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EXHIBIT 4(A)
NATIONAL CITY BANK, COLUMBUS
PROTOTYPE STANDARDIZED SAVINGS PLAN AND TRUST
ADOPTION AGREEMENT
Completion of this Adoption Agreement to the National City Bank,
Columbus Prototype Standardized Savings Plan and Trust (effective as of January
1, 1989) creates certain new legal relationships and responsibilities.
Accordingly, the Employer's legal counsel should review the Plan and Trust
prior to the execution of this document so as to ensure the suitability of the
Plan and Trust for the Employer.
Items marked with an asterisk (*) must be filled in.
Effective the 1st day of January, 1995.
Danninger Medical Technology, Inc., a
(Employer)
corporation, hereby:
(corporation, partnership, sole proprietorship)
*A. (1) ______ establishes an employee benefit plan and trust to be
known as
______________________________________________
Plan and Trust (the "Plan") in the form of the
National City Bank, Columbus Prototype
Standardized Savings Plan and Trust.
OR
(2) X amends The Danninger Medical Technology, Inc.
Retirement Express Savings Plan and Trust (the
"Plan"), originally executed on January 1, 1992,
effective as of January 1, 1992, by adopting in its
entirety the Danninger Medical Technology, Inc.
Retirement 401(k) Savings Plan and Trust in the form
of the National City Bank, Columbus Prototype
Standardized Savings Plan and Trust.
*B. Employer Address: 4140 Fisher Road, Columbus, Ohio 43228
Attn: Paul Miller Telephone: 614-276-2628
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*C. Plan Administrator (who is also Named Fiduciary and Agent for Service
of Process):
Company
*D. Employer Taxpayer Identification Number: 31-0992628
*E. The Plan Year ends on: December 31
E-1. The Fiscal Year, if different from the Plan Year, ends on: ____________
F. The Limitation Year ends on: __________________________________________
Valuation Date. The Valuation Date shall occur
*G. (1) ____ Annually on the last business day of the Plan Year.
OR
(2) ____ Semiannually on the last business day of the sixth
and twelfth months of the Plan Year.
OR
(3) ____ Quarterly on the last business day of the third,
sixth, ninth and twelfth months of the Plan Year.
OR
(4) ____ Annually on the last business day of the Plan Year
and, if the value of the Trust Fund has changed by
______ % since the last Valuation Date, on the last
business day of the quarter in which the change
occurred.
OR
(5) ____ Monthly on the last business day of each calendar
month of the Plan Year.
OR
(6) X Daily.
H. Base Pay. Base pay shall mean all of each Participants (select one)
___ (1) Section 3121 Wages (Social Security
Compensation).
X (2) Section 3401(a) Wages (Withholding
Compensation).
___ (3) 415 Safe-Harbor Compensation.
(1), (2), and (3) are defined in Section 2.3 of the
Plan.
Base Pay shall be determined over the following applicable period
(select one):
X the Plan Year.
___ the Calendar Year ending with or within the Plan Year.
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Compensation (select one)
X shall include
___ shall not include
Employer contributions made pursuant to a salary reduction agreement
which are not includible in the gross income of the Employee under
section 125, 402(a)(8), 402(h) or 403(b) of the Code.
I. Hours of Service. In lieu of crediting Hours of Service on the basis
of each hour actually completed, Hours of Service shall be credited on
the basis of the method selected below. Only one method may be
selected. The method selected shall be applied to all Employees
covered under the Plan.
(1) ___ On the basis of days worked:
An Employee shall be credited with 10 Hours
of Service if under Section 2.15 of the Plan
such Employee would be credited with at least
one Hour of Service during the day.
(2) ___ On the basis of weeks worked:
An Employee shall be credited with 45 Hours
of Service if under Section 2.15 of the Plan
such Employee would be credited with at least
one Hour of Service during the week.
(3) ___ On the basis of months worked:
An Employee shall be credited with 190 Hours
of Service if under Section 2.15 of the Plan
such Employee would be credited with at least
one Hour of Service during the month.
J. Eligibility Date.
(a) An Employee who has completed the Plan's eligibility
requirements shall become a Participant on the date described
in the first sentence of Section 2.11 of the Plan.
(b) ___ The Employer elects the monthly Eligibility Dates
described in the second sentence of Section 2.11 of the Plan.
K. Year of Eligibility Service. A Year of Eligibility Service shall be a
Plan Year during which an Employee completes ________ (less than
1,000) Hours of Service. (If not filled in, the terms of Section 2.34
of the Plan will control.)
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L. Year of Vesting Service. A Year of Vesting Service shall be a Plan
Year during which an Employee completed __________ (less than 1,000)
Hours of Service. (If not filled in, the terms of Section 2.35 of the
Plan will control.)
*M. Eligibility Requirements: The Eligibility requirements for
participation in the Plan are that:
(1) ___ The Employee has completed _______ Year(s) of Service
(not more than one (1) may be elected. If the Years
of Service selected is or includes a fractional year,
an Employee shall not be required to complete any
specified number of Hours of Service to receive
credit for such fractional year.
(2) X The Employee has attained age 21 (not greater
than age 21).
(3) X Excluded from Plan participation are employees
included in a unit of employees covered by a
collective bargaining agreement between the employer
and employee representatives, if retirement benefits
were the subject of good faith bargaining and if two
percent or less of the employees of the employer who
are covered pursuant to that agreement are
professionals as defined in section 1.410(b)-9(g) of
the proposed regulations. For this purpose, the term
"employee representatives" does not include any
organization more than half of whose members are
employees who are owners, officers, or executives of
the employer.
*N. Salary Reduction Contributions. Pursuant to Section 4.1 of the Plan,
Participants may elect Salary Reduction Contributions of up to the
following Reduction Percentage of Base Pay:
____ 1%
____ 2%
____ 3%
____ 4%
____ 5%
____ 6%
____ 7%
____ 8%
____ 9%
X 10% OR
any amount (in whole percentages) between 11% and 20%, which limiting
amount shall be ___________________%.
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A Participant may elect to commence Salary Reduction Contributions as
of January 1 and July 1 [ENTER AT LEAST ONE DATE OR PERIOD DURING A
CALENDAR YEAR] which date is no later than the earlier of the
Participant's date of participation under the Plan or his completion of
a Year of Service. Such election shall be come effective as of the 1st
(Enter Number) pay period following the pay period during which the
Participant's election to commence Salary Reduction Contributions was
made, or as soon as administratively feasible thereafter.
*O. Employer Matching Contributions. The Employer elects the following
ratio of Matching Contributions to Salary Reduction Contributions:
____ No match
____ 1 to 4 (25% match)
____ 1 to 2 (50% match)
____ 3 to 4 (75% match)
____ 1 to 1 (100% match)
X Other: (Describe below)
A discretionary matching contribution, the
amount determined by resolution of the Board
of Directors of the employer and communicated
to Participants on or before the end of the
taxable year.
P. Profit Sharing Contributions. (Optional). The Employer's annual
contribution (subject to the limitations of the Plan) shall be
____ (1) ____% of its Net Profit for the taxable year.
OR
____ (2) ____% of its Net Profits in excess of $______________.
OR
X (3) An amount determined by resolution of the Board of
Directors of the Employer and communicated to the
Participants on or before the end of the taxable
year.
OR
____ (4) The lesser of (i) ________% of the total Compensation
of all Participants for the taxable year, or
(ii) ______% of current Net Profit or the Employer
for such year.
OR
____ (5) An amount determined as follows:
NOTE: If this Item is elected, Items V and X must be completed.
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Q-1. Election to Disregard Profits. With regard to Plan contributions, Net
Profits shall be disregarded as indicated below.
____ Contributions,
____ Employer Matching Contributions, and
____ Profit Sharing Contributions to the Plan will be made
without regard to whether such contributions are made
from the Employer's Net Profits. (Check as
applicable.)
Q-2. Allocation of Special Qualified Non-elective Contributions to
Non-highly Compensated Employees. (Note: This Item may be elected
only if the Employer has also elected 100% vesting in Item X.)
____ In lieu of distributing Excess Deferred Contributions
sufficient to satisfy either of the Actual Deferral
Percentage tests contained in Section 5.3 of the
Plan, the Employer may make Special Qualified
Non-elective Contributions on behalf of Non-highly
Compensated Employees in an amount determined by the
Employer that is sufficient to satisfy either of such
tests.
Q-3. Election to Take Salary Reduction and Qualified Non-elective
Contributions into Account in Computing the Contribution Percentage.
(Note: This item may be elected only if the Employer has also elected
100% vesting in Item X.)
____ To the extent permitted in Treasury regulations and
in accordance with such regulations, Salary Reduction
Contributions and Qualified Nonelective Contributions
under this Plan and under any other plan of the
Employer may be taken into account in computing the
Contribution Percentage (as defined in Section 5.6 of
the Plan) of Participants in the Plan.
R. Allocation of Profit Sharing Account Forfeitures. (Note: This Item
must be completed if Item P has been elected unless 100% vesting has
been elected in Item X.) Forfeitures from the Profit Sharing Account
occurring during the Plan Year:
(1) ___ Shall be applied to reduce the contributions of the
Employer to the Plan.
(2) X Shall be allocated in the same manner as the Employer
contributions.
R-1. Allocation of Matching Contributions Account Forfeitures. (Note: This
Item and Item R-2 must be completed if Item O has been elected unless
100% vesting has been elected in Item W.) Forfeitures from the
Matching Contribution Account occurring during the Plan Year:
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(1) ___ Shall be applied to reduce the matching contributions
of the Employer of the Plan.
(2) X Shall be allocated in the same manner as are the
Employer contributions.
R-2. Forfeitures of Excess Aggregate Contributions shall be
(1) X applied to reduce Employer Contributions.
(2) ___ allocated, after all other Forfeitures under the
Plan, to each Participant's Matching Contribution
Account in the ratio which each Participant's Base
Pay for the Plan Year bears to the total Base Pay of
all Participants for such Plan Year. Such
forfeitures will not be allocated to the Account of
any Highly Compensated Employee.
S. ___ Non-Deductible Employee Contributions. Participants may make
voluntary non-deductible contributions pursuant to Section 6.1
of the Plan.
T. Profit Sharing Contributions may be made either on a basis which is
non-integrated or integrated with Social Security (Select (a) or (b)
below):
(a) X Non-integrated. Profit Sharing contributions shall
be allocated as provided in Section 8.5(a) of the
Plan.
(b) ___ Integrated. Profit Sharing contributions shall be
allocated as provided in Section 8.5(ba) of the
Plan.
NOTE: If the Employer maintains another qualified plan, which is a
plan integrated with Social Security, option (b) above may not be
selected.
Integration Level. The Integration Level is equal to:
(1) ___ The Taxable Wage Base
(2) ___ $_________________ (a dollar amount less than the
Taxable Wage Base)
OR
(3) ___ _________________% of the Taxable Wage Base (not to
exceed 100%)
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U. X Rollovers. Rollover contributions from other Plans pursuant
to Section 7.1 of the Plan shall be accepted.
V. (NOTE: This Item must be completed if Item P has been elected.) A
Participant whose employment is terminated before the end of a Plan
Year:
(1) ___ Shall share in Profit Sharing Contributions for such
Plan Year regardless of the number of Hours of
Service the Participant completed in that year.
(2) X Shall not share in Profit Sharing Contributions for
such Plan Year unless termination is due to death,
disability or retirement or unless the Participant in
any event completed at least 501 Hours of Service in
that year.
*W. Vesting - Matching Contribution Account. A Participant's Matching
Contribution Account shall be vested as follows:
(1) ___ 100% upon becoming a Participant;
OR
(2) ___ ____% (not less than 20) for each year of Vesting
Service;
OR
(3) ___ 100% after ________ (not to exceed 5) Years of
Vesting Service with no vesting before then;
OR
(4) X 20 % (not less than 20) vesting after 2 Years of
Vesting Service.
40 % (not less than 40) vesting after 3 Years of
Vesting Service.
60 % (not less than 60) vesting after 4 Years of
Vesting Service.
80 % (not less than 80) vesting after 5 Years of
Vesting Service.
100% vesting after 6 Years of Vesting Service;
OR
(5) ___ ____ (not less than 20) vesting after 3 Years of
Vesting Service.
____ (not less than 40) vesting after 4 Years of
Vesting Service.
____ (not less than 60) vesting after 5 Years of
Vesting Service.
____ (not less than 80) vesting after 6 Years of
Vesting Service.
100% vesting after 7 Years of Vesting Service.
X. Vesting - Profit Sharing Account. (NOTE: This Item must be completed
if Item P has been elected.) A Participant's Profit Sharing Account
shall be vested in him upon resignation or dismissal prior to
retirement in the following manner:
(1) ___ 100% upon becoming a Participant;
OR
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(2) ___ ____% (not less than 20) for each year of Vesting
Service
OR
(3) ___ 100% after - (not to exceed 5) Years of Vesting
Service with no vesting before then;
OR
(4) X 20 % (not less than 20) vesting after 2 Years of
Vesting Service.
40 % (not less than 40) vesting after 3 Years of
Vesting Service.
60 % (not less than 60) vesting after 4 Years of
Vesting Service.
80 % (not less than 80) vesting after 5 Years of
Vesting Service.
100% vesting after 6 Years of Vesting Service;
OR
(5) ____ (not less than 20) vesting after 3 Years of
Vesting Service.
____ (not less than 40) vesting after 4 Years of
Vesting Service.
____ (not less than 60) vesting after 5 Years of
Vesting Service.
____ (not less than 80) vesting after 6 Years of
Vesting Service.
100% vesting after 7 Years of Vesting Service.
Y. In computing a Participant's Years of Vesting Service for purposes of
Items W and X above, the following shall be disregarded:
(1) X Years of Service prior to the Participant's
attainment of age 18.
(2) ___ Years of Service before the Employer maintained this
Plan or a predecessor plan.
(3) ___ Years of Service before January 1, 1971, unless the
Employee has had at least 3 years of service after
December 31, 1970.
(4) ___ Years of Service before the effective date of ERISA
if such service would have been disregarded under the
break-in-service rules of the prior plan in effect
from time to time before such date. For this
purpose, break-in-service rules are rules which
result in the loss of prior vesting or benefit
accruals, or which deny an employee eligibility or
participate, by reason of separation or failure to
complete a required period of service within a
specified period of time.
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*Z. Limitation on Allocations. Note: If you maintain or ever maintained
another qualified plan in which any Participant in this Plan is (or
was) a participant or could possibly become a participant, you must
complete this Item. The employer must also complete this Item if it
maintains a welfare benefit fund, as defined in Section 419(e) of the
Code, or an individual medical account as defined in Section 415(1)(2)
of the Code, under which amounts are treated as annual additions with
respect to any Participant in this plan.
(1) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan:
____ The provisions of Section 9.3 of the Plan will apply
as if the other plan were a master or prototype plan.
____ (Provide the method under which the plans will limit
total Annual Additions to the Maximum Permissible
Amount, and will properly reduce any Excess Amounts,
in a manner that precludes Employer discretion.)
(2) If the Participant is or has ever been a Participant in a
defined benefit plan maintained by an Article VIII Employer:
(Employer must provide language which will satisfy the 1.0
limitation of Section 415(e) of the Code. Such language must
preclude Employer discretion. See Section 1.415-1 of the IRS
Regulations for guidance.)
AA. X Service with a Predecessor Employer. The Employer elects to
include an Employee's service with a predecessor employer for
the purpose of computing Years of Service and the predecessor
employer is at least eighty percent owned by the employer.
*BB. Top Heavy Provisions.
(1) Top-Heavy Valuation Date. For purposes of computing the
Top-Heavy Ration, the Top-Heavy Valuation Date shall be
________ for each year.
(2) ____ For each Participant who is covered under any other
plan of the Employer, the Top-Heavy minimum
allocation or benefit requirement will be met in that
other plan, entitled ________________________.
(3) The nonforfeitable interest of each Employee in his Matching
Contribution and Profit Sharing Account balances shall be
determined on the basis of the following:
(a) ___ 100% vesting after - (not to exceed 3) Year
of Vesting Service.
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(b) X 20 % (not less than 20) vesting after 2
Years of Vesting Service.
40 % (not less than 40) vesting after 3
Years of Vesting Service.
60 % (not less than 60) vesting after 4
Years of Vesting Service.
80 % (not less than 80) vesting after 5
Years of Vesting Service.
100% vesting after 6 Years of Vesting
Services
If the vesting schedule under the Plan shifts in or out of the above
schedule for any Plan Year because of the Plan's Top-Heavy status,
such shift is an amendment to the vesting schedule and the election in
Section 22.1(c) of the Plan applies.
(4) Present Value. For purposes of establishing present value to
compute the Top-Heavy Ratio, any benefit shall be discounted
only for mortality and interest based on the following:
Interest Rate: ______________________%
Mortality table: ____________________
Valuation date: For purposes of computing the Top-Heavy Ratio,
the valuation date shall be ___________________ of each year.
(5) Minimum Contribution: For purposes of minimum top-heavy
allocations, the contributions and forfeitures equal to 3% of
each non-key employee's Compensation will be allocation to the
employee's account when the Plan is top-heavy, or in the case
where the Employer has no defined benefit plan which
designates this Plan to satisfy Section 401 of the Code, the
largest percentage of Employer contributions and forfeitures,
as a percentage of the first $200,000 of the Key Employee's
Compensation, allocated on behalf of any Key Employee for that
Year.
CC. X Early Retirement. Each Participant shall be permitted to
elect early retirement on or after age 62 (not less than age 55
nor greater than age 64) with 6 Years of Vesting Service, (no
more than 10).
DD. X Hardship Distributions. Pursuant to Section 12.4 of the Plan,
Participants may apply for a distribution from the Plan in
situations of severe financial hardship. Distribution of
Salary Reduction Contributions (and earnings thereon accrued
as of December 31, 1989) may be made to a Participant in the
event of hardship. For the purposes of this section, hardship
is defined as an immediate and heavy financial need of the
employee where such employee lacks other available resources.
Hardship distributions are subject to the spousal consent
requirements contained in Sections 401 (a)(11) and 417 of the
Code.
Special Rules:
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(1) The following are the only financial needs considered
immediate and heavy: deductible medical expenses (within the
meaning of Section 213(d) of the Code) of the employee, the
employee's spouse, children, or dependents; the purchase
(excluding mortgage payments) of a principal residence for the
employee; payment of tuition for the next quarter or semester
of post-secondary education for the employee, the employee's
spouse, children or dependents; or the need to prevent the
eviction of the employee from, or a foreclosure on the
mortgage of the employee's principal residence.
(2) A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the employee only if:
(a) The employee has obtained all distributions, other
than hardship distributions, and all nontaxable loans
under all plans maintained by the employer;
(b) All plans maintained by the employer provide that the
employee's Elective Deferrals (and Employee
Contributions) will be suspended for twelve months
after the receipt of the hardship distribution;
(c) The distribution is not in excess of the amount of an
immediate and heavy financial need; and
(d) All plans maintained by the employer provide that the
employee may not make Elective Deferrals for the
employee's taxable year immediately following the
taxable year of the hardship distribution in excess
of the applicable limit under Section 402(g) of the
Code for such taxable year less the amount of such
employee's Elective Deferrals for the taxable year of
the hardship distribution.
EE. X Pre-Break Distributions to Terminated Participants. Pursuant
to sub-Section 12.6(b) and (c) of the Plan, Participants who
have terminated employment with the Employer may receive a
distribution before having incurred a Break-in-Service.
EE-1. X Forfeiture of Pre-Break Termination Distributions. The
special forfeiture rules described in sub-Section 12.6(c) of
the Plan shall be applied hereunder.
FF. X Loans. The Plan Administrator may, upon application of any
Participant, direct the Trustee to make a loan to such
Participant pursuant to the terms of Section 15.1 of the Plan.
Participant loans shall be
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___ held as general Trust Fund assets.
X held as assets of the accounts of individual Participants.
Minimum loan amount shall be $1,000.
GG. X Direction of Investment. The Employer hereby elects, pursuant
to Section 18.8 of the Plan, to permit Participants to direct
the investment of the following Accounts:
___ Salary Reduction Account
___ Matching Contribution Account
___ Profit Sharing Account
___ Non-Deductible Employee Account
___ Rollover Account
X All Accounts
Direction of investment by Participants:
___ Shall be limited
X Shall not be limited
to the investment in the collective investment trust maintained by
National City Bank, Cleveland, Ohio or any bank affiliated with
National City Bank and described in Section 18.6 of the Plan.
If individual direction of investments is permitted, the additional
fees for maintaining and administering Participant's individual
investment accounts
___ Shall be charged against said accounts.
___ Shall be charged to the Employer.
Each Participant who elects direction of investment shall have the
right to make one investment choice and one investment change under
Sections 18.8(c) and (d) of the Plan
___ annually
___ semi-annually
___ quarterly
X other period (specify) Daily
HH. ___ Insurance. The Employer hereby elects to allow the Trustee to
purchase life insurance contracts, if so requested by the
Participant, within the limits of Section 18.9 of the Plan.
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II. X Special Profit Sharing Benefit Form. Life annuities,
including Qualified Joint and Survivor Annuities, shall not be
available as a form of retirement benefit under the Plan.
Death benefit payments under Article XVI may not be paid to
Beneficiaries in the form of life annuities. Death benefit
payments shall be made to the surviving spouse of the
Participant or, if there is no such surviving spouse or if
such surviving spouse has consented in a manner conforming to
a Qualified Election (as that term is defined in sub-Section
13.2(c), to a designated Beneficiary.
JJ. Election of Survivor Annuity Percentage Other Than 50%. The survivor
annuity percentage for purposes of the Joint and Survivor Annuity
shall be ________%.
(The Employer must elect either (1) 66-2/3% or (2) 100% if the
Employer does not want to have such percentage to be 50%.)
KK. Special Distributions. The amounts in a Participant's Account shall
be distributable upon the occurrence of the following special events.
(check as applicable.)
X Termination of the Plan without the establishment of a
successor plan.
___ As soon as administratively feasible after the sale by the
corporate Employer of substantially all of the assets used by
the Employer in the trade or business in which the Participant
is employed to an entity which is not an Affiliated Employer.
___ As soon as administratively feasible after the sale by the
corporate Employer, to an entity that is not an Affiliated
Employer, of such corporate Employer's interest in a
subsidiary (within the meaning of Section 409(d)(3) of the
Code).
KK-1. Early Distributions. Salary Reduction Contributions, Qualified
Non-Elective Contributions, Qualified Matching Contributions and
income allocable to such amount shall be distributable prior to
termination of employment.
___ Upon attainment of age 59-1/2 by the Participant.
For purpose of this Item, the term "Affiliated Employer" shall mean
any entity required to be aggregated with the corporate Employer under
Sections 414(b), 414(c) or 414(o) of the Code.
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The Sponsor of this Prototype Plan is:
National City Bank, Columbus
Employee Benefits Department
155 East Broad Street
Columbus, OH 43251-0050
THE FAILURE TO PROPERLY COMPLETE THIS ADOPTION AGREEMENT MAY RESULT IN
DISQUALIFICATION OF THE PLAN.
The Sponsor will inform the Employer of any amendments to the Prototype Plan or
of the discontinuance or abandonment of such Plan.
An employer who has ever maintained or who later adopts any plan (including a
welfare benefit fund, as defined in Section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate accounts for key
employees, as defined in Section 419A(d)(3) of the Code, or an individual
medical account, as defined in Section 415(l)(2) of the Code) in addition to
this plan may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this plan is qualified under
Section 401 of the Internal Revenue Code. If the employer who adopts or
maintains multiple plans wishes to obtain reliance that his or her plan(s) are
qualified, application for a determination letter should be made to the
opportunity Key District Director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with basic plan
document #06.
IN WITNESS WHEREOF, the Employer and National City Bank, Columbus by their
respective duly authorized officer, have caused this Agreement to be executed
on this ________________________ day of _____________________________, 19_____.
Danninger Medical Technology, Inc. NATIONAL CITY BANK, COLUMBUS
By /s/ Paul A. Miller By /s/ Roger J. St. Cyr
--------------------------------- ---------------------------------
Paul A. Miller Roger J. St. Cyr
Title Chief Financial Officer Title Vice President
------------------------------ -----------------------------
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BANCOHIO NATIONAL BANK
PROTOTYPE STANDARDIZED SAVINGS PLAN AND TRUST
(Basic Plan Document #06)
BancOhio National Bank hereby adopts, to read as follows, the BancOhio
National Bank Prototype Standardized Savings Plan and Trust.
ARTICLE I - NAME
The Plan and Trust shall be known as BANCOHIO NATIONAL BANK PROTOTYPE
STANDARDIZED SAVINGS PLAN AND TRUST.
ARTICLE II - DEFINITIONS
Terms used in this Plan shall be defined as provided in this Article.
In addition, certain other definitions, for use in determining deferral and
benefit limitations, for applying non-discrimination standards and for defining
certain forms of benefits under the Tax Equity and Fiscal Responsibility Act of
1982, the Retirement Equity Act of 1984 and the Tax Reform Act of 1986 will be
found in Sections 5.1, 5.6. 9.1, 11.2 and 13.2, respectively.
2.1 "Account Valuation Date" or "Valuation Date" shall mean the
date the Trust assets are valued pursuant to Article VIII of the Plan.
Valuation will occur on the Valuation Dates specified in Item G of the Adoption
Agreement, but at least once per Plan Year.
2.2 "Adoption Agreement" shall mean the agreement under which an
Employer adopts a Plan or amends and restates an existing Plan.
2.3 "Base Pay" shall mean either (1), (2) or (3) below, as
elected by the Employer in the Adoption Agreement:
(1) Section 3121 wages (Social Security Compensation).
Wages as defined in section 3121(a), for purposes of calculating
social security taxes, but determined without regard to the wage base
limitation in section 3121(a)(1), the limitations on the exclusions
from wages in section 3121(a)(5)(C) and (D) for elective contributions
and payments by reason of salary reduction agreements, the special
rules in section 3121(v), any rules that limit covered employment
based on the type or location of an employee's employer. and any rules
that limit the remuneration included in wages based on familial
relationship or based
17
on the nature or location of the employment or the services performed
(such as the exceptions to the definition of employment in section
3121(b)(1) through 20)).
(2) Section 3401(a) wages (Withholding Compensation).
Wages as defined in section 3401(a) for the purposes of income tax
withholding at the source but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in section 3401(a)(2)).
(3) 415 Safe-Harbor Compensation. 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, reimbursements, and expense allowances), and excluding the
following:
(a) 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, or employer contributions under a simplified
employee pension plan to the extent such contributions are
deductible by the employee, or any distributions from a plan
of deferred compensation;
(b) 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;
(c) Amounts realized from the sale, exchange
or other disposition of stock acquired under a qualified
stock option; and
(d) 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 described in section 403(b) of the Internal
Revenue Code (whether or not the amounts are actually
excludable from the gross income of the employee).
For any Self-Employed Individual covered under the Plan, Base Pay shall mean
Earned Income. Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount which is contributed
by the Employer pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under section 125, 402(a)(8),
402(h) or 403(b) of the Code. The annual compensation of each Participant
taken into
18
account under the plan for any year shall not exceed $200,000, as adjusted by
the Secretary at the same time and in the same manner as under section 415(d)
of the Code, 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. If
a plan determines compensation on a period of time that contains fewer than 12
calendar months, then the annual compensation limit is an amount equal to the
annual compensation limit for the calendar year in which the compensation
period begins multiplied by the ratio obtained by dividing the number of full
months in the period by 12. In determining the compensation of a Participant
for purposes of this limitation. the rules of section 414(q)(6) of the Code
shall apply, except in applying such rules, the term "family" shall include
only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If, as
a result of the application of such rules the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion of compensation
up to the integration level if this plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in proportion to
each such individual's compensation as determined under this section prior to
the application of this limitation.
2.4 "Beneficiary" means the person or persons designated by a
Participant (or by a Participant's surviving spouse who is the Participant's
Beneficiary) as his Beneficiary on the last effective form filed with the Plan
Administrator or a person duly designated by the Plan Administrator, under
Section 16.1 of the Plan. In the absence of an effective designation, the
Beneficiary is the person or persons to whom a deceased Participant's benefits
are payable under said Section 16.1 of the Plan.
2.5 "Break in Service" shall mean an applicable Computation
Period during which an Employee does not complete more than 500 Hours of
Service with the Employer.
2.6 "Code" or "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended. Reference to a section of the Code shall
include that section and any comparable section or sections of any future
legislation that amends, supplements or supersedes that section.
2.7 "Computation Period" shall mean the applicable
12-consecutive month period for which Years of Service and Breaks in Service
are determined for purposes of Plan participation, vesting and benefit accrual:
(a) For Purposes of determining Years of Eligibility
Service and Breaks in Service for participation, the initial
Computation Period is the 12-consecutive month period beginning on the
date the Employee first performs an Hour of Service for the Employer.
The succeeding 12-consecutive month periods commence with the first
Plan Year which commences on, or prior to, the first anniversary of
the Employee's initial participation Computation Period, regardless of
whether the Employee is entitled to be credited with 1,000
19
Hours of Service during the initial Computation Period. An Employee
who is credited with 1,000 Hours of Service in both the initial
participation Computation Period and the first Plan Year which
commences prior to the first anniversary of the Employee's initial
participation Computation Period will be credited with two Years of
Eligibility Service for participation.
(b) Years of Eligibility Service after a Break in
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. 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
participation Computation Period in which the Employee incurs a Break
in Service.
(c) For purposes of computing an Employee's vested and
nonforfeitable right to the account balance derived from Employer
Contributions, Years of Vesting Service and Breaks in Service will be
measured by the Plan Year.
(d) For Purposes of determining a Participant's
entitlement to an allocation of Employer contributions or forfeitures,
Years of Accrual Service will be measured by the Plan Year.
2.8 "Early Retirement Age" shall mean the age, if indicated, in
Item CC on the Adoption Agreement, at which a Participant may retire from the
employ of an Employer, pursuant to Section 12.2 herein. If a Participant
separates from service before satisfying the age requirement for early
retirement, but after satisfying any service requirement, the Participant will
be entitled to elect an early retirement benefit upon satisfaction of such age
requirement.
2.9 "Earned Income" shall mean the net earnings from
self-employment in the trade or business with respect to which the Plan is
established, for which personal services of the individual are a material
income-producing factor. Net earnings will be determined without regard to
items not included in gross income and the deductions allocable to such items.
Net earnings are reduced by contributions by the Employer to a qualified plan
to the extent deductible under section 404 of the Code. Net earnings shall be
determined with regard to the deduction allowed to the employer by section
164(f) of the Code for taxable years beginning after December 31, 1989.
2.10 "Effective Date" shall be the effective date of the
Employer's plan as set forth in the Adoption Agreement.
2.11 "Eligibility Date" shall mean, with respect to any Employee,
the earlier of the Effective Date or the first day of any Plan Year, or the
date six months thereafter, if: (a) the Employee is then employed by the
Employer and (b) the Employee has completed any eligibility
20
requirements indicated in Item M of the Adoption Agreement. Notwithstanding
the provisions of the preceding sentence, the Employer may elect, in Item J of
the Adoption Agreement, that an Employee's Eligibility Date be the first day of
the calendar month which follows his completion of the Item M eligibility
requirements.
2.12 "Employee" shall refer to any individual who is employed by
the Employer or by any other employer required to be aggregated under section
414(b), (c), (m) or (o) of the Code. Any individual who is a leased employee
and deemed under section 414(n) or section 414(o) of the Code to be an employee
of any employer described in the preceding sentence shall also be considered an
Employee. Any leased Employee shall be treated as an Employee of the recipient
Employer; however, contributions or benefits provided by the leasing
organization which are attributable to services performed for the recipient
Employer shall be treated as provided by the recipient Employer. 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
Employer 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 of a type historically performed by employees in the
business field of 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 percent of compensation, as defined in section
415(c)(3) of the Code, but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the employee's gross income under
section 125, section 402(a)(8), section 402(h) or section 403(b) of the Code,
(2) immediate participation, and (3) full and immediate vesting; and (ii)
leased employees do not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
2.13 "Employer" shall refer to the corporation, partnership or
sole proprietor whose name appears on the Adoption Agreement executed by it
and to any successor corporation, partnership, or sole proprietor which elects
to continue this Plan pursuant to sub-Section 22.4(d). The term "Employer"
shall also refer, to the extent required by applicable law for any purpose, to
all members of a controlled group of corporations (as defined in section 414(b)
of the Code as modified by section 415(h)), all commonly controlled trades or
businesses (as defined in section 414(c) as modified by section 415(h)) or
affiliated service groups (as defined in section 414(m)) of which the adopting
employer is a part and any other entity required to be aggregated with the
employer pursuant to section 414(o) and the regulations thereunder.
2.14 "Employer Matching Contribution" shall mean a contribution
made or to be made by the Employer, as determined under Section 4.2.
21
2.15 "Hour of Service" shall mean:
(a) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer.
These Hours shall be credited to the Employee for the Computation
Period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence. No more than 501 Hours of Service
shall be credited under this paragraph for any single continuous
period (whether or not such period occurs in a single Computation
Period). Hours under this Paragraph shall be calculated and credited
pursuant to section 2530.200b-2 of the Department of Labor
Regulations, which are incorporated herein by reference; and
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer.
The same Hours of Service shall not be credited both under paragraph
(a) or paragraph (b), as the case may be, and under this paragraph
(c). These Hours shall be credited to the Employee for the
Computation Period or Periods to which the award or agreement
pertains, rather than the Computation Period in which the award,
agreement or payment is made.
(d) A leave of absence shall be granted by the
Employer for service in the armed forces of the United States and for
jury duty. A leave of absence may be granted by the Employer for
sickness, accident, vacations, disability or other similar reasons
under rules established by it and uniformly applied by it to all
individuals similarly situated.
(e) Hours of Service will be credited for employment
with other members of: (i) an affiliated service group, under section
414(m); (ii) a controlled group of corporations, under section 414(b);
or (iii) a group of trades or businesses under common control, under
section 414(c), provided that the Employer is a member of any such
group and with any other entity required to be aggregated with the
employer pursuant to section 414(o) and the regulations thereunder.
Hours of Service will also be credited for any individual considered
an Employee for purposes of this Plan under section 414(n) or section
414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether a Break
in Service, as defined in Section 2.5 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; in any case in which
such Hours cannot be determined, 8 Hours of Service
22
per day of such absence shall be credited. For purposes of this
sub-Section, absence from work for maternity or paternity reasons
means an absence (i) by reason of the pregnancy of the individual,
(ii) by reason of a birth of a child of the individual, (iii) by
reason of the placement of a child with the individual in connection
with the adoption of such child by such individual, or (iv) for
purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service credited
under this sub-Section shall be credited (i) in the Computation Period
in which the absence begins if the crediting is necessary to prevent a
Break in Service in that Period, or (ii) in all other cases, in the
following Computation Period.
(g) Hours of Service may be determined on an
alternative basis under a method selected in Item I of the Adoption
Agreement.
2.16 "Joint and Survivor Annuity" shall mean an annuity for the
life of the Participant with a survivor annuity for the life of the
Participant's spouse which is not less than one-half, nor greater than, the
amount of the annuity payable during the joint lives of the Participant and the
Participant's spouse. The Joint and Survivor Annuity will be the amount of
benefit which can be purchased with the Participant's Account balance. The
percentage of the survivor annuity under the Plan shall be 50% unless a
different percentage is elected by the Employer in Item JJ of the Adoption
Agreement.
2.17 "Matching Contribution Account" shall mean an account
established to hold Employer Matching Contributions described in Section 4.2,
as well as any earnings on such Contributions.
2.18 "Net Profits" shall mean the current and accumulated
earnings of the Employer, determined by the Employer upon the basis of its
books of accounts and in accordance with generally accepted accounting
practices, without any deduction for federal and state taxes or for
contributions made by the Employer under this Plan or any other qualified plan.
2.19 "Non-Deductible Employee Account" shall mean an account
established to hold any non-deductible Employee contributions made pursuant to
Section 6.1 herein, and any earnings on such contributions.
2.20 "Normal Retirement Age" shall mean, for all Participants,
age sixty-five (65) years, or the Employer's mandatory retirement age, if
lower.
2.21 "Owner-Employee" shall mean an individual who is a sole
proprietor or a partner owning more than 10 percent of either the capital or
profits interest of a partnership.
23
If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and any plan
established for other trades or businesses must, when looked at as a single
plan, satisfy Code sections 401(a) and (d) for the employees of this and all
other trades or businesses. If the Plan provides contributions or benefits for
one or more Owner-Employees who control one or more other trades or businesses,
the employees of the other trades or businesses must be included in a plan
which satisfies Code sections 401(a) and (d) and which provides contributions
and benefits not less favorable than Provided for Owner-Employees under this
Plan. An Owner-Employee, or two or more Owner-Employees, will be considered to
control a trade or business if the Owner-Employee, or two or more
Owner-Employees, either own the entire interest in an unincorporated trade or
business, or, in the case of a partnership, own more than fifty percent (50%)
of either the capital interest or the profits interest in the partnership. For
purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees, shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
If an individual is covered as an Owner-Employee under the
plan of two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or benefits of
the employees under the Plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan of
the trade or business which is not controlled.
2.22 "Participant" shall mean any Employee who on or after the
Effective Date has reached his Eligibility Date. An Employee shall become a
Participant on his Eligibility Date.
2.23 "Plan Administrator" shall mean the person or committee
named by the Employer in Item C of the Adoption Agreement, which person or
committee shall have the authority to control and manage the Plan operations
and administration. In the event that the position of Plan Administrator is
vacant at any time for any reason, the Employer shall carry out the duties of
the Plan Administrator hereunder.
2.24 "Plan Year" or "Year" shall mean the 12-consecutive month
period ending on the date specified in Item E of the Adoption Agreement and
each 12-consecutive month Period thereafter.
2.25 "Profit Sharing Account" shall mean an account established
to hold Profit Sharing Contributions described in Section 4.3, as well as any
earnings on such Contributions.
2.26 "Profit Sharing Contribution" shall mean an Employer
contribution described in Section 4.3 of the Plan.
24
2.27 "Rollover Account" shall mean an Account established to hold
rollover contributions (described in Section 7.1) transferred to the Plan, as
well as any earnings on such contributions.
2.28 "Salary Reduction Account" shall refer to an account
maintained by the Trustee, pursuant to Section 4.1, to account for a
Participant's interest in the Trust Fund attributable to his Salary Reduction
Contributions.
2.29 "Salary Reduction Contribution" shall mean a contribution
made or to be made as a result of an election made by a Participant under
Section 4.1 to have a portion of his Base Pay diverted to the Trust Fund as an
Employer contribution. Salary Reduction Contributions are sometimes referred
to as "Elective Deferrals".
2.30 "Salary Reduction Percentage" shall mean the portion,
expressed as a percentage, of a Participant's Base Pay which he elects, under
Section 4.1, to have contributed to the Trust Fund.
2.31 "Self-Employed Individual" shall mean: (a) an individual
who has Earned Income for his taxable year from the trade or business for which
the Plan is established and (b) an individual who would have had Earned Income
but for the fact that the trade or business had no Net Profits for its taxable
year.
2.32 "Trust Fund" or "Fund" shall mean all assets held under a
Plan by the Trustee.
2.33 "Trustee" shall be the BancOhio National Bank, or its
successor or successors as Trustee of the Trust.
2.34 "Year of Eligibility Service" shall mean a participation
Computation Period described in Section 2.7(a) during which an Employee
completes 1,000 (or other lesser number designated in Item K of the Adoption
Agreement) Hours of Service with the Employer.
2.35 "Year of Vesting Service" shall mean a Plan Year during
which an Employee completes 1,000 (or other lesser number designated in Item L
of the Adoption Agreement) Hours of Service with the Employer.
ARTICLE III - PARTICIPATION
3.1 Eligibility. An Employee shall become a Participant as of
the first Eligibility Date following his satisfying the requirements of Item M
of the Adoption Agreement. The Employer may elect in Item M to exclude from
participation Employees who are members of a collective bargaining unit and
whose retirement benefits have been the subject of good faith bargaining. Any
Employee
25
who has satisfied the age and service requirements of Item M but has been
excluded under the preceding sentence shall become a Participant as of the date
he no longer is so excludable.
3.2 Participation Break in Service Rules.
(a) If an Employee has a Break in Service before
satisfying the Plan's requirement for eligibility to participate,
service before the Break will not be taken into account. The
preceding sentence shall only apply with respect to Employees who must
complete more than one Year of Eligibility Service in order to become
eligible to participate in the Plan. A Participant shall continue as
a Participant until such time as he incurs a Break in Service.
(b) A former Participant will again become a
Participant immediately upon returning to the employ of the Employer
if such former Participant has a nonforfeitable (vested) right to all
or a portion of his Employer Account balance at the time of
termination from service.
(c) A former Participant who did not have a
nonforfeitable right to any portion of his Employer Account balance at
the time of termination from service will be considered a new
Employee, for purposes of eligibility to participate, if his number of
consecutive one year Breaks in Service equals or exceeds the greater
of five (5) or the aggregate number of Years of Eligibility Service
before such Break. If the number of consecutive Breaks in Service of
such former Participant do not equal or exceed the greater of five (5)
or the aggregate number of Years of Eligibility Service, he shall
participate immediately upon returning to the employ of the Employer.
3.3 Former Employee or Participant. Except as is otherwise
provided in Section 3.2, if a former Employee or Participant is reemployed by
the Employer, he will be considered as a new Employee for purposes of
participation in the Plan.
3.4 Predecessor Employer Service.
(a) An Employee's Years of Eligibility Service shall
be deemed to include all service with a predecessor employer, if so
elected by the Employer in Item AA of the Adoption Agreement.
(b) Where the Employer maintains the plan of a
predecessor employer, service for such predecessor employer shall be
treated as service for the Employer.
26
ARTICLE IV - SALARY REDUCTION, EMPLOYER MATCHING
AND PROFIT SHARING CONTRIBUTIONS
4.1 Salary Reduction Contributions.
(a) Each Plan Participant will be permitted to elect
to have his or her Base Pay reduced by a percentage permitted in this
Section. The percentage to be applied to the Participant's Base Pay
shall be a whole percentage, in the range elected by the Employer in
Item N of the Adoption Agreement, which shall be applied against the
Participant's Base Pay prior to federal or state income tax
adjustments. The amount by which Base Pay is reduced following
application of the Salary Reduction Percentage shall be contributed by
the Participant's Employer to the Trust Fund as a Salary Reduction
Contribution of that Employer. Each such Contribution shall be
credited to a Salary Reduction Account of each such electing
Participant and shall be invested by the Trustee pursuant to the terms
of Article XVIII. The provisions of the cash or deferred arrangement
("CODA") contained herein may be made effective as of the first day of
the Plan Year in which the CODA is adopted. However, under no
circumstances may a salary reduction agreement or other deferral
mechanism be adopted retroactively.
(b) A Participant shall be afforded a reasonable
period at least once each calendar year, as specified in the Adoption
Agreement, to elect to commence Salary Reduction Contributions. A
Participant's election to commence Salary Reduction Contributions must
remain in effect until modified or terminated. The election described
in the preceding sub-Section shall be made on forms provided by the
Plan Administrator. Such election shall be made and filed with the
Plan Administrator by such date as is Prescribed by the Plan
Administrator in its rules.
(c) Notwithstanding any provision to the contrary
herein, effective with respect to taxable Years beginning after
December 31, 1989, no Participant shall be permitted, pursuant to an
election made by him hereunder, to have Salary Reduction Contributions
made for him for any taxable year of his in excess of $7,979. The
$7,979 amount specified in this sub-Section may be increased from time
to time (as to taxable years beginning on or after January 1, 1991) by
the Secretary of the Treasury for increases in the cost of living
(hereinafter referred to as the "Adjustment Factor").
(d) The Salary Reduction Percentage election may be
changed during a Plan Year, as often as may be permitted by the Plan
Administrator, by the completion and proper filing of election change
forms. A Participant may elect to discontinue application of the
Salary Reduction Percentage to his Base Pay by notifying the Plan
Administrator, pursuant to its rules, of his desire to discontinue
Salary Reduction; provided, that such Participant's
27
eligibility for, and entitlement to, future Salary Reduction
Contributions shall be limited as provided in rules established by the
Plan Administrator.
(e) Any rules established under this Section shall be
established and administered in a uniform and non-discriminatory
fashion and may be amended from time to time in the sole and absolute
discretion of the Plan Administrator.
4.2 Employer Matching Contributions.
(a) Each Employer shall, if so elected in Adoption
Agreement Item O, make contributions to the Trust Fund, which, when
aggregated for a Plan Year, shall be equal to such percentage of the
total amount of the Plan Year's Salary Reduction Contributions of its
Employees as may be elected by the Employer in the said Item.
(b) Employer Matching Contributions shall be allocated
by the Trustee to separate Trust Fund accounts, known as Matching
Contribution Accounts, for the holding and investing of each
Participant's share of such Contributions. Allocation of each
Employer Matching Contribution shall be effected in a manner which
results in the crediting to the Matching Contribution Account of each
Employee-Participant of an amount equal to that same percentage of his
Salary Reduction Contribution as the Employer has elected in Item O.
Upon their allocation to the individual Matching Contribution Accounts
of Participants, Employer Matching Contributions shall be vested as
provided for in Item W of the Adoption Agreement and invested as
provided in Article XVIII of this Plan. In any event, Matching
Contributions shall be fully vested at normal retirement age, upon the
complete or partial termination of the profit-sharing plan, or upon
the complete discontinuance of employer contributions. Forfeitures of
Matching Contributions, other than Excess Aggregate Contributions,
shall be made in accordance with the provisions of section 4.5.
4.3 Profit Sharing Contributions.
(a) In addition to, or in lieu of, the Employer
Matching Contributions described in Section 4.2, the Employer may
elect, in Item P of the Adoption Agreement, to make Profit Sharing
Contributions an available Plan funding method. In such case, for
each Plan Year the Employer shall contribute to the Trustee such
amount as is determined in accordance with the provisions selected by
the Employer in the said Item P.
(b) Such Contributions shall be allocated pursuant to
the provisions of Sections 8.5 and 8.6 of the Plan. Upon their
allocation to the individual Profit Sharing Accounts of Participants,
Profit Sharing Contributions shall be vested as provided for in Item X
of the Adoption Agreement and shall be invested as provided in Article
XVIII of the Plan.
28
4.4 Net Profits. Employer Matching and Profit Sharing
Contributions for a Plan Year shall be paid out of the Employer's Net Profits.
Notwithstanding the foregoing provisions, to the extent elected by the Employer
in Item Q-1 of the Adoption Agreement, Employer Matching and Profit Sharing
Contributions for a Plan Year shall be made without regard to whether such
contributions are made from the Employer's Net Profits, provided the Plan shall
continue to be designed to qualify as a profit-sharing plan for purposes of
sections 401(a), 402, 412 and 417 of the Code. The sum of Salary Reduction,
Employer Matching and Profit Sharing Contributions made for a Plan or Fiscal
Year may not exceed the maximum amount deductible by the Employer for plan
contributions under section 404 of the Code.
4.5 Forfeitures. The Employer shall elect, in Item R of the
Adoption Agreement, whether the total of a preceding Plan Year's Profit Sharing
Account forfeitures, under sub-Section 10.3(d) of the Plan, should be included
as a component of the amounts described in the preceding Section or treated as
though a separate Profit Sharing Contribution (i.e., whether or not forfeitures
should be used to reduce such Contributions). A similar election by the
Employer shall be made with regard to Matching Contribution Account forfeitures
in Item R-1 of the Adoption Agreement.
4.6 Duties of Trustee Regarding Employer Contributions. All
contributions made under the Plan by the Employer shall be delivered to the
Trustee. The Trustee shall be accountable for all Employer contributions
received by it but shall have no duty to require any contributions to be
delivered to it or to determine if the contributions received comply with the
Plan or with any resolution of the Board of Directors of the Employer providing
therefor.
ARTICLE V - LIMITATIONS ON CONTRIBUTIONS
(NON-DISCRIMINATION STANDARDS)
5.1 Deferral Limitation Definitions. Solely for the purpose of
interpreting and carrying out the provisions of this Article, the following
terms shall be defined as set forth below:
(a) "Actual Deferral Percentage" (ADP) - The average
of the Individual Deferral Percentage of each Participant who is a
Highly Compensated Employee and each Participant who is a Non-highly
Compensated Employee, with such average to be calculated separately
for each such group of Employees.
(b) "Base Pay" - See Section 2.3.
(c) "Deferred Amount" - The sum of
(i) Salary Reduction Contributions,
29
(ii) if the Employer has elected 100%
vesting in Item W of the Adoption Agreement, Employer
Matching Contributions and
(iii) Qualified Nonelective Contributions,
credited on a Participant's behalf for a Plan Year.
(d) "Excess Deferred Contributions" - With respect to
any Plan Year, the excess of the Deferred Amount actually paid over to
the Trust on behalf of Highly Compensated Employees for such Plan
Year, over the maximum amount of such contributions permitted under
section 5.3 (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the Individual Deferral
Percentages beginning with the highest of such percentages).
(e) "Excess Elective Deferrals" - The amount of Salary
Reduction Contributions for a taxable year of a Participant that the
Participant allocates to this Plan pursuant to the claim procedure set
forth in section 5.2. Excess Elective Deferrals shall result from
contributions made under this Plan and any other arrangement described
in section 401(k) of the Code which in the aggregate exceed, for a
taxable year of a Participant, $7.000 multiplied by the Adjustment
Factor.
(f) "Family Member" - With respect to an Employee,
such Employee's spouse and lineal ascendants or descendants and the
spouses of such lineal ascendants or descendants.
(g) "Highly Compensated Employee" - The term highly
compensated employee includes highly compensated active employees and
highly compensated former employees.
A highly compensated active employee includes any
employee who performs service for the employer during the
determination year and who, during the look-back year: (i) received
compensation from the employer in excess of $75,000 (as adjusted
pursuant to section 415(d) of the Code); (ii) received compensation
from the employer in excess of $50,000 (as adjusted pursuant to
section 415(d) of the Code) and was a member of the top-paid group for
such year; or (iii) was an officer of the employer and received
compensation during such year that is greater than 50 percent of the
dollar limitation in effect under section 415(b)(1)(A) of the Code.
The term highly compensated employee also includes: (i) employees who
are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and
the employee is one of the 100 employees who received the most
compensation from the employer during the determination year; and (ii)
employees who are 5 percent owners at any time during the look-back
year or determination year.
30
If no officer has satisfied the compensation
requirement of (iii) above during either a determination year or
look-back year, the highest paid officer for such year shall be
treated as a highly compensated employee.
For this purpose, the determination year shall be
the plan year. The look-back year shall be the twelve-month period
immediately preceding the determination year.
A highly compensated former employee includes any
employee who separated from service (or was deemed to have separated)
prior to the determination year, performs no service for the employer
during the determination year, and was a highly compensated active
employee for either the separation year or any determination year
ending on or after the employee's 55th birthday.
If an employee is, during a determination year or
look-back year, a family member of either a 5 percent owner who is an
active or former employee or a highly compensated employee who is one
of the 10 most highly compensated employees ranked on the basis of
compensation paid by the employer during such year, then the family
member and the 5 percent owner or top-ten highly compensated employee
shall be aggregated. In such case, the family member and 5 percent
owner or top-ten highly compensated employee shall be treated as a
single employee receiving compensation and Plan contributions or
benefits equal to the sum of such compensation and contributions or
benefits of the family member and 5 percent owner or top-ten highly
compensated employee. For purposes of this section, family member
includes the spouse, lineal ascendants and descendants of the employee
or former employee and the spouses of such lineal ascendants and
descendants.
The determination of who is a highly compensated
employee, including the determinations of the number and identity of
employees in the top-paid group, the top 100 employees, the number of
employees treated as officers and the compensation that is considered,
will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
(h) "Non-highly Compensated Employee" - An Employee of
an Employer who is not a Highly Compensated Employee.
(i) "Qualified Nonelective Contributions" - Profit
Sharing Contributions, but only if the Employer has elected 100%
vesting in Item X of the Adoption Agreement.
(j) "Special Qualified Non-elective Contributions" -
Qualified Non-elective Contributions which are allocated to Non-highly
Compensated Employees only as provided in Section 5.5(b).
31
(k) "Individual Deferral Percentage" (IDP) - The
percentage figure derived from dividing a Participant's Deferred
Amount for a Plan Year by his Base Pay for such Year.
(l) "Salary Reduction Contributions" or Elective
Deferrals" - See Section 2.29.
(m) "Salary Reduction Percentage" - See Section 2.30.
(n) "Adjustment Factor" - See Section 4.1(c).
Special Rules:
1. The IDP for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Non-elective Contributions or
Qualified Matching Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP test) allocated to his or her
accounts under two or more arrangements described in section 401(k) of
the Code, that are maintained by the employer, shall be determined as
if such Elective Deferrals (and, if applicable, such Qualified
Non-elective Contributions or Qualified Matching Contributions, or
both) were made under a single arrangement. If a Highly Compensated
Employee participates in two 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.
2. In the event that this plan satisfies the
requirements of sections 401(k), 401(a)(4), or 410(b) of the Code only
if the aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such sections of the Code only
if aggregated with this plan, then this section shall be applied by
determining the ADP 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 section 401(k) of the Code only if they
have the same Plan Year.
3. For purposes of determining the IDP of a
Participant who is a 5-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the Elective Deferrals (and
Qualified Non-elective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) and Compensation of such Participant shall include
the Elective Deferrals (and, if applicable, Qualified Non-elective
Contributions and Qualified Matching Contributions, or both) and
Compensation for the Plan Year of Family Members (as defined in
section 414(q)(6) of the Code). Family Members, with respect to such
Highly Compensated Employees. shall be disregarded as separate
employees in determining the ADP both for Participants who are
32
Non-highly Compensated Employees and for Participants who are Highly
Compensated Employees.
4. For purposes of determining the ADP test, Elective
Deferrals, Qualified Non-elective 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.
5. The employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of Qualified
Non-elective Contributions or Qualified Matching Contributions, or
both, used in such test.
6. The determination and treatment of the ADP amounts
of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
5.2 Distribution of Excess Elective Deferrals. Notwithstanding
any other provision of the Plan, Excess Elective Deferrals, plus any income and
minus any loss allocated thereto, shall be distributed no later than April 15,
1988, and each April 15 thereafter, to Participants to whose accounts Excess
Elective Deferrals, were allocated for the preceding calendar year and who
claim Excess Elective Deferrals for such calendar year. Excess Elective
Deferrals shall not be treated as Annual Additions under the Plan to the extent
they are distributed by the first April 15 following the close of the calendar
year in which the Excess Elective Deferrals were made. The Participant's claim
shall be in writing; shall be submitted to the Plan Administrator not later
than the first March 1 after the close of the calendar year in which such
Excess Elective Deferrals were made; shall specify the amount of the
Participant's Excess Elective Deferrals for such calendar year; and shall be
accompanied by the Participant's written statement that if such amounts are not
distributed, such Excess Elective Deferrals. when added to amounts deferred
under other plans or arrangements described in sections 401(k), 408(k) or
403(b) of the Code, will exceed the limit imposed on the Participant by section
402(g) of the Code for the year in which the deferral occurred. The income or
loss allocable to Excess Elective Deferrals shall be determined by (1)
multiplying the income or loss allocable to the Participant's Salary Reduction
Contributions for the Plan Year by a fraction, the numerator of which is the
Excess Elective Deferral on behalf of the Participant for the preceding Plan
Year and the denominator of which is the Participant's account balance
attributable to Salary Reduction Contributions on the last day of the preceding
Plan Year and (2) adding to such amount ten percent of the amount determined
under (1) multiplied by the number of whole calendar months between the end of
the Participant's taxable year and the date of distribution, counting the month
of distribution if distribution occurs after the 15th of such month.
5.3 Actual Deferral Percentage. The Actual Deferral Percentage
for Highly Compensated Employees for each Plan Year and the Actual Deferral
Percentage for Non-highly Compensated Employees for the same Plan Year must
satisfy one of the following tests:
33
(a) The Actual Deferral Percentage for Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Participants who are
Non-highly Compensated Employees for the Plan Year multiplied by 1.25;
or
(b) The Actual Deferral Percentage for Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the Actual Deferral Percentage for Participants who are
Non-highly Compensated Employees for the Plan Year Multiplied by 2.0,
provided that the Actual Deferral Percentage for Participants who are
Highly Compensated Employees does not exceed the Actual Deferral
Percentage for Participants who are Non-highly Compensated Employees
by more than two (2) percentage points or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the multiple use
of this alternative limitation with respect to any Highly Compensated
Employee.
5.4 Aggregation of Plans. The Individual Deferral Percentage
for any Participant who is a Highly Compensated Employee for the Plan Year and
who is eligible to have Deferred Amounts allocated to his account under two or
more arrangements described in section 401(k) of the Code that are maintained
by the Employer shall be determined as if such Deferred Amounts were
contributed under a single arrangement.
5.5 Treatment of Excess Deferred Contributions.
(a) Subject to the provisions of the following
sub-Sections of this Section 5.5, Excess Deferred Contributions, plus
any income and minus any loss allocable thereto, shall be distributed
no later than the last day of each Plan Year beginning after December
31, 1987, to Highly Compensated Employees to whose accounts Deferred
Amounts were allocated for the preceding Plan Year. Notwithstanding
the foregoing, in order to avoid the imposition of a 10% excise tax on
the Employer on the amount of the Excess Deferred Contributions, the
Employer shall distribute such Contributions plus income no later than
2-1/2 months after the close of the Plan Year to which such
Contributions relate. The Excess Deferred Contributions are to be
distributed to those Highly Compensated Employees for whom a reduction
is made under section 5.1(d). Such distributions shall be made to
Highly Compensated Employees on the basis of the respective portions
of the Excess Contributions attributable to each of such employees.
Excess Contributions shall be allocated to Participants who are
subject to the family member aggregation rules of section 414(q)(6) of
the Code in the manner prescribed by the regulations.
(b) In lieu of distributing Excess Deferred
Contributions as provided in the preceding sub-Sections of this
Section, and to the extent elected in Item Q-2 of the Adoption
Agreement, the Employer may make Special Qualified Non-elective
Contributions on behalf of Non-highly Compensated Employees in an
amount that is sufficient to satisfy either of the
34
tests set forth in section 5.3. Allocations of Special Qualified
Non-elective Contributions to each Non-highly Compensated Employee's
account shall be made in the ratio in which each such Employee's Base
Pay for the Plan Year bears to the total Base Pay of all such
Employees for such Plan Year.
(c) Determination of income or loss: The Excess
Deferred Contributions shall be adjusted for income or loss. The
income or loss allocable to Excess Deferred Contributions is the sum
of (1) an amount determined by multiplying the income or loss
allocable to the Participant's Deferred Amount for the Plan Year by a
fraction, the numerator of which is the Excess Deferred Contributions
on behalf of the Participant for the preceding Plan Year and the
denominator of which is the sum of the Participant's account balances
attributable to his Deferred Amounts on the last day of the preceding
Plan Year without regard to any income or loss occurring during such
Plan Year; and (2) income or loss allocable to the Participant's
Excess Deferred Contributions for the period between the end of such
Plan Year and the date of distribution multiplied by the fraction
determined under (1) above; or, at the option of the employer, ten
(10) percent of the amount determined under (1) multiplied by the
number of whole calendar months between the end of such Plan Year and
the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
(d) Accounting for Excess Deferred Contributions:
Excess Deferred Contributions shall be distributed from the
Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching Contributions
(to the extent used in the ADP test) for the Plan Year. Excess
Deferred Contributions shall be distributed from the Participant's
Qualified Non-elective Contribution account only to the extent that
such Excess Deferred Contributions exceed the balance in the
Participant's Elective Deferral account and Qualified Matching
Contribution account.
(e) Excess Deferred Contributions shall be treated as
Annual Additions under the Plan.
5.6 Limitations on Employee Contributions and Matching
Contributions.
(a) For purposes of this Section, the following
terms"shall be defined as set forth below:
(i) "Average Contribution Percentage"
(ACP) - The average of the Contribution Percentage of each
Participant who is a Highly Compensated Employee and each
Participant who is a Non-highly Compensated Employee, with
such average to be calculated separately for each such group
of Employees.
35
(ii) "Contribution Percentage" - The
percentage figure derived from dividing a Participant's ECMC
Contributions for a Plan Year by his Base Pay for such Year.
(iii) "ECMC Contributions" - For a Plan
Year, the sum of (A) Voluntary Contributions made pursuant
to Section 6.1, (B) Employer Matching Contributions (to the
extent not taken into account for purposes of the Actual
Deferral Percentage tests set forth in Section 5-3) and (C)
to the extent permitted by regulations issued by the
Secretary of the Treasury, Salary Reduction Contributions
and Qualified Nonelective Contributions under the Plan or
any other plan of the Employer which the Employer elects
(pursuant to Item Q-3 of the Adoption Agreement) to take
into account in computing the Contribution Percentage. Such
ECMC Contributions shall include forfeitures of Excess
Aggregate Contributions or Employer Matching Contributions
allocated to the Participant's account, which shall be taken
into account in the year in which such forfeitures are
allocated. Salary Reduction Contributions may be included
as part of ECMC Contributions only if the Actual Deferral
Percentage test is met before the Salary Reduction
Contributions are used in the Average Contribution
Percentage ("ACP") test set forth in this Section 5.6 and
continues to be met following the exclusion of those Salary
Reduction Contributions that are used to meet the ACP test.
(iv) "Excess Aggregate Contributions" -
With respect to any Plan Year, the excess of the aggregate
amount of ECMC Contributions actually made on behalf of
Highly Compensated Employees for such Plan Year over the
maximum amount of such Contributions permitted under Section
5.6(b) (determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their
Contributed Percentages beginning with the highest of such
percentages).
(b) The Average Contribution Percentage for Highly
Compensated Employees for each Plan Year and the Average Contribution
Percentage for Non-highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(i) The Average Contribution Percentage
for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Contribution
Percentage for Participants who are Non-highly compensated
Employees for the Plan Year multiplied by 1.25; or
(ii) The Average Contribution Percentage
for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average
36
Contribution Percentage for Participants who are Non-highly
Compensated Employees for the Plan Year multiplied by two
(2), provided that the Average Contribution Percentage for
Participants who are Highly Compensated Employees does not
exceed the Average Contribution Percentage for Participants
who are Non-highly Compensated Employees by more than two
(2) percentage points or such lesser amount as the Secretary
of the Treasury shall prescribe to prevent the multiple use
of this alternative limitation with respect to any Highly
Compensated Employee.
(c) Special Rules:
1. Multiple Use: If one or more Highly
Compensated Employees participate in both a CODA and a plan
subject to the ACP test maintained by the employer and the
sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate Limit.
then the ACP of those Highly Compensated Employees who also
participate in a CODA will be reduced (beginning with such
Highly Compensated Employee whose ACP is the highest) so
that the limit is not exceeded. The amount by which each
Highly Compensated Employee's Contribution Percentage
Amounts is reduced shall be treated as an Excess Aggregate
Contribution. The ADP and ACP of the Highly Compensated
Employees are determined after any corrections required to
meet the ADP and ACP tests. Multiple use does not occur if
either the ADP or ACP of the Highly Compensated Employees
does not exceed 1.25 multiplied by the ADP and ACP of the
Non-highly Compensated Employees.
2. For purposes of this section, the
Contribution Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her
account under two or more plans described in section 401(a)
of the Code, or arrangements described in section 401(k) of
the Code that are maintained by the employer, shall be
determined as if the total of such Contribution Percentage
Amounts was made under each plan. If a Highly Compensated
Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
3. In the event that this plan satisfies
the requirements of sections 401(m), 401(a)(4) or 410(b) of
the Code only if aggregated with one or more other plans, or
if one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with this plan, then
this section shall be applied by determining the
Contribution Percentage of employees as if all such plans
were a
37
single plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy section
401(m) of the Code only if they have the same Plan Year.
4. For purposes of determining the
Contribution percentage of a Participant who is a
five-percent owner or one of the ten most highly-paid Highly
Compensated Employees, the Contribution' Percentage Amounts
and Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation for the
Plan Year of family Members (as defined in section 414(q)(6)
of the Code). Family members, with respect to Highly
Compensated Employees, shall be disregarded as separate
employees in determining the Contribution Percentage both
for Participants who are Non-highly Compensated Employees
and for Participants who are Highly Compensated Employees.
5. For purposes of determining the
Contribution Percentage test, Employee Contributions are
considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and
Qualified Non-elective Contributions will be considered made
for a Plan Year if made no later than the end of the
twelve-month period beginning on the day after the close of
the Plan Year.
6. The employer shall maintain records
sufficient to demonstrate satisfaction of the ACP test and
the amount of Qualified Non-elective Contributions or
Qualified Matching Contributions, or both, used in such
test.
5.7 Required Aggregation. (a) For purposes of Section 5.6, the
Contribution Percentage for any Participant who is a Highly Compensated
Employee and who is eligible to make ECMC Contributions under two or more plans
described in section 401(a) of the Code, or arrangements described in section
401(k) of the Code, that are maintained by the Employer, shall be determined as
if the total of such ECMC Contributions was made under each Plan. If a Highly
Compensated Employee participates in two or more cash or deferred arrangements
that have different plan years, all cash or deferred arrangements ending with
or within the same calendar year shall be treated as a single arrangement.
(b) If this Plan satisfies the requirements of section
410(b) of the Code only if aggregated with one or more other plans, or if one
or more other plans satisfy the requirements of section 410(b) of the Code only
if aggregated with this Plan, then Section 5.6 shall be applied by determining
the Contribution Percentages of Participants 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 section 401(m) of the Code only if they have the
same plan year.
38
5.8 Treatment of Excess Aggregate Contributions. (a) Excess
Aggregate Contributions, plus any income and minus any loss allocable thereto,
shall be distributed (or if forfeitable, shall be forfeited) no later than the
last day of each Plan Year beginning after December 31, 1987, to Highly
Compensated Employees on the basis of the respective portions of such amounts
attributable to each of such Employees. Forfeitures of Excess Aggregate
Contributions shall be allocated in the manner elected by the Employer in Item
R-2 of the Adoption Agreement. Notwithstanding the foregoing, in order to
avoid the imposition of a 10% excise tax on the Employer on the amount of the
Excess Aggregate Contributions, the Employer shall distribute (or if
forfeitable, shall forfeit) such Contributions plus income no later than 2-1/2
months after the close of the Plan Year to which such Contributions relate.
Excess Aggregate Contributions shall be allocated to Participants who are
subject to the family member aggregation rules of section 414(q)(6) of the Code
in the manner prescribed by the regulations.
(b) Determination of income or loss: The Excess
Aggregate Contributions shall be adjusted for income or loss. The income or
loss allocated to Excess Aggregate Contributions is the sum of (1) an amount
determined by multiplying the income or loss, allocable to the Participant's
ECMC Contributions for the Plan Year by a fraction, the numerator of which is
the Excess Aggregate Contributions on behalf of the Participant for the
preceding Plan Year and the denominator of which is the sum of the
Participant's ECMC Contributions on the last day of the preceding Plan Year;
and (2) income or loss allocable to the Participant's ECMC Contributions for
the period between the end of such Plan Year and the date of distribution
multiplied by the fraction determined under (1) above; or, at the option of the
employer, ten (10) percent of the amount determined under (1) multiplied by the
number of whole calendar months between the end of such Plan Year and the date
of distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
(c) To the extent that such order of distribution does
not violate general nondiscrimination requirements, amounts distributed under
this Section shall be distributed to a Participant in the following order:
(i) From his Non-Deductible Employee
Account;
(ii) From his Salary Reduction Account, to
the extent such amounts are used in calculating his
Contribution Percentage;
(iii) From his Profit Sharing Account, to
the extent Qualified Non-elective Contributions are used in
calculating his Contribution Percentage;
(iv) From his Matching Contribution
Account; with each Account to be reduced to zero before
distributions are to be made from the next Account.
39
(d) Excess Aggregate Contributions shall be treated as
Annual Additions under the Plan.
5.9 Order of Determination of Limitations. Limitations on
Contributions under this Article shall be determined in the following order:
(a) Excess Elective Deferrals.
(b) Excess Deferred Contributions.
(c) Excess Aggregate Contributions.
ARTICLE VI - NON-DEDUCTIBLE PARTICIPANT CONTRIBUTIONS
6.1 Voluntary Contributions. If permitted by the Employer in
Item S of the Adoption Agreement, a Participant may make voluntary
contributions ("nondeductible Employee contributions") in an amount not more
than ten percent (10%) of his aggregate taxable Base Pay for all Years under
this Plan and all other qualified plans of the Employer.
6.2 How Paid or Deducted. A Participant's contributions may be
made by regular payroll deductions from his Base Pay or in any other way
approved by the Employer and the Trustee. Participant contributions shall be
paid to the Trustee at least ten (10) business days before the Account
Valuation Date which ends the accounting period of the Plan for which such
contributions were made.
6.3 Variation, Discontinuance and Resumption. A Participant, by
notice to the Plan Administrator, may elect to change his voluntary
contribution rate (but not retroactively) within the limits specified above, to
discontinue making contributions, or to resume contributions. all as of the
Account Valuation Date coincident with or next following said notice.
6.4 Withdrawal of Participant Contributions. After all
adjustments required under the Plan as of the last preceding Account Valuation
Date have been made, a Participant may withdraw not more than the lesser of:
(a) his total non-deductible contributions made in accordance with Section 6.1
or (b) the amount then credited to his Non-Deductible Employee Account (as
described in Section 8.1), by filing a written request to do so with the Plan
Administrator at least forty-five (45) days in advance. No other
non-deductible contributions may be made by such Participant for the Year in
which he makes such a withdrawal. No forfeiture will occur solely as a result
of the Participant's withdrawal of his non-deductible contributions. Unless the
Special Profit Sharing Benefit Form has been elected by the Employer under Item
II of the Adoption Agreement, any withdrawal shall be made only if the
Participant's spouse (if any) consent's (in the manner set forth in Section
13.2(c)) to the withdrawal.
40
6.5 Nonforfeitability. A Participant's contributions made
pursuant to Section 6.1, as well as any earnings thereon, shall be fully vested
and nonforfeitable.
6.6 Duties of Trustee Regarding Participant Contributions. The
Trustee shall be accountable for all Participant contributions received by it,
but shall have no duty to require any contributions to be delivered to it nor
to determine that the contributions received are of the correct amount or are
correctly attributed to the Participants who made them.
ARTICLE VII - ROLLOVERS
7.1 Rollovers. If so permitted in Item U of the Adoption
Agreement, an Employee otherwise eligible to participate in the Plan,
regardless of whether he has satisfied the age and service requirements of the
Plan, who has had distributed to him his entire interest in a plan which meets
the requirements of section 401(a) of the Internal Revenue Code (the "Other
Plan") may, in accordance with procedures approved by the Plan Administrator,
transfer the distribution received from the other Plan to the Trustee provided
the following conditions are met:
(a) The transfer occurs on or before the 60th day
following his receipt of the distribution from the Other Plan or, if
such distribution had previously been deposited in an individual
retirement account (as defined in Section 408 of the Code), the
transfer occurs on or before the 60th day following his receipt of
such distribution plus earnings thereon from the individual retirement
account;
(b) The distribution from the Other Plan constitutes a
"qualified total distribution" as such term is defined in subsection
402(a)(5)(E)(i) of the Code; and
(c) The amount transferred is equal to no more than
the total distribution he received from the Other Plan, plus any
earnings on such sum accrued during the period, if any, in which such
sum was held in an individual retirement account, less the amount of
any non-deductible Employee contributions made to the Other Plan.
The Plan Administrator shall develop such procedures, and may require such
information from an Employee desiring to make such a transfer, as it deems
necessary or desirable to determine that the proposed transfer will meet the
requirements of this Section. Upon approval by the Plan Administrator, the
amount transferred shall be deposited in the Trust fund and shall be credited
to the Employee's Rollover Account. Such Account shall be fully vested in the
Employee and shall share in income allocations in accordance with Section 8.3
below. Upon termination of employment, the total amount of the Employee's
Rollover Account shall be distributed in accordance with Article XII. Upon
such a transfer by an Employee, who is otherwise eligible to participate in the
Plan but has not yet completed the service requirements of the Plan, his
Rollover Account shall represent his sole interest in the Plan until he becomes
a Participant.
41
7.2 Direct Transfer of Asset Agreements. The Trustee possesses
the specific authority to enter into merger agreements or direct transfer of
asset agreements with the trustees of other retirement plans described in Code
Section 401(a) and to accept the direct transfer of plan assets, or to transfer
plan assets, as a party to any such agreement:
(a) The Trustee may accept a direct transfer of plan
assets on behalf of an Employee prior to the date the Employee
satisfies the Plan's eligibility condition(s). If the Trustee accepts
such a direct transfer of plan assets, the Plan Administrator, the
Employer, and the Trustee shall treat the Employee as a Participant
for all purposes of the Plan except the Employee may not make
contributions nor shall the Employee share in Employer contributions
or forfeitures, if any, until he actually becomes a Participant in the
Plan by satisfying the Plan's eligibility conditions.
(b) The Trustee shall hold, administer, and distribute
the transferred assets as a part of the Fund and the Trustee shall
maintain appropriate separate accounts for the Employees on whose
behalf the Trustee accepted the transfer(s), in order to reflect the
value of the transferred assets.
(c) Right to Have Nonforfeitable Accrued Benefit
Transferred. By notice to the Plan Administrator, a Participant
entitled to a distribution shall have the right to have the
nonforfeitable portion of his Accrued Benefit transferred to another
plan and trust which is qualified under section 401(a) of the Code
(including but not limited to being in compliance with Code section
417) and is a tax-exempt trust under the provisions of section 501(a)
of the Code. No such transfer to a qualified plan and trust shall be
made until the Trustee has determined that such plan and trust meet
the "qualification" requirements of the Code.
7.3 Transfers from Other Plans; Rollover Contributions. The
Trustee, upon authorization from the Plan Administrator, may accept transfers
on behalf of a Participant from:
(a) a qualified pension or profit sharing plan
maintained by a former employer of the Participant;
(b) a qualified pension or profit sharing plan
previously maintained by the Employer, or which previously covered the
Participant;
(c) a "rollover" Individual Retirement Account as that
term is defined in Section 408(d)(3)(A)(ii) of the Code; or
(d) a plan in which assets are held on behalf of an
Owner Employee as defined in Section 401(c)(3) of the Code, which
satisfies the applicable requirements of Sections 401(a) and 401(d) of
the Code and with respect thereto:
42
(i) the transferred funds shall be
maintained in separate accounts in the name of the
respective Participants;
(ii) a Participant's interest in the separate
account shall be nonforfeitable; and
(iii) the Trustee may not lend any portion
of such separate account to any Participant.
ARTICLE VIII - ACCOUNTS AND ALLOCATIONS
8.1 Participants' Accounts. Separate accounting shall be carried
out by the Trustee for the accrued benefit of each Participant. Such
accounting shall include maintenance of a Salary Reduction Account, a Matching
Contribution Account and a Profit Sharing Account consisting of the
Participant's share of Profit Sharing Contributions and forfeitures arising
under the Plan. To the extent that the Employer elects, pursuant to Items W
and X of the Adoption Agreement, to make non-forfeitable Employer Matching
Contributions and/or Qualified Nonelective Contributions, separate Accounts
shall be maintained with respect to such nonforfeitable Employer Matching
Contributions and Qualified Nonelective Contributions. Each such Account shall
include any income, losses, appreciation and depreciation attributable thereto.
In addition, if so elected by the Employer in Items S and U of the Adoption
Agreement, such accounting shall also include maintenance by the Trustee of a
Non-Deductible Employee Account and a Rollover Account, where applicable, for
Participant contributions and rollovers and for any income, losses,
appreciation or depreciation attributable thereto.
The Trustee shall not be required to maintain separate
investment sub-accounts for any Account, unless the Employer elects to permit
Participants to direct the investments in their Accounts pursuant to Section
18.8 and to Item GG of the Adoption Agreement.
8.2 Employer Contributions Considered Made on Last Day of Plan
Year. For purposes of this Article, the Employer's contribution under the Plan
for any Plan Year will be considered to have been made on the last day of that
Year, regardless of when paid to the Trustee.
8.3 Valuation. As of each Account Valuation Date, the Trustee
shall:
(a) First, charge to the proper Accounts all payments
or distributions made from Participants' Accounts since the last
preceding Valuation Date that have not been charged previously;
(b) Second, determine the value of all assets in the
Trust Fund on the basis of fair market value and allocate the net gain
or loss to the Accounts of Participants in
43
proportion to the balances in such Accounts, determined without regard
to the amount of any Employer or Employee contributions made since the
last preceding Valuation Date;
(c) Third, allocate and credit Employer contributions
and forfeitures that are to be allocated and credited as of that
Valuation Date, in accordance with Section 8.5; and
(d) Fourth, credit any Salary Reduction Contributions,
Matching Contributions and Participant contributions (or rollovers)
that are to be credited as of that Valuation Date, in accordance with
Sections 4.1, 4.2, 6.1 and 7.1.
8.4 Charging of Payments and Distributions. As of each Account
Valuation Date, all payments and distributions made under the Plan since the
last preceding Valuation Date to or for the benefit of a Participant or his
Beneficiary will be charged to the proper Account of such Participant.
8.5 Allocation of Profit Sharing Contributions and Forfeitures.
Subject to the limitations of Article IX and, when applicable, the Top-Heavy
Plan provisions of Article XI, as of each Account Valuation Date falling on the
last day of a Plan Year, an Employer's Profit Sharing Contributions for that
Plan Year and any forfeitures which arose under the Plan during that Year,
shall be allocated to the Profit Sharing Accounts of Participants entitled,
under Section 8.6, to share in such contributions and forfeitures for that Year
in the manner provided in (a) or (b) below.
(a) Non-integrated Plan. There shall be allocated to
the Profit Sharing Account of each such Participant a portion of the
Employer's Profit Sharing Contribution, and of forfeitures treated
under Section 4.5 as a separate profit sharing contribution, equal to
the percentage which that Participant's Base Pay (without regard to
Salary Reduction Contributions) bears to the aggregate of such
unadjusted Base Pay of all such Participants in the Plan for the Year.
(b) Integrated Plan. If the Plan is integrated with
Social Security, profit sharing contributions for the Plan Year (plus
any forfeitures treated under Section 4.5 as a separate profit sharing
contribution) will be allocated to Participants' accounts as follows:
STEP ONE: The Employer will first, for each
Participant entitled to a profit sharing contribution
allocation for the year, determine a percentage of Base
Pay (the "base contribution percentage") which shall be
the same for each Participant and shall be multiplied by
the total Base Pay of each Participant for such year.
The resulting amount for each such Participant will be
allocated to his account.
STEP TWO: Additional contributions will be
allocated to each Participant's account in an amount
determined by multiplying each
44
Participant's Base Pay for the year in excess of
the integration level, if any, by a percentage
determined by the Employer, which percentage may
not exceed the lesser of (1) and (2), where (1) is
the base contribution percentage determined under
STEP ONE and (2) is the greater of 5.7% or the old
age insurance portion of the employers' OASDI tax
rate for the year (adjusted, as necessary, in
accordance with the disparity rate table set forth
below).
STEP THREE: Any remaining Profit
Sharing Contributions or Forfeitures will be
allocated to each Participant's Account in the
ratio that each Participant's total Base Pay for
the Plan Year bears to all Participants' total Base
Pay for that year.
The integration level shall be equal to
the taxable wage base (TWB) or such lesser amount
elected by the Employer in the Adoption Agreement.
The taxable wage base is the maximum amount of
earnings which may be considered wages for a year
under Section 3121(a)(1) of the Code in effect as
of the beginning of the Plan Year.
Base Pay shall mean Base Pay as defined
in Section 2.3. The maximum profit-sharing
disparity rate is equal to the lesser of:
(a) 5.7%
(b) the applicable percentage
determined in accordance with
the table below:
If the Integration Level:
the applicable
is more than but not more than percentage is:
------------ ----------------- --------------
$0 X* 5.7%
X* of TWB 80% of TWB 4.3%
80% of TWB Y** 5.4%
*X = the greater of $10,000 or 20 percent of the TWB.
45
**Y = any amount more than 80% of the TWB but less
than 100% of the TWB.
If the integration level used is equal to the taxable
wage base, the applicable percentage is 5.7%.
Provided, however, in any Plan Year during which the
Plan is top heavy within the meaning of Section 416 of the
Code, the allocation of the Contribution to Employer Accounts
shall be subject to the following limitations:
(i) The allocation to the Accounts of all Employees
must be at least 3% of Compensation. and
(ii) For purposes of paragraph (i) hereof, the term
Participant shall include those Participants who have
completed an Hour of Service in the Plan Year and have
not separated from service on the Account Valuation
Date of the Plan Year. For purposes of making the
minimum Contribution under this Section, a non-Key
Employee shall receive a minimum Contribution
regardless of his level of Compensation.
The minimum allocation required (to the extent
required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Section
411(a)(3)(B) or 411(A)(3)(D) of the Code.
8.6 Participants to Whom Profit Sharing Contributions and Forfeitures
Will be Allocated. An Employer's Profit Sharing Contributions for a Year, if
any, plus any forfeitures which arose under the Plan during that Year and which
are to be allocated to Participants' accounts, will be allocated among and
credited to the Profit Sharing Accounts of those Employees who are Participants
in the Plan during any part of such Year and who received Base Pay for such
Year, provided, however, that the Employer may limit the allocation of
contributions and forfeitures with respect to the Participants who terminated
employment before the end of a Plan Year in accordance with the Employer's
election made under Item V of the Adoption Agreement.
8.7 Crediting of Participant Contributions. Any voluntary contributions
made by a Participant under the Plan will be credited to the appropriate
Account, as of the Account Valuation Date which ends the accounting period of
the Plan for which such contributions were made by the Participant.
ARTICLE IX - LIMITATION ON ALLOCATIONS
9.1 Definitions. The following definitions shall apply to terms
used in this Article IX:
46
(a) "Actual Compensation" - A Participant's earned income,
wages, salaries, and fees for professional services and other amounts
received for personal services actually rendered in the course of
employment with the Employer maintaining the Plan (including, but not
limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums,
tips and bonuses), excluding the following:
(i) 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, or Employer
contributions under a simplified employee pension plan to the
extent such contributions are deductible by the Employee, or
any distributions from a plan of deferred compensation;
(ii) 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;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock
option; and
(iv) 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 described in section 403(b) of the Internal Revenue
Code (whether or not the amounts are actually excludable from
the gross income of the Employee).
For purposes of applying the limitations of this Article, Actual
Compensation for a Limitation Year is the Actual Compensation actually
paid or includible in gross income during such Year. Notwithstanding
the preceding sentence, Actual Compensation for a Participant who is
permanently and totally disabled (as defined in section 22(e)(3) of the
Internal Revenue Code) is the compensation such Participant would have
received for the Limitation Year if the Participant had been paid at
the rate of compensation paid immediately before becoming permanently
and totally disabled; 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 section 414(q) of the Code),
and contributions made on behalf of such Participant are nonforfeitable
when made.
(b) "Annual Additions" The sum of the following amounts
credited to a Participant's Accounts for the Limitation Year:
(i) Employer contributions;
47
(ii) forfeitures; and
(iii) non-deductible Employee contributions.
For this purpose, any Excess Amount applied under sub-Section 9.2(d) in
the Limitation Year to reduce Employer contributions will be considered
Annual Additions for such Limitation Year. In addition, amounts
allocated, after March 31, 1984, to an individual medical account
(defined in section 415(1)(2) of the Code), which is part of a pension
or annuity plan maintained by the Employer, are treated as Annual
Additions to a defined contribution plan. 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 a separate account of a key employee (as
defined in section 419A(d)(3) of the Code) under a welfare benefit fund
(defined in section 419(e) of the Code) maintained by an Employer are
to be treated as Annual Additions to a defined contribution plan.
(c) "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 one hundred
twenty-five percent (125%) of the dollar limitation determined for the
Limitation Year under sections 415(b) and (d) of the Code or one
hundred forty percent (140%) of the Highest Average Compensation,
including any adjustments under section 415(b) of the Code.
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 one hundred twenty-five percent
(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 Code section 415 for all
limitation years beginning before January 1, 1987.
(d) "Defined Contribution Fraction" - A fraction, the numerator
of which is the sum of the Annual Additions to the Participant under
all the defined contribution plans (whether or not terminated)
maintained by the Employer for the current and all prior Limitation
Years (including the Annual Additions attributable to the Participant's
Nondeductible Employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer), and the Annual
Additions attributable to all welfare benefit funds, as defined in
section 419(e) of the Code, and individual medical
48
accounts, as defined in section 415(1) (2) of the Code, 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 with
the Employer (regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate amount in any
Limitation Year is the lesser of one hundred twenty-five percent (125%)
of the dollar limitation determined under sections 415(b) and (d) of
the Code in effect under section 415(c)(1)(A) of the Code or
thirty-five percent (35%) of the Participant's Actual Compensation for
such Year. If the employee was a Participant as of the end of the first
day of the first limitation year beginning after December 31, 1986, in
one or more defined contribution Plans maintained by the employer which
were in existence on May 6, 1986, the numerator of this fraction will
be adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this plan. Under
the adjustment, an amount equal to the product of (1) the excess of the
sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last limitation year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the plan made after May 5, 1986, but using the 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 recomputed to treat all
employee contributions as annual additions.
(e) "Excess Amount" - The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(f) "Highest Average Compensation" - The average compensation
for the three (3) consecutive Years of Service with the Employer that
produces the highest average. A Year of Service with the Employer is
the 12-consecutive month period defined in Section 2.37 of the Plan.
(g) "Limitation Year" - A calendar year, or the 12-consecutive
month period elected by the Employer in Item F of the Adoption
Agreement. All qualified plans maintained by the Employer must use the
same Limitation Year. If the Limitation Year is amended to a different
12-consecutive month period, the new Limitation year must begin on a
date within the Limitation Year in which the amendment is made.
(h) "Master or Prototype Plan" A plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
(i) "Maximum Permissible Amount" - The lesser of:
49
(i) $30,000 (or, if greater, 1/4 of the defined
benefit dollar limitation set forth in section 415(b)(1) of the
Code as in effect for the Limitation Year), which is also the
"defined contribution dollar limitation" or,
(ii) twenty-five percent (25%) of the Participant's
Actual Compensation for the Limitation Year.
The compensation limitation referred to in (ii) shall not apply to any
contribution for medical benefits (within the meaning of section 401(h) or
section 419A(f)(2) of the Code) which is otherwise treated as an annual addition
under section 415(1)(1) or 419A(d)(2) of the Code. 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
amount in (i)(i) multiplied by the following fraction:
Number of months in the short Limitation Year
12
(j) "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 a plan assuming:
(i) the Participant will continue employment until
normal retirement age under that plan (or current age, if
later) and
(ii) the Participant's Actual Compensation for the
current Limitation Year and all other relevant factors used to
determine benefits under that plan will remain constant for all
future Limitation Years.
9.2 Participant in Single Plan. This Section shall apply if the
Participant does not participate, and has never participated, in another
qualified plan or in a welfare benefit fund, as defined in section 419(e) of the
Code maintained by the adopting Employer or an individual medical account, as
defined in section 415(1)(2) of the Code, maintained by the employer, which
provides an annual addition as defined in Section 9.1(b) of the Plan.
(a) The amount of Annual Additions which may be credited to the
Participant 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 would cause the Annual Additions for
the Limitation Year to exceed the Maximum Permissible Amount, the
amount contributed or
50
allocated will be reduced so that the Annual Additions for the
Limitation Year will equal the Maximum Permissible Amount.
(b) Prior to determining a Participant's Actual Compensation
for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for the Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants Similarly situated.
(c) 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.
(d) If, as a result of the allocation of forfeitures, a
reasonable error in estimating a Participant's annual compensation, or
under other limited facts and circumstances which the Commissioner
finds justify the availability of the rules set forth in this
sub-Section, there is an Excess Amount, the excess will be disposed of
as follows:
(i) Any Employee contributions, to the extent they
would reduce the Excess Amount, will be returned to the
Participant.
(ii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is covered by
the Plan at the end of the Limitation Year, the Excess Amount
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.
(iii) If after the application of paragraph (i) an
Excess Amount still exists, and the Participant is not covered
by the Plan at the end of the Limitation Year, the Excess
Amount will be held unallocated in a suspense account. The
suspense account will be applied to reduce future Employer
contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each
succeeding Limitation Year, if necessary.
(iv) If a suspense account is in existence at any time
during the 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
Participants' accounts before any employer or any employee
contributions may be made to the plan for that limitation year.
Excess amounts may not be distributed to Participants or former
Participants.
51
9.3 Participant in Other Prototype Defined Contribution Plan. This
Section shall apply if, in addition to this Plan, the Participant is covered
under another qualified defined contribution Master or Prototype Plan maintained
by the Employer or in a welfare benefit fund, as defined in section 419(e) of
the Code, maintained by the Employer or an individual medical account, as
defined in section 415(1)(2) of the Code, maintained by the Employer, which
provides an annual addition as defined in Section 9.1(b) of the Plan, during any
Limitation Year.
(a) The Annual Additions which may be credited to a Participant
under this Plan for any such Limitation Year will not exceed the
Maximum Permissible Amount reduced by the Annual Additions credited to
a Participant under the other Plans and welfare benefit funds for the
same Limitation Year. If the Annual Additions with respect to the
Participant under such other defined contribution Plans maintained by
the Employer are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or allocated
to the Participant under this Plan would cause the Annual Additions for
the Limitation Year to exceed this limitation, the amount contributed
or allocated will be reduced so that the Annual Additions under all
such Plans 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 under
this Plan for the Limitation Year.
(b) Prior to determining a Participant's Actual Compensation
for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for the Participant in the manner described in
sub-Section 9.2(b).
(c) 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.
(d) If, pursuant to sub-Section 9.1(c), 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 benefit fund will be deemed to have been
allocated first, regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on a
Valuation Date of this Plan which coincides with an allocation date of
another Plan, the Excess Amount attributed to this Plan will be the
product of:
(i) the total Excess Amount allocated as of such date,
times
52
(ii) the ratio of (A) the Annual Additions allocated
to the Participant for the Limitation Year as of, such Date
under this Plan to (B) 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 Master or
Prototype Plans.
(f) Any Excess Amount attributed to this Plan will be disposed
in the manner described in sub-Section 9.2(d).
9.4 Participant in Other Non-Prototype Defined Contribution Plan. This
Section shall apply if the Participant is covered under another qualified
defined contribution plan maintained by the Employer which is not a Master or
Prototype Plan. Annual Additions which may be credited to the Participant under
this Plan for any Limitation Year will be limited in accordance with Section 9.3
as though the other plan were a Master or Prototype Plan, unless the Employer
provides other limitations in Item Z of the Adoption Agreement.
9.5 Participant in Other Defined Benefit Plan. If the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering
any Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. Except as may otherwise be provided in any qualified defined
benefit- plan which is material to the limitations stated in this Section 9.5,
such reductions as are necessary to comply with the limitations of this Section
9.5 with respect to a Participant in this Plan shall be made in his Annual
Addition to this Plan and to any other defined contribution plan maintained by
the Employer in which he is a participant in such order as may be determined by
the Administrator in accordance with applicable law, provided that such
reductions shall be made first by returning to the Participant any of his
non-deductible employee contributions which are included in such Annual
Additions.
ARTICLE X - VESTING: NONFORFEITABILITY OF BENEFITS
10.1 Employee Contributions/Rollovers. A Participant's rights to the
balance at any time in his Non-Deductible Employee Account, which amount shall
reflect the Participant's accrued benefit from Employee contributions, shall at
all times be fully vested and not subject to forfeiture. Rollover Accounts of
Participants shall also be fully vested and nonforfeitable.
10.2 Employer Contributions. A Participant's right to the balance at
any time in his Salary Reduction Account shall at all times be fully vested and
not subject to forfeiture. A Participant's rights to the balance at any time in
his Matching Contribution and Profit Sharing Accounts, which amounts shall
constitute the Participant's accrued benefit attributable to any Employer
Matching and Profit Sharing Contributions, shall be 100% vested and
nonforfeitable upon occurrence of any of the following:
53
(a) attainment of Normal Retirement Age;
(b) attainment, when applicable under Item DD of the
Adoption Agreement, of Early Retirement Age;
(c) the Participant's death; or
(d) the Participant's disability retirement.
Absent occurrence of one of the above events, a Participant's vested and
nonforfeitable interest in his Matching Contribution and Profit Sharing
Accounts, from time to time, shall be determined through application of the
vesting schedules chosen by the Employer in Items W and X of the Adoption
Agreement.
10.3 Vesting Service. The following rules shall be applied for
calculating Years of Vesting Service for determination of a Participant's
nonforfeitable interest in his Matching Contribution and Profit Sharing
Accounts:
(a) In the case of a Participant who has incurred a 1-year
Break in Service, years of service before such break will not be taken
into account until the Participant has completed a year of service
after such break in service.
(b) In the case of a Participant who has 5 or more consecutive
1-year Breaks in Service all service after such Breaks in Service will
be disregarded for the purpose of vesting the employer-derived account
balance that accrued before such Breaks in Service. Such Participant's
pre-break service will count in vesting the post-break employer-derived
account balance only if either:
(i) such Participant has any nonforfeitable interest
in the account balance attributable to employer contributions
at the time of separation from service; or
(ii) upon returning to service the number of
consecutive 1-year Breaks in Service is less than the number of
years of service.
Separate accounts will be maintained for the Participant's pre-break
and post-break employer-derived account balance. Both accounts will
share in the earnings and losses of the fund.
(c) In addition to the rules set forth in sub-Sections (a) and
(b), the Employer may, in Item Y of the Adoption Agreement, elect not
to include certain other Years of Vesting Service from consideration in
determining Participants' Years of Vesting Service.
54
(d) Upon the occurrence of five (5) consecutive Breaks in
Service, any portion of a Participant's Matching Contribution or Profit
Sharing Account which is not vested shall be forfeited and shall be
treated in the manner provided in Section 4.5.
10.4 Amendments Affecting Vesting. If the Plan is amended in any way
that affects vesting, including a change to or from Top-Heavy status, certain
Participants may make the election described in Section 22.1(c) of the Plan.
ARTICLE XI - TOP-HEAVY PLAN PROVISIONS
11.1 General. If the Plan is or becomes Top-Heavy in any Plan Year
beginning after December 31, 1983, the provisions of this Article XI will
supersede any conflicting Provisions in the Plan or Adoption Agreement;
provided, that the Plan Administrator shall have sole responsibility for
determining whether an Employer's Plan is a Top-Heavy Plan.
11.2 Definitions. Terms used in this Article shall have the following
meanings:
(a) "Determination Date" - For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the first
Plan Year of the Plan, the last day of that Year.
(b) "Determination Period" - The Plan Year containing the
Determination Date and the four Plan Years preceding that Plan Year.
(c) "Key Employee" - Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
Determination Period was:
(i) an officer of the Employer whose Compensation
exceeded an amount equal to one and one-half (1-1/2) times the
Maximum Permissible Amount dollar figure, under paragraph (i)
of sub-Section 9.1(i), for a Plan Year;
(ii) an owner (or considered an owner under section
318 of the Code) of one of the ten largest interests in the
Employer, if such individual's Compensation exceeds the dollar
limitation under section 415(c)(1)(A) of the Code;
(iii) a five percent (5%) owner (as described in
section 416(i) of the Code) of the Employer; or
(iv) a one percent (1%) owner of the Employer who has
annual Compensation of more than $150,000.
55
The determination of who is a Key Employee will be made in accordance
with section 416(i)(1) of the Code and the regulations thereunder.
Annual compensation means compensation as defined in section 415(c)(3)
of the Code, but including amounts contributed by the employer pursuant
to a salary reduction agreement which are excludible from the
employee's gross income under section 125, section 402(a)(8), section
402(h) or section 403(b) of the Code.
(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 sections 401(a)(4) and 410 of
the Code.
(e) "Required Aggregation Group" -
(i) Each qualified plan of the Employer in which at
least one Key Employee participates or 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
sections 401(a)(4) or 410 of the Code.
(f) "Top-Heavy Plan" - For any Plan Year beginning after
December 31, 1983, this Plan is a Top-Heavy Plan if any of the
following conditions exists:
(i) If the Top-Heavy Ratio for this Plan exceeds sixty
percent (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 sixty
percent (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 sixty percent (60%).
(g) "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 5-year period ending on the
56
Determination Date or Dates, 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 Employer Account
balances of all Key Employees as of the Determination Date
(including any part of any Account balance distribution in the
5-year period ending on the Determination Date), and the
denominator of which is the sum of all Employer Account
balances (including any part of any Account balance distributed
in the 5-year period ending on the Determination Date) of all
Participants as of the Determination Date. Both the numerator
and denominator of the Top-Heavy Ratio are increased to reflect
any Employer contribution which is due but unpaid as of the
Determination Date.
(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 5-year period ending on
the Determination Date or Dates, 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 Employer Account balances under the
aggregated defined contribution plan or plans for all Key
Employees (determined in accordance with (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 or Dates, and the denominator of which is
the sum of the Employer Account balances under the aggregated
defined contribution plans for all Participants (determined in
accordance with (i) above) and the present value of accrued
benefits under the defined benefit plan or plans for all
Participants, as of the Determination Date or Dates, all
determined in accordance with Code Section 416 and regulations
thereunder. Both the numerator and denominator of the Top-Heavy
Ratio are increased for any distribution of an Account balance
or an accrued benefit made in the 5-year period ending on the
Determination Date and any Employer contribution due but unpaid
as of the Determination Date.
(iii) For purposes of (i) and (ii) above, the value of
Employer Account balances and of the present value of accrued
benefits will be determined as of the most recent Top-Heavy
Valuation Date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in
section 416 of the Code, and regulations thereunder, for the
first and second plan years of a defined benefit plan. The
Account balances and accrued benefits of a Participant who is
not a Key Employee but who was a Key Employee in a prior Year,
and of a Participant who has not been credited with at least
one Hour of Service with any Employer maintaining the Plan at
any time during the 5-year period ending on the Determination
Date, will be disregarded. The calculation of the Top-Heavy
Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account
57
will be made in accordance with section 416 of the Code and the
regulations thereunder. Deductible Employee contributions will
not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans the value of Account
balances and accrued benefits will be calculated with reference
to the Determination Dates that fall within the same calendar
year. The accrued benefit of a Participant other than a key
employee shall be determined under (a) the method, if any, that
uniformly applies for accrual purposes under all defined
benefit plans maintained by that employer, or (b) if there is
no such method, as if such benefit accrued not more rapidly
than these slowest accrual rate permitted under the fractional
rule of section 411(b)(1)(C) of the Code.
(h) "Top-Heavy Valuation Date" - The date elected by the
Employer in Item BB of the Adoption Agreement as of which Account
balances or accrued benefits are valued for purposes of calculating the
Top-Heavy Ratio.
11.3 Minimum Allocation.
(a) Except as otherwise provided in (c) below, the Employer
contributions and forfeitures allocated on behalf of any Participant
who is not a Key Employee shall not be less than the lesser of 3% of
such Participant's Base Pay or, in the case where the Employer has no
defined benefit plan which designates this Plan to satisfy section 401
of the Code, the largest percentage of Employer contributions and
forfeitures, as a percentage of the first $200,000 of the Key
Employee's Base Pay, allocated on behalf of any Key Employee for that
Year. The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received
a lesser allocation for the Year because of:
(i) the Participant's failure to complete 1,000 Hours
of Service; or
(ii) the Participant's Base Pay being less than a
stated amount.
(b) For purposes of computing the minimum allocation, Base Pay
will mean Base Pay as defined in Plan Section 2.3.
(c) The provision in (a) above shall not apply to any
Participant to the extent the Participant is covered under any other
plan or plans of the Employer and the Employer has provided in Item BB
of the Adoption Agreement that the minimum allocation or benefit
requirement applicable to Top-Heavy Plans will be met in the other plan
or plans.
58
(d) Salary Reduction Contributions and Employer Matching
Contributions may not be taken into account for the purpose of
Satisfying the minimum top-heavy contribution requirements for Plan
Years beginning after 1988.
11.4 Nonforfeitability of Minimum Allocation. The minimum allocation
required, to the extent required to be nonforfeitable under Code section 416(b),
may not be forfeited under section 411(a)(3)(B) or 411(a)(3)(D).
11.5 Compensation Limitation. For any Plan Year in which the Plan is
Top-Heavy, only the first $200,000 (or such larger amount as may be described by
the Secretary or his delegate) of a Participant's annual Base Pay shall be taken
into account for purposes of determining Employer contributions under the Plan.
11.6 Minimum Vesting Schedules. For any Plan Year in which this Plan is
Top-Heavy, one of the minimum vesting schedules elected by the Employer in Item
BB of the Adoption Agreement will automatically apply to the Plan. The minimum
vesting schedule applies to all benefits within the meaning of section 411(a)(7)
of the Code, except those attributable to Employee contributions, including
benefits accrued before the effective date of section 416 and benefits accrued
before the Plan became Top-Heavy. Further, no decrease in a Participant's
nonforfeitable percentage may occur in the event the Plan's status as Top-Heavy
changes for any Plan Year. However, this Section does not apply to the Employer
Account balances of any Employee who does not have an Hour of Service after the
Plan has initially become Top-Heavy and such Employee's Employer Account balance
will be determined without regard to this Section.
11.7 Adjustment to Maximum Benefits. If this Plan is a Top-Heavy Plan
for any Plan Year beginning on or after January 1, 1984 and if the Employer
maintains a defined benefit plan which could or does provide benefits to
Participants in this Plan:
(a) If this Plan is not an Extra Top-Heavy Plan (but is a
Top-Heavy Plan), then 4% shall be substituted for 3% in section
11.3(a).
(b) If this Plan is an Extra Top-Heavy Plan, the denominators
of the Defined Benefit Fraction and Defined Contribution Fraction (as
defined in Sections 9.1(c) and 9.1(d) of this Plan) shall be computed
using one hundred percent (100%) of the dollar limitation instead of
one hundred twenty-five percent (125%).
For any Plan Year beginning after December 31, 1983, this Plan is an Extra
Top-Heavy Plan if for such Year this Plan meets the conditions set forth in
Section 11.2(f) if ninety percent (90%) is substituted for sixty percent (60%).
59
ARTICLE XII - RETIREMENT, HARDSHIP, EMPLOYMENT TERMINATION
AND PAYMENT OF ACCOUNT BALANCES
NOTE: THE PROVISIONS OF THIS ARTICLE ARE SUBJECT TO THE PROVISIONS OF ARTICLE
XIII. PROVISIONS OF THAT ARTICLE SHALL TAKE PRECEDENCE OVER ANY CONFLICTING
PROVISION HEREIN.
12.1 Normal or Late Retirement. A Participant may retire from the
employ of the Employer on or after attaining Normal Retirement Age. A
Participant May continue in the employ of the Employer after attaining age 65;
provided that the Participant's right to his normal retirement benefits shall be
nonforfeitable upon his attainment of Normal Retirement Age.
12.2 Early Retirement. A Participant may early retire from the employ
of the Employer on or after attaining the Early Retirement Age, if any,
indicated in Item CC of the Adoption Agreement; provided that a Participant who
terminated employment with the Employer prior to satisfying the early retirement
age requirement, but after satisfying the early retirement service requirement,
shall be entitled to his early retirement benefits upon satisfaction of the age
requirement.
12.3 Disability Retirement. A Participant shall be entitled to retire
from the employ of the Employer because of medically determinable disability,
irrespective of his age. A Participant will be considered disabled for purposes
of the Plan if, on account of total and permanent physical or mental disability,
as determined by the Plan Administrator, he no longer is capable of performing
the duties assigned to him by the Employer. The permanence and degree of such
disability shall be supported by medical evidence.
12.4 Hardship Distributions. Distributions on account of financial
hardship shall be subject to the following requirements of this Section 12.4.
(a) If elected by the Employer in Item DD of the Adoption
Agreement, distributions of Salary Reduction Contributions under the
Plan and earnings thereon accrued prior to 1989 may be made on account
of financial hardship if the distribution is necessary in light of the
immediate and heavy financial needs of the Participant. Such a
distribution shall not exceed the amount required to meet the immediate
financial need created by the hardship and may not be made to the
extent that other financial resources of the Participant are reasonably
available.
(b) The determination of the existence of financial hardship,
and the amount required to be distributed to meet the need created by
the hardship, shall be made by a person or persons designated by the
Employer.
60
(c) All determinations regarding financial hardship shall be
made in accordance with written procedures that are established by the
person or persons described in section 12.4(b) above, and applied in a
uniform and nondiscriminatory manner. Such written procedures shall
specify the requirements for requesting and receiving distributions on
account of hardship, including what forms must be submitted and to
whom. All determinations regarding financial hardship must be made in
accordance with objective criteria set forth in Item DD of the Adoption
Agreement. Such determinations must also comply with applicable
regulations under the Code.
(d) Processing of applications and distributions of amounts
under this section, on account of a bona fide financial hardship, must
be made as soon as administratively feasible.
12.5 Fully Vested Benefits. If a Participant retires or is retired from
the employ of the Employer under Sections 12.1, 12.2 or 12.3, or dies while in
the employ of the Employer, or resigns, or is dismissed (with or without cause),
the entire balance in his Salary Reduction, Matching Contribution and Profit
Sharing Accounts, and in his Deductible, Non-Deductible and Rollover Accounts,
if any, as of the Account Valuation Date immediately preceding his termination
date (after all adjustments then required under the Plan have been made) will
become distributable to or for his benefit, or to or for the benefit of his
Beneficiary, as the case may be, in accordance with Section 12.8 below.
12.6 Partially Vested Benefits.
(a) Except as is specifically otherwise provided in this
Section, if a Participant resigns or is dismissed (with or without
cause) from the employ of the Employer before normal, early or
disability retirement and prior to his Matching Contribution or Profit
Sharing Account being fully vested under Items W and X of the Adoption
Agreement, the balance in his Matching Contribution and Profit Sharing
Accounts as of the date he first incurs five (5) consecutive Breaks in
Service (after all adjustments then required under the Plan have been
made) will be reduced to an amount determined in accordance with those
Items. The balance in those Accounts after the reduction will continue
to share in the earnings and losses of the Trust Fund. The balance in
the reduced Accounts and the balance in his other Accounts, if any
(after all adjustments then required under the Plan have been made),
will become distributable to the former Participant or for his benefit,
or to or for the benefit of his Beneficiary, as the case may be, in
accordance with Section 12.8 below.
(b) Notwithstanding the provisions of the preceding
sub-Section, which preclude distribution prior to the occurrence of
five (5) consecutive Breaks in Service of the Matching Contribution or
Profit Sharing Account interest of a terminated Participant who is not
fully vested in such Account, the Employer shall, if so elected in Item
EE of the Adoption Agreement, permit such pre-Break distributions to
terminated Participants.
61
Subject to the further election, described in
sub-Section (c), available to an Employer in Item EE-1 of the Adoption
Agreement, if a pre-Break termination distribution or a hardship
distribution is elected by the Employer for a Participant is who less
than 100% vested in his Matching Contribution or Profit Sharing Account
balance, the following general rule shall apply:
(i) A separate Matching Contribution or Profit Sharing
Account will be established for the Participant's interest in
the Plan as of the time of the distribution; and
(ii) At any relevant time, the Participant's vested
and nonforfeitable portion of the separate Account will be
equal to an amount ("X") determined by the formula:
X=P(AB + (RxD)) - (R x D)
For purposes of applying the formula: P is the vested percentage at the
relevant time; AB is the Account balance at the relevant time; D is the
amount of the distribution; and R is the ratio of the Account balance
at the relevant time to the Account balance after distribution.
(c) If an Employer elects, in Item EE-1 of the Adoption
Agreement, application of this sub-Section (c), the following special
forfeiture rules shall be in effect for the Plan:
(i) If a Participant terminates service and the value
of the Participant's vested account balance derived from
employer and employee contributions (other than accumulated
deductible employee contributions) is not greater than $3,500,
the Participant will receive a distribution of the value of his
entire vested portion of such account balance and the nonvested
portion will be treated as a forfeiture. However, no
distribution shall be made pursuant to the preceding sentence
after the first day of the first period for which an amount is
received as an annuity unless the Participant and his Spouse
(or the Participant's surviving Spouse) consent in writing to
such distribution. If a Participant terminates service and
elects (with his spouse's consent) to receive the value of his
vested Account balance, the non-vested portion will also be
treated as a forfeiture. If the Participant elects to have
distributed less than the entire vested portion of the Account
balance derived from employer contributions, the part of the
nonvested portion of such account 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 contributions and the
denominator of which is the total value of such vested employer
derived account balance. For purposes of this sub-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
62
account balance. A Participant's vested account balance shall
not include accumulated deductible employee contributions
within the meaning of section 72(o)(5)(B) of the Code for plan
years beginning prior to January 1, 1989.
(ii) If a Participant receives a distribution pursuant
to this sub-Section and resumes employment covered under this
Plan, the Participant's employer-derived account balance will
be restored to its balance amount on the date of distribution,
if the Participant repays to the Plan the full amount of the
distribution attributable to employer contributions on or
before he incurs five (5) consecutive Breaks in Service
following the date of distribution.
(d) 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) $3,500, and the account
balance is immediately distributable, the Participant and the
Participant's spouse (or where either the Participant or the spouse has
died, the survivor) must consent to any distribution of such account
balance. The consent of the Participant and the Participant's spouse
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 and the
Participant's spouse of the right to defer any distribution until the
Participant's account balance is no longer immediately distributable.
Such notification shall include a general description of the material
features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would
satisfy the notice requirements of 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.
Notwithstanding the foregoing, only the Participant
need consent to the commencement of a distribution in the form of a
qualified joint and survivor annuity while the account balance is
immediately distributable. (Furthermore, if payment in the form of a
qualified joint and survivor annuity is not required with respect to
the Participant pursuant to Section 13.5 of the plan, only the
Participant need consent to the distribution of an account balance that
is immediately distributable.) Neither the consent of the Participant
nor the Participant's spouse shall be required to the extent that a
distribution is required to satisfy section 401(a)(9) or section 415 of
the Code. In addition, upon termination of this plan if the plan does
not offer an annuity option (purchased from a commercial provider), the
Participant's account balance may, without the Participant's consent,
be distributed to the Participant or transferred to another defined
contribution plan (other than an employee stock ownership plan as
defined in section 4975(e)(7) of the Code) within the same controlled
group. 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.
For
63
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 is vested
account balance shall not include amounts attributable to accumulated
deductible employee contributions within the meaning of section
72(o)(5)(B) of the Code.
(e) Notwithstanding the provisions of the consent requirements
of sub-Sections (c) and (d) above, the consent of the Participant's
spouse shall not be required in the event (1) the Plan is a profit
sharing plan, (2) the Participant cannot or does not elect payments in
the form of a life annuity, (3) with respect to such Participant, the
Plan is not a direct or indirect transferee (in a transfer after
December 31, 1984) of a plan to which the joint and survivor annuity
and pre-retirement annuity provisions otherwise apply as provided in
section 401(a)(11) of the Code and (4) on the Participant's death the
Participant's vested account balance is payable to the Participant's
surviving spouse, or if such spouse is dead or consents thereto, to the
Participant' designated beneficiary.
12.7 Request Regarding Method of Payment. Upon a Participant's
entitlement to payment of benefits under this Article, he shall make application
for payment in such manner as the Plan Administrator may require and subject to
such conditions as the Plan Administrator may provide. His election shall
specify:
(a) whether he wishes payment of his benefits to be made as of
the date of such entitlement or to be deferred to the extent provided
below, and (b) which of the methods provided below for payment of his
benefits he would prefer. The Plan Administrator shall follow a
Participant's Beneficiary designation and may follow the method of
payment, if any, selected by the Participant in the case of a
distribution on account of the Participant's death.
12.8 Permissible Payment Methods. Subject to the requirements of
Article XIII, the Plan Administrator may direct the Trustee to distribute the
Participant's benefits in any one or more of the following methods:
(a) In a lump sum;
(b) In periodic payments over the life of the Participant;
(c) In periodic payments over the lives of the Participant and
his Beneficiary;
(d) In installment payments over a period not exceeding the
life expectancy of the Participant; or
64
(e) In installment payments over a period not exceeding the
joint life and last survivor expectancy of the Participant and his
Beneficiary.
Any annuity contract distributed under 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. If the
Employer elects Item II of the Adoption Agreement, the optional forms of benefit
shall be (b), (c), (d) and (e). Otherwise, the optional forms of benefit shall
be (a), (c), (d) and (e) if the Participant is not married and (a), (b), (d) and
(e) if the Participant is married.
12.9 Commencement of Benefits. Unless the Participant elects otherwise,
distribution of benefits will begin no later than the 60th day after the latest
of the close of the Plan Year in which:
(a) the Participant attains Normal Retirement Age;
(b) occurs the 10th anniversary of the Year in which the
Participant commenced participation in the Plan; or
(c) the Participant terminates service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and spouse
to consent to a distribution while a benefit is immediately
distributable, within the meaning of Section 12.6(d) of the plan, shall
be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
12.10 Special Distribution Rule. If elected under Item KK-l of the
Adoption Agreement, Salary Reduction Contributions, Qualified Non-Elective
Contributions, Qualified Matching Contributions and income allocable to such
amounts may be distributed to a Participant upon his attainment of age 59-1/2
even though his employment has not then been terminated.
ARTICLE XIII - JOINT AND SURVIVOR ANNUITY RULES
NOTE: THE PROVISIONS OF THIS ARTICLE SHALL TAKE PRECEDENCE OVER ANY CONFLICTING
PROVISIONS OF ARTICLES XII, XIV AND XV, OR OF ANY OTHER ARTICLES, IN THIS PLAN.
13.1 Applicability. Except as provided with respect to certain Plans
described in Section 13.5, the provisions of this Article shall apply to any
Participant who is credited with at least one Hour of Service with an Employer
on or after August 23, 1984, and to Participants described in Section 13.6.
13.2 Definitions. Terms used in this Article shall have the following
meanings:
65
(a) "Election Period" - The period which begins on the first
day of the Plan Year in which a Participant attains age 35 and ends on
the date of the Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in which he attains age
35, the Election Period will begin on the date of separation. A
participant who will not yet attain age 35 as of the end of any current
plan year may make a special qualified election to waive the qualified
Preretirement survivor annuity for the period beginning on the date of
such election and ending on the first day of the plan year in which the
Participant will attain age 35. Such election shall not be valid unless
the Participant receives a written explanation of the qualified
Preretirement survivor annuity in such terms as are comparable to the
explanation required under section 13.4. Qualified preretirement
survivor annuity coverage will be automatically reinstated as of the
first day of the plan year in which the Participant attains age 35. Any
new waiver on or after such date shall be subject to the full
requirements of this Article.
(b) "Earliest Retirement Age" - The earliest date on which,
under the Plan, the Participant could elect to receive retirement
benefits.
(c) "Qualified Election" - A waiver of a Qualified Joint and
Survivor Annuity or of a Qualified Preretirement Survivor Annuity. The
waiver must be in writing and must be consented to by the Participant's
Spouse. The Spouse's consent to a waiver must be witnessed by the Plan
Administrator, the Plan Administrator's representative or a notary
public, the spouse's consent must acknowledge the effect of the
election, and must be limited to a benefit for a specific alternate
beneficiary. Additionally, a Participant's waiver of the qualified
joint and survivor annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without
spousal consent (or the spouse expressly permits designations by the
Participant without any further spousal consent). A consent that
permits designations by the Participant without any requirement of
further consent by such spouse must acknowledge that the spouse has the
right to limit consent to a specific beneficiary, and a specific form
of benefit where applicable, and that the spouse voluntarily elects to
relinquish either or both of such rights. Notwithstanding this consent
requirement, if the Participant establishes to the satisfaction of the
Plan Administrator or the representative that such written consent may
not be obtained because there is no Spouse or the Spouse cannot be
located, a waiver will be deemed a Qualified Election. Any consent
necessary under this Provision will not be valid with respect to any
other Spouse. Additionally, a revocation of a prior waiver may be made
by a Participant without the consent of the Spouse at any time before
the commencement of benefits. The number of revocations shall not be
limited. Any new waiver or change of beneficiary will require a new
spousal consent. No consent obtained under this provision shall be
valid unless the Participant has received notice as provided in Section
13.4.
66
(d) "Qualified Joint and Survivor Annuity" - An immediate
annuity for the life of the Participant with an annuity for the life of
the Surviving Spouse which is not less than fifty percent (50%) and not
more than one hundred percent (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 Employer Account balance.
(e) "Qualified Preretirement Survivor Annuity" - The annuity
described in sub-Section 13.3(b) below.
(f) "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 to the extent provided under
a qualified domestic relations order, as described in section 414(p) of
the Code.
13.3 General Requirements. The following rules shall be applied in
administration of the distribution provisions of this Plan:
(a) Unless an optional form of benefit is selected pursuant to
a Qualified Election within the 90-day period ending on the annuity
starting date, the value of a Participant's vested account balance will
be paid in the form of a Qualified Joint and Survivor Annuity in the
case of a married Participant, and in the form of a life annuity in the
case of an unmarried Participant. As used herein, the term "annuity
starting date" shall mean the date an amount is payable as an annuity
and the term "vested account balance" shall mean 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 foregoing provisions 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.
(b) Unless an optional form of benefit has been selected within
the Election Period pursuant to a Qualified Election, if a Participant
dies before the annuity starting date, then the value of the
Participant's vested account balance shall be applied toward the
purchase of an annuity for the life of the Surviving Spouse. The
Surviving Spouse may elect to have such annuity distributed
immediately.
13.4 Notice Requirements.
(a) In the case of a Qualified Joint and Survivor Annuity. the
Plan Administrator shall no less than 30 days and no more than 90 days
prior to the annuity starting date provide
67
each Participant within a reasonable period prior to the commencement
of benefits, a written explanation of:
(i) the terms and conditions of a Qualified Joint and
Survivor Annuity;
(ii) the Participant's right to make, and the effect
of, an election to waive the Qualified Joint and Survivor
Annuity form of benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of a revocation
of a previous election to waive the Qualified Joint and
Survivor Annuity.
(b) In the case of a Qualified Preretirement Survivor Annuity,
the Plan Administrator shall provide each Participant within the
applicable period for each such Participant a written explanation of
the Qualified Preretirement Survivor Annuity in such terms and in such
manner as would be comparable to the explanation provided for meeting
the requirements of Section 13.4(a) applicable to a Qualified Joint and
Survivor Annuity. The applicable period for a participant is whichever
of the following periods ends last: (i) the period beginning with the
first day of the plan year in which the Participant attains age 32 and
ending with the close of the Plan year preceding the plan year in which
the participant attains age 35; (ii) a reasonable period after the
individual becomes a participant; (iii) a reasonable period after
sub-Section 13.4(c) ceased to apply to the participant; (iv) a
reasonable period after this article applies to the participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period after separation from service in the case of a
participant who separates from service before attaining age 35. For
purposes of applying the preceding provisions of this sub-Section, a
reasonable period ending after the enumerated events described in (ii),
(iii) and (iv) is the end of the two-year period beginning one year
prior to the date the applicable event occurs, and ,ending one year
after that date. In the case of a Participant who separates from
service before the plan year in which age 35 is attained, notice shall
be provided within the two-year period beginning one year prior to
separation and ending one year after separation. If such a Participant
thereafter returns to employment with the employer, the applicable
period for such Participant shall be redetermined.
(c) Notwithstanding the other requirements of sub-Sections (a)
and (b), the respective notices prescribed thereunder need not be given
to a Participant if (1) the Employer's Plan "fully subsidizes" the
costs of a Qualified Joint and Survivor Annuity or Qualified
Preretirement Survivor Annuity and (2) the plan does not allow the
Participant to waive the qualified joint and survivor annuity or
qualified preretirement survivor annuity and does not allow a married
Participant to designate a nonspouse beneficiary. For purposes of this
Section 13.4, a plan fully subsidizes the costs of a benefit if no
increase in cost, or
68
decrease in benefits to the Participant may result from the
Participant's failure to elect another benefit.
13.5 Special Rule for Profit Sharing Plans. Subject to the transitional
rules of Section 13.6, the requirements of the preceding Sections of this
Article shall not apply if the provisions of this Section are satisfied. This
section shall apply to a Participant in a profit-sharing plan, and to any
distribution, made on or after the first day of the first plan year beginning
after December 31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in section 72(o)(5)(B)
of the Code, and maintained on behalf of a Participant in a money purchase
pension plan, (including a target benefit plan) if the following conditions
are-satisfied.
(a) In general, the Article need not apply if, as a result of
the Employer's election in Item II of the Adoption Agreement the
following two conditions are met:
(i) the Participant may not elect payments in the form
of a life annuity, and
(ii) upon the death of the Participant, the
Participant's vested account balance(s) will be paid to the
Participant's Surviving Spouse, or, if there is no Surviving
Spouse or if the Surviving Spouse has already consented in a
manner conforming to a Qualified Election, then to the
Participant's designated Beneficiary.
The account balance shall be adjusted for gains or losses occurring
after the Participant's death in accordance with the provisions of the
plan governing the adjustment of account balances for other types of
distributions. The Participant may waive the spousal death benefit
described in this section at any time provided that no such waiver
shall be effective unless it satisfies the conditions of section
13.2(c) (other than the notification requirement referred to therein)
that would apply to the Participant's waiver of the qualified
preretirement survivor annuity. For purposes of this Section 13.5,
vested account balance shall mean, in the case of a money purchase
pension plan or a target benefit plan, the Participant's separate
account balance attributable solely to accumulated deductible employee
contributions within the meaning of section 72(o)(5)(B) of the Code. In
the case of a profit-sharing plan, vested account balance shall have
the same meaning as provided in section 13-3.
(b) This Section shall not be satisfied with respect to an
individual Participant if it is determined that the 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 which would otherwise provide for a life annuity form of payment
to the Participant. In addition, this Section shall not apply unless
the Participant's Spouse is the beneficiary of
69
insurance on the Participant's life purchased by Employer contributions
or forfeitures allocated to the Participant's Employer Account.
13.6 Transitional Rules.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by this
Article must be given the opportunity to elect to have the Article
apply if such Participant is credited with at least one Hour of Service
under this Plan or a predecessor Plan in a Plan Year beginning on or
after January 1, 1976, and if such Participant had at least ten (10)
Years of Vesting Service when he separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under this
Plan or a predecessor plan on or after September 2, 1974, and who is
not otherwise credited with any service in a Plan Year beginning on or
after January 1, 1976, must be given the opportunity to have his or her
benefits paid in accordance with sub-Section 13.6(d) below.
(c) The respective opportunities to elect (as described in
sub-Sections (a) and (b) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and
ending on the date benefits would otherwise commence to said
Participants.
(d) Any Participant who has elected pursuant to sub-Section
(b), who does not elect under sub-Section (a) or who meets the
requirements of sub-Section (a) except that such Participant does not
have at least ten (10) Years of Vesting Service when he separates from
service, shall have his benefits distributed in accordance with all of
the following requirements if benefits would have been payable in the
form of a life annuity:
(i) Automatic Joint and Survivor Annuity: If benefits
in the form of a life annuity become payable to a married
Participant who:
(A) begins to receive payments under the plan
on or after Normal Retirement Age; or
(B) dies on or after Normal Retirement Age
while still working for the Employer; or
(C) begins to receive payments on or after the
Qualified Early Retirement Age; or
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(D) separates from service on or after
attaining Normal Retirement Age (or the Qualified
Early Retirement Age) and after satisfying the
eligibility requirements for the payment of benefits
under the Plan and thereafter dies before beginning to
receive such benefits;
then such benefits will be received under this Plan in the form
of a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the period beginning
at least six (6) months before the Participant attains
Qualified Early Retirement Age and ending not more than ninety
(90) days before the commencement of benefits. Any election
hereunder will be in writing and may be changed by the
Participant at any time.
(ii) Election of Early Survivor Annuity: A Participant
who is employed after attaining the Qualified Early Retirement
Age will be given the opportunity to elect to have a survivor
annuity payable to his Spouse upon the occurrence of his death.
If the Participant elects the survivor annuity, payments under
such annuity must not be less than the payments which would
have been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day
before his death. Any election under this provision will be in
writing and may be changed by the Participant at any time. The
election may be made during the period beginning on the later
of the 90th day before the Participant attains the Qualified
Early Retirement Age or the date on which participation begins,
and ending on the date the Participant terminates employment.
(e) Solely for purposes of this Section, (1) "Qualified Early
Retirement Age" means the latest of:
(i) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits;
(ii) the first day of the 120th month beginning
before the Participant reaches Normal Retirement Age; and
(iii) the date the Participant begins participation;
and (2) "Qualified joint and survivor annuity" is an annuity for the
life of the Participant with a survivor annuity for the life of the
spouse as described in Section 13.2(d) of this Article.
71
ARTICLE XIV -
MINIMUM AMOUNTS TO BE DISTRIBUTED AND TIMING OF DISTRIBUTIONS
NOTE: THE PROVISIONS OF THIS ARTICLE ARE SUBJECT TO THE PROVISIONS OF ARTICLE
XIII. PROVISIONS OF THAT ARTICLE SHALL TAKE PRECEDENCE OVER ANY CONFLICTING
PROVISION HEREIN.
14.1 General Rule. The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's
required beginning date. Distribution of the Account balances of a
Participant other than an Employee described in Section 14.2 will
commence by April 1 of the calendar year following the calendar year in
which such Participant attains age 70-1/2. For calendar years beginning
after December 31, 1988, the minimum distribution to be made for each
calendar year starting with the calendar year in which such Participant
attains age 70-1/2 (each such year being referred to in this Article as
a "distribution calendar year") shall not be less than the quotient
obtained by dividing the Participant's benefit by the lesser of (1) the
applicable life expectancy or (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 section 14.3 as the
relevant divisor without regard to proposed regulations section
1.401(a)(9)-2 or in any other manner which assures that minimum
distributions shall continue to be made in accordance with section
401(a)(9) and the proposed regulations thereunder. 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. 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 section 401(a)(9) of the Code and the proposed
regulations thereunder. A Participant's benefit shall mean 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. For purposes of the preceding
sentence, 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.
72
14.2 Exception for Certain Non-Five Percent Owners. The provisions of
Section 14.1 shall not apply to any individual who has attained age 70-1/2
before January 1, 1988, unless that individual is a 5% owner (as defined in
section 416(i) of the Code) at any time during (a) the plan year ending with or
within the calendar year in which such owner attains age 66-1/2, and (b) any
subsequent plan year. The distribution of the Account balances of the non-5%
owner described in the preceding sentence will commence by April 1 of the
calendar year following the later of the calendar year in which he attains age
70-1/2 or the calendar year in which he retires. If an individual who has not
retired becomes a 5% owner after the year in which he attains age 70-1/2, the
distribution of his Account balances will commence by April 1 of the calendar
year following the calendar year in which he becomes a 5% owner. The minimum
distribution for such an individual described in either of the two preceding
sentences will be calculated in the manner set forth in Section 14.1 as if the
individual's date of retirement or becoming a 5 percent owner was the date of
his attainment of age 70-1/2. Once distributions have begun to a 5 Percent owner
under this Section, they must continue to be distributed even if the Participant
ceases to be a 5 percent owner in a subsequent year. The required beginning date
of a Participant who is not a 5 percent owner who attains age 70-1/2 during 1988
and who has not retired as of January 1, 1989, is April 1, 1990.
14.3 Life Expectancy Measurement.
(a) The life, or joint life and last survivor, expectancy
periods of a Participant described in Section 14.1 will be determined
as of the year in which that Participant attains age 70-1/2. The life,
or joint life and last survivor, expectancy period elected by the
Participant shall thereafter be reduced by one for each calendar year
commencing after his distribution calendar year.
(b) The life, or joint life and last survivor, expectancy
periods of a Participant described in Section 14.2 will be determined
as of the year in which that Participant attains age 70-1/2 or such
later age as he may have attained (counted in whole years) on the date
he retires or becomes a 5% owner. The life, or joint life and last
survivor, expectancy period elected by such person will thereafter be
reduced by one for each calendar year commencing after the year
determined in the preceding sentence which is applicable to him.
(c) Life expectancy and joint and last survivor expectancy are
computed by the use of the return multiples contained in section 1.72-9
of the Income Tax Regulations. Notwithstanding the provisions of
Sections 14.3(a), 14.3(b) and 16.2(c) the expectancy periods of a
Participant and of the Participant's spouse shall be redetermined on an
annual basis only if such annual redetermination is elected by the
Participant (or in the event of the Participant's death, by the
Participant's surviving spouse) on or before the relevant Required
Election Date. Any such election shall be irrevocable, in written form
satisfactory to the Plan Administrator, signed and dated by the
Participant or surviving spouse, as the case may be, and filed with the
Plan Administrator (a copy thereof being retained by the Participant
73
or surviving spouse). The term "Required Election Date" means the later
of the following dates: (a) the date of the first required distribution
for a Participant or surviving spouse Beneficiary," as the case may be.
from the Plan as provided in the Internal Revenue Code and the
Regulations thereunder and (b) such later date, if any, as may be
established as the appropriate deadline date for such purposes by the
Internal Revenue Service.
(d) The life expectancy of a non-spouse Beneficiary may not be
redetermined as provided in the preceding sub-Section. For calendar
years beginning before January 1, 1989, if the Participant's house is
not the designated Beneficiary, the method of distribution selected
hereunder must assure that at least fifty percent (50%) of the present
value of the amount available for distribution is paid within the life
expectancy of the Participant.
(e) For minimum distribution Purposes, designated Beneficiary
shall mean an individual who is designated as the beneficiary under the
Plan in accordance with section 401(a)(9) of the Code and the proposed
regulations thereunder.
14.4 Transitional Rule.
(a) Notwithstanding the provisions of the preceding three
Sections and subject to the requirements of Article XIII, distribution
on behalf of any Participant may be made in accordance with the
following requirements (regardless of when such distribution
commences):
(i) The distribution is one which would not have
disqualified the Plan under section 401(a)(9) of the Code as in
effect prior to its amendment by the Deficit Reduction Act of
1984.
(ii) The distribution is in accordance with a method
of distribution designated by the Participant whose interest is
being distributed or, if the Participant is deceased, by a
Beneficiary of such Participant.
(iii) Such designation was in writing, was signed by
the Participant or the Beneficiary, and was made before January
1, 1984.
(iv) The Participant had accrued a benefit under the
Plan as of December 31, 1983.
(v) The method of distribution designated by the
Participant or the Beneficiary specifies the time at which
distribution will commence, the period over which distributions
will be made and, in the case of any distribution upon the
Participant's death, the Beneficiaries of the Participant
listed in order of priority.
74
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains
the required information described above with respect to the
distributions to be made upon the death of the Participant.
(c) For any distribution which commences before January 1,
1984, but continues after December 31, 1983, the Participant or the
Beneficiary to whom such distribution is being made will be presumed to
have designated the method of distribution under which the distribution
is being made if the method of distribution was specified in writing
and the distribution satisfies the requirements of (a) above.
(d) If a designation is revoked, any subsequent distribution
must satisfy the requirements of Code section 401(a)(9) and the
proposed regulations thereunder. If a designation is revoked subsequent
to the date distributions are required to begin, the trust must
distribute by the end of the calendar year following the calendar year
in which the revocation occurs the total amount not yet distributed
which would have been required to have been distributed to satisfy
section 401(a)(9) of the Code and the proposed regulations thereunder,
but for the section 242(b)(2) election. For calendar years beginning
after December 31, 1988, such distributions must meet the minimum
distribution incidental benefit requirements in section 1.401(a)(9)-2
of the proposed regulations. Any changes in the designation will be
considered to be a revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to be a
revocation of "the designation, so long as such substitution or
addition does not alter the period over which distributions are to be
made under the designation, directly or indirectly. In the case in
which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 of the proposed regulations
shall apply.
14.5 Construction and Interpretation. The foregoing provisions of
Article XIV shall be construed and interpreted in accordance with the
requirements of Code section 401(a)(9) and proposed regulations promulgated
thereunder. Unless otherwise specified, the provisions of this Article apply to
calendar years beginning after December 31, 1984.
ARTICLE XV - LOANS TO PARTICIPANTS
15.1 General. The provisions of this Article XV shall apply to loans
made, renewed, renegotiated, modified or extended after December 31, 1986. If
Item FF of the Adoption Agreement so permits, the Plan Administrator may direct
the Trustee to lend a Participant an amount not in excess of 80% of the vested
portion of his Salary Reduction, Matching Contribution and Profit Sharing
Accounts as of the date on which the loan is approved. All loans shall be
subject to the approval of the Plan Administrator which shall thoroughly
investigate each application for a loan.
75
In addition to such rules and regulations as the Plan Administrator may adopt,
all loans shall comply with the following terms and conditions:
(a) An application for a loan by a Participant shall be made in
writing to the Plan Administrator, whose action thereon shall be final.
(b) The period of repayment for any loan shall be arrived at by
mutual agreement between the Plan Administrator and the borrower, but
such period shall not exceed five (5) years except in the case of a
loan used to acquire any dwelling unit which within a reasonable time
is to be used (determined at the time the loan is made) as the
principal residence of the Participant, in which case the repayment
period shall not exceed 15 years.
(c) Each loan shall be secured by the borrower's entire right,
title and interest in and to the Trust Fund, supported by the
borrower's promissory note for the amount of the loan, including
interest, payable to the order of the Trustee. The Trustee may, in its
discretion, request additional collateral from a Participant if the
Trustee feels at any time that such Participant's loan is not,
adequately secured.
(d) Each loan shall bear interest at a reasonable rate to be
fixed by the Plan Administrator and, in determining the interest rate,
the Plan Administrator shall take into consideration interest rates
currently being charged. The Plan Administrator shall not discriminate
among Participants in the matter of interest rates; but loans granted
at different times may bear different interest rates, if, in the
opinion of the Plan Administrator, the difference in rates is justified
by a change in general economic conditions. Each loan shall bear
interest at an effective annual percentage rate which is not less than
1/2 of 1% above the base rate currently being charged by the Trustee in
its commercial banking business, provided that such rate does not
violate any applicable usury laws. Except to the extent otherwise
provided in valid governmental regulations, borrowers shall be required
to repay any loan made pursuant to this Section on a substantially
level amortization basis, with payments made at least quarterly over
the term of the loan.
(e) No distribution shall be made to any Participant or former
Participant or to a Beneficiary of any such Participant unless and
until all unpaid loans, including accrued interest thereon, have been
liquidated. In addition, it is here specifically provided that, upon a
Participant's default or failure to make any required payment in a
timely manner, the Trustee shall have the discretion and authority to
offset such defaulted or unpaid amount against such Participant's Plan
interest, provided, however, that in the event of default, foreclosure
on the note and attachment of security will not occur until a
distributable event occurs under the Plan.
76
(f) The Employer shall elect, in Item FF of the Adoption
Agreement, whether Participant loans should be held as general Trust
Fund assets or assets of the borrowing Participants' own Accounts.
(g) To obtain a loan, a Participant must obtain the consent of
his Spouse, if any, during the ninety (90) day period before the time
any part of the Participant's interest in the Trust Fund is used as
security for the loan. A new consent is required if such interest in
the Trust Fund is used for any increase in the amount of security. Such
consent shall comply with the requirements of the consent to a
Qualified Election (as that term is defined in sub-Section 13.2(c)).
Any such consent shall be deemed to meet any requirements contained in
such sub-Section relating to the consent of a subsequent spouse.
(h) Loans shall be made available to all Participants on a
reasonably equivalent basis. Loans shall not be made available to
highly compensated employees (as defined in section 414(q) of the Code)
in an amount greater than the amount made available to other employees.
(i) No loans will be made to any Owner-Employee or
Shareholder-Employee. For purposes of this requirement, a Shareholder
Employee means an employee or officer of an electing small business
(Subchapter S) corporation who owns (or is considered as owning within
in the meaning of section 318(a)(1) of the Code), on any day during the
taxable year of such corporation, more than 5 percent of the
outstanding stock of the corporation.
(j) If a valid spousal consent has been obtained in accordance
with (g), then, notwithstanding any other provision of this Plan, the
Portion of the Participant's vested account balance used as a security
interest held by the plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the
amount of the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment of the
loan. If less than 100% of the Participant's vested account balance
(determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first
reducing the vested account balance by the amount of the security used
as repayment of the loan, and then determining the benefit payable to
the surviving spouse.
15.2 Special Limitations. In addition to any other limits, the total
amount of loans outstanding with respect to a Participant from this Plan and all
other qualified plans of the Employer (collectively, the "plans") may not exceed
the lesser of the following limits:
(i) $50,000, less the excess, if any, of (a) the
highest outstanding balance of loans from the plans to the
Participant during the 1-year period ending on the day
77
before such loan was made, over (b) the outstanding balance of
loans from the plans on the date on which such loan was made,
or
(ii) 50% of the value of the Participant's vested
Employer Account balance (but not less than $10,000).
ARTICLE XVI - DEATH BENEFITS
NOTE: THE PROVISIONS OF THIS ARTICLE ARE SUBJECT TO THE PROVISIONS OF ARTICLE
XIII. PROVISIONS OF THAT ARTICLE SHALL TAKE PRECEDENCE OVER ANY CONFLICTING
PROVISION HEREIN.
16.1 Designation of Beneficiaries. Each Participant (or the
Participant's surviving spouse who is the Participant's Beneficiary), by signing
a form furnished by the Plan Administrator, may from time to time designate as
his Beneficiary any person or persons (who may be designated concurrently,
contingently or successively) to whom his benefits under the Plan are to be paid
if he dies before he receives all of such benefits. A beneficiary designation
form will be effective only when the form is filed in writing with the Plan
Administrator (or a person duly designated by the Plan Administrator) while the
Participant is alive and will cancel all beneficiary designation forms
previously signed and filed by the Participant. If a Participant failed to
designate a Beneficiary before his death as provided above, or if the
Beneficiary designated by a deceased Participant dies before the Participant,
his Beneficiary shall be, in the following order of priority: his surviving
spouse, his surviving children (including adopted children), his surviving
parents or his estate. If, under the preceding sentence, the Beneficiary
consists of a class of two or more persons, such persons shall share equally in
benefits under the Plan. If a Beneficiary is a natural person who dies after the
Participant's death, such person's estate shall be substituted for such person
as Beneficiary. If the Plan Administrator cannot determine whether a designated
Beneficiary survived a Participant, it shall be conclusively presumed that the
Beneficiary died before the Participant distributed to his Beneficiary or
Beneficiaries within five (5) years after the date of his death. The five-year
rule set forth in the Preceding sentence shall not apply if:
(i) any portion of the Participant's interest is
payable to or for the benefit of a designated Beneficiary;
(ii) the portion of the Participant's interest to
which the Beneficiary is entitled will be distributed over a
period not extending beyond the life or life expectancy of the
Beneficiary; and
(iii) the distributions commence no later than one
(1) year after the date of the Participant's death (or such
later date as may be permitted under the Code and regulations
thereunder).
78
In addition, if the designated beneficiary is the Participant's
surviving spouse, the date distributions are required to begin in
accordance with the foregoing shall not be earlier than the later of
(1) December 31 of the calendar year immediately following the calendar
year in which the Participant died and (2) December 31 of the calendar
year in which the Participant would have attained age 70 1/2. If the
Participant has not made an election pursuant to this section as to the
method of distribution by the time of his or her death, the
Participant's designated beneficiary must elect the method of
distribution no later than the earlier or (1) December 31 of the
calendar year in which distributions would be required to begin under
this Section, 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. If the spouse dies before payments begin, subsequent
distributions shall be made as if the spouse had been the Participant.
(b) If distributions have commenced to the Participant before
the Participant' s death, distributions to the Participant's surviving
spouse, Beneficiaries or estate will continue to be distributed at
least as rapidly as under the method selected by the Participant.
(c) For purposes of this Section, payments will be calculated
by use of the return multiples specified in section 1.72-9 of the
Income Tax Regulations. Life expectancy of a surviving spouse may be
recalculated annually. In the case of any other designated Beneficiary,
such life expectancy will be calculated at the time payment first
commences and payments for any 12-consecutive month period will be
based on such life expectancy minus the number of whole years passed
since distributions first commenced.
(d) Any amount paid as a death benefit to a child of the
Participant will be treated as if it had been paid to the surviving
spouse, if the amount becomes payable to the surviving spouse when the
child reaches the age of majority.
ARTICLE XVII - NON-ALIENATION OF BENEFITS AND FACILITY OF DISTRIBUTION
17.1 General Rule. No benefit or interest available hereunder will be
subject to assignment or alienation, either voluntarily or involuntarily.
Notwithstanding the terms of the preceding sentence, the following rules shall
apply with respect to domestic relations orders:
(i) The terms of the general rule Stated above shall
also apply to the creation, assignment or recognition of a
right to any benefit payable with respect to a Participant
pursuant to a domestic relations order entered after December
31, 1984,
79
unless such order is determined to be a qualified domestic
relations order, as defined in section 414(p) of the Code.
(ii) A domestic relations order entered prior to
January 1, 1985, will be treated as a qualified domestic
relations order (as described in (i) above) if payment of
benefits pursuant to the order has commenced as of such date.
If payment of benefits has not commenced as of such date, the
Plan Administrator may, in its sole discretion, determine that
such an order be treated as a qualified domestic relations
order, even though the order does not satisfy the requirements
of section 414(p) of the Code.
17.2 Missing Participants or Beneficiaries.
(a) Each Participant and each Beneficiary designated by the
Participant must file with the Plan Administrator from time to time in
writing his address and each change of address. Any communication,
statement or notice addressed to a Participant or Beneficiary at his
last address filed with the Plan Administrator, or if no address is
filed with the Plan Administrator then at his last address as shown on
the Employer's records, will be binding on the Participant and his
Beneficiary for all purposes of the Plan. Neither the Plan
Administrator nor the Trustee shall be required to search for or locate
a Participant or Beneficiary.
(b) 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.
ARTICLE XVIII THE TRUST
18.1 Trustee. The Trustee shall receive, hold, invest, administer and
distribute Plan's Trust Fund in accordance with the provisions of the Plan as
herein set forth. The interests of each Plan in the assets of the Trust shall be
only the right to have such assets received, held, invested, administered and
distributed in accordance with the provisions of that Plan.
18.2 Records and Accounts of Trustee. The Trustee shall maintain
accurate and detailed records and accounts of all transactions of the Plan,
which shall be available at all reasonable times for inspection or audit by any
person designated by the Employer and by any other person or entity to the
extent required by law.
18.3 Cash Basis for Accounts. All accounts of the Trustee shall be kept
on a cash basis except as otherwise herein provided.
80
18.4 Annual Reports. As soon as practicable following the close of each
Plan Year and following the effective date of the termination of the Plan (and
in no event more than 120 days thereafter), the Trustee shall file with the
Employer a written report setting forth all transactions with respect to its
Plan's Trust Fund during such Fiscal Year or during the period from the close of
the last Fiscal Year to the date of such termination and listing the assets of
the Trust Fund and the market value thereof as of the close of the period
covered by such report. The Trustee shall also provide the Employer and the Plan
Administrator with such other information in its possession as may be necessary
for the Employer to conform with the requirements of section 103 of the Employee
Retirement Income Security Act of 1974 ("ERISA").
18.5 Investment of the Trust Fund. Except as otherwise provided in the
Plan, the net income and profits of the Trust shall be accumulated, added to the
principal of the Trust and invested and reinvested therewith as a single fund.
The Trustee is authorized to invest the Trust Fund in such bonds, notes,
debentures, options to purchase property, mortgages, equipment trust
certificates, investment trust certificates, preferred or common stocks
(including stock of or issued by the Trustee), mutual funds, or in such other
property, real or personal, within the United States, as the Trustee may deem
advisable, subject to the provisions of sections 402 and 406 of ERISA. The
Trustee in its discretion may hold in cash such portion of the Trust Fund as it
deems reasonable under the circumstances, pending investment or payment of
expenses or distribution of benefits.
18.6 Investment Funds. With respect to the Trust Fund, the Trustee may
establish separate Funds (herein called "Investment Funds"). The Trustee shall
hold, manage, administer, value, invest, reinvest, distribute, account for and
otherwise deal with each such Fund separately. Such Investment Funds shall be
those selected from time to time by the Plan Administrator, and may include (1)
an Equity Fund, (2) a Fixed Income Fund, (3) a Money Market Fund, (4) a Fund
which invests primarily in quality investment contracts issued by insurance
companies and/or banks and savings and loan associations, (5) a Fund which
invests primarily in stock of an Employer or an affiliate of such Employer and
(6) any other form or type of Investment Fund (meeting the requirements of
applicable law) designated by the Plan Administrator from time to time by
written notice to the Trustee. Except as otherwise provided with respect to any
Investment Fund established by the Plan Administrator, all or any part of an
Investment Fund may, in the discretion of the Trustee, be invested in any
comparable fund (herein called "NCB Collective Fund") now or hereafter
established under the trust instrument entitled "Declaration of Trust
Establishing The National City Bank of Cleveland Investment Fund for Retirement
Trusts" and executed by The National City Bank of Cleveland (now known as
National City Bank) on December 4, 1956, as such trust instrument has been and
may be amended, or in any comparable fund established under a collective
investment trust maintained by the Trustee or any other bank or trust company
which is affiliated with the Trustee ("Other Trust") so long as the trust
established by such instrument in which the assets are so held and all trusts
participating therein in accordance with the terms thereof are qualified and
exempt under sections 401(a) and 501(a), respectively. of the Code, as amended,
and, to the extent of the equitable share of any Investment Fund in such NCB
Collective Fund or Other Trust, the terms of the
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instrument establishing the NCB Collective Fund or Other Trust, as said
instrument has been or may be amended, and the collective trust established
thereby, shall be deemed part of the Plan and this Agreement. Whether a
particular investment, is within the category of one or another of such
Investment Funds shall be determined by the Trustee solely in its discretion.
18.7 Trustee Powers. The Trustee shall have the following powers,
rights and duties in addition to those vested in it elsewhere in the Plan or by
law:
(a) To retain, manage, improve, repair, operate and control any
assets of the Trust;
(b) To sell, convey, transfer, exchange, partition, grant
options with respect to, lease for any term (even though such terms
extend beyond the duration of the Trust or commence in the future),
mortgage, pledge or otherwise deal with or dispose of any asset of the
Trust Fund in such manner, for such consideration and UD on such terms
and conditions as the Trustee, in its discretion, shall by determine;
(c) To invest the Trust in deposits which bears reasonable
interest rate in the bank acting as Trustee;
(d) To employ such agents and counsel as may be reasonably
necessary in collecting, managing, administering, investing,
distributing and protecting the Trust or the assets thereof and to pay
them reasonable compensation;
(e) To settle, compromise or abandon all claims and demands in
favor of or against the Trust;
(f) To borrow money for the Trust from anyone (other than a
"party in interest" (as defined in section 3(14) of ERISA)), with or
without giving security from the Master Trust;
(g) To vote any corporate stock either in person or by proxy
for any purpose; to exercise any conversion privilege, subscription
right or any other right or option given to the Trustee as the owner of
any security owned by the Trust and to make any payments incidental
thereto; to consent to, take any action in connection with, and receive
and retain any securities resulting from any reorganization,
consolidation, merger, readjustment of the financial structure, sale,
lease or other disposition of the assets of any corporation or other
organization, the securities of which may be an asset of the Trust;
(h) To organize and incorporate (or participate in the
organization or incorporation of), under the laws of any state, a
corporation for the purpose of acquiring and
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holding title to any property which the Trustee is authorized to
acquire for the Trust and to exercise with respect thereto any of the
powers, rights and duties it has with respect to other assets of the
Trust;
(i) To carry any investment held in the Trust Fund in bearer
form; to cause such investments to be registered and carried in its own
name or in the name of a nominee, with or without disclosing any
fiduciary relationship; to permit investments of the Trust to be held
in a depository. with such holding permitted to be in bearer form or
registered and carried in the name of the depository or the
depository's nominee; provided that, the records of the Trust clearly
show the ownership of such investments to be in the Trustee; and to
exercise any of the powers and rights of an individual owner with
respect to any property of the Trust and to do all other acts in its
judgment necessary or desirable for the proper administration of the
Trust although the power to do such acts is not specifically set forth
herein.
18.8 Participant Direction of Investments.
(a) To the extent that separate Investment Funds are
established for a Plan and if elected by the Employer, in Item GG of
the Adoption Agreement for such Plan, a Participant shall be permitted
to direct the investment of the Account or Accounts designated in such
Item. In such event, all investment experience of the directed
investments shall be credited to or charged against sub-accounts
maintained under the Participant's individual Account or Accounts.
(b) A Participant's individually-directed sub-account(s) shall
be established as of the first business day following a Valuation Date,
or such other date as may be approved by the Plan Administrator, if the
Trustee has received, at least ten (10) days prior to such date, signed
written directions from the Participant which have been forwarded to
the Trustee by way of the Plan Administrator. By directing such
investment, the Participant agrees to indemnify and hold harmless the
Trustee from any and all claims and costs arising from said individual
direction, unless due to willful misconduct on the part of the Trustee.
(c) A Participant who elects to direct the investment of his
Accounts shall have the right to direct the Trustee to invest cash in
his Accounts in any Investment Fund, as is available for investment, as
he may choose; provided, however, that the Trustee may, in its
discretion, temporarily retain in cash or cash balances or in a savings
account or in short term government obligations or commercial paper,
such portion of a Participant's individual investment sub-account as it
may deem advisable pending written instructions from the Participant.
Such an investment choice made by a Participant shall remain in effect
and be applicable to all subsequent contributions to his accounts
unless and until a new investment choice is made by him and becomes
effective. However, only one new investment choice
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may be made by a Participant in the period of time elected by the
Employer in Item GG of the Adoption Agreement.
(d) Each Participant shall have the right to change his
investment option previously made as to the investment of his accounts,
provided, such an investment change may only be made once in the period
of time elected by the Employer in Item GG of the Adoption Agreement.
(e) An investment choice or change pursuant to this Section may
only be made on a form approved by the Employer, signed by the
Participant and filed with the Trustee. Such an election by a
Participant filed with the Trustee shall be carried out in accordance
with the provisions of paragraph (b) of this Section, at the time and
in the manner set forth therein.
(f) The Trustee shall not be liable for the purchase,
retention, or sale of any investment or reinvestment, made by it for a
Participant's individual investment sub-account(s) while following the
written directions of the Participant, nor shall the Trustee be liable
for any loss or by reason of any breach of trust which results from
such Participant's exercise of control over the assets of his Accounts.
(g) The Trustee shall be entitled to additional fees for
maintaining and administering a Participant's individual investment
sub-accounts. Such additional Trustee compensation and expenses may be
paid by the Employer or may be charged to each Participant's individual
investment sub-account, as directed by the Employer in Item GG of the
Adoption Agreement. Until paid, such expenses shall constitute a charge
upon the Participant's Account. If charged, each Participant's Account
shall be charged for those additional expenses incurred in its
maintenance.
18.9 Insurance. If the Employer elects to allow the Trustee to purchase
life insurance contracts, pursuant to Item HH of the Adoption Agreement, the
Trustee may, if requested to do so by the Participant, purchase life insurance
contracts for the benefit of the Participant and his Beneficiary, and premiums
for such contracts will be charged against the Participant's Trust Accounts.
(a) The contracts shall be owned and held by the Trustee and
the Trustee shall be the beneficiary of all such contracts. The Trustee
shall pay the proceeds of any insurance contracts held under this Plan
to the Beneficiary or Beneficiaries designated pursuant to Section 16.1
of the Plan. For purposes of these incidental insurance provisions,
ordinary life insurance contracts are contracts with both nondecreasing
death benefits and nonincreasing premiums.
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(b) If an ordinary life type contract is purchased, the
aggregate of premiums shall be less than 50% of the aggregate of the
Employer contributions and forfeitures allocated for such Participant
at any particular time. If a term life, universal life or other
nonordinary life contract is purchased, the aggregate of premiums shall
be less than 25% of the aggregate of the Employer contribution and
forfeitures allocated for such Participant at any particular time. If
both ordinary and non-ordinary life insurance contracts are purchased
the amount expended for the term insurance premiums plus one-half the
amount expended for the ordinary life insurance premiums may not in the
aggregate exceed 25% of the aggregate of the Employer's contributions
and forfeitures allocated for such Participants at any particular time.
Subject to the provisions of Article XIII, the Trustee shall convert
the entire value, if any, of the life insurance contract into cash or
an annuity, or shall distribute the contract to the Participant, upon
commencement of benefits, so that no portion may be used to continue
life insurance protection beyond retirement.
(c) If at any time the Participant's current allocable share
plus other assets in his Salary Reduction, Matching Contribution and
Profit Sharing Accounts will not permit the payment of the Premium or a
portion of the premium within the limitations of (a) above, the
Participant shall be given the opportunity to pay such premium from
personal funds or from his Non-Deductible Employee Account or to
purchase the contract for its cash value. If the contract is purchased
by the Participant, the Trustee will transfer ownership of the contract
to the Participant and credit his appropriate Account(s) with the
purchase price. If none of these alternatives is effected, the contract
shall be retained under the Trust on a lapsed paid-up basis or reduced
to accommodate a lower premium which will meet the limitations of (a)
above, with any cash values released being credited to the appropriate
Participant Account.
(d) Any dividends or credits earned under contracts for a
Participant shall be allocated to the appropriate Participant
Account(s).
(e) A Participant, upon whose life a contract has been issued,
may direct the Trustee to include a Waiver of Premium option in his
contract. In no event shall the cost of such option exceed the limits
of sub-Section (a).
(f) The Trustee shall apply for and will be the owner of any
insurance contract purchased under the terms of the Plan. Such
contracts must provide that proceeds will be payable to the Trustee.
The Trustee, however, will be required to pay all such proceeds of such
contracts to the Participant's designated Beneficiary, in accordance
with the distribution provisions of Articles XIII and XVI herein. A
Participant's Spouse (as described in sub-Section 13.2(f)) will be the
designated Beneficiary of the proceeds in all circumstances, unless a
Qualified Election (as defined in sub-Section 13.2(c)) has been made in
accordance with Article XIII. Under no circumstances shall the trust
fund retain any part of the
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proceeds. In the event of any conflict between the provisions of this
Plan and the terms of an insurance policy or contract issued, the
provisions of this Plan shall control.
18.10 Consultation With Counsel. The Trustee may consult with legal
counsel, who may be counsel for an Employer, in respect to any of its rights,
duties or obligations hereunder.
18.11 Compensation and Expenses. All reasonable costs, charges and
expenses incurred by the Trustee in connection with its administration of each
Trust Fund, including fees for legal services rendered to the Trustee and such
reasonable compensation to the Trustee as may be agreed upon from time to time
between the Employer and the Trustee may be paid by the Employer, but if not
paid by the Employer shall be paid from that Trust Fund.
18.12 Employer Information. Any written direction or communication from
the Employer or Plan Administrator to the Trustee shall constitute a
certification that the content of such direction or communication (including
directions or communications concerning allocations, balances or other Account
information) is proper and correct and is of a type which the Employer or Plan
Administrator is authorized to issue under the Plan and Trust. The Trustee may
rely on the accuracy of such directions and communications and shall not be
required to make further investigation or inquiry concerning the content
thereof. No direction or communication shall be binding upon the Trust or the
Trustee until such time as it is received by the Trustee.
ARTICLE XIX - APPOINTMENT OF AN INVESTMENT MANAGER
19.1 Appointment. The Employer shall have the authority to appoint from
time to time with respect to any portion of the property of the Trust Fund that
is allocated to a subsidiary fund, as herein provided, an Investment Manager
meeting the requirements of section 3(38) of the Employee Retirement and Income
Security Act of 1974 ("ERISA"). Such appointment shall be evidenced by a written
instrument signed and authorized by the Employer and the Investment Manager, and
shall be delivered to the Trustee. Such written instrument shall acknowledge the
appointment of the Investment Manager and identify the portion of the property
of the Trust Fund allocated to the subsidiary fund and shall contain an
acceptance by the Investment Manager of its appointment, an acknowledgment by
the Investment Manager of its status as a fiduciary with respect to the Plan and
such other terms and provisions consistent with the terms of the Plan as may be
approved by the Employer. It shall also state whether the Investment Manager,
the Trustee or any other party is to have custody of the property of the
subsidiary fund. The appointment of any Investment Manager may be terminated at
any time by the Employer, such termination to be evidenced by a written
instrument signed by the Employer and delivered to the Trustee and to the
Investment Manager. The Employer may appoint separate Investment Managers for
separate subsidiary funds.
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19.2 Creation of Subsidiary Fund. Whenever an Investment Manager is
appointed, the Trustee shall create a subsidiary fund within the Trust
consisting of that portion of the Trust Fund for which the Investment Manager is
to have authority and responsibility hereunder. A subsidiary fund may consist of
all or any portion of the property of the Trust Fund. Any subsidiary fund
created hereunder shall be so designated on the books and in the records
maintained by the Trustee and shall be separately accounted for by the Trustee,
but no physical segregation of the property thereof shall be required if the
Trustee is to continue to have custody of the property of the subsidiary fund. A
subsidiary fund may be dissolved by the Trustee upon termination of the
appointment of the Investment Manager.
19.3 Fund Management. So long as the appointment of an Investment
Manager is in effect, such Investment Manager shall have, with respect to the
subsidiary fund for which it has been appointed, the exclusive authority and
responsibility to invest, or to direct the Trustee in the investment of, the
assets of such Fund, in the same categories of investments as the Trustee is
authorized to invest under the terms of this Plan and Trust.
19.4 No Trustee Responsibility. So long as an appointment of an
Investment Manager is in effect, the Trustee shall have no authority or
responsibility to exercise the powers otherwise conferred upon it under Sections
18.1, 18.5 and 18.7 with respect to the subsidiary fund for which such
Investment Manager has been appointed, except in accordance with written
instructions received by the Trustee from such Investment Manager.
19.5 Investment Procedure. The Employer shall specify in writing to the
trustee and to any Investment Manager whether the Trustee or the Investment
Manager (or a separate custodian) shall place the buy and sell orders with the
brokers or other persons through whom such transactions shall be accomplished on
behalf of the subsidiary fund (the placement of the buy and sell orders being
herein called "trading"). If the Employer shall specify that the Trustee shall
do the trading, then the Trustee shall cause the subsidiary fund to be invested,
reinvested, sold, or otherwise disposed of only as directed in writing by such
Investment Manager. If the Employer shall specify that the Investment Manager
shall do the trading, then the Trustee's sole duty and obligation relating to
the investment of the subsidiary fund shall be to accept and pay for any
property of any nature whatsoever which it is directed in writing by the
Investment Manager to accept and pay for, and to deliver against payment
therefor any property of any nature whatsoever which it holds and is directed in
writing by such Investment Manager to deliver against payment therefor. The
Trustee shall use its best efforts to consummate any such acceptance and payment
or delivery against payment as it may be so directed to do; provided, however,
that the Trustee shall not be required to accept delivery of or pay for any
property purchased for the account of a subsidiary fund to the extent that such
payment cannot be made from the assets of such subsidiary fund. Unless it has
knowledge to the contrary, the Trustee may assume (and shall be protected in
relying on such assumption) that: (a) any property of any nature whatsoever
acquired by or disposed of by any Investment Manager on behalf of the subsidiary
fund is a proper investment for or disposition of
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such property of the subsidiary fund, and (b) that the price, terms and
conditions of any such acquisition or disposition made by any Investment Manager
on behalf of the subsidiary fund are the correct price, terms, and conditions of
any such acquisition or disposition.
19.6 No Trustee Liability. Unless and to the extent otherwise required
by the terms of ERISA, the Trustee shall be relieved from any and all liability
resulting from: (a) any action taken, suffered or omitted by the Investment
Manager with respect to such subsidiary fund; (b) following the written
instructions of the Investment Manager with respect to such subsidiary fund; and
(c) the retention in such subsidiary fund of property purchased by, or upon the
written instructions of, the Investment Manager, the liability of the Trustee in
such cases being limited to liability for any failure of its part to comply
fully with such instructions.
ARTICLE XX - EXCLUSIVE BENEFIT OF PARTICIPANTS
20.1 General Rule. The Employer has no beneficial interest in the Trust
Fund and the Trust Fund, with the exception of the circumstances described in
Section 20.2, may not be diverted to or used for other than the exclusive
benefit of Participants of this Plan and their Beneficiaries.
20.2 Exceptions. Under the following circumstances and with the
following limitations, certain assets of the Trust Fund may be returned to the
Employer:
(a) Any contribution made by the Employer because of a mistake
of fact must be returned to the Employer within one year of the
contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that an Employer's 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 that employer's return for the taxable year in which
the plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
(c) In the event that a contribution is made to the Plan
conditioned upon the deductibility of the contribution under section
404 of the Code, such contribution, to the extent the deduction is
disallowed, may be returned to the Employer within one year from the
date of disallowance.
ARTICLE XXI - CLAIMS PROCEDURE
21.1 General. Any person who thinks that he is entitled to a benefit
under the Plan shall have the right to file with the Employer a written notice
of claim for such benefit. Within 90 days
88
after its receipt of such written notice of the claim (180 days in the event of
special circumstances), the Employer shall either grant or deny such claim
provided, however, that any delay on the part of the Employer in arriving at a
decision shall not adversely affect the benefits payable under a granted claim.
A decrease in the value of a Participant Account due to market value
depreciation during the processing of a claim shall not be deemed to be an
adverse effect attributable to Employer delay. The Employer shall provide to
each claimant: (a) the specific reasons for such denial; (b) specific reference
to the pertinent Plan provisions of which the denial is based; (c) a description
of any additional material or information necessary for the claimant to perfect
the claim and an explanation of why such material or information is necessary;
and (d) an explanation of the Plan's claim review procedure.
21.2 Appeals Process.
(a) Each claimant shall have the right to appeal the denial of
his claim to the Employer for a full and fair review at any time within
six (6) months after the claimant received written notice of such
denial. The Employer shall thereby afford the claimant or his duly
authorized representative the opportunity (i) to review documents
pertinent to the claim, (ii) to submit issues and comments in writing,
and (iii) to discuss such documents and issues with the Employer.
(b) The final decision of the Employer shall be made promptly,
and not later than 60 days after its receipt from the claimant of a
request for review unless circumstances beyond the control of the
Employer require an extension of time for Processing, in which case, a
decision shall be made as soon as possible but not later than 120 days
after receipt of a request for review. Such decision shall be made in
writing and shall include specific reasons for the decision, written in
a manner calculated to be understood by the claimant, and specific
references to pertinent Plan provisions on which the decision is based.
ARTICLE XXII - AMENDMENT OR TERMINATION
22.1 Amendment by Employer. While the Employer expects and intends to
continue the Plan it must necessarily reserve and reserves the right, subject to
Section 20.1, to amend the Plan from time to time by either:
(a) Filing an amended Adoption Agreement with the Trustee to
change any provision previously elected by it after the effective date
of the amended Adoption Agreement; or
(b) Amending any other provisions of the Plan in any manner it
considers desirable; provided that if any amendment is so made, the
Plan shall thereafter be treated as an individually designed plan of
the Employer not covered by any Internal Revenue Service
89
opinion letter issued to the Sponsor. If the Plan is so amended, the
Employer shall promptly notify the Sponsor of such amendment. In the
event the Plan is amended by the removal of the Trustee and the
appointment of a successor trustee, appropriate written notice of such
removal shall be delivered promptly to the Trustee. The effective date
of said removal and appointment may be sixty (60) days or less from the
date of such delivery, if acceptable to the Sponsor and the Employer.
The Trustee shall transfer and deliver the Trust Fund to the successor
trustee on the effective date of the successor trustee's appointment or
as soon thereafter as is practicable. However, the Trustee may first
subtract any amounts owed it from the Trust Fund for compensation,
expenses, fees and other costs and charges due.
(c) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the computation
of a Participant's nonforfeitable percentage or if the Plan is deemed
amended by an automatic change to or from a Top-Heavy Plan vesting
schedule, each Participant with at least three (3) Years of Vesting
Service with the Employer may elect, within a reasonable period after
the adoption of the amendment or change, to have the nonforfeitable
percentage computed under the Plan without regard to such amendment or
change.
(d) The period during which the election under sub-Section (c)
may be made shall commence with the date the amendment is adopted or
deemed to be made and shall end on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; or
(iii) 60 days after the Participant is issued written
notice of the amendment by the Employer or Plan Administrator.
(e) 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 section 412(c)(8) of the
Code. 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 attributable to
service before the amendment shall be treated as reducing an accrued
benefit. Furthermore, if the vesting schedule of a plan is amended, in
the case of an employee who is a Participant as of the later of the
date such amendment is adopted or the date it becomes effective, then
on forfeitable percentage (determined as of such date) of such
employee's right to his employer-derived accrued benefit will not be
less than his percentage computed under the plan without regard to such
amendment.
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(f) The Employer may amend the Plan by adding overriding plan
language to the Adoption Agreement, where such language is necessary to
satisfy Code sections 415 or 416, because of the required aggregation
of multiple plans and may add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption
will not cause the Plan to be treated as individually designed. An
employer that amends the plan for any other reason, including a waiver
of the minimum funding requirement under section 412(d) of the Code,
will no longer participate in this master or prototype plan and will be
considered to have an individually designed plan.
22.2 Amendment by Plan Sponsor. BancOhio National Bank, as the Plan
Sponsor, must necessarily reserve and reserves the right to amend the Plan from
time to time, subject to the provisions of Section 20.1 and the following:
(a) Except as provided in paragraphs (b) and (c) next below, no
such amendment shall become effective until at least thirty (30) days
prior written notice thereof has been given to the Employer, nor shall
any such amendment reduce Participants' benefits to less than the
benefits to which they would have been entitled if they had resigned
from the employ of the Employer on the date of the amendment.
(b) An amendment of the Plan and Trust made under this Section
which the Sponsor deems necessary or appropriate to enable the Plan and
Trust to meet the requirements of section 401(a) of the Code may be
made effective as of the date the Plan and Trust was established by the
Trustee or as of any subsequent date.
(c) An amendment of the Plan and Trust made under this Section
to conform the Plan and Trust to any change in the law of the United
States, or to any rule and regulation thereunder, may take effect as of
the date such amendment is required to be effective under such law,
rule or regulation.
Any amendment executed pursuant to the provisions of this Section shall be
executed by an authorized officer of the Sponsor. For purposes of this Section,
the Employer shall be deemed to have been furnished a copy of any amendment on
the business day next following the mailing thereof to the Employer by the
Sponsor.
The Trustee may resign at any time by written notice to the Employer
which shall be effective sixty (60) days after delivery to the Employer, unless
the Trustee and the Employer agree to an earlier effective date. The Employer
shall promptly appoint a successor trustee, and the Trustee shall transfer and
deliver the Trust Fund to the successor trustee on the effective date of the
successor trustee's appointment or as soon thereafter as is practicable.
However, the Trustee may first subtract any amounts owed it from the Trust Fund
for compensation, expenses, fees and other costs and charges due. Prior to the
resignation or removal of the Trustee, the Employer shall amend its plan
91
to eliminate any reference to the Plan. If the Employer fails to appoint a
successor trustee within sixty (60) days of resignation or removal, or such
longer period as the Trustee permits in writing. the Trustee may apply to a
court of competent jurisdiction for appointment of a successor trustee.
22.3 Retroactive Amendments. Except as specifically provided above in
this Article, no amendment to the Plan or Trust may be made effective
retroactively to a day prior to the beginning of the Fiscal Year in which it is
adopted, unless the Board of Directors of the Employer in its resolution
adopting the amendment, or any officer of the Employer or of the Sponsor,
whichever is applicable, by written instrument, shall state that its legal
counsel has advised that such retroactive effect is necessary to establish or
maintain the Plan and Trust without interrupting the qualified status thereof
under the Code and the regulations promulgated thereunder.
22.4 Termination. The Plan will terminate on the Valuation Date
coincident with or next following the first to occur of the following:
(a) The date the Plan is terminated by the Employer if thirty
(30) days advance written notice of the termination is given to the
Trustee;
(b) The date that the Employer is judicially declared bankrupt
or insolvent;
(c) The date that the Employer permanently discontinues its
contributions under the Plan; or (d) The dissolution, merger,
consolidation or reorganization of the Employer, or the sale by the
Employer of all or substantially all of its assets, except that,
subject to the provisions of Section 22.5 in any such event
arrangements may be made whereby the Plan will be continued by any
successor to the Employer or any purchaser of all or substantially all
of the Employer's assets, in which case the successor or purchaser will
be substituted for the Employer under the Plan.
22.5 Merger and Consolidation of Plan, Transfer of Plan Assets. In the
case of any merger or consolidation with, or transfer of assets and liabilities
to any other plan, provisions shall be made so that each Participant in the Plan
on the date thereof (if the Plan then terminated) would receive 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
prior to the merger, consolidation or transfer if the Plan had then terminated.
22.6 Effect of Termination and Partial Termination. On termination or
partial termination of the Plan or complete discontinuance of contributions
hereunder, the Participant's Matching Contribution and Profit Sharing Accounts
shall be nonforfeitable. The Plan Administrator shall then direct the Trustee to
make distribution of such benefits in accordance with the terms herein. All
appropriate accounting provisions of the Plan will continue to apply until the
benefits of all affected Participants have been distributed to them. Upon (a)
termination of the Plan without establishment
92
of a successor plan, (b) the sale by the corporate employer of substantially all
of the assets (within the meaning of section 409(d)(2) of the Code) used by the
corporation in a trade or business of such corporation with respect to an
employee who continues employment with the corporation acquiring such assets or
(c) the sale by the corporate employer of such corporation's interest in a
subsidiary (within the meaning of section 409(d)(3) of the Code) with respect to
an employee who continues employment with such subsidiary, the employer may
elect, pursuant to Item KK of the Adoption Agreement, but subject to the consent
provisions of Sections 12.6(d) and (e) of the Plan, to direct the Trustee to
make distribution in a lump sum to each Employee-Participant affected by clause
(a), (b) or (c) pursuant to Section 12.1 as if such Employee-Participant had
reached his Normal Retirement Age and his employment with the Employer had then
terminated.
22.7 Notice of Amendment, Termination or Partial Termination. Affected
Participants will be notified of an amendment, termination or partial
termination of the Plan within a reasonable time.
ARTICLE XXIII - DISCHARGE OF DUTIES BY FIDUCIARIES
Subject to the provisions of Article XX, the Plan Administrator and the
Trustee and any other fiduciary shall discharge their respective duties set
forth in the Plan and Trust solely in the interest of the Participants and their
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 man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; and
(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.
ARTICLE XXIV - MISCELLANEOUS PROVISIONS
24.1 Employer Action. Except as may be specifically provided herein,
any action required or permitted to be taken by the Employer may be taken on
behalf of the Employer by any officer of the Employer.
24.2 Employer Records. Records of the Employer as to an Employee's or
Participant's period of employment, termination of employment and the reason
therefor, leaves of absence,
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reemployment and compensation will be conclusive on all Persons, unless
determined to be incorrect.
24.3 No Guarantee of Interests. None of the Trustees, the Employer or
the Plan Administrator in any way guarantees the Trust Fund from loss or
depreciation, nor do they guarantee any payment to any person. The liability of
the Trustee, the Employer and the Plan Administrator to make any payments
hereunder is limited to the available assets of the Trust Fund.
24.4 Employment Rights. The Plan is not a contract of employment and
participation in the Plan will not give any Participant the right to be retained
in the Employer's employ, nor any right or claim to any benefit under the Plan,
unless the right or claim has specifically accrued under the Plan.
24.5 Interpretations and Adjustments. To the extent permitted by law,
an interpretation of the Plan and a decision on any matter within the Plan
Administrator's discretion made in good faith is binding on all persons. A
misstatement or other mistake of fact shall be corrected when it becomes known
and the person responsible shall make such adjustment on account thereof as he
considers equitable and practicable.
24.6 Uniform Rules. In the administration of the Plan, uniform rules
will be applied to all Participants similarly situated.
24.7 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
24.8 Waiver of Notice. Any notice required under the Plan may be waived
by the person entitled to notice.
24.9 Tax Exemption of Employer's Plan. In the event an individual
Employer's plan fails to attain or retain qualification, then such plan shall no
longer be permitted to participate in this prototype Plan and will be considered
an individually designer plan.
24.10 Annual Statement of Account. As soon as practicable after the
last day of each Plan Year, the Trustee will deliver to each Participant, or to
the Plan Administrator for delivery to each Participant, a statement of his
account balances as of that date.
24.11 Counterparts. The Plan and Trust may be executed in two or more
counterparts, any one of which will be an original without reference to the
others.
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24.12 Gender and Number. Where the context admits, words in the
masculine gender shall include the feminine and neuter genders, the plural shall
include the singular, and the singular shall include the plural.
24.13 Controlling Law. The law of Ohio shall be the controlling state
law in all matters relating to the Plan and shall apply to the extent that it is
not preempted by the laws of the United States of America.
IN WITNESS WHEREOF, this Plan and Trust is hereby executed by BancOhio National
Bank on this______day of_________________, 19___.
BANCOHIO NATIONAL BANK
By___________________________
And__________________________