Exhibit 4
JAMES MONROE BANK KSOP PLAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.................
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY..................... 12
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES............... 12
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR...................... 13
2.5 RECORDS AND REPORTS......................................... 13
2.6 APPOINTMENT OF ADVISERS..................................... 14
2.7 PAYMENT OF EXPENSES......................................... 14
2.8 CLAIMS PROCEDURE............................................ 14
2.9 CLAIMS REVIEW PROCEDURE..................................... 14
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY................................... 14
3.2 EFFECTIVE DATE OF PARTICIPATION............................. 15
3.3 DETERMINATION OF ELIGIBILITY................................ 15
3.4 TERMINATION OF ELIGIBILITY.................................. 15
3.5 OMISSION OF ELIGIBLE EMPLOYEE............................... 15
3.6 INCLUSION OF INELIGIBLE EMPLOYEE............................ 15
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE..................... 15
3.8 ELECTION NOT TO PARTICIPATE................................. 16
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION............... 16
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION..................... 17
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION.................... 19
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS........ 19
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS............................ 22
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS.............. 24
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS........................ 25
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS.......... 27
4.9 MAXIMUM ANNUAL ADDITIONS.................................... 29
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS................... 30
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4.11 ROLLOVERS AND PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS... 31
4.12 DIRECTED INVESTMENT ACCOUNT................................. 32
4.13 QUALIFIED MILITARY SERVICE.................................. 33
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY........................................... 33
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND................................. 34
6.2 METHOD OF VALUATION......................................... 34
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT................... 34
7.2 DETERMINATION OF BENEFITS UPON DEATH........................ 34
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY............ 35
7.4 DETERMINATION OF BENEFITS UPON TERMINATION.................. 36
7.5 DISTRIBUTION OF BENEFITS.................................... 38
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED........................ 40
7.7 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY........... 41
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN.............. 41
7.9 ADVANCE DISTRIBUTION FOR HARDSHIP........................... 41
7.10 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION............. 42
ARTICLE VIII
TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE....................... 42
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE................. 43
8.3 OTHER POWERS OF THE TRUSTEE................................. 43
8.4 VOTING COMPANY STOCK........................................ 45
8.5 DUTIES OF HE TRUSTEE REGARDING PAYMENTS..................... 46
8.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES............... 46
8.7 ANNUAL REPORT OF THE TRUSTEE................................ 46
8.8 AUDIT....................................................... 46
8.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE.............. 47
8.10 TRANSFER OF INTEREST........................................ 47
8.11 TRUSTEE INDEMNIFICATION..................................... 47
8.12 DIRECT ROLLOVER............................................. 47
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ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
9.1 AMENDMENT................................................... 48
9.2 TERMINATION................................................. 49
9.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS................. 49
ARTICLE X
TOP HEAVY
10.1 TOP HEAVY PLAN REQUIREMENTS................................. 49
10.2 DETERMINATION OF TOP HEAVY STATUS........................... 49
ARTICLE XI
MISCELLANEOUS
11.1 PARTICIPANT'S RIGHTS....................................... 51
11.2 ALIENATION................................................. 51
11.3 CONSTRUCTION OF PLAN....................................... 52
11.4 GENDER AND NUMBER.......................................... 52
11.5 LEGAL ACTION............................................... 52
11.6 PROHIBITION AGAINST DIVERSION OF FUNDS..................... 52
11.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE................. 53
11.8 INSURER'S PROTECTIVE CLAUSE................................ 53
11.9 RECEIPT AND RELEASE FOR PAYMENTS........................... 53
11.10 ACTION BY THE EMPLOYER..................................... 53
11.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY......... 53
11.12 HEADINGS................................................... 53
11.13 APPROVAL BY INTERNAL REVENUE SERVICE....................... 54
11.14 UNIFORMITY................................................. 54
11.15 SECURITIES AND EXCHANGE COMMISSION APPROVAL................ 54
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JAMES MONROE BANK KSOP PLAN
THIS AGREEMENT, hereby made and entered into this __________ day of
_________________________, by and between James Monroe Ban (herein referred to
as the "Employer") and David W. Pijor, Richard I. Linhart and John R. Maxwell
(herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Profit Sharing Plan
effective June 8, 1998, (hereinafter called the "Effective Date") known as James
Monroe Bank 401(k) Plan and which plan shall hereinafter be known as James
Monroe Bank KSOP Plan (herein referred to as the "Plan") in recognition of the
contribution made to its successful operation by its employees and for the
exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Profit Sharing Plan, the Employer has
the ability to amend the Profit Sharing Plan, provided the Trustee joins in such
amendment if the provisions of the Profit Sharing Plan affecting the Trustee are
amended;
WHEREAS, the Employer desires to amend the Profit Sharing Plan to
enable its eligible employees to acquire a proprietary interest in capital stock
of the Employer; and
WHEREAS, contributions to the Plan will be made by the Employer and
such contributions made to the trust will be invested primarily in the capital
stock of the Employer;
NOW, THEREFORE, effective Gust 6/8/98 ESOP 1/1/03, except as otherwise
provided, the Employer and Trustee in accordance with the provisions of the
Profit Sharing Plan pertaining to amendments thereof, hereby modify, amend and
restate the Profit Sharing Plan in its entirety as an Employee Stock Ownership
Plan (ESOP) as defined in Section 4975(e)(7) of the Internal Revenue Code, known
as James Monroe Bank KSOP Plan (hereinafter referred to as the "Plan"), to
provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "Administrator" means the Employer unless another person or entity has
been designated by the Employer pursuant to Section 2.2 to administer the Plan
on behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 10.2.
1.5 "Anniversary Date" means the last day of the Plan Year.
1.6 "Beneficiary" means the person (or entity) to whom the share of a
deceased Participant's total account is payable, subject to the restrictions of
Sections 7.2 and 7.5.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.8 "Company Stock" means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradable on an established securities
market. If there is no common stock which meets the foregoing requirement, the
term "Company Stock" means common stock issued by the Employer (or by a
corporation which is a member of the same controlled group) having a combination
of voting power and dividend rights equal to or in excess of: (A) that class of
common stock of the Employer (or of any other such corporation) having the
greatest voting power, and (B) that
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class of common stock of the Employer (or of any other such corporation) having
the greatest dividend rights. Noncallable preferred stock shall be deemed to be
"Company Stock" if such stock is convertible at any time into stock which
constitutes "Company Stock" hereunder and if such conversion is at a conversion
price which (as of the date of the acquisition by the Trust) is reasonable. For
purposes of the preceding sentence, pursuant to Regulations, preferred stock
shall be treated as noncallable if after the call there will be a reasonable
opportunity for a conversion which meets the requirements of the preceding
sentence.
1.9 "Company Stock Account" means the account of a Participant which is
credited with the shares of Company Stock purchased and paid for by the Trust
Fund or contributed to the Trust Fund.
A separate accounting shall be maintained with respect to that portion
of the Company Stock Account attributable to Elective Contributions and
Non-Elective Contributions.
1.10 "Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation
must be determined without regard to any rules under Code Section 3401(a) that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall
be made by:
(a) excluding commissions.
(b) excluding bonuses.
(c) including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which
are not includible in the gross income of the Participant
under Code Sections 125, 132(f)(4) for Plan Years beginning
after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
For a Participant's initial year of participation, Compensation shall
be recognized for the entire Plan Year.
Compensation in excess of $150,000 (or such other amount provided in
the Code) shall be disregarded for all purposes other than for purposes of
salary deferral elections pursuant to Section 4.2. Such amount shall be adjusted
for increases in the cost of living in accordance with Code Section
401(a)(17)(B), except that the dollar increase in effect on January 1 of any
calendar year shall be effective for the Plan Year beginning with or within such
calendar year. For any short Plan Year the Compensation limit shall be an amount
equal to the Compensation limit for the calendar year in which the Plan Year
begins multiplied by the ratio obtained by dividing the number of full months in
the short Plan Year by twelve (12). In applying this limitation, the family
group of a Highly Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) as in effect prior to the Small
Business Job Protection Act of 1996 because such Participant is either a "five
percent owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year, shall be treated
as a single Participant, except that for this purpose Family Members shall
include only the affected Participant's spouse and any lineal descendants who
have not attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules the adjusted limitation is exceeded,
then the limitation shall be prorated among the affected Family Members in
proportion to each such Family Member's Compensation prior to the application of
this limitation, or the limitation shall be adjusted in accordance with any
other method permitted by Regulation.
If, as a result of such rules, the maximum "annual addition" limit of
Section 4.9(a) would be exceeded for one or more of the affected Family Members,
the prorated Compensation of all affected Family Members shall be adjusted to
avoid or reduce any excess. The prorated Compensation of any affected Family
Member whose allocation would exceed the limit shall be adjusted downward to the
level needed to provide an allocation equal to such limit. The prorated
Compensation of affected Family Members not affected by such limit shall then be
adjusted upward on a pro rata basis not to exceed each such affected Family
Member's Compensation as determined prior to application of the Family Member
rule. The resulting allocation shall not exceed such individual's maximum
"annual addition" limit. If, after these adjustments, an "excess amount" still
results, such "excess amount" shall be disposed of in the manner described in
Section 4.10 pro rata among all affected Family Members.
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1.11 "Contract" or "Policy" means any life insurance policy, retirement
income policy or annuity policy (group or individual) issued pursuant to the
terms of the Plan. In the event of any conflict between the terms of this Plan
and the terms of any contract purchased hereunder, the Plan provisions shall
control.
1.12 "Deferred Compensation" with respect to any Participant means the
amount of the Participant's total Compensation which has been contributed to the
Plan in accordance with the Participant's deferral election pursuant to Section
4.2 excluding any such amounts distributed as excess "annual additions" pursuant
to Section 4.10.
1.13 "Early Retirement Date." This Plan does not provide for a retirement
date prior to Normal Retirement Date.
1.14 "Elective Contribution" means the Employer contributions to the Plan
of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.10. In addition, any Employer Qualified
Non-Elective Contribution made pursuant to Section 4.1(c) and Section 4.6(b)
which is used to satisfy the "Actual Deferral Percentage" tests shall be
considered an Elective Contribution for purposes of the Plan. Any contributions
deemed to be Elective Contributions (whether or not used to satisfy the "Actual
Deferral Percentage" tests or the "Actual Contribution Percentage" tests) shall
be subject to the requirements of Sections 4.2(b) and 4.2(c) and shall further
be required to satisfy the nondiscrimination requirements of Regulation
1.401(k)-1(b)(5) and Regulation 1.401(m)-1(b)(5), the provisions of which are
specifically incorporated herein by reference.
1.15 "Eligible Employee" means any Employee.
Employees of Affiliated Employers shall not be eligible to
participate in this Plan unless such Affiliated Employers have specifically
adopted this Plan in writing.
Employees classified by the Employer as independent contractors who
are subsequently determined by the Internal Revenue Service to be Employees
shall not be Eligible Employees.
1.16 "Employee" means any person who is employed by the Employer or
Affiliated Employer, and excludes any person who is employed as an independent
contractor. Employee shall include Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a
plan described in Code Section 414(n)(5) and such Leased Employees do not
constitute more than 20% of the recipient's non-highly compensated work force.
1.17 "Employer" means James Monroe Bank and any successor which shall
maintain this Plan; and any predecessor which has maintained this Plan. The
Employer is a corporation with principal offices in the Commonwealth of
Virginia.
1.18 "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of the aggregate amount of the Employer matching contributions made
pursuant to Section 4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on behalf of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a) (determined
by hypothetically reducing contributions made on behalf of Highly Compensated
Participants in order of the actual contribution ratios beginning with the
highest of such ratios). Such determination shall be made after first taking
into account corrections of any Excess Deferred Compensation pursuant to Section
4.2 and taking into account any adjustments of any Excess Contributions pursuant
to Section 4.6.
1.19 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions used to satisfy the "Actual Deferral Percentage" tests
made on behalf of Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section 4.5(a) (determined
by hypothetically reducing contributions made on behalf of Highly Compensated
Participants in order of the actual deferral ratios beginning with the highest
of such ratios). Excess Contributions shall be treated as an "annual addition"
pursuant to Section 4.9(b).
1.20 "Excess Deferred Compensation" means, with respect to any taxable year
of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.9(b) when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year. Additionally, for
purposes of Sections 10.2 and 4.4(h), Excess Deferred Compensation shall
continue to be treated
4
as Employer contributions even if distributed pursuant to Section 4.2(f).
However, Excess Deferred Compensation of Non-Highly Compensated Participants is
not taken into account for purposes of Section 4.5(a) to the extent such Excess
Deferred Compensation occurs pursuant to Section 4.2(d).
1.21 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11.
1.22 "Family Member" means, for Plan Years beginning prior to the first day
of the first Plan Year beginning after 6/8/98, with respect to an affected
Participant, such Participant's spouse and such Participant's lineal descendants
and ascendants and their spouses, all as described in Code Section 414(q)(6)(B)
as in effect prior to the Small Business Job Protection Act of 1996.
1.23 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.24 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1 of each year and ending the following December 31.
1.25 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of the
Participant's Account of a Former Participant who has severed
employment with the Employer. For purposes of this provision, if the
Former Participant has a Vested benefit of zero, then such Former
Participant shall be deemed to have received a distribution of such
Vested benefit as of the year in which the severance of employment
occurs, or
(b) the last day of the Plan Year in which a Former
Participant who has severed employment with the Employer incurs five
(5) consecutive 1-Year Breaks in Service.
Regardless of the preceding provisions, if a Former Participant is
eligible to share in the allocation of Employer contributions or Forfeitures in
the year in which the Forfeiture would otherwise occur, then the Forfeiture will
not occur until the end of the first Plan Year for which the Former Participant
is not eligible to share in the allocation of Employer contributions or
Forfeitures. Furthermore, the term "Forfeiture" shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.26 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.27 "415 Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. "415
Compensation" must be determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of "415 Compensation"
shall include any elective deferral (as defined in Code Section 401(g)(3)), and
any amount which is contributed or deferred by the Employer at the election of
the Participant and which is not includible in the gross income of the
Participant by reason of Code Sections 125, 132(f)(4) for "limitation years"
beginning after December 31, 2000 and 457.
1.28 "414(s) Compensation" means any definition of compensation that
satisfies the nondiscrimination requirements of Code Section 414(s) and the
Regulations thereunder. The period for determining 414(s) Compensation must be
either the Plan Year or the calendar year ending with or within the Plan Year.
An Employer may further limit the period taken into account to that part of the
Plan Year or calendar year in which an Employee was a Participant in the
component of the Plan being tested. The period used to determine 414(s)
Compensation must be applied uniformly to all Participants for the Plan Year.
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1.29 "Highly Compensated Employee" means, for Plan Years beginning after
December 31, 1996, an Employee described in Code Section 414(q) and the
Regulations thereunder, and generally means any Employee who:
(c) was a "five percent owner" as defined in Section 1.34(c) at
any time during the "determination year" or the "look-back year"; or
(d) for the "look-back year" had "415 Compensation" from the
Employer in excess of $80,000 and were in the Top Paid Group of
Employees for the Plan Year. The $80,000 amount is adjusted at the
same time and in the same manner as under Code Section 415(d), except
that the base period is the calendar quarter ending September 30,
1996.
The "determination year" means the Plan Year for which testing is
being performed, and the "look back year" means the immediately preceding twelve
(12) month period.
A highly compensated former Employee is based on the rules applicable
to determining Highly Compensated Employee status as in effect for the
"determination year," in accordance with Regulation 1.414(q)-1T, A-4 and IRS
Notice 97-45 (or any superseding guidance).
In determining whether an Employee is a Highly Compensated Employee
for a Plan Year beginning in 1997, the amendments to Code Section 414(q) stated
above are treated as having been in effect for years beginning in 1996.
If an Employee is, during a "determination year" or "look-back year",
a Family Member of either a "five percent owner" (whether active or former) or a
Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of "415 Compensation" paid by the Employer during
such year, then the Family Member and the "five percent owner" or top-ten Highly
Compensated Employee shall be aggregated. In such case, the Family Member and
"five percent owner" or top-ten Highly Compensated Employee shall be treated as
a single Employee receiving "415 Compensation" and Plan contributions or
benefits equal to the sum of such "415 Compensation" and contributions or
benefits of the Family Member and "five percent owner" or top-ten Highly
Compensated Employee.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
1.30 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the component of the Plan being tested.
1.31 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties (these hours will be credited to the Employee for
the computation period in which the duties are performed); (2) each hour for
which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period (these hours will
be calculated and credited pursuant to Department of Labor regulation
2530.200b-2 which is incorporated herein by reference); (3) each hour for which
back pay is awarded or agreed to by the Employer without regard to mitigation of
damages (these hours will be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made). The same Hours of
Service shall not be credited both under (1) or (2), as the case may be, and
under (3).
Notwithstanding (2) above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be
6
credited to the Employee if such payment is made or due under a plan maintained
solely for the purpose of complying with applicable worker's compensation, or
unemployment compensation or disability insurance laws; and (iii) Hours of
Service are not required to be credited for a payment which solely reimburses an
Employee for medical or medically related expenses incurred by the Employee.
For purposes of (2) above, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due from
the Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
Notwithstanding the foregoing, a Participant shall be credited with 45
Hours of Service for each week in which an Employee is paid or entitled to
payment for at least one Hour of Service.
For purposes of this Section, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.32 "Income" means the income or losses allocable to "excess amounts"
which shall equal the sum of the allocable gain or loss for the "applicable
computation period" and the allocable gain or loss for the period between the
end of the "applicable computation period" and the date of distribution ("gap
period"). The income allocable to "excess amounts" for the "applicable
computation period" and the "gap period" is calculated separately and is
determined by multiplying the income for the "applicable computation period" or
the "gap period" by a fraction. The numerator of the fraction is the "excess
amount" for the "applicable computation period." The denominator of the fraction
is the total "account balance" attributable to "Employer contributions" as of
the end of the "applicable computation period" or the "gap period", reduced by
the gain allocable to such total amount for the "applicable computation period"
or the "gap period" and increased by the loss allocable to such total amount for
the "applicable computation period" or the "gap period". The provisions of this
Section shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess amounts";
(2) "taxable year of the Participant" for "applicable
computation period";
(3) "Deferred Compensation" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance.
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Elective Contributions" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer matching contributions made pursuant to Section
4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section
4.7(c)" for "Employer contributions"; and
(4) "Participant's Account" for "account balance."
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap period."
Under the "safe harbor method," allocable Income for the "gap
7
period" shall be deemed to equal ten percent (10%) of the Income allocable to
"excess amounts" for the "applicable computation period" multiplied by the
number of calendar months in the "gap period." For purposes of determining the
number of calendar months in the "gap period," a distribution occurring on or
before the fifteenth day of the month shall be treated as having been made on
the last day of the preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the first day of the next
subsequent month.
Income allocable to any distribution of Excess Deferred Compensation
on or before the last day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of the Participant to the date
on which the distribution is made pursuant to either the "fractional method" or
the "safe harbor method." Under such "safe harbor method," allocable Income for
such period shall be deemed to equal ten percent (10%) of the Income allocable
to such Excess Deferred Compensation multiplied by the number of calendar months
in such period. For purposes of determining the number of calendar months in
such period, a distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth day shall be treated as
having been made on the first day of the next subsequent month.
1.33 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
1.34 "Key Employee" means an Employee as defined in Code Section 416(i) and
the Regulations thereunder. Generally, any Employee or former Employee (as well
as each of the Employee's or former Employee's Beneficiaries) is considered a
Key Employee if the Employee's or former Employee's, at any time during the Plan
Year that contains the "Determination Date" or any of the preceding four (4)
Plan Years, has been included in one of the following categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation
in effect under Code Section 415(c)(1)(A) for the calendar year in
which such Plan Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers. However, in
determining whether an individual has "415 Compensation" of more than
$150,000, "415 Compensation" from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken
into account.
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 132(f)(4) for Plan
Years beginning after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
8
1.35 "Late Retirement Date" means the first day of the month coinciding
with or next following a Participant's actual Retirement Date after having
reached Normal Retirement Date.
1.36 "Leased Employee" means, for Plan Years beginning after December 31,
1996, any person (other than an Employee of the recipient Employer) who pursuant
to an agreement between the recipient Employer and any other person or entity
("leasing organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year,
and such services are performed under primary direction or control by the
recipient Employer. Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient Employer.
Furthermore, Compensation for a Leased Employee shall only include Compensation
from the leasing organization that is attributable to services performed for the
recipient Employer. A Leased Employee shall not be considered an Employee of the
recipient Employer:
(a) if such employee is covered by a money purchase pension
plan providing:
(1) a nonintegrated employer contribution rate of at least 10%
of compensation, as defined in Code Section 415(c)(3), but for
Plan Years beginning prior to January 1, 2001, excluding
amounts that are not includible in gross income under Code
Section 132(f)(4);
(2) immediate participation;
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient Employer's nonhighly compensated work force.
1.37 "Non-Elective Contribution" means the Employer contributions to the
Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2 and any Qualified Non-Elective
Contribution used in the "Actual Deferral Percentage" tests.
1.38 "Non-Highly Compensated Participant" means, for Plan Years beginning
after December 31, 1996, any Participant who is neither a Highly Compensated
Employee nor a Family Member. However, for purposes of Section 4.5 and Section
4.7, if the prior year testing method is used, a Non-Highly Compensated
Participant shall be determined using the definition of Highly Compensated
Employee in effect for the preceding Plan Year.
1.39 "Non-Key Employee" means any Employee or former Employee (and such
Employee's or former Employee's Beneficiaries) who is not, and has never been, a
Key Employee.
1.40 "Normal Retirement Age" means the Participant's 65 birthday, or the
Participant's 5th anniversary of joining the Plan, if later. A Participant shall
become fully Vested in the Participant's Account upon attaining Normal
Retirement Age.
1.41 "Normal Retirement Date" means the first day of the month coinciding
with or next following the Participant's Normal Retirement Age.
1.42 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means an absence from work
for any period by reason of the Employee's pregnancy, birth of the Employee's
child, placement of a child with the Employee in connection with the adoption of
such child, or any absence for the purpose of caring for such child for a period
immediately following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the absence from
work begins, only if credit therefore is necessary to prevent the Employee from
incurring a 1-Year Break in Service, or, in any other case, in the immediately
following computation period. The Hours of
9
Service credited for a "maternity or paternity leave of absence" shall be those
which would normally have been credited but for such absence, or, in any case in
which the Administrator is unable to determine such hours normally credited,
eight (8) Hours of Service per day. The total Hours of Service required to be
credited for a "maternity or paternity leave of absence" shall not exceed the
number of Hours of Service needed to prevent the Employee from incurring a
1-Year Break in Service.
1.43 "Other Investments Account" means the account of a Participant which
is credited with such Participant's share of the net gain (or loss) of the Plan,
Forfeitures and Employer contributions in other than Company Stock and which is
debited with payments made to pay for Company Stock.
A separate accounting shall be maintained with respect to that
portion of the Other Investments Account attributable to Elective Contributions
and Non-Elective Contributions.
1.44 "Participant" means any Eligible Employee who participates in the Plan
and has not for any reason become ineligible to participate further in the Plan.
1.45 "Participant Direction Procedures" means such instructions, guidelines
or policies, the terms of which are incorporated herein, as shall be established
pursuant to Section 4.12 and observed by the Administrator and applied to
Participants who have Participant Directed Accounts.
1.46 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to such Participant's
total interest in the Plan and Trust resulting from the Employer Non-Elective
Contributions.
A separate accounting shall be maintained with respect to that
portion of the Participant's Account attributable to Employer matching
contributions made pursuant to Section 4.1(b), Employer discretionary
contributions made pursuant to Section 4.1(d) and any Employer Qualified
Non-Elective Contributions.
1.47 "Participant's Combined Account" means the total aggregate amount of
each Participant's Elective Account and Participant's Account.
1.48 "Participant's Directed Account" means that portion of a Participant's
interest in the Plan with respect to which the Participant has directed the
investment in accordance with the Participant Direction Procedure.
1.49 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to the
Participant's total interest in the Plan and Trust resulting from the Employer
Elective Contributions used to satisfy the "Actual Deferral Percentage" tests. A
separate accounting shall be maintained with respect to that portion of the
Participant's Elective Account attributable to such Elective Contributions
pursuant to Section 4.2 and any Employer Qualified Non-Elective Contributions.
1.50 "Participant's Transfer/Rollover Account" means the account
established and maintained by the Administrator for each Participant with
respect to the Participant's total interest in the Plan resulting from amounts
transferred to this Plan from a direct plan-to-plan transfer and/or with respect
to such Participant's interest in the Plan resulting from amounts transferred
from another qualified plan or "conduit" Individual Retirement Account in
accordance with Section 4.11.
A separate accounting shall be maintained with respect to that
portion of the Participant's Transfer/Rollover Account attributable to transfers
(within the meaning of Code Section 414(l)) and "rollovers."
1.51 "Plan" means this instrument, including all amendments thereto.
1.52 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1 of each year and ending the following December 31.
1.53 "Qualified Non-Elective Contribution" means any Employer contributions
made pursuant to Section 4.1(c) and Section 4.6(b) and Section 4.8(f). Such
contributions shall be considered an Elective Contribution for the purposes of
the Plan and may be used to satisfy the "Actual Deferral Percentage" tests or
the "Actual Contribution Percentage" tests.
1.54 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or a delegate of the Secretary of the Treasury, and as
amended from time to time.
10
1.55 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.56 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date or Late Retirement Date (see
Section 7.1).
1.57 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.58 "Top Heavy Plan" means a plan described in Section 10.2(a).
1.59 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.60 "Top-Paid Group" means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of "415 Compensation" received from the Employer during such year. All
Affiliated Employers shall be taken into account as a single employer, and
Leased Employees within the meaning of Code Sections 414(n)(2) and 414(o)(2)
shall be considered Employees unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Employer. Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section 911(d)(2)) from
the Employer constituting United States source income within the meaning of Code
Section 861(a)(3) shall not be treated as Employees. Furthermore, for the
purpose of determining the number of active Employees in any year, the following
additional Employees shall also be excluded, however, such Employees shall still
be considered for the purpose of identifying the particular Employees in the
Top-Paid Group:
a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours
per week;
(c) Employees who normally work less than six (6) months during
a year; and
(d) Employees who have not yet attained age twenty-one (21).
In addition, if 90 percent or more of the Employees of the Employer
are covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top-Paid Group.
The foregoing exclusions set forth in this Section shall be applied on
a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.61 "Total and Permanent Disability" means a physical or mental condition
of a Participant resulting from bodily injury, disease, or mental disorder which
renders such Participant incapable of continuing any gainful occupation and
which condition constitutes total disability under the federal Social Security
Acts.
1.62 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
1.63 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.64 "Valuation Date" means the Anniversary Date and may include any other
date or dates deemed necessary or appropriate by the Administrator for the
valuation of the Participant's accounts during the Plan Year, which may include
any day that the Trustee, any transfer agent appointed by the Trustee or the
Employer or any stock exchange used by such agent, are open for business.
1.65 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.66 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
11
For vesting purposes, the computation periods shall be the Plan Year,
including periods prior to the Effective Date of the Plan.
The computation period shall be the Plan Year if not otherwise set
forth herein.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c). However,
in determining whether an Employee has completed a Year of Service for benefit
accrual purposes in the short Plan Year, the number of the Hours of Service
required shall be proportionately reduced based on the number of full months in
the short Plan Year.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
ADMINISTRATION
a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered
to appoint and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of the Plan
to ensure that the Plan is being operated for the exclusive benefit of
the Participants and their Beneficiaries in accordance with the terms
of the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settlor) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run
goal and investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. The Employer or
its delegate shall communicate such needs and goals to the Trustee,
who shall coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to the investment of
the Trust Funds. Such "funding policy and method" shall be consistent
with the objectives of this Plan and with the requirements of Title I
of the Act.
(c) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
d) The Employer will furnish Plan Fiduciaries and Participants
with notices and information statements when voting rights must be
exercised pursuant to Section 8.4.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint any
person, including, but not limited to, the Employees of the Employer, to perform
the duties of the Administrator. Any person so appointed shall signify
acceptance by filing written acceptance with the Employer. Upon the resignation
or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
12
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any such determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable to carry out the purpose
of the Plan; provided, however, that any procedure, discretionary act,
interpretation or construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be consistent with the
intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish the Administrator's duties under the
Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan as set forth under the terms of the Plan, including,
but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall be
entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of
the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which
such Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(h) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion in a manner designed to
accomplish specific objectives;
(i) to prepare and implement a procedure to notify Eligible
Employees that they may elect to have a portion of their Compensation
deferred or paid to them in cash;
(j) to establish and communicate to Participants a procedure for
allowing each Participant to direct the Trustee as to the distribution
of such Participant's Company Stock Account pursuant to Section 4.12;
(k) to establish and communicate to Participants a procedure and
method to insure that each Participant will vote Company Stock
allocated to such Participant's Company Stock Account pursuant to
Section 8.4;
(l) to determine the validity of, and take appropriate action
with respect to, any qualified domestic relations order received by
it; and
(m) to assist any Participant regarding the Participant's rights,
benefits, or elections available under the Plan.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, policies, and other data that may be
necessary for proper administration of the Plan and shall be
13
responsible for supplying all information and reports to the Internal Revenue
Service, Department of Labor, Participants, Beneficiaries and others as required
by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and to Plan Participants.
2.7 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties under
the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, agents (including nonfiduciary agents) appointed for the
purpose of assisting the Administrator or the Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts and
other specialists and their agents, the costs of any bonds required pursuant to
Act Section 412, and other costs of administering the Plan. Until paid, the
expenses shall constitute a liability of the Trust Fund.
2.8 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed, or such period as
is required by applicable law or Department of Labor regulation. In the event
the claim is denied, the reasons for the denial shall be specifically set forth
in the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.9 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.8
shall be entitled to request the Administrator to give further consideration to
a claim by filing with the Administrator a written request for a hearing. Such
request, together with a written statement of the reasons why the claimant
believes the claim should be allowed, shall be filed with the Administrator no
later than sixty (60) days after receipt of the written notification provided
for in Section 2.8. The Administrator shall then conduct a hearing within the
next sixty (60) days, at which the claimant may be represented by an attorney or
any other representative of such claimant's choosing and expense and at which
the claimant shall have an opportunity to submit written and oral evidence and
arguments in support of the claim. At the hearing (or prior thereto upon five
(5) business days written notice to the Administrator) the claimant or the
claimant's representative shall have an opportunity to review all documents in
the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within sixty (60) days of receipt of the appeal
(unless there has been an extension of sixty (60) days due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the sixty (60) day period). Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder on
the date of such Employee's employment with the Employer. However, any Employee
who was a Participant in the Plan prior to the effective date of this amendment
and restatement shall continue to participate in the Plan.
14
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the
first day of the Plan Year quarter coinciding with or next following the date
such Employee met the eligibility requirements of Section 3.1, provided said
Employee was still employed as of such date (or if not employed on such date, as
of the date of rehire if a 1-Year Break in Service has not occurred or, if
later, the date that the Employee would have otherwise entered the Plan had the
Employee not terminated employment).
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review pursuant to Section 2.9.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in the Plan for each Year of Service completed while a
noneligible Employee, until such time as the Participant's Account shall be
forfeited or distributed pursuant to the terms of the Plan. Additionally, the
Former Participant's interest in the Plan shall continue to share in the
earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by the Employer for the year has been made
and allocated, then the Employer shall make a subsequent contribution, if
necessary after the application of Section 4.4(e), so that the omitted Employee
receives a total amount which the Employee would have received (including both
Employer contributions and earnings thereon) had the Employee not been omitted.
Such contribution shall be made regardless of whether it is deductible in whole
or in part in any taxable year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
inclusion is not made until after a contribution for the year has been made and
allocated, the Employer shall be entitled to recover the contribution made with
respect to the ineligible person provided the error is discovered within twelve
(12) months of the date on which it was made. Otherwise, the amount contributed
with respect to the ineligible person shall constitute a Forfeiture for the Plan
Year in which the discovery is made. Notwithstanding the forgoing, any Deferred
Compensation made by an ineligible person shall be distributed to the person
(along with any earnings attributable to such Deferred Compensation).
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE
(a) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed by the
Employer before a 1-Year Break in Service occurs, the Former
Participant shall become a Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed after a
1-Year Break in Service has occurred, Years of Service shall include
Years of Service prior to the 1-Year Break in Service subject to the
following rules:
(1) In the case of a Former Participant who under the Plan does
not have a nonforfeitable right to any interest in the Plan
resulting from Employer contributions, Years of Service before a
period of 1-Year Break in Service will not be taken into account
if the number of consecutive 1-Year Breaks in Service equal or
exceed the greater of (A) five (5) or (B) the aggregate number of
pre-break Years of Service. Such aggregate number of Years of
Service will not include any Years of Service disregarded under
the preceding sentence by reason of prior 1-Year Breaks in
Service.
(2) A Former Participant shall participate in the Plan as of the
date of reemployment.
15
(c) After a Former Participant who has severed employment with
the Employer incurs five (5) consecutive 1-Year Breaks in Service, the
Vested portion of said Former Participant's Account attributable to
pre-break service shall not be increased as a result of post-break
service. In such case, separate accounts will be maintained as
follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing the Participant's Employer derived
account balance in the Plan attributable to post-break service.
(d) If any Participant becomes a Former Participant due to
severance of employment with the Employer and is reemployed by the
Employer before five (5) consecutive 1-Year Breaks in Service, and
such Former Participant had received a distribution of the entire
Vested interest prior to reemployment, then the forfeited account
shall be reinstated only if the Former Participant repays the full
amount which had been distributed. Such repayment must be made before
the earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of
the first period of five (5) consecutive 1-Year Breaks in Service
commencing after the distribution. If a distribution occurs for any
reason other than a severance of employment, the time for repayment
may not end earlier than five (5) years after the date of
distribution. In the event the Former Participant does repay the full
amount distributed, the undistributed forfeited portion of the
Participant's Account must be restored in full, unadjusted by any
gains or losses occurring subsequent to the Valuation Date preceding
the distribution. The source for such reinstatement may be Forfeitures
occurring during the Plan Year. If such source is insufficient, then
the Employer will contribute an amount which is sufficient to restore
any such forfeited Accounts provided, however, that if a discretionary
contribution is made for such year, such contribution shall first be
applied to restore any such Accounts and the remainder shall be
allocated in accordance with Section 4.4.
If a non-Vested Former Participant was deemed to have
received a distribution and such Former Participant is reemployed by
the Employer before five (5) consecutive 1-Year Breaks in Service,
then such Participant will be deemed to have repaid the deemed
distribution as of the date of reemployment.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, within a reasonable period of time
before the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be
deemed an Employer Elective Contribution.
(b) On behalf of each Participant who is eligible to share in
matching contributions for the Plan Year, a discretionary matching
contribution equal to a uniform percentage of each such Participant's
Deferred Compensation, the exact percentage, if any, to be determined
each year by the Employer, which amount, if any, shall be deemed an
Employer Non-Elective Contribution.
(c) On behalf of each Non-Highly Compensated Participant who is
eligible to share in the Qualified Non-Elective Contribution for the
Plan Year, a discretionary Qualified Non-Elective Contribution equal
to a uniform percentage of each eligible individual's Compensation,
the exact percentage, if any, to be determined each year by the
Employer. Any Employer Qualified Non-Elective Contribution shall be
deemed an Employer Elective Contribution.
(d) A discretionary amount, which amount, if any, shall be deemed
an Employer Non-Elective Contribution.
16
(e) Additionally, to the extent necessary, the Employer shall
contribute to the Plan the amount necessary to provide the top heavy
minimum contribution. All contributions by the Employer shall be made
in cash or in such property as is acceptable to the Trustee.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of Compensation
which would have been received in the Plan Year (except for the
deferral election) by up to the maximum amount which will not cause
the Plan to violate the provisions of Sections 4.5(a) and 4.9. A
deferral election (or modification of an earlier election) may not be
made with respect to Compensation which is currently available on or
before the date the Participant executed such election. For purposes
of this Section, Compensation shall be determined prior to any
reductions made pursuant to Code Sections 125, 132(f)(4) for Plan
Years beginning after December 31, 2000, 402(e)(3), 402(h)(1)(B),
403(b) or 457(b), and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective
Account.
(b) The balance in each Participant's Elective Account shall be
fully Vested at all times and, except as otherwise provided herein,
shall not be subject to Forfeiture for any reason.
(c) Notwithstanding anything in the Plan to the contrary, amounts
held in the Participant's Elective Account may not be distributable
earlier than:
(1) a Participant's separation from service, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the existence at the time
of Plan termination of another defined contribution plan or the
establishment of a successor defined contribution plan by the
Employer or an Affiliated Employer within the period ending
twelve months after distribution of all assets from the Plan
maintained by the Employer. For this purpose, a defined
contribution plan does not include an employee stock ownership
plan (as defined in Code Section 4975(e)(7) or 409), a simplified
employee pension plan (as defined in Code Section 408(k)), or a
simple individual retirement account plan (as defined in Code
Section 408(p));
(4) the date of disposition by the Employer to an entity that is
not an Affiliated Employer of substantially all of the assets
(within the meaning of Code Section 409(d)(2)) used in a trade or
business of such corporation if such corporation continues to
maintain this Plan after the disposition with respect to a
Participant who continues employment with the corporation
acquiring such assets;
(5) the date of disposition by the Employer or an Affiliated
Employer who maintains the Plan of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) to an entity which
is not an Affiliated Employer but only with respect to a
Participant who continues employment with such subsidiary; or
(6) the proven financial hardship of a Participant, subject to
the limitations of Section 7.9.
(d) For each Plan Year, a Participant's Deferred Compensation
made under this Plan and all other plans, contracts or arrangements of
the Employer maintaining this Plan shall not exceed, during any
taxable year of the Participant, the limitation imposed by Code
Section 402(g), as in effect at the beginning of such taxable year. If
such dollar limitation is exceeded, a Participant will be deemed to
have notified the Administrator of such excess amount which shall be
distributed in a manner consistent with Section 4.2(f). The dollar
limitation shall be adjusted annually pursuant to the method provided
in Code Section 415(d) in accordance with Regulations.
17
(e) In the event a Participant has received a hardship
distribution from the Participant's Elective Account pursuant to
Section 7.9(b) or pursuant to Regulation 1.401(k)-1(d)(2)(iv)(B) from
any other plan maintained by the Employer, then such Participant shall
not be permitted to elect to have Deferred Compensation contributed to
the Plan for a period of twelve (12) months following the receipt of
the distribution. Furthermore, the dollar limitation under Code
Section 402(g) shall be reduced, with respect to the Participant's
taxable year following the taxable year in which the hardship
distribution was made, by the amount of such Participant's Deferred
Compensation, if any, pursuant to this Plan (and any other plan
maintained by the Employer) for the taxable year of the hardship
distribution.
(f) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation
1.402(g)-1(b)) under another qualified cash or deferred arrangement
(as described in Code Section 401(k)), a simplified employee pension
(as described in Code Section 408(k)(6)), a simple individual
retirement account plan (as described in Code Section 408(p)), a
salary reduction arrangement (within the meaning of Code Section
3121(a)(5)(D)), a deferred compensation plan under Code Section
457(b), or a trust described in Code Section 501(c)(18) cumulatively
exceed the limitation imposed by Code Section 402(g) (as adjusted
annually in accordance with the method provided in Code Section 415(d)
pursuant to Regulations) for such Participant's taxable year, the
Participant may, not later than March 1 following the close of the
Participant's taxable year, notify the Administrator in writing of
such excess and request that the Participant's Deferred Compensation
under this Plan be reduced by an amount specified by the Participant.
In such event, the Administrator may direct the Trustee to distribute
such excess amount (and any Income allocable to such excess amount) to
the Participant not later than the first April 15th following the
close of the Participant's taxable year. Any distribution of less than
the entire amount of Excess Deferred Compensation and Income shall be
treated as a pro rata distribution of Excess Deferred Compensation and
Income. The amount distributed shall not exceed the Participant's
Deferred Compensation under the Plan for the taxable year (and any
Income allocable to such excess amount). Any distribution on or before
the last day of the Participant's taxable year must satisfy each of
the following conditions:
(1) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution as Excess
Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
Matching contributions which relate to Excess Deferred
Compensation which is distributed pursuant to this Section 4.2(f)
shall be forfeited.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess
Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 4.6(a) for
the Plan Year beginning with or within the taxable year of the
Participant.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Account shall be used to provide
additional benefits to the Participant or the Participant's
Beneficiary.
(i) Employer Elective Contributions made pursuant to this Section
may be segregated into a separate account for each Participant in a
federally insured savings account, certificate of deposit in a bank or
savings and loan association, money market certificate, or other
short-term debt security acceptable to the Trustee until such time as
the allocations pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall implement the salary
reduction elections provided for herein in accordance with the
following:
(4) A Participant must make an initial salary deferral election
within a reasonable time, not to exceed thirty (30) days, after
entering the Plan pursuant to Section 3.2. If the Participant
fails to make an initial salary deferral election within such
time, then such
18
Participant may thereafter make an election in accordance with
the rules governing modifications. The Participant shall make
such an election by entering into a written salary reduction
agreement with the Employer and filing such agreement with the
Administrator. Such election shall initially be effective
beginning with the pay period following the acceptance of the
salary reduction agreement by the Administrator, shall not have
retroactive effect and shall remain in force until revoked.
(5) A Participant may modify a prior election during the Plan
Year and concurrently make a new election by filing a written
notice with the Administrator within a reasonable time before the
pay period for which such modification is to be effective.
However, modifications to a salary deferral election shall only
be permitted quarterly, during election periods established by
the Administrator prior to the first day of each Plan Year
quarter. Any modification shall not have retroactive effect and
shall remain in force until revoked.
(6) A Participant may elect to prospectively revoke the
Participant's salary reduction agreement in its entirety at any
time during the Plan Year by providing the Administrator with
thirty (30) days written notice of such revocation (or upon such
shorter notice period as may be acceptable to the Administrator).
Such revocation shall become effective as of the beginning of the
first pay period coincident with or next following the expiration
of the notice period. Furthermore, the termination of the
Participant's employment, or the cessation of participation for
any reason, shall be deemed to revoke any salary reduction
agreement then in effect, effective immediately following the
close of the pay period within which such termination or
cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
The Employer may make its contribution to the Plan for a particular
Plan Year at such time as the Employer, in its sole discretion, determines. If
the Employer makes a contribution for a particular Plan Year after the close of
that Plan Year, the Employer will designate to the Trustee the Plan Year for
which the Employer is making its contribution.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other Valuation Date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) With respect to the Employer Elective Contribution made
pursuant to Section 4.1(a), to each Participant's Elective
Account in an amount equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(b), to each Participant's Account in
accordance with Section 4.1(b).
Any Participant actively employed during the Plan Year shall be
eligible to share in the matching contribution for the Plan Year.
(3) With respect to the Employer Qualified Non-Elective
Contribution made pursuant to Section 4.1(c), to each
Participant's Elective Account when used to satisfy the "Actual
Deferral Percentage" tests or Participant's Account in accordance
with Section 4.1(c).
Any Non-Highly Compensated Participant actively employed during
the Plan Year shall be eligible to share in the Qualified
Non-Elective Contribution for the Plan Year.
(4) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(d), to each Participant's Account in the
same proportion that each such Participant's Compensation for the
year bears to the total Compensation of all Participants for such
year.
19
Only Participants who have completed a Year of Service during the
Plan Year and are actively employed on the last day of the Plan
Year shall be eligible to share in the discretionary contribution
for the year.
(c) The Company Stock Account of each Participant shall be
credited as of each Anniversary Date with Forfeitures of Company Stock
and the Participant's allocable share of Company Stock (including
fractional shares) purchased and paid for by the Plan or contributed
in kind by the Employer. Stock dividends on Company Stock held in the
Participant's Company Stock Account shall be credited to the
Participant's Company Stock Account when paid to the Plan. Cash
dividends on Company Stock held in the Participant's Company Stock
Account shall be credited to the Participant's Other Investments
Account when paid to the Plan. However, cash dividends payable to
Participants or their Beneficiary or credited to each Participant's
Other Investment Account on and after January 1, 2003 shall, at the
election of the Participant or Beneficiary, be reinvested in Company
Stock.
(d) As of each Valuation Date, before allocation of one-half of
the Employer contributions for the entire Plan Year and after
allocation of Forfeitures, any earnings or losses (net appreciation or
net depreciation) of the Trust Fund shall be allocated in the same
proportion that each Participant's and Former Participant's
nonsegregated accounts (other than each Participant's Company Stock
Account) bear to the total of all Participants' and Former
Participants' nonsegregated accounts (other than each Participant's
Company Stock Account) as of such date. Earnings or losses with
respect to a Participant's Directed Account shall be allocated in
accordance with Section 4.12.
Participants' transfers from other qualified plans
deposited in the general Trust Fund shall share in any earnings and
losses (net appreciation or net depreciation) of the Trust Fund in the
same manner provided above. Each segregated account maintained on
behalf of a Participant shall be credited or charged with its separate
earnings and losses.
(e) On or before each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date may be made available to
reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 3.7(d), be used to
satisfy any contribution that may be required pursuant to Section 3.5
and/or 7.8, or used to pay any administrative expenses of the Plan.
The remaining Forfeitures, if any, shall be allocated to Participants'
Accounts and used to reduce the contribution of the Employer hereunder
for the Plan Year in which such Forfeitures occur in the following
manner:
(1) Forfeitures attributable to Employer matching contributions
made pursuant to Section 4.1(b) shall be used to reduce the
Employer contribution for the Plan Year in which such Forfeitures
occur.
(2) Forfeitures attributable to Employer discretionary
contributions made pursuant to Section 4.1(d) shall be allocated
among the Participants' Accounts of Participants otherwise
eligible to share in the allocation of discretionary
contributions for the year in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all such Participants for the year.
Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition" (as
defined in Section 4.9) to any Participant's Account to exceed the
amount allowable by the Code, the excess shall be reallocated in
accordance with Section 4.10.
(f) For any Top Heavy Plan Year, Employees not otherwise eligible
to share in the allocation of contributions and Forfeitures as
provided above, shall receive the minimum allocation provided for in
Section 4.4(h) if eligible pursuant to the provisions of Section
4.4(j).
(g) Notwithstanding the foregoing, Participants who are not
actively employed on the last day of the Plan Year due to Retirement
(Normal or Late), Total and Permanent Disability or death shall not
share in the allocation of contributions and Forfeitures for that Plan
Year.
(h) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the Employer contributions and Forfeitures
20
allocated to the Participant's Combined Account of each Employee shall
be equal to at least three percent (3%) of such Employee's "415
Compensation" (reduced by contributions and forfeitures, if any,
allocated to each Employee in any defined contribution plan included
with this Plan in a Required Aggregation Group). However, if (1) the
sum of the Employer contributions and Forfeitures allocated to the
Participant's Combined Account of each Key Employee for such Top Heavy
Plan Year is less than three percent (3%) of each Key Employee's "415
Compensation" and (2) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet the
requirements of Code Section 401(a)(4) or 410, the sum of the Employer
contributions and Forfeitures allocated to the Participant's Combined
Account of each Employee shall be equal to the largest percentage
allocated to the Participant's Combined Account of any Key Employee.
However, in determining whether a Non-Key Employee has received the
required minimum allocation, such Non-Key Employee's Deferred
Compensation and matching contributions needed to satisfy the "Actual
Contribution Percentage" tests pursuant to Section 4.7(a) shall not be
taken into account.
However, no such minimum allocation shall be required in
this Plan for any Employee who participates in another defined
contribution plan subject to Code Section 412 included with this Plan
in a Required Aggregation Group.
(i) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the "415 Compensation" for such Key Employee.
(j) For any Top Heavy Plan Year, the minimum allocations set
forth above shall be allocated to the Participant's Combined Account
of all Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Employees who
have (1) failed to complete a Year of Service; and (2) declined to
make mandatory contributions (if required) or, in the case of a cash
or deferred arrangement, elective contributions to the Plan.
(k) For the purposes of this Section, "415 Compensation" in
excess of $150,000 (or such other amount provided in the Code) shall
be disregarded. Such amount shall be adjusted for increases in the
cost of living in accordance with Code Section 401(a)(17)(B), except
that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such
calendar year. If "415 Compensation" for any prior determination
period is taken into account in determining a Participant's minimum
benefit for the current Plan Year, the "415 Compensation" for such
determination period is subject to the applicable annual "415
Compensation" limit in effect for that prior period. For this purpose,
in determining the minimum benefit in Plan Years beginning on or after
January 1, 1989, the annual "415 Compensation" limit in effect for
determination periods beginning before that date is $200,000 (or such
other amount as adjusted for increases in the cost of living in
accordance with Code Section 415(d) for determination periods
beginning on or after January 1, 1989, and in accordance with Code
Section 401(a)(17)(B) for determination periods beginning on or after
January 1, 1994). For determination periods beginning prior to January
1, 1989, the $200,000 limit shall apply only for Top Heavy Plan Years
and shall not be adjusted. For any short Plan Year the "415
Compensation" limit shall be an amount equal to the "415 Compensation"
limit for the calendar year in which the Plan Year begins multiplied
by the ratio obtained by dividing the number of full months in the
short Plan Year by twelve (12).
(l) Notwithstanding anything herein to the contrary, Participants
who terminated employment for any reason during the Plan Year shall
share in the salary reduction contributions made by the Employer for
the year of termination without regard to the Hours of Service
credited.
(m) Notwithstanding anything in this Section to the contrary, all
information necessary to properly reflect a given transaction may not
be available until after the date specified herein for processing such
transaction, in which case the transaction will be reflected when such
information is received and processed. Subject to express limits that
may be imposed under the Code, the processing of any contribution,
distribution or other transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive
values or prices, and the correction for errors or omissions or the
errors or omissions of any service provider). The processing date of a
transaction will be binding for all purposes of the Plan.
21
(n) Notwithstanding anything to the contrary, if this is a Plan
that would otherwise fail to meet the requirements of Code Section
410(b)(1) and the Regulations thereunder because Employer
contributions would not be allocated to a sufficient number or
percentage of Participants for a Plan Year, then the following rules
shall apply:
(1) The group of Participants eligible to share in the Employer's
contribution and Forfeitures for the Plan Year shall be expanded
to include the minimum number of Participants who would not
otherwise be eligible as are necessary to satisfy the applicable
test specified above. The specific Participants who shall become
eligible under the terms of this paragraph shall be those who
have not separated from service prior to the last day of the Plan
Year and have completed the greatest number of Hours of Service
in the Plan Year.
(2) If after application of paragraph (1) above, the applicable
test is still not satisfied, then the group of Participants
eligible to share in the Employer's contribution and Forfeitures
for the Plan Year shall be further expanded to include the
minimum number of Participants who have separated from service
prior to the last day of the Plan Year as are necessary to
satisfy the applicable test. The specific Participants who shall
become eligible to share shall be those Participants who have
completed the greatest number of Hours of Service in the Plan
Year before terminating employment.
(3) Nothing in this Section shall permit the reduction of a
Participant's accrued benefit. Therefore any amounts that have
previously been allocated to Participants may not be reallocated
to satisfy these requirements. In such event, the Employer shall
make an additional contribution equal to the amount such affected
Participants would have received had they been included in the
allocations, even if it exceeds the amount which would be
deductible under Code Section 404. Any adjustment to the
allocations pursuant to this paragraph shall be considered a
retroactive amendment adopted by the last day of the Plan Year.
(4) Notwithstanding the foregoing, if the portion of the Plan
which is not a Code Section 401(k) or 401(m) plan would fail to
satisfy Code Section 410(b) if the coverage tests were applied by
treating those Participants whose only allocation would otherwise
be provided under the top heavy formula as if they were not
currently benefiting under the Plan, then, for purposes of this
Section 4.4(n), such Participants shall be treated as not
benefiting and shall therefore be eligible to be included in the
expanded class of Participants who will share in the allocation
provided under the Plan's non top heavy formula.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year beginning after
December 31, 1996, the annual allocation derived from Employer
Elective Contributions to a Highly Compensated Participant's
Elective Account shall satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group (for
the preceding Plan Year if the prior year testing method is used
to calculate the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group) multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group (for
the preceding Plan Year if the prior year testing method is used
to calculate the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group) shall not be more than two
percentage points. Additionally, the "Actual Deferral Percentage"
for the Highly Compensated Participant group shall not exceed the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group)
multiplied by 2. The provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-1(b) are incorporated herein by reference.
22
However, in order to prevent the multiple use of the alternative
method described in (2) above and in Code Section 401(m)(9)(A),
any Highly Compensated Participant eligible to make elective
deferrals pursuant to Section 4.2 and to make Employee
contributions or to receive matching contributions under this
Plan or under any other plan maintained by the Employer or an
Affiliated Employer shall have a combination of such
Participant's Elective Contributions and Employer matching
contributions reduced pursuant to Regulation 1.401(m)-2, the
provisions of which are incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral Percentage"
means, with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group for a Plan Year, the average
of the ratios, calculated separately for each Participant in such
group, of the amount of Employer Elective Contributions allocated to
each Participant's Elective Account for such Plan Year, to such
Participant's "414(s) Compensation" for such Plan Year. The actual
deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group shall be calculated to the nearest
one-hundredth of one percent. Employer Elective Contributions
allocated to each Non-Highly Compensated Participant's Elective
Account shall be reduced by Excess Deferred Compensation to the extent
such excess amounts are made under this Plan or any other plan
maintained by the Employer.
Notwithstanding the above, if the prior year testing method
is used to calculate the "Actual Deferral Percentage" for the
Non-Highly Compensated Participant group for the first Plan Year of
this amendment and restatement, the "Actual Deferral Percentage" for
the Non-Highly Compensated Participant group for the preceding Plan
Year shall be calculated pursuant to the provisions of the Plan then
in effect.
(c) For the purposes of Sections 4.5(a) and 4.6, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make a deferral election pursuant to
Section 4.2, whether or not such deferral election was made or
suspended pursuant to Section 4.2.
Notwithstanding the above, if the prior year testing method
is used to calculate the "Actual Deferral Percentage" for the
Non-Highly Compensated Participant group for the first Plan Year of
this amendment and restatement, for purposes of Section 4.5(a) and
4.6, a Non-Highly Compensated Participant shall include any such
Employee eligible to make a deferral election, whether or not such
deferral election was made or suspended, pursuant to the provisions of
the Plan in effect for the preceding Plan Year.
(d) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), this Plan may not be combined with any other plan.
(e) For the purpose of this Section, for Plan Years beginning
after December 31, 1996, unless otherwise provided below, when
calculating the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group, the current year testing method shall
be used. Any change from the current year testing method to the prior
year testing method shall be made pursuant to Internal Revenue Service
Notice 98-1, Section VII (or superseding guidance), the provisions of
which are incorporated herein by reference.
For the Plan Year beginning after December 31, 1997, the
current year testing method shall be used.
For the Plan Year beginning after December 31, 1998, the
current year testing method shall be used.
For the Plan Year beginning after December 31, 1999, the
current year testing method shall be used.
For the Plan Year beginning after December 31, 2000, the
current year testing method shall be used.
(f) Notwithstanding anything in this Section to the contrary, the
provisions of this Section and Section 4.6 may be applied separately
(or will be applied separately to the extent required by Regulations)
to each plan within the meaning of Regulation 1.401(k)-1(g)(11).
23
Furthermore, for Plan Years beginning after December 31, 1998, the
provisions of Code Section 401(k)(3)(F) may be used to exclude from
consideration all Non-Highly Compensated Employees who have not
satisfied the minimum age and service requirements of Code Section
410(a)(1)(A).
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event (or if it is anticipated) that the initial allocations of
the Employer Elective Contributions made pursuant to Section 4.4 do (or might)
not satisfy one of the tests set forth in Section 4.5(a) for Plan Years
beginning after December 31, 1996, the Administrator shall adjust Excess
Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following
the end of each Plan Year, but in no event later than the close of the
following Plan Year, the Highly Compensated Participant having the
largest dollar amount of Elective Contributions shall have a portion
of such Participant's Elective Contributions distributed until the
total amount of Excess Contributions has been distributed, or until
the amount of such Participant's Elective Contributions equals the
Elective Contributions of the Highly Compensated Participant having
the second largest dollar amount of Elective Contributions. This
process shall continue until the total amount of Excess Contributions
has been distributed. In determining the amount of Excess
Contributions to be distributed with respect to an affected Highly
Compensated Participant as determined herein, such amount shall be
reduced pursuant to Section 4.2(f) by any Excess Deferred Compensation
previously distributed to such affected Highly Compensated Participant
for such Participant's taxable year ending with or within such Plan
Year.
(1) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are
allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as a distribution
of Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of
Excess Contributions and Income.
(3) Matching contributions which relate to Excess Contributions
shall be forfeited unless the related matching contribution is
distributed as an Excess Aggregate Contribution pursuant to
Section 4.8.
(b) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution in accordance with one of the following
provisions which contribution shall be allocated to the Participant's
Elective Account of each Non-Highly Compensated Participant eligible
to share in the allocation in accordance with such provision. The
Employer shall provide the Administrator with written notification of
the amount of the contribution being made and for which provision it
is being made pursuant to:
(1) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.5(a). Such contribution
shall be allocated in the same proportion that each Non-Highly
Compensated Participant's 414(s) Compensated for the year (or
prior year if the prior year testing method is being used) bears
to the total 414(s) Compensation of all Non-Highly Compensated
Participants for such year.
(2) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.5(a). Such contribution
shall be allocated in the same proportion that each Non-Highly
Compensated Participant electing salary reductions pursuant to
Section 4.2 in the same proportion that each such
24
Non-Highly Compensated Participant's Deferred Compensation for
the year (or at the end of the prior Plan Year if the prior year
testing method is being used) bears to the total Deferred
Compensation of all such Non-Highly Compensated Participants for
such year.
(3) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.5(a). Such contribution
shall be allocated in equal amounts (per capita).
(4) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants electing salary
reductions pursuant to Section 4.2 in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 4.5(a). Such contribution shall be
allocated for the year (or at the end of the prior Plan Year if
the prior year testing method is used) to each Non-Highly
Compensated Participant electing salary reductions pursuant to
Section 4.2 in equal amounts (per capita).
(5) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.5(a). Such contribution
shall be allocated to the Non-Highly Compensated Participant
having the lowest 414(s) Compensation, until one of the tests set
forth in Section 4.5(a) is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has
received the maximum "annual addition" pursuant to Section 4.9.
This process shall continue until one of the tests set forth in
Section 4.5(a) is satisfied (or is anticipated to be satisfied).
Notwithstanding the above, at the Employer's discretion,
Non-Highly Compensated Participants who are not employed at the end of
the Plan Year (or at the end of the prior Plan Year if the prior year
testing method is being used) shall not be eligible to receive a
special Qualified Non-Elective Contribution and shall be disregarded.
Notwithstanding the above, for Plan Years beginning after
December 31, 1998, if the testing method changes from the current year
testing method to the prior year testing method, then for purposes of
preventing the double counting of Qualified Non-Elective Contributions
for the first testing year for which the change is effective, any
special Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants used to satisfy the "Actual Deferral
Percentage" or "Actual Contribution Percentage" test under the current
year testing method for the prior year testing year shall be
disregarded.
(c) If during a Plan Year, it is projected that the aggregate
amount of Elective Contributions to be allocated to all Highly
Compensated Participants under this Plan would cause the Plan to fail
the tests set forth in Section 4.5(a), then the Administrator may
automatically reduce the deferral amount of affected Highly
Compensated Participants, beginning with the Highly Compensated
Participant who has the highest deferral ratio until it is anticipated
the Plan will pass the tests or until the actual deferral ratio equals
the actual deferral ratio of the Highly Compensated Participant having
the next highest actual deferral ratio. This process may continue
until it is anticipated that the Plan will satisfy one of the tests
set forth in Section 4.5(a). Alternatively, the Employer may specify a
maximum percentage of Compensation that may be deferred.
(d) Any Excess Contributions (and Income) which are distributed
on or after 2 1/2 months after the end of the Plan Year shall be
subject to the ten percent (10%) Employer excise tax imposed by Code
Section 4979.
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for Plan Years beginning
after December 31, 1996 for the Highly Compensated Participant group
shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group); or
25
(2) the lesser of 200 percent of such percentage for the
Non-Highly Compensated Participant group (for the preceding Plan
Year if the prior year testing method is used to calculate the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participant group), or such percentage for the Non-Highly
Compensated Participant group (for the preceding Plan Year if the
prior year testing method is used to calculate the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant
group) plus 2 percentage points. However, to prevent the multiple
use of the alternative method described in this paragraph and
Code Section 401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 4.2 or
any other cash or deferred arrangement maintained by the Employer
or an Affiliated Employer and to make Employee contributions or
to receive matching contributions under this Plan or under any
plan maintained by the Employer or an Affiliated Employer shall
have a combination of Elective Contributions and Employer
matching contributions reduced pursuant to Regulation 1.401(m)-2
and Section 4.8(a). The provisions of Code Section 401(m) and
Regulations 1.401(m)-1(b) and 1.401(m)-2 are incorporated herein
by reference.
(b) For the purposes of this Section and Section 4.8, "Actual
Contribution Percentage" for a Plan Year means, with respect to the
Highly Compensated Participant group and Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Deferral Percentage"
for the Non-Highly Compensated Participant group), the average of the
ratios (calculated separately for each Participant in each group and
rounded to the nearest one-hundredth of one percent) of:
(1) the sum of Employer matching contributions made pursuant to
Section 4.1(b) on behalf of each such Participant for such Plan
Year; to
(2) the Participant's "414(s) Compensation" for such Plan Year.
Notwithstanding the above, if the prior year testing method
is used to calculate the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group for the first Plan Year of
this amendment and restatement, for purposes of Section 4.7(a), the
"Actual Contribution Percentage" for the Non-Highly Compensated
Participant group for the preceding Plan Year shall be determined
pursuant to the provisions of the Plan then in effect.
(c) For purposes of determining the "Actual Contribution
Percentage," only Employer matching contributions contributed to the
Plan prior to the end of the succeeding Plan Year shall be considered.
In addition, the Administrator may elect to take into account, with
respect to Employees eligible to have Employer matching contributions
pursuant to Section 4.1(b) allocated to their accounts, elective
deferrals (as defined in Regulation 1.402(g)-1(b)) and qualified
non-elective contributions (as defined in Code Section 401(m)(4)(C))
contributed to any plan maintained by the Employer. Such elective
deferrals and qualified non-elective contributions shall be treated as
Employer matching contributions subject to Regulation 1.401(m)-1(b)(5)
which is incorporated herein by reference. However, the Plan Year must
be the same as the plan year of the plan to which the elective
deferrals and the qualified non-elective contributions are made.
(d) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(m), this Plan may not be combined with any other plan.
(e) For purposes of Sections 4.7(a) and 48, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any
Employee eligible to have Employer matching contributions (whether or
not a deferral election was made or suspended) allocated to the
Participant's account for the Plan Year.
Notwithstanding the above, if the prior year testing method
is used to calculate the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group for the first Plan Year of
this amendment and restatement, for the purposes of Section 4.7(a), a
Non-Highly Compensated Participant shall include any such Employee
eligible to have Employer matching contributions (whether or not a
deferral election was made or suspended) allocated to the
Participant's account for the preceding Plan Year pursuant to the
provisions of the Plan then in effect.
26
(f) For the purpose of this Section, for Plan Years beginning
after December 31, 1996, unless otherwise provided below, when
calculating the "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group, the current year testing method shall
be used. Any change from the current year testing method to the prior
year testing method shall be made pursuant to Internal Revenue Service
Notice 98-1, Section VII (or superseding guidance), the provisions of
which are incorporated herein by reference.
For the Plan Year beginning after December 31, 2000, the
current year testing method shall be used.
(g) Notwithstanding anything in this Section to the contrary, the
provisions of this Section and Section 4.8 may be applied separately
(or will be applied separately to the extent required by Regulations)
to each plan within the meaning of Regulation 1.401(k)-1(g)(11).
Furthermore, for Plan Years beginning after December 31, 1998, the
provisions of Code Section 401(k)(3)(F) may be used to exclude from
consideration all Non-Highly Compensated Employees who have not
satisfied the minimum age and service requirements of Code Section
410(a)(1)(A).
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event (or if it is anticipated) that, for Plan Years
beginning after December 31, 1996, the "Actual Contribution
Percentage" for the Highly Compensated Participant group exceeds (or
might exceed) the "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group pursuant to Section 4.7(a), the
Administrator (on or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than the
close of the following Plan Year) shall direct the Trustee to
distribute to the Highly Compensated Participant having the largest
dollar amount of contributions determined pursuant to Section
4.7(b)(1), the Vested portion of such contributions (and Income
allocable to such contributions) and, if forfeitable, forfeit such
non-Vested Excess Aggregate Contributions attributable to Employer
matching contributions (and Income allocable to such forfeitures)
until the total amount of Excess Aggregate Contributions has been
distributed, or until the Participant's remaining amount equals the
amount of contributions determined pursuant to Section 4.7(b)(1) of
the Highly Compensated Participant having the second largest dollar
amount of contributions. This process shall continue until the total
amount of Excess Aggregate Contributions has been distributed.
If the correction of Excess Aggregate Contributions
attributable to Employer matching contributions is not in proportion
to the Vested and non-Vested portion of such contributions, then the
Vested portion of the Participant's Account attributable to Employer
matching contributions after the correction shall be subject to
Section 7.5(j).
(b) Any distribution and/or forfeiture of less than the entire
amount of Excess Aggregate Contributions (and Income) shall be treated
as a pro rata distribution and/or forfeiture of Excess Aggregate
Contributions and Income. Distribution of Excess Aggregate
Contributions shall be designated by the Employer as a distribution of
Excess Aggregate Contributions (and Income). Forfeitures of Excess
Aggregate Contributions shall be treated in accordance with Section
4.4.
(c) Excess Aggregate Contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes
of Code Sections 404 and 415 even if distributed from the Plan.
Forfeited matching contributions that are reallocated to
Participants' Accounts for the Plan Year in which the forfeiture
occurs shall be treated as an "annual addition" pursuant to Section
4.9(b) for the Participants to whose Accounts they are reallocated and
for the Participants from whose Accounts they are forfeited.
(d) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
after-tax voluntary Employee contributions due to recharacterization
for the plan year of any other qualified cash or deferred arrangement
(as defined in Code Section 401(k)) maintained by the Employer that
ends with or within the Plan Year.
(e) If during a Plan Year the projected aggregate amount of
Employer matching contributions to be allocated to all Highly
Compensated Participants under this Plan would, by
27
virtue of the tests set forth in Section 4.7(a), cause the Plan to
fail such tests, then the Administrator may automatically reduce
proportionately or in the order provided in Section 4.8(a) each
affected Highly Compensated Participant's projected share of such
contributions by an amount necessary to satisfy one of the tests set
forth in Section 4.7(a).
(f) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution in accordance with one of the following
provisions which contribution shall be allocated to the Participant's
Account of each Non-Highly Compensated Participant eligible to share
in the allocation in accordance with such provision. The Employer
shall provide the Administrator with written notification of the
amount of the contribution being made and for which provision it is
being made pursuant to:
(1) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated in the same proportion that each Non-Highly
Compensated Participant's 414(s) Compensation for the year (or
prior year if the prior year testing method is being used) bears
to the total 414(s) Compensation of all Non-Highly Compensated
Participants for such year.
(2) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated in the same proportion that each Non-Highly
Compensated Participant electing salary reductions pursuant to
Section 4.2 in the same proportion that each such Non-Highly
Compensated Participant's Deferred Compensation for the year (or
at the end of the prior Plan Year if the prior year testing
method is being used) bears to the total Deferred Compensation of
all such Non-Highly Compensated Participants for such year.
(3) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated in equal amounts (per capita).
(4) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants electing salary
reductions pursuant to Section 4.2 in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 4.7. Such contribution shall be
allocated for the year (or at the end of the prior Plan Year if
the prior year testing method is used) to each Non-Highly
Compensated Participant electing salary reductions pursuant to
Section 4.2 in equal amounts (per capita).
(5) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated to the Non-Highly Compensated Participant
having the lowest 414(s) Compensation, until one of the tests set
forth in Section 4.7 is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has
received the maximum "annual addition" pursuant to Section 4.9.
This process shall continue until one of the tests set forth in
Section 4.7 is satisfied (or is anticipated to be satisfied).
Notwithstanding the above, at the Employer's discretion,
Non-Highly Compensated Participants who are not employed at the end of
the Plan Year (or at the end of the prior Plan Year if the prior year
testing method is being used) shall not be eligible to receive a
special Qualified Non-Elective Contribution and shall be disregarded.
Notwithstanding the above, for Plan Years beginning after
December 31, 1998, if the testing method changes from the current year
testing method to the prior year testing method, then for purposes of
preventing the double counting of Qualified Non-Elective Contributions
for the first testing year for which the change is effective, any
special Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants used to satisfy the "Actual Deferral
Percentage" or "Actual Contribution Percentage" test under the current
year testing method for the prior year testing year shall be
disregarded.
28
(g) Any Excess Aggregate Contributions (and Income) which are
distributed on or after 2 1/2 months after the end of the Plan Year
shall be subject to the ten percent (10%) Employer excise tax imposed
by Code Section 4979.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, for "limitation year"
beginning after December 31, 1994, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall
equal the lesser of: (1) $30,000 adjusted annually as provided in Code
Section 415(d) pursuant to the Regulations, or (2) twenty-five percent
(25%) of the Participant's "415 Compensation" for such "limitation
year." If the Employer contribution that would otherwise be
contributed or allocated to the Participant's accounts would cause the
"annual additions" for the "limitation year" to exceed the maximum
"annual additions," the amount contributed or allocated will be
reduced so that the "annual additions" for the "limitation year" will
equal the maximum "annual additions," and any amount in excess of the
maximum "annual additions," which would have been allocated to such
Participant may be allocated to other Participants. For any short
"limitation year," the dollar limitation in (1) above shall be reduced
by a fraction, the numerator of which is the number of full months in
the short "limitation year" and the denominator of which is twelve
(12).
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts
for any "limitation year" of (1) Employer contributions, (2) Employee
contributions, (3) forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code Section
415(l)(2) which is part of a pension or annuity plan maintained by the
Employer and (5) amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits allocated
to the separate account of a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit plan (as defined in Code Section
419(e)) maintained by the Employer. Except, however, the "415
Compensation" percentage limitation referred to in paragraph (a)(2)
above shall not apply to: (1) any contribution for medical benefits
(within the meaning of Code Section 419A(f)(2)) after separation from
service which is otherwise treated as an "annual addition," or (2) any
amount otherwise treated as an "annual addition" under Code Section
415(l)(1).
(c) For purposes of applying the limitations of Code Section 415,
the transfer of funds from one qualified plan to another is not an
"annual addition." In addition, the following are not Employee
contributions for the purposes of Section 4.9(b): (1) rollover
contributions (as defined in Code Sections 402(a)(5), 403(a)(4),
403(b)(8) and 408(d)(3)); (2) repayments of loans made to a
Participant from the Plan; (3) repayments of distributions received by
an Employee pursuant to Code Section 411(a)(7)(B) (cash-outs); (4)
repayments of distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from gross
income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined
contribution plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
(f) For the purpose of this Section, if the Employer is a member
of a controlled group of corporations, trades or businesses under
common control (as defined by Code Section 1563(a) or Code Section
414(b) and (c) as modified by Code Section 415(h)), is a member of an
affiliated service group (as defined by Code Section 414(m)), or is a
member of a group of entities required to be aggregated pursuant to
Regulations under Code Section 414(o), all Employees of such Employers
shall be considered to be employed by a single Employer.
(g) For the purpose of this Section, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will be
considered to be a separate Employer.
29
(h)(1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan
shall equal the maximum "annual additions" for the "limitation year"
minus any "annual additions" previously credited to such Participant's
accounts during the "limitation year."
(2) If a Participant participates in both a defined contribution
plan subject to Code Section 412 and a defined contribution plan
not subject to Code Section 412 maintained by the Employer which
have the same Anniversary Date, "annual additions" will be
credited to the Participant's accounts under the defined
contribution plan subject to Code Section 412 prior to crediting
"annual additions" to the Participant's accounts under the
defined contribution plan not subject to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by
the Employer which have the same Anniversary Date, the maximum
"annual additions" under this Plan shall equal the product of (A)
the maximum "annual additions" for the "limitation year" minus
any "annual additions" previously credited under subparagraphs
(1) or (2) above, multiplied by (B) a fraction (i) the numerator
of which is the "annual additions" which would be credited to
such Participant's accounts under this Plan without regard to the
limitations of Code Section 415 and (ii) the denominator of which
is such "annual additions" for all plans described in this
subparagraph.
(i) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of Forfeitures, a
reasonable error in estimating a Participant's Compensation, a
reasonable error in determining the amount of elective deferrals
(within the meaning of Code Section 402(g)(3)) that may be made with
respect to any Participant under the limits of Section 4.9 or other
facts and circumstances to which Regulation 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would cause the
maximum "annual additions" to be exceeded for any Participant, the
"excess amount" will be disposed of in one of the following manners,
as uniformly determined by the Administrator for all Participants
similarly situated.
(1) Any matched Deferred Compensation and Employer matching
contributions which relate to such Deferred Compensation will be
proportionately reduced to the extent they would reduce the
"excess amount." The Deferred Compensation (and any gains
attributable to such Deferred Compensation) will be distributed
to the Participant and the Employer matching contributions (and
any gains attributable to such matching contributions) will be
used to reduce the Employer contribution in the next "limitation
year";
(2) If, after the application of subparagraph (1) above, 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 the Employer contribution (including
allocation of any Forfeitures) for such Participant in the next
"limitation year," and each succeeding "limitation year" if
necessary;
(3) If, after the application of subparagraph (1) above, an
"excess amount" still exists, and the Participant is not covered
by the Plan at the end of the "limitation year," the "excess
amount" will be held unallocated in a "Section 415 suspense
account." The "Section 415 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;
(4) If a "Section 415 suspense account" is in existence at any
time during the "limitation year" pursuant to this Section, it
will not participate in the allocation of investment gains and
losses of the Trust Fund. If a "Section 415 suspense account" is
in existence at any time during a particular "limitation year,"
all amounts in the "Section
30
415 suspense account" must be allocated and reallocated to
Participants' accounts before any Employer contributions or any
Employee contributions may be made to the Plan for that
"limitation year." Except as provided in (1) above, "excess
amounts" may not be distributed to Participants or Former
Participants.
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of
(1) the "annual additions" which would be credited to the
Participant's account under the terms of the Plan without regard to
the limitations of Code Section 415 over (2) the maximum "annual
additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense account"
shall mean an unallocated account equal to the sum of "excess amounts"
for all Participants in the Plan during the "limitation year."
4.11 ROLLOVERS AND PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred (within the meaning of Code Section 414(l)) to this Plan
from other tax qualified plans under Code Section 401(a) by
Participants, provided that the trust from which such funds are
transferred permits the transfer to be made and the transfer will not
jeopardize the tax exempt status of the Plan or Trust or create
adverse tax consequences for the Employer. Prior to accepting any
transfers to which this Section applies, the Administrator may require
an opinion of counsel that the amounts to be transferred meet the
requirements of this Section. The amounts transferred shall be set up
in a separate account herein referred to as a Participant's
Transfer/Rollover Account. Furthermore, for vesting purposes, the
Participant's portion of the Participant's Transfer/Rollover Account
attributable to any transfer shall be subject to Section 7.4(b).
Except as permitted by Regulations (including Regulation
1.411(d)-4), amounts attributable to elective contributions (as
defined in Regulation 1.401(k)-1(g)(3)), including amounts treated as
elective contributions, which are transferred from another qualified
plan in a plan-to-plan transfer (other than a direct rollover) shall
be subject to the distribution limitations provided for in Regulation
1.401(k)-1(d).
(b) With the consent of the Administrator, the Plan may accept a
"rollover" by Participants, provided the "rollover" will not
jeopardize the tax exempt status of the Plan or create adverse tax
consequences for the Employer. Prior to accepting any "rollovers" to
which this Section applies, the Administrator may require the Employee
to establish (by providing opinion of counsel or otherwise) that the
amounts to be rolled over to this Plan meet the requirements of this
Section. The amounts rolled over shall be set up in a separate account
herein referred to as a "Participant's Transfer/Rollover Account."
Such account shall be fully Vested at all times and shall not be
subject to Forfeiture for any reason.
For purposes of this Section, the term "qualified plan"
shall mean any tax qualified plan under Code Section 401(a), or, any
other plans from which distributions are eligible to be rolled over
into this Plan pursuant to the Code. The term "rollover" means: (i)
amounts transferred to this Plan directly from another qualified plan;
(ii) distributions received by an Employee from other "qualified
plans" which are eligible for tax-free rollover to a "qualified plan"
and which are transferred by the Employee to this Plan within sixty
(60) days following receipt thereof; (iii) amounts transferred to this
Plan from a conduit individual retirement account provided that the
conduit individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by another
"qualified plan" (B) were eligible for tax-free rollover to a
"qualified plan" and (C) were deposited in such conduit individual
retirement account within sixty (60) days of receipt thereof; (iv)
amounts distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause (iii) above, and
transferred by the Employee to this Plan within sixty (60) days of
receipt thereof from such conduit individual retirement account; and
(v) any other amounts which are eligible to be rolled over to this
Plan pursuant to the Code.
(c) Amounts in a Participant's Transfer/Rollover Account shall be
held by the Trustee pursuant to the provisions of this Plan and may
not be withdrawn by, or distributed to the Participant, in whole or in
part, except as provided in paragraph (d) of this Section. The Trustee
shall have no duty or responsibility to inquire as to the propriety of
the amount, value or type of
31
assets transferred, nor to conduct any due diligence with respect to
such assets; provided, however, that such assets are otherwise
eligible to be held by the Trustee under the terms of this Plan.
(d) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute all or a portion of the amount
credited to the Participant's Transfer/Rollover Account. Any
distributions of amounts held in a Participant's Transfer/Rollover
Account shall be made in a manner which is consistent with and
satisfies the provisions of Section 7.5, including, but not limited
to, all notice and consent requirements of Code Section 411(a)(11) and
the Regulations thereunder. Furthermore, such amounts shall be
considered as part of a Participant's benefit in determining whether
an involuntary cash-out of benefits may be made without Participant
consent.
(e) The Administrator may direct that Employee transfers and
rollovers made after a Valuation Date be segregated into a separate
account for each Participant until such time as the allocations
pursuant to this Plan have been made, at which time they may remain
segregated or be invested as part of the general Trust Fund or be
directed by the Participant pursuant to Section 4.12.
(f) This Plan shall not accept any direct or indirect transfers
(as that term is defined and interpreted under Code Section 401(a)(11)
and the Regulations thereunder) from a defined benefit plan, money
purchase plan (including a target benefit plan), stock bonus or profit
sharing plan which would otherwise have provided for a life annuity
form of payment to the Participant.
(g) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction
having the effect of such a transfer) shall only be permitted if it
will not result in the elimination or reduction of any "Section
411(d)(6) protected benefit" as described in Section 9.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) Participants may, subject to Section 4.12(d) and a procedure
established by the Administrator (the Participant Direction
Procedures) and applied in a uniform nondiscriminatory manner, direct
the Trustee, in writing (or in such other form which is acceptable to
the Trustee), to invest all or a portion of their individual account
balances in specific assets, specific funds or other investments
permitted under the Plan and the Participant Direction Procedures.
That portion of the interest of any Participant so directing will
thereupon be considered a Participant's Directed Account.
(b) As of each Valuation Date, all Participant Directed Accounts
shall be charged or credited with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in the market
value using publicly listed fair market values when available or
appropriate as follows:
(1) to the extent that the assets in a Participant's Directed
Account are accounted for as pooled assets or investments, the
allocation of earnings, gains and losses of each Participant's
Directed Account shall be based upon the total amount of funds so
invested in a manner proportionate to the Participant's share of
such pooled investment; and
(2) to the extent that the assets in the Participant's Directed
Account are accounted for as segregated assets, the allocation of
earnings, gains and losses from such assets shall be made on a
separate and distinct basis.
(c) Investment directions will be processed as soon as
administratively practicable after proper investment directions are
received from the Participant. No guarantee is made by the Plan,
Employer, Administrator or Trustee that investment directions will be
processed on a daily basis, and no guarantee is made in any respect
regarding the processing time of an investment direction.
Notwithstanding any other provision of the Plan, the Employer,
Administrator or Trustee reserves the right to not value an investment
option on any given Valuation Date for any reason deemed appropriate
by the Employer, Administrator or Trustee. Furthermore, the processing
of any investment transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive
values or prices, and correction for errors or omissions or the errors
or omissions of any service provider).
32
The processing date of a transaction will be binding for all purposes
of the Plan and considered the applicable Valuation Date for an
investment transaction.
(d) Each "Qualified Participant" may elect within ninety (90)
days after the close of each Plan Year during the "Qualified Election
Period" to direct the Trustee in writing as to the distribution in
cash and/or Company Stock of 25 percent of the total number of shares
of Company Stock acquired by or contributed to the Plan that have ever
been allocated to such "Qualified Participant's" Company Stock Account
(reduced by the number of shares of Company Stock previously
distributed in cash and/or Company Stock pursuant to a prior
election). In the case of the election year in which the last election
can be made by the Participant, the preceding sentence shall be
applied by substituting "50 percent" for "25 percent." If the
"Qualified Participant" elects to direct the Trustee as to the
distribution of the Participant's Company Stock Account, such
direction shall be effective no later than 180 days after the close of
the Plan Year to which such direction applies.
Notwithstanding the above, if the fair market value
(determined pursuant to Section 6.1 at the Plan Valuation Date
immediately preceding the first day on which a "Qualified Participant"
is eligible to make an election) of Company Stock acquired by or
contributed to the Plan and allocated to a "Qualified Participant's"
Company Stock Account is $500 or less, then such Company Stock shall
not be subject to this paragraph. For purposes of determining whether
the fair market value exceeds $500, Company Stock held in accounts of
all employee stock ownership plans (as defined in Code Section
4975(e)(7)) and tax credit employee stock ownership plans (as defined
in Code Section 409(a)) maintained by the Employer or any Affiliated
Employer shall be considered as held by the Plan.
(e) For the purposes of this Section the following definitions
shall apply:
(1) "Qualified Participant" means any Participant or Former
Participant who has completed ten (10) Years of Service as a
Participant and has attained age 55.
(2) "Qualified Election Period" means the six (6) Plan Year
period beginning with the first Plan Year in which the
Participant first became a "Qualified Participant."
4.13 QUALIFIED MILITARY SERVICE
Notwithstanding any provision of this Plan to the contrary, effective
December 12, 1994, contributions, benefits and service will be provided in
accordance with Code Section 414(u).
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is designed to invest primarily in Company Stock.
(b) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in other
property described in the Trust or in life insurance policies to the
extent permitted by subparagraph (c) below, or the Trustee may hold
such funds in cash or cash equivalents.
(c) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in
insurance policies on the life of any "keyman" Employee. The proceeds
of a "keyman" insurance policy may not be used for the repayment of
any indebtedness owed by the Plan which is secured by Company Stock.
In the event any "keyman" insurance is purchased by the Trustee, the
premiums paid thereon during any Plan Year, net of any policy
dividends and increases in cash surrender values, shall be treated as
the cost of Plan investment and any death benefit or cash surrender
value received shall be treated as proceeds from an investment of the
Plan.
(d) The Plan may not obligate itself to acquire Company Stock
from a particular holder thereof at an indefinite time determined upon
the happening of an event such as the death of the holder.
(e) The Plan may not obligate itself to acquire Company Stock
under a put option binding upon the Plan. However, at the time a put
option is exercised, the Plan may be given
33
an option to assume the rights and obligations of the Employer under a
put option binding upon the Employer.
(f) All purchases of Company Stock shall be made at a price
which, in the judgment of the Administrator, does not exceed the fair
market value thereof. All sales of Company Stock shall be made at a
price which, in the judgment of the Administrator, is not less than
the fair market value thereof. The valuation rules set forth in
Article VI shall be applicable.
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date,
to determine the net worth of the assets comprising the Trust Fund as it exists
on the Valuation Date. In determining such net worth, the Trustee shall value
the assets comprising the Trust Fund at their fair market value (or their
contractual value in the case of a Contract or Policy) as of the Valuation Date
and shall deduct all expenses for which the Trustee has not yet obtained
reimbursement from the Employer or the Trust Fund. The Trustee may update the
value of any shares held in the Participant Directed Account by reference to the
number of shares held by that Participant, priced at the market value as of the
Valuation Date.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all relevant
factors for determining the fair market value of securities. In the case of a
transaction between a Plan and a disqualified person, value must be determined
as of the date of the transaction. For all other Plan purposes, value must be
determined as of the most recent Valuation Date under the Plan. An independent
appraisal will not in itself be a good faith determination of value in the case
of a transaction between the Plan and a disqualified person. However, in other
cases, a determination of fair market value based on at least an annual
appraisal independently arrived at by a person who customarily makes such
appraisals and who is independent of any party to the transaction will be deemed
to be a good faith determination of value. Company Stock not readily tradable on
an established securities market shall be valued by an independent appraiser
meeting requirements similar to the requirements of the Regulations prescribed
under Code Section 170(a)(1).
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate employment with the Employer and
retire for the purposes hereof on the Participant's Normal Retirement Date.
However, a Participant may postpone the termination of employment with the
Employer to a later date, in which event the participation of such Participant
in the Plan, including the right to receive allocations pursuant to Section 4.4,
shall continue until such Participant's Late Retirement Date. Upon a
Participant's Retirement Date or attainment of Normal Retirement Date without
termination of employment with the Employer, or as soon thereafter as is
practicable, the Trustee shall distribute, at the election of the Participant,
all amounts credited to such Participant's Combined Account in accordance with
Sections 7.5 and 7.6.
7.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before the Participant's
Retirement Date or other termination of employment, all amounts
credited to such Participant's Combined Account shall become fully
Vested. If elected, distribution of the Participant's Combined Account
shall commence not later than one (1) year after the close of the Plan
Year in which such Participant's death occurs. The Administrator shall
direct the Trustee, in accordance with the provisions of Sections 7.5
and 7.6, to distribute the value of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of
Sections 7.5 and 7.6, to distribute any remaining Vested amounts
credited to the accounts of a deceased Former Participant to such
Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of the
value of the account of a deceased Participant or
34
Former Participant as the Administrator may deem desirable. The
Administrator's determination of death and of the right of any person
to receive payment shall be conclusive.
(d) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however, the
Participant may designate a Beneficiary other than the spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a court
order to such effect (and there is no "qualified domestic
relations order" as defined in Code Section 414(p) which provides
otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be
made on a form satisfactory to the Administrator. A Participant may at
any time revoke a designation of a Beneficiary or change a Beneficiary
by filing written (or in such other form as permitted by the Internal
Revenue Service) notice of such revocation or change with the
Administrator. However, the Participant's spouse must again consent in
writing (or in such other form as permitted by the Internal Revenue
Service) to any change in Beneficiary unless the original consent
acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to
relinquish such right.
(e) In the event no valid designation of Beneficiary exists, or
if the Beneficiary is not alive at the time of the Participant's
death, the death benefit will be paid in the following order of
priority to:
(1) the Participant's surviving spouse;
(2) the Participant's children, including adopted children, per
stirpes;
(3) the Participant's surviving parents in equal shares; or
(4) the Participant's estate.
If the Beneficiary does not predecease the Participant, but
dies prior to distribution of the death benefit, the death benefit
will be paid to the Beneficiary's estate.
(f) Notwithstanding anything in this Section to the contrary, if
a Participant has designated the spouse as a Beneficiary, then a
divorce decree or a legal separation that relates to such spouse shall
revoke the Participant's designation of the spouse as a Beneficiary
unless the decree or a qualified domestic relations order (within the
meaning of Code Section 414(p)) provides otherwise.
(g) Any consent by the Participant's spouse to waive any rights
to the death benefit must be in writing (or in such other form as
permitted by the Internal Revenue Service), must acknowledge the
effect of such waiver, and be witnessed by a Plan representative or a
notary public. Further, the spouse's consent must be irrevocable and
must acknowledge the specific nonspouse Beneficiary.
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior
to the Participant's Retirement Date or other termination of employment, all
amounts credited to such Participant's Combined Account shall become fully
Vested. In the event of a Participant's Total and Permanent Disability, the
Administrator, in accordance with the provisions of Sections 7.5 and 7.6, shall
direct the distribution to such Participant of all Vested amounts credited to
such Participant's Combined Account. If such Participant elects, distribution
shall commence not later than one (1) year after the close of the Plan Year in
which Total and Permanent Disability occurs.
35
7.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is terminated
for any reason other than death, Total and Permanent Disability or
retirement, then such Participant shall be entitled to such benefits
as are provided hereinafter pursuant to this Section 7.4.
If a portion of a Participant's Account is forfeited,
Company Stock allocated to the Participant's Company Stock Account
must be forfeited only after the Participant's Other Investments
Account has been depleted. If interest in more than one class of
Company Stock has been allocated to a Participant's Account, the
Participant must be treated as forfeiting the same proportion of each
such class.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of
the Employer (upon the Participant's death, Total and Permanent
Disability or Normal Retirement). However, at the election of the
Participant, the Administrator shall direct the Trustee that the
entire Vested portion of the Terminated Participant's Combined Account
to be payable to such Terminated Participant .Any distribution under
this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 7.5 and 7.6, including, but not
limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.
If, for Plan Years beginning after August 5, 1997, the
value of a Terminated Participant's Vested benefit derived from
Employer and Employee contributions does not exceed $5,000 and, if the
distribution is made prior to March 22, 1999, has never exceeded
$5,000 at the time of any prior distribution, then the Administrator
shall direct the Trustee to cause the entire Vested benefit to be paid
to such Participant in a single lump sum.
For purposes of this Section 7.4, if the value of a
Terminated Participant's Vested benefit is zero, the Terminated
Participant shall be deemed to have received a distribution of such
Vested benefit.
(b) Effective January 1, 2002 the vested portion of any
Participant's Account shall be a percentage of the total amount
credited to the Participant's Account determined on the basis of the
Participant's number of Years of Service according to the following
schedule:
Vesting Schedule
Years of Service Percentage
SALARY DEFERRAL 100%
Any years
MATCHING ACCOUNTS
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
PROFIT SHARING AND EMPLOYER STOCK ACCOUNTS
Less than 5 0%
5 100%
(c) Notwithstanding the vesting schedule provided for in
paragraph (b) above, for any Top Heavy Plan Year, the Vested portion
of the Participant's Account of any Participant who has an Hour of
Service after the Plan becomes top heavy shall be a percentage of the
total amount credited to the Participant's Account determined on the
basis of the Participant's number of Years of Service according to the
following schedule:
36
Vesting Schedule
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
If in any subsequent Plan Year, the Plan ceases to be a Top
Heavy Plan, the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such reversion
shall be treated as a Plan amendment pursuant to the terms of the
Plan.
(d) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Account shall not be less than the
Vested percentage attained as of the later of the effective date or
adoption date of this amendment and restatement.
(e) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer contributions to the Plan or upon any
full or partial termination of the Plan, all amounts then credited to
the account of any affected Participant shall become 100% Vested and
shall not thereafter be subject to Forfeiture.
(f) A Participant with at least three (3) Years of Service as of
the expiration date of the election period may elect to have the
nonforfeitable percentage computed under the Plan without regard to
such amendment and restatement. If a Participant fails to make such
election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence on the
adoption date of the amendment and shall end 60 days after the latest
of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
Except, however, any Employee who was a Participant as of
the later of the effective date or adoption date of this amendment and
restatement and who completed three (3) Years of Service shall be
subject to the pre-amendment vesting schedule provided such schedule
is more liberal than the new vesting schedule.
Pre-Amendment Vesting Schedule
Years of Service Percentage
Five (5) 100%
(g) The computation of a Participant's nonforfeitable percentage
of such Participant's interest in the Plan shall not be reduced as the
result of any direct or indirect amendment to this Plan. In the event
that the Plan is amended to change or modify any vesting schedule, or
if the Plan is amended in any way that directly or indirectly affects
the computation of the Participant's nonforfeitable percentage, or if
the Plan is deemed amended by an automatic change to a top heavy
vesting schedule then each Participant with at least three (3) Years
of Service as of the expiration date of the election period may elect
to have such Participant's nonforfeitable percentage computed under
the Plan without regard to such amendment or change. If a Participant
fails to make such election, then such Participant shall be subject to
the new vesting schedule. The Participant's election period shall
commence on the adoption date of the amendment and shall end sixty
(60) days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
37
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
7.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a Participant
or such Participant's Beneficiary any amount to which the Participant
is entitled under the Plan in one or more of the following methods:
(1) One lump-sum payment.
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual installments. The period over which such
payment is to be made shall not extend beyond the earlier of the
Participant's life expectancy (or the life expectancy of the
Participant and the Participant's designated Beneficiary) or the
limited distribution period provided for in Section 7.5(b).
(b) Unless the Participant elects in writing (or such other form
as permitted by the Internal Revenue Service) a longer distribution
period, distributions to a Participant or the Participant's
Beneficiary attributable to Company Stock shall be in substantially
equal monthly, quarterly, semiannual, or annual installments over a
period not longer than five (5) years. In the case of a Participant
with an account balance attributable to Company Stock in excess of
$500,000, the five (5) year period shall be extended one (1)
additional year (but not more than five (5) additional years) for each
$100,000 or fraction thereof by which such balance exceeds $500,000.
The dollar limits shall be adjusted at the same time and in the same
manner as provided in Code Section 415(d).
(c) Any distribution to a Participant, for Plan Years beginning
after August 5, 1997, for Plan Years beginning on and after June 8,
1998, who has a benefit which exceeds $5,000 or, if the distribution
is made prior to March 22, 1999, has ever exceeded $5,000 at the time
of any prior distribution, shall require such Participant's written
(or in such other form as permitted by the Internal Revenue Service)
consent if such distribution commences prior to the time the benefit
is "immediately distributable." A benefit is "immediately
distributable" if any part of the benefit could be distributed to the
Participant (or surviving spouse) before the Participant attains (or
would have attained if not deceased) the later of the Participant's
Normal Retirement Age or age 62. However, for distributions prior to
October 17, 2000, if a Participant has begun to receive distributions
pursuant to an optional form of benefit under which at least one
scheduled periodic distribution has not yet been made, and if the
value of the Participant's benefit, determined at the time of the
first distribution under that optional form of benefit, exceeded
$5,000, then the value of the Participant's benefit prior to October
17, 2000 is deemed to continue to exceed such amount. With regard to
this required consent:
(1) The Participant must be informed of the right to defer
receipt of the distribution. If a Participant fails to consent,
it shall be deemed an election to defer the commencement of
payment of any benefit. However, any election to defer the
receipt of benefits shall not apply with respect to distributions
which are required under Section 7.5(f).
(2) Notice of the rights specified under this paragraph shall be
provided no less than thirty (30) days and no more than ninety
(90) days before the date the distribution commences.
(3) Written (or such other form as permitted by the Internal
Revenue Service) consent of the Participant to the distribution
must not be made before the Participant receives the notice and
must not be made more than ninety (90) days before the date the
distribution commences.
(4) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to
the distribution.
Any such distribution may commence less than thirty (30)
days after the notice required under Regulation 1.411(a)-11(c) is
given, provided that: (1) the Administrator clearly informs the
Participant that the Participant has a right to a period of at least
thirty (30) days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if
38
applicable, a particular distribution option), and (2) the
Participant, after receiving the notice, affirmatively elects a
distribution.
(d) Notwithstanding anything herein to the contrary, the
Administrator, subject to the election of the Participant or
Beneficiary pursuant to Section 4.4(c), may direct that cash dividends
on shares of Company Stock allocable to Participants' or Former
Participants' Company Stock Accounts be distributed to such
Participants or Former Participants within ninety (90) days after the
close of the Plan Year in which the dividends are paid.
(e) Any part of a Participant's benefit which is retained in the
Plan after the Anniversary Date on which the Participant's
participation ends will continue to be treated as a Company Stock
Account or as an Other Investments Account (subject to Section 7.4(a))
as provided in Article IV. However, neither account will be credited
with any further Employer contributions or Forfeitures.
(f) Notwithstanding any provision in the Plan to the contrary,
the distribution of a Participant's benefits made on or after January
1, 1997 shall be made in accordance with the following requirements
and shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation 1.401(a)(9)-2), the
provisions of which are incorporated herein by reference:
(1) A Participant's benefits shall be distributed or must begin
to be distributed not later than April 1st of the calendar year
following the later of (i) the calendar year in which the
Participant attains age 70 1/2 or (ii) the calendar year in which
the Participant retires, provided, however, that this clause (ii)
shall not apply in the case of a Participant who is a "five (5)
percent owner" at any time during the Plan Year ending with or
within the calendar year in which such owner attains age 70 1/2.
Such distributions shall be equal to or greater than any required
distribution.
Alternatively, distributions to a Participant must begin no later
than the applicable April 1st as determined under the preceding
paragraph and must be made over a period certain measured by the
life expectancy of the Participant (or the life expectancies of
the Participant and the Participant's designated Beneficiary) in
accordance with Regulations.
(2) Distributions to a Participant and the Participant's
Beneficiaries shall only be made in accordance with the
incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.
(g) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder. If it is
determined, pursuant to Regulations, that the distribution of a
Participant's interest has begun and the Participant dies before the
entire interest has been distributed, the remaining portion of such
interest shall be distributed at least as rapidly as under the method
of distribution selected pursuant to Section 7.5 as of the date of
death. If a Participant dies before receiving any distributions of the
interest in the Plan or before distributions are deemed to have begun
pursuant to Regulations, then the death benefit shall be distributed
to the Participant's Beneficiaries by December 31st of the calendar
year in which the fifth anniversary of the Participant's date of death
occurs.
However, in the event that the Participant's spouse
(determined as of the date of the Participant's death) is the
designated Beneficiary, then in lieu of the preceding rules,
distributions must be made over a period not extending beyond the life
expectancy of such designated Beneficiary and must commence on or
before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died;
or (2) December 31st of the calendar year in which the Participant
would have attained age 70 1/2. If the surviving spouse dies before
distributions to such spouse begin, then the 5-year distribution
requirement of this Section shall apply as if the spouse was the
Participant.
(h) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse may, at the election of the
Participant or the Participant's spouse, be redetermined in accordance
with Regulations. The election, once made, shall be irrevocable. If no
election is made by the time distributions must commence, then the
life expectancy of the Participant and the Participant's spouse shall
not be subject to recalculation. Life expectancy and joint and last
survivor expectancy shall be computed using the return multiples in
Tables V and VI of Regulation 1.72-9.
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(i) Except as limited by Sections 7.5 and 7.6, whenever the
Trustee is to make a distribution or to commence a series of payments,
the distribution or series of payments may be made or begun on such
date or as soon thereafter as is practicable. However, unless a Former
Participant elects in writing to defer the receipt of benefits (such
election may not result in a death benefit that is more than
incidental), the payment of benefits shall begin not later than the
sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(1) the date on which the Participant attains the earlier of age
65 or the Normal Retirement Age specified herein;
(2) the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan; or
(3) the date the Participant terminates his service with the
Employer.
(j) If a distribution is made to a Participant who has not
severed employment and who is not fully Vested in the Participant's
Account and the Participant may increase the Vested percentage in such
account, then, at any relevant time the Participant's Vested portion
of the account will be equal to an amount ("X") determined by the
formula:
X equals P(AB plus D) - 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, and D is the amount of distribution.
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit may be made in cash
or Company Stock or both, provided, however, that if a Participant or
Beneficiary so demands, such benefit shall be distributed only in the
form of Company Stock. Prior to making a distribution of benefits, the
Administrator shall advise the Participant or the Participant's
Beneficiary, in writing (or such other form as permitted by the
Internal Revenue Service), of the right to demand that benefits be
distributed solely in Company Stock.
(b) If a Participant or Beneficiary demands that benefits be
distributed solely in Company Stock, distribution of a Participant's
benefit will be made entirely in whole shares or other units of
Company Stock. Any balance in a Participant's Other Investments
Account will be applied to acquire for distribution the maximum number
of whole shares or other units of Company Stock at the then fair
market value. Any fractional unit value unexpended will be distributed
in cash. If Company Stock is not available for purchase by the
Trustee, then the Trustee shall hold such balance until Company Stock
is acquired and then make such distribution, subject to Sections
7.5(i) and 7.5(f).
(c) The Trustee will make distribution from the Trust only on
instructions from the Administrator.
(d) Notwithstanding anything contained herein to the contrary, if
the Employer charter or by-laws restrict ownership of substantially
all shares of Company Stock to Employees and the Trust Fund, as
described in Code Section 409(h)(2)(B)(ii)(I), the Administrator shall
distribute a Participant's Combined Account entirely in cash without
granting the Participant the right to demand distribution in shares of
Company Stock.
(e) Except as otherwise provided herein, Company Stock
distributed by the Trustee may be restricted as to sale or transfer by
the by-laws or articles of incorporation of the Employer, provided
restrictions are applicable to all Company Stock of the same class. If
a Participant is required to offer the sale of Company Stock to the
Employer before offering to sell Company Stock to a third party, in no
event may the Employer pay a price less than that offered to the
distributee by another potential buyer making a bona fide offer and in
no event shall the Trustee pay a price less than the fair market value
of the Company Stock.
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7.7 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY
In the event a distribution is to be made to a minor or incompetent
Beneficiary, then the Administrator may direct that such distribution be paid to
the legal guardian, or if none in the case of a minor Beneficiary, to a parent
of such Beneficiary or a responsible adult with whom the Beneficiary maintains
residence, or to the custodian for such Beneficiary under the Uniform Gift to
Minors Act or Gift to Minors Act, if such is permitted by the laws of the state
in which said Beneficiary resides. Such a payment to the legal guardian,
custodian or parent of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to
a Participant or Beneficiary hereunder shall, at the later of the Participant's
attainment of age 62 or Normal Retirement Age, remain unpaid solely by reason of
the inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent effort,
to ascertain the whereabouts of such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the Plan.
Notwithstanding the foregoing, effective Gust 6/8/98 ESOP 1/1/03, or if later,
the adoption date of this amendment and restatement, if the value of a
Participant's Vested benefit derived from Employer and Employee contributions
does not exceed $5,000, then the amount distributable may, in the sole
discretion of the Administrator, either be treated as a Forfeiture, or be paid
directly to an individual retirement account described in Code Section 408(a) or
individual retirement annuity described in Code Section 408(b) at the time it is
determined that the whereabouts of the Participant or the Participant's
Beneficiary cannot be ascertained. In the event a Participant or Beneficiary is
located subsequent to the Forfeiture, such benefit shall be restored, first from
Forfeitures, if any, and then from an additional Employer contribution if
necessary. However, regardless of the preceding, a benefit which is lost by
reason of escheat under applicable state law is not treated as a Forfeiture for
purposes of this Section nor as an impermissible forfeiture under the Code.
7.9 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan
Year up to the lesser of 100% of the Participant's Elective Account
and Participant's Transfer/Rollover Account valued as of the last
Valuation Date or the amount necessary to satisfy the immediate and
heavy financial need of the Participant. Any distribution made
pursuant to this Section shall be deemed to be made as of the first
day of the Plan Year or, if later, the Valuation Date immediately
preceding the date of distribution, and the Participant's Elective
Account and Participant's Transfer/Rollover Account shall be reduced
accordingly. Withdrawal under this Section is deemed to be on account
of an immediate and heavy financial need of the Participant only if
the withdrawal is for:
(1) Medical expenses described in Code Section 213(d) incurred by
the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as described
in Code Section 213(d);
(2) The costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the Participant;
(3) Payment of tuition, related educational fees, and room and
board expenses for the next twelve (12) months of post-secondary
education for the Participant, and the Participant's spouse,
children, or dependents; or
(4) Payments necessary to prevent the eviction of the Participant
from the Participant's principal residence or foreclosure on the
mortgage on that residence.
(b) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation and
such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant. The amount
of the immediate and heavy financial need may include any amounts
necessary to pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the distribution;
41
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the
loan) loans currently available under all plans maintained by the
Employer;
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and after-tax
voluntary Employee contributions will be suspended for at least
twelve (12) months after receipt of the hardship distribution or,
the Participant, pursuant to a legally enforceable agreement,
will suspend elective deferrals and after-tax voluntary Employee
contributions to the Plan and all other plans maintained by the
Employer for at least twelve (12) months after receipt of the
hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals for
the Participant's taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable
limit under Code Section 402(g) for such next taxable year less
the amount of such Participant's elective deferrals for the
taxable year of the hardship distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Account pursuant to this Section shall be
limited solely to the Participant's total Deferred Compensation as of
the date of distribution, reduced by the amount of any previous
distributions pursuant to this Section.
(d) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Sections 7.5 and 7.6, including, but not limited to, all notice and
consent requirements of Code Section 411(a)(11) and the Regulations
thereunder.
7.10 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order," even if the affected
Participant has not separated from service and has not reached the "earliest
retirement age" under the Plan. For the purposes of this Section, "alternate
payee," "qualified domestic relations order" and "earliest retirement age" shall
have the meaning set forth under Code Section 414(p).
ARTICLE VIII
TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method" determined by
the Employer, to invest, manage, and control the Plan assets
subject, however, to the direction of a Participant with respect
to Participant Directed Accounts, the Employer or an Investment
Manager if the Trustee should appoint such manager as to all or a
portion of the assets of the Plan;
(2) At the direction of the Administrator, to pay benefits
required under the Plan to be paid to Participants, or, in the
event of their death, to their Beneficiaries; and
(3) To maintain records of receipts and disbursements and furnish
to the Employer and/or Administrator for each Plan Year a written
annual report pursuant to Section 8.7.
(b) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures), or the
Employer, or an Investment Manager with respect to the investment of
any or all Plan assets, the Trustee shall have no liability with
respect to the investment of such assets, but shall be responsible
only to execute such investment instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the written
(or other form acceptable to the Administrator and the Trustee,
including, but not limited to, voice
42
recorded) instructions of a Participant (pursuant to the
Participant Direction Procedures), or the Employer, or any
Fiduciary or nonfiduciary agent of the Employer, in the discharge
of such duties, and shall not be liable for any loss or other
liability, resulting from such direction (or lack of direction)
of the investment of any part of the Plan assets.
(2) The Trustee may delegate the duty of executing such
instructions to any nonfiduciary agent, which may be an affiliate
of the Trustee or any Plan representative.
(3) The Trustee may refuse to comply with any direction from the
Participant in the event the Trustee, in its sole and absolute
discretion, deems such directions improper by virtue of
applicable law. The Trustee shall not be responsible or liable
for any loss or expense which may result from the Trustee's
refusal or failure to comply with any directions from the
Participant.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's
Directed Account, unless paid by the Employer.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to
sign papers on their behalf.
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between principal and
income and in such securities or property, real or personal, wherever
situated, as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred, open-end or close-end mutual
funds, bonds and other evidences of indebtedness or ownership, and
real estate or any interest therein. The Trustee shall at all times in
making investments of the Trust Fund consider, among other factors,
the short and long-term financial needs of the Plan on the basis of
information furnished by the Employer. In making such investments, the
Trustee shall not be restricted to securities or other property of the
character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times the
Plan may qualify as an Employee Stock Ownership Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under
which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
(c) In the event the Trustee invests any part of the Trust Fund,
pursuant to the directions of the Administrator, in any shares of
stock issued by the Employer, and the Administrator thereafter directs
the Trustee to dispose of such investment, or any part thereof, under
circumstances which, in the opinion of counsel for the Trustee,
require registration of the securities under the Securities Act of
1933 and/or qualification of the securities under the Blue Sky laws of
any state or states, then the Employer at its own expense, will take
or cause to be taken any and all such action as may be necessary or
appropriate to effect such registration and/or qualification.
8.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common
law, statutory authority, including the Act, and other provisions of the Plan,
shall have the following powers and authorities, to be exercised in the
Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property
held by the Trustee, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other disposition, with
or without advertisement;
43
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other
property. However, the Trustee shall not vote proxies relating to
securities for which it has not been assigned full investment
management responsibilities. In those cases where another party has
such investment authority or discretion, the Trustee will deliver all
proxies to said party who will then have full responsibility for
voting those proxies;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the Trustee's
nominees, in a clearing corporation, in a depository, or in entry form
or in bearer form, but the books and records of the Trustee shall at
all times show that all such investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as
Trustee hereunder, whether or not such securities or other property
would normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or
defend suits or legal or administrative proceedings, and to represent
the Plan in all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or
may not be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance
companies, to be selected by the Administrator, as an investment of
the Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper; to exercise, at
any time or from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect, receive,
and settle for the proceeds of all such annuity or other Contracts as
and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or cash
balances without liability for interest thereon;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under
the Investment Company Act of 1940;
(o) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(p) To vote Company Stock as provided in Section 8.4;
44
(q) To consent to or otherwise participate in reorganizations,
recapitalizations, consolidations, mergers and similar transactions
with respect to Company Stock or any other securities and to pay any
assessments or charges in connection therewith;
(r) To deposit such Company Stock (but only if such deposit does
not violate the provisions of Section 8.4 hereof) or other securities
in any voting trust, or with any protective or like committee, or with
a trustee or with depositories designated thereby;
(s) To sell or exercise any options, subscription rights and
conversion privileges and to make any payments incidental thereto;
(t) To exercise any of the powers of an owner, with respect to
such Company Stock and other securities or other property comprising
the Trust Fund. The Administrator, with the Trustee's approval, may
authorize the Trustee to act on any administrative matter or class of
matters with respect to which direction or instruction to the Trustee
by the Administrator is called for hereunder without specific
direction or other instruction from the Administrator;
(u) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national securities
exchange, are guaranteed by a member firm of the New York Stock
Exchange regardless of whether such options are covered;
(v) To appoint a nonfiduciary agent or agents to assist the
Trustee in carrying out any investment instructions of Participants
and of any Investment Manager or Fiduciary, and to compensate such
agent(s) from the assets of the Plan, to the extent not paid by the
Employer;
(w) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee
may deem necessary to carry out the purposes of the Plan.
8.4 VOTING COMPANY STOCK
The Trustee shall vote all Company Stock held by it as part of the
Plan assets. Provided, however, that if any agreement entered into by the Trust
provides for voting of any shares of Company Stock pledged as security for any
obligation of the Plan, then such shares of Company Stock shall be voted in
accordance with such agreement. If the Trustee does not timely receive voting
directions from a Participant or Beneficiary with respect to any Company Stock
allocated to that Participant's or Beneficiary's Company Stock Account, the
Trustee shall vote such Company Stock.
Notwithstanding the foregoing, if the Employer has a registration-type
class of securities, each Participant or Beneficiary shall be entitled to direct
the Trustee as to the manner in which the Company Stock which is entitled to
vote and which is allocated to the Company Stock Account of such Participant or
Beneficiary is to be voted. If the Employer does not have a registration-type
class of securities, each Participant or Beneficiary in the Plan shall be
entitled to direct the Trustee as to the manner in which voting rights on shares
of Company Stock which are allocated to the Company Stock Account of such
Participant or Beneficiary are to be exercised with respect to any corporate
matter which involves the voting of such shares with respect to the approval or
disapproval of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all assets of
a trade or business, or such similar transaction as prescribed in Regulations.
For purposes of this Section the term "registration-type class of securities"
means: (A) a class of securities required to be registered under Section 12 of
the Securities Exchange Act of 1934; and (B) a class of securities which would
be required to be so registered except for the exemption from registration
provided in subsection (g)(2)(H) of such Section 12.
If the Employer does not have a registration-type class of securities
and the by-laws of the Employer require the Plan to vote an issue in a manner
that reflects a one-man, one-vote philosophy, each Participant or Beneficiary
shall be entitled to cast one vote on an issue and the Trustee shall vote the
shares held by the Plan in proportion to the results of the votes cast on the
issue by the Participants and Beneficiaries.
45
8.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
8.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in
the Trustee's fee schedule (if the Trustee has such a schedule) or as agreed
upon in writing by the Employer and the Trustee. However, an individual serving
as Trustee who already receives full-time pay from the Employer shall not
receive compensation from the Plan. In addition, the Trustee shall be reimbursed
for any reasonable expenses, including reasonable counsel fees incurred by it as
Trustee. Such compensation and expenses shall be paid from the Trust Fund unless
paid or advanced by the Employer. All taxes of any kind whatsoever that may be
levied or assessed under existing or future laws upon, or in respect of, the
Trust Fund or the income thereof, shall be paid from the Trust Fund.
8.7 ANNUAL REPORT OF THE TRUSTEE
(a) Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer contribution for each Plan
Year, the Trustee, or its agent, shall furnish to the Employer and
Administrator a written statement of account with respect to the Plan
Year for which such contribution was made setting forth:
(1) the net income, or loss, of the Trust Fund;
(2) the gains, or losses, realized by the Trust Fund upon sales
or other disposition of the assets;
(3) the increase, or decrease, in the value of the Trust Fund;
(4) all payments and distributions made from the Trust Fund; and
(5) such further information as the Trustee and/or Administrator
deems appropriate.
(b) The Employer, promptly upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be
deemed an approval thereof. The approval by the Employer of any
statement of account shall be binding on the Employer and the Trustee
as to all matters contained in the statement to the same extent as if
the account of the Trustee had been settled by judgment or decree in
an action for a judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties.
However, nothing contained in this Section shall deprive the Trustee
of its right to have its accounts judicially settled if the Trustee so
desires.
8.8 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of all
Participants an independent qualified public accountant for that
purpose. Such accountant shall, after an audit of the books and
records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan
Year, furnish to the Administrator and the Trustee a report of the
audit setting forth the accountant's opinion as to whether any
statements, schedules or lists that are required by Act Section 103 or
the Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and
may, at the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated, supervised, and
subject to periodic examination by a state or federal agency, then it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act
46
Section 103(b) within one hundred twenty (120) days after the end of
the Plan Year or by such other date as may be prescribed under
regulations of the Secretary of Labor.
8.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) Unless otherwise agreed to by both the Trustee and the
Employer, a Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of resignation.
(b) Unless otherwise agreed to by both the Trustee and the
Employer, the Employer may remove a Trustee at any time by delivering
to the Trustee, at least thirty (30) days before its effective date, a
written notice of such Trustee's removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the powers and responsibilities of the predecessor as if such
successor had been originally named as a Trustee herein. Until such a
successor is appointed, the remaining Trustee or Trustees shall have
full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the powers and responsibilities of the predecessor as if such
successor had been named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of the predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, the
Trustee shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan Year
during which the individual or entity served as Trustee. This
statement shall be either (i) included as part of the annual statement
of account for the Plan Year required under Section 8.7 or (ii) set
forth in a special statement. Any such special statement of account
should be rendered to the Employer no later than the due date of the
annual statement of account for the Plan Year. The procedures set
forth in Section 8.7 for the approval by the Employer of annual
statements of account shall apply to any special statement of account
rendered hereunder and approval by the Employer of any such special
statement in the manner provided in Section 8.7 shall have the same
effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty
or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by
Section 8.7 and this subparagraph.
8.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of a Participant to another trust forming part of a pension,
profit sharing or stock bonus plan maintained by such Participant's new employer
and represented by said employer in writing as meeting the requirements of Code
Section 401(a), provided that the trust to which such transfers are made permits
the transfer to be made.
8.11 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and hold harmless the Trustee against
any and all claims, losses, damages, expenses and liabilities the Trustee may
incur in the exercise and performance of the Trustee's power and duties
hereunder, unless the same are determined to be due to gross negligence or
willful misconduct.
8.12 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a "distributee's" election under this
Section, a "distributee" may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an "eligible
rollover distribution" that is equal to at least $500 paid directly to
an "eligible retirement plan" specified by the "distributee" in a
"direct rollover."
(b) For purposes of this Section the following definitions shall
apply:
47
(1) An "eligible rollover distribution" is any distribution of
all or any portion of the balance to the credit of the
"distributee," except that an "eligible rollover distribution"
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
"distributee" or the joint lives (or joint life expectancies) of
the "distributee" and the "distributee's" designated beneficiary,
or for a specified period of ten years or more; any distribution
to the extent such distribution is required under Code Section
401(a)(9); the portion of any other distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities); any hardship distribution described in Code
Section 401(k)(2)(B)(i)(IV); and any other distribution that is
reasonably expected to total less than $200 during a year.
(2) An "eligible retirement plan" is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the
"distributee's" "eligible rollover distribution." However, in the
case of an "eligible rollover distribution" to the surviving
spouse, an "eligible retirement plan" is an individual retirement
account or individual retirement annuity.
(3) A "distributee" includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are "distributees" with
regard to the interest of the spouse or former spouse.
(4) A "direct rollover" is a payment by the Plan to the "eligible
retirement plan" specified by the "distributee."
ARTICLE IX
AMENDMENT, TERMINATION AND MERGERS
9.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this
Plan subject to the limitations of this Section. However, any
amendment which affects the rights, duties or responsibilities of the
Trustee or Administrator, may only be made with the Trustee's or
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee shall
not be required to execute any such amendment unless the amendment
affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4) or other IRS guidance, no Plan amendment or transaction
having the effect of a Plan amendment (such as a merger, plan transfer
or similar transaction) shall be effective if it eliminates or reduces
any "Section 411(d)(6) protected benefit" or adds or modifies
conditions relating to "Section 411(d)(6) protected benefits" which
results in a further restriction on such benefit unless such "Section
411(d)(6) protected benefits" are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit. A Plan
amendment that eliminates or restricts the ability of a Participant to
receive payment of the Participant's interest in the Plan under a
particular optional form of benefit will be permissible if the
amendment satisfies the conditions in (1) and (2) below:
(1) The amendment provides a single-sum distribution form that is
otherwise identical to the optional form of benefit eliminated or
restricted. For purposes of this
48
condition (1), a single-sum distribution form is otherwise
identical only if it is identical in all respects to the
eliminated or restricted optional form of benefit (or would be
identical except that it provides greater rights to the
Participant) except with respect to the timing of payments after
commencement.
(2) The amendment is not effective unless the amendment provides
that the amendment shall not apply to any distribution with an
annuity starting date earlier than the earlier of: (i) the
ninetieth (90th) day after the date the Participant receiving the
distribution has been furnished a summary that reflects the
amendment and that satisfies the Act requirements at 29 CFR
2520.104b-3 (relating to a summary of material modifications) or
(ii) the first day of the second Plan Year following the Plan
Year in which the amendment is adopted.
9.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination. Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall become
100% Vested as provided in Section 7.4 and shall not thereafter be
subject to forfeiture, and all unallocated amounts, including
Forfeitures, shall be allocated to the accounts of all Participants in
accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to
Participants in a manner which is consistent with and satisfies the
provisions of Sections 7.5 and 7.6. Except as permitted by
Regulations, the termination of the Plan shall not result in the
reduction of "Section 411(d)(6) protected benefits" in accordance with
Section 9.1(c).
9.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
This Plan and Trust may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan and trust only if the
benefits which would be received by a Participant of this Plan, in the event of
a termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 9.1(c).
ARTICLE X
TOP HEAVY
10.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 7.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c) pursuant
to Section 4.4 of the Plan.
10.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy Group). In
addition, if a Participant or Former Participant has not performed any
services for any Employer maintaining the Plan at any time during the
five year period ending on the Determination Date, any accrued benefit
for such Participant or Former
49
Participant shall not be taken into account for the purposes of
determining whether this Plan is a Top Heavy Plan.
(b) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date is the sum of:
(1) the Participant's Combined Account balance as of the most
recent valuation occurring within a twelve (12) month period
ending on the Determination Date.
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the Valuation Date but due on
or before the Determination Date, except for the first Plan Year
when such adjustment shall also reflect the amount of any
contributions made after the Determination Date that are
allocated as of a date in that first Plan Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding
Plan Years. However, in the case of distributions made after the
Valuation Date and prior to the Determination Date, such
distributions are not included as distributions for top heavy
purposes to the extent that such distributions are already
included in the Participant's Aggregate Account balance as of the
Valuation Date. Notwithstanding anything herein to the contrary,
all distributions, including distributions under a terminated
plan which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified
voluntary employee contributions shall not be considered to be a
part of the Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and made
from a plan maintained by one employer to a plan maintained by
another employer), if this Plan provides the rollovers or
plan-to-plan transfers, it shall always consider such rollovers
or plan-to-plan transfers as a distribution for the purposes of
this Section. If this Plan is the plan accepting such rollovers
or plan-to-plan transfers, it shall not consider such rollovers
or plan-to-plan transfers as part of the Participant's Aggregate
Account balance.
(6) with respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the
rollover or plan-to-plan transfer, it shall not be counted as a
distribution for purposes of this Section. If this Plan is the
plan accepting such rollover or plan-to-plan transfer, it shall
consider such rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers are to
be treated as the same employer in (5) and (6) above, all
employers aggregated under Code Section 414(b), (c), (m) and (o)
are treated as the same employer.
(c) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a
Key Employee is a participant in the Plan Year containing the
Determination Date or any of the four preceding Plan Years, and
each other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be aggregated.
Such group shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in
50
the Required Aggregation Group will be considered a Top Heavy
Plan if the Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include
any other plan not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that
is part of the Required Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is a Top Heavy
Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group
is not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(d) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of
such Plan Year.
(e) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a Participant
other than a Key Employee, shall be as determined using the single
accrual method used for all plans of the Employer and Affiliated
Employers, or if no such single method exists, using a method which
results in benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The determination of
the Present Value of Accrued Benefit shall be determined as of the
most recent valuation date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in Code
Section 416 and the Regulations thereunder for the first and second
plan years of a defined benefit plan.
(f) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under
all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for
all Participants.
ARTICLE XI
MISCELLANEOUS
11.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon the Employee as a Participant of this Plan.
11.2 ALIENATION
(a) Subject to the exceptions provided below, and as otherwise
permitted by the Code and Act, no benefit which shall be payable out
of the Trust Fund to any person (including a Participant or the
Participant's Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void;
and no such benefit shall in any manner be liable for, or subject to,
the debts, contracts, liabilities,
51
engagements, or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and the same
shall not be recognized by the Trustee, except to such extent as may
be required by law.
(b) Subsection (a) shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former
spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(c) Subsection (a) shall not apply to an offset to a
Participant's accrued benefit against an amount that the Participant
is ordered or required to pay the Plan with respect to a judgment,
order, or decree issued, or a settlement entered into in accordance
with Code Sections 401(a)(13)(C) and (D).
11.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the
Code, the Act and the laws of the Commonwealth of Virginia, other than its laws
respecting choice of law, to the extent not pre-empted by the Act.
11.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
11.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
11.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of the
Trust, by termination of either, by power of revocation or amendment,
by the happening of any contingency, by collateral arrangement or by
any other means, for any part of the corpus or income of any Trust
Fund maintained pursuant to the Plan or any funds contributed thereto
to be used for, or diverted to, purposes other than the exclusive
benefit of Participants, Former Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time of
payment and the Trustees shall return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable to
the contributions may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.
(c) Except for Sections 3.5, 3.6, and 4.1(e), any contribution by
the Employer to the Trust Fund is conditioned upon the deductibility
of the contribution by the Employer under the Code and, to the extent
any such deduction is disallowed, the Employer may, within one (1)
year following the final determination of the disallowance, whether by
agreement with the Internal Revenue Service or by final decision of a
competent jurisdiction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
(1) year following the disallowance. Earnings of the Plan attributable
to the contribution may not be returned to the Employer, but any
losses attributable thereto must reduce the amount so returned.
52
11.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
The Employer, Administrator and Trustee, and their successors, shall
not be responsible for the validity of any Contract issued hereunder or for the
failure on the part of the insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
11.8 INSURER'S PROTECTIVE CLAUSE
Except as otherwise agreed upon in writing between the Employer and
the insurer, an insurer which issues any Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
11.9 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, the Participant's legal
representative, Beneficiary, or to any guardian or committee appointed for such
Participant or Beneficiary in accordance with the provisions of the Plan, shall,
to the extent thereof, be in full satisfaction of all claims hereunder against
the Trustee and the Employer, either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a condition precedent to
such payment, to execute a receipt and release thereof in such form as shall be
determined by the Trustee or Employer.
11.10 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
11.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee, and (4) any Investment Manager appointed
hereunder. The named Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them under the Plan
including, but not limited to, any agreement allocating or delegating their
responsibilities, the terms of which are incorporated herein by reference. In
general, the Employer shall have the sole responsibility for making the
contributions provided for under Section 4.1; and shall have the authority to
appoint and remove the Trustee and the Administrator; to formulate the Plan's
"funding policy and method"; and to amend or terminate, in whole or in part, the
Plan. The Administrator shall have the sole responsibility for the
administration of the Plan, including, but not limited to, the items specified
in Article II of the Plan, as the same may be allocated or delegated thereunder.
The Trustee shall have the sole responsibility of management of the assets held
under the Trust, except to the extent directed pursuant to Article II or with
respect to those assets, the management of which has been assigned to an
Investment Manager, who shall be solely responsible for the management of the
assets assigned to it, all as specifically provided in the Plan. Each named
Fiduciary warrants that any directions given, information furnished, or action
taken by it shall be in accordance with the provisions of the Plan, authorizing
or providing for such direction, information or action. Furthermore, each named
Fiduciary may rely upon any such direction, information or action of another
named Fiduciary as being proper under the Plan, and is not required under the
Plan to inquire into the propriety of any such direction, information or action.
It is intended under the Plan that each named Fiduciary shall be responsible for
the proper exercise of its own powers, duties, responsibilities and obligations
under the Plan as specified or allocated herein. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity.
11.12 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
53
11.13 APPROVAL BY INTERNAL REVENUE SERVICE
Notwithstanding anything herein to the contrary, if, pursuant to an
application for qualification filed by or on behalf of the Plan by the time
prescribed by law for filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date that the Secretary of the Treasury may
prescribe, the Commissioner of Internal Revenue Service or the Commissioner's
delegate should determine that the Plan does not initially qualify as a
tax-exempt plan under Code Sections 401 and 501, and such determination is not
contested, or if contested, is finally upheld, then if the Plan is a new plan,
it shall be void ab initio and all amounts contributed to the Plan by the
Employer, less expenses paid, shall be returned within one (1) year and the Plan
shall terminate, and the Trustee shall be discharged from all further
obligations. If the disqualification relates to an amended plan, then the Plan
shall operate as if it had not been amended.
11.14 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
11.15 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Employer may request an interpretative letter from the Securities
and Exchange Commission stating that the transfers of Company Stock contemplated
hereunder do not involve transactions requiring a registration of such Company
Stock under the Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the right to amend
the Plan and Trust retroactively to their Effective Dates in order to obtain a
favorable interpretative letter or to terminate the Plan.
54
<page>
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Signed, sealed, and delivered
in the presence of:
James Monroe Bank
____________________________________ By _________________________________
EMPLOYER
____________________________________
WITNESSES AS TO EMPLOYER
ATTEST ______________________ (SEAL)
____________________________________ _____________________________ (SEAL)
TRUSTEE David W. Pijor
____________________________________
WITNESSES AS TO TRUSTEE
____________________________________ _____________________________ (SEAL)
TRUSTEE Richard I. Linhart
____________________________________
WITNESSES AS TO TRUSTEE
____________________________________ _____________________________ (SEAL)
TRUSTEE John R. Maxwell
____________________________________
WITNESSES AS TO TRUSTEE