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EXHIBIT 4.3
LODGIAN, INC.
401(K) PLAN
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LODGIAN, INC. 401(K) PLAN
TABLE OF CONTENTS
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ARTICLE I
PURPOSE..................................................................................................1
1.1 Exclusive Benefit...............................................................................1
1.2 No Rights of Employment Granted.................................................................1
ARTICLE II
DEFINITIONS..............................................................................................1
2.1 Accrued Benefit.................................................................................1
2.2 Actual Deferral Percentage......................................................................1
2.3 Administrative Committee........................................................................2
2.4 Affiliated Employer.............................................................................2
2.5 Average Actual Deferral Percentage..............................................................2
2.6 Average Contribution Percentage.................................................................2
2.7 Beneficiary.....................................................................................2
2.8 Cash-Out........................................................................................2
2.9 Compensation....................................................................................3
2.10 Contribution Percentage.........................................................................3
2.11 Elective Deferrals..............................................................................4
2.12 Eligible Employee...............................................................................4
2.13 Employee........................................................................................4
2.14 Employer........................................................................................5
2.15 Employer Account................................................................................5
2.16 Employer Matching Account.......................................................................5
2.17 Employer Stock Fund.............................................................................5
2.18 ERISA...........................................................................................5
2.19 Excess Aggregate Contributions..................................................................5
2.20 Excess Contributions............................................................................5
2.21 Excess Deferral Amount..........................................................................5
2.22 [Reserved]......................................................................................5
2.23 Forfeiture......................................................................................5
2.24 Highly Compensated Employee.....................................................................6
2.25 Hour of Service.................................................................................6
2.26 IRC.............................................................................................7
2.27 Leave of Absence................................................................................7
2.28 Nonelective Contributions.......................................................................7
2.29 Nonhighly Compensated Employee..................................................................7
2.30 Normal Retirement Age...........................................................................8
2.31 One Year Break in Service.......................................................................8
2.32 Participant.....................................................................................8
2.33 Participant Deferral Account....................................................................8
2.34 Plan............................................................................................8
2.35 Plan Administrator..............................................................................9
(i)
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2.36 Plan Year.......................................................................................9
2.37 Predecessor Employer............................................................................9
2.38 Qualified Joint and Survivor Annuity............................................................9
2.39 [Reserved]......................................................................................9
2.40 Retirement......................................................................................9
2.41 Rollover Contribution...........................................................................9
2.42 Termination Date...............................................................................10
2.43 Total and Permanent Disability.................................................................10
2.44 Total Service for Vesting......................................................................10
2.45 Trust..........................................................................................10
2.46 Trust Fund.....................................................................................10
2.47 Year of Service for Accrual of Benefits........................................................10
2.48 A Year of Service for Participation............................................................11
2.49 Year of Service for Vesting....................................................................11
ARTICLE III
ELIGIBILITY TO PARTICIPATE..............................................................................11
3.1 Initial Entry..................................................................................11
3.2 Resumption of Participation....................................................................12
3.3 Acquisitions...................................................................................13
ARTICLE IV
CONTRIBUTIONS TO THE TRUST..............................................................................13
4.1 Elective Deferrals by Participants.............................................................13
4.2 Matching Contributions.........................................................................14
4.3 Employer Contributions to Participants.........................................................16
4.4 Annual Limitation on Participant Elective Deferrals............................................16
4.5 Average Actual Deferral Percentage Limitation..................................................17
4.6 Average Contribution Percentage Limitation.....................................................20
4.7 Multiple Use of Alternative Limitation.........................................................22
4.8 Permissible Types of Employer Contributions....................................................23
4.9 Loans to Participants..........................................................................23
4.10 Rollover Contributions.........................................................................24
ARTICLE V
ADMINISTRATION OF ACCOUNTS..............................................................................25
5.1 Investments....................................................................................25
5.2 Invest in Single Fund and Reasonable Rules.....................................................25
5.3 Valuation of Assets and Allocation of Changes..................................................25
5.4 Limitations on Allocations to Each Participant.................................................26
5.5 Designation of Beneficiary.....................................................................31
5.6 Life Insurance.................................................................................31
ARTICLE VI
VESTING.................................................................................................33
6.1 Participant Deferral Account and Rollover Account 100 Percent Vested...........................33
6.2 Employer Account Vesting on Death, Retirement, or Total Permanent Disability...................33
6.3 Employer Account and Employer Matching Account Vesting on Termination..........................33
(ii)
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6.4 [Reserved].....................................................................................34
6.5 Restoration of Forfeitures.....................................................................34
ARTICLE VII
DISTRIBUTION OF BENEFITS................................................................................34
7.1 Hardship Distribution (Effective September 13, 1999):..........................................34
7.2 Method of Distribution.........................................................................36
7.3 Time of Distribution...........................................................................37
7.4 Qualified Joint and Survivor Annuity...........................................................41
7.5 Segregation if Installment Distribution........................................................42
7.6 Non-segregation if Installment Distribution....................................................43
7.7 Distribution After Death of Participant........................................................43
7.8 Distribution After Death of Beneficiary........................................................43
7.9 Direct Rollover ...............................................................................43
7.10 Suspense Account for Terminated Participants...................................................44
7.11 Unable to Locate Participant or Beneficiary....................................................45
7.12 Repayment of Cash-Out..........................................................................45
7.13 Qualified Domestic Relations Orders............................................................45
ARTICLE VIII
DUTIES AND AUTHORITY OF TRUSTEE.........................................................................46
8.1 General Fiduciary Duties ......................................................................46
8.2 Receive Payments...............................................................................46
8.3 Value Assets...................................................................................46
8.4 Segregation of Accounts........................................................................46
8.5 Tax Returns and Reports........................................................................47
8.6 Powers.........................................................................................47
8.7 Expenses.......................................................................................48
8.8 Litigation.....................................................................................48
8.9 Written Instructions...........................................................................49
8.10 Appointment of Investment Manager..............................................................49
8.11 Removal and Resignation of the Trustee.........................................................49
8.12 Individual Choice Accounts.....................................................................49
8.13 Investment in Employer Stock (Effective September 13, 1999)....................................49
ARTICLE IX
DUTIES AND AUTHORITY OF ADMINISTRATIVE COMMITTEE........................................................50
9.1 Appointment....................................................................................50
9.2 No Discrimination..............................................................................50
9.3 Majority Action................................................................................50
9.4 Powers.........................................................................................50
9.5 Filing Reports.................................................................................51
9.6 Records and Information........................................................................51
9.7 Information to Participants....................................................................51
9.8 Compensation of Members........................................................................51
9.9 Review of Participant's Claims.................................................................51
(iii)
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ARTICLE X
MODIFICATIONS FOR TOP-HEAVY PLANS.......................................................................51
10.1 Application of Article.........................................................................51
10.2 Definitions....................................................................................51
10.3 Accelerated Vesting............................................................................53
10.4 Minimum Contributions..........................................................................54
10.5 Limitation on Compensation Taken into Account Under Plan.......................................54
10.6 Modification of Defined Benefit and Defined Contribution Fraction..............................55
ARTICLE XI
AMENDMENT AND TERMINATION...............................................................................55
11.1 Rights to Suspend or Terminate Plan............................................................55
11.2 Successor Corporation..........................................................................55
11.3 Amendment......................................................................................55
11.4 100% Vesting on Termination of Plan............................................................56
11.5 Plan Merger or Consolidation...................................................................56
ARTICLE XII
MISCELLANEOUS...........................................................................................56
12.1 Laws of Florida to Apply.......................................................................56
12.2 Participant Cannot Transfer or Assign Benefits.................................................56
12.3 Right to Perform Alternative Acts..............................................................57
12.4 Reversion of Contributions Under Certain Circumstances.........................................57
12.5 Plan Administrator Agent for Service of Process................................................57
12.6 Filing Tax Returns and Reports.................................................................57
12.7 Indemnification................................................................................57
12.8 Number and Gender..............................................................................58
12.9 Veterans's Reemployment Rights (Effective December 12, 1994)...................................58
(iv)
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LODGIAN, INC. 401(K) PLAN
The Servico, Inc. 401(k) Plan (the "Plan") was adopted by Servico, Inc.
("Servico) effective July 1, 1984 and previously amended several times. Servico
and Impac Hotel Group, LLC. ("Impac") combined their respective businesses
through a series of corporate mergers the result of which is that Servico and
Impac became wholly-owned subsidiaries of Lodgian, Inc. ("Lodgian") effective on
December 11, 1998. Effective January 1, 1999, Lodgian assumed sponsorship of the
Plan. By amendment adopted September 13, 1999, Lodgian amended the Plan to
conform to changes required by recent legislation and as desired by Lodgian.
This document is an amendment and restatement of the Plan effective January 1,
1997, unless otherwise noted.
ARTICLE I
PURPOSE
1.1 EXCLUSIVE BENEFIT
This Plan has been executed for the exclusive benefit of the
Participants hereunder and their Beneficiaries. This Plan shall be interpreted
in a manner consistent with this intent and with the intention of the Employer
that this Plan satisfy Internal Revenue Code section 401 and section 501. Under
no circumstances shall the Trust Fund ever revert to or be used or enjoyed by
the Employer, except as provided in Section 12.4.
1.2 NO RIGHTS OF EMPLOYMENT GRANTED
The establishment of this Plan shall not be considered as giving any
employee the right to be retained in the service of the Employer.
ARTICLE II
DEFINITIONS
2.1 ACCRUED BENEFIT
The "Accrued Benefit" is the amount credited to the Employer Account
and, if applicable, the Participant Deferral Account of a Participant or
Beneficiary.
2.2 ACTUAL DEFERRAL PERCENTAGE
"Actual Deferral Percentage" of each Participant is the ratio,
expressed as a percentage, of (1) the amount of Employer contributions actually
paid over to the Trust on behalf of such Participant for the Plan Year to (2)
the Participant's Compensation for the portion of such Plan Year in which the
Participant was an Eligible Employee. Employer contributions on behalf of any
Participant shall include: (1) any Elective Deferrals made pursuant to the
Participant's deferral election (including Excess Deferral Amounts of Highly
Compensated Employees), but excluding (a) Excess Deferral Amounts of Nonhighly
Compensated Employees that arise solely from Elective Deferrals made under the
Plan or plans of this Employer and (b) Elective Deferrals that are taken into
account in the Average Contribution Percentage test (provided the Average Actual
Deferral Percentage test is satisfied both with and without exclusion of these
Elective Deferrals); and (2) at the election of the Employer, Qualified
Nonelective Contributions and qualified matching contributions. For purposes of
computing the Actual Deferral Percentage, an Employee who would be a Participant
but for the failure to make Elective Deferrals shall be treated as a Participant
on whose behalf no Elective Deferrals are made. The Actual Deferral Percentage
of each Eligible Employee shall be rounded to the nearest 100th of 1% of such
Employee's Compensation.
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2.3 ADMINISTRATIVE COMMITTEE
The "Administrative Committee" shall refer to the Administrative
Committee, as defined in Section 9.1.
2.4 AFFILIATED EMPLOYER
"Affiliated Employer" shall mean the Employer and any corporation which
is a member of a controlled group of corporations (as defined in IRC section
414(b)) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in IRC section 414(c))
with the Employer; and organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in IRC section 414(m)) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to regulations under IRC section 414(o).
2.5 AVERAGE ACTUAL DEFERRAL PERCENTAGE
"Average Actual Deferral Percentage" shall mean, for a specified group
of Eligible Employees for a Plan Year, the average of the Actual Deferral
Percentages (calculated separately for each Participant in such group). The
Average Actual Deferral Percentage of the Eligible Employees shall be rounded to
the nearest 100th of 1%.
2.6 AVERAGE CONTRIBUTION PERCENTAGE
"Average Contribution Percentage" shall mean, for a specified group of
Eligible Employees for a Plan Year, the average of the Contribution Percentages
(calculated separately for each Participant in such group). The Average
Contribution Percentage of the Eligible Employees shall be rounded to the
nearest 100th of 1%.
2.7 BENEFICIARY
A "Beneficiary" is any person, estate or trust who by operation of law,
or under the terms of the Plan, or otherwise, is entitled to receive any Accrued
Benefit of a Participant under the Plan. A "designated Beneficiary" is any
individual designated or determined in accordance with Section 5.5, except that
it shall not include any person who becomes a beneficiary by virtue of the laws
of inheritance or intestate succession.
2.8 CASH-OUT
A "Cash-Out" may be involuntary or voluntary.
An involuntary Cash-Out is a distribution of Accrued Benefit to a
former Participant which meets the following requirements: (i) the former
Participant's entire non-forfeitable Accrued Benefit is distributed to him, (ii)
the present value of the non-forfeitable Accrued Benefit of the Participant does
not exceed $5,000, and (iii) the distribution is made on account of the
Employee's termination of participation in the Plan and no later than the end of
the first Plan Year following such termination.
A voluntary Cash-Out is a distribution of Accrued Benefits to a former
Participant which meets the following requirements: (i) the former Participant
has voluntarily elected to receive the
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distribution, and (ii) the distribution is made on account of the Employee's
termination of participation in the Plan and no later than the end of the first
Plan Year following such termination.
2.9 COMPENSATION
"Compensation" refers to all compensation paid during the Plan Year
under consideration as wages, salary or commissions by the Employer to an
Employee, during the time he was a Participant, including overtime payments and
bonuses but excluding director's fees and including amounts deferred pursuant to
IRC section 402(e)(3) (with respect to cash or deferred arrangements as defined
in section 401(k)(2)), section 402(h) (with respect to Simplified Employee
Pension Plans) or section 403(b), or contributed to any welfare benefit plans
maintained by the Employer through a reduction in the Employee's compensation
which, pursuant to IRC section 125, are not included in the gross income of the
Employee for the taxable year in which such amounts are contributed. It excludes
all contributions by the Employer to the Plan and to any other retirement or
deferred compensation plan maintained by the Employer (except amounts deferred
pursuant to IRC section 402(e)(3), section 402(h), or section 403(b) or
contributed pursuant to IRC section 125).
Compensation shall include only that compensation which is actually
paid to the Participant during the determination period. For purposes of this
Section, determination period shall mean the calendar year ending within the
Plan Year.
For Plan Years beginning after December 31, 1988 and before 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 $200,000. This limitation shall be adjusted by the Secretary at
the same time and in the same manner as under IRC section 415(d), except that
the dollar increase in effect on January 1 of any calendar year is effective for
years beginning in such calendar year and the first adjustment to the $200,000
limitation is effected on January 1, 1990. For Plan Years beginning on and after
January 1, 1994, the annual compensation of each Participant taken into account
under the Plan shall not exceed $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Code Section 401(a)(17)(B).
The cost of living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than 12 months, the annual Compensation limit described
in this paragraph will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.
If the Compensation for any prior determination period is taken into
account in determining an Employee's allocations or benefits for the current
determination period, the Compensation for such prior year is subject to the
applicable annual Compensation limit in effect for that prior year. For this
purpose, for years beginning before January 1, 1990, the applicable annual
Compensation limit is $200,000.
2.10 CONTRIBUTION PERCENTAGE
"Contribution Percentage" is the ratio, expressed as a percentage, of
after-tax contributions and matching contributions on behalf of an Eligible
Employee for the Plan Year to
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the Eligible Employee's Compensation for the portion of such Plan Year in which
the Participant was an Eligible Employee. However, matching contributions shall
not be taken into account to the extent they are forfeited either to correct
Excess Aggregate Contributions or because the contributions to which they relate
are Excess Deferral Amounts, Excess Contributions, or Excess Aggregate
Contributions. The Contribution Percentage of each Eligible Employee shall be
rounded to the nearest 100th of 1% of such Employee's Compensation.
2.11 ELECTIVE DEFERRALS
"Elective Deferrals" shall mean any Employer contributions made to the
Plan at the election of the 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 is the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in IRC section 401(k), any simplified employee
pension cash or deferred arrangement as described in IRC section 402(h)(1)(B),
any eligible deferred compensation plan under IRC section 457, any plan as
described under IRC section 501(c)(18), and any Employer contributions made on
the behalf of a Participant for the purchase of an annuity contract under IRC
section 403(b) pursuant to a salary reduction agreement. Elective Deferrals
shall not include any deferrals properly distributed as excess annual additions.
2.12 ELIGIBLE EMPLOYEE
"Eligible Employee" shall mean any Employee of the Employer who is
otherwise authorized under the terms of the Plan to have Elective Deferrals
allocated to his account for all or any portion of the Plan Year with respect to
computing the Average Actual Deferral Percentage. An Employee who would be
eligible to make Elective Deferrals but for a suspension due to a distribution,
a loan, or an election not to participate in the Plan, will not fail to be an
Eligible Employee for purposes of Sections 4.4, 4.5, 4.6, and 4.7 for a Plan
Year merely because the Employee may not make an Elective Deferral by reason of
such suspension. Further, an Employee will not fail to be an Eligible Employee
merely because the Employee may receive no additional annual additions pursuant
to Section 5.4.
2.13 EMPLOYEE
"Employee" shall mean any employee of the employer maintaining the Plan
or of any other employer required to be aggregated with such Employer under IRC
sections 414(b), (c), (m) or (o). An "Employee" is an individual who would be an
Employee but who is on a Leave of Absence. Directors acting solely in that
capacity and independent contractors shall not be Employees.
The term Employee shall also include any leased employee deemed to be
an Employee of any employer described in the previous paragraph as provided in
IRC sections 414(n) or (o).
The term "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 Section
414(n)(6) of the Code) 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 and benefits provided a leased employee
by the leasing organization
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which are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer.
A leased employee shall not be considered an Employee of the recipient
if: (i) such employee is covered by a money purchase pension plan providing: (1)
a nonintegrated employer contribution rate of at least 10% of compensation, as
defined in IRC section 415(c)(3), but including amounts contributed pursuant to
a salary reduction agreement which are excludable from the employee's gross
income under IRC section 125, section 402(e)(3), section 402(h), or section
403(b), (2) immediate participation, and (3) full and immediate vesting; and
(ii) leased employees do not constitute more than 20% of the recipient's
nonhighly compensated workforce.
2.14 EMPLOYER
The "Employer" shall mean Lodgian, Inc.
2.15 EMPLOYER ACCOUNT
The "Employer Account" is the separate account maintained for each
Participant to which all Employer contributions shall be allocated.
2.16 EMPLOYER MATCHING ACCOUNT
The "Employer Matching Account" is the separate account maintained for
each Participant to which all matching contributions shall be allocated.
2.17 EMPLOYER STOCK FUND
"Employer Stock Fund" is the fund that is reflected on the books and
records of the Plan as invested predominantly in stock of the Employer.
Participants may direct the investment of their contributions and account
balances to the Employer Stock Fund pursuant to Section 8.12 and any
discretionary contributions made by the Employer in Employer stock shall be held
in the Employer Stock Fund. This definition shall apply for Plan Years beginning
on and after January 1, 1999.
2.18 ERISA
"ERISA" refers to the Employee Retirement Income Security Act of 1974,
as amended.
2.19 EXCESS AGGREGATE CONTRIBUTIONS
"Excess Aggregate Contributions" shall mean the amount described in
Subsection 4.6(f).
2.20 EXCESS CONTRIBUTIONS
"Excess Contributions" shall mean the amount described in Subsection
4.5(e).
2.21 EXCESS DEFERRAL AMOUNT
"Excess Deferral Amount" shall mean the amount described in Subsection
4.4(c).
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2.22 [RESERVED]
2.23 FORFEITURE
Effective with respect to forfeitures that occur January 1, 1999 or
thereafter, "Forfeiture" refers to the amount of non-vested Accrued Benefits in
a Participant's Employer Account which shall be used to reduce Employer
contributions provided for under Sections 4.2 and 4.3, or to pay administrative
expenses of the Plan, at the discretion of the Employer.
2.24 HIGHLY COMPENSATED EMPLOYEE
The term "Highly Compensated Employee" includes highly compensated
active Employees and highly compensated former Employees. A highly compensated
active Employee means any Employee who (a) was a 5% owner (as defined in section
416(i)(1) of the Code) of the Employer at any time during the current or the
preceding Plan Year, or (b) for the preceding Plan Year had compensation from
the Employer in excess of $80,000 (as adjusted by the Secretary pursuant to
Section 415(d) of the Code, except that the base period shall be the calendar
quarter ending September 30, 1996).
A former Employee shall be treated as a Highly Compensated Employee if
(a) such Employee was a Highly Compensated Employee when such Employee separated
from service, or (b) such Employee was a Highly Compensated Employee at any time
after attaining age 55.
The determination of who is a Highly Compensated Employee will be made
in accordance with Section 414(q) of the Code and the regulations thereunder.
For purposes of this section, the term "compensation" means
compensation within the meaning of Section 415(c)(3) of the Code. The
determination will be made without regard to Sections 125, 402(e)(3), and
402(h)(1)(B) of the Code, and in the case of Employer contributions made
pursuant to a salary reduction agreement, without regard to Section 403(b) of
the Code.
2.25 HOUR OF SERVICE
"Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours will be
credited to the Employee for the computation period in which the duties are
performed;
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or Leave of Absence. No more than
501 Hours of Service will be credited under this Subsection (b) for any single
continuous period (whether or not such period occurs in a single computation
period). Hours under this Subsection (b) will be calculated and credited
pursuant to section 2530.200b-2 of the Department of Labor Regulations which is
incorporated herein by this reference;
(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 will not be credited both
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under Subsection (a) or Subsection (b), as the case may be, and under this
Subsection (c). These hours will be credited to the Employee for the computation
periods to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made; and
(d) Each hour prior to or after the effective date of this Plan
for which an Employee was directly or indirectly paid or entitled to be paid by
the Predecessor Employer.
Hours of Service will be credited for employment with other members of
an affiliated service group (under IRC section 414(m)), a controlled group of
corporations (under IRC section 414(b)), or a group of trades or businesses
under common control (under IRC section 414(c)) of which the adopting Employer
is a member, and any other entity required to be aggregated with the Employer
pursuant to IRC section 414(o).
Hours of service will also be credited for any individual considered an
Employee for purposes of this Plan under IRC section 414(n) or IRC section
414(o).
Solely for purposes of determining whether a One Year Break in Service,
as defined in Section 2.31, for participation and vesting purposes has occurred
in a computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service in accordance
with the second paragraph of Section 2.31.
Service will be determined on the basis of actual hours for which an
Employee is paid or entitled to payment.
If the Employer maintains the plan of a predecessor employer, service
with such employer will be treated as service for the Employer.
2.26 IRC
"IRC" refers to the Internal Revenue Code of 1986, as amended.
2.27 LEAVE OF ABSENCE
A "Leave of Absence" shall refer to that period during which the
Participant is absent without Compensation and for which the Administrative
Committee, in its sole discretion has determined him to be on a "Leave of
Absence" instead of having terminated his employment. (However, such discretion
of the Administrative Committee shall be exercised in a nondiscriminatory
manner.) In all events, a Leave of Absence by reason of service in the armed
forces of the United States shall end no later than the time at which a
Participant's reemployment rights as a member of the armed forces cease to be
protected by law and a Leave of Absence for any other reason shall end after 6
months, except that if the Participant resumes employment with the Employer
prior thereto, the Leave of Absence shall end on such date of resumption of
employment. The date that the Leave of Absence ends shall be deemed the
Termination Date if the Participant does not resume employment with the
Employer. In determining a Year of Service for Accrual of Benefits, all such
Leaves of Absence shall be considered to be periods when the Employee is a
Participant.
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2.28 NONELECTIVE CONTRIBUTIONS
"Nonelective Contributions" means the Employer contributions described
in Subsection 4.5(i).
2.29 NONHIGHLY COMPENSATED EMPLOYEE
A "Nonhighly Compensated Employee" shall mean an Employee of the
Employer who is not a Highly Compensated Employee.
2.30 NORMAL RETIREMENT AGE
The "Normal Retirement Age" shall be the date at which the Participant
attains 65 years of age.
2.31 ONE YEAR BREAK IN SERVICE
A "One Year Break in Service" means a Plan Year in which the
Participant has not completed more than 500 Hours of Service, except that in
determining a One Year Break in Service for purposes of eligibility, the initial
eligibility computation period is the 12-consecutive month period beginning on
the date of the Employee first performs an Hour of Service for the Employer
(employment commencement date). The succeeding 12-consecutive month periods
commence with the first Plan Year which commences prior to the first anniversary
of the Employee's employment commencement date (regardless of whether the
Employee is entitled to be credited with 1,000 Hours of Service during the
initial eligibility computation period).
Solely for purposes of determining whether a One Year Break in Service,
as defined in this Section 2.31, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be determined, 8 Hours of
Service per day of such absence. For purposes of this paragraph, an absence (1)
by reason of the pregnancy of the individual, (2) by reason of a birth of a
child of the individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such individual, or
(4) for purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service credited under this
paragraph shall be credited (1) in the computation period in which the absence
begins if the crediting is necessary to prevent a break in service in that
period, or (2) in all other cases, in the following computation period.
2.32 PARTICIPANT
A "Participant" shall refer to every Employee or former Employee who
has met the applicable participation requirements of Article III.
2.33 PARTICIPANT DEFERRAL ACCOUNT
The "Participant Deferral Account" is the separate account, if
applicable, maintained for each Participant to which Elective Deferrals are
allocated. If applicable there shall be a post-1986 Participant Deferral Account
as described in Section 7.1.
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2.34 PLAN
"Plan" refers to this Lodgian, Inc. 401(k) Plan.
2.35 PLAN ADMINISTRATOR
The "Plan Administrator" shall be the Employer, unless a different
person is designated Plan Administrator in a resolution adopted by the board of
directors of the Employer, and such person accepts the designation in writing.
2.36 PLAN YEAR
A "Plan Year" is the period from the first day of January to the last
day of December, annually.
2.37 PREDECESSOR EMPLOYER
"Predecessor Employer" refers to Servico Corporation and any other
employer required to be aggregated with Servico Corporation under IRC sections
414(b), (c), (m) or (o).
2.38 QUALIFIED JOINT AND SURVIVOR ANNUITY
A "Qualified Joint and Survivor Annuity" is an immediate annuity for
life of the Participant with a survivor annuity for the life of the spouse which
is not less than 50% and not more than 100% of the amount of the annuity which
is payable during the joint lives of the Participant and the spouse and which is
the amount of benefit which can be purchased with the Participant's vested
account balance. The percentage of the survivor annuity under the Plan shall be
50%.
2.39 [RESERVED]
2.40 RETIREMENT
"Retirement" refers to the termination of employment of a Participant
who has attained at least the Normal Retirement Age. Effective as of September
13, 1999, the Participant may work beyond Normal Retirement Age, in which case
Employer contributions and Forfeitures (to the extent not used to pay
administrative expenses of the Plan) shall continue to be allocated to the
Employer Account of the Participant.
2.41 ROLLOVER CONTRIBUTION
"Rollover Contribution" means:
(a) amounts transferred to this Plan directly from another
qualified corporate or qualified noncorporate plan;
(b) lump sum distributions received by an Employee from another
qualified plan which are eligible for tax-free rollover treatment and which are
transferred by the Employee to this Plan within sixty (60) days following his
receipt thereof;
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(c) amounts transferred to this Plan from a conduit individual
retirement account, provided that such account has no assets other than assets
which were previously distributed to the Employee by another qualified plan; and
further provided that such amounts met the applicable requirements of IRC
section 408(d)(3) for rollover treatment on transfer to the conduit individual
retirement account; and
(d) amounts distributed to an Employee from a conduit individual
retirement account meeting the requirements of Subsection (c) above which are
transferred by the Employee to this Plan within sixty (60) days of his receipt
from such account.
2.42 TERMINATION DATE
The "Termination Date" shall be the date on which the earliest of the
following events occurs: (a) a Participant's retirement, (b) a Participant's
termination of employment as a result of Total and Permanent Disability, (c) a
Participant's death, or (d) a Participant's termination of employment for any
other reason.
2.43 TOTAL AND PERMANENT DISABILITY
"Total and Permanent Disability" shall refer to the Participant
suffering from a physical or mental condition as determined by the
Administrative Committee, based upon appropriate medical reports and
examinations, may be expected to result in death or be of long and indefinite
duration and which renders the Participant incapable of performing his customary
duties for the Employer.
2.44 TOTAL SERVICE FOR VESTING
"Total Service for Vesting" shall mean the sum of each separate Year of
Service for Vesting credited to the Participant. In the case of a Participant
who has 5 consecutive One Year Breaks in Service, all Years of Service for
Vesting after such One Year Breaks in Service will be disregarded for the
purpose of vesting the Employer-derived account balance that accrued before such
breaks, but both pre-break and post-break service will count for the purposes of
vesting the Employer-derived account balance that accrues after such breaks.
Both accounts will share in the earnings and losses of the Trust Fund.
In the case of a Participant who does not have 5 consecutive One Year
Breaks in Service, both the pre-break and post-break service will count in
vesting both the pre-break and post-break Employer-derived account balance.
2.45 TRUST
"Trust" means the Trust created under this Plan.
2.46 TRUST FUND
The "Trust Fund" consists of the Employer and Participant contributions
held by the Plan and any income or appreciation thereon.
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2.47 YEAR OF SERVICE FOR ACCRUAL OF BENEFITS
A "Year of Service for Accrual of Benefits" means a Plan Year during
which the Employee had not less than 1,000 Hours of Service as a Participant. If
the Participant entered the Plan other than on the first day of the Plan Year,
all Hours of Service rendered by the Participant during that Plan Year, whether
or not rendered as a Participant, shall be treated as if they were Hours of
Service as a Participant.
Notwithstanding the preceding paragraph, if the number of Employees who
have less than 1,000 but more than 500 Hours of Service as a Participant for the
Plan Year is such that the Plan would not otherwise meet the requirements of IRC
Section 410(b) (pertaining to minimum coverage), then the 1,000 Hours of Service
requirement of the first paragraph of this Section will be reduced to 501 Hours
of Service, but only to the extent necessary to permit a sufficient additional
number of Employees to be credited with a Year of Service for Accrual of
Benefits to meet the requirements of IRC Section 410(b). The Employees (or
former Employees) so qualifying shall be determined by first selecting the
Employee with the lowest number of Hours of Service (more than 500) for the Plan
Year and continuing in ascending order until a sufficient number of Employees
have qualified. If Section 4.3 requires that an individual be an Employee on the
last day of the Plan Year, that requirement shall be waived for purposes of this
paragraph.
2.48 A YEAR OF SERVICE FOR PARTICIPATION
A "Year of Service for Participation" means the 12-consecutive month
period (computation period) during which the Employee completes at least 1,000
Hours of Service, which shall be determined as follows:
For purposes of determining a Year of Service for Participation, the
initial eligibility computation period is the 12-consecutive month period
beginning on the date of the Employee first performs an Hour of Service for the
employer (employment commencement date).
The succeeding 12-consecutive month periods commence with the first
Plan Year which commences prior to the first anniversary of the Employee's
employment commencement date regardless of whether the Employee is entitled to
be credited with 1,000 Hours of Service during the initial eligibility
computation period. An Employee who is credited with 1,000 Hours of Service in
both the initial eligibility computation period and the first Plan Year which
commences prior to the first anniversary of the Employee's initial eligibility
computation period will be credited with two Years of Service for Participation.
2.49 YEAR OF SERVICE FOR VESTING
A "Year of Service for Vesting" shall mean a Plan Year during which the
Employee had not less than 1,000 Hours of Service.
ARTICLE III
ELIGIBILITY TO PARTICIPATE
3.1 INITIAL ENTRY
(a) Except as provided in subsections (b) through (d) below, each
Employee who has attained age twenty-one (21) and completed six months of
continuous employment shall become
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a participant on the earlier of the next January 1st or July 1st that occurs
after meeting such criteria, provided that he is an Employee on such date and
completed:
(i) at least 500 Hours of Service during the six
consecutive month period immediately preceding his Entry Date, if the Entry Date
is July 1st; or
(ii) at least 500 Hours of Service during the twelve
consecutive month period immediately preceding his Entry Date, if the Entry Date
is January 1st.
(b) Any Employee who does not meet the criteria for entry into the
Plan provided for in subsection (a), above, shall become a Participant on the
next January 1st or July 1st that occurs following completion of a Year of
Service for participation and attainment of age twenty-one (21), provided that
he is an Employee on such date.
(c) Notwithstanding the preceding paragraphs of this Section 3.1,
an individual shall not be eligible to participate in the Plan during any time
period for which he or she is:
(i) leased employee, as defined in IRC Section 414(n);
(ii) included in a unit of Employees covered by a
collective bargaining agreement between Employee representatives and one or more
employers, if there is evidence that retirement benefits were the subject of
good faith bargaining between such Employee representatives and the employer,
except to the extent that such good faith bargaining results in the
determination that such Employees shall be eligible for participation hereunder;
(iii) or a nonresident alien (within the meaning of IRC
Section 7701(b)(1)(B)) who receives no earned income (within the meaning of IRC
Section 911(d)(2)) from the Employer which constitutes income from sources
within the United States (within the meaning of IRC Section 861(a)(3));
(iv) those Employees who regularly perform services at any
of the locations listed on Appendix B to the Plan; or
(v) performing services for the Employer or a Worksite
Employer and does not receive an IRS Form W-2 with respect to the payment for
such services.
(d) In the event an Employee who is not a member of an eligible
class of Employees becomes a member of an eligible class, such Employee will
participate on the first day of the month after becoming a member of an eligible
class if such Employee has satisfied the minimum age and service requirements
and would have otherwise previously become a Participant.
(e) Effective May 1, 1999, notwithstanding anything to the
contrary above, each Employee who makes a Rollover Contribution to the Plan of
substantially all of the amount received from another qualified plan before
completion of six months of continuous employment shall become eligible to
participate in the Plan for purposes of making elective deferrals pursuant to
Section 4.1 (but not for purposes of sharing in the allocation of Matching
Contributions pursuant to Section 4.2) on the Entry Date coinciding with or next
following the date of the Plan's acceptance of the Rollover Contribution,
provided he is an Employee on such date. An Employee who makes such a Rollover
Contribution shall be eligible to share in the allocation of the
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Employer's Matching Contribution and any other contribution effective as
provided in Section 3.1(a), above.
3.2 RESUMPTION OF PARTICIPATION
If a Participant incurs at least a One Year Break in Service his active
participation in the Plan shall be suspended until the sooner of the time he
completes one Hour of Service or a Year of Service for Participation following
such One Year Break in Service. Following such One Year Break in Service and
upon then completing a Year of Service for Participation, measured from his
reemployment commencement date, or upon the sooner of his completing one Hour of
Service or a Year of Service for Participation following such One Year Break in
Service the Participant will be readmitted to active participation in the Plan
retroactive to the beginning of such Year of Service for Participation. Such
Year of Service will be measured by the 12-consecutive month period beginning on
an Employee's reemployment commencement date and, if necessary, Plan Years
beginning with the Plan Year which includes the first anniversary of the
reemployment commencement date. For purposes of this Plan, the reemployment
commencement date is the first day on which the Employee is credited with an
Hour of Service for the performance of duties after the first eligibility
computation period in which the Employee incurs a One Year Break in Service.
In the event a Participant is no longer a member of an eligible class
of employees and becomes ineligible to participate but has not incurred a One
Year Break in Service, such employee will participate immediately upon returning
to an eligible class of employees. If such Participant incurs a One Year Break
in Service, eligibility will be determined under the break in service rules of
the Plan.
3.3 ACQUISITIONS
Effective September 13, 1999, notwithstanding Section 3.1 above, and
except as may be provided otherwise by the Employer, individuals who become
Employees as the result of an acquisition, merger, consolidation, or any other
similar transaction shall receive credit for service performed for the
Employee's previous employer for purposes of determining (a) such Employee's
eligibility to participate in the Plan and (b) such Employee's vested percentage
in his or her Employer account, if the Employee had terminated service and was
rehired, only service after the most recent date of rehire shall be counted. To
the extent that the previous employer did not maintain records to determine
precisely the amount of credit to be received under this Section, or if such
records were maintained on a basis other than as provided in this Plan, the
Administrative Committee shall determine such credit from reasonably available
records on a basis that as closely as possible approximates the service
crediting provisions of this Plan, in its discretion and in a nondiscriminatory
manner. The Employer may provide, in an amendment or Appendix to the Plan, such
other provisions concerning the rights of such Employees to their benefit under
this Plan, including any amounts transferred from a previous employer's plan, as
the Employer deems appropriate.
ARTICLE IV
CONTRIBUTIONS TO THE TRUST
4.1 ELECTIVE DEFERRALS BY PARTICIPANTS
For a period of 30 days prior to each Plan Year, and for such other
periods as it may establish in a nondiscriminatory manner, the Administrative
Committee will permit each
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Participant (including Employees who are expected to be Participants during the
following Plan Year) to elect to defer up to 10% of his Compensation. Such
deferred amount will be contributed to the Plan and allocated to the Participant
Deferral Account. No Participant shall be required to make a deferral.
A Participant who has received a hardship distribution pursuant to
Section 7.1 shall be suspended from making an Elective Deferral, and shall be
limited in the amount of Elective Deferrals he may make in the taxable year
immediately following the taxable year of the hardship distribution, in
accordance with Section 7.1.
4.2 MATCHING CONTRIBUTIONS
(a) Subject to the limitations contained in Sections 4.6, 4.7 and
5.4, the Employer may contribute with respect to each Plan Year on behalf of
each Employee an amount equal to that percentage of the Participant's
Compensation contributed as an Elective Deferral (which is not subsequently
returned to the Participant pursuant to a corrective distribution described in
Subsection 4.5(b)) as the Board of Directors of the Employer may determine from
time to time. This contribution may be either in cash or in stock of the
Employer, as the Board of Directors of the Employer may determine from time to
time.
(b) Any Employer contribution shall be allocated to each
Participant who is an Employee on the last day of the Plan Year and who has a
Year of Service for Accrual of Benefits for the Plan Year. For purposes of
determining whether a Participant is employed on the last day of the Plan Year,
a Participant who terminated employment before the last day of the Plan Year on
account of death, Total and Permanent Disability, or Retirement shall be
considered employed on the last day of the Plan Year.
(c) In addition, if the requirements of Subsection 4.2(d) are met,
the Employer shall contribute to the Plan as of the end of the succeeding Plan
Year an amount equal to such percentage as the Board of Directors of the
Employer may determine of the sum (but not less than zero) of (i) and (ii),
below, reduced as provided in Subsection 4.2(e) and subject to the limitation
described in Subsection 4.2(f). For purposes of the preceding sentence, (i) and
(ii) are as follow--
(i) is the total amount of the Participant's Elective
Deferrals during the Plan Year that the Participant directs for investment in
the Employer Stock Fund, and
(ii) is the sum (even if less than zero) of (A) and (B)
where --
(A) is the total amount of the Participant's
accounts that is transferred pursuant to the Participant's direction to the
Employer Stock Fund during the Plan Year, as described in Subsection 4.2(g), and
(B) is the total amount of the Participant's
accounts that is transferred pursuant to the Participant's direction from the
Employer Stock Fund during the Plan Year, as described in Subsection 4.2(g).
(d) The requirements of this Subsection are as follows:
(i) The Employer made a matching contribution that was
allocated to the Participant's Employer Account for the Plan Year.
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(ii) The Participant is an Employee on the last day of the
succeeding Plan Year. For purposes of determining whether a Participant is
employed on the last day of the succeeding Plan Year, a Participant who
terminated employment before the last day of the succeeding Plan Year on account
of death, Total and Permanent Disability, or Retirement shall be considered
employed on the last day of the succeeding Plan Year.
(iii) The Participant has a Year of Service for Accrual of
Benefits for the succeeding Plan Year.
(e) The reduction to the Employer's contribution in the succeeding
Plan Year referred to in Subsection 4.2(c) is as follows. If the sum of (i),
(ii) and (iii), below, is less than zero, then the Employer's contribution in
the succeeding Plan Year shall be reduced by 50% of such sum expressed as a
positive figure. For purposes of the preceding sentence,
(i) is the total amount of Participant's Elective
Deferrals during the succeeding Plan Year that the Participant directs for
investment in the Employer Stock Fund,
(ii) is the total amount of the Participant's accounts
that is transferred pursuant to the Participant's direction to the Employer
Stock Fund during the succeeding Plan Year, as described in Subsection 4.2(g),
and
(iii) is the total amount of the Participant's accounts
that is transferred pursuant to the Participant's direction from the Employer
Stock Fund during the succeeding Plan Year, as described in Subsection 4.2(g).
(f) Any matching contribution shall not exceed 10% of the
Compensation of the applicable Participant. The limitation on the Employer's
contribution in the succeeding Plan Year referred to in Subsection 4.2(c) is as
follows. The Employer's contribution in such succeeding Plan Year shall not
exceed the excess of (i) over (ii) where --
(i) is the lesser of
(A) the Participant's Elective Deferrals for the
Plan Year, and
(B) 10% of the Participant's Compensation for
the Plan Year; and
(ii) is the Employer's matching contribution made pursuant
to Subsection 4.2(a) or (b), as applicable, for the Plan Year.
In addition, the Employer shall not make the contribution referred to in
Subsection 4.2(c) in the succeeding Plan Year for any Participant with respect
to whom such contribution would cause any of the limitations of Section 4.6 to
be exceeded for the Plan Year.
(g) An amount shall be considered as transferred to the Employer
Stock Fund if it is transferred from another investment choice available to the
Participant or from another source such as a rollover from another qualified
retirement plan or an individual retirement account or annuity, or is a
redeposit of any distribution that occurred within the same Plan Year. An amount
shall be considered as transferred from the Employer Stock Fund if it is
transferred to another investment choice available to the Participant or
transferred or liquidated to provide a loan or distribution to the Participant,
other than a corrective distribution referred to in Sections 4.5 and 4.6.
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(h) Matching contributions shall be vested in accordance with the
Plan's general vesting schedule contained in Section 6.3. In any event, matching
contributions shall be fully vested at Normal Retirement Age, upon the complete
or partial termination of the profit sharing portion of this Plan, or upon the
complete discontinuance of Employer contributions. Forfeitures of matching
contributions, other than Excess Aggregate Contributions, shall be made in
accordance with Section 6.3.
4.3 EMPLOYER CONTRIBUTIONS TO PARTICIPANTS
Subject to the rights of the Employer under Article XI, the Employer
may make a contribution to the Trust beginning with the first Plan Year ending
on or after the effective date of the Plan. The amount of the contribution shall
be discretionary with the Employer and shall be paid to the Trustee on or before
the time required by law for filing the Employer's federal income tax return
(including extensions) for the year with respect to which the contribution is
made. However, no Employer contributions may be made in any Plan Year to the
extent that they would not be deductible.
All contributions by the Employer for any Plan Year shall be allocated
as of the last day of such year to the Employer Account of each Participant who
is an Employee on such date (except an Employee who terminated employment before
the last day of the Plan Year on account of death, Total and Permanent
Disability or Retirement), and who has a Year of Service for Accrual of Benefits
for the Plan Year, in the same proportion that each such Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year. Effective September 13, 1999, all Forfeitures,
if any, during such year, shall be used to reduce Employer contributions
provided for under Section 4.2 and 4.3 or to pay administrative expenses of the
Plan, at the discretion of the Employer.
4.4 ANNUAL LIMITATION ON PARTICIPANT ELECTIVE DEFERRALS
(a) No Participant shall be permitted to make Elective Deferrals
under this Plan during any calendar year in excess of $7,000 (including any
other elective deferrals within the meaning of IRC section 402(g)(3) in the case
of all other plans, contracts, or arrangements of the Employer), adjusted in the
manner described in IRC section 402(g)(5) for the calendar year.
(b) Notwithstanding any other provision of the Plan, Excess
Deferral Amounts and income allocable thereto shall be distributed no later than
each April 15th to Participants who claim such Excess Deferral Amounts for the
preceding calendar year. A distribution pursuant to this Subsection 4.4(b) of
Excess Deferral Amounts and income, gains and losses allocable thereto shall be
made without regard to any consent otherwise required under Section 7.3 or any
other provision of the Plan. A distribution pursuant to this Subsection 4.4(b)
of Excess Deferral Amounts and income, gains and losses allocable thereto shall
not be treated as a distribution for purposes of determining whether the
distribution required by Section 7.3(b)--(h) is satisfied. Any distribution
under this Subsection 4.4(b) of less than the entire Excess Deferral Amount and
income, gains and losses allocable thereto shall be treated as a pro rata
distribution of Excess Deferral Amounts and income, gains and losses allocable
thereto. In no case may an Employee receive from the Plan as a corrective
distribution for a taxable year under this Subsection 4.4(b) an amount in excess
of the individual's total Elective Deferrals under the Plan for the taxable
year.
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(c) "Excess Deferral Amount" shall mean those Elective Deferrals
that are includible in a Participant's gross income under IRC section 402(g) to
the extent such Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under IRC section 402(g). An Excess Deferral Amount shall be
treated as annual additions under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the Participant's
taxable year.
(d) The Participant's claim made pursuant to Subsection 4.4(b)
shall be in writing; shall be submitted to the Administrative Committee no later
than March 1 with respect to the preceding calendar year; shall specify the
Participant's Excess Deferral Amount for the preceding calendar year; and shall
be accompanied by the Participant's written statement that if such amounts are
not distributed, such Excess Deferral Amount, when added to amounts deferred
under other plans or arrangements described in IRC sections 401(k), 408(k), or
403(b), exceeds the limit imposed on the Participant by IRC section 402(g) for
the calendar year in which the deferral occurred. A Participant is deemed to
notify the Administrative Committee of any Excess Deferral Amount that arises by
taking into account only those Elective Deferrals made to this Plan and any
other plans of this Employer.
(e) The Excess Deferral Amount shall be adjusted for income or
loss. The income or loss allocable to the Excess Deferral Amount for the taxable
year of the individual is equal to the income or loss for the taxable year of
the individual allocable to the Participant's Elective Deferrals multiplied by a
fraction, the numerator of which is such Participant's Excess Deferral Amount
for the taxable year, and the denominator is equal to the sum of the
Participant's Elective Deferral Account as of the beginning of the taxable year,
plus the Participant's Elective Deferrals for the taxable year.
(f) The Excess Deferral Amount which may be distributed under
Subsection 4.4(b) with respect to an Employee for a taxable year shall be
reduced by any Excess Contributions previously distributed with respect to such
Employee for the Plan Year beginning with or within such taxable year. In the
event of a reduction under this Subsection 4.4(f), the amount of Excess
Contributions included in the gross income of the Employee and reported by the
Employer as a distribution of Excess Contributions shall be reduced by the
amount of the reduction under this Subsection 4.4(f).
4.5 AVERAGE ACTUAL DEFERRAL PERCENTAGE LIMITATION
(a) The Average Actual Deferral Percentage for the current Plan
Year for Eligible Employees who are Highly Compensated Employees may not exceed
the greater of:
(i) the Average Actual Deferral Percentage for the
current Plan Year for all Eligible Employees who are Non-highly Compensated
Employees multiplied by 1.25, or
(ii) the Average Actual Deferral Percentage for the
current Plan Year for all Eligible Employees who are Non-highly Compensated
Employees multiplied by 2.0, but not more than 2 percentage points in excess of
the Average Actual Deferral Percentage of Eligible Employees who are Non-highly
Compensated Employees.
For the 1998 Plan Year only, subsections (i) and (ii) shall be read by
substituting "the prior Plan Year" for "the current Plan Year."
If any Highly Compensated Employee is eligible to make Elective Deferrals, to
make after-tax contributions or to receive matching contributions, the
disparities between the Average Actual Deferral Percentages of the respective
groups shall be reduced as described in Section 4.7.
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(b) Should neither limitation (i) nor (ii) in Subsection 4.5(a) be
met with respect to a Plan Year 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. If such excess amounts are distributed
more than 2-1/2 months after the last day of the Plan Year in which such excess
amounts arose, a 10% excise tax will be imposed on the employer maintaining the
plan with respect to such amounts. The Administrative Committee will distribute
to each Highly Compensated Employee his respective share of the Excess
Contributions, starting with the Highly Compensated Employee who has the highest
amount of Elective Deferrals, reducing his Elective Deferrals to the next
highest amount of Elective Deferrals then, if necessary, reducing the Elective
Deferrals of the Highly Compensated Employee(s) at the next highest Elective
Deferral level (including the Elective Deferrals of the Highly Compensated
Employees(s) whose Elective Deferrals the Administrative Committee already has
reduced), and continuing in this manner until the total Excess Contributions for
the group have been distributed.
Excess Contributions shall be treated as annual additions under the
Plan. A distribution of Excess Contributions and income, gains and losses
allocable thereto shall be made without regard to any consent otherwise required
under Section 7.3 or any other provision of the Plan. A distribution pursuant to
Paragraph 4.5(b) of Excess Contributions and income, gains and losses allocable
thereto shall not be treated as a distribution for purposes of determining
whether the distribution required by Subsection 7.3(b)--(h) is satisfied. Any
distribution under Paragraph 4.5(b) of less than the entire Excess Contribution
and income, gains and losses allocable thereto shall be treated as a pro rata
distribution of Excess Contributions and income, gains and losses allocable
thereto. In no event shall Excess Contributions for a Plan Year remain
unallocated or be allocated to a suspense account for allocation to one or more
employees in any future Plan Year.
With respect to the distribution of Excess Contributions as provided
above, such distribution shall be made first from unmatched Elective Deferrals
and, thereafter, simultaneously from Elective Deferrals which are matched. In
accordance with Plan Section 4.2(a), any portion of a Participant's Elective
Deferral that is distributed in a corrective distribution provided in this
Section is not eligible for an Employer Matching Contribution.
(c) The Average Actual Deferral Percentage for any Participant who
is a Highly Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective Contributions or qualified
matching contributions, or both, if treated as Elective Deferrals for purposes
of the test described in Subsection (a)) allocated to his or her accounts under
two or more arrangements described in IRC section 401(k), that are maintained by
the Employer, shall be determined as if such Elective Deferrals (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.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under regulations under IRC section 401(k).
In the event that this Plan satisfies the requirements of IRC sections
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 sections of the
Internal Revenue Code only if aggregated with this Plan, then this Section shall
be applied by determining the Average Actual Deferral Percentage of employees as
if all such plans were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy IRC section 401(k) only if
they have the same Plan Year.
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(d) [Reserved]
(e) For purposes of this Plan, "Excess Contributions" shall mean,
with respect to any Plan Year, the excess of:
(i) The aggregate amount of Employer contributions
actually taken into account in computing the Average Actual Deferral Percentage
of Highly Compensated Employees for such Plan Year, over
(ii) The maximum amount of such contributions permitted by
the Average Actual Deferral Percentage test (determined by reducing
contributions made on behalf of Highly Compensated Employees in order of the
Average Deferral Percentages, beginning with the highest of such percentages).
In no case shall the amount of Excess Contributions for a Plan Year with respect
to any Highly Compensated Employee exceed the amount of Elective Deferrals made
on behalf of such Highly Compensated Employee for such Plan Year.
(f) Excess Contributions shall be adjusted for income or loss. The
income or loss allocable to Excess Contributions is equal to the income or loss
allocable to the Participant's Elective Deferral Account (and, if applicable,
the Qualified Nonelective Contribution Account or the qualified Employer
Matching Account or both) for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Contributions for the year, and
the denominator is equal to the sum of the Participant's account balance
attributable to Elective Deferrals (and Qualified Nonelective Contributions or
qualified matching contributions, or both, if any of such contributions are
included in the Average Actual Deferral Percentage test) as of the beginning of
the Plan Year, plus the Participant's Elective Deferrals (and Qualified
Nonelective Contributions or qualified matching contributions, or both, if any
of such contributions are included in the Average Actual Deferral Percentage
test) for the Plan Year.
(g) Coordination of Excess Contributions with Distribution of
Excess Deferrals.
(i) The amount of Excess Contributions to be distributed
under Subsection 4.5(b) with respect to a Highly Compensated Employee for a Plan
Year shall be reduced by any Excess Deferral Amount previously distributed in
accordance with Subsection 4.4(b) to such Participant for the Participant's
taxable year ending with or within such Plan Year.
(ii) The Excess Deferral Amount that may be distributed
under Subsection 4.4(b) with respect to an Employee for a taxable year shall be
reduced by any Excess Contributions previously distributed with respect to such
Employee for the Plan Year beginning with or within such taxable year. In the
event of a reduction under this Paragraph (g)(ii), the amount of Excess
Contributions included in the gross income of the Employee and the amount of
Excess Contributions reported by the Employer as includable in the gross income
of the Employee shall be reduced by the amount of the reduction under Subsection
4.4(f).
(h) [Reserved]
(i) Should Subsection 4.5(b) be applicable with respect to a Plan
Year, the Employer may, in lieu of or in conjunction with the reductions
described in Subsection 4.5(b), contribute an additional amount (not limited to
the amount needed to meet limitation (i) or (ii)) as a Nonelective Contribution,
which shall be allocated, at the election of the Employer, only to Nonhighly
Compensated Employees who made or were eligible to make, Elective Deferrals for
such Plan
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Year. Such amounts shall, at the election of the Employer, be allocated either
(i) in proportion to the Compensation of such individuals, or (ii) in proportion
to the Elective Deferrals of such individuals, or (iii) pro rata to each of such
individuals. Contributions made pursuant to this Subsection (i) shall be 100%
vested at all times and shall be subject to the same limitations as to
withdrawal and distribution as Elective Deferrals.
(j) For purposes of determining the test described in this
Subsection (a), Elective Deferrals, Qualified Nonelective Contributions and
qualified matching contributions must be made before the last day of the
twelve-month period immediately following the Plan Year to which contributions
relate.
(k) The Employer shall maintain records sufficient to demonstrate
satisfaction of the test described in this Section 4.5 and the amount of
Qualified Nonelective Contributions or qualified matching contributions, or
both, used in such test.
(l) The determination and treatment of the Average Actual Deferral
Percentage amounts of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
4.6 AVERAGE CONTRIBUTION PERCENTAGE LIMITATION
(a) The Average Contribution Percentage for Eligible Employees who
are Highly Compensated Employees may not exceed the greater of:
(i) the Average Contribution Percentage for all Eligible
Employees who are Non-Highly Compensated Employees for the Plan Year multiplied
by 1.25, or
(ii) the Average Contribution Percentage for all Eligible
Employees who are Non-Highly Compensated Employees for the Plan Year multiplied
by 2.0, but not more than 2 percentage points in excess of the Average
Contribution Percentage for Eligible Employees who are Non-Highly Compensated
Employees.
If any Highly Compensated Employee is eligible to make Elective Deferrals and is
eligible to make after-tax contributions or to receive matching contributions,
the disparities between the Average Contribution Percentages of the respective
groups will be reduced in accordance with Section 4.7.
(b) The Contribution Percentage for any Eligible Employee who is a
Highly Compensated Employee for the Plan Year and who is eligible to make
after-tax contributions or to receive matching contributions allocated to his
account under two or more plans to which contributions to which IRC section
401(m) applies that are maintained by the Employer or an Affiliated Employer
shall be determined as if all such after-tax contributions and matching
contributions were made under a single plan for purposes of this Section 4.6.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under regulations under IRC section 401(m).
(c) In the event this Plan satisfies the requirements of IRC
section 410(b) only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of IRC section 410(b) only if
aggregated with this Plan, then this Section 4.6 shall be applied by determining
the Contribution Percentage of Eligible Employees as if all such plans were a
single plan.
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(d) [Reserved]
(e) Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if the Participant is not 100% vested in his or her Employer
Matching Account pursuant to Section 6.3 or, if the Participant is 100% vested
in his or her Employer Matching Account, distributed no later than the last day
of each Plan Year to Participants to whose accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. 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% excise tax will
be imposed on the Employer maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as annual additions under the
Plan. A distribution of Excess Aggregate Contributions and income, gains and
losses allocable thereto shall be made without regard to any consent otherwise
required under Section 7.3 or any other provision of the Plan. A distribution
pursuant to this Subsection 4.6(e) of Excess Aggregate Contributions and income,
gains and losses allocable thereto shall not be treated as a distribution for
purposes of determining whether the distributions required by Subsections
7.3(b)--(h) are satisfied.
(f) For purposes of this Plan, "Excess Aggregate Contributions"
shall mean, with respect to any Plan Year, the excess of:
(i) The aggregate Contribution Percentage Amounts taken
into account in computing the numerator of the Average Contribution Percentage
actually made on behalf of Highly Compensated Employees for such Plan Year, over
(ii) The maximum Contribution Percentage Amounts permitted
by the Average Contribution Percentage test (determined by 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 Deferral Amounts
pursuant to Section 4.4 and then determining Excess Contributions pursuant to
Section 4.5. In no case shall the amount of Excess Aggregate Contributions with
respect to any Highly Compensated Employee exceed the amount of after-tax
contributions and matching contributions made on behalf of such Highly
Compensated Employee for such Plan Year.
(g) Excess Aggregate Contributions shall be adjusted for income or
loss. The income or loss allocable to Excess Aggregate Contributions Amount is
equal to the Participant After-Tax Account, Employer Matching Account (if any,
and if all amounts therein are not used in the Average Actual Deferral
Percentage test) and, if applicable, Qualified Nonelective Contribution Account
and Elective Deferral Account of the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate Contributions for the
Plan Year, and the denominator is equal to the sum of the Participant's account
balance(s) attributable to after-tax contributions, matching contributions and,
if applicable, Qualified Nonelective Contributions and Elective Deferrals as of
the beginning of the Plan Year, plus the after-tax contributions, matching
contributions and, if applicable, Qualified Nonelective Contributions and
Elective Deferrals for the Plan Year.
(h) [Reserved]
(i) Excess Aggregate Contributions shall be forfeited, if
forfeitable. If nonforfeitable, the Administrative Committee will distribute to
each Highly Compensated Employee his respective
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share of the Excess Aggregate Contributions, starting with the Highly
Compensated Employee who has the highest amount of after-tax or matching
contributions, reducing his after-tax or matching contributions to the next
highest amount of after-tax or matching contributions then, if necessary,
reducing the after-tax or matching contributions of the Highly Compensated
Employee(s) at the next highest after-tax or matching contribution level
(including the after-tax or matching contributions of the Highly Compensated
Employees(s) whose after-tax or matching contributions the Administrative
Committee already has reduced), and continuing in this manner until the total
Excess Aggregate Contributions for the group have been distributed.
(j) Effective September 13, 1999, Forfeitures of Excess Aggregate
Contributions shall be applied to reduce Employer contributions or to pay
administrative expenses of the Plan, at the discretion of the Employer.
(k) Notwithstanding the foregoing, no forfeitures arising under
this Section 4.6 shall remain unallocated or be allocated to a suspense account
for allocation to one or more Employees in any future Plan Year.
(l) Nothing contained in this Article IV shall prevent the
Administrative Committee from reducing the rate of after-tax contributions
during the Plan Year for Highly Compensated Employees in order to meet the test
of Subsection 4.6(a).
4.7 MULTIPLE USE OF ALTERNATIVE LIMITATION
(a) The Average Actual Deferral Percentage or Average Contribution
Percentage of Highly Compensated Employees shall be adjusted as described in
Subsection 4.7(b) below if all of the following conditions of this Subsection
4.7(a) apply --
(i) One or more Highly compensated Employees of the
Employer or an Affiliated Employer are eligible to participate both in an IRC
section 401(k) arrangement and in a plan maintained by the Employer or an
Affiliated Employer subject to IRC section 401(m);
(ii) The sum of the Average Actual Deferral Percentage of
all Eligible Employees under the plans described in Paragraph (a)(i) who are
Highly Compensated Employees and the Average Contribution Percentage of the
entire group of Eligible Employees who are Highly Compensated Employees exceeds
the Aggregate Limit described in Subsection 4.7(e);
(iii) The Average Actual Deferral Percentage of the entire
group of Eligible Employees who are Highly Compensated Employees exceeds the
amount described in Paragraph 4.5(a)(i); and
(iv) The Average Contribution Percentage of the entire
group of Eligible Employees who are Highly Compensated Employees exceeds the
amount described in Paragraph 4.6(a)(i).
(b) The Administrative Committee shall elect to reduce either the
Average Actual Deferral Percentage or the Average Contribution Percentage of the
entire group of Eligible Employees who are Highly Compensated Employees in
accordance with this Subsection 4.7(b). The amount of the reduction to the
Average Actual Deferral Percentage of the entire group of Eligible Employees who
are Highly Compensated Employees shall, if elected, be calculated and
accomplished in the manner described in Subsection 4.5(e) or the amount of the
reduction to the Average Contribution Percentage of the entire group of Eligible
Employees who are Highly Compensated Employees shall, if elected, be calculated
and accomplished in the manner described
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in Subsection 4.6(f), so that in either case the Aggregate Limit described in
Subsection 4.7(e) shall not be exceeded. The Administrative Committee may elect
to reduce the Actual Deferral Percentage or the Contribution Percentage either
for all Highly Compensated Employees under the Plan who are subject to reduction
or for only those Highly Compensated Employees who are eligible in both the
arrangements subject to IRC section 401(k) and the plan subject to IRC section
401(m).
(c) The required reduction described in Subsection 4.7(b) shall be
treated as an Excess Contribution or Excess Aggregate Contribution under the
Plan as the case may be.
(d) For purposes of applying Subsection 4.7(a), the Average Actual
Deferral Percentage and Average Contribution Percentage of the group of Eligible
Employees who are Highly Compensated Employees shall be determined after any
corrective distribution of Excess Deferral Amounts pursuant to Subsection
4.4(b), Excess Contributions pursuant to Paragraph 4.5(b), or Excess Aggregate
Contributions pursuant to Subsection 4.6(e) required without regard to this
Section 4.7. Only plans and arrangements maintained by the same Employer or an
Affiliated Employer shall be taken into account under this Section 4.7.
(e) For purposes of this Section 4.7, the "Aggregate Limit" shall
mean the greater of (i) or (ii) where --
(i) is the sum of:
A. 125% of the greater of (I) the Average
Actual Deferral Percentage of the group of Eligible Employees who are Non-Highly
Compensated Employees for the Plan Year, or (II) the Average Contribution
Percentage of the group of Eligible Employees who are Non-Highly Compensated
Employees for the Plan Year, and
B. two percentage points plus the lesser of
Subparagraphs 4.7(e)(i)(A)(I) or 4.7(e)(i)(A)(II) above. In no event, however,
shall the amount described in this Subparagraph 4.7(e)(i)(B) exceed 200% of the
lesser of Subparagraphs 4.7(e)(i)(A)(I) or (II) above; and
(ii) the sum of:
A. 125% of the lesser of (I) the Average Actual
Deferral Percentage of the group of Eligible Employees who are Non-Highly
Compensated Employees for the Plan Year, or (II) the Average Contribution
Percentage of the group of Eligible Employees who are Non-Highly Compensated
Employees for the Plan Year, and
B. two percentage points plus the greater of
Subparagraphs 4.7(e)(ii)(A)(I) or 4.7(e)(ii)(A)(II) above. In no event, however,
shall the amount described in this Subparagraph 4.7(e)(ii)(B) exceed 200% of the
lesser of Subparagraph 4.7(e)(ii)(A)(I) or (II) above.
4.8 PERMISSIBLE TYPES OF EMPLOYER CONTRIBUTIONS
Payments on account of the contributions due from the Employer for any
year may be made in cash or in kind; except that assets may not be contributed
if such contribution violates the prohibited transaction rules of IRC section
4975, or the corresponding rules under ERISA section 406, if applicable.
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4.9 LOANS TO PARTICIPANTS
(a) No loan to any Participant or Beneficiary can be made to the
extent that such loan when added to the outstanding balance of all other loans
to the Participant or Beneficiary would exceed the lesser of (i) $50,000 reduced
by the excess (if any) of the highest outstanding balance of loans during the
one-year period ending on the day before the loan is made, over the outstanding
balance of loans from the Plan on the date the loan is made, or (ii) one-half of
the present value of the nonforfeitable Accrued Benefit of the Participant. For
the purpose of the above limitation, all loans from all plans of the Employer
and other members of a group of employers described in IRC sections 414(b), (c),
(m), and (o) are aggregated. Furthermore, any loan shall by its terms require
that repayment (principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond five years from
the date of the loan, unless such loan is used to acquire a dwelling unit which
within reasonable time (determined at the time the loan is made) will be used as
the principal residence of the Participant. An assignment or pledge of any
portion of the Participant's interest in the Plan and a loan, pledge, or
assignment with respect to any insurance contract purchased under the Plan, will
be treated as a loan under this Subsection (a).
(b) Loans may not be made to Participants or Beneficiaries who are
Highly Compensated Employees in percentage amounts greater than amounts made
available to other Participants and Beneficiaries, and such loans must be made
available to all Participants and Beneficiaries on a reasonably equivalent
basis. However, loans will not be made in an amount less than $500. Any loans
made must bear a reasonable rate of interest, considering all relevant factors,
specifically including current bank interest rates, and must be adequately
secured, as determined by the Administrative Committee. No Participant loan
shall exceed the present value of the Participant's vested Accrued Benefit. The
Employer and Rollover Account of the borrower may be pledged as security for
such loans. All costs and expenses in connection with obtaining the loans and
perfecting the Plan's security interest therein, including but not limited to
taxes, recording fees, filing fees and attorney's fees shall be prepaid by the
Participant or Beneficiary or shall be deducted from the total proceeds of the
loan.
(c) Effective September 13, 1999, any loan shall be allocated to
the accounts of the Participant to whom the loan is made and repayment of
principal and interest on the loan shall be allocated to such accounts in
accordance with the Participant's investment instructions on file at the time
such repayment is made.
(d) The Administrative Committee may adopt a loan policy, provided
that it shall not conflict with the Plan.
(e) In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event occurs in the
Plan. In the event of default, the consent provided for in the following
subsection 4.9(f) shall be considered consent to a distribution of the
Participant's Account(s) to the extent of the amount in default. Any
distribution effected pursuant to the preceding sentence shall be a taxable
distribution for all purposes under the IRC.
(f) A Participant must obtain the consent of his or her spouse, if
any, to use the account balance as security for the loan. Spousal consent shall
be obtained no earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be so secured. The consent must be in writing, must
acknowledge the effect of the loan, and must be witnessed by a Plan
representative or notary public. Such consent shall thereafter be binding with
respect to the consenting spouse or any subsequent spouse with respect to that
loan. A new consent shall be
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required if the account balance is used for renegotiation, extension, renewal,
or other revision of the loan.
4.10 ROLLOVER CONTRIBUTIONS
(a) Any Employee may make a Rollover Contribution to this Plan,
subject to the consent of the Employer; provided, however, that the trust from
which the funds are to be transferred must permit the transfer to be made, and
provided, further, that, in the opinion of the Employer's legal counsel, such
transfer will not jeopardize the tax exempt status of this Plan or Trust or
create adverse tax consequences for the Employer. Rollover Contributions shall
be made by delivery to the Trustee (or to the Employer for delivery to the
Trustee) for deposit in the Trust. All Rollover Contributions must be in cash or
property satisfactory to the Trustee, whose decision in this regard shall be
final. The Trustee will not accept rollovers of accumulated deductible employee
contributions from a Simplified Employee Pension Plan.
(b) If the Administrative Committee accepts such transfer of
funds, it shall allocate them to a separate or segregated account established
for such purpose ("Rollover Account"). If the funds are allocated to a
segregated account, they shall be invested separately and any appreciation,
depreciation, gain, or loss with respect to such account, and any related
expenses shall be allocated to such account; such funds shall be 100% vested.
(c) Rollover Contributions shall not be considered to be
Participant contributions for the purpose of calculating the limitations under
Section 5.4.
ARTICLE V
ADMINISTRATION OF ACCOUNTS
5.1 INVESTMENTS
The amounts allocated to the Employer and Participant Accounts shall be
invested by the Trustee (except as provided in Section 9.4) in accordance with
Article VIII.
5.2 INVEST IN SINGLE FUND AND REASONABLE RULES
The Trustee may cause all contributions paid to it by the Employer and,
if applicable the Participant, and the income therefrom, without distinction
between principal and income, to be held and administered as a single fund, and
the Trustee shall not be required to invest separately any share of any
Participant except as provided in Sections 4.10 and 7.4 and 8.12. The Trustee
may adopt reasonable rules for the administration of such common fund and for
the determination of the proportionate interest of each Participant in the fund.
5.3 VALUATION OF ASSETS AND ALLOCATION OF CHANGES
The assets of the Trust Fund will be valued as of the close of the last
day of each Plan Year at their fair market value and the Employer Account (or
Employer Accounts if the Participant has Accrued Benefits for service incurred
both prior and subsequent to 5 consecutive One Year Breaks in Service),
including any Employer Account held in suspense, and, if applicable, the
Participant Deferral Account of each Participant shall be adjusted for any net
appreciation or net depreciation in the assets of the Plan and any net income or
net loss of the Trust for such year, with each account being credited or charged
in the ratio that the amount of the account (as of the close of the last day of
the Plan Year) bears to the total (as of the close of the last day of the Plan
Year) of all remaining non-segregated accounts; provided, however, that the
amount allocated to
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each Participant's Accounts shall be determined on a time weighted basis under
nondiscriminatory procedures developed by the Administrative Committee. For the
purpose of such adjustment of accounts, any contribution made by the Employer
with respect to that Plan Year shall be considered as having been made
immediately after such valuation and adjustment, unless such contributions are
actually allocated to a Participant's account prior to such valuation. In making
the adjustments required by this Section the cash value of any life insurance,
and the value of any amounts segregated in accordance with Sections 4.10 and 7.4
and 8.12 shall not be considered in determining the amount of net appreciation,
depreciation, gain or loss to be allocated to such account. The amount of any
net appreciation, depreciation, gain or loss with respect to such cash value or
segregated account shall be allocated to the individual account with respect to
which it arose; provided, however, that the amount allocated to each
Participant's Accounts shall be determined on a time weighted basis under
nondiscriminatory procedures developed by the Administrative Committee. In
addition to the valuations required by the first sentence of this Section 5.3,
the Trust Fund may be valued at such other times during the Plan Year as the
Administrative Committee deems appropriate.
5.4 LIMITATIONS ON ALLOCATIONS TO EACH PARTICIPANT
(a) (i) 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 IRC section 419(e) maintained by the
employer, or an individual medical account, as defined in IRC section 415(l)(2),
maintained by the employer, which provides an annual addition as defined in
Paragraph (d)(i), the amount of annual additions which may be credited to the
Participant's account for any limitation year will not exceed the lesser of the
maximum permissible amount or any other limitation contained in this Plan. If
the employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the annual additions for the limitation
year to exceed the maximum permissible amount, the amount contributed or
allocated will be reduced so that the annual additions for the limitation year
will equal the maximum permissible amount.
(ii) 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.
(iii) 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.
(iv) If, pursuant to Paragraph (a)(iii) or as a result of
an allocation of Forfeitures there is an excess amount the excess will be
disposed of as follows:
(1) Any nondeductible voluntary employee
contributions to the extent they would reduce the excess amount, will be
returned to the Participant.
(2) If after the application of Subparagraph (1)
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.
(3) If after the application of Subparagraph (1)
an excess amount still exists, and the Participant is not covered by the Plan at
the end of a limitation year, the excess
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amount will be held unallocated in a suspense account. The suspense account will
be applied to reduce employer contributions for all remaining Participants in
the next limitation year, and each succeeding limitation year if necessary.
(4) If a suspense account is in existence at any
time during a limitation year pursuant to this Section, it will not participate
in the allocation of the Trust's investment gains and losses. If a suspense
account is in existence at any time during a particular limitation year, all
amounts in the suspense account must be allocated and reallocated to
Participant's accounts before any employer or Employee contributions may be made
to the Plan for that limitation year. Excess amounts may not be distributed to
Participants or former Participants.
(b) (i) This Subsection (b) 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, as defined in IRC
section 419(e) maintained by the employer, or an individual medical account, as
defined in IRC section 415(l)(2), maintained by the employer, which provides an
annual addition as defined in Paragraph (d)(i), 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 plans and welfare benefit funds for the same limitation year. If the
annual additions with respect to the Participant under the other defined
contribution plans and welfare benefit funds maintained by the employer are less
than the maximum permissible amount and the employer contribution that would
otherwise cause the annual additions for the limitation year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
annual additions under all such plans and funds for the limitation year will
equal the maximum permissible amount. If the annual additions with respect to
the Participant under such other defined contribution plans and welfare benefit
funds in the aggregate are equal to or greater than the maximum permissible
amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the limitation year.
(ii) Prior to determining the Participant's actual
compensation for the limitation year, the employer may determine the maximum
permissible amount for a Participant in the manner described in Paragraph
(a)(ii).
(iii) 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.
(iv) If, pursuant to Paragraph (b)(iii) or as a result of
the allocation of forfeitures, a Participant's annual additions under this Plan
and such other plans would result in an excess amount for a limitation year, the
excess amount will be deemed to consist of the annual additions last allocated,
except that annual additions attributable to a welfare fund or individual
medical account will be deemed to have been allocated first regardless of the
actual allocation date.
(v) 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 additions
allocated to
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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 the other qualified defined contribution
plans.
(vi) Any excess amount attributed to this Plan will be
disposed in the manner described in Paragraph (a)(iv).
(c) If the employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit fraction and defined contribution fraction
will not exceed 1.0 in any limitation year. The annual additions which may be
credited to the Participant's account under this Plan for any limitation year
are limited as follows: If the Participant's defined benefit fraction and
defined contribution fraction would otherwise exceed 1.0, the Participant's
annual additions under this Plan will be reduced to the extent necessary to
prevent such combined fraction from exceeding 1.0 before any accruals under any
defined benefit plan of the employer are reduced. (Effective through December
31, 1998; effective January 1, 2000 this section 5.4(c) is "Reserved.")
(d) Definitions.
(i) Annual additions: The sum of the following credited
to a Participant's account for the limitation year:
(1) employer contributions,
(2) employee contributions,
(3) forfeitures, and
(4) amounts allocated, after March 31, 1984, to
an individual medical account, as defined in IRC section 415(l)(2), which is
part of a pension or annuity plan maintained by the employer are treated as
annual additions to a defined contribution plan. Also 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 IRC section
419A(d)(3), under a welfare benefit fund, as defined in IRC section 419(e),
maintained by the employer are treated as annual additions to a defined
contribution plan.
For this purpose, any excess amount applied under
(a)(iv) or (b)(vi) in the limitation year to reduce employer contributions will
be considered annual additions for such limitation year.
(ii) Compensation: Compensation is defined as wages,
salaries, and fees for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer maintaining the
Plan to the extent that the amounts are includable in gross income (including,
but not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Treasury Regulation section 1.62-2(c)), and
excluding the following:
(1) Effective January 1, 1998, distributions
from a plan of deferred compensation or employer contributions to a plan of
deferred compensation which are not includible in the Employee's gross income
for the taxable year in which contributed, except that
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compensation shall include any amounts deferred pursuant to IRC section
402(e)(3), section 402(h), or section 403(b) or contributed pursuant to IRC
section 125.
(2) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or property) held by the
employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and
(4) Other amounts which received special tax
benefits, or contributions made by the employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract described in
IRC section 403(b) (whether or not the contributions are actually excludable
from the gross income of the Employee).
For any self-employed individual compensation will
mean earned income.
For limitation years beginning after December 31,
1991, for purposes of applying the limitations of this Section 5.4, compensation
for a limitation year is the compensation actually paid or made available during
such limitation year.
Notwithstanding the preceding sentence, compensation
for a Participant in a defined contribution plan who is permanently and totally
disabled (as defined in IRC section 22(e)(3)) is the compensation such
Participant would have received for the limitation year before becoming
permanently and totally disabled; such imputed compensation for the disabled
Participant may be taken into account only if the Participant is not a Highly
Compensated Employee (as defined in IRC section 414(q)) and contributions made
on behalf of such Participant are nonforfeitable when made.
(iii) Defined benefit fraction: A fraction, the numerator
of which is the sum of the Participant's projected annual benefits under all the
defined benefit plans (whether or not terminated) maintained by the employer,
and the denominator of which is the lesser of 125% of the dollar limitation
determined for the limitation year under IRC sections 415(b) and (d) or 140% of
the highest average compensation, including any adjustments under IRC section
415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125% of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the last limitation
year beginning before January 1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate satisfied the
requirements of IRC section 415 for all limitation years beginning before
January 1, 1987. (Effective through December 31, 1998; effective January 1, 2000
this section 5.4(d)(iii) is "Reserved.")
(iv) Defined contribution dollar limitation: $30,000,
effective January , 1999.
(v) Defined contribution fraction: A fraction, the
numerator of which is the sum of the annual additions to the Participant's
account under all the defined contribution plans
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(whether or not terminated) maintained by the employer for the current and all
prior limitation years (including the annual additions attributable to the
Participant's nondeductible employee contributions to all defined benefit plans,
whether or not terminated, maintained by the employer, and the annual additions
attributable to all welfare benefit funds, as defined in IRC section 419(e), and
individual medical accounts, as defined in IRC section 415(l)(2), maintained by
the employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior limitation years of service with the
employer (regardless of whether a defined contribution plan was maintained by
the employer). The maximum aggregate amount in any limitation year is the lesser
of 125% of the dollar limitation determined under IRC sections 415(b) and (d) in
effect under IRC section 415(c)(1)(A) or 35% of the Participant's compensation
for such year.
If the Employee was a Participant as of the end of
the first day of the limitation year beginning after December 31, 1986, in one
or more defined contribution plans maintained by the employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0 times (ii) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last limitation year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the IRC section 415 limitation applicable to
the first limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be computed to treat all employee
contributions as annual additions. (Effective through December 31, 1998;
effective January 1, 2000 this section 5.4(d)(v) is "Reserved.")
(vi) Employer: For purposes of this Section 5.4, employer
shall mean the employer that adopts this Plan, and all members of a controlled
group of corporations (as defined in IRC section 414(b) as modified by IRC
section 415(h)), all commonly controlled trades or businesses (as defined in IRC
section 414(c) as modified by IRC section 415(h), or affiliated service groups
(as defined in IRC 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 IRC section 414(o).
(vii) Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum permissible amount.
(viii) Highest average compensation: The average
compensation for the three consecutive years of service with the employer that
produces the highest average. A year of service with the employer is the
12-consecutive month period used for measuring Compensation in the second
paragraph of Section 2.9.
(ix) Limitation year: The Plan Year, unless the Employer
elects in writing a different 12-consecutive month period. All qualified plans
maintained by the employer must use the same limitation year. If the limitation
year is amended to a different 12-consecutive month period, the new limitation
year must begin on a date within the limitation year in which the amendment is
made.
(x) Maximum permissible amount: The maximum 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:
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(1) the defined contribution dollar limitation,
or
(2) 25% 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 IRC
section 401(h) or IRC section 419A(f)(2)) which is otherwise treated as an
annual addition under IRC section 415(l)(1) or section 419A(d)(2).
If a short limitation year is created because of an
amendment changing the limitation year to a different 12-consecutive month
period, the maximum permissible amount will not exceed the defined contribution
dollar limitation multiplied by the following fraction:
Number of months in the short limitation year
---------------------------------------------
12
(xi) Projected Annual Benefit: The annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or qualified
joint and survivor annuity) to which the Participant would be entitled under the
terms of the plan assuming:
(1) the Participant will continue employment
until normal retirement age under the plan (or current age, if later), and
(2) the Participant's compensation for the
current limitation year and all other relevant factors used to determine
benefits under the plan will remain constant for all future limitation years.
(Effective through December 31, 1998; effective January 1, 2000 this section
5.4(d)(xi) is "Reserved.")
5.5 DESIGNATION OF BENEFICIARY
Each Participant may designate from time to time in writing one or more
Beneficiaries, who will receive the Participant's vested Accrued Benefit in the
event of the Participant's death. If the Participant dies without having made a
Beneficiary designation, the Trustee shall distribute such benefits in the
following order of priority to the deceased Participant's: (a) spouse, (b)
lineal descendants, (c) parents, or (d) estate.
However, in the event of the death of a married Participant, the
surviving spouse must be the sole beneficiary unless the surviving spouse has
consented in writing to a different election, has acknowledged the effect of
such election, and the consent and acknowledgement are witnessed by a member of
the Administrative Committee or a notary public. The consent of the spouse shall
not be necessary if it is established to the satisfaction of the Administrative
Committee that there is no spouse, the spouse cannot reasonably be located, or
for such other reasons as the regulations may prescribe. The consent of a spouse
as reason for not requiring such consent shall be applicable only to that
spouse. If the spouse of a Participant becomes locatable or if a Participant
remarries, it shall be the duty of the Participant to bring that fact to the
attention of the Administrative Committee. If the Participant so notifies the
Administrative Committee, the Administrative Committee shall then, if
applicable, proceed to make available to such spouse the consent of spouse
procedures described in this Section.
5.6 LIFE INSURANCE
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(a) Portions of the Trust Fund may be used to purchase and pay
premiums on life insurance contracts on the lives of Participants as to which
the insured Participant shall have the power to designate beneficiaries.
(b) Each life insurance contract shall be purchased and premiums
paid thereon in accordance with uniform policies, established by the
Administrative Committee and providing for treatment of Participants in similar
circumstances in a similar fashion (except those Participants declared
uninsurable at standard rates by an insurance company, for whom no insurance
need be purchased) from the Employer Account of the Participant whose life is
insured. If life insurance is not purchased ratably for all Participants (except
those Participants uninsurable at standard rates) the consent of Participants on
whose behalf life insurance contracts are purchased must be obtained. The
aggregate premiums paid for any Plan Year on such insurance contracts on the
Participant's life from his Employer Account shall, in the case of whole life
insurance, at all times be less than 50% of the aggregate of the Employer
contributions allocated to the credit of such Participant's Employer Account;
and in the case of term life insurance, universal life insurance and all other
life insurance contracts which are not whole life, shall at all times be less
than 25% of such Employer contributions. The sum of 50% of the ordinary life
insurance premiums and all other life insurance premiums will not exceed 25% of
the aggregate Employer contributions allocated to any Participant. However, the
Administrative Committee may adopt rules permitting a Participant to instruct
the Trustee to pay life insurance premiums from funds contained in the
Participant Account of any individual Participant.
(c) As to such life insurance contract on any Participant's life,
upon or before the happening of any of the circumstances (other than the
Participant's death) upon which, pursuant to Article VII the Participant becomes
eligible for payments under the Plan, the Trustee shall:
(i) convert its entire value into cash; or
(ii) convert its entire value to provide periodic income
to the Participant, provided that no portion may be used to continue life
insurance for the Participant; or
(iii) distribute it to the Participant.
In no event, however, shall this Section 5.6 be interpreted to permit
receipt by a Participant of such cash, periodic income, or contracts (with modes
of settlement, as to all three alternatives, limited to those provided elsewhere
in the Plan) before he is eligible to receive benefits pursuant to Article VII.
(d) In the event that contracts of life insurance are purchased
pursuant to this Section 5.6, amounts paid for premiums on such policies shall
be subtracted from the Employer Accounts of the Participants upon such payments,
and such contracts and the cash or reserve values thereof shall not be deemed
part of the Trust Fund for purposes of the allocation of profit and loss of the
Trust under Section 5.3. Notwithstanding the preceding, any such contract of
life insurance, including the cash surrender value thereof, shall be deemed as
part of the Employer Account of the Participant or the Participant's Account to
the extent, if any, that premiums were paid from the Participant's Account, for
purposes of this Plan. Dividends paid upon, and return of premiums with respect
to, any policy of life insurance held hereunder shall be credited to the
Employer or Participant Deferral Account of the Participant insured, as
applicable.
(e) The Trustee shall apply for and will be the owner of any
insurance contract purchased under the terms of this Plan. The insurance
contract(s) must provide that proceeds will be payable to the Trustee, however
the Trustee shall be required to pay over all proceeds of the
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contract(s) to the Participant's designated Beneficiary in accordance with the
distribution provisions of this Plan. A Participant's spouse will be the
designated Beneficiary of the proceeds in all circumstances unless a qualified
election has been made in accordance with Section 7.4, Qualified Joint and
Survivor Annuity or Pre-Retirement Survivor Annuity, if applicable. Under no
circumstances shall the Trust retain any part of the proceeds. In the event of
any conflict between the terms of this Plan and the terms of any insurance
contract purchased hereunder, the Plan provisions shall control.
ARTICLE VI
VESTING
6.1 PARTICIPANT DEFERRAL ACCOUNT AND ROLLOVER ACCOUNT 100 PERCENT VESTED
The Accrued Benefit in the Participant Deferral Account and Rollover
Account shall be 100% vested at all times.
6.2 EMPLOYER ACCOUNT VESTING ON DEATH, RETIREMENT, OR TOTAL PERMANENT
DISABILITY
If a Participant's employment is terminated for death, for Total and
Permanent Disability, or upon a Participant attaining Normal Retirement Age,
100% of the Accrued Benefit shall vest in the Participant (or in his
Beneficiary, as the case may be) and shall be distributed in accordance with the
provisions of Article VII.
6.3 EMPLOYER ACCOUNT AND EMPLOYER MATCHING ACCOUNT VESTING ON TERMINATION
(a) If a Participant's employment is terminated prior to attaining
Normal Retirement Age except for death or Total and Permanent Disability, the
following percentages of the Accrued Benefit in the Employer Account and
Employer Matching Account of the Participant shall vest in the Participant and
shall be distributed to or set aside for him (or his Beneficiary) in accordance
with the provisions of Article VII:
Vested percentage of
Total Service for Vesting Employer Account
------------------------- ---------------------
less than 3 years 0%
3 years 20%
4 years 40%
5 years 60%
6 years 80%
7 years or more 100%
(b) The Accrued Benefit of a Participant which is not vested as
above provided shall be treated as a Forfeiture, in accordance with the
provisions of Sections 4.3, 6.5, 7.10, and 7.12.
(c) Insofar as the vesting schedule provided above reflects a
changed vesting schedule concerning vesting in the Employer Account (but not the
Employer Matching Account), each Participant with at least three Years of
Service for Vesting at the effective date of this amended and restated Plan will
be deemed to have chosen to have the previous vesting schedule (100% after one
Year of Service for Vesting) apply with respect to the Participant's Employer
Account, but not the Participant's Employer Matching Account, notwithstanding
Section 6.3(d) and (e) below.
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(d) In the case of an amendment to the vesting schedule, the
vested percentage of a Participant's Employer Account shall not be less than the
Vested percentage attained as of the later of the effective date or adoption
date of the amendment.
(e) The computation of a Participant's vested percentage of his
interest in his or her Employer Account shall not be reduced as the result of
any direct or indirect amendment to this Plan. For this purpose, the Plan shall
be treated as having been amended if the Plan provides for an automatic change
in vesting due to a change in top heavy status. In the event that the Plan is
amended to change or modify any vesting schedule, a Participant with at least
three Years of Service for Vesting as of the expiration date of the election
period may elect to have this nonforfeitable percentage computed under the Plan
without regard to such amendment. If a Participant fails to make such election,
then such participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of: (i) the adoption date of
the amendment; (ii) the effective date of the amendment or (iii) the date the
Participant receives written notice of the amendment from the Employer or
Administrator.
6.4 [RESERVED]
6.5 RESTORATION OF FORFEITURES
If a Participant is less than 100% vested, and either (i) he receives
a distribution from the Plan and forfeits part of his Accrued Benefit, and then,
if the Participant resumes employment with the Employer before the occurrence of
five consecutive One Year Breaks in Service, or (ii) the Participant receives an
in-service distribution, then until such time as there is a fifth consecutive
One Year Break in Service, the Participant's vested portion of the balance in
his account at any time shall be equal to an amount ("X") determined by the
formula X = P(AB + (R X D)) - (R X D), where "P" is the vested percentage of the
Participant at such time, "AB" is the balance in the Participant's account at
such time and "D" is the amount of the distribution not previously repaid by the
Participant in accordance with Section 7.12 (if applicable), and "R" is the
ratio of the account balance at the relevant time to the account balance after
distribution. (This paragraph is deleted effective January 1, 1999.)
If an Employee who is zero percent vested is deemed to receive a
distribution pursuant to Section 7.2, and that Employee resumes employment
covered under this Plan before the date he or she incurs 5 consecutive One Year
Breaks in Service, upon the reemployment of such Employee, the Employer-derived
account balance of the Employee will be restored to the amount on the date of
such deemed distribution.
If the Participant's forfeited Accrued Benefit is restored pursuant
to this Section 6.5, the restoration shall be made first out of Forfeitures, if
any, and then by additional Employer contributions.
ARTICLE VII
DISTRIBUTION OF BENEFITS
7.1 HARDSHIP DISTRIBUTION (EFFECTIVE SEPTEMBER 13, 1999):
(a) A Participant may apply in writing to the Administrator for a
hardship distribution of part or all of his (i) Participant Deferral Account and
(ii) Participant's Account attributable to a Rollover Contribution. The
Administrative Committee in its discretion and in accordance with the provisions
of this Section 7.1 shall determine what portion or all of the Participant's
Accrued
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Benefit is necessary to alleviate the hardship. A distribution is on account of
hardship only if the distribution both is made on account of an immediate and
heavy financial need of the Participant as determined in accordance with
Subsection (c) below and is necessary to satisfy such financial need as
determined in accordance with Subsection (d) below. The determination by the
Administrative Committee of the existence of an immediate and heavy financial
need and of the amount necessary to meet the need shall be made in a
nondiscriminatory and uniform manner. The determination of hardship by the
Administrative Committee shall be final and binding.
(b) In the case of a distribution from the Participant's Deferral
Account, the amount of the distribution is limited to the Participant's net
distributable amount. The net distributable amount is equal to the distributable
amount, reduced by the amount of previous distributions on account of hardship.
The distributable amount is equal to the sum of (i) the Participant's total
Elective Deferrals as of the date of distribution and (ii) income allocable to
Elective Deferrals that is credited to the Participant's Deferral Account before
the end of the last Plan Year ending before July 1, 1989.
(c) A distribution will be deemed to be made on account of an
immediate and heavy financial need of the Participant if the distribution is
for:
(i) expenses for medical care described in Code Section
213(d) incurred by the Participant, the Participant's spouse, or any dependents
of the Participant (as defined in Code Section 152), or necessary for these
persons to obtain medical care described in Code Section 213(d);
(ii) costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(iii) payment of tuition and related educational fees for
the next 12 months of post-secondary education for the Participant, the
Participant's spouse, children, or dependents of the Participant;
(iv) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage of that
residence; or
(v) such other financial needs as prescribed by the
Commissioner of the Internal Revenue Service.
(d) A distribution will be deemed to be necessary to satisfy an
immediate and heavy financial need of a Participant if all of the following
requirements are satisfied:
(i) the distribution is not in excess of the amount of
the immediate and heavy financial need of the Participant. The amount of an
immediate and heavy financial need may include any amounts necessary to pay any
federal, state, or local income taxes or penalties reasonably anticipated to
result from the distribution;
(ii) in the case of a distribution from the Participant's
Deferral Account, the Participant has obtained all distributions, other than
hardship distributions from the Participant's Deferral Account, and all
nontaxable (at the time of the loan) loans currently available under all plans
maintained by the Employer;
(iii) in the case of a distribution from the Participant's
Deferral Account, the Participant does not make an Elective Deferral for his
taxable year immediately following the
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taxable year of the hardship distribution in excess of the $7,000 limit
(adjusted for the cost of living) for such next taxable year less the amount of
such Participant's Elective Deferral for the taxable year of the hardship
distribution; and
(iv) in the case of a distribution from the Participant's
Deferral Account, the Participant does not make an Elective Deferral or
contribution to all other plans maintained by the Employer for a 12-month period
following the date of receipt of the hardship distribution. For this purpose,
the phrase "all other plans maintained by the Employer" means all qualified and
nonqualified plans of deferred compensation maintained by the Employer. The
phrase includes a stock option, stock purchase, or similar plan, or a cash or
deferred arrangement that is part of a cafeteria plan within the meaning of Code
Section 125. However, such phrase does not include a health or welfare benefit
plan, including one that is part of a cafeteria plan.
(e) Any distribution under this Section 7.1 shall be made first
from the Participant's Account attributable to a Rollover Contribution until
that Account is depleted and then from the Participant's Deferral Account.
7.2 METHOD OF DISTRIBUTION
(a) The Participant shall elect to receive distribution of his
Participant and Employer and Rollover Accounts in one of the following forms:
(a) an annuity (including a Qualified Joint and Survivor Annuity as provided in
Section 7.4), (b) a lump-sum distribution, (c) an installment distribution
consisting of approximately equal annual or more frequent installments (subject
to the limitations of Section 7.3) over a term certain, or (d) a Cash-Out.
Notwithstanding the preceding, if a Participant's vested Accrued Benefit at the
time he terminates employment (through severance, death, or Total and Permanent
Disability) does not exceed $5,000, the entire amount of such Accrued Benefit
shall be distributed in the form of a Cash-Out.
(b) If an employee terminates service, and the value of the
employee's vested account balance derived from employer and employee
contributions is not greater than $5,000, the employee will receive a
distribution of the value of the entire vested portion of such account balance
and the nonvested portion will be treated as a forfeiture. For purposes of this
Section, if the value of an employee's vested account balance is zero, the
employee shall be deemed to have received a distribution of such vested account
balance. A Participant's vested account balance shall not include accumulated
deducible employee contributions within the meaning of IRC section 72(o)(5)(B)
for plan years beginning prior to January 1, 1989.
(c) If the value of a Participant's vested account balance derived
from employer and employee contributions exceeds (or at the time of any prior
distribution exceeded) $5,000, and the account balance is immediately
distributable, the Participant must consent to any distribution of such account
balance. The consent of the Participant shall be obtained in writing within the
90-day period ending on the annuity starting date. The annuity starting date is
the first day of the first period for which an amount is paid as an annuity or
any other form. The Plan Administrator shall notify the Participant of the right
to defer any distribution until the Participant's account balance is no longer
immediately distributable. Such notification shall include a general description
of the material features and an explanation of the relative values of, the
optional forms of benefit available under the Plan in a manner that would
satisfy the notice requirements of IRC section 417(a)(3), and shall be provided
no less than 30 days and no more than 90 days prior to the annuity starting
date.
(i) Neither the consent of the Participant nor the
Participant's spouse shall be required to the extent that a distribution is
required to satisfy IRC section 401(a)(9) or IRC
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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 as the employer does not
maintain another defined contribution plan (other than an employee stock
ownership plan as defined in IRC 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 as the
employer maintains another defined contribution plan (other than an employee
stock ownership plan as defined in IRC section 4975(e)(7)) then the
Participant's account balance will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent to an immediate
distribution.
(ii) An account balance is immediately distributable if
any part of the account balance could be distributed to the Participant (or
surviving spouse) before the Participant attains or would have attained if not
deceased) the later of normal retirement age or age 62.
Effective September 13, 1999, notwithstanding anything in this
paragraph to the contrary, a participant may elect (with any consent of the
Spouse as may be required under Section 7.4) to waive any requirement that the
written explanation be provided at least 30 days before the annuity starting
date if the distribution commences more than 7 days after such explanation is
provided.
(d) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the first
Plan Year beginning after December 31, 1988, the Participant's vested account
balance shall not include amounts attributable to accumulated deductible
employee contributions within the meaning of IRC section 72(o)(5)(B).
(e) If distributions are made in installments rather than a
Qualified Joint and Survivor Annuity, lump-sum distribution or a Cash-Out, then
(i) the installments must be over a period of 10 years or less or (ii) the
amount of the installment to be distributed each year must be at least an amount
equal to the quotient obtained by dividing the Participant's entire interest by
the life expectancy of the Participant or the joint and last survivor expectancy
of the Participant and his designated Beneficiary. Life expectancy and joint and
last survivor expectancy are computed by the use of the return multiples
contained in Treasury Regulations section 1.72-9, Table V and VI or, in the case
of payments under a contract issued by an insurance company, by use of the life
expectancy tables of the insurance company. For purposes of this computation, a
Participant's life expectancy may be recalculated no more frequently than
annually, but the life expectancy of a nonspouse Beneficiary may not be
recalculated. If the Participant's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least 50% of the present
value of the amount available for distribution is paid within the life
expectancy of the Participant.
(f) Any annuity distributed from the Plan must be nontransferable.
The terms of any annuity contract purchased and distributed by the Plan to a
Participant or spouse shall comply with the requirements of this Plan.
7.3 TIME OF DISTRIBUTION
Subject to Section 7.4, Qualified Joint and Survivor Annuity or
Pre-Retirement Survivor Annuity, the requirements of this Section 7.3 shall
apply to any distribution of a Participant's interest and will take precedent
over any inconsistent provisions of this Plan. Unless otherwise specified, the
provisions of this Section 7.3 apply to calendar years beginning after December
31, 1984. All distributions required under this Section 7.3 shall be determined
and made in accordance with the Proposed Regulations under IRC section
401(a)(9), including the minimum distribution incidental benefit requirement of
section 1.401(a)(9)-2 of the proposed Treasury regulations.
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(a) After the Participant has attained the Normal Retirement Age,
has died, or has terminated his employment, then the first installment, the
lump-sum payment or Cash-Out, as the case may be, shall be made no later than
the first day of the eighth month after the event occurs, or as soon thereafter
as administratively feasible. If the distribution is made prior to the time the
Participant attains the later of age 62 or the Normal Retirement Age under the
Plan, the Participant must consent to the distribution, unless it is in the form
of an involuntary Cash-Out. If such consent is required, a Participant may
consent to a distribution of less than all of his Vested Accrued Benefit. If the
distribution is delayed until the Participant incurs a One Year Break in Service
or is 100% vested, it shall be made within 90 days of the occurrence of such
event. If the Participant is 0% vested in his Accrued Benefit, his account
balance will be deemed to have been distributed to him in the form of a
Cash-Out. In addition, at such time as a Participant shall have attained age
59-1/2, the Participant may withdraw all or a portion of his Vested Accrued
Benefit from his Participant Deferral Account and, when the Participant is 100%
Vested in his Accrued Benefit from his Employer Account, he may withdraw all or
a portion of such Accrued Benefit. However, in all events such distributions
shall begin no later than 60 days after the end of the Plan Year in which occurs
the latest of the following:
(i) the date on which the Participant attains the earlier
of age 65 or the Normal Retirement Age;
(ii) the tenth anniversary of the year in which the
Participant commenced participation in the Plan; or
(iii) the Termination Date.
For Plan Years beginning prior to September 13, 1999, distributions
shall commence no later than April 1 of the calendar year following the calendar
year in which the Participant attains age 70 1/2.
(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 a combination thereof):
(i) the life of the Participant,
(ii) the life of the Participant and a designated
beneficiary,
(iii) a period certain not extending beyond the life
expectancy of the Participant, or
(iv) 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:
(i) Individual account.
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(1) If a Participant's benefit is to be
distributed over (1) 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 (2) a period not extending
beyond the life expectancy of the designated beneficiary, the amount required to
be distributed for each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the quotient obtained by
dividing the Participant's benefit by the applicable life expectancy.
(2) 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% of the present
value of the amount available for distribution is paid within the life
expectancy of the Participant.
(3) 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 benefits by the lesser of (1) the
applicable life expectancy of (2) 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 Subparagraph (d)(i)(1) above as the relevant
divisor without regard to proposed regulations section 1.401(a)(9)-2.
(4) 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 employee's required beginning date occurs, must be made on or
before December 31 of that distribution calendar year.
(ii) 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 IRC section 401(a)(9) and
the proposed regulations thereunder.
(e) If the Participant dies after distributions to him have begun
but before his entire Accrued Benefit has been distributed to him, the remaining
portion of his Accrued Benefit shall be distributed from the Plan at least as
rapidly as under the method of distribution previously established for him, if
such method was irrevocable at the time of his death.
(f) If the Participant dies before distribution of his interest
commences, then distributions of the Participant's remaining Accrued Benefit
must be completed by the end of the fifth calendar year following the year of
his death. However, installment distributions to a designated Beneficiary which
begin not later than the end of the calendar year following the death of the
Participant shall be treated as complying with this 5 year distribution
requirement (even though the installment payments are not completed within 5
years of the Participant's death) if the distributions are made at a rate which
is not longer than that calculated (in the manner described in Subparagraph
(d)(i)(3) of this Section 7.3) to provide payment of all the Participant's
Accrued Benefit during the anticipated life expectancy of the designated
Beneficiary. Provided that if the designated Beneficiary is the surviving spouse
of the deceased Participant, the distributions can begin as long after the
Participant's death as the date on which the deceased Participant would have
attained the age of 70-1/2. If the surviving spouse dies after the Participant,
but before payments to such spouse begin, the provisions of this Subsection (f)
shall be applied as if the surviving spouse were the Participant.
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If the Participant has not made an election pursuant to this Subsection
(f) by the time of his or her death, the Participant's designated Beneficiary
must elect the method of distribution no later than the earlier of (1) December
31 of the calendar year in which distributions would be required to begin under
this Subsection, or (2) December 31 of the calendar year which contains the
fifth anniversary of the date of death of the Participant. 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.
(g) For purposes of this Section 7.3, any amount paid to a child
of a Participant will be treated as if it had been paid to the surviving spouse
of the Participant if such remaining amount becomes payable to the surviving
spouse when the child reaches the age of majority.
(h) For the purposes of this Subsection 7.3(h), distribution of a
Participant's interest is considered to begin on the Participant's required
beginning date (or, if Subsection 7.3(f) above is applicable, the date
distribution is required to begin to the surviving spouse pursuant to Subsection
7.3(f)). If distribution in the form of an annuity irrevocably commences to the
Participant before the required beginning date, the date distribution is
considered to begin is the date distribution actually commences.
(i) Definitions.
(i) "Applicable life expectancy." The 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 as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and if life
expectancy is being recalculated such succeeding calendar year.
(ii) "Designated Beneficiary." The individual who is
designated as the Beneficiary under the Plan in accordance with IRC section
401(a)(9) and the proposed regulations thereunder.
(iii) "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 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 Subsection 7.3(d) above.
(iv) "Life expectancy." Life expectancy and joint and last
survivor expectancy are computed by use of the expected return multiples in
Tables V and VI of Treasury Regulations section 1.72-9, or, in the case of
payments under a contract issued by an insurance company, by use of the life
expectancy tables of the insurance company.
Unless otherwise elected by the Participant (or spouse, in
the case of distributions described in Subsection 7.3(f)) by the time
distributions are required to begin, life expectancies 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.
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(v) "Participant's benefit."
(1) 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 dates in the valuation
calendar year after the valuation date and decreased by distributions made in
the valuation calendar year after the valuation date.
(2) For purposes of Subparagraph (1) 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.
(vi) "Required beginning date." The "Required Beginning
Date" for a Participant other than a 5-percent owner (as described in IRC
Section 416(i)) is April 1 of the calendar year following the later of (1) the
calendar year in which the Participant retires or (2) the calendar year in which
the Participant attains age 70 1/2. The Required Beginning Date for a
Participant who is a 5-percent owner is April 1 of the calendar year following
the calendar year in which the Participant attains age 70 1/2. Notwithstanding
anything to the contrary in this Section, until his termination of employment
with the Employer, a Participant other than a 5% owner who attained age 70 1/2
prior to January 1, 1999, has a continuing election to receive the minimum
distribution which the Participant would have been required to take prior to
January 1, 1999, subject to the requirements of Section 7.4.
7.4 QUALIFIED JOINT AND SURVIVOR ANNUITY
The provisions of this Section 7.4 shall apply to any Participant: (i)
who is credited with at least one hour of service with the employer on or after
August 23, 1984; (ii) with respect to whom this Plan is a direct or indirect
transferee of a defined benefit plan, money purchase pension plan (including a
target benefit plan), stock bonus, or profit sharing plan to which IRC Section
401(a)(11) applied; and (iii) the Participant elects to receive his benefits
under the Plan in the form of an annuity.
(a) Qualified Joint and Survivor Annuity. Unless an optional form
of annuity is selected pursuant to a qualified election within the 90-day period
ending on the annuity starting date, a married Participant's vested account
balance will be paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's vested account balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity distributed upon
attainment of the earliest retirement age under the Plan.
(b) Definitions
(i) "Qualified election." A waiver of a Qualified Joint
and Survivor Annuity. Any waiver of a Qualified Joint and Survivor Annuity shall
not be effective unless the Participant's spouse consents in writing to the
election, the spouse's consent acknowledges the effect of the election and the
spouse's consent is witnessed by a Plan representative or notary public. If it
is established to the satisfaction of a Plan representative that there is no
spouse or that the spouse cannot be located, a waiver will be deemed a qualified
election.
Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be obtained) shall be
effective only with respect to such spouse.
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(ii) "Qualified Joint and Survivor Annuity." An immediate
annuity for the life of the Participant with a survivor annuity for the life of
the spouse which is not less than 50% and not more than 100% of the amount of
the annuity which is payable during the joint lives of the Participant and the
spouse and which is the amount of benefit which can be purchased with the
Participant's vested account balance, and is further defined in Section 2.37.
(iii) "Spouse (surviving spouse)." The spouse or surviving
spouse of the Participant, provided that a former spouse will be treated as the
spouse or surviving spouse and a current spouse will not be treated as the
spouse or surviving spouse to the extent provided under a qualified domestic
relations order as described in IRC section 414(p).
(iv) "Annuity starting date." The first day of the first
period for which an amount is paid as an annuity or any other form.
(v) "Vested account balance." The aggregate value of the
Participant's vested account balances derived from employer and employee
contributions (including rollovers), whether vested before or upon death,
including the proceeds of insurance contracts, if any, on the Participant's
life. The provisions of this Section 7.4 shall apply to a Participant who is
vested in amounts attributable to employer contributions, employee contributions
(or both) at the time of death or distribution.
(c) Notice Requirements.
(i) If the Participant elects to receive his Vested
account balance in the form of an annuity, the Plan Administrator shall no less
than 30 days and no more than 90 days prior to the annuity starting date provide
each Participant a written explanation of: (1) the terms and conditions of a
Qualified Joint and Survivor Annuity; (2) the Participant's right to make and
the effect of an election to waive the Qualified Joint and Survivor Annuity form
of benefit; (3) the rights of a Participant's spouse; and (4) the right to make,
and the effect of, a revocation of a previous election to waive the Qualified
Joint and Survivor Annuity.
(ii) Notwithstanding the other requirements of this
Subsection (c), the notice prescribed by this Subsection (c) need not be given
to a Participant if (1) the Plan "fully subsidizes" the costs of a Qualified
Joint and Survivor Annuity, and (2) the Plan does not allow the Participant to
waive the Qualified Joint and Survivor Annuity. For purposes of this Paragraph
(c)(ii), a plan fully subsidizes the costs of a benefit if no increase in cost,
or decrease in benefits to the Participant may result from the Participant's
failure to elect another benefit.
Effective September 13, 1999, notwithstanding anything in this paragraph to the
contrary, a participant may elect (with any consent of the Spouse as may be
required under this Section) to waive any requirement that the written
explanation be provided at least 30 days before the annuity starting date if the
distribution commences more than 7 days after such explanation is provided.
7.5 SEGREGATION IF INSTALLMENT DISTRIBUTION
The Administrative Committee may determine that the Employer and
Participant Accounts of a Participant who is no longer an Employee shall be
segregated and set aside, in which event the Administrative Committee shall
direct the Trustee to segregate the vested portion (as defined in Article VI) of
the entire balance of the Participant's Employer Account and Participant
Deferral Account, if applicable, and to deposit such portion in a separate
interest bearing account at a bank or savings and loan association, and said
account shall cease to participate in the income or net loss or appreciation or
depreciation of the Trust Fund, as of the beginning of the Plan Year in
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which such segregation occurs, and instead will be credited with the full amount
of interest earned thereon.
7.6 NON-SEGREGATION IF INSTALLMENT DISTRIBUTION
In the event the Administrative Committee does not segregate (as
provided in Section 7.4) the Employer Account and Participant Deferral Account,
if applicable, of a Participant, said account shall continue to be treated,
without interruption, in the same manner as when the Participant was an
Employee, in which case the installment distributions shall be adjusted upward
or downward to reflect appreciation or depreciation, or income or loss in the
account balance.
7.7 DISTRIBUTION AFTER DEATH OF PARTICIPANT
In the event of the death of a Participant after installment payments
have begun, but prior to completion of such payments, the full amount of such
unpaid benefits shall continue to be paid in the form of the previously
established installments except that the Beneficiary may request that the
remaining Accrued Benefit be paid in a lump sum.
In the event of the death of the Participant prior to the start of any
payment of his Accrued Benefit, distributions shall be made in the form and at
the time or times selected by the Beneficiary pursuant to Sections 7.1, 7.2 and
7.3.
7.8 DISTRIBUTION AFTER DEATH OF BENEFICIARY
In the event of the death of a Beneficiary (or a contingent
Beneficiary, if applicable) prior to the completion of payment of benefits due
the Beneficiary from the Plan, the full amount of such unpaid benefits shall at
once vest in and become the property of the estate of said Beneficiary. In
determining the amount of such unpaid benefits, no adjustment shall be made by
reason of any net income, or net loss, of the Trust, or any net appreciation or
net depreciation by the Trust's assets subsequent to the beginning of the Plan
Year in which such final distribution occurs.
7.9 DIRECT ROLLOVER
(a) This Section applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a distributee may
elect, at the time and in the manner prescribed by the Administrative Committee,
to have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
(b) Definitions
(i) "Eligible rollover distribution." An eligible
rollover distribution is any distribution of all or any portion of the balance
to the credit of the distributee, except that an eligible rollover distribution
does not include any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joints lives (or joint life expectancies)
of the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the IRC; and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
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(ii) "Eligible retirement plan." An eligible retirement
plan is an individual retirement account described in section 408(a) of the IRC,
an individual retirement annuity described in section 408(b) of the IRC, an
annuity plan described in section 403(a) of the IRC, or a qualified trust
described in section 401(a) of the IRC, 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.
(iii) "Distributee." A distributee includes an employee or
former employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as defined in
section 414(p) of the IRC, are distributees with regard to the interest of the
spouse or former spouse.
(iv) "Direct rollover." A direct rollover is a payment by
the Plan to the eligible retirement plan specified by the distributee.
Effective January 1, 1999, notwithstanding to the contrary in this paragraph, a
hardship distribution made pursuant to Section 7.1 shall not be an "eligible
rollover distribution."
7.10 SUSPENSE ACCOUNT FOR TERMINATED PARTICIPANTS
If a Participant has terminated his employment but his Employer Account
is not 100% vested and he has not had 5 consecutive One Year Breaks in Service
subsequent to his termination, all funds in his Employer Account shall be held
in suspense until the happening of the soonest of the following: (i) the
Participant returning to employment with the Employer, or (ii) the occurrence of
5 consecutive One Year Breaks in Service with respect to the Participant, or
(iii) the Participant attaining Normal Retirement Age. At such time the
Participant's Employer Account shall cease to be held in suspense. If a
Participant has returned to employment prior to incurring 5 consecutive One Year
Breaks in Service, his Employer Account which has been held in suspense shall be
restored to his credit. If 5 consecutive One Year Breaks in Service occur, the
non-vested portion of the Employer Account held in suspense will be forfeited;
the vested portion shall be distributed in accordance with the provisions of
Article VII. In the case of a Participant attaining Normal Retirement Age while
his Employer Account is being held in suspense, the entire amount will be
distributed in accordance with the provisions of Article VII.
Such suspense account shall share in any appreciation, depreciation, or
net income or loss as if it were not in suspense, except that an account which
is in suspense shall have no Forfeitures allocated to it for a Plan Year in
which the Employee does not have a Year of Service for Accrual of Benefits.
Notwithstanding anything contained in this Section 7.10 to the
contrary, upon the payment of a Participant's vested Accrued Benefit through a
Cash-Out, the non-vested portion of such Participant's Accrued Benefit shall be
immediately forfeited.
If an Employee terminates service, and elects, in accordance with the
requirements of Subsection 7.3(a), to receive the value of the Employee's vested
account balance, the nonvested portion will be treated as a Forfeiture. If the
Employee elects to have distributed less than the entire vested portion of the
account balance derived from Employer contributions, the part of the nonvested
portion that will be treated as a Forfeiture is the total nonvested portion
multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer
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contributions and the denominator of which is the total value of the vested
Employer derived account balance.
7.11 UNABLE TO LOCATE PARTICIPANT OR BENEFICIARY
If the Participant or Beneficiary to whom benefits are to be
distributed cannot be located, and reasonable efforts have been made to find
him, including the sending of notification by certified or registered mail to
his last known address, the Administrative Committee may direct the Trustee to
take any of the following actions:
(i) Distribute the benefits in question to an interest
bearing savings account established in the name of the Participant or
Beneficiary; or, if the benefits are payable to a Participant (as reasonably
determined by the Administrative Committee) the Administrative Committee may
instruct the Trustee to distribute the funds to the Participant by placing them
in a savings account in the Participant's name or by purchasing U.S. Savings
Bonds in the Participant's name and holding them for the Participant;
(ii) If the Administrative Committee has taken the
reasonable efforts to locate the Participant, the Administrative Committee may
allocate the Participant's Accrued Benefits to a segregated account in the
manner described in Section 7.5, as if an installment distribution were being
made; however, such funds shall be held in the segregated account for
distribution to the Participant when located;
(iii) The Participant's Accrued Benefits may be forfeited;
if a benefit is forfeited because the Participant or Beneficiary cannot be
found, such benefit will be reinstated if a claim is made by the Participant or
Beneficiary, and such benefit shall be reinstated first out of Forfeitures, if
any, and then by additional Employer contributions.
7.12 REPAYMENT OF CASH-OUT
If an Employee receives a distribution pursuant to Section 7.2 and the
Employee resumes employment covered under this Plan, the Employee's
Employer-derived account balance will be restored to the amount on the date of
distribution if the Employee repays to the Plan the full amount of the
distribution attributable to Employer contributions before the earlier of 5
years after the first date on which the participant is subsequently re-employed
by the Employer, or the date the participant incurs 5 consecutive One Year
Breaks in Service following the date of the distribution. The permissible
sources of restoration of the forfeited portion of a Cash-Out distribution are
Forfeitures and Employer contributions.
7.13 QUALIFIED DOMESTIC RELATIONS ORDERS
Notwithstanding any other provisions of Article VII, any Accrued
Benefit of a Participant may be apportioned between the Participant and the
alternate payee (as defined in IRC section 414(p)(8)) either through separate
Accounts or by providing the alternate payee a percentage of the Participant's
Account. The Administrative Committee may direct distributions to an alternate
payee pursuant to a qualified domestic relations order as defined in IRC section
414(p)(1)(A) prior to the date on which the Participant attains the earliest
Retirement Age, provided that the Administrative Committee has properly notified
the affected Participant and each alternate payee of the order and has
determined that the order is a qualified domestic relations order as defined in
IRC section 414(p)(1)(A). The alternate payee shall be paid his separate Account
or his percentage of the Participant's Account, computed as of the valuation
date described in Section 5.3, in a lump sum payment notwithstanding the value
of such lump sum payment unless the
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domestic relations order specifies a different manner of payment permitted by
the Plan; the alternate payee shall not be required to consent to such lump sum
payment. The Administrative Committee shall adopt reasonable procedures to
determine the qualified status of domestic relations orders and to administer
the distributions thereunder.
ARTICLE VIII
DUTIES AND AUTHORITY OF TRUSTEE
8.1 GENERAL FIDUCIARY DUTIES
Except as may be provided in Section 12.4 and as otherwise may be
required or permitted by ERISA, the Trustee and all fiduciaries hereunder shall
discharge their duties with respect to the Plan solely in the interest of the
participants and beneficiaries and:
(a) for the exclusive purpose of:
(i) providing benefits to participants and their
beneficiaries; and
(ii) defraying reasonable expenses of administering the
Plan;
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in
a like capacity and familiar with such matters would use in
the conduct of an enterprise of alike character and with like
aims;
(c) by diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is
clearly prudent not to do so; and
(d) in accordance with the Plan document insofar as the Plan
document is consistent with Part Four of Title I of ERISA.
8.2 RECEIVE PAYMENTS
The Trustee shall receive from the Employer the payments made by it on
account of its contributions under the Plan, and made by Participants, if any,
but the Trustee shall have no duty to compute any amount due from the Employer
or to collect the same.
8.3 VALUE ASSETS
The Trustee shall value the assets of the Trust Fund as of the close of
the last day of each Plan Year at their fair market value and the Administrative
Committee or its agent will allocate the sums contributed by the Employer and by
Participants, if any, plus the net income or minus the net loss of the Trust
Fund and plus the net appreciation or minus the net depreciation in the Trust
Fund to separate bookkeeping accounts in the names of the respective
Participants under the Plan in accordance with the provisions of Article V.
8.4 SEGREGATION OF ACCOUNTS
When directed in writing by the Administrative Committee, the Trustee
shall segregate the accounts of terminated Participants in accordance with the
provisions of Section 4.10 or 7.5, and make payments out of the Trust Fund from
time to time to the Participants or their
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Beneficiaries, such payments to be made in the manner and in the amounts as may
be specified in the written instructions of the Administrative Committee.
8.5 TAX RETURNS AND REPORTS
If the Trustee is a corporate fiduciary, then such Trustee shall
prepare or cause to have prepared and filed, all tax returns, reports, and
related documents, except as otherwise specifically provided in this Plan or
unless the Administrative Committee, in writing, relieves the Trustee of such
obligation, in part or entirely, in which case the Administrative Committee, or
the person or persons it designates, shall be responsible for filing the tax
returns, reports, and related filings, as provided by the Administrative
Committee. The Trustee shall be entitled to rely on the accuracy of any written
statement from the Administrative Committee or from an officer of the Employer
as to those matters provided in Article IX.
8.6 POWERS
The Trustee is authorized and empowered to:
(a) Invest and reinvest the Trust Fund, without distinction
between principal and income, in bank accounts, certificates of deposit, common
stocks, preferred stocks, bonds, notes, debentures, mortgages, U.S. retirement
plan bonds, and in other property, real or personal, so long as the incidents of
ownership of such property are within the jurisdiction of the United States, and
so long as such investments do not violate applicable law;
(b) To acquire and hold "qualifying Employer securities" and
"qualifying Employer real property," as those terms are defined in ERISA,
provided, however, that the Trustee shall not be permitted to acquire any
qualifying Employer securities or qualifying Employer real property if,
immediately after the acquisition of such securities or property, the fair
market value of all qualifying Employer securities and qualifying Employer real
property held by the Trustee hereunder should amount to more than 100% of the
fair market value of all assets in the Trust Fund;
(c) Sell, exchange, convey, transfer, or otherwise realize the
value of any property held by it;
(d) Convert any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any warrants, conversion privileges, subscription
rights, or other options and to make any payment incidental thereto; to consent
to or otherwise participate in corporate reorganizations or other changes
affecting corporate securities and to delegate discretionary powers to pay any
assessments or charges in connection therewith; and generally to exercise any of
the powers of an owner with respect to stocks, bonds, securities or other
properties held in the Trust Fund;
(e) Make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out the powers herein granted;
(f) Register any investments held in the Trust Fund in its own
name or in the name of a nominee or nominees and to hold any investment in
bearer form, but the books and records of the Trustee shall at all times show
that all such investments are part of the Trust Fund;
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(g) Invest all or a part of the Trust Fund in deposits which bear
a reasonable rate of interest in a bank or similar financial institution, even
though such institution is a Trustee or other fiduciary, as defined in IRC
section 4975(e)(3);
(h) Invest in a common or collective trust fund or pooled
investment fund maintained by a bank or trust company or a pooled investment
fund of an insurance company qualified to do business in a State even though
such bank, trust company or insurance company is a disqualified person, as
defined in IRC section 4975(e)(2);
(i) Make distributions to Participants or Beneficiaries in cash,
annuity policies, insurance policies or any other property;
(j) Perform all such acts, although not specifically mentioned
herein, as the Trustee may deem necessary to administer the Trust Fund and to
carry out the purpose of the Trust; and
(k) Borrow or loan sums, except as prohibited by IRC section
4975(c) (without reference to IRC section 4975(d)), as the Trustee deems
desirable, and for that purpose, to mortgage or pledge all or part of the Trust
Fund.
8.7 EXPENSES
All brokerage costs, transfer taxes and similar expenses incurred in
connection with the investment and reinvestment of the Trust Fund and all taxes
of any kind whatsoever which may be levied or assessed under existing or future
laws upon or in respect of the Trust Fund, and any interest which may be payable
on money borrowed by the Trustee for the purpose of the Trust, shall be paid
from the Trust Fund, and, until paid, shall constitute a charge upon the Trust
Fund. All other administrative expenses incurred by the Trustee in the
performance of its duties, including such compensation to the Trustee as may be
agreed upon from time to time between the Employer and the Trustee (in
accordance with the Trustee's standard schedule of fees in effect from time to
time during the time it administers this Trust, if applicable) and all proper
charges and disbursements of the Trustee, may be paid by the Employer, and if
not paid by the Employer shall be paid from the Trust Fund, and until paid shall
constitute a charge upon the Trust Fund. If the Employer advises the Trustee in
writing of its determination to make no further contribution to this Trust, the
expenses of the Trustee shall thereafter be charged against and paid out of the
Trust Fund and a lien for the payment thereof shall be impressed upon the assets
of the Trust to be charged proportionately against the amount standing to the
credit of each Participant. However, no person who is a disqualified person (as
defined in IRC section 4975(e)(2)) and who received full-time pay from the
Employer, may receive compensation from the Trust, except for reimbursement of
expenses properly and actually incurred.
The Trustee may inspect the records of the Employer whenever such
inspection may be reasonably necessary in order to determine any fact pertinent
to the performance of its duties as the Trustee. The Trustee, however, shall not
be required to make such inspection, but may, in good faith, rely on any
statement of the Employer or any of its officers.
8.8 LITIGATION
The Trustee shall not be required to participate in any litigation
either for the collection of monies or other property due the Trust Fund, or in
defense of any claim against the Trust Fund unless the Trustee shall have been
indemnified to its satisfaction against all expenses and liability to which the
Trustee might become subject.
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8.9 WRITTEN INSTRUCTIONS
When any act of the Trustee is based upon instructions of the Employer
or the Administrative Committee, the Trustee may rely upon instructions in
writing, signed by an officer of the Employer, or upon written instructions from
the Administrative Committee or the Plan Administrator, as appropriate.
8.10 APPOINTMENT OF INVESTMENT MANAGER
The Trustee, with the written concurrence of the Administrative
Committee, may appoint an Investment Manager (as defined in ERISA section
3(38)), who shall have responsibility for investment of the Trust Fund. The
Investment Manager shall have the investment powers granted the Trustee in
Section 8.5 except to the extent the Investment Manager's powers are
specifically limited by an agreement between the Trustee and Investment Manager.
8.11 REMOVAL AND RESIGNATION OF THE TRUSTEE
The Employer may at any time remove any Trustee acting hereunder or
appoint a corporation and/or an individual or individuals to be successor
Trustee hereunder in the place of any removed or resigning Trustee. Any Trustee
may at any time resign by giving written notice to the Employer, which
resignation shall take effect on the date therein specified and which shall not
be less than 30 days from the date of notice unless the Employer shall agree to
an earlier date.
8.12 INDIVIDUAL CHOICE ACCOUNTS
Notwithstanding Section 5.2, a Participant may at any time instruct the
Trustee in writing that he wishes to have part or all of the funds in his
Employer Account and/or Participant Deferral Account invested in assets of such
Participant's own choosing other than "collectibles" as defined in IRC section
408(m). After such notification the Participant may, from time to time, place an
order or orders for the assets the Participant desires to have purchased for his
Employer Account and/or Participant Deferral Account. Subsequent investments in
the Employer and/or Participant Deferral Account, as applicable, shall be made
by the Participant, and shall be paid for with funds from the appropriate
account of the Participant and shall be delivered directly to the Trustee.
Notwithstanding the preceding, the Administrative Committee can establish
reasonable rules limiting the investment discretion of a Participant. Accounts
which have been individually directed will be segregated for the purpose of
allocating earnings and expenses pursuant to Section 5.3. All expenses incurred
pursuant to a Participant's directing investments, including brokerage fees,
state and federal income taxes arising from unrelated business taxable income
and any other incidental expenses shall be paid solely with funds from the
accounts of such Participant. Neither the Trustee nor the Administrative
Committee will be held liable for the Participant's investment choice, so long
as the investment is made in accordance with this Section 8.12.
8.13 INVESTMENT IN EMPLOYER STOCK (EFFECTIVE SEPTEMBER 13, 1999)
Notwithstanding the unrestricted powers hereinabove conferred on the
Trustee, the Trustee shall retain stock of the Employer which is contributed by
the Employer to the Plan, or which the Employer directs the Trustee to purchase,
regardless of market fluctuations. The Trustee shall sell such stock only to
meet administrative and distribution requirements of the Plan or as directed by
the Employer. The Employer shall undertake the responsibility to inform Plan
Participants of the unique nature of the Plan and Trust. The Employer accepts
full responsibility under the Plan and Trust for any investment of the Trust
which is held in Employer stock pursuant to this Section.
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ARTICLE IX
DUTIES AND AUTHORITY OF ADMINISTRATIVE COMMITTEE
9.1 APPOINTMENT
This Plan shall be administered by an Administrative Committee, which
shall consist of at least 1 but not more than 3 persons appointed by the board
of directors of the Employer, who shall signify in writing their acceptance of
such appointment. Any member of the Administrative Committee may resign upon
giving written notice to the board of directors of the Employer. Each appointee
shall hold office at the pleasure of the board of directors of the Employer.
Members of the board of directors of the Employer may be appointed members of
the Administrative Committee. Vacancies arising in the Administrative Committee
from death, resignation, removal or otherwise, shall be filled by the board of
directors of the Employer, but the Administrative Committee may act
notwithstanding the existence of vacancies so long as there is at least one
member of the Administrative Committee. If the board of directors of the
Employer does not appoint an Administrative Committee, the Employer shall act as
the Administrative Committee.
At any time the board of directors of the Employer may adopt a
resolution abolishing the Administrative Committee and assigning all of the
duties of the Administrative Committee to the Trustee; such resolution shall be
effective as soon as it is communicated in writing to both the Administrative
Committee and Trustee, or at any such subsequent effective date as is provided
in the resolution. Whenever such a resolution is effective as to the Plan, the
term "Trustee" shall be deemed to replace the term "Administrative Committee."
Such a resolution may be rescinded by the board of directors of the Employer and
shall be effective as soon as it is communicated in writing to the Trustee, or
shall be effective at such later date as is provided in the resolution.
9.2 NO DISCRIMINATION
The Administrative Committee shall not take any action nor direct the
Trustee to take any action that would result in benefiting one Participant or
group of Participants at the expense of another, or discriminating between
Participants similarly situated, or applying different rules to substantially
similar sets of facts.
9.3 MAJORITY ACTION
The Administrative Committee shall act by a majority (or by all members
if there be only one or two members) of the number of members constituting the
Administrative Committee at the time of such action, and such action may be
taken either by vote at a meeting or in writing without a meeting.
9.4 POWERS
Except as otherwise provided in the Plan, the Administrative Committee
shall have control of the administration of the Plan, with all powers necessary
to enable it to carry out its duties in that respect. Not in limitation, but in
amplification of the foregoing, the Administrative Committee shall have power to
interpret or construe the Plan and to determine all questions that may arise
hereunder as to the status and rights of Participants and others hereunder. The
Administrative Committee shall have the right, exercisable at any time by
delivery to the Trustee of an instrument in writing, to instruct or direct the
Trustee with respect to the investment of the Trust Fund. The Administrative
Committee may inspect the records of the Employer or Trustee whenever such
inspection may be reasonably necessary in order to determine any fact pertinent
to the performance of the duties of the Administrative Committee.
The Administrative Committee,
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however, shall not be required to make such inspection, but may, in good faith,
rely on any statement of the Trustee or Employer or any of its officers or
employees.
9.5 FILING REPORTS
The Administrative Committee shall furnish, or shall see that the
Employer furnishes, a summary of this Plan to all Employees, as required by
applicable Federal law. The Administrative Committee shall furnish to the
Trustee the names of all Employees who become eligible as Participants, and the
Administrative Committee shall notify each Employee of his eligibility.
9.6 RECORDS AND INFORMATION
The Administrative Committee shall keep a complete record of all its
proceedings and all data necessary for the administration of the Plan.
9.7 INFORMATION TO PARTICIPANTS
The Administrative Committee shall direct the maintenance of separate
accounts of the Participants. It shall give each Participant, at least once
every year, information as to the balance of his Employer Account and
Participant Deferral Account, if applicable.
9.8 COMPENSATION OF MEMBERS
The members of the Administrative Committee shall serve without
compensation for their services as such, but shall be reimbursed by the Employer
for all necessary expenses incurred in the discharge of their duties. If the
Employer advises the Administrative Committee in writing of its determination to
make no further contributions to the Plan, the expenses of the Administrative
Committee shall thereafter be charged against and paid out of the Trust Fund and
a lien for the payment thereof shall be impressed upon the assets of the Trust
to be charged proportionately against the amount standing to the credit of each
Participant.
9.9 REVIEW OF PARTICIPANT'S CLAIMS
In case the claim of any Participant or Beneficiary for benefits under
the Plan is denied, the Administrative Committee shall provide adequate notice
in writing to such claimant, setting forth the specific reasons for such denial.
The notice shall be written in a manner calculated to be understood by the
claimant. The Administrative Committee shall afford a Participant or
Beneficiary, whose claim for benefits has been denied, 60 days from the date
notice of such denial is delivered or mailed in which to appeal the decision in
writing to the Administrative Committee. If the Participant or Beneficiary
appeals the decision in writing within 60 days, the Administrative Committee
shall review the written comments and any submissions of the Participant or
Beneficiary and render its decision regarding the appeal, all within 60 days of
such appeal.
ARTICLE X
MODIFICATIONS FOR TOP-HEAVY PLANS
10.1 APPLICATION OF ARTICLE
The provisions in this Article X shall take precedence over any other
provisions in the Plan with which they conflict.
10.2 DEFINITIONS
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(a) "Key employee." Any Employee or former Employee (and the
beneficiaries of such employee) who at any time during the determination period
was an officer of the Employer if such individual's annual compensation exceeds
50% of the dollar limitation under IRC section 415(b)(1)(A), an owner (or
considered an owner under IRC section 318) of one of the ten largest interests
in the employer if such individual's compensation exceeds 100% of the dollar
limitation under IRC section 415(c)(1)(A), a five-percent owner of the employer,
or a one-percent owner of the employer who has an annual compensation of more
than $150,000. Effective January 1, 1998, annual compensation means compensation
as defined in Section 5.4(d)(ii). 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 will be made in accordance
with IRC section 416(i)(1) and the regulations thereunder.
(b) "Top-heavy plan." For any Plan Year beginning after December
31, 1983, this Plan is top-heavy if any of the following conditions exists:
(i) If the top-heavy ratio for this Plan exceeds 60% and
this Plan is not part of any required aggregation group or permissive
aggregation group of plans.
(ii) If this Plan is a part of a required aggregation
group of plans but not part of a permissive aggregation group and the top-heavy
ratio for the group of plans exceeds 60%.
(iii) If this Plan is a part of a required aggregation
group and part of a permissive aggregation group of plans and the top-heavy
ratio for the permissive aggregation group exceeds 60%.
(c) "Top-heavy ratio."
(i) 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 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 determination date(s)), both computed in
accordance with IRC 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 IRC section 416 and the
regulations thereunder.
(ii) 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
any accrued benefits, the top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the numerator of which is the
sum of all account balances under the aggregated defined contribution plan or
plans for all key employees, determined in accordance with Paragraph (i) 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
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contribution plan or plans for all Participants, determined in accordance with
Paragraph (i) 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 IRC 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.
(iii) For purposes of Paragraphs (i) and (ii) 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 IRC
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 (1) who is not a key employee but who was a key employee in a prior
year, or (2) who has not been credited with at least one 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 IRC section 416 and the regulations
thereunder. Deductible employee contributions will not be taken into account for
purposes of computing the top-heavy ratio. When aggregating plans the value of
account balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
The accrued benefit of a Participant other than a key
employee shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained by the
employer, or (b) if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional rule of IRC
section 411(b)(1)(C).
(d) "Permissive aggregation group." The required aggregation group
of plans plus any other plan or plans of the employer which, when considered as
a group with the required aggregation group, would continue to satisfy the
requirements of IRC sections 401(a)(4) and 410.
(e) "Required aggregation group." (i) Each qualified plan of the
employer in which at least one key employee participated at any time during the
determination period (regardless of whether the plan has terminated), and (ii)
any other qualified plan of the employer which enables a plan described in (i)
to meet the requirements of IRC sections 401(a)(4) or 410.
(f) "Determination date." For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first year of
the Plan, the last day of that year.
(g) "Non-key employee." Any Employee who is not a key employee.
10.3 ACCELERATED VESTING
Unless the Plan provides for full and immediate vesting of Employer and
Participant Deferral Accounts upon participation, then for any Plan Year in
which this Plan is deemed to be a top-heavy plan, the vesting schedule contained
in Section 6.3 shall be modified as follows:
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Total Service for Vesting
(excluding Years of Service
prior to effective date
of this Plan) Vested percentage
- --------------------------- -----------------
less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years or more 100%
Should this Plan not be deemed to be a top-heavy plan after previously
being so categorized, the vesting schedule contained in Section 6.3 shall again
be effective except that the vested percentage attained by Participants shall
not be reduced thereby and Participants with 3 or more Years of Service for
Vesting shall have the right to select the vesting schedule under which their
vested Accrued Benefit will be determined.
10.4 MINIMUM CONTRIBUTIONS
For any Plan Year in which this Plan is determined to be a top-heavy
plan, either (i) a minimum Employer contribution shall be made, pursuant to this
Plan or another defined contribution plan maintained by the Employer, to the
account of each non-key employee (except those who are separated from service
with the Employer at the end of the Plan Year), or (ii) a minimum non-integrated
benefit must be provided to each non-key employee (except those who are
separated from service with the Employer at the end of the Plan Year), pursuant
to a defined benefit plan maintained by the Employer.
For the purposes of the first sentence of this Section 10.4, the
minimum Employer contribution provided to each non-key employee (except those
who are separated from service with the Employer at the end of the Plan Year)
shall be equal to 3% of such non-key employee's annual Compensation. If,
however, the Employer contribution, under this and any other defined
contribution plan required to be included in the permissive or required
aggregation group and maintained by the Employer, for any key employee for such
Plan Year is less than 3% of such key employee's total annual Compensation,
then, the Employer contribution to each Participant (except those who are
separated from service with the Employer at the end of the Plan Year) shall
equal the amount which results from multiplying such Participant's annual
Compensation times the highest contribution rate of any key employee covered by
the Plan.
For the purposes of the first sentence of this Section 10.4, the
minimum non-integrated benefit provided by the Employer to each non-key employee
(except those who are separated from service with the Employer at the end of the
Plan Year) is an amount, which when expressed as an annual retirement benefit,
shall be no less than 2% of such non-key employee's average annual compensation
for his 5 highest consecutive years of service, multiplied by the Employee's
years of service with the Employer, not to exceed 10 years. For the purposes of
the preceding sentence, years of service with the Employer shall not include
years of service completed during any Plan Year which begins before January 1,
1984, or years of service completed during a Plan Year for which the Plan is not
a top-heavy plan. For the purposes of this Section 10.4, the minimum benefit
provided above shall be computed in the form of a single life annuity, with no
ancillary benefits, beginning at Normal Retirement Age.
The minimum allocation required (to the extent required to be
nonforfeitable under IRC section 416(b)) may not be forfeited under IRC section
411(a)(3)(B) or 411(a)(3)(D).
10.5 LIMITATION ON COMPENSATION TAKEN INTO ACCOUNT UNDER PLAN
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For any Plan Year prior to Plan Years beginning before January 1, 1989,
in which this Plan is deemed to be a top-heavy plan the definition of annual
compensation contained in Subsection 10.2(a) shall exclude amounts in excess of
$200,000.
10.6 MODIFICATION OF DEFINED BENEFIT AND DEFINED CONTRIBUTION FRACTION
For any Plan Year in which the Plan is deemed to be a top-heavy plan,
the denominators of the defined benefit fraction and the defined contribution
fraction contained in Subsection 5.4(d) shall be deemed to be modified by
substituting 100% for 125%. Notwithstanding the above, if this Plan would not be
deemed to be a top-heavy plan if 90% were substituted for 60% in Subsection
10.2(b) and if the Employer provides benefits and/or makes contributions to the
Employer Accounts of non-key employees who participate in defined benefit and/or
defined contribution plans maintained by the Employer, in amounts at least equal
to that which would be required by Section 10.4 after substituting 4% for 3% in
the second paragraph thereof, and by substituting 3% for 2% in the third
paragraph thereof, then the reduction in the defined benefit fraction and the
defined contribution fraction as set forth in the preceding sentence, shall not
be made. (Effective through December 31, 1998; effective January 1, 2000 this
section 10.6 is "Reserved.")
ARTICLE XI
AMENDMENT AND TERMINATION
11.1 RIGHTS TO SUSPEND OR TERMINATE PLAN
It is the present intention of the Employer to maintain this Plan
throughout its corporate existence. Nevertheless, the Employer reserves the
right, at any time, to discontinue or terminate the Plan, to terminate the
Employer's liability to make further contributions to this Plan, to suspend
contributions for a fixed or indeterminate period of time. In any event, the
liability of the Employer to make contributions to this Plan shall automatically
terminate upon its legal dissolution or termination, upon its adjudication as a
bankrupt, upon the making of a general assignment for the benefit of creditors,
or upon its merger or consolidation with any other corporation or corporations.
11.2 SUCCESSOR CORPORATION
In the event of the termination of the liability of the Employer to
make further contributions to this Plan, the Employer's liability may be assumed
by any other corporation or organization which employs a substantial number of
the Participants of this Plan. Such assumption of liability shall be expressed
in an agreement between such other corporation or organization and the Trustee
under which such other corporation or organization assumes the liabilities of
this Trust with respect to the Participants employed by it.
11.3 AMENDMENT
To provide for contingencies which may require the clarification,
modification, or amendment of this Plan, the Employer reserves the right to
amend this Plan at any time.
No amendment to the Plan shall be effective to the extent that it has
the effect of decreasing a Participant's Accrued Benefit. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to the extent
permitted under IRC section 412(c)(8). For purposes of this paragraph, a Plan
amendment which has the effect of decreasing a Participant's account balance or
eliminating an optional form of benefit, with respect to benefits
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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 Employer derived
Accrued Benefit will not be less than the percentage computed under the Plan
without regard to such amendment.
Each Participant having at least three Years of Service for Vesting at
the time of the adoption of any amendment changing any vesting schedule under
the Plan, or prior to the end of the election period set forth by this
paragraph, shall have the right to elect at any time, but no later than 60 days
after the later of (a) the date the amendment is adopted, (b) the date on which
the amendment is effective, or (c) the date on which the Participant is given
written notice of the amendment, to have his vested percentage computed under
the Plan without regard to such amendment.
11.4 100% VESTING ON TERMINATION OF PLAN
Upon termination or partial termination of the Plan and Trust by formal
action of the Employer or for any other reason, or if Employer contributions to
the Plan and Trust are permanently discontinued for any reason, there shall be
vested 100% in each Participant directly affected by such action the amount
allocated to the accounts of each such Participant, and payment to such
Participant shall be made in cash or in kind as soon as practicable after
liquidation of the assets of the Trust; provided, however, that an amount may
only be distributed if the Employer does not maintain or establish another
defined contribution plan at the time the Plan is terminated or within the 12
month period ending after distribution of all assets from the Plan, other than
an employee stock ownership plan (as defined in IRC section 4975(e) or IRC
section 409), a Simplified Employee Pension Plan as defined in IRC section
408(k), or a defined contribution plan if fewer than 2% of the Employees who are
eligible under the Plan at the time of its termination are or were eligible
under such other defined contribution plan at any time during the 24 month
period beginning 12 months before the time of the termination. In addition,
distributions made after March 31, 1988 on account of the termination of the
Plan must be made in a lump sum (as defined in Treasury Regulation section
1.401(k)-1(d)(5)).
11.5 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation with, or transfer of any
assets or liabilities to, any other plan, each Participant in this Plan must be
entitled to receive (if the surviving plan is then terminated) a benefit
immediately after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation, or transfer (if this Plan had terminated).
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ARTICLE XII
MISCELLANEOUS
12.1 LAWS OF FLORIDA TO APPLY
This Plan shall be construed according to the laws of Florida, to the
extent Federal laws do not control.
12.2 PARTICIPANT CANNOT TRANSFER OR ASSIGN BENEFITS
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None of the benefits, payments, proceeds, claims, or rights of any
Participant hereunder shall be subject to any claim of any creditor of the
Participant, nor shall any Participant have any right to transfer, assign,
encumber, or otherwise alienate, any of the benefits or proceeds which he may
expect to receive, contingently or otherwise under this Plan, except as
specifically permitted in Section 4.9.
Notwithstanding any restrictions on the time of distribution which
would otherwise apply under this Plan, distributions with respect to a Qualified
Domestic Relations Order may be made at any time required by the order.
12.3 RIGHT TO PERFORM ALTERNATIVE ACTS
In the event it becomes impossible for the Employer, the Administrative
Committee or the Trustee to perform any act required by this Plan, then the
Employer, the Administrative Committee or the Trustee may perform such
alternative act which most clearly carries out the intent and purpose of this
Plan.
12.4 REVERSION OF CONTRIBUTIONS UNDER CERTAIN CIRCUMSTANCES
In the event that the Commissioner of Internal Revenue determines that
the Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must be
returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe.
All contributions made pursuant to Article IV are conditioned on
deductibility of such contributions under IRC section 404. To the extent that
the deduction under IRC section 404 for any year is disallowed, the contribution
shall be returned to the Employer within one year after disallowance of the
deduction.
If a contribution is made by an Employer by a mistake of fact, the
contribution may be returned to the Employer within one year after the payment
of the contribution.
Notwithstanding the above, earnings attributable to amounts described
in paragraphs two and three of this Section 12.4 shall not be returned to the
Employer; losses attributable to such amounts shall reduce the amount returned.
12.5 PLAN ADMINISTRATOR AGENT FOR SERVICE OF PROCESS
The Plan Administrator is designated agent to receive service of legal
process on behalf of the Plan.
12.6 FILING TAX RETURNS AND REPORTS
If the Trustee is not a corporate fiduciary, the Plan Administrator
shall prepare, or cause to have prepared, all tax returns, reports, and related
documents, except as otherwise specifically provided in this Plan or unless the
Administrative Committee provides to the contrary in the manner prescribed in
Section 8.4.
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12.7 INDEMNIFICATION
The Employer agrees to indemnify all Employees, who serve as members of
the Administrative Committee or who serve as Trustee, against all liability
arising in connection with their duties under the Plan, except that this
indemnification shall not include acts of embezzlement, or diversion of Trust
Funds by the Employee, nor shall it include acts of gross negligence.
12.8 NUMBER AND GENDER
When appropriate the singular as used in this Plan shall include the
plural and vice versa; and the masculine shall include the feminine.
12.9 VETERANS'S REEMPLOYMENT RIGHTS (EFFECTIVE DECEMBER 12, 1994)
(a) Notwithstanding any provision of the Plan to the contrary, if
an Employee is reemployed by the Employer in accordance with Chapter 43 of Title
38 of the United States Code:
(i) the Employee shall be treated as not having incurred
a Break in Service with the Employer by reason of such Employee's period of
Qualified Military Service;
(ii) the Employee's period of Qualified Military Service
shall be deemed service with the Employer for purposes of determining the vested
percentage of the Employee's Account; and
(iii) the Employer shall make contributions to the Account
of the Employee in such amount as would have been made during the period of such
Employee's Qualified Military Service if the Employee had been in Service.
(b) An Employee who is in Qualified Military Service shall be
treated as receiving Compensation from the Employer during such period of
Qualified Military Service equal to:
(i) the Compensation the Employee would have received
during such period if the Employee were not in Qualified Military Service,
determined based on the rate of pay the Employee would have received from the
Employer but for absence during the period of Qualified Military Service; or
(ii) if the Compensation the Employee would have received
during such period was not reasonably certain, the Employee's average
Compensation from the Employer during the 12-month period immediately preceding
the Qualified Military Service (or, if shorter, the period of employment
immediately preceding the Qualified Military Service).
(c) Nothing in this Article shall be construed as requiring any
crediting of earnings to an Employee with respect to any contribution before
such contribution is actually made or the allocation of any Forfeiture with
respect to the period of an Employee's Qualified Military Service.
(d) For purposes of this Section 12.9, "Qualified Military
Service" means any service in the "uniformed services" (as defined in Chapter 43
of Title 38 of the United States Code) by any Employee if such Employee is
entitled to reemployment rights under such Chapter with respect to such service.
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IN WITNESS WHEREOF, the parties have executed this agreement
effective as provided herein.
EMPLOYER
ATTEST: LODGIAN, INC.
By:
- --------------------------------- --------------------------------
WITNESSES AS TO TRUSTEES: TRUSTEES
- --------------------------------- -----------------------------------
David E. Hawthorne
- --------------------------------- -----------------------------------
Robert D. Ruffin
- --------------------------------- -----------------------------------
Warren Knight
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APPENDIX A-1
SERVICO, INC. 401(K) PLAN
EMPLOYEES OF AMI OPERATING PARTNERS, L.P.
On May 28, 1998, Servico, Inc. acquired 100% of the general and limited
partnership interests of AMI Operating Partners, L.P. ("AMI") and employees of
AMI became employees of the Servico, Inc. controlled group and potentially
eligible to participate in the Plan. This Appendix contains special provisions
concerning such employees, who are hereinafter referred to as "AMI Employees."
I. PARTICIPATION OF AMI EMPLOYEES. As new employees of the
Servico, Inc. controlled group, AMI Employees normally would be eligible to
participate in the Plan after completion of one Year of Eligibility Service, as
provided in Article III of the Plan. Notwithstanding the normal rules governing
participation in Article III of the Plan, the following provisions apply to AMI
Employees:
Each AMI Employee who was employed by AMI on August 28, 1998
and who on that date satisfied the criteria for eligibility to
participate in the Winegardner & Hammons, Inc. Managed Properties
Profit Sharing Plan - AMI Operating Partners (the "AMI 401(k) Plan")
shall be eligible to participate in the Plan effective August 28, 1998.
Each such AMI Employee's salary deferral contribution election made
with respect to the AMI 401(k) Plan and effective on August 28, 1998
shall be deemed made with respect to the Plan on and after such date
until changed by the Participant in accordance with Plan procedures.
II. INVESTMENT OF AMI PLAN MATCHING CONTRIBUTION ACCOUNT. In connection
with the future transfer to the Plan from the AMI's 401(k) Plan of the
account balances of the AMI Employees, the Plan will accept the
transfer of each such Employee's matching contribution account, which
has not been invested in Employer stock. An AMI Employee shall be
permitted to direct the investment of his or her matching contribution
account transferred from the AMI's 401(k) Plan in accordance with the
Plan's usual procedures governing Participant direction of investments.
III. VESTING IN AMI'S 401(K) PLAN EMPLOYER MATCHING CONTRIBUTION ACCOUNT.
Upon the transfer from the Seller's Plan of the account balances of the
AMI Employees, the Administrative Committee shall segregate or
otherwise account separately for the Employer matching contribution
account of each AMI Employee transferred from Seller's Plan.
Notwithstanding the provisions of Section 6.3 of the Plan, if an AMI
Employee's employment is terminated prior to attaining Normal
Retirement Age except for death or Total and Permanent Disability, the
following percentages of the Employer matching account transferred from
the Seller's Plan shall vest in the AMI Participant and shall be
distributed to or set aside for him (or his Beneficiary) in accordance
with the provisions of Article VII of the Plan:
Vested percentage of
Total Service for Vesting Employer Account
------------------------- --------------------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
Servico, Inc. has caused this Appendix A-1 to the Servico, Inc. 401(K)
Plan (the "Plan") to be executed effective with respect to such Plan
participants as described below.
67
SERVICO, INC.
By:
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Name:
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Title:
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68
APPENDIX A-2
SERVICO, INC. 401(K) PLAN
IMPAC HOTEL GROUP LLC
Effective December 11, 1998, as a result of several interrelated
corporate transactions, Servico, Inc. and Impac Hotel Group, LLC ("Impac")
become wholly owned subsidiaries of Lodgian, Inc. Employees of Impac thus became
employees of the Servico, Inc. controlled group and potentially eligible to
participate in the Plan. This Appendix contains special provisions concerning
such employees, who are hereinafter referred to as "Impac Employees."
I. PARTICIPATION OF IMPAC EMPLOYEES. As new employees of the
Servico, Inc. controlled group, Impac Employees normally would be eligible to
participate in the Plan after completion of one Year of Eligibility Service, as
provided in Article III of the Plan. Notwithstanding the normal rules governing
participation in Article III of the Plan, the following provisions apply to
Impac Employees:
Each Impac Employee who was employed by Impac on December 31,
1998, who on that date satisfied the criteria for eligibility to
participate in the Impac Hotel Group 401(k) Plan (the "Impac 401(k)
Plan") and who would have been eligible to participate in the Impac
401(k) Plan effective January 1, 1999 shall be eligible to participate
in the Plan effective January 1, 1999. Each such Impac Employee's
salary deferral contribution election made with respect to the Impac
401(k) Plan and effective on December 31, 1998 shall be deemed made
with respect to the Plan on and after such date until changed by the
Participant in accordance with Plan procedures.
II. INVESTMENT OF IMPAC PLAN MATCHING CONTRIBUTION ACCOUNT. In connection
with the future transfer to the Plan from the Impac's 401(k) Plan of
the account balances of the Impac Employees, the Plan will accept the
transfer of each such Employee's matching contribution account, which
has not been invested in Employer stock. An Impac Employee shall be
permitted to direct the investment of his or her matching contribution
account transferred from the Impac's 401(k) Plan in accordance with the
Plan's usual procedures governing Participant direction of investments.
Servico, Inc. has caused this Appendix A-2 to the Servico, Inc. 401(K)
Plan (the "Plan") to be executed effective with respect to such Plan
participants as described below.
SERVICO, INC.
By:
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Name:
-----------------------------------
Title:
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