and the regulations thereunder.
NON-KEY EMPLOYEE means any Employee who is not a Key Employee.
PRESENT VALUE means the present value of a participant's accrued benefit
under a defined benefit plan. For purposes of establishing Present Value
to compute the Top-heavy Ratio, any benefit shall be discounted only for
7.5% interest and mortality according to the 1971 Group Annuity Table
(Male) without the 7% margin but with projection by Scale E from 1971 to
the later of (a) 1974, or (b) the year determined by adding the age to
1920, and wherein for females the male age six years younger is used.
TOP-HEAVY PLAN means a plan which is top-heavy for any plan year beginning
after December 31, 1983. This Plan shall be top-heavy if any of the
following conditions exist:
(a) The Top-heavy Ratio for this Plan exceeds 60 percent and this Plan
is not part of any required Aggregation Group or permissive
Aggregation Group.
(b) This Plan is a part of a required Aggregation Group, but not part of
a permissive Aggregation Group, and the Top-heavy Ratio for the
required Aggregation Group exceeds 60 percent.
(c) This Plan is a part of a required Aggregation Group and part of a
permissive Aggregation Group and the Top-heavy Ratio for the
permissive Aggregation Group exceeds 60 percent.
TOP-HEAVY RATIO means:
(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-year period ending on the Determination Date(s) has or has had
accrued benefits, the Top-heavy Ratio for
78
this Plan alone or for the required or permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum of
the account balances of all Key Employees as of the Determination
Date(s) (including any part of any account balance distributed in
the five-year period ending on the Determination Date(s)), and the
denominator of which is the sum of all account balances (including
any part of any account balance distributed in the five-year period
ending on the Distribution 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-year period ending on the Determination Date(s) has
or has had 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 the account balances under the
aggregated defined contribution plan or plans of 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-year period
ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances and
the Present Value of accrued benefits will be determined as of the
most recent Valuation Date that falls within or ends with the
12-month period ending on the Determination Date, except as provided
in 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 (i) who is not a Key Employee
but who was a Key Employee in a prior year or (ii) who has not been
credited with at least an hour of service with any employer
maintaining the plan at any time during the five-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.
Deductible employee contributions will not be taken into account for
purpose of computing the Top-heavy Ratio. When aggregating plans,
the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall
within the same calendar year.
The accrued benefit of a participant other than a Key Employee shall
be determined under (i) the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by
the Employer, or (ii) 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).
SECTION 11.03--MODIFICATION OF VESTING REQUIREMENTS.
If a Participant's Vesting Percentage determined under Article I is not at
least as great as his Vesting Percentage would be if it were determined under a
schedule permitted in Code Section 416, the following shall apply. During any
Plan Year in which the Plan is a Top-heavy Plan, the Participant's Vesting
Percentage shall be the greater of the Vesting Percentage determined under
Article I or the schedule below.
79
VESTING SERVICE NONFORFEITABLE
(whole years) PERCENTAGE
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The schedule above shall not apply to Participants who are not credited
with an Hour-of-Service after the Plan first becomes a Top-heavy Plan. The
Vesting Percentage determined above applies to the portion of the Participant's
Account which is multiplied by a Vesting Percentage to determine his Vested
Account, including benefits accrued before the effective date of Code Section
416 and benefits accrued before this Plan became a Top-heavy Plan.
If, in a later Plan Year, this Plan is not a Top-heavy Plan, a
Participant's Vesting Percentage shall be determined under Article I. A
Participant's Vesting Percentage determined under either Article I or the
schedule above shall never be reduced and the election procedures of the
AMENDMENTS SECTION of Article X shall apply when changing to or from the
schedule as though the automatic change were the result of an amendment.
The part of the Participant's Vested Account resulting from the minimum
contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of
this article (to the extent required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Section 411(a)(3)(B) or (D).
SECTION 11.04--MODIFICATION OF CONTRIBUTIONS.
During any Plan Year in which this Plan is a Top-heavy Plan, the Employer
shall make a minimum contribution as of the last day of the Plan Year for each
Non-key Employee who is an Employee on the last day of the Plan Year and who was
an Active Participant at any time during the Plan Year. A Non-key Employee is
not required to have a minimum number of Hours-of-Service or minimum amount of
Compensation in order to be entitled to this minimum. A Non-key Employee who
fails to be an Active Participant merely because his Compensation is less than a
stated amount or merely because of a failure to make mandatory participant
contributions or, in the case of a cash or deferred arrangement, elective
contributions shall be treated as if he were an Active Participant. The minimum
is the lesser of (a) or (b) below:
(a) 3 percent of such person's Compensation for such Plan Year.
(b) The "highest percentage" of Compensation for such Plan Year at which
the Employer's contributions are made for or allocated to any Key
Employee. The highest percentage shall be determined by dividing the
Employer Contributions made for or allocated to each Key Employee
during the Plan Year by the amount of his Compensation for such Plan
Year, and selecting the greatest quotient (expressed as a
percentage). To determine the highest percentage, all of the
Employer's defined contribution plans within the Aggregation Group
shall be treated as one plan. The minimum shall be the amount in (a)
above if this Plan and a defined benefit plan of the Employer are
required to be included in the Aggregation Group and this Plan
enables the defined benefit plan to meet the requirements of Code
Section 401(a)(4) or 410.
For purposes of (a) and (b) above, Compensation shall be limited by Code
Section 401(a)(17).
80
If the Employer's contributions and allocations otherwise required under
the defined contribution plan(s) are at least equal to the minimum above, no
additional contribution shall be required. If the Employer's total contributions
and allocations are less than the minimum above, the Employer shall contribute
the difference for the Plan Year.
The minimum contribution applies to all of the Employer's defined
contribution plans in the aggregate which are Top-heavy Plans. A minimum
contribution under a profit sharing plan shall be made without regard to whether
or not the Employer has profits.
If a person who is otherwise entitled to a minimum contribution above is
also covered under another defined contribution plan of the Employer's which is
a Top-heavy Plan during that same Plan Year, any additional contribution
required to meet the minimum above shall be provided in this Plan.
If a person who is otherwise entitled to a minimum contribution above is
also covered under a defined benefit plan of the Employer's which is a Top-heavy
Plan during that same Plan Year, the minimum benefits for him shall not be
duplicated. The defined benefit plan shall provide an annual benefit for him on,
or adjusted to, a straight life basis equal to the lesser of:
(c) 2 percent of his average compensation multiplied by his years of
service, or
(d) 20 percent of his average compensation.
Average compensation and years of service shall have the meaning set forth in
such defined benefit plan for this purpose.
For purposes of this section, any employer contribution made according to
a salary reduction or similar arrangement and employer contributions which are
matching contributions, as defined in Code Section 401(m), shall not apply in
determining if the minimum contribution requirement has been met, but shall
apply in determining the minimum contribution required.
The requirements of this section shall be met without regard to any Social
Security contribution.
81
By executing this Plan, the Primary Employer acknowledges having counseled
to the extent necessary with selected legal and tax advisors regarding the
Plan's legal and tax implications.
Executed this 29th day of September, 2004.
WEST BANCORPORATION, INC.
By: /s/ Thomas E. Stanberry
-----------------------------
Chairman, President and CEO
-----------------------------
Title
Defined Contribution Plan 8.0
RESTATEMENT OCTOBER 1, 2004 PLAN EXECUTION (8-01401)-1
82
GOOD FAITH COMPLIANCE AMENDMENT FOR THE
ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 (EGTRRA)
This amendment of the Plan is adopted to reflect certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). This
amendment is intended as good faith compliance with the requirements of EGTRRA
and is to be construed in accordance with EGTRRA and guidance issued thereunder.
Except as otherwise provided, this amendment shall be effective as of the first
day of the first Plan Year beginning after December 31, 2001. This amendment
shall continue to apply to the Plan, including the Plan as later amended, until
such provisions are integrated into the Plan or the good faith compliance EGTRRA
amendment provisions are specifically amended.
This amendment shall supersede any previous good faith compliance EGTRRA
amendment and the provisions of the Plan to the extent those provisions are
inconsistent with the provisions of this amendment.
WEST BANCORPORATION, INC. EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
The Plan named above gives the Employer the right to amend it at any time.
According to that right, the Plan is amended as follows:
INCREASE IN COMPENSATION LIMIT
For Plan Years beginning on and after January 1, 2002, the annual Compensation
of each Participant taken into account for determining all benefits provided
under the Plan for any determination period shall not exceed $200,000, as
adjusted for increases in the cost-of-living in accordance with Code Section
401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year
applies to any determination period beginning in such calendar year.
If Compensation for any prior determination period is taken into account in
determining a Participant's contributions or benefits for the current Plan Year,
the Compensation for such prior determination period is subject to the
applicable annual compensation limit in effect for that determination period.
For this purpose, in determining contributions or benefits in Plan Years
beginning on or after January 1, 2002, the annual Compensation limit in effect
for determination periods beginning before that date is $200,000.
LIMITATIONS ON CONTRIBUTIONS
EFFECTIVE DATE. This section shall be effective for Limitation Years beginning
after December 31, 2001.
MAXIMUM ANNUAL ADDITION. Except to the extent permitted in the Catch-up
Contributions section of this amendment that provides for catch-up contributions
under EGTRRA section 631 and Code Section 414(v), if applicable, the Annual
Addition 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) $40,000, as adjusted for increases in the cost-of-living under Code
Section 415(d), or
b) 100 percent 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 after separation from service (within the
meaning of Code Section 401(h) or 419A(f)(2)) which is otherwise treated as an
Annual Addition.
1
ELECTIVE DEFERRALS - CONTRIBUTION LIMITATION
No Participant shall be permitted to have Elective Deferral Contributions, as
defined in the EXCESS AMOUNTS Section, 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 in the Catch-up Contributions
section of this amendment that provides for catch-up contributions under EGTRRA
section 631 and Code Section 414(v), if applicable.
CATCH-UP CONTRIBUTIONS
EFFECTIVE DATE. This section shall apply to Contributions received after
December 31, 2001.
CATCH-UP CONTRIBUTIONS. All employees who are eligible to make Elective Deferral
Contributions under this Plan and who have attained age 50 before the close 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 Section 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.
LIMITATIONS ON DEFERRALS
EFFECTIVE DATE. This section shall be effective as of October 1, 2004.
If the Plan does not have a percent of Compensation limit on Elective Deferral
Contributions, a Participant's Elective Deferral Contributions, including
Catch-up Contributions, for any pay period shall be limited to 75% of his
Compensation for such period. If the Plan does have a percent of Compensation
limit on Elective Deferral Contributions, a Participant who is eligible to make
Catch-up Contributions shall have his Elective Deferral Contributions, including
Catch-up Contributions, for any pay period limited to 75% of his Compensation
for such pay period. Once such Participant has contributed an amount in excess
of the Plan's otherwise allowable Compensation limit equal to the amount of
Catch-up Contributions permitted under Code Section 414(v), he shall be limited
to the Plan's limit.
DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS
EFFECTIVE DATE. This section shall apply to distributions made after December
31, 2001. The provisions of the second modification of this section shall not
apply if the Plan does not provide for hardship distributions. The provisions of
the third modification of this section shall not apply if the Plan does not have
after-tax employee contributions.
MODIFICATION OF DEFINITION OF ELIGIBLE RETIREMENT PLAN. For purposes of the
DIRECT ROLLOVER Section, 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
and 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).
MODIFICATION OF DEFINITION OF ELIGIBLE ROLLOVER DISTRIBUTION TO EXCLUDE HARDSHIP
DISTRIBUTIONS. For purposes of the DIRECT ROLLOVER Section, 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.
2
MODIFICATION OF DEFINITION OF ELIGIBLE ROLLOVER DISTRIBUTION TO INCLUDE
AFTER-TAX EMPLOYEE CONTRIBUTIONS. For purposes of the DIRECT ROLLOVER Section, a
portion of a distribution shall not fail to be an Eligible Rollover Distribution
merely because the portion consists of after-tax employee contributions which
are not includible in gross income. However, such portion may be transferred
only to an individual retirement account or individual retirement 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.
ROLLOVERS FROM OTHER PLANS
The Plan will accept Participant Rollover Contributions and/or direct rollovers
of distributions made after December 31, 2001 from the types of plans specified
below beginning January 1, 2002. The Plan will accept all of the following
sources of rollovers, unless otherwise specified in (a) below.
DIRECT ROLLOVERS
The Plan will accept a direct rollover of an Eligible Rollover
Distribution from:
i) a qualified plan described in Code Section 401(a) or 403(a),
including after-tax employee contributions.
ii) an annuity contract described in Code Section 403(b), excluding
after-tax employee contributions.
iii) 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.
PARTICIPANT ROLLOVER CONTRIBUTIONS FROM OTHER PLANS
The Plan will accept a Participant contribution of an Eligible Rollover
Distribution from:
i) a qualified plan described in Code Section 401(a) or 403(a).
ii) an annuity contract described in Code Section 403(b).
iii) 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.
PARTICIPANT ROLLOVER CONTRIBUTIONS FROM IRAS
The Plan will accept a Participant Rollover Contribution of the portion of
a distribution from an individual retirement account or individual
retirement annuity described in Code Section 408(a) or (b) that is
eligible to be rolled over and would otherwise be includible in gross
income.
(Select (a) to allow only certain sources of rollovers.)
a) [ ] The Plan will accept Participant Rollover Contributions and/or direct
rollovers of distributions made after December 31, 2001 from the types of
plans specified below beginning January 1, 2002. (Select any that apply.)
DIRECT ROLLOVERS
The Plan will accept a direct rollover of an Eligible Rollover Distribution
from:
3
i) [ ] a qualified plan described in Code Section 401(a) or 403(a), including
after-tax employee contributions.
ii) [ ] a qualified plan described in Code Section 401(a) or 403(a), excluding
after-tax employee contributions. (Cannot select if (i) is selected.)
iii) [ ] an annuity contract described in Code Section 403(b), excluding
after-tax employee contributions.
iv) [ ] 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.
PARTICIPANT ROLLOVER CONTRIBUTIONS FROM OTHER PLANS
The Plan will accept a Participant contribution of an Eligible Rollover
Distribution from:
i) [ ] a qualified plan described in Code Section 401(a) or 403(a).
ii) [ ] an annuity contract described in Code Section 403(b).
iii) [ ] 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.
PARTICIPANT ROLLOVER CONTRIBUTIONS FROM IRAS
The Plan will accept a Participant Rollover Contribution of the portion of a
distribution from an individual retirement account or individual retirement
annuity described in Code Section 408(a) or (b) that is eligible to be rolled
over and would otherwise be includible in gross income, unless otherwise
specified below.
i) [ ] Participant Rollover Contributions from IRAs are not permitted.
ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS
Rollover Contributions will be included in determining the value of account
balances for involuntary distributions, unless otherwise specified below. (NOTE:
Can only select (a) if the Plan is not subject to the qualified joint and
survivor annuity requirements of Code Sections 401(a)(11) and 417.)
a) [ ] Rollover Contributions are excluded in determining the value of the
Participant's nonforfeitable balance for purposes of the Plan's
involuntary cash-out rules for distributions made after December 31, 2001
with respect to Participants who separated from service after December 31,
2001.
REPEAL OF MULTIPLE USE TEST
The multiple use test described in Treasury Regulation section 1.401(m)-2 and
the EXCESS AMOUNTS Section shall not apply for Plan Years beginning after
December 31, 2001.
DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT
EFFECTIVE DATE. This section shall apply for distributions due to severance from
employment occurring after December 31, 2001 and distributions that are
processed after December 31, 2001 regardless of when the severance from
employment occurred.
NEW DISTRIBUTABLE EVENT - DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT. A
Participant's Elective Deferral Contributions, Qualified Nonelective
Contributions, if any, Qualified Matching
4
Contributions, if any, 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.
SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION
The suspension period following a hardship distribution will be decreased. A
Participant who receives a distribution of elective deferrals after December 31,
2001, on account of hardship shall be prohibited from making elective deferrals
and participant contributions under this and all other plans of the Employer for
six months after receipt of the distribution. A Participant who receives a
distribution of elective deferrals in calendar year 2001 on account of hardship
shall be prohibited from making elective deferrals and participant contributions
under this and all other plans of the Employer for six months after receipt of
the distribution or until January 1, 2002, if later.
MODIFICATION OF TOP-HEAVY RULES
EFFECTIVE DATE. This section shall apply for purposes of determining whether the
Plan is a Top-heavy Plan 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 the Top-heavy Plan Requirements
Article of the Plan.
DETERMINATION OF TOP-HEAVY STATUS.
KEY EMPLOYEE means 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 is
more than $130,000 (as adjusted under Code Section 416(i)(1) for Plan
Years beginning after December 31, 2002),
b) a 5-percent owner of the Employer, or
c) a 1-percent owner of the Employer who has annual Compensation of more than
$150,000.
The determination period is the Plan Year containing the Determination Date.
The determination of who is a Key Employee shall be made according to Code
Section 416(i)(1) and the applicable regulations and other guidance of general
applicability issued thereunder.
DETERMINATION OF PRESENT VALUES AND AMOUNTS. This section shall apply for
purposes of determining the present values of accrued benefits and the amounts
of account balances of Employees as of the Determination Date.
DISTRIBUTIONS DURING YEAR ENDING ON THE DETERMINATION DATE. The present values
of accrued benefits and the amounts of account balances of an Employee as of the
Determination Date shall be increased by the distributions made with respect to
the Employee under the Plan and any plan aggregated with the Plan under Code
Section 416(g)(2) during the one-year period ending on the 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 the 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 "five-year period" for "one-year period."
EMPLOYEES NOT PERFORMING SERVICES DURING YEAR ENDING ON THE DETERMINATION DATE.
The accrued benefits and accounts of any individual who has not performed
services for the Employer during the one-year period ending on the Determination
Date shall not be taken into account.
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MINIMUM BENEFITS.
MATCHING CONTRIBUTIONS. Employer matching contributions shall be taken into
account for purposes of satisfying the minimum contribution requirements of Code
Section 416(c)(2) and the Plan. 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 Plan 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 with respect
to which the requirements of Code Section 401(m)(11) are met).
This amendment is made an integral part of the aforesaid Plan and is controlling
over the terms of said Plan with respect to the particular items addressed
expressly therein. All other provisions of the Plan remain unchanged and
controlling.
Unless otherwise stated on any page of this amendment, eligibility for benefits
and the amount of any benefits payable to or on behalf of an individual who is
an Inactive Participant on the effective date(s) stated above, shall be
determined according to the provisions of the aforesaid Plan as in effect on the
day before he became an Inactive Participant.
Signing this amendment, the Employer, as plan sponsor, has made the decision to
adopt this plan amendment. The Employer is acting in reliance on its own
discretion and on the legal and tax advice of its own advisors, and not that of
any member of the Principal Financial Group or any representative of a member
company of the Principal Financial Group.
Signed this 29th day of September, 2004.
For the Employer
By /s/ Thomas E. Stanberry
-----------------------
Chairman, President & CEO
--------------------------
Title
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MODEL AMENDMENT TO COMPLY WITH THE 401(A)(9) FINAL AND TEMPORARY
REGULATIONS
Plan Name WEST BANCORPORATION, INC. EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
The Plan named above gives the Employer the right to amend it at any time.
According to that right, the Plan is amended by adopting the model amendment set
forth below.
The plan's existing minimum distribution provisions are superseded to the extent
they are inconsistent with the provisions of this model amendment, but those
provisions that are not inconsistent (such as the plan's definition of required
beginning date) shall be retained. The plan's minimum distribution provisions
are amended as follows:
ARTICLE VII. MINIMUM DISTRIBUTION REQUIREMENTS.
Section 1. General Rules
1.1. Effective Date. The provisions of this article will apply for purposes of
determining required minimum distributions for calendar years beginning
with the 2003 calendar year.
1.2. Coordination with Minimum Distribution Requirements Previously in Effect.
This amendment is not effective until calendar years beginning with the
2003 calendar year, therefore, no coordination is required.
1.3. Precedence. The requirements of this article will take precedence over any
inconsistent provisions of the plan.
1.4. Requirements of Treasury Regulations Incorporated. All distributions
required under this article will be determined and made in accordance with
the Treasury regulations under section 401(a)(9) of the Internal Revenue
Code.
1.5. TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of
this article, distributions may be made under a designation made before
January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act (TEFRA) and the provisions of the plan that
relate to section 242(b)(2) of TEFRA.
Section 2. Time and Manner of Distribution.
2.1. Required Beginning Date. The participant's entire interest will be
distributed, or begin to be distributed, to the participant no later than
the participant's required beginning date.
2.2. Death of Participant Before Distributions Begin. If the participant dies
before distributions begin, the participant's entire interest will be
distributed, or begin to be distributed, no later than as follows:
(a) If the participant's surviving spouse is the participant's sole
designated beneficiary, then distributions to the surviving spouse
will begin by December 31 of the calendar year immediately following
the calendar year in which the participant died, or by December 31
of the calendar year in which the participant would have attained
age 70 1/2 if later, except to the extent that an election is made
to receive distributions in accordance with the 5-year rule. Under
the 5-year rule, the participant's entire interest will be
distributed to the designated beneficiary by December 31 of the
calendar year containing the fifth anniversary of the participant's
death.
(b) If the participant's surviving spouse is not the participant's sole
designated beneficiary, then distributions to the designated
beneficiary will begin by December 31 of the calendar year
immediately following the calendar year in which the participant
died, except to the extent that an election is made to receive
distributions in accordance with the 5-year rule. Under the 5-year
rule, the participant's entire interest will be distributed to the
designated beneficiary by December 31 of the calendar year
containing the fifth anniversary of the participant's death.
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(c) If there is no designated beneficiary as of September 30 of the year
following the year of the participant's death, the participant's
entire interest will be distributed by December 31 of the calendar
year containing the fifth anniversary of the participant's death.
(d) If the participant's surviving spouse is the participant's sole
designated beneficiary and the surviving spouse dies after the
participant but before distributions to the surviving spouse begin,
this section 2.2, other than section 2.2(a), will apply as if the
surviving spouse were the participant.
For purposes of this section 2.2 and section 4, unless section 2.2(d)
applies, distributions are considered to begin on the participant's
required beginning date. If section 2.2(d) applies, distributions are
considered to begin on the date distributions are required to begin to the
surviving spouse under section 2.2(a). If distributions under an annuity
purchased from an insurance company irrevocably commence to the
participant before the participant's required beginning date (or to the
participant's surviving spouse before the date distributions are required
to begin to the surviving spouse under section 2.2(a)), the date
distributions are considered to begin is the date distributions actually
commence.
2.3. Forms of Distribution. Unless the participant's interest is distributed in
the form of an annuity purchased from an insurance company or in a single
sum on or before the required beginning date, as of the first distribution
calendar year distributions will be made in accordance with sections 3 and
4 of this article. If the participant's interest is distributed in the
form of an annuity purchased from an insurance company, distributions
thereunder will be made in accordance with the requirements of section
401(a)(9) of the Code and the Treasury regulations.
Section 3. Required Minimum Distributions During Participant's Lifetime.
3.1. Amount of Required Minimum Distribution For Each Distribution Calendar
Year. During the participant's lifetime, the minimum amount that will be
distributed for each distribution calendar year is the lesser of:
(a) the quotient obtained by dividing the participant's account balance
by the distribution period in the Uniform Lifetime Table set forth
in section 1.401(a)(9)-9 of the Treasury regulations, using the
participant's age as of the participant's birthday in the
distribution calendar year; or
(b) the participant's sole designated beneficiary for the distribution
calendar year is the participant's spouse, the quotient obtained by
dividing the participant's account balance by the number in the
Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of
the Treasury regulations, using the participant's and spouse's
attained ages as of the participant's and spouse's birthdays in the
distribution calendar year.
3.2. Lifetime Required Minimum Distributions Continue Through Year of
Participant's Death. Required minimum distributions will be determined
under this section 3 beginning with the first distribution calendar year
and up to and including the distribution calendar year that includes the
participant's date of death.
Section 4. Required Minimum Distributions After Participant's Death.
4.1. Death On or After Date Distributions Begin.
(a) Participant Survived by Designated Beneficiary. If the participant
dies on or after the date distributions begin and there is a
designated beneficiary, the minimum amount that will be distributed
for each distribution calendar year after the year of the
participant's death is the quotient obtained by dividing the
participant's account balance by the longer of the remaining life
expectancy of the participant or the remaining life expectancy of
the participant's designated beneficiary, determined as follows:
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(1) The participant's remaining life expectancy is calculated
using the age of the participant in the year of death, reduced
by one for each subsequent year.
(2) If the participant's surviving spouse is the participant's
sole designated beneficiary, the remaining life expectancy of
the surviving spouse is calculated for each distribution
calendar year after the year of the participant's death using
the surviving spouse's age as of the spouse's birthday in that
year. For distribution calendar years after the year of the
surviving spouse's death, the remaining life expectancy of the
surviving spouse is calculated using the age of the surviving
spouse as of the spouse's birthday in the calendar year of the
spouse's death, reduced by one for each subsequent calendar
year.
(3) If the participant's surviving spouse is not the participant's
sole designated beneficiary, the designated beneficiary's
remaining life expectancy is calculated using the age of the
beneficiary in the year following the year of the
participant's death, reduced by one for each subsequent year.
(b) No Designated Beneficiary. If the participant dies on or after the
date distributions begin and there is no designated beneficiary as
of September 30 of the year after the year of the participant's
death, the minimum amount that will be distributed for each
distribution calendar year after the year of the participant's death
is the quotient obtained by dividing the participant's account
balance by the participant's remaining life expectancy calculated
using the age of the participant in the year of death, reduced by
one for each subsequent year.
4.2. Death Before Date Distributions Begin.
(a) Participant Survived by Designated Beneficiary. If the participant
dies before the date distributions begin and there is a designated
beneficiary, the minimum amount that will be distributed for each
distribution calendar year after the year of the participant's death
is the quotient obtained by dividing the participant's account
balance by the remaining life expectancy of the participant's
designated beneficiary, determined as provided in section 4.1,
except to the extent that an election is made to receive
distributions in accordance with the 5-year rule. Under the 5-year
rule, the participant's entire interest will be distributed to the
designated beneficiary by December 31 of the calendar year
containing the fifth anniversary of the participant's death.
(b) No Designated Beneficiary. If the participant dies before the date
distributions begin and there is no designated beneficiary as of
September 30 of the year following the year of the participant's
death, distribution of the participant's entire interest will be
completed by December 31 of the calendar year containing the fifth
anniversary of the participant's death.
(c) Death of Surviving Spouse Before Distributions to Surviving Spouse
Are Required to Begin. If the participant dies before the date
distributions begin, the participant's surviving spouse is the
participant's sole designated beneficiary, and the surviving spouse
dies before the distributions are required to begin to the surviving
spouse under section 2.2(a), this section 4.2 will apply as if the
surviving spouse were the participant.
Section 5. Definitions.
5.1. Designated Beneficiary. The individual who is designated as the
beneficiary under the BENEFICIARY SECTION of Article X of the plan and is
the designated beneficiary under section 401(a)(9) of the Internal Revenue
Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations.
5.2. Distribution Calendar Year. A calendar year for which a minimum
distribution is required. 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
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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 under section
2.2. The required minimum distribution for the participant's first
distribution calendar year will be made on or before the participant's
required beginning date. The required minimum distribution for other
distribution calendar years, including the required minimum distribution
for the distribution year in which the participant's required beginning
date occurs, will be made on or before December 31 of that distribution
calendar year.
5.3. Life Expectancy. Life expectancy as computed by use of the Single Life
Table in section 1.401(a)(9)-9 of the Treasury regulations.
5.4. Participant's Account Balance. The account balance as of the last
valuation date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions made and allocated or forfeitures allocated to the account
balance as of dates in the valuation calendar year after the valuation
date and decreased by distributions made in the valuation calendar year
after the valuation date. The account balance for the valuation calendar
year includes any amounts rolled over or transferred to the plan either in
the valuation calendar year or in the distribution calendar year if
distributed or transferred in the valuation calendar year.
5.5. Required Beginning Date. The date specified in the DEFINITIONS SECTION of
Article VII of the plan.
Section 6. Election to Allow Participants or Beneficiaries to Elect 5-Year Rule.
Participants or beneficiaries may elect on an individual basis whether the
5-year rule or the life expectancy rule in sections 2.2 and 4.2 of Article
VII of the plan applies to distributions after the death of a participant
who has a designated beneficiary. The election must be made no later than
the earlier of September 30 of the calendar year in which distribution
would be required to begin under section 2.2 of Article VII of the plan,
or by September 30 of the calendar year which contains the fifth
anniversary of the participant's (or, if applicable, surviving spouse's)
death. If neither the participant nor beneficiary makes an election under
this paragraph, distributions will be made in accordance with the life
expectancy rule under sections 2.2 and 4.2 of Article VII of the plan.
Section 7. Election to Allow Designated Beneficiary Receiving Distributions
Under 5-Year Rule to Elect Life Expectancy Distributions.
A designated beneficiary who is receiving payments under the 5-year rule
may make a new election to receive payments under the life expectancy rule
until December 31, 2003, provided that all amounts that would have been
required to be distributed under the life expectancy rule for all
distribution calendar years before 2004 are distributed by the earlier of
December 31, 2003 or the end of the 5-year period.
This amendment is made an integral part of the aforesaid Plan and is controlling
over the terms of said Plan with respect to the particular items addressed
expressly therein. All other provisions of the Plan remain unchanged and
controlling.
Unless otherwise stated on any page of this amendment, eligibility for benefits
and the amount of any benefits payable to or on behalf of an individual who is
an inactive participant on the effective date(s) stated above, shall be
determined according to the provisions of the aforesaid Plan as in effect on the
day before he became an inactive participant.
Signing this amendment, the Employer, as plan sponsor, has made the decision to
adopt this plan amendment. The Employer is acting in reliance on its own
discretion and on the legal and tax advice of its own advisors, and not that of
any member of the Principal Financial Group or any representative of a member
company of the Principal Financial Group.
Signed this 29th day of September, 2004.
For the Employer,
By: /s/ Thomas E. Stanberry
Chairman, President & CEO
-------------------------
Business Title
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