EXHIBIT 10.7a
HOT TOPIC, INC.
401(k) PROFIT SHARING PLAN
TABLE OF CONTENTS
ARTICLE 1..................................................................- 2 -
DEFINITIONS................................................................- 2 -
1.1 ACP or ACP TEST.................................................- 2 -
1.2 ACTUAL DEFERRAL PERCENTAGE TEST.................................- 2 -
1.3 ADP or ADP TEST.................................................- 4 -
1.4 ADMINISTRATOR...................................................- 4 -
1.5 ADOPTING EMPLOYER...............................................- 4 -
1.6 AFFILIATED EMPLOYER.............................................- 5 -
1.7 AGE.............................................................- 5 -
1.8 ANNIVERSARY DATE................................................- 5 -
1.9 ANNUITY STARTING DATE...........................................- 5 -
1.10 AVERAGE CONTRIBUTION PERCENTAGE TEST............................- 5 -
1.11 BENEFICIARY.....................................................- 8 -
1.12 BREAK IN SERVICE................................................- 8 -
1.13 CODE............................................................- 8 -
1.14 CODE ss.3401 COMPENSATION.......................................- 9 -
1.15 CODE ss.415 COMPENSATION........................................- 9 -
1.16 COMPENSATION....................................................- 9 -
1.17 DISABILITY.....................................................- 11 -
1.18 EARLY RETIREMENT AGE...........................................- 11 -
1.19 EARNED INCOME..................................................- 11 -
1.20 ELECTIVE DEFERRAL..............................................- 11 -
1.21 ELECTIVE DEFERRAL ACCOUNT......................................- 12 -
1.22 ELIGIBLE PARTICIPANT...........................................- 12 -
1.23 EMPLOYEE.......................................................- 12 -
1.24 EMPLOYER.......................................................- 13 -
1.25 ERISA..........................................................- 13 -
1.26 EXCESS AGGREGATE CONTRIBUTIONS.................................- 13 -
1.27 EXCESS CONTRIBUTIONS...........................................- 13 -
1.28 EXCESS ELECTIVE DEFERRALS......................................- 13 -
1.29 FIDUCIARY......................................................- 13 -
1.30 FISCAL YEAR....................................................- 13 -
1.31 FORFEITURE.....................................................- 13 -
1.32 FORM W-2 COMPENSATION..........................................- 14 -
1.33 HCE............................................................- 14 -
1.34 HIGHLY COMPENSATED EMPLOYEE....................................- 14 -
1.35 HOUR OF SERVICE................................................- 14 -
1.36 KEY EMPLOYEE...................................................- 15 -
1.37 LEASED EMPLOYEE................................................- 16 -
1.38 LIMITATION YEAR................................................- 16 -
1.39 MATCHING CONTRIBUTION..........................................- 16 -
1.40 MATCHING CONTRIBUTION ACCOUNT..................................- 16 -
1.41 MATERNITY OR PATERNITY LEAVE...................................- 16 -
1.42 NHCE...........................................................- 16 -
1.43 NON-ELECTIVE CONTRIBUTIONS.....................................- 16 -
1.44 NON-ELECTIVE CONTRIBUTION ACCOUNT..............................- 17 -
1.45 NON-HIGHLY COMPENSATED EMPLOYEE................................- 17 -
1.46 NON-KEY EMPLOYEE...............................................- 17 -
1.47 NORMAL RETIREMENT AGE..........................................- 17 -
1.48 NORMAL RETIREMENT DATE.........................................- 17 -
1.49 OWNER-EMPLOYEE.................................................- 17 -
1.50 PARTICIPANT....................................................- 17 -
1.51 PARTICIPANT'S ACCOUNT..........................................- 17 -
1.52 PERIOD OF SERVICE..............................................- 17 -
1.53 PERIOD OF SEVERANCE............................................- 20 -
1.54 PERMISSIVE AGGREGATION GROUP...................................- 20 -
1.55 PLAN...........................................................- 20 -
1.56 PLAN YEAR......................................................- 20 -
1.57 POLICY.........................................................- 20 -
1.58 QMAC...........................................................- 20 -
1.59 QNEC...........................................................- 20 -
1.60 QUALIFIED JOINT AND SURVIVOR ANNUITY...........................- 20 -
1.61 QUALIFIED MATCHING CONTRIBUTION................................- 20 -
1.62 QUALIFIED NON-ELECTIVE CONTRIBUTION............................- 21 -
1.63 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.......................- 21 -
1.64 REQUIRED AGGREGATION GROUP.....................................- 21 -
1.65 REQUIRED BEGINNING DATE........................................- 21 -
1.66 ROLLOVER ACCOUNT...............................................- 22 -
1.67 ROLLOVER CONTRIBUTION..........................................- 22 -
1.68 SAFE HARBOR CONTRIBUTION ACCOUNT...............................- 22 -
1.69 SELF-EMPLOYED INDIVIDUAL.......................................- 22 -
1.70 SHAREHOLDER-EMPLOYEE...........................................- 22 -
1.71 SPONSOR........................................................- 23 -
1.72 SPOUSE.........................................................- 23 -
1.73 TERMINATION OF EMPLOYMENT......................................- 23 -
1.74 TERMINATED PARTICIPANT.........................................- 23 -
1.75 TOP HEAVY......................................................- 23 -
1.76 TOP HEAVY MINIMUM ALLOCATION...................................- 23 -
1.77 TOP HEAVY RATIO................................................- 23 -
1.78 TRUSTEE........................................................- 24 -
1.79 TRUST FUND.....................................................- 24 -
1.80 VALUATION DATE.................................................- 24 -
1.81 VESTED AGGREGATE ACCOUNT.......................................- 25 -
1.82 VESTED, VESTED INTEREST or VESTING.............................- 25 -
1.83 VOLUNTARY EMPLOYEE CONTRIBUTION................................- 25 -
1.84 VOLUNTARY EMPLOYEE CONTRIBUTION ACCOUNT........................- 25 -
ARTICLE 2.................................................................- 26 -
PLAN PARTICIPATION........................................................- 26 -
2.1 ELIGIBILITY REQUIREMENTS.......................................- 26 -
2.2 ENTRY DATE.....................................................- 27 -
2.3 WAIVER OF PARTICIPATION........................................- 27 -
2.4 PARTICIPATION UPON REEMPLOYMENT................................- 27 -
2.5 EXCLUSION OF ELIGIBLE EMPLOYEE.................................- 27 -
2.6 INCLUSION OF INELIGIBLE EMPLOYEE...............................- 27 -
ARTICLE 3.................................................................- 28 -
CONTRIBUTIONS AND ALLOCATIONS.............................................- 28 -
3.1 EMPLOYER CONTRIBUTIONS.........................................- 28 -
3.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS...........................- 30 -
3.3 ALLOCATION OF EARNINGS AND LOSSES..............................- 34 -
3.4 ALLOCATION OF FORFEITURES......................................- 34 -
3.5 TOP HEAVY MINIMUM ALLOCATION...................................- 35 -
3.6 SAFE HARBOR CONTRIBUTIONS......................................- 36 -
3.7 ROLLOVER CONTRIBUTIONS.........................................- 39 -
3.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS...............................- 41 -
ARTICLE 4.................................................................- 42 -
PLAN BENEFITS.............................................................- 42 -
4.1 BENEFIT UPON NORMAL RETIREMENT.................................- 42 -
4.2 BENEFIT UPON LATE RETIREMENT...................................- 42 -
4.3 BENEFIT UPON DEATH.............................................- 42 -
4.4 BENEFIT UPON DISABILITY........................................- 42 -
4.5 BENEFIT UPON TERMINATION.......................................- 42 -
4.6 DETERMINATION OF VESTED INTEREST...............................- 43 -
ARTICLE 5.................................................................- 44 -
DISTRIBUTION OF BENEFITS..................................................- 44 -
5.1 BENEFIT UPON RETIREMENT........................................- 44 -
5.2 BENEFIT UPON DEATH.............................................- 44 -
5.3 DISABILITY BENEFITS............................................- 45 -
5.4 BENEFIT UPON TERMINATION.......................................- 46 -
5.5 CASH-OUT OF BENEFITS...........................................- 46 -
5.6 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS........................- 47 -
5.7 RESTORATION OF FORFEITED ACCOUNT BALANCE.......................- 48 -
5.8 SPOUSAL CONSENT REQUIREMENTS...................................- 49 -
5.9 APPLICATION OF CODE ss.401(a)(9) REQUIREMENTS..................- 49 -
5.10 STATUTORY COMMENCEMENT OF BENEFITS.............................- 49 -
5.11 SEGREGATION OF BENEFIT BEFORE DISTRIBUTION.....................- 49 -
5.12 DISTRIBUTION IN EVENT OF INCAPACITY............................- 50 -
5.13 MISSING PARTICIPANTS AND UNCLAIMED BENEFITS....................- 50 -
5.14 DIRECT ROLLOVERS...............................................- 51 -
5.15 DISTRIBUTION OF PROPERTY.......................................- 51 -
5.16 DISTRIBUTIONS SUBJECT TO CODE ss.401(a)(11) REQUIREMENTS.......- 52 -
5.17 FINANCIAL HARDSHIP DISTRIBUTIONS...............................- 55 -
5.18 IN-SERVICE DISTRIBUTIONS.......................................- 56 -
5.19 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS......................- 56 -
5.20 DISTRIBUTION OF EXCESS CONTRIBUTIONS...........................- 57 -
5.21 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.................- 59 -
5.22 ELIMINATION OF CERTAIN FORMS OF PAYMENT........................- 60 -
ARTICLE 6.................................................................- 61 -
CODE SS.415 LIMITATIONS...................................................- 61 -
6.1 MAXIMUM ANNUAL ADDITION........................................- 61 -
6.2 ADJUSTMENTS TO MAXIMUM ANNUAL ADDITION.........................- 61 -
6.3 MULTIPLE PLANS AND MULTIPLE EMPLOYERS..........................- 62 -
6.4 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS......................- 62 -
6.5 MULTIPLE PLAN REDUCTION........................................- 62 -
ARTICLE 7.................................................................- 65 -
DUTIES OF THE TRUSTEE.....................................................- 65 -
7.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION...............- 65 -
7.2 INVESTMENT ALTERNATIVES OF THE TRUSTEE.........................- 65 -
7.3 VALUATION OF THE TRUST FUND....................................- 67 -
7.4 COMPENSATION AND EXPENSES......................................- 68 -
7.5 PAYMENTS FROM THE TRUST FUND...................................- 68 -
7.6 PAYMENT OF TAXES...............................................- 68 -
7.7 ACCOUNTS, RECORDS AND REPORTS..................................- 68 -
7.8 EMPLOYMENT OF AGENTS AND COUNSEL...............................- 68 -
7.9 DIVISION OF DUTIES AND INDEMNIFICATION.........................- 69 -
7.10 APPOINTMENT OF INVESTMENT MANAGER..............................- 70 -
7.11 ASSIGNMENT AND ALIENATION OF BENEFITS..........................- 70 -
7.12 EXCLUSIVE BENEFIT RULE.........................................- 70 -
7.13 PURCHASE OF INSURANCE..........................................- 71 -
7.14 LOANS TO PARTICIPANTS..........................................- 72 -
7.15 DIRECTED INVESTMENT ACCOUNTS...................................- 74 -
7.16 SUPERSEDING TRUST OR CUSTODIAL AGREEMENT.......................- 76 -
ARTICLE 8.................................................................- 77 -
DUTIES OF THE ADMINISTRATOR...............................................- 77 -
8.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION...............- 77 -
8.2 POWERS AND DUTIES OF THE ADMINISTRATOR.........................- 77 -
8.3 APPOINTMENT OF ADMINISTRATIVE COMMITTEE........................- 77 -
8.4 FINALITY OF ADMINISTRATIVE DECISIONS...........................- 77 -
8.5 MULTIPLE ADMINISTRATORS........................................- 77 -
8.6 COMPENSATION AND EXPENSES......................................- 77 -
8.7 APPOINTMENT OF AGENTS AND COUNSEL..............................- 78 -
8.8 CORRECTING ADMINISTRATIVE ERRORS...............................- 78 -
8.9 PROMULGATING NOTICES AND PROCEDURES............................- 78 -
8.10 CLAIMS PROCEDURES..............................................- 78 -
8.11 QUALIFIED DOMESTIC RELATIONS ORDERS............................- 81 -
ARTICLE 9.................................................................- 83 -
AMENDMENT, TERMINATION AND MERGER.........................................- 83 -
9.1 AMENDMENT OF THE PLAN..........................................- 83 -
9.2 TERMINATION OF PLAN BY SPONSOR.................................- 83 -
9.3 TERMINATION OF PARTICIPATION BY ADOPTING EMPLOYER..............- 84 -
9.4 MERGER OR CONSOLIDATION........................................- 84 -
ARTICLE 10................................................................- 85 -
MISCELLANEOUS PROVISIONS..................................................- 85 -
10.1 NO CONTRACT OF EMPLOYMENT......................................- 85 -
10.2 TITLE TO ASSETS................................................- 85 -
10.3 QUALIFIED MILITARY SERVICE.....................................- 85 -
10.4 BONDING OF FIDUCIARIES.........................................- 85 -
10.5 SEVERABILITY OF PROVISIONS.....................................- 85 -
10.6 GENDER AND NUMBER..............................................- 85 -
10.7 HEADINGS AND SUBHEADINGS.......................................- 85 -
10.8 LEGAL ACTION...................................................- 85 -
10.9 QUALIFIED PLAN STATUS..........................................- 86 -
10.10 MAILING OF NOTICES TO ADMINISTRATOR, EMPLOYER OR TRUSTEE.......- 86 -
10.11 PARTICIPANT NOTICES AND WAIVERS OF NOTICES TO PARTICIPANTS.....- 86 -
10.12 NO DUPLICATION OF BENEFITS.....................................- 86 -
10.13 EVIDENCE FURNISHED CONCLUSIVE..................................- 86 -
10.14 RELEASE OF CLAIMS..............................................- 86 -
10.15 MULTIPLE COPIES OF PLAN AND/OR TRUST...........................- 86 -
10.16 LIMITATION OF LIABILITY AND INDEMNIFICATION....................- 86 -
HOT TOPIC, INC.
401(k) PROFIT SHARING PLAN
THIS AGREEMENT is made and entered into as of the _______ day of
____________________, __________, between HOT TOPIC, INC. (hereafter referred to
as the "Sponsor") and JAMES MCGINTY, ELIZABETH MCLAUGHLIN, JANE CRUZ, GERALD
COOK AND GEORGE WEHLITZ (hereafter collectively referred to as the Trustee).
W I T N E S S E T H:
WHEREAS, the Sponsor originally established a Code ss.401(k) plan
(hereafter referred to as the "Plan"), effective August 1, 1995, in order to
provide retirement and other incidental benefits to Employees who are eligible
to participate therein; and
WHEREAS, in accordance with the terms of the Plan, the Sponsor has the
ability at any time, and from time to time, to amend the Plan;
NOW, THEREFORE, effective January 1, 2003 (except for those specific
provisions that have an earlier effective date), the Sponsor hereby amends and
restates the Plan in its entirety in order to comply with the requirements of
the Employee Retirement Income Security Act of 1974 and the Internal Revenue
Code of 1986, as amended by the Uruguay Round Agreements Act, the Small Business
Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the Internal Revenue
Service Restructuring and Reform Act of 1998, the Community Renewal Tax Relief
Act of 2000, and all applicable rulings and regulations issued thereunder, and
the Trustee accepts the Plan under the following terms and conditions:
ARTICLE 1
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DEFINITIONS
1.1 ACP OR ACP TEST
The term ACP means the Average Contribution Percentage as defined in
Section 1.10(c). The term ACP Test means the Average Contribution
Percentage Test.
1.2 ACTUAL DEFERRAL PERCENTAGE TEST
The term Actual Deferral Percentage Test (or ADP Test) means either of
the following nondiscrimination tests for Elective Deferrals: (1) the
ADP for Participants who are HCEs will not exceed the ADP for
Participants who are NHCEs multiplied by 1.25; or (2) the ADP for
Participants who are HCEs will not exceed the ADP for Participants who
are NHCEs multiplied by 2.0, provided that the ADP for Participants who
are HCEs does not exceed the ADP for Participants who are NHCEs by more
than 2 percentage points. The ADP Test for any Plan Year will be
determined in accordance with the following provisions:
(a) TESTING METHOD: The ADP Test will be determined each Plan Year
by either Current Year Testing or Prior Year Testing (as
described in paragraph (b) below) as follows: Current Year
Testing is used for the 1997 Plan Year; Current Year Testing
is used for the 1998 Plan Year; Current Year Testing is used
for the 1999 Plan Year; Current Year Testing is used for the
2000 Plan Year; Current Year Testing is used for the 2001 Plan
Year; and Prior Year Testing is used for the 2002 Plan Year
and for each Plan Year thereafter until otherwise elected by
the Employer by means of a Plan amendment.
(b) DEFINITION OF CURRENT AND PRIOR YEAR TESTING: The term Current
Year Testing means the ADP Test will be determined for a Plan
Year by comparing the ADP of Participants who are Highly
Compensated Employees for that Plan Year to the ADP of
Participants who were Non-Highly Compensated Employees for
that Plan Year. The term Prior Year Testing means the ADP Test
will be determined for a Plan Year by comparing the ADP of
Participants who are Highly Compensated Employees for that
Plan Year to the ADP of Participants who were Non-Highly
Compensated Employees for the prior Plan Year. If Prior Year
Testing is specified in paragraph (a), then in the case of the
first Plan Year in which the Plan permits any Participant to
make Elective Deferrals (unless this is a successor Plan), the
ADP used for Participants who were Non-Highly Compensated
Employees in the prior Plan Year will be the greater of 3% or
their actual ADP for the first Plan Year in which Elective
Deferrals were permitted. Prior Year Testing cannot be used in
any Plan Year in which a supplemental Safe Harbor Notice is
issued that reduces or eliminates a Safe Harbor Matching
Contribution for that Plan Year.
(c) DEFINITION OF ACTUAL DEFERRAL PERCENTAGE: The term Actual
Deferral Percentage (ADP) means, for a specified group of
Participants for a Plan Year, the average of the ratios
calculated separately for each Participant in such group of
(1) the amount of Employer contributions actually paid on
behalf of such Participant for the Plan Year to (2) the
Compensation of such Participant for such Plan Year.
(d) CONTRIBUTIONS USED TO DETERMINE ADP TEST: Employer
contributions used to determine the ADP Test include Elective
Deferrals, including Excess Elective Deferrals as defined in
Section 1.28, but excluding Excess Elective Deferrals of NHCEs
that arise solely from Elective Deferrals made to this Plan or
any other plans maintained by this Employer and Elective
Deferrals that are taken into account in the ACP Test if the
ADP Test is satisfied both with and without exclusion of these
Elective Deferrals. The Employer may also elect each Plan Year
- 2 -
to include QMACs and/or QNECs, and in any Plan Year in which
Current Year Testing is used, may further elect to include
such QNECs and/or QMACs only to the extent necessary to pass
the ADP Test. In computing ADPs, an Employee who would be a
Participant but for the failure to make Elective Deferrals
will be treated as a Participant on whose behalf no Elective
Deferrals are made.
(e) HIGHLY COMPENSATED EMPLOYEES: A Participant is a Highly
Compensated Employee for a particular Plan Year if he or she
meets the definition of a Highly Compensated Employee in
effect for that Plan Year. A Participant is a Non-Highly
Compensated Employee for a particular Plan Year if he or she
does not meet the definition of a Highly Compensated Employee
in effect for that Plan Year. The ADP for any Participant who
is a HCE for the Plan Year and who is eligible to have
Elective Deferrals (and QNECs or QMACs, or both, if treated as
Elective Deferrals for purposes of the ADP Test) allocated to
his or her accounts under two or more arrangements described
in Code ss.401(k) that are maintained by this Employer will be
determined as if such Elective Deferrals (and, if applicable,
QNECs or QMACs, or both) were made under a single arrangement.
If a HCE participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar
year will be treated as a single arrangement; except that
certain plans will be treated as separate if mandatorily
disaggregated under regulations under Code ss.401(k).
(f) OTHER RULES: In determining the ADP Test, (1) if this Plan
satisfies the requirements of Code ss.401(k), ss.401(a)(4), or
ss.410(b) only if aggregated with one or more other plans, or
if one or more other plans satisfy such requirements only if
aggregated with this Plan, then this section will be applied
by determining the ADP of Employees as if all such plans were
a single plan. For any Plan Year in which the Employer elects
prior year testing under this Section, adjustments to the ADP
of Non-Highly Compensated Employees for the prior Plan Year
will be made in accordance with Notice 98-1 and any
superseding guidance. Plans may be aggregated to satisfy Code
ss.401(k) only if they have the same Plan Year and use the
same ADP testing method; (2) Elective Deferrals, QNECs and
QMACs must be made before the last day of the 12-month period
immediately following the Plan Year to which contributions
relate; (3) the Employer will maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of
QNECs or QMACs, or both, used in such test; and (4) the
determination and treatment of the ADP amounts of any
Participant will satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
(g) CHANGE TO PRIOR YEAR TESTING: If the Employer elects Current
Year Testing for any Plan Year, the Employer can only elect to
change to Prior Year Testing in accordance with the
requirements in Notice 98-1 (or superseding guidance). If the
Employer elects to change to Prior Year Testing, the ADP for
NHCEs for the prior year will be determined by counting only
(1) Elective Deferrals for those NHCEs that were counted for
purposes of the ADP Test (and not the ACP Test) under the
Current Year Testing method for the prior year, and (2) QNECs
that were allocated to the accounts of those NHCEs for the
prior year but that were not used to satisfy the ADP Test or
the ACP Test under the Current Year Testing method for the
prior year. Thus, if the Employer elects to change to Prior
Year Testing, the following contributions made for the prior
year will be disregarded: QNECs used to satisfy either the ADP
Test or ACP Test under the Current Year Testing method for the
- 3 -
prior testing year, Elective Deferrals taken into account for
purposes of the ACP Test, and all QMACs. The limitations on
double counting do not apply for testing years beginning
before January 1, 2001, and if the Plan changes to Prior Year
Testing for the first time for any Plan Year after 1997, the
ADP for NHCEs will be the same as for the Plan Year
immediately preceding the Plan Year for which the change to
Prior Year Testing was effective.
1.3 ADP OR ADP TEST
The term ADP means the Actual Deferral Percentage as defined in Section
1.2(c). The term ADP Test means the Actual Deferral Percentage Test.
1.4 ADMINISTRATOR
The term Administrator means the Employer unless another Administrator
is appointed by the Employer pursuant to the provisions of Section 8.1
of the Plan.
1.5 ADOPTING EMPLOYER
The term Adopting Employer means any entity that adopts this Plan with
the consent of the Sponsor. An Employee's transfer to or from any
Employer or Adopting Employer will not affect his or her Participant's
Account balance, total Years of Service (or Periods of Service) and
total Years of Service as a Participant (or Periods of Service as a
Participant). All Adopting Employers will be subject to the following
provisions:
(a) MULTIPLE EMPLOYER PLAN PROVISIONS UNDER CODE SS.413(C):
Notwithstanding any other provision in the Plan to the
contrary, unless the Plan is a collectively bargained plan
described in Regulation ss.1.413-1(a), the following
provisions will apply with respect to any Adopting Employer
that is not an Affiliated Employer of the Sponsor:
(1) INSTANCES OF SEPARATE EMPLOYER TESTING: Employees of
any such Adopting Employer will be treated separately
for purposes of testing under the provisions of Code
ss.401(a)(4), Code ss.401(k), Code ss.401(m) and, if
the Sponsor and the Adopting Employer do not share
Employees, Code ss.416. Furthermore, the terms of
Code ss.410(b) will be applied separately on an
employer-by-employer basis by the Sponsor (and the
Adopting Employers which are part of the Affiliated
Group which includes the Sponsor) and each Adopting
Employer that is not an Affiliated Employer of the
Sponsor, taking into account the generally applicable
rules described in Code ss.401(a)(5), ss.414(b) and
ss.414(c).
(2) INSTANCES OF SINGLE EMPLOYER TESTING: Employees of
the Adopting Employer will be treated as part of a
single employer plan for purposes of eligibility to
participate under Article 2 and under the provisions
of Code ss.410(a). Furthermore, the terms of Code
ss.411 relating to Vesting will be applied as if all
Employees of all such Adopting Employers and the
Sponsor were employed by a single employer, except
that the rules regarding Breaks in Service will be
applied under such regulations as may be prescribed
by the Secretary of Labor.
(3) COMMON TRUST: Contributions made by any such Adopting
Employer will be held in a common Trust Fund with
contributions made by the Sponsor, and all such
contributions will be available to pay the benefits
of any Participant or Beneficiary who is an Employee
of the Sponsor or any such Adopting Employer.
(4) COMMON DISQUALIFICATION PROVISION: The failure of
either the Sponsor or any such Adopting Employer to
satisfy the qualification requirements under Code
ss.401(a), as modified by the provisions of Code
ss.413(c), will result in the disqualification of the
Plan for all such Employers maintaining the Plan.
- 4 -
(b) TERMINATION OF ADOPTION: An Adopting Employer may terminate
participation in the Plan by delivering written notice to the
Sponsor, the Administrator and the Trustee; but in accordance
with Article 9, only the Sponsor can terminate the Plan. If a
request for and approval of a transfer of assets from this
Plan to any successor qualified retirement plan maintained by
the Adopting Employer or its successor is not made in
accordance with Section 9.3, Participants who are no longer
Employees because the Adopting Employer terminates Plan
participation will only be entitled to the commencement of
their benefits (1) in the case of Participants who are no
longer Employees of an Adopting Employer that is an Affiliated
Employer of the Sponsor, in accordance with Article 5 after
their death, retirement, Disability or Termination of
Employment from the Adopting Employer or former Adopting
Employer; and (2) in the case of Participants who are no
longer Employees of an Adopting Employer that is not an
Affiliated Employer of the Sponsor, within a reasonable time
thereafter as if the Plan had been terminated under Section
9.2.
1.6 AFFILIATED EMPLOYER
The term Affiliated Employer means any of the following of which the
Employer is a part: (1) a controlled group of corporations as defined
in Code ss.414(b); (2) a trade or business (whether or not
incorporated) under common control under Code ss.414(c); (3) any
organization (whether or not incorporated) which is a member of an
affiliated service group under Code ss.414(m); and (4) any other entity
required to be aggregated under Code ss.414(o).
1.7 AGE
The term Age means an Employee's actual attained age.
1.8 ANNIVERSARY DATE
The term Anniversary Date means December 31st.
1.9 ANNUITY STARTING DATE
The term Annuity Starting Date means the first day of the first period
for which an amount is paid as an annuity, or, in the case of a benefit
not payable as an annuity, the first day all events have occurred which
entitle the Participant to such benefit. The first day of the first
period for which a benefit is to be received by reason of Disability
will be treated as the Annuity Starting Date only if such benefit is
not an auxiliary benefit.
1.10 AVERAGE CONTRIBUTION PERCENTAGE TEST
The term Average Contribution Percentage (or ACP) Test means the
greater of one of the following nondiscrimination tests for Matching
Contributions and Employee contributions: (1) the ACP for Participants
who are HCEs will not exceed the ACP for Participants who are NHCEs
multiplied by 1.25; or (b) the ACP for Participants who are HCEs will
not exceed the ACP for Participants who are NHCEs multiplied by 2.0,
provided that the ACP for Participants who are HCEs does not exceed the
ACP for Participants who are NHCEs by more than 2 percentage points.
The ACP Test for any Plan Year will be determined in accordance with
the following:
(a) TESTING METHOD: The ACP Test will be determined each Plan Year
by the Current Year Testing method as described in paragraph
(b) below.
(b) DEFINITION OF CURRENT AND PRIOR YEAR TESTING: The term Current
Year Testing means the ACP Test will be determined for a Plan
Year by comparing the ACP of Participants who are Highly
Compensated Employees for that Plan Year to the ACP of
Participants who were Non-Highly Compensated Employees for
that Plan Year. The term Prior Year Testing means the ACP Test
will be determined for a Plan Year by comparing the ACP of
Participants who are Highly Compensated Employees for that
Plan Year to the ACP of Participants who were Non-Highly
Compensated Employees for the prior Plan Year. If Prior Year
- 5 -
Testing is specified in paragraph (a), then for the first Plan
Year in which the Plan permits any Participant to make
Voluntary Employee Contributions, provides for Matching
Contributions, or both (unless this Plan is a successor Plan),
the ACP used for Participants who were Non-Highly Compensated
Employees in the prior Plan Year will be the greater of 3% or
their actual ACP for the first Plan Year. Prior Year Testing
cannot be used in any Plan Year in which a supplemental Safe
Harbor Notice is issued that reduces or eliminates a Safe
Harbor Matching Contribution for that Plan Year.
(c) DEFINITION OF AVERAGE CONTRIBUTION PERCENTAGE: For purposes of
this Section, the term Average Contribution Percentage (or
ACP) means the average of the Contribution Percentages of the
"eligible" Participants in a group.
(d) DEFINITION OF CONTRIBUTION PERCENTAGE: For purposes of this
Section, the term Contribution Percentage means the ratio
(expressed as a percentage) of the Participant's Contribution
Percentage Amounts to the Participant's Compensation for the
Plan Year.
(e) DEFINITION OF CONTRIBUTION PERCENTAGE AMOUNTS: For purposes of
this Section, the term Contribution Percentage Amounts means
the sum of the Employee Contributions, Matching Contributions
and Qualified Non-Elective Contributions (to the extent not
used in the ADP Test) made under the plan on behalf of the
participant for the Plan Year.
(f) CONTRIBUTIONS USED IN DETERMINING CONTRIBUTION PERCENTAGE
AMOUNTS: Contribution Percentage Amounts will not include
Matching Contributions that are forfeited either to correct
Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions,
or Excess Aggregate Contributions. The Employer may elect each
Plan Year to include as Contribution Percentage Amounts QNECs
and/or Elective Deferrals so long as the ADP Test is met
before the Elective Deferrals are used in the ACP Test and
continues to be met following the exclusion of those Elective
Deferrals that are used to meet the ACP Test. For any Plan
Year in which Current Year Testing is specified in paragraph
(a) above, the Employer may further elect to include such
QNECs and/or Elective Deferrals as Contribution Percentage
Amounts only to the extent necessary to satisfy the ACP (and
Multiple Use) Test.
(g) MULTIPLE USE: If one or more HCEs participate in both a cash
or deferred arrangement and in a plan subject to the ACP Test
maintained by the Employer, and if the sum of the ADP and ACP
of those HCEs subject to either or both tests exceeds the
Aggregate Limit, then the ACP of those HCEs who also
participate in a cash or deferred arrangement will be reduced
as described in Section 5.21 so that the limit is not
exceeded. The amount by which each HCE's Contribution
Percentage Amount is reduced will be treated as an Excess
Aggregate Contribution. The ADP and ACP of HCEs are determined
after any corrections required to meet the ADP Test and the
ACP Test and are deemed to be the maximum permitted under such
tests for the Plan Year. Multiple use does not occur if either
the ADP or the ACP of the HCEs does not exceed 1.25 multiplied
by the ADP and the ACP of the NHCEs.
(h) HIGHLY COMPENSATED EMPLOYEES: A Participant is a HCE for a
particular Plan Year if he or she meets the definition of a
HCE in effect for that Plan Year; and a Participant is a NHCE
for a particular Plan Year if he or she does not meet the
definition of a HCE in effect for that Plan Year. The
Contribution Percentage for any Participant who is a HCE and
who is eligible to have Contribution Percentage Amounts
allocated to his or her account under two or more plans
described in Code ss.401(a), or arrangements described in Code
ss.401(k) that are maintained by the Employer, will be
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determined as if the total of such Contribution Percentage
Amounts was made under each plan. If a HCE participates in two
or more cash or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with or within
the same calendar year will be treated as a single
arrangement. Notwithstanding the foregoing, certain plans will
be treated as separate if mandatorily disaggregated under
regulations under Code ss.401(m).
(i) OTHER RULES: In determining the ACP Test, if this Plan
satisfies the requirements of Code ss.401(m), ss.401(a)(4) or
ss.410(b) only if aggregated with one or more other plans, or
if one or more other plans satisfy such requirements only if
aggregated with this Plan, then this section will be applied
by determining the Contribution Percentage of Employees as if
all such plans were a single plan. For any Plan Year in which
the Employer elects Prior Year Testing under this Section,
adjustments to the ACP of Non-Highly Compensated Employees for
the prior Plan Year will be made in accordance with Notice
98-1 and any superseding guidance. Plans with the same Plan
Year may be aggregated to satisfy Code ss.401(m). In
determining the Contribution Percentage test, Employee
contributions are considered to have been made in the Plan
Year in which contributed to the Plan, and Matching
Contributions and QNECs will be considered made for a Plan
Year if made no later than the end of the twelve-month period
beginning on the day after the close of the Plan Year. The
Employer will maintain records sufficient to demonstrate
satisfaction of the ACP Test and the amount of QNECs or QMACs,
or both, used in such test. The determination and treatment of
the Contribution Percentage of any Participant will satisfy
such other requirements as may be prescribed by the Secretary
of the Treasury.
(j) AGGREGATE LIMIT: The term Aggregate Limit means the sum of (1)
125% of the greater of the ADP of Participants who are NHCEs
for the current Plan Year (or for the prior Plan Year for any
Plan Year for which prior year testing has been elected) or
the ACP of Participants who are NHCEs subject to Code
ss.401(m) for the Plan Year beginning with or within the
current Plan Year (or for the prior Plan Year for any Plan
Year for which prior year testing has been elected) of the
cash or deferred arrangement (2) the lesser of 200% or two
plus the lesser of such ADP or ACP. The word "lesser" will be
substituted for "greater" in (1) above, and the word "greater"
will be substituted for "lesser" after "two plus the" in (2)
above if that would result in a larger Aggregate Limit.
(k) "ELIGIBLE" PARTICIPANT: For purposes of this Section, an
"eligible" Participant is any Employee who is eligible to make
an Employee Contribution, or an Elective Deferral (if the
Employer takes such contributions into account in the
calculation of the Contribution Percentage), or to receive a
Matching Contribution (including forfeitures) or a QMAC. If an
Employee Contribution is required as a condition of Plan
participation, any Employee who would be a Participant if such
Participant made such a contribution will be treated as an
"eligible" Participant on behalf of whom no Employee
Contributions are made. An Employee Contribution means any
contribution made by or on behalf of a Participant that is
included in the Participant's gross income in the year in
which made and that is maintained under a separate account to
which earnings and losses are allocated.
(l) CHANGE TO PRIOR YEAR TESTING: If the Employer elects Current
Year Testing for any Plan Year, the Employer can only elect to
change to prior year testing in accordance with the
requirements in Notice 98-1 (or superseding guidance). If the
Employer amends the Plan to elect prior year testing, the ACP
for NHCEs for the prior year will be determined by taking into
account only (1) Voluntary Employee Contributions for those
NHCEs for the prior year, and (2) Matching Contributions for
those NHCEs that were taken into account in the ACP Test (and
- 7 -
not the ADP Test) under the current year testing method for
the prior year, and (3) QNECs that were allocated to the
accounts of those NHCEs for the prior year but that were not
used to satisfy the ACP Test or the ADP Test under the current
year testing method for the prior year. Thus, if the Employer
elects to change to prior year testing, the following
contributions made for the prior year will be disregarded:
QNECs used to satisfy either the ADP or ACP Test under the
current year testing method for the prior testing year, QMACs
taken into account in the ADP Test, and all Elective
Deferrals. These limitations on double counting do not apply
for testing years beginning before January 1, 1999, and if the
Plan changes to prior year testing for the first time for the
1998 Plan Year, the ACP for NHCEs will be the same as for the
1997 Plan Year.
1.11 BENEFICIARY
The term Beneficiary means the recipient designated by the Participant
to receive the Plan benefits payable upon the death of the Participant,
or the recipient designated by a Beneficiary to receive any benefits
which may be payable in the event of the Beneficiary's death prior to
receiving the entire death benefit to which the Beneficiary is
entitled. All such Beneficiary designations will be made in accordance
with the following provisions:
(a) BENEFICIARY DESIGNATIONS BY A PARTICIPANT: Subject to the
provisions of Section 5.8 regarding the rights of a
Participant's Spouse, each Participant may designate a
Beneficiary on a form supplied by the Administrator, and may
change or revoke that designation by filing written notice
with the Administrator. If a Participant completes or has
completed a Beneficiary designation form in which the
Participant designates his or her Spouse as the Beneficiary,
and the Participant and the Participant's Spouse are legally
divorced subsequent to the date of such designation, then the
designation of such Spouse as a Beneficiary hereunder will be
deemed null and void unless the Participant, subsequent to the
legal divorce, reaffirms the designation by completing a new
Beneficiary designation form. In the absence of a written
Beneficiary designation form, the Participant will be deemed
to have designated the following Beneficiaries in the
following order: (1) the Participant's Spouse, if then living;
(2) the Participant's issue, per stirpes; and (3) the
Participant's estate.
(b) BENEFICIARY DESIGNATIONS BY A BENEFICIARY: In the absence of a
Beneficiary designation or other directive from the deceased
Participant to the contrary, any Beneficiary may name his or
her own Beneficiary in accordance with Section 5.2(e) to
receive any benefits which may be payable in the event of the
Beneficiary's death prior to the receipt of all the
Participant's death benefits to which the Beneficiary was
entitled.
(c) BENEFICIARIES CONSIDERED CONTINGENT UNTIL DEATH OF
PARTICIPANT: Notwithstanding any provision in this Section,
any Beneficiary named hereunder will be considered a
contingent Beneficiary until the death of the Participant (or
Beneficiary, as the case may be), and until such time will
have no rights granted to Beneficiaries under the Plan.
1.12 BREAK IN SERVICE
The term Break in Service means a 1-Year Period of Severance.
Notwithstanding the foregoing, a Participant who incurs a Break in
Service but does not terminate employment with the Employer will
continue to be eligible to make Elective Deferrals to the Plan, but
will no longer be eligible to receive an allocation of any other
Employer contributions.
1.13 CODE
The term Code means the Internal Revenue Code of 1986, as amended, and
the regulations and rulings promulgated thereunder by the Internal
Revenue Service.
- 8 -
1.14 CODE SS.3401 COMPENSATION
The term Code ss.3401 Compensation means wages within the meaning of
Code ss.3401(a) that are actually paid or made available in gross
income for the purposes of income tax withholding at the source but
determined without regard to any rules under Code ss.3401 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 ss.3401(a)(2)).
1.15 CODE SS.415 COMPENSATION
The term Code ss.415 Compensation means Earned Income, wages, salaries,
fees for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan, including, but not limited to,
commissions paid salespersons, compensation for services based on a
percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements, or other expense
allowances under a non-accountable plan as described in IRS regulation
ss.1.62-2(c). A Participant's Code ss.415 Compensation will be
determined subject to the following provisions:
(a) AMOUNTS EXCLUDED FROM CODE SS.415 COMPENSATION: Code ss.415
Compensation does not include (1) Employer contributions to a
plan of deferred compensation which are not includible in
gross income for the taxable year in which contributed, or
Employer contributions to a simplified employee pension plan
to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation; (2) amounts realized from a non-qualified stock
option, or when restricted stock or property held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture; (3) amounts
realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and (4) other amounts
which receive special tax benefits, or contributions made by
an Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in
Code ss.403(b) (whether or not the amounts are excludible from
an Employee's gross income).
(b) TREATMENT OF ELECTIVE DEFERRALS AND OTHER AMOUNTS: For
Limitation Years beginning on or after January 1, 1998, Code
ss.415 Compensation will include any elective deferrals as
defined in Code ss.402(g)(3), and any amounts contributed or
deferred at the election of the Employee that were not
includible in the gross income by reason of Code ss.125 or
ss.457. Code ss.415 Compensation will also include elective
amounts that are not includible in the gross income of the
Employee by reason of Code ss.132(f)(4) for Limitation Years
beginning on or after January 1, 2001 (or if elected by the
Administrator on a non-discriminatory basis, any earlier
Limitation Year beginning on or after January 1, 1998).
1.16 COMPENSATION
The term Compensation means amounts received by a Participant from the
Employer during a Compensation Determination Period, determined subject
to the following provisions:
(a) COMPENSATION USED TO DETERMINE ELECTIVE DEFERRALS: In
determining the amount of a Participant's Elective Deferrals
for a Plan Year, the term Compensation means a Participant's
Form W-2 Compensation actually paid during a Compensation
Determination Period, determined subject to the following
provisions:
(1) COMPENSATION DETERMINATION PERIOD: Under this
paragraph (a), the Compensation Determination Period
is the Plan Year.
- 9 -
(2) TREATMENT OF ELECTIVE DEFERRALS: For purposes of this
paragraph (a), Employer contribution amounts made
pursuant to a salary reduction agreement which are
not currently includible in the gross income of an
Employee by reason of Code ss.125, ss.402(e)(3),
ss.402(h)(1)(B), or ss.403(b) will, at the election
of the Administrator on a non-discriminatory basis,
be included in determining Compensation. In addition,
if elected by the Administrator on a
non-discriminatory basis, Compensation will also
include elective amounts that are not includible in
the gross income of the Employee by reason of Code
ss.132(f)(4), beginning with the Plan Year elected by
the Administrator but not earlier than the Plan Year
beginning on or after January 1, 1998.
(3) CERTAIN AMOUNTS EXCLUDED FROM COMPENSATION: For
purposes of this paragraph (a), any amount which
would otherwise be considered Compensation under this
paragraph but which is received by a Participant
under the following circumstances will not be
considered Compensation for purposes of this
paragraph: (1) any amount received as a bonus; (2)
any amount received as a commission; (3) any amount
intended as reimbursement for moving expenses; (4)
any amount intended as reimbursement for car
expenses; and (5) any amount taxable for purposes of
Domestic Partner medical coverage and Stock Options.
(4) AMOUNTS RECEIVED PRIOR TO BECOMING A PARTICIPANT: All
amounts which would be considered Compensation under
this paragraph but which are received by an Employee
prior to the date the Employee becomes a Participant
in the Plan will be considered Compensation for
purposes of this paragraph (a). However, the
Administrator may elect to limit Compensation under
this paragraph to Compensation received during the
period during which the cash or deferred arrangement
was in effect under the Plan.
(5) COMPENSATION RECEIVED WHILE IN AN INELIGIBLE CLASS OF
EMPLOYEES: Compensation for purposes of this
paragraph (a) will exclude any amount received while
an Employee is a member of an ineligible class of
Employees as described in Section 2.1(a)(2).
(b) COMPENSATION USED TO DETERMINE MATCHING CONTRIBUTIONS:
Matching Contributions are not currently permitted under the
terms of the Plan.
(c) COMPENSATION USED TO DETERMINE NON-ELECTIVE CONTRIBUTIONS:
Non-Elective Contributions are not currently permitted under
the terms of the Plan.
(d) COMPENSATION USED IN DETERMINING THE ACP TEST AND ADP TEST: In
determining the ACP Test, the term Compensation means a
Participant's Form W-2 Compensation. In determining the ADP
Test, the term Compensation means a Participant's Form W-2
Compensation. However, in determining a Participant's ADP or
ACP, the Administrator may elect (1) to include or exclude
Elective Deferrals; (2) to include or exclude any items of
compensation includible or excludible under Code ss.414(s) and
the regulations thereunder, provided such adjusted definition
conforms to the nondiscrimination requirements of those
regulations; and/or (3) to limit Compensation taken into
account in computing a Participant's ADP or ACP to
Compensation received only for the portion of the Plan Year in
which the Participant was a Participant and only for the
portion of the Plan Year during which the Plan contained a
cash or deferred arrangement. The Plan Administrator's
election as described above must be consistent and uniform
with respect to all Participants and all plans of the Employer
for any particular Plan Year.
- 10 -
(e) COMPENSATION USED FOR TOP HEAVY PURPOSES: Notwithstanding
anything in this Section to the contrary, in determining Top
Heavy allocations under Section 3.5, the term Compensation
means the Code ss.415 Compensation received by an Employee
during an entire Compensation Determination Period excluding
amounts received while a member of an ineligible class of
Employees as described in Section 2.1(a)(2).
(f) COMPENSATION OF OWNER-EMPLOYEES AND SHAREHOLDER-EMPLOYEES: For
purposes of this Plan, the Compensation of an Owner-Employee
or a Self-Employed Individual will equal his or her Earned
Income up to the dollar limit described in the next paragraph.
(g) DOLLAR LIMITATION ON COMPENSATION: Notwithstanding anything in
this Section to the contrary, a Participant's Compensation for
any Compensation Determination Period will not exceed the
limitation set forth in Code ss.401(a)(17) as in effect for
that determination period. If a Compensation Determination
Period consists of fewer than 12 months, the Code
ss.401(a)(17) limitation will be multiplied by a fraction, the
numerator of which is the number of months in that
determination period, and the denominator of which is 12.
(h) COMPENSATION LIMITATION ELECTION AVAILABLE TO CERTAIN
PARTICIPANTS: Except for purposes of determining Top Heavy
allocation requirements under Section 3.5 or the Code ss.415
limitations under Article 6, any Participant who is a Key
Employee, an Owner-Employee, a Self-Employed Individual, or a
Highly Compensated Employee may elect for any Plan Year, on a
form prescribed by the Administrator to limit Compensation for
all purposes under this Plan.
(i) REPEAL OF FAMILY AGGREGATION RULES: The family aggregation
rules that were described in Code ss.401(a)(17)(A) as in
effect prior to January 1, 1997 will not apply to this Plan
for Plan Years beginning on or after January 1, 1997.
1.17 DISABILITY
The term Disability means a physical or mental condition arising after
an Employee has become a Participant that qualifies the Participant for
disability benefits under the Social Security Act in effect on the date
the Participant suffers the Disability.
1.18 EARLY RETIREMENT AGE
There is no Early Retirement Age under the Plan.
1.19 EARNED INCOME
The term Earned Income means net earnings from self-employment in the
trade or business with respect to which the Plan is established and for
which personal services of the individual are a material
income-producing factor. Net earnings (1) will be determined without
regard to items not included in gross income and the deductions
allocable thereto, and for taxable years beginning after December 31,
1989, with regard to the deduction allowed by Code ss.164(f); and (2)
will be reduced by deductible Employer contributions to a qualified
retirement plan for taxable years beginning after December 31, 1989.
1.20 ELECTIVE DEFERRAL
The term Elective Deferrals means Employer contributions made to the
Plan at the election of the Participant in lieu of cash compensation,
and will include contributions made pursuant to a salary reduction
agreement or other deferral mechanism, as follows:
- 11 -
(a) DETERMINATION OF AMOUNT: In any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions
made on behalf of such Participant pursuant to an election to
defer under any qualified cash or deferred arrangement under
Code ss.401(k), any simplified employee pension cash or
deferred arrangement under Code ss.402(h)(1)(B), any SIMPLE
individual retirement plan under Code ss.408(p), any eligible
deferred compensation plan under Code ss.457, any plan under
Code ss.501(c)(18), and any Employer contributions made on the
behalf of a Participant for the purchase of an annuity
contract under Code ss.403(b) pursuant to a salary reduction
agreement. Elective Deferrals will not include any deferrals
properly distributed as excess Annual Additions.
(b) RESTRICTIONS ON WITHDRAWAL: Elective Deferrals (exclusive of
earnings thereon) can only be withdrawn upon the earlier of
the date (1) a Participant incurs a Termination of Employment;
(2) a Participant dies; (3) a Participant suffers a
Disability; (4) an event described in Code ss.401(k)(10)
occurs; (5) a Participant receives a hardship distribution if
hardship distributions are permitted by the Employer under
Section 5.17; and (6) a Participant reaches Age 59 1/2 if on
or after such date a pre-retirement in-service withdrawal of
Elective Deferrals is permitted by the Employer under Section
5.18.
1.21 ELECTIVE DEFERRAL ACCOUNT
The term Elective Deferral Account means the sub-account of a
Participant's Account to which the Participant's Elective Deferrals are
credited.
1.22 ELIGIBLE PARTICIPANT
The term Eligible Participant means a Participant eligible in
accordance with the following provisions to receive an allocation of
any Matching Contributions, Non-Elective Contributions and Forfeitures
that are allocable for the Plan Year:
(a) MATCHING CONTRIBUTIONS AND RELATED FORFEITURES: Matching
Contributions are not currently permitted under the terms of
the Plan.
(b) NON-ELECTIVE CONTRIBUTIONS AND RELATED FORFEITURES:
Non-Elective Contributions are not currently permitted under
the terms of the Plan.
1.23 EMPLOYEE
The term Employee means (a) any person reported on the payroll records
of the Employer as an employee who is deemed by the Employer to be a
common law employee; (b) except for determining eligibility to
participate in this Plan, any person reported on the payroll records of
an Affiliated Employer of the Sponsor or an Adopting Employer as an
employee who is deemed by the Affiliated Employer to be a common law
employee, even if the Affiliated Employer is not an Adopting Employer;
(c) any Self-Employed Individual who derives Earned Income from the
Employer; (d) any Owner-Employee; and (e) any person who is considered
a Leased Employee but who (1) is not covered by a plan described in
Code ss.414(n)(5), or (2) is covered by a plan described in Code
ss.414(n)(5), but Leased Employees constitute more than 20% of the
Employer's non-highly compensated workforce. However, the term Employee
will not include any individual who is not reported on the payroll
records of the Employer or an Affiliated Employer as a common law
employee. If such person is later determined by the Sponsor or by a
court or governmental agency to be or to have been an Employee, he or
she will only be eligible for participation prospectively and may
participate in the Plan as of the next entry date in Section 2.2
following such determination and after the satisfaction of all other
eligibility requirements.
- 12 -
1.24 EMPLOYER
The term Employer means the Sponsor, any Adopting Employer, and any
direct predecessor business entity of the Sponsor or an Adopting
Employer that was or would have been considered an Affiliated Employer
of the Sponsor or an Adopting Employer. Where applicable, such as
determining Hours of Service, Periods of Service and Years of Service,
the term Employer or Adopting Employer will also mean any business
entity that was an Adopting Employer. As to any Employee, the term
Employer at the time of reference means the employer of such Employee.
1.25 ERISA
The term ERISA means the Employee Retirement Income Security Act of
1974, as amended, and the regulations and rulings promulgated
thereunder.
1.26 EXCESS AGGREGATE CONTRIBUTIONS
The term Excess Aggregate Contributions means, with respect to any Plan
Year, the excess of (1) the aggregate Contribution Percentage Amounts
used in computing the numerator of the Contribution Percentage actually
made on behalf of Participants who are Highly Compensated Employees for
such Plan Year, over (2) the maximum Contribution Percentage Amounts
permitted by the ACP Test (determined by hypothetically reducing
contributions made on behalf of Participants who are Highly Compensated
Employees in order of their Contribution Percentages beginning with the
highest of such percentages). Such determination will be made after
first determining Excess Elective Deferrals and then determining Excess
Contributions. The terms Average Contribution Percentage, Contribution
Percentage and Contribution Percentage Amount are defined in Sections
1.10(c), 1.10(d) and 1.10(e).
1.27 EXCESS CONTRIBUTIONS
The term Excess Contributions means, with respect to any Plan Year, the
excess of the aggregate amount of Employer contributions actually taken
into account in computing the ADP of Participants who are Highly
Compensated Employees for such Plan Year, over the maximum amount of
such contributions permitted by the ADP Test (determined by
hypothetically reducing contributions made for Participants who are
Highly Compensated Employees in order of their ADPs, beginning with the
highest of such percentages).
1.28 EXCESS ELECTIVE DEFERRALS
The term Excess Elective Deferrals means Elective Deferrals that are
includible in a Participant's gross income under Code ss.402(g) to the
extent such Participant's Elective Deferrals for a taxable year exceed
the dollar limit under such Code Section.
1.29 FIDUCIARY
The term Fiduciary means any individual or entity which exercises any
discretionary authority or control over the management of the Plan or
over the disposition of the assets of the Plan; renders investment
advice for a fee or other compensation (direct or indirect); has any
discretionary authority or responsibility over Plan administration; or
acts to carry out a fiduciary responsibility, when designated by a
named Fiduciary pursuant to authority granted by the Plan; subject,
however, to any exception granted directly or indirectly by the
provisions of ERISA or any applicable regulations. The Sponsor is the
"named Fiduciary" for purposes of ERISA ss.402(a)(2).
1.30 FISCAL YEAR
The term Fiscal Year means the Employer's accounting year beginning
February 1st and ending the following January 31st.
1.31 FORFEITURE
The term Forfeiture means the amount by which a Participant's Account
balance exceeds his or her Vested Interest upon the earlier to occur of
(a) the date the Participant receives a distribution of his or her
- 13 -
Vested Interest under Article 5; or (b) the date the Participant incurs
5 consecutive Breaks in Service after Termination of Employment. No
Forfeitures will occur solely as a result of the withdrawal of a
Participant's own contributions to the Plan or a Participant's transfer
to an Affiliated Employer or Adopting Employer. All Forfeitures will be
placed in the Forfeiture Account pending allocation pursuant to Section
3.4.
1.32 FORM W-2 COMPENSATION
The term Form W-2 Compensation means wages within the meaning of Code
ss.3401(a) and all other payments of compensation actually paid or made
available in gross income to an Employee by the Employer in the course
of the Employer's trade or business for which the Employer is required
to furnish the Employee a Form W-2 under Code ss.6041(d), ss.6051(a)(3)
and ss.6052. Compensation must be determined without regard to any
rules under Code ss.3401(a) limiting remuneration included in wages
based on the nature or location of the employment or services performed
(such as the exception for agricultural labor in Code ss.3401(a)(2)).
1.33 HCE
The term HCE means a Highly Compensated Employee.
1.34 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee means, for Plan Years beginning
after December 31, 1996, any Employee who during the Plan Year or
during the look-back year was a 5% owner as defined in Code
ss.416(i)(1), or who for the look-back year had Code ss.415
Compensation in excess of $80,000 as adjusted in accordance with Code
ss.415(d) (except that the base year will be the calendar quarter
ending September 30, 1996). In determining who is a highly compensated
former Employee, the rules for determining Highly Compensated Employee
status as in effect for the Plan Year or look-back year for which the
determination is being made (in accordance with temporary regulation
1.414(q)-1T, A-4 and Notice 97-45) will be applied. In determining if
an Employee is a Highly Compensated Employee for Plan Years beginning
in 1997, the amendments to Code ss.414(q) are deemed to have been in
effect for years beginning in 1996. If the Employer maintains more than
one qualified retirement plan, the definition of Highly Compensated
Employee must be consistently applied to all such plans.
(a) DETERMINATION OF LOOK-BACK YEAR: The look-back year will be
the 12 month period immediately preceding the Plan Year for
which the determination is being made.
(b) TOP PAID GROUP ELECTION: In determining if an Employee is a
Highly Compensated Employee based on Code ss.415 Compensation,
the top paid group election set forth in Code ss.414(q)(3) is
not being applied for any Plan Year beginning on or after
January 1, 1997.
(c) REPEAL OF FAMILY AGGREGATION RULES: The family aggregation
rules that were described in Code ss.414(q)(6) as in effect
prior to January 1, 1997 will not apply to this Plan for Plan
Years beginning on or after January 1, 1997.
1.35 HOUR OF SERVICE
The term Hour of Service means, with respect to any provision of the
Plan in which service is determined by reference to an Employee's
Periods of Service, each hour for which an Employee is paid, or is
entitled to payment, by the Employer or an Affiliated Employer for the
performance of duties. With respect to any provision of the Plan in
which service is determined by reference to an Employee's Years of
Service, the term Hour of Service means the following:
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(a) DETERMINATION OF HOURS: The term Hour of Service means (1)
each hour an Employee is paid, or entitled to payment, for the
performance of duties for the Employer or an Affiliated
Employer, which will be credited to the Employee for the
computation period in which the duties are performed; (2) each
hour for which an Employee is paid, or entitled to payment, by
the Employer or an Affiliated Employer on account of a period
of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence, except
that no more than 501 hours will be credited under this clause
(2) for any single continuous period (whether or not such
period occurs in a single computation period); and (3) each
hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an
Affiliated Employer, except that the same hours will not be
credited both under clause (1) or clause (2) and under this
clause (3), and these hours will be credited 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. Hours of Service will be
calculated and credited pursuant to DOL regulation
2530.200b-2(b) and (c), which are incorporated herein by
reference.
(b) MATERNITY OR PATERNITY LEAVE: In determining if a Break in
Service for participation and vesting has occurred in a
computation period, an individual on Maternity or Paternity
Leave will receive credit for up to 501 Hours of Service which
would otherwise have been credited but for such absence, or in
any case in which such Hours of Service cannot be determined,
8 Hours of Service per day of such absence. Hours of Service
credited for Maternity or Paternity Leave will be credited in
the computation period in which the absence begins if the
crediting is necessary to prevent a Break in Service in that
period, or in all other cases, in the following computation
period.
(c) USE OF EQUIVALENCIES: Notwithstanding paragraph (a), the
Administrator may elect for all Employees or for one or more
different classifications of Employees (provided such
classifications are reasonable and are consistently applied)
to apply one or more of the following equivalency methods in
determining the Hours of Service of an Employee paid on an
hourly or salaried basis. Under such equivalency methods, an
Employee will be credited with either (1) 190 Hours of Service
for each month in which he or she is paid or entitled to
payment for at least one Hour of Service; or (2) 95 Hours of
Service for each semi-monthly period in which he or she is
paid or entitled to payment for at least one Hour of Service;
or (3) 45 Hours of Service for each week in which he or she is
paid or entitled to payment for at least one Hour of Service;
or (4) 10 Hours of Service for each day in which he or she is
paid or entitled to payment for at least one Hour of Service.
1.36 KEY EMPLOYEE
The term Key Employee means any Employee, Former Employee, deceased
Employee, or Beneficiary who at any time during the Plan Year
containing the Determination Date for the Plan Year in question or any
of the prior 4 Plan Years was one of the following:
(a) OFFICERS: An officer of the Employer whose Code ss.415
Compensation exceeds 50% of the amount in effect under Code
ss.415(b)(1)(A), except that no more than fifty Employees (or,
if lesser, the greater of three or 10% of the Employees) will
be treated as officers.
(b) OWNERS: An owner (or was considered an owner under Code
ss.318) of one of the ten largest interests in the Employer
whose Code ss.415 Compensation exceeds 100% of the dollar
limitation in effect under Code ss.415(c)(1)(A), but if two
Employees own the same interest in the Employer, the Employee
- 15 -
with the greater annual Code ss.415 Compensation will be
treated as owning a larger interest; or a 5% owner of the
Employer as defined in Code ss.416(i)(1)(B)(i); or a 1% owner
of the Employer as defined in Code ss.416(i)(1)(B)(ii) whose
annual Code ss.415 Compensation is more than $150,000.
1.37 LEASED EMPLOYEE
The term Leased Employee means, for Plan Years beginning on or after
January 1, 1997, any person within the meaning of Code ss.414(n)(2) and
ss.414(o) who is not reported on the payroll records of the Employer as
a common law employee and who provides services to the Employer if (a)
the services are provided under an agreement between the Employer and a
leasing organization; (b) the person has performed services for the
Employer or for the Employer and related persons as determined under
Code ss.414(n)(6) on a substantially full time basis for a period of at
least one year; and (c) the services are performed under the primary
direction and control of the Employer. Contributions or benefits
provided to a Leased Employee by the leasing organization attributable
to services performed for the Employer will be treated as provided by
the Employer. A Leased Employee will not be considered an Employee of
the recipient if he is covered by a money purchase plan providing (a) a
non-integrated Employer contribution rate of at least 10% of Code
ss.415 Compensation, including amounts contributed by the Employer
pursuant to a salary reduction agreement which are excludible from the
Leased Employee's gross income under a cafeteria plan covered by Code
ss.125, a cash or deferred plan under Code ss.401(k), a SEP under Code
ss.408(k) or a tax-deferred annuity under Code ss.403(b), and also
including, for Plan Years beginning on or after January 1, 2001, any
elective amounts that are not includible in the gross income of the
Leased Employee because of Code ss.132(f)(4); (b) immediate
participation; and (c) full and immediate vesting. This exclusion is
only available if Leased Employees do not constitute more than 20% of
the recipient's non-highly compensated work force.
1.38 LIMITATION YEAR
The term Limitation Year means the Plan Year.
1.39 MATCHING CONTRIBUTION
The term Matching Contribution means an Employer contribution made to
this or any other defined contribution plan on behalf of a Participant
on account of Voluntary Employee Contributions made by such
Participant, or on account of a Participant's Elective Deferral, under
a Plan maintained by the Employer.
1.40 MATCHING CONTRIBUTION ACCOUNT
The term Matching Contribution Account means the sub-account of a
Participant's Account to which Matching Contributions are credited.
1.41 MATERNITY OR PATERNITY LEAVE
The term Maternity or Paternity Leave means that an Employee is absent
from work because of the Employee's pregnancy; because of the birth of
the Employee's child; because of the placement of a child with the
Employee in connection with the adoption of such child by the Employee;
or because of the need to care for such child for a period beginning
immediately following the child's birth or placement as set forth
above.
1.42 NHCE
The term NHCE means a Non-Highly Compensated Employee.
1.43 NON-ELECTIVE CONTRIBUTIONS
The term Non-Elective Contribution means an Employer contribution other
than a Matching Contribution or a QMAC that the Participant may not
elect to receive in cash until such contributions are distributed from
the Plan.
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1.44 NON-ELECTIVE CONTRIBUTION ACCOUNT
The term Non-Elective Contribution Account means the sub-account of a
Participant's Account to which Non-Elective Contributions are credited.
1.45 NON-HIGHLY COMPENSATED EMPLOYEE
The term Non-Highly Compensated Employee means any Employee who is not
a Highly Compensated Employee.
1.46 NON-KEY EMPLOYEE
The term Non-Key Employee means any Employee who is not a Key Employee.
1.47 NORMAL RETIREMENT AGE
The term Normal Retirement Age means the date a Participant reaches Age
59 1/2. There is no mandatory retirement age.
1.48 NORMAL RETIREMENT DATE
The term Normal Retirement Date means the date a Participant reaches
Normal Retirement Age.
1.49 OWNER-EMPLOYEE
The term Owner-Employee means (1) in the case of an Employer or
Affiliated Employer which is an unincorporated trade or business, an
individual who owns the entire interest in such Employer or Affiliated
Employer; and (2) in the case of an Employer or Affiliated Employer
which is a partnership, an individual who owns more than 10% of either
the capital interest or the profit interest in such Employer or
Affiliated Employer.
1.50 PARTICIPANT
The term Participant means any Employee who has met the eligibility and
participation requirements of the Plan. However, an individual who is
no longer an Employee will not be deemed a Participant if his or her
entire Plan benefit (a) is fully guaranteed by an insurance company and
is legally enforceable at the sole choice of such individual against
such insurance company, provided that a contract, Policy, or
certificate describing the benefits to which such individual is
entitled under the Plan has been issued to such individual; or (b) is
paid in a lump sum distribution which represents such individual's
entire interest in the Plan; or (c) is paid in some other form of
distribution and the final payment thereunder has been made.
1.51 PARTICIPANT'S ACCOUNT
The term Participant's Account means the account to which is credited a
Participant's share of Employer contributions, Forfeitures (if any)
that are allocated under Section 3.4, investment earnings or losses
allocated under Section 3.3, and the proceeds of insurance Policies (if
any) that are purchased on a Participant's life under Section 7.13.
Each Participant's Account will be divided into the following Employer
contribution sub-accounts for accounting purposes: the Elective
Deferral Account, and if applicable, the Matching Contribution Account,
the Qualified Matching Contribution Account, the Non-Elective
Contribution Account, the Qualified Non-Elective Contribution Account,
the Safe Harbor Contribution Account, and any other sub-accounts as the
Administrator may determine necessary from time to time.
1.52 PERIOD OF SERVICE
The term Period of Service means a period during which an Employee is
employed by an Employer or an Affiliated Employer beginning on an
Employee's Employment Commencement Date or Re-employment Commencement
Date as defined in paragraph (b), and ending on the Severance from
Service Date as defined in paragraph (d). For any provision of the Plan
in which an Employee's service is determined by his or her Period of
Service, a 1-Year Period of Service and all other Periods of Service
will be determined in accordance with the following provisions:
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(a) CREDIT FOR AN HOUR OF SERVICE AS A PERIOD OF SERVICE: If an
Employee performs an Hour of Service during a period which
would otherwise be considered a Period of Severance as
indicated in paragraph (c) below, the Plan must take into
account such period and the Employee will receive credit for
such as a Period of Service.
(b) DEFINITION OF EMPLOYMENT COMMENCEMENT DATE: The term
Employment Commencement Date means the first day an Employee
performs an Hour of Service for an Employer or an Affiliated
Employer; and the term Reemployment Commencement Date means
the first day following a Period of Severance on which an
Employee performs an Hour of Service for an Employer or an
Affiliated Employer.
(c) DEFINITION OF PERIOD OF SEVERANCE: The term Period of
Severance means the period beginning on the Severance from
Service Date and ending on the Reemployment Commencement Date.
A Participant will incur a 1-Year Period of Severance if the
Employee fails to perform an Hour of Service during a
12-consecutive month period following the earlier of either
(1) the Severance from Service Date on which an Employee
retires, dies, quits or is discharged from employment by an
Employer or an Affiliated Employer, or (2) the Severance from
Service Date on which an Employee remains absent from service
with an Employer or an Affiliated Employer (with or without
pay) for any reason other than the Employee retiring, dying,
quitting or being discharged from employment by an Employer or
an Affiliated Employer, such as for vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence. In the case of a
Participant who is on Maternity or Paternity Leave, the
12-consecutive month period beginning on the first anniversary
of the first day of such Maternity or Paternity Leave will not
constitute a Period of Severance. If the Employee does perform
an Hour of Service during the periods indicated in clauses (1)
or (2) above, the Plan must take into account such period and
the Employee will receive credit for such as a Period of
Service.
(d) DEFINITION OF SEVERANCE FROM SERVICE DATE: The term Severance
from Service Date means the date on which an Employee retires,
dies, quits or is discharged from employment by an Employer or
an Affiliated Employer; or if earlier the first anniversary of
the date on which an Employee remains absent from service with
an Employer or an Affiliated Employer (with or without pay)
for any reason other than the Employee retiring, dying,
quitting or being discharged from employment by an Employer or
an Affiliated Employer, such as for vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence.
(e) AGGREGATING PERIODS OF SERVICE AND FRACTIONAL PERIODS OF
SERVICE: A 1-Year Period of Service is a 12-consecutive month
Period of Service. An Employee will receive credit for Periods
of Service of less than 12 consecutive months, by aggregating,
subject to the limitations below, all non-successive Periods
of Service and all Periods of Service which are fractional
years or which do not constitute a whole 1-Year Period of
Service, whether or not consecutive. Fractional periods of a
year are expressed in terms of days, on the basis that a day
of service is credited if an Employee completes an Hour of
Service during such day, and on the basis that 12 months of
service (30 days being deemed to be a month in the case of the
aggregation of fractional months) or 365 days of service
equals a 1-Year Period of Service.
- 18 -
(f) PRIOR SERVICE CREDIT: An Employee will not receive credit for
Periods of Service with any other entity except as otherwise
set forth herein with respect to the Employer, an Affiliated
Employer, and any business that was an Adopting Employer.
(g) REEMPLOYMENT BEFORE A 1-YEAR PERIOD OF SEVERANCE: If an
Employee terminates employment but is re-employed by the
Employer before a Period of Severance, his or her Periods of
Service and employment will not be deemed to have been
interrupted during such Plan Year and, if the Employee was a
Participant (or otherwise satisfied the requirements for
participation specified in Section 2.1 of the Plan), he or she
will remain (or become) a Participant immediately upon his or
her re-employment by the Employer. If an Employee was not a
Participant in the Plan but otherwise satisfied the
requirements for participation specified in the Plan, he or
she will become a Participant on the later of the date the
Employee would have entered the Plan had he or she not
terminated employment with the Employer, or upon his
Reemployment Commencement Date.
(h) REEMPLOYMENT AFTER A 1-YEAR PERIOD OF SEVERANCE: If a former
Employee terminates employment and is re-employed by an
Employer or an Affiliated Employer after a 1-Year Period of
Severance, Periods of Service completed prior to the 1-Year
Period of Severance will be counted, subject to the following:
(1) DETERMINATION OF PERIODS OF SERVICE FOR ELIGIBILITY:
For eligibility purposes, if such Employee did not
have a Vested Interest in his or her Participant's
Account before the 1-Year Period of Severance and the
number of the Employee's consecutive 1-Year Periods
of Severance equals or exceeds the greater of five or
the aggregate number of 1-Year Periods of Service,
Periods of Service completed prior to the 1-Year
Period of Severance will not be counted. The
aggregate number of 1-Year Periods of Service will
not include any Period of Service previously
disregarded hereunder by reason of prior 1-Year
Periods of Severance. If such Employee's Periods of
Service are disregarded under this paragraph, he or
she will be treated as a new Employee for eligibility
purposes.
(2) DETERMINATION OF PERIODS OF SERVICE FOR PURPOSES
OTHER THAN ELIGIBILITY: For all purposes other than
eligibility, if the Employee has incurred five
consecutive 1-Year Periods of Severance, Periods of
Service completed prior to such five consecutive
1-Year Periods of Severance will not be counted for
such purposes if the Participant did not have a
Vested Interest in his or her Participant's Account
and the number of the Employee's consecutive 1-Year
Periods of Severance equals or exceeds the aggregate
number of 1-Year Periods of Service before such
period.
(3) ENTRY OR REENTRY INTO THE PLAN: If such Employee was
a Participant before the 1-Year Period of Severance,
such Employee will be reinstated as a Participant
upon his or her Reemployment Commencement Date. If
the Employee was not a Participant before incurring
the 1-Year Period of Severance but (A) had satisfied
the eligibility requirements in Section 2.1, such
Employee will enter the Plan as a Participant on the
later of his or her Reemployment Commencement Date or
the date the Employee would have entered the Plan had
he or she not terminated employment with the
Employer; or (B) had not satisfied the eligibility
requirements set forth in Section 2.1, such Employee
will be eligible to enter the Plan as a Participant
after satisfaction of any such eligibility
requirements, in which event the Employee will enter
the Plan as a Participant on the applicable entry
date set forth in Section 2.2. In all events, the
Employee will receive credit for all Periods of
Service which were completed prior to the 1-Year
Period of Severance.
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(4) RE-ENTRY FOR PURPOSES OF MAKING DEFERRALS:
Notwithstanding the preceding subparagraph, such
Employee, solely for the purpose of making Elective
Deferrals, will re-enter the Plan immediately upon
re-employment.
(i) IGNORING SERVICE FOR ELIGIBILITY IF MORE THAN 1-YEAR PERIOD OF
SERVICE IS REQUIRED: If this Plan at any time provides that an
Employee must complete more than either a 1-Year Period of
Service or 12 months of service for eligibility purposes, and
provides that an Employee will have a 100% Vested Interest in
his or her Participant's Account upon becoming a Participant
in the Plan, then the Period of Service of an Employee who
incurs a 1-Year Period of Severance before satisfying such
eligibility requirement will not be counted for eligibility
purposes.
1.53 PERIOD OF SEVERANCE
See Section 1.52(c).
1.54 PERMISSIVE AGGREGATION GROUP
The term Permissive Aggregation Group means a Required Aggregation
Group plus any Employer plan(s) which when considered as a group with
the Required Aggregation Group would continue to satisfy Code
ss.401(a)(4) and ss.410.
1.55 PLAN
The term Plan means this plan and trust agreement, which is named the
Hot Topic, Inc. 401(k) Profit Sharing Plan.
1.56 PLAN YEAR
The term Plan Year means the Plan's accounting year beginning January
1st and ending the following December 31st.
1.57 POLICY
The term Policy means a life insurance policy or annuity contract
purchased pursuant to the provisions of Section 7.13 of the Plan.
1.58 QMAC
The term QMAC means a Qualified Matching Contribution.
1.59 QNEC
The term QNEC means a Qualified Non-Elective Contribution.
1.60 QUALIFIED JOINT AND SURVIVOR ANNUITY
The term Qualified Joint and Survivor Annuity means an immediate
annuity for the life of the Participant with a survivor benefit for the
life of the Participant's Spouse that is not less than 50% or more than
100% of the annuity payable during the joint lives of the Participant
and his or her Spouse and is the benefit that can be purchased with the
Participant's Vested Aggregate Account. The survivor benefit will be
50% unless a higher percentage is elected by the Participant.
1.61 QUALIFIED MATCHING CONTRIBUTION
The term Qualified Matching Contribution means a Matching Contribution
that (a) is used for the purpose of satisfying the ADP Test or the ACP
Test; (b) a Participant may not elect to receive in cash until
distributed from the Plan; and (c) is subject to the distribution and
nonforfeitability requirements of Code ss.401(k) when made to the Plan.
- 20 -
1.62 QUALIFIED NON-ELECTIVE CONTRIBUTION
The term Qualified Non-Elective Contribution means a contribution
(other than a Matching Contribution or a Qualified Matching
Contribution) that is made by the Employer that (a) is used for the
purpose of satisfying the ADP Test or the ACP Test; (b) a Participant
may not elect to receive in cash until distributed from the Plan; and
(c) is subject to the distribution and nonforfeitability requirements
of Code ss.401(k) when made to the Plan. Qualified Non-Elective
Contributions may be considered in determining the Top Heavy Minimum
Contribution under Section 3.5. For any Plan Year in which the Employer
elects Current Year Testing under Sections 1.2 and/or 1.10, in lieu of
distributing Excess Contributions under Section 5.20 or Excess
Aggregate Contributions under Section 5.21, the Employer may make a
Qualified Non-Elective Contribution on behalf of Participants in an
amount sufficient to satisfy the ADP Test and/or the ACP Test, to the
extent permitted in Sections 1.2 and 1.10.
1.63 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY
The term Qualified Preretirement Survivor Annuity means a survivor
annuity for the life of a deceased Participant's surviving Spouse that
is equal to the amount of benefit that can be purchased by 50% of the
deceased Participant's Vested Aggregate Account balance determined at
the date of death. In determining a Participant's Vested Aggregate
Account balance for purposes of this Section, any security interest
held by the Plan because of a loan outstanding to the Participant will
be taken into consideration.
1.64 REQUIRED AGGREGATION GROUP
The term Required Aggregation Group means (a) each qualified deferred
compensation Plan of the Employer in which at least one Key Employee
participates or participated at any time during the determination
period (regardless of whether the plan has terminated), and (b) any
other qualified deferred compensation plan of the Employer which
enables a plan described in (a) to meet the requirements of Code
ss.401(a)(4) or ss.410.
1.65 REQUIRED BEGINNING DATE
The term Required Beginning Date means, for Plan Years beginning on or
after January 1, 1997, for a Participant who is not a 5% owner, April
1st of the calendar year following the later of the calendar year in
which the Participant reaches Age 70 1/2 or the calendar year in which
the Participant actually retires. For a Participant who is a 5% owner,
the term Required Beginning Date means April 1st of the calendar year
following the calendar year in which the Participant reaches Age 70
1/2. A Participant will be treated as a 5% owner if he or she is a 5%
owner as defined in Code ss.416 at any time during the Plan Year ending
with or within the calendar year in which such Participant reaches Age
70 1/2. Once distributions have begun to a 5% owner, they must continue
even if the Participant ceases to be a 5% owner in a subsequent year.
Notwithstanding the foregoing to the contrary, however, a Participant
may have a later Required Beginning Date determined as follows:
(a) ELIMINATION OF PRE-RETIREMENT AGE 70 1/2 DISTRIBUTION OPTION:
The pre-retirement Age 70 1/2 distribution option will only be
eliminated for Employees who reach Age 70 1/2 in or after a
calendar year that begins after the later of December 31,
1998, or the adoption date of this amended Plan. The
pre-retirement Age 70 1/2 distribution option is an optional
form of benefit under which benefits payable in a particular
distribution form (including any modifications that may be
elected after benefit commencement) begin at a time during the
period that begins on or after January 1st of the calendar
year in which an Employee reaches Age 70 1/2 and ends April 1
of the immediately following calendar year.
- 21 -
(b) ELECTION TO DEFER: If the Administrator offered an election to
defer distributions, a Participant who is not a 5% owner who
reaches Age 70 1/2 in years after 1995 and who made the
election by April 1st of the calendar year following the year
in which he or she reached Age 70 1/2 (or by December 31, 1997
in the case of a Participant who reached Age 70 1/2 in 1996)
may defer distribution until the calendar year following the
calendar year in which his or her retirement occurs. If the
Administrator does not offer such an election, or if the
election is offered but not made, the Participant will begin
receiving distributions by April 1st of the calendar year
following the year in which he or she reaches age 70 1/2 (or
by December 31, 1997 in the case of a Participant who reached
Age 70 1/2 in 1996).
(c) ELECTION TO SUSPEND: If the Administrator offered an election
to suspend distributions, a Participant who is not a 5% owner
who reaches Age 70 1/2 prior to 1997 and who made the election
may stop distributions and recommence by April 1st of the
calendar year following the year in which the Participant
actually retires. In such an event, the Administrator may, on
a uniform non-discriminatory basis, elect that a new Annuity
Starting Date will begin upon the distribution recommencement
date.
1.66 ROLLOVER ACCOUNT
The term Rollover Account means the account to which a Participant's
Rollover Contributions (if permitted under Section 3.7) are allocated.
A Participant will at all times have a 100% Vested Interest in all
amounts credited to his or her Rollover Account.
1.67 ROLLOVER CONTRIBUTION
The term Rollover Contribution means an amount transferred to this Plan
(a) in a trustee to trustee transfer from another qualified plan; (b)
from another qualified plan as a distribution eligible for tax free
rollover treatment and which is transferred by the Participant to this
Plan within 60 days following his receipt thereof; (c) from a conduit
individual retirement account if the only assets therein were
previously distributed to the Participant by another qualified plan as
a distribution eligible for a tax free rollover within 60 days of
receipt thereof and earnings on the assets; or (d) from a conduit
individual retirement account meeting the requirements of (a) and
transferred to this Plan within 60 days of receipt thereof.. Any
portion of a Rollover Contribution made under clause (a) as part of a
trustee to trustee transfer which was subject at the time of the
transfer to the Qualified Joint and Survivor Annuity and Qualified
Pre-retirement Survivor Annuity requirements of Code ss.401(a)(11) must
be distributed in accordance with Section 5.16.
1.68 SAFE HARBOR CONTRIBUTION ACCOUNT
The term Safe Harbor Contribution Account means the sub-account of a
Participant's Account to which is credited any Employer "safe harbor"
contributions that are made to the Plan pursuant to the provisions of
Section 3.6.
1.69 SELF-EMPLOYED INDIVIDUAL
The term Self-Employed Individual means anyone who owns an interest
(other than stock) in the Employer and has Earned Income for the Plan
Year or who would have had Earned Income but for the fact the Employer
had no net profits for the Plan Year.
1.70 SHAREHOLDER-EMPLOYEE
The term Shareholder-Employee means, in the case of an Employer or
Affiliated Employer which is an electing small business corporation, an
individual who is an employee or officer of such electing small
business corporation and owns, or is considered as owning within the
meaning of Code ss.318(a)(1), on any day during the taxable year of
such corporation, more than 5% of the outstanding stock of the
corporation.
- 22 -
1.71 SPONSOR
The term Sponsor means Hot Topic, Inc. (and any successor thereto that
elects to assume sponsorship of this Plan).
1.72 SPOUSE
The term Spouse means the person to whom a Participant is legally
married; provided, however, that such person has been married to the
Participant throughout the one year period ending on the earlier of the
Annuity Starting Date or the date of the Participant's death.
1.73 TERMINATION OF EMPLOYMENT
The term Termination of Employment means that a Participant has ceased
to be an Employee for reasons other than retirement, death, or
Disability.
1.74 TERMINATED PARTICIPANT
The term Terminated Participant means a Participant who has ceased to
be an Employee for reasons other than retirement, death or Disability.
1.75 TOP HEAVY
The term Top Heavy means for any Plan Year beginning after December 31,
1983 (a) that the Top Heavy Ratio exceeds 60% and the Plan is not part
of a Required Aggregation Group or Permissive Aggregation Group; or (b)
that the Plan is a part of a Required Aggregation Group but not a
Permissive Aggregation Group and the Top Heavy Ratio for the group
exceeds 60%; or (c) that the Plan is a part of a Required Aggregation
Group and a Permissive Aggregation Group and the Top Heavy Ratio for
the Permissive Aggregation Group exceeds 60%.
1.76 TOP HEAVY MINIMUM ALLOCATION
The term Top Heavy Minimum Allocation means an amount of Employer
contributions and Forfeitures equal to 3% of an Employee's Compensation
(or such higher or lesser percentage of Compensation as may otherwise
be indicated in Section 3.5).
1.77 TOP HEAVY RATIO
In determining if this Plan is Top Heavy or Super Top Heavy, the Top
Heavy Ratio will be determined in accordance with the following
provisions:
(a) RULE 1: If the Employer maintains one or more defined
contribution plans (including any simplified employee pension
plans) and has not maintained any defined benefit plan which
during the 5-year period ending on the Determination Date had
accrued benefits, the Top Heavy Ratio for this Plan alone or
for the Required or Permissive Aggregation Group is a
fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date
(including any part of any account balance distributed during
the 5-year period ending on the Determination Date), and the
denominator of which is the sum of the account balances
(including any part of any account balance distributed during
the 5-year period ending on the Determination Date) determined
under Code ss.416 and the regulations thereunder. Both the
numerator and the denominator of the Top Heavy Ratio will be
increased to reflect any contribution that are not actually
made as of the Determination Date but that are required to be
taken into account under Code ss.416 and the regulations
thereunder.
(b) RULE 2: If the Employer maintains one or more defined
contribution plans (including a simplified employee pension
plan) and maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
Determination Date has had any accrued benefits, the Top Heavy
Ratio for any Required or Permissive Aggregation Group is a
fraction, the numerator of which is the sum of account
- 23 -
balances under the aggregated defined contribution plans for
all Key Employees determined in accordance with paragraph (a)
above, and the present value of accrued benefits under the
aggregated defined benefit plans for all Key Employees as of
the Determination Date, and the denominator of which is the
sum of the account balances under the aggregated defined
contribution plans for all Participants, determined in
accordance with paragraph (a), and the present value of
accrued benefits under the aggregated defined benefit plans
for all Participants as of the Determination Date, all
determined under Code ss.416 and the regulations thereunder.
The accrued benefits under a defined benefit plan in both the
numerator and denominator of the Top Heavy Ratio are increased
for any distribution made in the 5-year period ending on the
Determination Date.
(c) RULE 3: For purposes of paragraphs (a) and (b), the value of
account balances and the present value of accrued benefits
will be determined as of the most recent Valuation Date that
falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Code ss.416 and the
regulations thereunder for the first and second Plan Years of
a defined benefit plan. The account balances and accrued
benefits will be disregarded for a Participant who (1) is not
a Key Employee but who was a Key Employee in a prior year or
(2) has not been credited with at least 1 Hour of Service with
any Employer maintaining the Plan at any time during the
5-year period ending on the Determination Date. The
calculation of the Top Heavy Ratio and the extent to which
distributions, rollovers, and transfers are taken into account
will be made in accordance with Code ss.416 and the
regulations thereunder. When aggregating plans, the value of
accounts and accrued benefits will be calculated with
reference to the Determination Date that falls within the same
calendar year. The accrued benefit of a Participant other than
a Key Employee will be determined under (1) the method, if
any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer, or (2)
effective as of the first Plan Year beginning after December
31, 1986, if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Code ss.411(b)(1)(C).
Deductible employee contributions will not be taken into
account in determining the Top Heavy Ratio.
(d) DEFINITION OF DETERMINATION DATE: In determining the Top Heavy
Ratio, the term Determination Date means the last day of the
preceding Plan Year except for the first Plan Year when the
Determination Date means the last day of such first Plan Year.
1.78 TRUSTEE
The term Trustee means the person(s) or entity named as trustee or
trustees in this Plan, or in any superseding trust under Section 7.16,
and any successor to such Trustee or Trustees.
1.79 TRUST FUND
The term Trust Fund or Trust means the assets of the Plan.
1.80 VALUATION DATE
Except as otherwise provided in paragraph (c) of the definition of Top
Heavy Ratio, the term Valuation Date means the date on which the
Trustee determines the value of the Trust Fund. The Trust Fund must be
valued at least annually as of the last day of the Plan Year, but the
Administrator can elect to have all or any portion of the assets of the
Trust Fund valued more frequently, including, but not limited to,
semi-annually, quarterly, monthly, or daily.
- 24 -
1.81 VESTED AGGREGATE ACCOUNT
The term Vested Aggregate Account means the aggregate amount in a
Participant's Account, Rollover Account (if any), Voluntary Employee
Contribution Account (if any), and any other accounts as the
Administrator may determine necessary from time to time, in which the
Participant has a Vested Interest.
1.82 VESTED, VESTED INTEREST OR VESTING
The terms Vested, Vested Interest, and Vesting mean a Participant's
nonforfeitable percentage in an account maintained on his or her behalf
under the terms of the Plan. A Participant's Vested Interest in his or
her Participant's Account will be determined under the provisions of
Section 4.6.
1.83 VOLUNTARY EMPLOYEE CONTRIBUTION
The term Voluntary Employee Contribution means a non-deductible
contribution made to the Plan by a Participant.
1.84 VOLUNTARY EMPLOYEE CONTRIBUTION ACCOUNT
The term Voluntary Employee Contribution Account means the account to
which a Participant's Voluntary Employee Contributions are allocated. A
Participant will at all times have a 100% Vested Interest in all
amounts credited to his or her Voluntary Employee Contribution Account.
- 25 -
ARTICLE 2
PLAN PARTICIPATION
2.1 ELIGIBILITY REQUIREMENTS
Any Employee who was a Participant on December 31, 2002 will be
eligible to continue as a Participant. Any other Employee who was not
already a Participant on December 31, 2002 and is in an eligible class
of Employees as described in paragraphs (a), (b) and (c) below, and who
for purposes of this Article 2 is hereafter referred to as an Eligible
Employee, will become eligible to enter the Plan as a Participant on
the applicable entry date described in Section 2.2 in accordance with
the following provisions:
(a) ELIGIBILITY FOR ELECTIVE DEFERRALS: The eligibility
requirements for the purpose of making Elective Deferrals to
the Plan are as follows:
(1) GENERAL ELIGIBILITY REQUIREMENTS: For the purpose of
making Elective Deferrals only, an Eligible Employee
described in subparagraph (2) will enter the Plan as
a Participant on the applicable entry date in Section
2.2 upon reaching Age 21 and completing a 1-Year
Period of Service.
(2) ELIGIBLE CLASSES OF EMPLOYEES: For the purpose of
making Elective Deferrals, all Employees are eligible
to participate in the Plan upon satisfying the
eligibility requirements in subparagraph (1) except
for the following ineligible classes of Employees:
(1) Employees whose employment is governed by the
terms of a collective bargaining agreement between
Employee representatives and the Employer in which
retirement benefits were the subject of good faith
bargaining, unless such agreement expressly provides
for the inclusion of such Employees as Participants
in the Plan; (2) Employees who are non-resident
aliens who do not receive any earned income from the
Employer which constitutes income from sources within
the United States; and (3) Any person who is
considered a Leased Employee but who (A) is not
covered by a plan described in Code ss.414(n)(5), or
(B) is covered by a plan described in Code
ss.414(n)(5) but Leased Employees constitute more
than 20% of the Employer's non-highly compensated
workforce.
(b) ELIGIBILITY FOR MATCHING CONTRIBUTIONS: Matching Contributions
are not currently permitted under the terms of the Plan.
(c) ELIGIBILITY FOR NON-ELECTIVE CONTRIBUTIONS: Non-Elective
Contributions are not currently permitted under the terms of
the Plan.
(d) PARTICIPATION BY EMPLOYEES WHOSE STATUS CHANGES: If an
Employee who is not an Eligible Employee under paragraphs (a),
(b) or (c) above becomes an Eligible Employee thereunder, such
Employee will participate in the Plan immediately solely for
the purpose set forth therein if he or she satisfies the
eligibility requirements set forth in such paragraph and would
have previously become a Participant for the purpose set forth
in such paragraph had he or she been an Eligible Employee
under such paragraph. The participation of a Participant who
becomes a member of an ineligible class will be suspended, and
such Participant will be entitled to an allocation of Employer
contributions and Forfeitures for the Plan Year only to the
extent of Hours of Service completed while an Eligible
Employee. Upon returning to an eligible class of Employees, a
suspended Participant will immediately participate again in
the Plan. The Vested Interest of an Employee who ceases to be
an Eligible Employee will continue to increase in accordance
with Section 4.6.
- 26 -
(e) PARTICIPATION BY FORMER PARTICIPANTS: A Participant who
terminates employment with the Employer for any reason but who
is reemployed as an Eligible Employee will again become a
Participant in the Plan as provided in the definition of
Period of Service.
2.2 ENTRY DATE
An Eligible Employee who has satisfied the eligibility requirements set
forth in Section 2.1 will enter the Plan as a Participant in accordance
with the following provisions:
(a) ENTRY DATE FOR ELECTIVE DEFERRALS: In order to make Elective
Deferrals, an Eligible Employee described in Section 2.1(a)(2)
who satisfies the eligibility requirements in Section
2.1(a)(1) will enter the Plan as a Participant on the first
day of the month that coincides with or next follows the date
on which the Employee first satisfies such eligibility
requirements.
(b) ENTRY DATE FOR MATCHING CONTRIBUTIONS: Matching Contributions
are not currently permitted under the terms of this Plan
(c) ENTRY DATE FOR NON-ELECTIVE CONTRIBUTIONS: Non-Elective
Contributions are not currently permitted under the terms of
this Plan
2.3 WAIVER OF PARTICIPATION
Employees who have satisfied the eligibility requirements set forth in
Section 2.1 are not permitted to waive participation in the Plan.
2.4 PARTICIPATION UPON REEMPLOYMENT
If an Employee terminates employment and is re-employed by the Employer
or an Affiliated Employer, his or her Period of Service for purposes of
eligibility (as well as the time such Employee enters or re-enters the
Plan as a Participant) will be determined in accordance with the rules
described in the definition of Period of Service.
2.5 EXCLUSION OF ELIGIBLE EMPLOYEE
If any Employee who should have been included as a Participant is
erroneously excluded from the Plan in any Plan Year and discovery of
such omission is not made until after a contribution for that Plan Year
has been allocated, the Employer will correct the omission so that the
omitted Employee receives the same amount which the Employee would have
received had he or she not been omitted. Such omission can be corrected
by one or more of the following methods: (a) by making an additional
contribution to the Plan on behalf of the omitted Employee; (b) by
allocating any available Forfeitures on behalf of the omitted Employee;
and/or (c) by any other method of correction permitted under Revenue
Procedure 2000-16 or any subsequent Revenue Procedure or guidance
issued by the Internal Revenue Service.
2.6 INCLUSION OF INELIGIBLE EMPLOYEE
If any person who should not have been included as a Participant is
erroneously included in any Plan Year and discovery of that incorrect
inclusion is not made until after a contribution for that Plan Year has
been allocated, and such ineligible Employee has not received a
distribution of the amount erroneously allocated to him or her, then
the amount erroneously contributed with respect to the ineligible
Employee cannot be refunded to the Employer and will be applied as a
Forfeiture (other than Elective Deferrals, which will be distributed to
the ineligible Employee) for the Plan Year in which the error is
discovered.
- 27 -
ARTICLE 3
CONTRIBUTIONS AND ALLOCATIONS
3.1 EMPLOYER CONTRIBUTIONS
Each Plan Year the Employer will make a contribution to the Plan, the
amount of which will be determined in accordance with the following
provisions:
(a) ELECTIVE DEFERRALS: Each Participant may enter into a Salary
Deferral Agreement authorizing the Employer to withhold a
percentage of the Participant's Compensation as an Elective
Deferral. The amount of each Participant's Elective Deferral
for any Plan Year will be determined in accordance with the
following provisions, subject to any limitations thereon that
may be imposed by the Administrator:
(1) DEFERRAL PERCENTAGE: For each contribution period, a
Participant may elect that up to the maximum amount
of Compensation that will not cause the Plan to
violate the ADP Test for the Plan Year be withheld as
an Elective Deferral. Elective Deferrals may be made
in whole percentages of Compensation or in specific
dollar amounts as designated by the Participant. The
Administrator will have the right to direct that such
percentages of Compensation be rounded to the next
highest or lowest dollar. Furthermore, on a uniform
nondiscriminatory basis, the Administrator may permit
a Participant to identify separate components of the
Participant's Compensation (such as base salary,
bonuses, etc.) and to specify that a different
percentage (or dollar amount) apply to each such
component.
(2) ANNUAL DOLLAR LIMITATION: The actual dollar amount
withheld during the course of a Plan Year under
subparagraph (1) cannot exceed the lesser of (A) the
maximum dollar amount permitted for that Plan Year
under Code ss.402(g)(5), or (B) the maximum amount
permitted for that Plan Year under subparagraph (1).
(3) DEFERRAL ELECTION WITH RESPECT TO BONUSES AND
SEVERANCE: On a uniform nondiscriminatory basis, and
subject to the limits set forth in subparagraph (2)
above, the Administrator may permit a Participant to
make an election to defer up to 100% of (A)
Compensation received as a bonus that is paid after
the end of the Plan Year for which the bonus is
payable, but which is not paid more than two and
one-half months after the last day of the Plan Year;
and (B) Compensation received as severance pay
provided such Compensation is received in a single
lump sum payment. Severance pay that is received in
the form of installment payments is not eligible for
Elective Deferrals under this Plan.
(4) SALARY REDUCTION AGREEMENT: In accordance with such
procedures as may be specified by the Administrator,
each Participant will complete a Salary Deferral
Agreement on a form made available by, and filed
with, the Administrator. A Participant may, in
accordance with those procedures, (A) amend the
agreement to increase or decrease the percentage
being withheld; and (B) suspend or cancel the
agreement. If a Participant cancels or suspends the
agreement, the Participant will not be permitted to
put a new agreement into effect until such time as
set forth in the procedures established by the
Administrator. If necessary to insure that the Plan
satisfies the ADP Test, the Administrator may also
amend or terminate a Participant's agreement on
written notice to the Participant.
- 28 -
(5) PARTICIPANT ELECTION TO DEFER UP TO 100% OF
COMPENSATION: On a uniform nondiscriminatory basis,
the Administrator may permit a Participant whose
Salary Deferral Agreement has not authorized the
Employer to withhold at the maximum rate permitted
under subparagraph (1) to increase the total amount
withheld for a Plan Year to the maximum rate
permitted under subparagraph (1), in which event the
Participant may authorize the Employer to withhold a
supplemental amount up to 100% of his or her eligible
Compensation for one or more pay periods. In no event
can the sum of the amount withheld under the Salary
Deferral Agreement plus the supplemental withholding
exceed the lesser of (A) the maximum amount permitted
under subparagraph (1) above; or (B) the maximum
dollar amount permitted for that Plan Year under Code
ss.402(g)(5); or (C) 25% of the Participant's Code
ss.415 Compensation for that Plan Year.
(6) ELECTIVE DEFERRALS MUST SATISFY ADP TEST: All
Elective Deferrals made for a Plan Year must satisfy
the ADP Test. Elective Deferrals that exceed the Code
ss.402(g)(5) dollar limitation will be deemed Excess
Elective Deferrals and will be returned under Section
5.19. Elective Deferrals that do not satisfy the ADP
Test will be deemed Excess Contributions and will be
returned under Section 5.20.
(7) PAYROLL DEDUCTION AUTHORIZATION: An Elective Deferral
will constitute a payroll deduction authorization for
purposes of applicable state law.
(b) MATCHING CONTRIBUTIONS: Matching Contributions are not
currently permitted.
(c) NON-ELECTIVE CONTRIBUTIONS: Non-Elective Contributions are not
currently permitted.
(d) QUALIFIED MATCHING CONTRIBUTIONS: The Employer may make a
Qualified Matching Contribution each Plan Year in such amount
as the Employer, in its sole discretion, may determine. The
Employer may also elect to treat all or any portion of a
Matching Contribution as a Qualified Matching Contribution.
(e) QUALIFIED NON-ELECTIVE CONTRIBUTIONS: The Employer may elect
to make a Qualified Non-Elective Contribution each Plan Year
in such amount as the Employer determines. The Employer may
also elect to treat as a Qualified Non-Elective Contribution
all or any portion of a Non-Elective Contribution not yet
allocated under Section 3.2(c).
(f) CONTRIBUTION PERIOD: Each Plan Year, any contribution that is
made under the terms of the Plan may, at the election of the
Administrator, be contributed to the Plan each payroll period;
each month; each Plan quarter; on an annual basis; or on any
other less than annual contribution period basis as determined
by the Employer, provided such contribution period does not
discriminate in favor of Highly Compensated Employees. The
Employer may elect a different contribution period for each
type of contribution.
(g) CONTRIBUTION LIMITATIONS: Notwithstanding paragraphs (a), (b)
and (c), (1) the sum of all Employer contributions will not
exceed the maximum amount deductible under Code ss.404 and
will not exceed the limitations set forth in Code ss.415; and
(2) for Plan Years beginning on or after January 1, 1997, if
this Plan provides contributions or benefits for Employees
some or all of whom are Owner-Employees, such contributions or
benefits can only be provided with respect to the Earned
Income of such Owner-Employee which is derived from the trade
or business with respect to which the Plan is established.
(h) REFUND OF CONTRIBUTIONS: Contributions made to the Plan by the
Employer can only be returned to the Employer in accordance
with the following provisions:
- 29 -
(1) FAILURE TO INITIALLY QUALIFY: If the Plan fails to
initially satisfy the requirements of Code ss.401(a)
and the Employer declines to amend the Plan to
satisfy such requirements, contributions made prior
to the date such qualification is denied must be
returned to the Employer within 1 year of the date of
such denial, but only if the application for the
qualification is made by the time prescribed by law
for filing the Employer's tax return for the taxable
year in which the Plan is adopted, or by such later
date as the Secretary of the Treasury may prescribe.
(2) CONTRIBUTIONS MADE UNDER A MISTAKE OF FACT: If a
contribution is attributable in whole or in part to a
good faith mistake of fact, including a good faith
mistake in determining the deductibility of the
contribution under Code ss.404, then an amount may be
returned to the Employer which is equal to the excess
of the amount contributed over the amount which would
have been contributed had the mistake not occurred.
Earnings attributable to any such excess contribution
will not be returned, but losses attributable to the
excess contribution will reduce the amount so
returned. Such amount will be returned within one
year of the date the contribution was made or the
deduction disallowed, as the case may be.
(3) NONDEDUCTIBLE CONTRIBUTIONS: Except to the extent an
Employer may intentionally make a nondeductible
contribution, for example to correct an
administrative error or restore a Forfeiture, any
contribution by the Employer is conditioned on its
deductibility and will otherwise be returned to the
Employer.
(i) FORM OF CONTRIBUTION: The Employer's contribution (if any) may
consist of (1) cash; (2) qualifying employer securities or
qualifying employer real property as defined in ss.407(d) of
ERISA, provided the acquisition of such qualifying employer
securities or qualifying real property securities satisfies
the requirements of ss.408(e) of ERISA; or (3) any other
property that is permitted under Code ss.4975 and is
acceptable to the Trustee.
3.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS
Subject to the Top Heavy allocation requirements under Section 3.5 and
the Code ss.415 limitations of Article 6, each Eligible Participant's
share of the various types of Employer contributions made under the
Plan will be allocated to his or her Participant's Account in
accordance with the following provisions:
(a) ELECTIVE DEFERRALS: Each Participant's Elective Deferrals
contributed under Section 3.1(a) will be allocated to the
Participant's Elective Deferral Account.
(b) MATCHING CONTRIBUTIONS: Matching Contributions are not
currently permitted.
(c) NON-ELECTIVE CONTRIBUTIONS: Non-Elective Contributions are not
currently permitted.
(d) QUALIFIED MATCHING CONTRIBUTIONS: Qualified Matching
Contributions contributed under Section 3.1(d) and any
Matching Contributions permitted and contributed under Section
3.1(b) that are treated as QMACs will be allocated in
accordance with the following provisions to the Qualified
Matching Contribution Account of each Participant for whom a
Qualified Matching Contribution is made for the Plan Year:
(1) PARTICIPANTS ELIGIBLE FOR ALLOCATION: Qualified
Matching Contributions will be allocated on behalf of
each Eligible Participant who for the Plan Year is a
Non-Highly Compensated Employee who made an Elective
Deferral for the Plan Year and is considered an
Eligible Participant for the purpose of receiving a
- 30 -
Matching Contribution allocation, or if eligibility
for Matching Contributions is more restrictive than
for Elective Deferrals, is considered an Eligible
Participant only for the purpose of making Elective
Deferrals.
(2) PERMISSIBLE METHODS OF ALLOCATION: Any allocation of
Qualified Matching Contributions to an Eligible
Participant who is described in subparagraph (1)
above will be made using one of the methods described
in subparagraphs (2)(A) through (F) below. However,
the actual method used for a particular Plan Year
will be the method set forth in subparagraph (3)
below.
(A) PRO-RATA METHOD: The allocation will be made
in the ratio that the Elective Deferral of
each such Eligible Participant bears to the
total Elective Deferrals of all such
Eligible Participants, except that any
Elective Deferrals that are not used to
determine the basic Matching Contribution
allocated to a Participant under Section
3.1(b) or Section 3.2(b) will not be
counted.
(B) PRO-RATA METHOD USING BOTTOM-UP BASED ON
COMPENSATION: The allocation will be made
beginning with a group of one or more of
such Eligible Participants and who have the
lowest Compensation for the Plan Year and
continuing with the next one or more such
Eligible Participants who have the next
lowest Compensation until no further
allocations are required to pass the ADP or
ACP Tests. The amount so allocated for the
Plan Year to any such Eligible Participant
will be in the ratio that such Eligible
Participant's Elective Deferral bears to the
total Elective Deferrals of all such
Eligible Participants, except that any
Elective Deferrals not used to determine
basic Matching Contributions allocated to a
Participant under Section 3.1(b) or 3.2(b)
will not be counted.
(C) PRO-RATA METHOD USING BOTTOM-UP BASED ON
ELECTIVE DEFERRALS: The allocation will be
made beginning with a group of one or more
of such Eligible Participants for the Plan
Year and who have the lowest Elective
Deferral amount for the Plan Year and
continuing with the next one or more
Eligible Participants who have the next
lowest Elective Deferral amount until no
further allocations are required for the
Plan to pass the ADP or ACP Tests. The
amount so allocated for the Plan Year to any
such Eligible Participant will be in the
ratio that such Eligible Participant's
Elective Deferral bears to the total
Elective Deferrals of all such Eligible
Participants, except that any Elective
Deferrals not used to determine the basic
Matching Contributions allocated to a
Participant under Section 3.1(b) or 3.2(b)
will not be counted.
(D) PER CAPITA METHOD: The amount that is
allocated for the Plan Year to any such
Eligible Participant for the Plan Year will
be on a per capita (equal dollar amount)
basis to each such Eligible Participant.
(E) PER CAPITA METHOD USING BOTTOM-UP BASED ON
COMPENSATION: The allocation will be made
beginning with a group of one or more of
such Eligible Participants who have the
lowest Compensation for the Plan Year and
continuing with the next one or more such
Eligible Participants who have the next
lowest Compensation until no further
- 31 -
allocations are required for the Plan to
pass the ADP or ACP Tests. The amount so
allocated for the Plan Year to any such
Eligible Participant will be on a per capita
(equal dollar amount) basis to each such
Eligible Participant.
(F) PER CAPITA METHOD USING BOTTOM-UP BASED ON
ELECTIVE DEFERRALS: The allocation will be
made beginning with a group of one or more
of such Eligible Participants who have the
lowest Elective Deferral amount for the Plan
Year and continuing with the next one or
more such Eligible Participants who have the
next lowest Elective Deferral amount until
no further allocations are required for the
Plan to pass the ADP or ACP Tests. The
amount so allocated for the Plan Year to any
such Eligible Participant will be on a per
capita (equal dollar) basis to each such
Eligible Participant.
(3) ACTUAL METHOD OF QMAC ALLOCATION: Until this
subparagraph (3) is amended by the Employer to
specify a different method of allocation, QMACs will
be allocated using the method described in
subparagraph (2)(A) above.
(4) PERMISSIBLE DISAGGREGATION: Permissible
disaggregation under Code ss.410(b)(4) or
ss.401(k)(3)(F) will be used for the ADP and/or ACP
Test for the Plan Year to further limit the number of
Eligible Participants who receive such allocation to
those Participants (i) who also satisfy the maximum
minimum age and service requirements of Code
ss.410(a)(1)(A) for the purpose of making Elective
Deferrals or eligibility to share in Matching
Contributions, or (ii) to those Participants who do
not satisfy the maximum minimum age and service
requirements of Code ss.410(a)(1)(A) for the purpose
of making Elective Deferrals or eligibility to share
in Matching Contributions; and if permissible
disaggregation under Code ss.410(b)(4) is used for
the ADP and/or ACP Tests for the Plan Year, the
Employer will separately determine the amount to be
allocated hereunder with respect to such Eligible
Participants in clauses (i) and (ii).
(5) ALLOCATION TO HCES: If the Employer makes an
additional Qualified Matching Contribution after no
further allocation of QMACs is required for the Plan
to pass the ADP and/or ACP Tests, any such
contribution will be allocated in the same manner
described in subparagraph (3) above (provided however
that the ADP and/or ACP Tests continue to be
satisfied) to all such Eligible Participants who for
the Plan Year are HCEs (or to all such Eligible
Participants who are HCEs or NHCEs) who made an
Elective Deferral and are considered Eligible
Participants for the purpose of receiving a Matching
Contribution allocation.
(e) QUALIFIED NON-ELECTIVE CONTRIBUTIONS: Qualified Non-Elective
Contributions contributed under Section 3.1(e) and
Non-Elective Contributions contributed under Section 3.1(c)
that are treated as QNECS will be allocated to the Qualified
Non-Elective Contribution Account of an Eligible Participant
in accordance with the following:
(1) PARTICIPANTS ELIGIBLE FOR ALLOCATION: Subject to
subparagraphs (2) and (3) below, Qualified
Non-Elective Contributions will be allocated on
behalf of each Eligible Participant who for the Plan
Year is a Non-Highly Compensated Employee and is
considered an Eligible Participant for the purpose of
receiving a Non-Elective Contribution allocation for
the Plan Year, or if Non-Elective Contributions are
not permitted or if eligibility for Non-Elective
Contributions is more restrictive than for Elective
Deferrals, is considered an Eligible Participant only
for the purpose of making Elective Deferrals.
- 32 -
(2) PERMISSIBLE METHODS OF ALLOCATION: Any allocation of
Qualified Non-Elective Contributions under this
Section to an Eligible Participant who is described
in subparagraph (1) above will be made using one of
the methods described in subparagraphs (2)(A) through
(D) below. However, the actual method used for a
particular Plan Year will be the method set forth in
subparagraph (3) below.
(A) PRO-RATA METHOD: The amount that is so
allocated for any such Eligible Participant
will be in the ratio that his or her
Compensation bears to the total Compensation
of all such Eligible Participants.
(B) PRO-RATA METHOD USING BOTTOM-UP BASED ON
COMPENSATION: The allocation will be made
beginning with a group of one or more of
such Eligible Participants who have the
lowest Compensation for the Plan Year and
continuing with the next one or more such
Eligible Participants who have the next
lowest Compensation until no further
allocations are required to pass the ADP or
ACP Tests. The amount that is so allocated
for the Plan Year to any such Eligible
Participant will be in the ratio that the
Compensation of each such Eligible
Participant bears to the total Compensation
of all such Eligible Participants.
(C) PER CAPITA METHOD: The amount that is so
allocated for the Plan Year to any such
Eligible Participant will be on a per capita
(equal dollar amount) basis to each Eligible
Participant.
(D) PER CAPITA METHOD USING BOTTOM-UP BASED ON
COMPENSATION: The allocation will be made
beginning with a group of one or more of
such Eligible Participants who have the
lowest Compensation for the Plan Year and
continuing with the next one or more
Eligible Participants who have the next
lowest Compensation until no further
allocations are required for the Plan to
pass the ADP or ACP Tests. The amount so
allocated for the Plan Year to any such
Eligible Participant will be on a per capita
(equal dollar amount) basis to each such
Eligible Participant.
(3) ACTUAL METHOD OF QNEC ALLOCATION: Until this subparagraph (3)
is amended by the Employer to specify a different method of
allocation, QNECs will be allocated using the method described
in subparagraph (2)(A) above.
(4) PERMISSIBLE DISAGGREGATION: Permissable disaggregation under
Code ss.410(b)(4) or ss.401(k)(3)(F) will be used for the ADP
and/or ACP Test for the Plan Year to further limit the number
of Eligible Participants who receive such allocation to those
Participants (i) who also satisfy the maximum minimum age and
service requirements of Code ss.410(a)(1)(A) for the purpose
of making Elective Deferrals or eligibility to share in
Matching Contributions, or (ii) to those Participants who do
not satisfy the maximum minimum age and service requirements
of Code ss.410(a)(1)(A) for the purpose of making Elective
Deferrals or eligibility to share in Matching Contributions;
and if permissable disaggregation under Code ss.410(b)(4) is
used for the ADP and/or ACP Tests for the Plan Year, the
Employer will separately determine the amount to be allocated
hereunder with respect to such Eligible Participants in
clauses (i) and (ii).
- 33 -
(5) ALLOCATION TO HCES: If the Employer makes an additional
Qualified Non-Elective Contribution after no further
allocation of QNECs is required for the Plan to pass the ADP
and/or ACP Tests, any such contribution will be allocated in
the same manner described in subparagraph (3) (provided
however that the ADP and/or ACP Tests continue to be
satisfied) to all such Eligible Participants who for the Plan
Year are HCEs (or to all such Eligible Participants who are
HCEs or NHCEs) and are considered Eligible Participants for
the purpose of receiving a Non-Elective Contribution
allocation for the Plan Year.
3.3 ALLOCATION OF EARNINGS AND LOSSES
As of each Valuation Date, accounts which have not been distributed
since the prior Valuation Date will have the net income of the Trust
Fund earned since the prior Valuation Date allocated in accordance with
such rules and procedures as may be established by the Administrator,
and applied in a uniform and nondiscriminatory manner; or accounts will
be valued and adjusted as hereinafter set forth in this Section. Net
income is the net of any interest, dividends, unrealized appreciation
and depreciation, capital gains and losses, and investment expenses of
the Trust Fund determined on each Valuation Date.
(a) NON-SEGREGATED ELECTIVE DEFERRAL ACCOUNTS: Elective Deferral
Accounts which have not been segregated from the general Trust
Fund for investment will have net income allocated thereto in
the ratio that the value of each such non-segregated account
bears to the total value of all such non-segregated accounts
on the Valuation Date. For purposes of this paragraph, the
value of each such account on the Valuation Date will be
determined on a time-weighted basis as determined by the
Administrator.
(b) NON-SEGREGATED MATCHING CONTRIBUTION ACCOUNTS: Matching
Contributions are not currently permitted under the terms of
this Plan.
(c) NON-SEGREGATED NON-ELECTIVE CONTRIBUTION ACCOUNTS:
Non-Elective Contributions are not currently permitted under
the terms of this Plan.
(d) FORFEITURE ACCOUNT: The Forfeiture Account will share in the
allocation of the Plan's earnings and losses under this
Section.
(e) SEGREGATED ACCOUNTS AND POLICY DIVIDENDS: Any accounts which
have been segregated for investment purposes, including any
Directed Investment Accounts that may be established in
accordance with Section 7.15 and any other accounts (including
Directed Investment Accounts) which are valued on a daily
basis, will only have the net income earned thereon allocated
thereto. Any insurance Policy dividends or credits will be
allocated to the Participant's Account for whose benefit the
Policy is held.
3.4 ALLOCATION OF FORFEITURES
The Administrator may elect each Plan Year to first use all or any
portion of the Forfeiture Account to pay administration costs of the
Plan, and/or to restore previously forfeited Account balances as
provided under Section 5.7 or Section 5.13. Subject to the Top Heavy
allocation requirements under Section 3.5 and the Code ss.415
limitations of Article 6, any remaining Forfeitures will be used by the
Administrator in the following manner:
(a) FORFEITURES OF MATCHING CONTRIBUTIONS: Matching Contributions
are not currently permitted under the terms of the Plan.
- 34 -
(b) FORFEITURES OF NON-ELECTIVE CONTRIBUTIONS: Non-Elective
Contributions are not currently permitted under the terms of
the Plan.
(c) EXCESS AGGREGATE CONTRIBUTIONS: The Administrator may elect
that all of any portion of the Forfeitures which are
attributable to Excess Aggregate Contributions will (1) be
allocated (after all other Forfeitures) to the Matching
Contribution Account of each Participant who is a Non-Highly
Compensated Employee who made Elective Deferrals or Employee
contributions. The allocation will be made in the ratio which
each such Participant's Compensation for the Plan Year bears
to the total Compensation of all such Participants for such
Plan Year; and/or (2) be applied to reduce Employer
contributions for the Plan Year in which the excess arose to
the extent it exceeds Employer contributions or the Employer
has already contributed for such Plan Year.
3.5 TOP HEAVY MINIMUM ALLOCATION
In any Top Heavy Plan Year in which a Key Employee receives an
allocation of Employer contributions or Forfeitures, each Employee who
is described in paragraph (a) below will receive the Top Heavy benefit
required under the provisions of Code ss.416, such benefit to be
determined in accordance with the following provisions:
(a) PARTICIPANTS WHO MUST RECEIVE TOP HEAVY MINIMUM ALLOCATION:
For each Plan Year in which a Top Heavy contribution is
required, the Top Heavy Minimum Allocation (or such lesser
amount as may be permitted under paragraph (b) below) will be
made for each Participant who is a Non-Key Employee employed
by an Employer on the last day of the Plan Year in an eligible
class of Employees as described in Section 2.1, even if such
Participant (1) fails to complete any minimum Hours of Service
or Period of Service required to receive an allocation of
Employer contributions or Forfeitures for the Plan Year; (2)
fails to make elective contributions to the Plan in the case
of a cash or deferred arrangement; (3) receives Compensation
that is less than a stated amount; or (4) declines to make a
mandatory Employee contribution to the Plan.
(b) LESSER ALLOCATION ALLOWED: If the amount of Employer
contributions and Forfeitures allocated to the Participant's
Account of each Key Employee for the Plan Year is less than 3%
of his or her Compensation, and if this Plan is not required
to be included in an Aggregation Group to enable a defined
benefit plan to meet the requirements of Code ss.401(a)(4) or
ss.410, then the amount allocated under this Section for each
Participant who is described in paragraph (a) above will be
equal to the largest percentage of Employer contributions and
Forfeitures allocated to the Participant's Account of a Key
Employee for that Plan Year, determined after taking into
account elective contributions made by a Key Employee to a
cash or deferred arrangement maintained by the Employer.
(c) PARTICIPATION IN MULTIPLE DEFINED CONTRIBUTION PLANS: If a
Participant described in paragraph (a) above participates in
this Plan and in one or more defined contribution plans that
are included with this Plan in a Required Aggregation Group,
and if the allocation of Employer contributions and
Forfeitures in this Plan or any other such defined
contribution plan is insufficient to satisfy the Top Heavy
requirement with respect to such Participant, such requirement
will nevertheless be deemed to be satisfied if the aggregate
allocation of Employer contributions and Forfeitures made
under this Plan and all other such plans on behalf of such
Participant is sufficient to satisfy the Top Heavy
requirement. If not, the Employer will make an additional
contribution to this Plan and/or to one or more such plans on
behalf of the Participant in order that the aggregate
allocation of Employer contributions and Forfeitures to this
Plan and all such plans satisfies the Top Heavy requirements
with respect to such Participant.
- 35 -
(d) PARTICIPATION IN DEFINED BENEFIT PLAN AND DEFINED CONTRIBUTION
PLAN: Any Participant described in paragraph (a) above who
participates in this Plan and in a defined benefit plan which
is included with this Plan in a Required Aggregation Group
will, in lieu of the allocation provided under paragraph (a)
above, receive an allocation under this Plan (or any other
defined contribution plan sponsored by the Employer) which is
equal to 5% of Compensation. However, in any Top Heavy
Limitation Year beginning before January 1, 2000 in which the
Employer wishes to avail itself of the adjustment described in
Section 6.5(f), (1) the 5% allocation described herein will be
increased to 7.5%; and (2) the allocation under paragraph (a)
above for each Non-Key Employee described therein who is a
Participant only in this Plan will be increased from 3% to 4%
of Compensation. Notwithstanding the foregoing to the contrary
however, the Administrator may determine, in a uniform
non-discriminatory manner which is intended to satisfy the
requirements of Code ss.416(f) regarding the preclusion of
required duplication and inappropriate omission of Top Heavy
minimum benefits or contributions, that such Non-Key Employee
will receive the minimum Top Heavy benefit required under Code
ss.416 under the defined benefit plan in lieu of any such
benefit under the terms of this Plan.
(e) CONTRIBUTIONS THAT CAN BE USED TO SATISFY TOP HEAVY MINIMUM:
The following contributions will be taken into account in
determining if the Employer has contributed an amount
necessary to satisfy the requirements of this Section:
Non-Elective Contributions; Qualified Non-Elective
Contributions; Safe Harbor Non-Elective Contributions under
Section ; and any other contributions as may be permitted by
law. However, Elective Deferrals cannot be used to satisfy the
Top Heavy requirements.
3.6 SAFE HARBOR CONTRIBUTIONS
For Plan Years beginning on or after January 1, 1999, this Section will
apply for any such Plan Year in which the Sponsor, by the Sponsor's
written resolution and issuance of a Safe Harbor Notice (as described
in paragraph (d) below), elects to administer the Plan pursuant to the
"safe harbor" provisions of Code ss.401(k)(12) (pertaining to
alternative methods of satisfying the ADP Test) and/or Code
ss.401(m)(11) (pertaining to additional alternative methods of
satisfying the ACP Test). The Sponsor's written resolution must specify
the Plan Year for which the safe harbor is elected, the method by which
the safe harbor is to be satisfied, and whether "safe harbor"
contributions will be made to HCEs as well as NHCEs. The Sponsor's
written resolution will be deemed to be an amendment to this Plan if
made in accordance with Notice 98-52, Notice 2000-3 and any subsequent
guidance issued by the Internal Revenue Service.
(a) DEFINITIONS: For any Plan Year in which the Sponsor elects to
administer the Plan in accordance with this Section, the
following definitions will apply:
(1) ACP TEST SAFE HARBOR MATCHING CONTRIBUTION: The term
ACP Test Safe Harbor Matching Contribution means a
Matching Contribution described in paragraph (c)
below.
(2) ADP TEST SAFE HARBOR CONTRIBUTION: The term ADP Test
Safe Harbor Contribution means a "Basic Matching
Contribution" as described in paragraph (b)(1); an
"Enhanced Matching Contribution" as described in
paragraph (b)(2); and a Non-Elective Contribution as
described in paragraph (b)(3).
(3) COMPENSATION: The term Compensation is defined in
Section 1.16, except that for purposes of this
Section: (1) no dollar limitation other than the Code
ss.401(a)(17) limitation will apply under this
paragraph to Non-Highly Compensated Employees; and
- 36 -
(2) Compensation may, at the discretion of the
Administrator, be excluded (i) for any period during
which an Employee was not a Participant in the Plan;
and (ii) for any period during which a cash or
deferred election was not in effect under the terms
of the Plan. However, solely for purposes of
determining Compensation subject to a Participant's
deferral election, the Employer may use an
alternative definition to the one described in the
preceding sentence, provided such alternative
definition is a reasonable definition within the
meaning of regulation ss.1.414(s)-1(d)(2) and permits
each Participant to make sufficient Elective
Deferrals to receive the maximum amount of Matching
Contributions (determined using the definition of
Compensation described in the preceding sentence)
available under the Plan.
(4) MATCHING CONTRIBUTION: The term Matching Contribution
means a contribution made by the Employer because of
a Safe Harbor Participant's Elective Deferrals.
(5) SAFE HARBOR PARTICIPANT: The term Safe Harbor
Participant means each Participant who (i) is a
Non-Highly Compensated Employee (and if the Employer
elects, one or more Highly Compensated Employees) for
the Plan Year; and (ii) was eligible to make an
Elective Deferral at any time during the Plan Year or
who would have been eligible to make Elective
Deferrals but for a suspension due to a hardship
distribution or a statutory limitation (such as Code
ss.402(g) and ss.415). However, for Plan Years
beginning on or after January 1, 1999, a Safe Harbor
Participant will only include those Participants
described in the preceding sentence who have reached
Age 21 and completed 1 at least Year of Service.
(b) ADP TEST SAFE HARBOR CONTRIBUTIONS: For a Plan Year in which
the Employer wishes to utilize the alternative method of
satisfying the ADP Test, the Employer must make an ADP Test
Safe Harbor Contribution to the Plan in the form of a "Basic
Matching Contribution", an "Enhanced Matching Contribution"
and/or a "Safe Harbor Non-Elective Contribution", or a "Safe
Harbor Alternative Contribution". The Employer must specify in
the Safe Harbor Notice which ADP Test Safe Harbor Contribution
it intends to make for the Plan Year, and any such
contribution will be made in accordance with one of the
following provisions:
(1) BASIC MATCHING CONTRIBUTION: If the Employer elects
to make a Basic Matching Contribution, it will be
made on behalf of each Safe Harbor Participant in an
amount equal to the sum of (i) 100% of the amount
such Participant's Elective Deferrals that do not
exceed 3% of his or her Compensation; plus (ii) 50%
of the amount of such Participant's Elective
Deferrals that exceed 3% of his or her Compensation
but do not exceed 5% of Compensation ("Basic Matching
Contributions"). The maximum match that can be made
under this Basic Matching Contribution formula is 4%
of Compensation which would apply to any Safe Harbor
Participant who defers at least 5% of Compensation.
(2) ENHANCED MATCHING CONTRIBUTION: If the Employer
elects to make an "Enhanced Matching Contribution" on
behalf of each Safe Harbor Participant, such
contribution will be an amount equal to the sum of
(A) and (B) as follows:
(A) The amount of such Participant's Elective
Deferrals that do not exceed the percentage
specified in the Safe Harbor Notice (which
percentage must be at least 3% but not more
than 6%) of Compensation; plus
- 37 -
(B) The percentage specified in the Safe Harbor
Notice of such Participant's Elective
Deferrals that exceed the percentage
specified in the Safe Harbor Notice (which
percentage must be at least 3% but not more
than 6%) of the Participant's Compensation
for the Plan Year and that do not exceed the
percentage specified in the Safe Harbor
Notice of the Employee's Compensation for
the Plan Year. Notwithstanding the
foregoing, Matching Contributions
contributed under this subparagraph must, at
any rate of Elective Deferrals, equal at
least the Matching Contribution the
Participant would have received if the
Employer were making Basic Matching
Contributions, but the rate of match cannot
increase as deferrals increase.
(3) SAFE HARBOR NON-ELECTIVE CONTRIBUTION: If the
Employer elects to make a Safe Harbor Non-Elective
Contribution for each Safe Harbor Participant, it
will be an amount equal to at least 3% of each such
Participant's Compensation.
(4) ALLOCATION OF ADP TEST SAFE HARBOR CONTRIBUTIONS: All
ADP Test Safe Harbor Contributions (other than Safe
Harbor Alternative Contributions) will be allocated
to a Participant's Safe Harbor Contribution Account;
and under no circumstances will such contributions be
allocated with regard to permitted disparity under
Code ss.401(1).
(5) VESTING AND DISTRIBUTION OF ADP TEST SAFE HARBOR
CONTRIBUTIONS: ADP Test Safe Harbor Contributions
allocated to a Participant's Safe Harbor Contribution
Account will be 100% Vested at all times, and can
only be distributed upon the earlier of the date a
Participant incurs a Termination of Employment; the
date a Participant dies; the date a Participant
suffers a Disability; the date a Participant reaches
Age 59 1/2 if on or after such date in-service
withdrawals are permitted under Section 5.18; or the
date an event described in Code ss.401(k)(10) occurs.
ADP Test Safe Harbor Contributions may not be
distributed because of hardship.
(6) TRUE-UP ELECTION: If for any Plan Year "Basic
Matching Contributions" or "Enhanced Matching
Contributions" are made to the Plan on a basis that
is more frequent than annual, and if on the last day
of any such Plan Year the dollar amount of any such
contribution made on behalf of a Safe Harbor
Participant is less than the dollar amount that would
have been made if such contribution for that Plan
Year had been contributed on an annual basis only,
then the Employer may elect for any such Plan Year to
make an additional contribution in order to make the
amount contributed for a Safe Harbor Participant for
the full Plan Year equal to the amount that would
have been made if the contribution for that Plan Year
had been contributed on an annual basis only.
However, any such additional contribution can only be
made to the Plan on a uniform nondiscriminatory
basis.
(c) ACP TEST SAFE HARBOR MATCHING CONTRIBUTIONS: In order to use
the alternative method of satisfying the ACP Test, the
Employer may, in addition to the ADP Test Safe Harbor
Contributions described in paragraph (b) above, elect in its
Safe Harbor Notice to make an ACP Test Safe Harbor Matching
Contribution to the Plan on behalf of each Safe Harbor
Participant. Such contribution will be made in accordance with
the following provisions, and must be equal to one of the
following amounts:
- 38 -
(1) SINGLE TIER FIXED FORMULA: The amount determined by
multiplying the Safe Harbor Participant's Elective
Deferrals for the Plan Year by the matching
percentage specified in the Safe Harbor Notice;
provided, however, that such amount cannot exceed 6%
of the Safe Harbor Participant's Compensation.
(2) TWO TIERED FIXED FORMULA: The amount determined by
multiplying the Safe Harbor Participant's Elective
Deferrals that do not exceed the percentage specified
in the Safe Harbor Notice of such Participant's
Compensation for the Plan Year by the "first tier"
matching percentage specified in the Safe Harbor
Notice, plus the amount determined by multiplying the
Safe Harbor Participant's Elective Deferrals
thereafter by the "second tier percentage" specified
in the Safe Harbor Notice, but no such contribution
will be made with respect to Elective Deferrals that
exceed 6% of the Participants Compensation.
Notwithstanding the foregoing, the "second tier
percentage" cannot exceed the "first tier
percentage".
(3) SINGLE TIER DISCRETIONARY FORMULA: An amount
determined by multiplying the Safe Harbor
Participant's Elective Deferrals for the Plan Year by
a discretionary percentage, excluding any such
Elective Deferrals in excess of 6% of the Safe Harbor
Participant's Compensation; provided, however, that
such amount cannot exceed 4% of the Safe Harbor
Participant's Compensation.
(4) OTHER FORMULAS: An amount determined by any other
formula in which (i) Matching Contributions are not
made on Elective Deferrals in excess of 6% of
Compensation, (ii) the amount of Matching
Contributions subject to the Employer's discretion
cannot exceed 4% of Compensation, (iii) no HCE can
receive a greater rate of Matching Contributions than
an NHCE at the same rate of Elective Deferrals, and
(iv) the rate of Matching Contributions cannot
increase as a Participant's Elective Deferrals
increase.
(5) VESTING AND DISTRIBUTION OF ACP TEST SAFE HARBOR
CONTRIBUTIONS: Unless otherwise indicated in the Safe
Harbor Notice to be nonforfeitable, ACP Test Safe
Harbor Matching Contributions will be Vested in
accordance with the Vesting schedule in Section
4.6(c). Forfeitures of non-Vested ACP Test Safe
Harbor Matching Contributions will be used to reduce
Employer contributions.
(d) SAFE HARBOR NOTICE: The term Safe Harbor Notice means a
written notice provided by the Employer to all eligible
Employees in accordance with Notice 98-52 and 2000-3, and any
subsequent guidance issued by the Internal Revenue Service. In
addition to any other election periods provided under the
Plan, each Participant may make or modify a deferral election
during the 30-day period immediately following receipt of the
Notice.
3.7 ROLLOVER CONTRIBUTIONS
Subject to any rules or procedures that may be established by the
Administrator under paragraph (f) below, any Employee who is in an
eligible class of Employees, regardless of whether such Employee has
satisfied the Plan's eligibility requirements, may, with the consent of
the Administrator, make Rollover Contributions to the Plan. Rollover
Contributions will be allocated to a Participant's Rollover Account
and, subject to any rules or procedures established hereunder, will be
administered in accordance with the following provisions:
(a) INVESTMENT OF ROLLOVER ACCOUNTS: Except for that portion which
a Participant may be permitted to self-direct under Section
7.15, the Administrator may choose for investment purposes to
either segregate Rollover Accounts into separate interest
bearing accounts or to invest Rollover Accounts as part of the
general Trust Fund, in which case such accounts will share in
the allocation of earnings and losses under Section 3.3(a).
- 39 -
(b) WITHDRAWAL OF ROLLOVERS: Subject to paragraph (c) below, an
Employee may request a withdrawal of all or any portion of his
or her Rollover Account at any time prior to becoming a
Participant in the Plan, and thereafter upon the earlier of
(1) the date the Employee is entitled to a distribution of his
or her Participant's Account under the provisions of Article
5, or (2) within an administratively reasonable time after the
Employee's Termination of Employment. An Employee may also
request a withdrawal of all or any portion of his or her
Rollover Account at any time prior to the dates described in
(1) and (2) above. The Administrator may require up to 60 days
notice in advance of the requested date of withdrawal. A
Rollover withdrawal will not prevent an Employee from accruing
future benefits from Employer contributions. Any amount
withdrawn may be redeposited to the Participant's Rollover
Account if such prior withdrawn distribution continues to
qualify as a Rollover Contribution except for the fact that
the amount originated from this Plan.
(c) SPOUSAL CONSENT REQUIREMENTS UPON WITHDRAWAL: Any Rollover
Contribution that at the time it is made to this Plan is no
longer subject to the requirements of Code ss.401(a)(11) can
be withdrawn from the Plan without the consent of the
Participant's Spouse. However, the withdrawal of any Rollover
Contribution that was a direct or indirect transfer as defined
in Code ss.401(a)(11) from a defined benefit plan, a money
purchase plan, a target benefit plan, a stock bonus plan, or a
profit sharing plan that provided for a life annuity form of
payment to the Participant will be subject to the spousal
consent requirements in Section 5.16.
(d) FORM OF DISTRIBUTION: Any Rollover Contribution a Participant
withdraws from the Plan prior to the time the Participant is
entitled to a distribution of his or her Participant's Account
will only be distributed in a lump sum. Any amount remaining
in a Participant's Rollover Account at the time the
Participant is entitled to a distribution of his or her
Participant's Account that is not subject to the spousal
consent requirements in paragraph (c) above will be
distributed, at the election of the Participant, in a lump-sum
or in the same manner as the Participant's Account under
Article 5. Any amount remaining in the Participant's Rollover
Account at the time the Participant is entitled to a
distribution of his or her Participant's Account that is
subject to the spousal consent requirements will be
distributed in accordance with Section 5.16.
(e) SPECIAL RULE FOR WITHDRAWAL OF ELECTIVE DEFERRALS:
Notwithstanding paragraph (b) to the contrary, the limitations
described in regulation 1.401(k)-1(d) will apply to the
withdrawal of any Rollover Contributions which are
attributable to a Participant's elective contributions as
defined in regulation 1.401(k)-1(g)(3) and which are
transferred to this Plan in a trustee to trustee transfer from
another qualified plan.
(f) ESTABLISHMENT OF ADMINISTRATIVE PROCEDURES: The Administrator
may, in a separate written document, establish rules or
procedures regarding the conditions under which Rollover
Contributions can be made to and/or withdrawn from the Plan by
an Employee. Such separate written document, when properly
executed, will be deemed incorporated in this Plan. The rules
or procedures set forth therein may be modified or amended by
the Administrator without the necessity of amending this
Section of the Plan, but any such modifications must be
communicated to Participants in the manner described in
Section 8.9. Notwithstanding the foregoing, (1) a summary plan
description or summary of material modifications thereto in
which the rules or procedures regarding the making and/or
withdrawal of Rollover Contributions are described will be
considered a separate written document sufficient to satisfy
the requirements (including the execution requirement) of this
paragraph; and (2) any rules or procedures established under
this paragraph must be applied by the Administrator in a
uniform nondiscriminatory manner.
- 40 -
3.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS
Voluntary Employee Contributions are not currently permitted.
- 41 -
ARTICLE 4
PLAN BENEFITS
4.1 BENEFIT UPON NORMAL RETIREMENT
Every Participant who has reached Normal Retirement Age will be
entitled upon termination of employment to receive his or her Vested
Aggregate Account balance determined as of the most recent Valuation
Date coinciding with or immediately preceding the date of distribution.
Distribution will be made under Section 5.1.
4.2 BENEFIT UPON LATE RETIREMENT
A Participant who has reached Normal Retirement Age and who remains
employed by the Employer will continue to participate in the Plan and
will continue to receive allocations under Article 3 until he or she
terminates employment with the Employer. However, notwithstanding
Section 4.1 to the contrary, such Participant may at any time after
reaching Normal Retirement Age (1) choose to have distributed prior to
actual retirement all or part of his or her Vested Aggregate Account
balance determined as of the most recent Valuation Date coinciding with
or immediately preceding the date of distribution (but any portion
thereof which is attributable to elective contributions, qualified
matching contributions and/or qualified non-elective contributions made
to a cash or deferred arrangement can only be distributed if the
Participant has also reached Age 59 1/2); or (2) choose to have such
Vested Aggregate Account balance transferred to another qualified
retirement plan maintained by the Employer. Upon actual retirement, the
Participant will be entitled to his or her undistributed Vested
Aggregate Account balance determined as of the most recent Valuation
Date coinciding with or immediately preceding the date of distribution.
Distribution will be made under Section 5.1.
4.3 BENEFIT UPON DEATH
Upon the death of a Participant prior to Termination of Employment, or
upon the death of a Terminated Participant prior to distribution of his
or her Vested Aggregate Account, his or her Beneficiary will be
entitled to the Participant's Vested Aggregate Account balance
determined as of the most recent Valuation Date coinciding with or
immediately preceding the date of distribution. If any Beneficiary who
is alive on the date of the Participant's death dies before receiving
the entire death benefit to which he or she is entitled, the balance of
the death benefit will be distributed to the Beneficiary's beneficiary
in accordance with Section 5.2. The Administrator's determination that
a Participant has died and that a particular person has a right to
receive a death benefit will be final. Distribution will be made in
accordance with Section 5.2.
4.4 BENEFIT UPON DISABILITY
If a Participant suffers a Disability prior to Termination of
Employment and terminates employment with the Employer as a result of
that Disability, or if a Terminated Participant suffers a Disability
prior to a distribution of his or her Vested Aggregate Account balance,
he or she will be entitled to his or her Vested Aggregate Account
balance determined as of the most recent Valuation Date coinciding with
or immediately preceding the date of distribution. Distribution will be
made in accordance with Section 5.3.
4.5 BENEFIT UPON TERMINATION
A Participant who incurs a Termination of Employment will be entitled
to his or her Vested Aggregate Account balance determined as of the
most recent Valuation Date coinciding with or immediately preceding the
date of distribution. A Terminated Participant's Vested Aggregate
Account will be distributed under Section 5.4 unless, prior to the time
of distribution set forth therein, the Participant (1) dies, in which
case distribution will be made under 5.2; or (2) suffers a Disability,
in which case distribution will be made under Section 5.3.
- 42 -
4.6 DETERMINATION OF VESTED INTEREST
A Participant's Vested Interest in his or her Participant's Account
will be determined in accordance with the following provisions:
(a) VESTING UPON RETIREMENT, DEATH OR DISABILITY: A Participant's
Account will be 100% Vested upon reaching Normal Retirement
Age prior to Termination of Employment, and also upon death or
Disability prior to Termination of Employment.
(b) 100% VESTING OF ELECTIVE DEFERRALS, QMACS AND QNECS: A
Participant will at all times have a 100% Vested Interest in
his or her Elective Deferral Account, Qualified Matching
Contribution Account and Qualified Non-Elective Contribution
Account.
(c) VESTING OF MATCHING CONTRIBUTIONS: Matching Contributions are
not currently permitted under the terms of the Plan.
(d) VESTING OF NON-ELECTIVE CONTRIBUTIONS: Non-Elective
Contributions are not currently permitted under the terms of
the Plan.
(e) AMENDMENTS TO VESTING SCHEDULE: No amendment may directly or
indirectly reduce a Participant's Vested Interest in his or
her Participant's Account. If the Plan is amended in any way
that directly or indirectly affects the computation of a
Participant's Vested Interest in his or her Participant's
Account or the Plan is deemed amended by an automatic change
to or from a Top Heavy vesting schedule, the following will
apply:
(1) PARTICIPANT ELECTION: Any Participant with at least
three 1-Year Periods of Service may, by filing a
written request with the Administrator, elect to have
the Vested Interest in his or her Participant's
Account computed by the vesting schedule in effect
prior to the amendment. A Participant who fails to
make an election will have his or her Vested Interest
computed under the new schedule. The period in which
the election may be made will begin on the date the
amendment is adopted or is deemed to be made and will
end on the latest of (1) 60 days after the date the
amendment is adopted; (2) 60 days after the date the
amendment becomes effective; or (3) 60 days after the
date the Participant is issued written notice of the
amendment by the Employer or Administrator.
(2) PRESERVATION OF VESTED INTEREST: Notwithstanding the
foregoing to the contrary, if the vesting schedule is
amended, then in the case of an Employee who is a
Participant as of the later of the date such
amendment is adopted or the date it becomes
effective, the Vested Interest in his or her
Participant's Account determined as of such date will
not be less than his or her Vested Interest computed
under the Plan without regard to such amendment.
- 43 -
ARTICLE 5
DISTRIBUTION OF BENEFITS
5.1 BENEFIT UPON RETIREMENT
Unless a cash-out occurs under Section 5.5, and except as otherwise
provided in Section 5.16 regarding the distribution of benefits that
remain subject to the Qualified Joint and Survivor Annuity requirements
of Code ss.401(a)(11), the retirement benefit a Participant is entitled
to receive under Section 4.1 or Section 4.2 will be distributed as
follows:
(a) FORMS OF DISTRIBUTION: A Participant can elect to have his or
her retirement benefit distributed as follows: (1) in one lump
sum payment; or (2) in substantially equal monthly, quarterly,
semi-annual or annual cash installments over a period certain
that does not extend beyond the Participant's life, or beyond
the lives of the Participant and his or her designated
Beneficiary (or beyond the life expectancy of the Participant
or the joint and last survivor expectancy of the Participant
and his or her designated Beneficiary), which will either be
paid from the Plan or paid by a nontransferable immediate or
deferred annuity selected by the Trustee which provides for
the installment payments.
(b) TIME OF DISTRIBUTION: Distribution will begin within an
administratively reasonable time after the date (1) a
Participant actually retires; or (2) a Participant who elects
late retirement under Section 4.2 requests payment as
permitted therein. However, distribution must begin under this
Section no later than the Required Beginning Date.
5.2 BENEFIT UPON DEATH
Unless a cash-out occurs under Section 5.5, a deceased Participant's
death benefit as determined under Section 4.3 will be distributed as
follows:
(a) SURVIVING SPOUSE: If a Participant dies before the Annuity
Starting Date and is married on the date of his or her death,
the Participant's surviving Spouse will be entitled to receive
100% of the Participant's death benefit unless the surviving
Spouse has waived that right under Section 5.8. Unless the
Participant directed through a Beneficiary designation form
that the benefit be paid in a specific form of distribution
permitted under Section 5.1(a), the surviving Spouse can elect
any form of distribution permitted under Section 5.1(a). If
the surviving Spouse elects to receive installment payments,
the death benefit will either be paid from the Plan or be paid
by a nontransferable immediate or deferred annuity selected by
the Trustee which provides for the installment payments. Upon
the death of a Participant, distribution will be made to the
surviving Spouse within an administratively reasonable time
after he or she requests payment, but distribution must begin
no later than December 31st of the calendar year in which the
Participant would have attained Age 70 1/2.
(b) DEATH OF SURVIVING SPOUSE BEFORE DISTRIBUTION BEGINS: If the
surviving Spouse dies before distribution of the benefit
begins, distribution will be made as if the surviving Spouse
were the Participant. Distribution will be considered as
having commenced when the deceased Participant would have
reached Age 70 1/2 even if payments have been made to the
surviving Spouse before that date.
(c) NON-SPOUSE BENEFICIARY: Unless the Participant directed
through a Beneficiary designation form that the death benefit
be paid in a specific form of distribution permitted under
Section 5.1(a), a non-Spouse Beneficiary can elect any form of
distribution permitted under Section 5.1(a). If the
Beneficiary elects to receive installment payments, the death
- 44 -
benefit will either be paid from the Plan or be paid by a
nontransferable immediate or deferred annuity selected by the
Trustee which provides for the installment payments. Upon the
death of a Participant, distribution will be made within an
administratively reasonable time after a non-Spouse
Beneficiary requests payment; but distribution of the entire
death benefit must be made by December 31st of the calendar
year which contains the 5th anniversary of the date of the
Participant's death unless installment payments begin no later
than December 31st of the calendar year immediately following
the calendar year in which the Participant died.
(d) DISTRIBUTION IF THE PARTICIPANT OR OTHER PAYEE IS IN PAY
STATUS: If a Participant or Beneficiary who has started
receiving distribution of his or her benefit dies before the
entire benefit has been distributed, the balance of the
benefit will be distributed to the Participant's Beneficiary
(or Beneficiary's beneficiary) at least as rapidly as under
the method of distribution being used on the date of the
Participant's or Beneficiary's death.
(e) PAYMENTS TO A BENEFICIARY OF A BENEFICIARY: In the absence of
a Beneficiary designation or other directive from the deceased
Participant to the contrary, any Beneficiary may name his or
her own Beneficiary to receive any benefits payable in the
event of the Beneficiary's death prior to receiving the entire
death benefit to which the Beneficiary is entitled; and if a
Beneficiary has not named his or her own Beneficiary, the
Beneficiary's estate will be the Beneficiary. If any benefit
is payable under this paragraph to a Beneficiary of the
deceased Participant's Beneficiary or to the estate of the
deceased Participant's Beneficiary, or to any other
Beneficiary or the estate thereof, subject to the limitations
regarding the latest dates for benefit payment in paragraphs
(a) and (c) above, the Administrator may (1) continue to pay
the remaining value of such benefits in the amount and form
already commenced, or pay such benefits in any other manner
permitted under the Plan for a Participant or Beneficiary, and
(2) if payments have not already commenced, pay such benefits
in any other manner permitted under the Plan. Distribution to
the Beneficiary of a Beneficiary must begin no later than the
date distribution would have been made to the Participant's
Beneficiary. The Administrator's determination under this
paragraph will be final and will be applied in a
non-discriminatory manner that does not discriminate in favor
of HCEs.
5.3 DISABILITY BENEFITS
Unless a cash-out occurs under Section 5.5, and except as otherwise
provided in Section 5.16 regarding the distribution of benefits that
remain subject to the Qualified Joint and Survivor Annuity requirements
of Code ss.401(a)(11), the Disability benefit a Participant is entitled
to receive under Section 4.4 will be distributed as follows:
(a) FORMS OF DISTRIBUTION: A Participant can elect to have his or
her benefit distributed as follows: (1) in one lump sum
payment; or (2) in substantially equal monthly, quarterly,
semi-annual or annual cash installments over a period certain
that does not extend beyond the Participant's life, or beyond
the lives of the Participant and his or her designated
Beneficiary (or beyond the life expectancy of the Participant
or the joint and last survivor expectancy of the Participant
and his or her designated Beneficiary), which will either be
paid from the Plan or paid by a nontransferable immediate or
deferred annuity selected by the Trustee which provides for
the installment payments.
(b) TIME OF DISTRIBUTION: Distribution will begin within an
administratively reasonable time after the date on which a
Participant who suffers a Disability terminates employment
with the Employer on account of the Disability. However,
distribution must begin under this Section no later than the
Participant's Required Beginning Date.
- 45 -
5.4 BENEFIT UPON TERMINATION
Unless a cash-out occurs under Section 5.5, and except as otherwise
provided in Section 5.16 regarding the distribution of benefits that
remain subject to the Qualified Joint and Survivor Annuity requirements
of Code ss.401(a)(11), the benefit a Terminated Participant is entitled
to receive under Section 4.5 will be distributed as follows:
(a) FORMS OF DISTRIBUTION: A Terminated Participant can elect to
have his or her benefit distributed as follows: (1) in one
lump sum payment; or (2) in substantially equal monthly,
quarterly, semi-annual or annual cash installments over a
period certain that does not extend beyond the Participant's
life, or beyond the lives of the Participant and his or her
designated Beneficiary (or beyond the life expectancy of the
Participant or the joint and last survivor expectancy of the
Participant and his or her designated Beneficiary), which will
either be paid from the Plan or paid by a nontransferable
immediate or deferred annuity selected by the Trustee which
provides for the installment payments.
(b) TIME OF DISTRIBUTION: Distribution will begin under this
Section within an administratively reasonable time after
Termination of Employment occurs, but in no event later than
the earlier to occur of (1) the date the Terminated
Participant reaches Normal Retirement Age, or (2) the Required
Beginning Date.
5.5 CASH-OUT OF BENEFITS
The Administrator, without the consent of the Participant, may
distribute a Participant's Vested Aggregate Account balance in a lump
sum any time after a Participant terminates employment, subject to the
following provisions:
(a) GENERAL RULE: The Administrator can only make distribution
under this Section (1) with regard to distributions made for
Plan Years beginning prior to August 6, 1997, if the
Participant's Vested Aggregate Account balance (determined
before taking into account the Participant's Rollover Account
and Voluntary Employee Contribution Account) on the date he or
she terminates employment with the Employer does not exceed,
or at the time of any prior distribution did not exceed,
$3,500 (or such lesser amount as may be designated by the
Administrator); and (2) for Plan Years beginning on or after
August 6, 1997, if a Participant's Vested Aggregate Account
balance (determined before taking into account the
Participant's Rollover Account and Voluntary Employee
Contribution Account) on the date he or she terminates
employment with the Employer does not exceed, or at the time
of any prior distribution did not exceed, $5,000 (or such
lesser amount as may be designated by the Administrator). Any
such distribution will be made as soon as administratively
feasible after the date the Participant terminates employment,
and any portion of the Participant's Account which is not
Vested will be treated as a Forfeiture.
(b) LATER DISTRIBUTION IF ACCOUNT FALLS TO $5,000: With regard to
distributions made for Plan Years beginning on or after
October 17, 2000, if a Participant would have received a
distribution under paragraph (a) but for the fact that the
Participant's Vested Aggregate Account (determined before
taking into account the Participant's Rollover Account and
Voluntary Employee Contribution Account) exceeded $5,000 (or
such lesser amount as may be designated by the Administrator)
when the Participant terminated employment, and if at a later
time the Participant's Vested Aggregate Account (determined
before taking into account the Participant's Rollover Account
- 46 -
and Voluntary Employee Contribution Account) is reduced to an
amount not greater than $5,000 (or such lesser amount as may
be designated by the Administrator), the Administrator may
distribute such remaining amount in a lump sum without the
Participant's consent as soon as administratively feasible
after the date the Participant terminates employment with the
Employer, and any portion of the Participant's Account which
is not Vested will be treated as a Forfeiture.
(c) DEEMED DISTRIBUTION: If a Participant's Vested Interest in his
or her Participant's Account is zero on the date the
Participant terminates employment, the Participant will be
deemed to have received a distribution of such Vested Interest
on the date of termination.
(d) FORM OF DISTRIBUTION: If the whereabouts of a terminated
Participant are known, distribution under this Section will be
made in the form of a lump sum cash payment unless such
Participant elects a direct rollover under Section 5.14. If
the whereabouts of a terminated Participant are not known, the
provisions of Section 5.13 will apply.
5.6 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
If a Participant's Vested Aggregate Account balance exceeds the amount
set forth in paragraph (a) of this Section and is immediately
distributable, such account can only be distributed in accordance with
the following provisions:
(a) GENERAL RULE: If a Participant's Vested Aggregate Account
(determined before taking into account the Participant's
Rollover Account and Voluntary Employee Contribution Account)
exceeds $5,000, and if such amount is immediately
distributable, the Participant must consent to any
distribution of such amount. Any portion of the Participant's
Account which is not Vested will be treated as a Forfeiture.
If less than the entire Vested Aggregate Account balance is
distributed, the part of the non-Vested portion that will be
treated as a Forfeiture is the total non-Vested portion
multiplied by a fraction, the numerator of which is the amount
of the distribution attributable to Employer contributions and
the denominator of which is the total value of the Vested
Interest in the Participant's Account.
(b) TRANSITION RULE: Notwithstanding paragraph (a), with regard to
distributions made before October 17, 2000, if a Participant's
Vested Aggregate Account balance (determined before taking
into account the Rollover Account and Voluntary Employee
Contribution Account) (1) exceeded $3,500 (or exceeded $3,500
at the time of any prior distribution) for Plan Years
beginning before August 6, 1997, or (2) exceeded $5,000 (or
exceeded $5,000 at the time of any prior distribution) for
Plan Years beginning on or after August 6, 1997 and for a
distribution made before October 17, 2000; or (3) either
exceeded $5,000 or was a remaining payment under a selected
optional form of payment that exceeded $5,000 at the time the
selected payment began for Plan Years beginning after August
5, 1997 and for a distribution made on or after October 17,
2000, and if the account balance is immediately distributable,
then the Participant and the Participant's Spouse (or where
either one has died, the survivor) must consent to any
distribution of such account.
(c) DEFINITION OF IMMEDIATELY DISTRIBUTABLE: A Participant's
benefit is immediately distributable if any part of the
benefit could be distributed to the Participant (or the
Participant's surviving Spouse) before the Participant reaches
(or would have reached if not deceased) the later of his or
her Normal Retirement Age or Age 62.
- 47 -
(d) GENERAL CONSENT REQUIREMENT: The consent of the Participant to
any benefit that is immediately distributable must be obtained
in writing within the 90-day period ending on the Annuity
Starting Date. However, the Participant will not be required
to consent to a distribution that is required by Code
ss.401(a)(9) or ss.415.
(e) NOTIFICATION REQUIREMENTS: The Administrator must notify the
Participant of the right to defer any distribution until the
benefit is no longer immediately distributable. Notification
will include a general explanation of the material features
and relative values of the optional forms of benefit available
under the Plan in a manner that would satisfy the notice
requirements of Code ss.417(a)(3); and will be provided no
less than 30 days or more than 90 days prior to the Annuity
Starting Date.
(f) WAIVER OF 30-DAY REQUIREMENT: For Plan Years beginning on or
after January 1, 1997, distribution of a Participant's benefit
may begin less than 30 days after the notice in paragraph (e)
is given, provided (1) the Administrator clearly informs the
Participant that the Participant has a right to a period of at
least 30 days after receiving notice to consider the decision
of whether or not to elect a distribution; (2) the
Participant, after receiving the notice, affirmatively elects
a distribution or a particular distribution option.
(g) CONSENT NOT NEEDED ON PLAN TERMINATION: If upon Plan
termination neither the Employer nor an Affiliated Employer
maintains another defined contribution plan other than an
employee stock ownership plan (ESOP) as defined in Code
ss.4975(e)(7), the Participant's benefit will, without the
Participant's consent, be distributed to the Participant. If
the Employer or an Affiliated Employer maintains another
defined contribution plan other than an ESOP, the
Participant's benefit will, without the Participant's consent,
be transferred to the other plan if the Participant does not
consent to an immediate distribution under this Section.
5.7 RESTORATION OF FORFEITED ACCOUNT BALANCE
If a Participant who does not have a 100% Vested Interest in his or her
Participant's Account terminates employment with the Employer and
receives (or is deemed to have received) a distribution of such Vested
Interest from the Plan, and such Participant is subsequently rehired by
the Employer, his or her Participant's Account upon such reemployment
will be administered in accordance with the following provisions:
(a) REEMPLOYMENT BEFORE FIVE CONSECUTIVE BREAKS IN SERVICE: If a
terminated Participant is reemployed before incurring five
consecutive Breaks in Service, such Participant's Account
balance will be restored in accordance with the following:
(1) PARTIALLY VESTED PARTICIPANTS: If upon termination of
employment a Participant has at least a partially
Vested Participant's Account, then upon reemployment
by the Employer prior to incurring five consecutive
Breaks in Service, such Participant's Account balance
will be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution which was
attributable to Employer contributions. Repayment
must be made before the earlier of five years after
the first date on which the Participant is
subsequently re-employed by the Employer or the date
on which the Participant incurs five consecutive
Breaks in Service following the date of distribution.
(2) NON-VESTED PARTICIPANTS: If upon termination of
employment a Participant's Vested Interest in his or
her Participant's Account is zero, such Participant
is deemed to have received a distribution of such
Vested Interest before the date he or she incurs five
consecutive Breaks in Service, and upon re-employment
with the Employer prior to incurring five consecutive
Breaks in Service, such Participant's Account balance
attributable to Employer contributions will be
restored to the amount on the date of the deemed
distribution.
- 48 -
(3) SOURCE OF FUNDS: The Administrator, on a case-by-case
basis, may elect to restore a Participant's Account
balance under this Section by the use of Forfeitures,
by the use of earnings from non-segregated Trust Fund
accounts, by the use of Employer contributions, or by
the use of any combination thereof.
(b) REEMPLOYMENT AFTER FIVE CONSECUTIVE BREAKS IN SERVICE: If a
terminated Participant is reemployed by the Employer after
incurring five consecutive Breaks in Service, that portion, if
any, of his or her Participant's Account which was (or was
deemed to be) a Forfeiture will be permanently forfeited under
the terms of this Plan.
5.8 SPOUSAL CONSENT REQUIREMENTS
A surviving Spouse's election not to receive a death benefit under
Section 5.2 will not be effective unless (1) the election is in
writing; (2) the election designates a specific Beneficiary or form of
benefit which may not be changed without spousal consent (or the
Spouse's consent expressly permits designations by the Participant
without any requirement of further spousal consent); and (3) the
Spouse's consent acknowledges the effect of the election and is
witnessed by the Administrator or a notary public.
5.9 APPLICATION OF CODE SS.401(A)(9) REQUIREMENTS
All distributions made under the terms of the Plan will be determined
and made in accordance with the regulations issued under Code
ss.401(a)(9), including the minimum distribution incidental benefit
requirement of regulation ss.1.401(a)(9)-2, and any provisions in this
Plan which reflect Code ss.401(a)(9) will override any distribution
options which are inconsistent with such Code section and regulations.
If Participant's Vested Aggregate Account is paid in a form that is
based on life expectancies through other than the purchase of an
immediate annuity, the joint life expectancies of the Participant and
his or her Spouse will only be recalculated annually if the Participant
elects the recalculation method of determining life expectancy. In the
case of any other Beneficiary, life expectancy will be calculated at
the time payment first commences, and payments for any 12-consecutive
month period will be based on such life expectancy minus the number of
whole years passed since distribution first commenced.
5.10 STATUTORY COMMENCEMENT OF BENEFITS
Unless a Participant otherwise elects, distribution of his or her
benefit must begin no later than the 60th day after the latest of the
close of the Plan Year in which the Participant (1) reaches the earlier
of Age 65 or Normal Retirement Age; (2) reaches the 10th anniversary of
the year the Participant commenced Plan participation; or (3)
terminates service with the Employer. However, the failure of a
Participant to consent to a distribution while a benefit is immediately
distributable within the meaning of Section 5.6 will be deemed to be an
election to defer commencement of payment of any benefit sufficient to
satisfy this Section. If this Plan provides for early retirement, a
Participant who satisfies the service requirement for early retirement
prior to Termination of Employment will be entitled to receive his or
her Vested Aggregate Account, if any, upon satisfaction of the age
requirement for early retirement.
5.11 SEGREGATION OF BENEFIT BEFORE DISTRIBUTION
With respect to that portion of a Participant's Vested Aggregate
Account which the Participant is not permitted to self-direct under
Section 7.15, as of the Valuation Date coinciding with or next
following the date a Participant terminates employment with the
Employer for any reason, the Administrator will, until a distribution
is made to the Participant or the Participant's Beneficiary under the
- 49 -
Plan, direct the Trustee in a uniform nondiscriminatory manner to
either (1) invest such Vested Aggregate Account determined as of such
Valuation Date in a separate interest bearing account; or (2) leave
such Vested Aggregate Account as part of the general Trust Fund, in
which case such account will share in the allocation of earnings and
losses under Section 3.3(a).
5.12 DISTRIBUTION IN EVENT OF INCAPACITY
If any person who is entitled to receive a distribution of benefits
(the "Payee") suffers from a Disability or is under a legal incapacity,
payments may be made in one or more of the following ways as directed
by the Administrator: (a) to the Payee directly; (b) to the guardian or
legal representative of the Payee's person or estate; (c) to a relative
of the Payee, to be expended for the Payee's benefit; or (d) to the
custodian of the Payee under any Uniform Transfers to Minors Act or
under any Uniform Gifts To Minors Act. The Administrator's
determination of the minority or incapacity of any payee will be final.
5.13 MISSING PARTICIPANTS AND UNCLAIMED BENEFITS
Neither the Trustee nor the Administrator will be required to search
for or ascertain the whereabouts of any Participant or Beneficiary.
With respect to a Participant or Beneficiary who has not claimed any
benefit (the "missing payee") to which such missing payee is entitled,
and with respect to any Participant or Beneficiary who has not
satisfied the administrative requirements for benefit payment, the
following provisions will apply:
(a) ATTEMPT TO CONTACT AND FORFEITURE OF BENEFIT: The
Administrator will notify a missing payee that he or she is
entitled to a distribution under the Plan, by certified or
registered mail addressed to the missing payee's last known
address. The Administrator, in its sole discretion, may also
utilize other methods of locating a missing payee, including
letter forwarding programs offered by the Internal Revenue
Service or the Social Security Administration, or internet or
other search services offered by the Pension Benefit Guaranty
Corporation (PBGC) if such services are made available to
defined contributions plans; or by placing public notices in a
local newspaper. If a missing payee fails to make his or her
whereabouts known in writing to the Trustee or Administrator
or otherwise fails to claim a benefit, or the administrative
requirements for benefit payment for any payee are not
satisfied, upon the earlier to occur of (1) the later of the
date the Plan is terminated or discontinued or six months from
the date the notice was mailed or (2) the date which is two
years from the date the notice was mailed, the Administrator
may, but will not be required to, treat the payee's benefit as
a forfeiture, subject to paragraphs (b) and (c) below.
(b) ALTERNATIVE METHODS TO FORFEITURE: In lieu of Forfeiture under
paragraph (a), the Administrator may elect one the following
alternatives described below:
(1) DIRECT ROLLOVER TO IRA: If a Participant's Vested
Aggregate Account balance (determined before taking
into account his or her Rollover Account and
Voluntary Employee Contribution Account) on the date
he or she terminated employment with the Employer
does not exceed $5,000 (or such lesser amount as may
be designated by the Administrator), the
Administrator may elect to make distribution
hereunder in the form of a direct rollover to an
individual retirement account (IRA) if the IRA can be
established by the Administrator at a qualified
financial institution. In establishing the IRA on
behalf of the Participant or other payee, the
- 50 -
Administrator will select an IRA trustee, custodian
or issuer unrelated to the Employer or the
Administrator and will make the initial investment
choices for the IRA. The default direct rollover will
occur not less than 30 days and not more than 90 days
after the Code ss.402(f) notice with the explanation
of the default direct rollover is provided to the
Participant or other payee.
(2) ESCHEAT TO THE STATE: The Administrator may elect to
escheat the payee's benefit to the state in which the
Sponsor's principal place of business is located.
(3) OTHER METHODS OF DISTRIBUTION: The Administrator may
elect to distribute a payee's benefit by any other
method approved by the United States Department of
the Treasury and/or by the United States Department
of Labor.
(c) CONDITIONS FOR RESTORATION OF FORFEITED BENEFIT: If a payee
whose benefit has been forfeited under paragraph (a) is
located, or if a payee whose benefit has been forfeited under
paragraph (a) for failure to satisfy the administrative
requirements for benefit payment subsequently satisfies the
administrative requirements for benefit payment and claims his
or her benefit, and if the Plan has not terminated (or if the
Plan has, all benefits have not yet been paid), then the
benefit will be restored. The Administrator, on a case-by-case
basis, may elect to restore the benefit by the use of either
earnings from non-segregated Trust Fund assets, or Employer
contributions, or any combination thereof. However, if such
missing payee has not been located by the time the Plan
terminates and all benefits are distributed, the Forfeiture of
such unpaid benefit will be irrevocable.
5.14 DIRECT ROLLOVERS
A distributee may elect to have all or any portion of an eligible
rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover, which is a payment
by the Plan to the eligible retirement plan specified by the
distributee.
(a) ELIGIBLE ROLLOVER DISTRIBUTION: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include (1) 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 for 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; (2) any distribution to
the extent such distribution is required under Code
ss.401(a)(9); (3) the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation on Employer
securities); and (4) the portion of any distribution made on
or after January 1, 2000 which is attributable to a hardship
distribution described in Code ss.401(k)(2)(B)(i)(IV).
(b) ELIGIBLE RETIREMENT PLAN: An eligible retirement plan is an
individual retirement account described in Code ss.408(a), an
individual retirement annuity described in Code ss.408(b), an
annuity plan described in Code ss.403(a), or a qualified trust
described in Code ss.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.
(c) DEFINITION OF DISTRIBUTEE: For purposes of this Section, a
distributee includes an Employee or former Employee. In
addition, an Employee's or former Employee's surviving Spouse
and an 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 ss.414(p), are distributees
with regard to the interest of the Spouse or former Spouse.
5.15 DISTRIBUTION OF PROPERTY
The determination to pay all or a part of a lump sum in property will
be made by the Administrator in its sole discretion applied in a
non-discriminatory manner that does not discriminate in favor of Highly
Compensated Employees; except that if this is an amended or restated
- 51 -
Plan, the payee will have the right to elect a full or partial
distribution in property within the period described in Section
9.1(a)(2) if the Plan as in effect one day prior to this amendment or
restatement provided for a property distribution at the payee's option.
5.16 DISTRIBUTIONS SUBJECT TO CODE SS.401(A)(11) REQUIREMENTS
Unless a cash-out occurs under Section 5.5 or unless otherwise elected
under paragraph (c) below, upon distribution of a Participant's Vested
Aggregate Account for any reason, any portion thereof which was
transferred to this Plan in a trustee to trustee transfer from a money
purchase plan, a target benefit plan, a defined benefit plan, or a
profit sharing plan which was subject to requirements of Code
ss.401(a)(11) at the time of the transfer, or any portion thereof which
is to be distributed in an optional form protected under this Plan and
which is subject to the requirements of Code ss.401(a)(11), will be
distributed in accordance with the following provisions:
(a) DISTRIBUTIONS OTHER THAN DEATH: Any portion of a Participant's
benefit which is distributed under Sections 5.1, 5.3 or 5.4
and which is subject to the requirements of this Section will
be distributed as a Qualified Joint and Survivor Annuity if
the Participant is married on the Annuity Starting Date and
has not died before such date. If the Participant is unmarried
on the Annuity Starting Date and has not died before such
date, any such portion of the Participant's benefit will be
distributed as a life annuity. If a Participant elects not to
receive the annuity of form of payment described above, any
portion of the Participant's benefit that is subject to the
requirements of this Section will be distributed in the manner
described in Sections 5.1, 5.3 or 5.4 of the Plan, as
applicable.
(b) DISTRIBUTIONS UPON DEATH: Notwithstanding any other
Beneficiary designation made by a Participant, if a
Participant is married on the date of his or her death and
dies before the Annuity Starting Date, the Participant's
surviving Spouse will, with respect to any portion of a
deceased Participant's benefit which is subject to the
requirements of this Section, receive a minimum death benefit
as a Qualified Preretirement Survivor Annuity unless such
annuity has been waived under paragraph (c) below, in which
event any such death benefit will be distributed to the
surviving Spouse in the manner described in Section 5.2. Any
portion of a deceased Participant's death benefit which a
non-Spouse Beneficiary is entitled to receive under Section
4.3 and which is subject to the requirements of this Section
will be distributed in the manner described in Section 5.2(c).
(c) SPOUSAL CONSENT REQUIRED TO WAIVE QJSA AND QPSA REQUIREMENTS:
A married Participant's election not to receive a Qualified
Joint and Survivor Annuity (QJSA) or a Qualified
Pre-retirement Survivor Annuity (QPSA) as set forth in
paragraph (a) above, or an unmarried Participant's election
not to receive a life annuity as set forth in paragraph (a)
above, must be made in accordance with the following
provisions:
(1) ELECTION NOT TO RECEIVE A QJSA: A Participant's
election not to receive a Qualified Joint and
Survivor Annuity or a life annuity as set forth in
paragraph (a) must be in writing and must be made
during the 90-day period ending on the Annuity
Starting Date. Such election may be revoked in
writing and a new election made at any time and any
number of times during the election period.
(2) ELECTION NOT TO RECEIVE A QPSA: A Participant's
election not to receive a Qualified Preretirement
Survivor Annuity as set forth in subparagraph (2)
must be in writing and must be made during an
election period beginning on the first day of the
Plan Year in which the Participant reaches Age 35 and
ending on the date of his or her death. The election
- 52 -
may be revoked in writing and a new election made at
any time and any number of times during the election
period. A Terminated Participant's election period
concerning his or her Vested Aggregate Account before
his or her termination will not begin later than such
date. Notwithstanding the foregoing, if the
Participant has not completed a Beneficiary
designation form specifying the time or form of
payment, the surviving Spouse may waive the Qualified
Preretirement Survivor Annuity.
(3) SPECIAL PRE-AGE 35 QPSA ELECTION: A Participant who
has not yet reached Age 35 as of the end of any
current Plan Year may make a special election not to
receive a Qualified Preretirement Survivor Annuity
for the period beginning on the date of such election
and ending on the first day of the Plan Year in which
such Participant reaches Age 35. This election will
not be valid unless the Participant receives the same
written explanation of the Qualified Preretirement
Survivor Annuity as described in subparagraph (4).
Qualified Preretirement Survivor Annuity coverage
will be automatically reinstated as of the first day
of the Plan Year in which the Participant reaches Age
35. Any new election on or after such date will be
subject to the full requirements of this Section.
(4) REQUIRED WRITTEN EXPLANATION: In connection with an
election not to receive a QJSA, the Administrator
will, no less than 30 days and no more than 90 days
prior to the Annuity Starting Date, provide the
Participant with a written explanation of the terms
and conditions of the QJSA; the Participant's right
to make (and the effect of) an election to waive the
QJSA; the rights of the Participant's Spouse; and the
right of the Participant to revoke such election (and
the effect thereof). In connection with an election
not to receive a QPSA, the Administrator will provide
each Participant within the Applicable Period as
defined in subparagraph (3) with a written
explanation of the QPSA in such terms and in such
manner as would be comparable to the written
explanation applicable to a QJSA as set forth in this
paragraph.
(5) APPLICABLE PERIOD: The Applicable Period for a
Participant is whichever of the following periods
ends last: (1) the period beginning with the first
day of the Plan Year in which the Participant attains
Age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant
attains Age 35; (2) a reasonable period after the
individual becomes a Participant; (3) a reasonable
period ending after Code ss.401(a)(11) applies to the
Participant; or (4) a reasonable period ending after
Code ss.417(a)(5) ceases to apply to the Participant.
A reasonable period is the end of the two-year period
beginning one year prior to the date the applicable
event occurs, and ending one year after that date.
(6) PARTICIPANTS WHO TERMINATE BEFORE AGE 35: In the case
of a Participant who separates from service before
the Plan Year in which the Participant reaches Age
35, the notice under subparagraph (4) will be
provided within the two year period beginning one
year prior to separation from service and ending one
year after such separation. If such Participant
thereafter returns to employment with the Employer,
the Applicable Period for such Participant will be
redetermined.
(7) ELECTIONS MUST HAVE SPOUSAL CONSENT: A Participant's
election not to receive a Qualified Joint and
Survivor Annuity or a Participant's election not to
receive a Qualified Preretirement Survivor Annuity
will not be effective (1) unless the Participant's
Spouse consents in writing to the election; (2)
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unless the election designates a specific Beneficiary
(or form of benefit) which may not be changed without
spousal consent (or the consent of the Spouse
expressly permits designations by the Participant
without any requirement of further spousal consent);
and (3) unless the Spouse's consent acknowledges the
effect of the election and is witnessed by the
Administrator or a notary public.
(8) ADDITIONAL REQUIREMENTS FOR SPOUSAL CONSENT: A
Spouse's consent will not be required if there is no
Spouse or if the Spouse cannot be located, or if
there are other circumstances present which preclude
the necessity of such Spouse's consent. Any consent
by a Participant's Spouse (or establishment that
consent cannot be obtained) will be effective only
with respect to such Spouse. A consent that permits
designations by the Participant without any
requirement of further spousal consent must
acknowledge that the Spouse has the right to limit
consent to a specific Beneficiary, and a specific
form of benefit where applicable, and that the Spouse
voluntarily elects to relinquish either or both of
such rights. A revocation of a prior election may be
made by a Participant without the Spouse's consent at
any time before benefits begin. No consent obtained
under subparagraph (7) will be valid unless the
Participant has received notice as provided in
subparagraph (4).
(d) SPOUSAL CONSENT REQUIRED FOR IMMEDIATELY DISTRIBUTABLE
BENEFITS: Notwithstanding Section 5.6, a Participant's Spouse
must give written consent as set forth in paragraph (c) above
to the distribution of any portion of a Participant's Vested
Aggregate Account balance which is immediately distributable
and which at the time of distribution is subject to the
Qualified Joint and Survivor Annuity and Qualified
Preretirement Survivor Annuity requirements of Code
ss.401(a)(11), subject to the following provisions:
(1) GENERAL REQUIREMENT: The consent of the Participant
and the Participant's Spouse (or where either the
Participant or the Participant's Spouse has died, the
survivor) must be obtained in writing within the
90-day period ending on the Annuity Starting Date.
However, (1) only the Participant need consent to the
distribution of a QJSA while the benefit is
immediately distributable; and (2) neither the
Participant nor the Participant's Spouse will be
required to consent to a distribution that is
required by Code ss.401(a)(9) or ss.415.
(2) NOTIFICATION REQUIREMENTS: The Administrator must
notify the Participant and the Participant's Spouse
of the right to defer any such distribution until the
benefit is no longer immediately distributable. The
content of the notification must comply with all of
the requirements in Section 5.6(e), and must be
provided no less than 30 days or more than 90 days
prior to the Annuity Starting Date.
(3) CONSENT NOT NEEDED ON PLAN TERMINATION: If this Plan
upon termination does not offer an annuity option
(purchased from a commercial provider), and neither
the Employer nor an Affiliated Employer maintains
another defined contribution plan other than an
employee stock ownership plan (ESOP) as defined in
Code ss.4975(e)(7), then such portion of the
Participant's benefit will, without the Participant's
consent, be distributed to the Participant. If the
Employer or an Affiliated Employer maintains another
defined contribution plan other than an ESOP, such
portion of the Participant's benefit will, without
the Participant's consent, be transferred to the
other plan if the Participant does not consent to an
immediate distribution as described in Section 5.6 of
the Plan.
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5.17 FINANCIAL HARDSHIP DISTRIBUTIONS
Subject to any rules or procedures that may be established by the
Administrator under paragraph (g) below, a Participant who is still an
Employee may withdraw up to 100% of his or her Elective Deferral
Account (excluding any earnings allocated thereto) because of financial
hardship. If permitted by the rules and procedures, such Participant
may also withdraw up to 100% of the Vested Interest in his or her
Matching Contribution Account and/or Non-Elective Contribution Account
because of financial hardship. Unless modified by the rules and
procedures, hardship distributions will be made in accordance with the
following provisions:
(a) AMOUNT AND FORM OF DISTRIBUTION: The maximum amount
distributable will be based on the Participant's Account
balance as of the Valuation Date immediately preceding the
date of the request, and the amount actually distributed
cannot exceed the amount required to relieve the financial
hardship, including amounts necessary to pay any federal,
state or local income taxes or penalties reasonably
anticipated to result from the distribution. Distribution will
only be made to the Participant in one lump sum. The
Administrator, on a uniform nondiscriminatory basis, will
determine from which account any distribution hereunder will
be made.
(b) DEFINITION OF FINANCIAL HARDSHIP: Financial hardship means an
immediate and heavy financial need that the Participant lacks
available resources to satisfy. Only the following financial
needs will be considered immediate and heavy: (1) payment of
medical expenses within the meaning of Code ss.213(d) that are
incurred by the Participant, his or her Spouse or his or her
children; (2) the purchase (excluding mortgage payments) of a
principal residence for the Participant; (3) payment of
tuition and related educational fees for the next 12 months of
post-secondary education for the Participant, the
Participant's Spouse or the Participant's children; (4) the
need to prevent the eviction of the Participant from his or
her principal residence or foreclosure on the mortgage of the
Participant's principal residence; (5) payment of funeral
expenses for a member of the Participant's family; or (6) any
other immediate and heavy financial need of the Participant
that the Administrator determines on the basis of all relevant
facts and circumstances cannot be satisfied from other
resources reasonably available to the Participant.
(c) PARTICIPANT'S WRITTEN REPRESENTATIONS: Except as otherwise
provided in paragraph (d) below, a hardship distribution can
only be made to the extent a Participant's financial hardship
cannot be satisfied from other resources reasonably available
to the Participant, as determined by the Administrator on the
basis of all relevant facts and circumstances. However, the
Administrator may treat a distribution as necessary to satisfy
a financial hardship if the Administrator, in the absence of
actual knowledge to the contrary, elects to rely upon the
Participant's written representation that the financial
hardship cannot be relieved (1) through reimbursement or
compensation by insurance or otherwise; (2) by liquidation of
the Participant's assets, to the extent such liquidation would
not itself cause a financial hardship; (3) by cessation of the
Participant's Elective Deferrals or Voluntary Employee
Contributions to the Plan; or (4) by other distributions or
nontaxable (at the time of the loan) loans from any other
Employer-maintained plans or from any other employer, or by
borrowing from commercial sources on reasonable commercial
terms.
(d) SAFE HARBOR DEEMED DISTRIBUTIONS: With respect to a
distribution made for one of the reasons in paragraph (b)(1),
(2), (3) or (4), if the Administrator does not elect to rely
upon a Participant's written representation as set forth in
paragraph (c), or if the Administrator offers to rely upon a
Participant written representation and the Participant fails
to provide such written representation, then any such
distribution will be deemed to be necessary to satisfy a
- 55 -
financial hardship if the Participant has obtained all
distributions (other than financial hardship distributions)
and all nontaxable loans currently available under all plans
maintained by the Employer. Furthermore, if the Administrator
offers to rely on the written representation requirements of
paragraph (c) but the Participant elects not to comply with
such written requirements, and if any portion of the amount
distributed is from the Participant's Elective Deferral
Account, then the Participant cannot make Elective Deferrals
and Voluntary Employee Contributions to this Plan or any other
plan maintained by the Employer for at least 12 months after
receipt of the distribution; and for the Participant's taxable
year immediately following the taxable year of the hardship
distribution, the Participant cannot make Elective Deferrals
to this Plan or any other plan maintained by the Employer in
excess of the applicable limit under Code ss.402(g)(5) for
such taxable year, minus the amount of such Participant's
Elective Deferrals made for the taxable year in which the
financial hardship distribution was made.
(e) ORDER OF DISTRIBUTION: If hardship distributions are permitted
to be made from a Participant's Matching Contribution Account
and/or Non-Elective Contribution Account as well as from his
or her Elective Deferral Account, the Administrator will
determine the portion (including zero) of the distribution
that will be made from each such account, provided that any
such determination is made in a uniform nondiscriminatory
manner.
(f) RESTRICTION ON CERTAIN TRANSFERRED ASSETS: Notwithstanding any
provision in this Section, no hardship distribution can be
made with respect to benefits attributable to assets
(including post-transfer earnings thereon) and liabilities
that are transferred, within the meaning of Code ss.414(l), to
this Plan from a money purchase pension plan or target benefit
pension plan qualified under Code ss.401(a) (other than any
portion of those assets and liabilities that are attributable
to Voluntary Employee Contributions).
(g) ESTABLISHMENT OF ADMINISTRATIVE PROCEDURES: The Administrator
may, in a separate written document, establish rules or
procedures regarding hardship distributions under this
Section. Such separate written document, when properly
executed, will be deemed incorporated in this Plan. The rules
or procedures set forth therein may be modified or amended by
the Administrator without the necessity of amending this
Section of the Plan, but any such modifications must be
communicated to Participants in the manner described in
Section 8.9. Notwithstanding the foregoing, (1) a summary plan
description or summary of material modifications thereto in
which the rules or procedures regarding the making of hardship
distributions are described will be considered a separate
written document sufficient to satisfy the requirements
(including the execution requirement) of this paragraph; and
(2) any such rules or procedures that are established under
this paragraph must be applied in a uniform nondiscriminatory
manner.
5.18 IN-SERVICE DISTRIBUTIONS
Except as may otherwise be permitted under Section 4.2, no
distributions are permitted before a Participant terminates employment
with the Employer.
5.19 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
Elective Deferrals that exceed the Code ss.402(g)(5) dollar limitation
will be deemed Excess Elective Deferrals, and all Excess Elective
Deferrals, plus any income and minus any loss allocable thereto, will
be distributed no later than April 15th to any Participant to whose
account Excess Elective Deferrals were allocated for the preceding year
and who claims Excess Elective Deferrals for such taxable year.
Distribution of Excess Elective Deferrals will be made in accordance
with the following provisions:
- 56 -
(a) ASSIGNMENT OF EXCESS ELECTIVE DEFERRALS: A Participant may
assign to this Plan any Excess Elective Deferrals made during
a taxable year of the Participant by notifying the
Administrator on or before April 15th of the amount of the
Excess Elective Deferrals to be assigned to the Plan. A
Participant will be deemed to notify the Administrator of any
Excess Elective Deferrals that arise by taking into account
only those Elective Deferrals made to this Plan and any other
plans of the Employer.
(b) TREATMENT AS ANNUAL ADDITIONS: Excess Elective Deferrals will
be treated as Annual Additions under Section 6.1 of the Plan
unless such amounts are distributed no later than the first
April 15th following the close of the Participant's taxable
year. Excess Elective Deferrals that are distributed after
April 15th are includible in the Participant's gross income in
the taxable year in which deferred and the taxable year in
which distributed.
(c) DETERMINATION OF INCOME OR LOSS: Excess Elective Deferrals
will be adjusted for any income or loss up to the end of the
Participant's taxable year and, at the discretion of the
Administrator, may be adjusted for income or loss up to the
date of distribution. The period between the end of the
Participant's taxable year and the date of distribution will
be referred to as the gap period, and any income earned
therein will be allocated at the discretion of the
Administrator applied consistently to all Participants and to
all corrective distributions for the taxable year. The income
or loss allocable to a Participant's Excess Elective Deferrals
will be the amount determined by either the method in
subparagraph (1) or subparagraph (2) below plus, if applicable
the amount determined in subparagraph (3) below:
(1) The amount determined by multiplying the income or
loss allocable to the Participant's Elective
Deferrals for the taxable year (and the gap period)
by a fraction, the numerator of which is the
Participant's Excess Elective Deferrals for the year
and the denominator of which is (A) the Participant's
Elective Deferral Account balance as of the beginning
of the Participant's taxable year plus any Elective
Deferrals allocated to the Participant's Elective
Deferral Account during such taxable year and the gap
period, or (B) solely with respect to taxable years
beginning before January 1, 1992, the Participant's
Elective Deferral Account balance as of the end of
the Participant's taxable year, reduced by any gain
and increased by any loss allocable thereto during
the taxable year; or
(2) The amount determined by any reasonable method of
allocating income or loss to Excess Elective
Deferrals for the taxable year and for the gap period
provided the method used is the same method used by
this Plan for allocating income or losses to
Participant's Accounts; and
(3) 10% of the amount determined under (1) multiplied by
the number of whole months between the end of the
Participant's taxable year and the distribution date,
counting the month of distribution if it occurs after
the 15th of such month.
(d) SOURCE OF DISTRIBUTION: Distribution of Excess Elective
Deferrals will be taken from a Participant's investment
options based on rules established by the Administrator.
5.20 DISTRIBUTION OF EXCESS CONTRIBUTIONS
Excess Contributions, plus any income and minus any loss allocable
thereto, will be distributed no later than the last day of each Plan
Year to Participants to whose accounts such Excess Contributions were
allocated for the preceding Plan Year. The amount of Excess
Contributions to be distributed to a Participant under this Section
will be reduced by any Excess Elective Deferrals previously distributed
- 57 -
to the Participant under Section 5.19 for the Participant's taxable
year ending with or within the Plan Year. Distribution of Excess
Contributions will be made in accordance with the following provisions:
(a) ALLOCATION TO HIGHLY COMPENSATED EMPLOYEES: Excess
Contributions will be allocated to the Highly Compensated
Employees with the largest amounts of Employer contributions
taken into account in calculating the ADP Test for the year in
which the Excess Contributions arose, beginning with the HCE
with the largest amount of such Employer contributions and
continuing in descending order until all the Excess
Contributions have been allocated. For purposes of the
preceding sentence, the "largest amount" is determined after
distribution of any Excess Deferrals. If excess amounts are
distributed more than 2 1/2 months after the last day of the
Plan Year in which they arose, a 10% excise tax will be
imposed on the Employer. Excess Contributions will be treated
as Annual Additions pursuant to Section 6.1.
(b) DETERMINATION OF INCOME OR LOSS: Excess Contributions will be
adjusted for any income or loss up to the end of the Plan Year
and, at the discretion of the Administrator, may be adjusted
for income or loss up to the date of distribution. The period,
if any, between the end of the Plan Year and the date of
distribution will be referred to as gap period, and any income
earned therein will be allocated at the Administrator's
discretion applied consistently to all Participants and to all
corrective distributions made for the Plan Year. The income or
loss allocable to each Participant's Excess Contributions will
be the amount determined by either the method in subparagraph
(1) or subparagraph (2) plus, if applicable, the amount
determined under subparagraph (3), as follows:
(1) The amount determined by multiplying the income or
loss allocable to the Participant's Elective
Deferrals (and, if applicable, QNECs or QMACs, or
both) for the Plan Year (and the gap period, if
applicable) by a fraction, the numerator of which is
the Participant's Excess Contributions for the year
and the denominator of which is (A) the Participant's
Elective Deferral Account balance (and QNECs or
QMACs, or both, if any of such contributions are used
in the ADP test) as of the beginning of the Plan Year
plus any Elective Deferrals (and QNECs or QMACs, or
both, if any of such contributions are included in
the ADP test) allocated to the Participant during
such Plan Year and the gap period, if applicable, or
(B) solely with respect to Plan Years beginning
before January 1, 1992, the Participant's Elective
Deferral Account balance (and QNECs or QMACs or both,
if any such contributions are included in the ADP
Test) as of the end of the Plan Year reduced by any
gain and increased by any loss allocable thereto
during the Plan Year; or
(2) The amount determined by any reasonable method of
allocating income or loss to the Participant's
Elective Deferrals (and if applicable, QNECs or
QMACS, or both) for the Plan Year and for the gap
period provided the method used is the same method
used for allocating income or losses to Participants'
Accounts; and
(3) 10% of the amount determined under (1) multiplied by
the number of whole months between the end of the
Plan Year and the distribution date, counting the
month of distribution if it occurs after the 15th of
such month.
(c) ACCOUNTING FOR EXCESS CONTRIBUTIONS: Excess Contributions will
be distributed from the Participant's Elective Deferral
Account and Qualified Matching Contribution Account in
proportion to the Participant's Elective Deferrals and
Qualified Matching Contributions (to the extent used in the
- 58 -
ADP Test) for the Plan Year. Excess Contributions will be
distributed from the Participant's Qualified Non-Elective
Contribution Account only to the extent the Excess
Contributions exceed the balance in the Participant's Elective
Deferral Account and Qualified Matching Contribution Account.
(d) SOURCE OF DISTRIBUTION: Distribution of Excess Contributions
will be taken from a Participant's investment options based on
rules established by the Administrator.
5.21 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
All Excess Aggregate Contributions (plus any income and minus any loss
allocable thereto) which are not Vested will be used to reduce Employer
contributions for the current Plan Year or a future Plan Year. All
Excess Aggregate Contributions (plus any income and minus any loss
allocable thereto) which are Vested will be distributed no later than
the last day of each Plan Year to Participants to whose Accounts Excess
Aggregate Contributions were allocated for the preceding Plan Year.
Distribution of Excess Aggregate Contributions will be made in
accordance with the following provisions:
(a) ALLOCATION TO HIGHLY COMPENSATED EMPLOYEES: Excess Aggregate
Contributions will be allocated to the HCEs with the largest
Contribution Percentage Amounts taken into account in
calculating the ACP Test for the year in which the Excess
Aggregate Contributions arose, beginning with the HCE with the
largest amount of such Contribution Percentage Amounts and
continuing in descending order until all the Excess Aggregate
Contributions have been allocated. For purposes of the
preceding sentence, the "largest amount" is determined after
distribution of any Excess Contributions.
(b) EXCISE TAX ON CERTAIN DISTRIBUTIONS: If Excess Aggregate
Contributions are distributed more than 2 1/2 months after the
last day of the Plan Year in which they arose, a 10% excise
tax will be imposed on the Employer with respect to those
amounts.
(c) TREATMENT AS ANNUAL ADDITIONS: Excess Aggregate Contributions
will be treated as Annual Additions under Section 6.1.
(d) FORFEITURE OF CERTAIN MATCHING CONTRIBUTIONS: Matching
Contributions made on behalf of an Employee which are
attributable to Excess Elective Deferrals and Excess
Contributions will be treated as Forfeitures and will be used
in the manner described in Section 3.4(c).
(e) DETERMINATION OF INCOME: Excess Aggregate Contributions will
be adjusted for any income or loss up to the end of the Plan
Year and, at the discretion of the Administrator, may be
adjusted for income or loss up to the date of distribution.
The period between the end of the Plan Year and the date of
distribution will be referred to as the gap period, and any
income earned during the gap period will be allocated at the
discretion of the Administrator applied consistently to all
Participants and to all corrective distributions for the Plan
Year. The income or loss allocable to a Participant's Excess
Aggregate Contributions will be the amount determined by
either the method in subparagraph (1) or subparagraph (2)
plus, if applicable, the amount determined under subparagraph
(3):
(1) The amount determined by multiplying the income or
loss allocable to the Participant's Voluntary
Employee Contributions, Matching Contributions (if
not used in the ADP Test), Qualified Non-Elective
Contributions and, to the extent applicable, Elective
Deferrals for the Plan Year (and the gap period, if
applicable) by a fraction, the numerator of which is
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such Participant's Excess Aggregate Contributions for
the year and the denominator of which is (A) the
Participant's Account balance(s) attributable to
Contribution Percentage Amounts as of the beginning
of the Plan Year, plus any additional amounts
attributable to Contribution Percentage Amounts
allocated to the Participant during such Plan Year
and the gap period, if applicable, or (B) solely with
respect to Plan Years beginning before January 1,
1992, the Participant's Account balance attributable
to Contribution Percentage Amounts as of the end of
the Plan Year, reduced by any gain and increased by
any loss allocable thereto during the Plan Year; or
(2) The amount determined by any reasonable method of
allocating income or loss to the Participant's
Voluntary Contributions, Matching Contributions and
Qualified Non-Elective Contribution for the Plan Year
and for the gap period, if applicable, provided the
method used is the same one used for allocating
income or losses to Participants' Accounts; and
(3) 10% of the amount determined under (1) multiplied by
the number of whole months between the end of the
Plan Year and the distribution date, counting the
month of distribution if it occurs after the 15th of
such month.
(f) ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS: Excess
Aggregate Contributions will be forfeited if forfeitable, or
will be distributed on a pro-rata basis from the Participant's
Voluntary Employee Contribution Account, Matching Contribution
Account and Qualified Matching Contribution Account, and if
applicable, from the Qualified Non-Elective Contribution
Account or Elective Deferral Account, or from both.
(g) SOURCE OF DISTRIBUTION: Distribution of Excess Aggregate
Contributions will be taken from a Participant's investment
options based on rules established by the Administrator.
5.22 ELIMINATION OF CERTAIN FORMS OF PAYMENT
The form or forms of distribution described in Section 5.1, 5.3 and 5.4
are intended to satisfy the requirements of regulation ss.1.411(d)-4,
Q&A-2(e). Accordingly, the form or forms of distribution described
therein are intended to be the only form or forms of distribution
permitted under this Plan, and subject to the provisions of Section
9.1(a)(2), any other form of distribution permitted by the Plan on
December 31, 2002 is eliminated.
- 60 -
ARTICLE 6
CODE SS.415 LIMITATIONS
6.1 MAXIMUM ANNUAL ADDITION
The maximum Annual Addition as defined in paragraph (c) below made to a
Participant's various accounts maintained under the Plan for any
Limitation Year beginning after December 31, 1986 will not exceed the
lesser of the Dollar Limitation set forth in paragraph (a) or the
Compensation Limitation set forth in paragraph (b), as follows:
(a) DOLLAR LIMITATION: For Limitation Years beginning after
December 31, 1994, the Dollar Limitation is $30,000 as
annually adjusted pursuant to Code ss.415(d).
(b) COMPENSATION LIMITATION: The Compensation Limitation is equal
to 25% of the Participant's Section 415 Compensation for the
Limitation Year. This limitation will not apply to any
contribution made for medical benefits within the meaning of
Code ss.419A(f)(2) after separation from service which is
otherwise treated as an Annual Addition or to any amount
treated as an Annual Addition under Code ss.415(l)(1).
(c) ANNUAL ADDITIONS: The term Annual Additions means the sum of
the following amounts credited to a Participant's Account for
the Limitation Year: (1) Employer contributions; (2) Employee
contributions; (3) Forfeitures; (4) amounts allocated after
March 31, 1984 to an individual medical account, as defined in
Code ss.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, attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in Code ss.419A(d)(3),
under a welfare fund, as defined in Code ss.419(e), maintained
by the Employer. Annual Additions do not include a
Participant's rollovers, loan repayments, repayments of prior
Plan distributions or prior distributions of mandatory
contributions, direct transfers of contributions from another
plan to this Plan, deductible contributions to a SEP, or
voluntary deductible contributions.
6.2 ADJUSTMENTS TO MAXIMUM ANNUAL ADDITION
In applying the limitation on Annual Additions set forth in Section
6.1, the following adjustments must be made to the limitation:
(a) SHORT LIMITATION YEAR: In a Limitation Year of less than 12
months, the Defined Contribution Dollar Limitation in Section
6.1(a) will be adjusted by multiplying it by the ratio that
the number of months in the short Limitation Year bears to 12.
(b) MULTIPLE DEFINED CONTRIBUTION PLANS: If a Participant
participates in multiple defined contribution plans sponsored
by the Employer which have different Anniversary Dates, the
maximum Annual Addition in this Plan for the Limitation Year
will be reduced by the Annual Additions credited to the
Participant's accounts in the other defined contribution plans
in the Limitation Year. If a Participant participates in
multiple defined contribution plans sponsored by the Employer
which have the same Anniversary Date, (1) if only one of the
plans is subject to Code ss.412, Annual Additions will first
be credited to the Participant's account in the plan subject
to Code ss.412; and (2) if more than one of the plans is
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subject to Code ss.412, the maximum Annual Addition in this
Plan for a given Limitation Year will be equal to the product
of the maximum Annual Addition for such Limitation Year minus
any other Annual Additions previously credited to the
Participant's account under clause (1), multiplied by the
ratio the Annual Additions which would be credited to a
Participant's accounts hereunder without regard to the
limitations in Section 6.1 bears to the Annual Additions for
all plans described in this clause (2).
6.3 MULTIPLE PLANS AND MULTIPLE EMPLOYERS
All defined benefit plans (whether terminated or not) of the Employer
will be treated as one defined benefit plan, and all defined
contribution plans (whether terminated or not) of the Employer will be
treated as one defined contribution plan. In addition, all Affiliated
Employers will be considered a single employer.
6.4 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
If for any Limitation Year the Annual Additions allocated to a
Participant's Account exceeds the maximum amount permitted under
Section 6.1 above because of an allocation of Forfeitures, a reasonable
error in estimating a Participant's Compensation, a reasonable error in
determining the amount of elective contributions (within the meaning of
Code ss.402(g)(3)), or because of other limited facts and circumstances
that the Commissioner finds justify the availability of the rules set
forth in this Section, then such Participant's Account will be adjusted
in accordance with the following provisions in order to reduce the
excess Annual Additions:
(a) RETURN OF EMPLOYEE CONTRIBUTIONS: First, Voluntary Employee
Contributions, if any, and second, the amount of elective
deferrals and corresponding Employer matching contributions,
if any, to the extent that they would reduce the excess
amount, will be calculated. Such elective deferrals and
Voluntary Employee Contributions plus attributable earnings,
will be returned to the Participant. Any Employer matching
contribution amount will be applied as described in (b) or (c)
below, depending on whether the Participant is covered by the
Plan at the end of the Limitation Year.
(b) EXCESS USED TO REDUCE EMPLOYER CONTRIBUTIONS IF PARTICIPANT IS
STILL COVERED BY THE PLAN: If, after the application of
paragraph (a), an excess amount still exists and the
Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's
Account plus applicable earnings thereon, if any, will be used
to reduce Employer contributions (including any allocation of
Forfeitures) for such Participant in the next Limitation Year,
and in each succeeding Limitation Year if necessary.
(c) EXCESS USED TO REDUCE EMPLOYER CONTRIBUTIONS IF PARTICIPANT IS
NOT COVERED BY THE PLAN: If, after the application of
paragraph (a), an excess amount still exists and the
Participant is not covered by the Plan at the end of a
Limitation Year, the excess amount, plus applicable earnings
thereon, if any, will be held unallocated in a suspense
account. The suspense account will be applied to reduce future
Employer contributions (including the allocation of any
Forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if
necessary.
(d) SUSPENSE ACCOUNT: If a suspense account is in existence at any
time during a Limitation Year pursuant to this Section, such
suspense account will not participate in the allocation of the
Trust's investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year,
all amounts in the suspense account must be allocated and
reallocated to Participants' Accounts before any Employer
Contributions or any Employee contributions may be made to the
Plan for that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
6.5 MULTIPLE PLAN REDUCTION
For Limitation Years beginning before January 1, 2000, if an Employee
is, or has been, a Participant in one or more Employer-sponsored
defined benefit plans and in one or more Employer-sponsored defined
contribution plans, the sum of the defined benefit plan fraction and
the defined contribution plan fraction for any Limitation Year may not
exceed 1.0, determined in accordance with the following provisions:
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(a) DEFINED BENEFIT FRACTION: The defined benefit fraction has as
its numerator the Participant's Projected Annual Benefits
determined as of the close of the Limitation Year and has as
its denominator the lesser of 125% of the dollar limitation
for the Limitation Year determined under Code ss.415(b) and
ss.415(d), or 140% of the amount which may be taken into
account under Code ss.415(b)(1)(B) for such Limitation Year.
However, with respect to anyone who was a Participant as of
the first day of the first Limitation Year beginning after
December 31, 1987, in one or more defined benefit plans
maintained by the Employer which were in existence on May 6,
1986, the denominator of the defined benefit fraction will not
be less than 125% of the Current Accrued Benefit.
(b) DEFINITIONS: The term Projected Annual Benefits means the
annual benefits payable to a Participant under all defined
benefit plans (whether terminated or not) of the Employer as
determined under regulation ss.1.415-7(b)(3); and the term
Current Accrued Benefit means a Participant's accrued benefit
under a defined benefit plan, determined as if the Participant
had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987, when
expressed as an annual benefit within the meaning of Code
ss.415(b)(2). In determining a Participant's Current Accrued
Benefit, the Administrator will disregard any changes to the
Plan after May 5, 1986, and any cost of living adjustment
after May 5, 1986. The Current Accrued Benefit will only be
used as set forth above if the defined benefit plans
individually and in the aggregate satisfied the requirements
of Code ss.415 for all Limitation Years beginning before
January 1, 1987.
(c) DEFINED CONTRIBUTION FRACTION: The defined contribution
fraction has as its numerator the sum of the Annual Additions
to the Participant's Account under all the defined
contribution plans (whether terminated or not) maintained by
the Employer for the current Limitation Year and all prior
Limitation Years (including the Annual Additions attributable
to the Participant's non-deductible contributions to all
Employer maintained defined benefit plans, whether terminated
or not, and the Annual Additions attributable to all welfare
benefit funds, as defined in Code ss.419(e), and individual
medical accounts, as defined in Code ss.415(l)(2) maintained
by the Employer), and has as its denominator the sum of the
maximum aggregate amounts for the current Limitation Year and
all prior Limitation Years the Employee was employed by the
Employer (regardless of whether a defined contribution plan
was maintained by the Employer). The maximum permissible
aggregate amount in any Limitation Year is the lesser of (1)
125% of the dollar limitation in effect in Code
ss.415(c)(1)(A) for such Limitation Year determined without
regard to Code ss.415(c)(6) and adjusted per regulation
ss.1.415-7(d)(1) and Notice 83-10, or (2) 35% of the
Participant's Section 415 Compensation.
(d) TRANSITION RULE FOR DENOMINATOR: For defined contribution
plans in effect on or before July 1, 1982, the Administrator
may elect for any Limitation Year ending after December 31,
1982 that the denominator be the product of the denominator
for the Limitation Year ending in 1982 determined under the
law in effect for such Limitation Year, multiplied by the
Transition Fraction, which is a fraction which has as its
numerator the lesser of $51,875 or 1.4 multiplied by 25% of
the Participant's Section 415 Compensation for the Plan Year
ending in 1981, and which has as its denominator the lesser of
$41,500 or 25% of the Participant's Section 415 Compensation
for the Plan Year ending in 1981. In any Top Heavy Limitation
Year, $41,500 will be substituted for $51,875 in determining
the Transition Fraction unless the Extra Minimum Allocation is
being provided in Section 3.5. In a Super Top Heavy Plan Year,
$41,500 will always be substituted for $51,875.
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(e) ADJUSTMENT OF FRACTION: If an Employee was a Participant as of
the end of the first day of the first Limitation Year
beginning after December 31, 1986 in one or more defined
contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of the defined
contribution fraction will be adjusted if the sum of such
defined contribution fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of the excess
of the sum of the defined benefit fraction and the defined
contribution fraction over 1.0 multiplied by the denominator
of the defined contribution fraction will be permanently
subtracted from the numerator of the defined contribution
fraction. The adjustment will be calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, disregarding
any changes in the terms and conditions of the Plan made after
May 5, 1986, but using the Code ss.415 limitation applicable
to the first Limitation Year beginning on or after January 1,
1987.
(f) TOP HEAVY ADJUSTMENTS: In any Top Heavy Limitation Year, 100%
will be substituted for 125% in paragraphs (a) and (c) unless
an eligible Non-Key Employee (1) is being provided a 7.5%
allocation under Section 3.5(d); or (2) is being provided a
retirement benefit under a defined benefit plan equal to 3% of
average monthly Code ss.415 Compensation. However, in any
Super Top Heavy Limitation Year (which means the Top Heavy
Ratio exceeds 90% for that Limitation Year), 100% will be
substituted for 125% in any event. If the 100% limitation is
exceeded for any Participant in any Limitation Year, then (1)
the Participant's accrued benefit in the defined benefit plan
will not be increased; (2) no Annual Additions may be credited
to the Participant's accounts under this Plan; and (3) the
Participant may not make any contributions, whether voluntary
or mandatory, to this Plan or any other Employer-sponsored
qualified plan.
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ARTICLE 7
DUTIES OF THE TRUSTEE
7.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION
The Plan will have one or more individual Trustees, a corporate Trustee
or any combination thereof appointed as follows:
(a) APPOINTMENT OF TRUSTEE: Each Trustee will be appointed by the
Sponsor and will serve until its successor has been named or
until such Trustee's resignation, death, incapacity, or
removal, in which event the Employer will name a successor
Trustee. The term Trustee will include the original and any
successor Trustees.
(b) RESIGNATION OF TRUSTEE: A Trustee may resign by giving 30 days
written notice in advance to the Sponsor, unless such notice
is waived by the Sponsor. The Sponsor may remove a Trustee any
time, with or without cause, by giving written notice of the
removal to the Trustee. Unless waived in writing by the
Sponsor, if any Trustee who is an Employee, a Self-Employed
Individual or an Owner-Employee resigns or terminates
employment with, or ownership of, the Sponsor or an Adopting
Employer for any reason, such termination will constitute an
immediate resignation as a Trustee of the Plan.
(c) SUCCESSOR TRUSTEE: Each successor Trustee will succeed to
title to the Trust by filing a written acceptance of
appointment with the former Trustee and the Sponsor. The
former Trustee, upon receipt of such acceptance, will execute
all documents and perform all acts necessary to vest the Trust
Fund's title of record in any successor Trustee. No successor
Trustee will be personally liable for any act or failure to
act of any predecessor Trustee.
(d) MERGER OF CORPORATE TRUSTEE: If any corporate Trustee, before
or after qualification, changes its name, consolidates or
merges with another corporation, or otherwise reorganizes, any
resulting corporation which succeeds to the fiduciary business
of such Trustee will become a Trustee hereunder in lieu of
such corporate Trustee.
7.2 INVESTMENT ALTERNATIVES OF THE TRUSTEE
The Trustees will implement an investment program based on the
Employer's investment objectives and the Employee Retirement Income
Security Act. In addition to powers given by law, the Trustees may
engage in the following investment activities on behalf of the Trust:
(a) PROPERTY: The Trustee may invest assets in any form of
property, including common and preferred stocks, exchange
covered call options, bonds, money market instruments, mutual
funds, savings accounts, certificates of deposit, Treasury
bills, insurance policies and contracts, or in any other
property, real or personal, foreign or domestic, having a
ready market including securities issued by an institutional
Trustee and/or affiliate of the institutional Trustee. An
institutional Trustee may invest in its own deposits if such
deposits bear a reasonable interest rate. The Trustee may
retain, manage, operate, repair, improve and mortgage or lease
for any period on such terms as it deems proper any real
estate or personal property held by the Trustee, including the
power to demolish any building or other improvements in whole
or part. The Trustee may erect buildings or other
improvements, make leases that extend beyond the term of this
Trust, and foreclose, extend, renew, assign, release or
partially release and discharge mortgages or other liens.
(b) POOLED FUNDS AND COMMON TRUSTS: If the Sponsor maintains more
than one qualified retirement plan, the assets of two or more
of such plans may be maintained by the Trustee in a single
trust established by the Sponsor. In addition, the Trustee may
transfer any Trust assets to a collective trust established to
permit the pooling of funds of separate pension and
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profit-sharing trusts provided the Internal Revenue Service
has ruled such collective trust to be qualified under Code
ss.401(a) and exempt under Code ss.501(a) (or under the
applicable corresponding provision of any other Revenue Act)
or to any other common, collective, or commingled trust fund
which has been or may hereafter be established and maintained
by the Trustee and/or affiliates of an institutional Trustee.
Such commingling of assets of the Fund with assets of other
qualified trusts is specifically authorized, and to the extent
of the investment of the Trust Fund in such a group or
collective trust, the terms of the instrument establishing the
group or collective trust will be a part hereof as though set
forth herein.
(c) EMPLOYER STOCK: The Trustee may invest assets in the common
stock, debt obligations, or any other security issued by the
Employer within the limitations provided under ERISA ss.406,
ss.407 and ss.408 if such investment does not constitute a
prohibited transaction under Code ss.4975. Any such investment
will only be made upon written direction of the Employer,
which will be solely responsible for its propriety.
(d) CASH RESERVES: The Trustee may retain in cash such Trust Fund
assets as the Trustee may deem advisable to satisfy the
liquidity needs of the Plan and to deposit any cash held in
the Trust Fund in a bank account without liability for the
highest rate of interest available. If a bank is acting as
Trustee, such Trustee is specifically given authority to
invest in deposits of such Trustee. The Trustee may also hold
cash un-invested at any time and from time to time and in such
amount or to such extent as the Trustee deems prudent, and the
Trustee will not be liable for any losses that may be incurred
as the result of the failure to invest same, except to the
extent provided herein or in ERISA.
(e) REORGANIZATIONS, RECAPITALIZATIONS, CONSOLIDATIONS, SALES OR
MERGERS: The Trustee may join in or oppose the reorganization,
recapitalization, consolidation, sale or merger of
corporations or properties, upon such terms as the Trustee
deems wise.
(f) REGISTRATION OF SECURITIES: The Trustee may cause any
securities or other property to be registered in the Trustee's
own name or in the name of the Trustee's nominee or nominees,
and may hold any investments in bearer form, but the records
of the Trustee will at all times show all such investments as
part of the Trust Fund.
(g) PROXIES: The Trustee may vote proxies and if appropriate pass
them on to any investment manager which may have directed the
investment in the equity giving rise to the proxy.
(h) OWNERSHIP RIGHTS: The Trustee may exercise all ownership
rights with respect to any assets held in the Trust Fund.
(i) OTHER INVESTMENTS: The Trustee may accept and retain for such
time as the Trustee deems advisable any securities or other
property received or acquired as Trustee, whether or not such
securities or property would normally be purchased as
investments hereunder.
(j) KEY MAN INSURANCE: The Trustee, with the consent of the
Administrator, may purchase insurance Policies on the life of
any Participant whose employment is deemed to be key to the
Employer's financial success. Such key man Policies will be
deemed to be an investment of the Trust Fund and will be
payable to the Trust Fund as the beneficiary thereof. The
Trustee may exercise any and all rights granted under such
Policies. Neither the Trustee, Employer, Administrator, nor
any Fiduciary will be responsible for the validity of any
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Policy or the failure of any insurer to make payments
thereunder, or for the action of any person which delays
payment or renders a Policy void in whole or in part. No
insurer that issues a Policy will be deemed a party to this
Plan for any purpose or to be responsible for its validity;
nor will it be required to look into the terms of the Plan nor
to question any action of the Trustee. The obligations of the
insurer will be determined solely by the Policy's terms and
any other written agreements between it and the Trustee. The
insurer will act only at the written direction of the Trustee,
and will be discharged from all liability with respect to any
amount paid to the Trustee. The insurer will not be obligated
to see that any money paid by it to the Trustee or any other
person is properly distributed or applied.
(k) LOANS TO THE TRUST: The Trustee may borrow or raise money for
purposes of the Plan in such amounts, and upon such terms and
conditions, as the Trustee deems advisable; and for any sum so
borrowed, the Trustee may issue a promissory note as Trustee,
and secure repayment of the loan by pledging all, or any part,
of the Trust Fund as collateral. No person lending money to
the Trustee will be bound to see to the application of the
money lent or to inquire into the validity or propriety of any
borrowing.
(l) AGREEMENTS WITH BANKS: The Trustee may with the consent of the
Sponsor and upon such terms as they deem necessary, enter into
an agreement with a bank or trust company providing for the
deposit of all or part of the Trust assets with such bank or
trust company, and the appointment of such bank or trust
company as the agent or custodian of the Trustees for
investment purposes, with such discretion in investing and
reinvesting the funds of the Trust as the Trustees deem it
necessary or desirable to delegate.
(m) LITIGATION: The Trustee may begin, maintain, or defend any
litigation necessary in connection with the administration of
the Plan, except that the Trustee will not be obliged or
required to do so unless indemnified to its satisfaction.
(n) CLAIMS, DEBTS OR DAMAGES: The Trustee may settle, compromise,
or submit to arbitration any claims, debts, or damages due or
owing to or from the Plan.
(o) MARGIN ACCOUNTS, OPTIONS AND COMMODITIES TRADING: The Trustee
may engage in the following activities: borrowing on margin,
buying options, writing covered options, options
spreads/straddles, and future/commodities trading.
(p) MISCELLANEOUS: The Trustee may do all such acts (including,
but not limited to, margin trading and futures and commodities
trading) and exercise all such rights, although not
specifically mentioned herein, as the Trustee deems necessary.
The Trustee will not be restricted to securities or other
property of the character expressly authorized by applicable
law for trust investments, provided the Trustee discharges its
duties with the care, skill, prudence, and diligence, under
the circumstances then prevailing, that a prudent person
acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of similar character and
with similar aims by diversifying the investments to minimize
the risks of large losses unless under the circumstances it is
clearly prudent not to do so.
7.3 VALUATION OF THE TRUST FUND
On each Valuation Date, the Trustee will determine the net worth of the
Trust Fund. The fair market value of securities listed on a registered
stock exchange will be the prices at which they were last traded on
such exchange preceding the close of business on the Valuation Date. If
the securities were not traded on the Valuation Date, or if the
exchange on which they are traded was not open for business on the
Valuation Date, then the securities will be valued at the prices at
- 67 -
which they were last traded prior to the Valuation Date. Any unlisted
security will be valued at its bid price next preceding the close of
business on the Valuation Date, which bid price will be obtained from a
registered broker or an investment banker. To determine the fair market
value of assets other than securities for which trading or bid prices
can be obtained, the Trustee may use any reasonable method to determine
the value of such assets, or may elect to employ one or more appraisers
for that purpose and rely on the values established by such appraiser
or appraisers.
7.4 COMPENSATION AND EXPENSES
The Trustee, either from the Trust Fund or from the Employer, will be
reimbursed for all of its expenses and will be paid reasonable
compensation as agreed upon from time to time with the Employer; but no
person who receives full-time pay from the Employer will receive any
fees for services to the Plan as Trustee or in any other capacity.
Expenses will be paid by each Adopting Employer in the ratio that each
Adopting Employer's Participants' Accounts bears to the total of all
the Participants' Accounts maintained by this Plan.
7.5 PAYMENTS FROM THE TRUST FUND
The Trustee will pay Plan benefits and other payments as the
Administrator directs, and except as provided by ERISA, the Trustee
will not be responsible for the propriety of such payments. Any payment
made to a Participant, or a Participant's legal representative or
Beneficiary in accordance with the terms of the Plan will, to the
extent of such payment, be in full satisfaction of all claims arising
against the Trust, the Trustee, the Employer, and the Administrator.
Any payment or distribution made from the Trust is contingent on the
recipient executing a receipt and release acceptable to the Trustee,
Administrator, or Employer.
7.6 PAYMENT OF TAXES
The Trustee will pay all taxes of the Trust Fund, including property,
income, transfer and other taxes which may be levied or assessed upon
or in respect of the Trust Fund or any money, property or securities
forming a part of the Trust Fund. The Trustee may withhold from
distributions to any payee such sum as the Trustee may reasonably
estimate as necessary to cover federal and state taxes for which the
Trustee may be liable, which are, or may be, assessed with regard to
the amount distributable to such payee. Prior to making any payment,
the Trustee may require such releases or other documents from any
lawful taxing authority and may require such indemnity from any payee
or distributee as the Trustee deems necessary.
7.7 ACCOUNTS, RECORDS AND REPORTS
The Trustee will keep accurate records reflecting its administration of
the Trust Fund and will make them available to the Administrator for
review and audit. At the request of the Administrator, the Trustee
will, within 90 days of such request, file with the Administrator an
accounting of its administration of the Trust Fund during such period
or periods as the Administrator determines. The Administrator will
review the accounting and notify the Trustee within 90 days if the
report is disapproved, providing the Trustee with a written description
of the items in question. The Trustee will have 60 days to provide the
Administrator with a written explanation of the items in question. If
the Administrator again disapproves of the report, the Trustee will
file its accounting in a court of competent jurisdiction for audit and
adjudication.
7.8 EMPLOYMENT OF AGENTS AND COUNSEL
The Trustee may employ such agents, counsel, consultants, or service
companies as it deems necessary and may pay their reasonable expenses
and compensation. The Trustee will not be liable for any action taken
or omitted by the Trustee in good faith pursuant to the advice of such
agents and counsel. Any agent, counsel, consultant, service company
and/or its successors will exercise no discretionary authority over
investments or the disposition of Trust assets, and their services and
duties will be ministerial only and will be to provide the Plan with
those things required by law or by the terms of the Plan without in any
- 68 -
way exercising any fiduciary authority or responsibility under the
Plan. The duties of a third party administrator will be to safe-keep
the individual records for all Participants and to prepare all required
actuarial services and disclosure forms under the supervision of the
Administrator and any Fiduciaries of the Plan. It is expressly stated
that the third party administrator's services are only ministerial in
nature and that under no circumstances will such third party
administrator exercise any discretionary authority whatsoever over Plan
Participants, Plan investments, or Plan benefits.
7.9 DIVISION OF DUTIES AND INDEMNIFICATION
The division of duties and the indemnification of the Trustee of this
Plan will be governed by the following provisions:
(a) NO GUARANTEE AGAINST LOSS: The Trustee will have the authority
and discretion to manage and control the Trust Fund to the
extent provided in this instrument, but does not guarantee the
Fund in any manner against investment loss or depreciation in
asset value, or guarantee the adequacy of the Fund to meet and
discharge all or any liabilities of the Plan. Furthermore, the
Trustee will not be liable for the making, retention or sale
of any investment or reinvestment made by it, as herein
provided, or for any loss to or diminution of the Fund, or for
any other loss or damage which may result from the discharge
of its duties hereunder, except to the extent it is judicially
determined that the Trustee failed to exercise the care,
skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of like character and like aims.
(b) REPRESENTATIONS OF THE SPONSOR: The Sponsor warrants that all
directions issued to the Trustee by it or the Plan
Administrator will be in accordance with the terms of the Plan
and not contrary to the provisions of the Employee Retirement
Income Security Act of 1974 and the regulations issued
thereunder.
(c) DIRECTIONS BY OTHERS: The Trustee will not be answerable for
any action taken pursuant to any direction, consent,
certificate, or other paper or document on the belief that the
same is genuine and signed by the proper person. All
directions by the Employer, a Participant or the Plan
Administrator will be in writing. The Plan Administrator will
deliver to the Trustee certificates evidencing the individual
or individuals authorized to act as the Administrator and will
deliver to the Trustee specimens of their signatures.
(d) DUTIES AND OBLIGATIONS LIMITED BY THE PLAN: The duties and
obligations of the Trustee will be limited to those expressly
imposed upon it by this Plan or subsequently agreed upon by
the parties. Responsibility for administrative duties required
under the Plan or applicable law not expressly imposed upon or
agreed to by the Trustee, will rest solely with the Sponsor
and with the Administrator.
(e) INDEMNIFICATION OF TRUSTEE: The Trustee will be indemnified
and saved harmless by the Employer against any and all
liability to which the Trustee may be subjected, including all
expenses reasonably incurred in its defense, for any action or
failure to act resulting from compliance with the Employer's
instructions, the Employer's employees or agents, the
Administrator, or any other Plan Fiduciary, and for any
liability arising from the actions or non-actions of any
predecessor Trustees or Plan Fiduciary.
(f) TRUSTEE NOT RESPONSIBLE FOR APPLICATION OF PAYMENTS: The
Trustee will not be responsible in any way for the application
of any payments it is directed to make or for the adequacy of
the Fund to meet and discharge any and all liabilities under
the Plan.
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(g) MULTIPLE TRUSTEES: If more than one Trustee is appointed, any
single Trustee may act independently in undertaking any act
and/or transaction on behalf of the Trust unless the Trustees
have agreed by a majority vote that a particular action,
including signing documents or checks, must be approved by a
majority vote before it can be undertaken.
(h) LIMITATION OF LIABILITY: No Trustee will be liable for the act
of any other Trustee or Fiduciary unless the Trustee has
knowledge of such act.
(i) TRUSTEE AS PARTICIPANT OR BENEFICIARY: Trustee will not be
prevented from receiving any benefits to which it may be
entitled as a Participant or Beneficiary in the Plan, so long
as the benefits are computed and paid on a basis that is
consistent with the terms of the Plan as applied to all other
Participants and Beneficiaries.
(j) NO SELF-DEALING: The Trustee will not (1) deal with the assets
of the Trust Fund in its own interest or for its own account;
(2) in its individual or in any other capacity, act in any
transaction involving the Trust Fund on behalf of a party (or
represent a party) whose interests are adverse to the
interests of the Plan, or its Participants or Beneficiaries;
or (3) receive any consideration for its own personal accounts
from any party dealing with the Plan in connection with a
transaction involving assets of the Trust Fund.
7.10 APPOINTMENT OF INVESTMENT MANAGER
The Trustee, if so directed by the Sponsor, will appoint an Investment
Manager to manage and control the investment of all or any portion of
the Trust Fund. Each Investment Manager will be either (a) an
investment advisor registered under the Investment Advisors Act of
1940; (b) a bank as defined in that Act; or (c) an insurance company
qualified to manage, acquire or dispose of any asset of the Trust under
the laws of more than one state. An Investment Manager must acknowledge
in writing that it is a Fiduciary. The Sponsor will enter into an
agreement with an Investment Manager specifying the duties and
compensation of the Investment Manager and further specifying any other
terms and conditions under which the Investment Manager will be
retained. The Trustee will not be liable for any act or omission of an
Investment Manager, and will not be liable for following the advice of
an Investment Manager with respect to any duties delegated by the
Sponsor to the Investment Manager. The Sponsor will determine the
portion of the Trust Fund to be invested by an Investment Manager and
will establish investment objectives and guidelines for the Investment
Manager to follow.
7.11 ASSIGNMENT AND ALIENATION OF BENEFITS
Except as may otherwise be permitted under Code ss.401(a)(13)(C)
effective August 5, 1997, or as may otherwise be permitted under a
Qualified Domestic Relations Order as provided in Section 8.11, or as
otherwise be permitted under Section 7.14 if loans to Participants are
permitted, no right or claim to, or interest in, any part of the Trust
Fund, or any payment therefrom, will be assignable, transferable, or
subject to sale, mortgage, pledge, hypothecation, commutation,
anticipation, garnishment, attachment, execution, or levy of any kind,
and the Trustees will not recognize any attempt to assign, transfer,
sell, mortgage, pledge, hypothecate, commute, or anticipate the same,
except to the extent required by law.
7.12 EXCLUSIVE BENEFIT RULE
All contributions made by an Employer (whether or not the Employer is
an Affiliated Employer with one or more other Adopting Employers) to
the Trust Fund will be used for the exclusive benefit of all
Participants and their Beneficiaries and will not be used for nor
diverted to any other purpose except the payment of the costs of
maintaining the Plan.
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7.13 PURCHASE OF INSURANCE
Subject to any rules or procedures that may be established by the
Administrator under paragraph (k) below, the Trustee may purchase life
insurance Policies on the life of a Participant and/or the
Participant's Spouse in accordance with the following provisions:
(a) OWNERSHIP OF POLICIES: All life insurance Policies will be
vested exclusively in the Trustee and will be payable to the
Trustee, subject to the rights of the Beneficiaries hereunder
unless the Trustee permits the designation of a named
beneficiary other than the Trustee. However, notwithstanding
the foregoing, no Trustee who is also a Participant may,
except in a fiduciary capacity, exercise any ownership rights
with respect to any Policy insuring the life of such Trustee
in his or her capacity as a Participant.
(b) PRIMARY LIMIT ON PREMIUMS: At the direction of the
Administrator, the Trustee will purchase Policies on the life
of the Participant, provided that the aggregate premiums on
ordinary life insurance Policies must be less than 50% of the
Participant's Account balance; (2) the aggregate premiums on
term life insurance Policies, universal life insurance
Policies and all other life insurance Policies which are not
ordinary life insurance Policies must be less than 25% of the
Participant's Account balance; and (3) the sum of one-half of
the premiums on ordinary life insurance Policies and the total
of all other life insurance premiums cannot exceed 25% of the
Participant's Account balance. For purposes of this Section,
an ordinary life insurance Policy is an insurance policy that
has a non-decreasing death benefit and also has a
non-increasing premium.
(c) ALTERNATE LIMIT ON PREMIUMS: Notwithstanding paragraph (a), a
Participant may elect that up to 100% of his or her Rollover
Account, and up to 100% of the portion of his or her Vested
Participant's Account that has accumulated in the Plan for at
least 2 years, be used to purchase Policies on the life of the
Participant's life, the life of the Participant's Spouse,
and/or the joint lives of the Participant and the
Participant's Spouse. Likewise, a Participant who has
participated in the Plan for at least 5 years may elect that
up to 100% of his or her Rollover Account, and up to 100% of
his or her Vested Participant's Account balance, be used to
purchase Policies on the life of the Participant, the life of
the Participant's Spouse, and/or the joint lives of the
Participant and his or her Spouse.
(d) PAYMENT OF PREMIUMS: If Employer contributions are inadequate
to pay all premiums on Policies, the Trustees may, at the
direction of the Plan Administrator, utilize other amounts
remaining in the Trust Fund to pay the premiums, allow the
Policies to lapse, reduce the Policies to a level at which
they may be maintained, or borrow against the Policies on a
prorated basis if borrowing does not discriminate in favor of
Policies issued on the lives of officers,
Shareholder-Employees and/or Highly Compensated Employees.
(e) PAYMENT OF PREMIUMS FROM LOANS: The Trustees may pay premiums
when due from the loan values of the Policies themselves if
(1) any such loan is made against all of the Policies in
proportion to their respective cash surrender values, and (2)
all such loans are repaid in proportion to the cash surrender
value of such Policies.
(f) POLICY DIVIDENDS: Any insurer payments that are paid to the
Trustee on account of experience credits, dividends, or
surrender or cancellation credits, will be applied by the
Employer within the current or next succeeding Plan Year
toward premiums due.
(g) CONFLICT WITH PLAN: Subject to the provisions of paragraph (j)
below, if the provisions of any insurance Policy purchased
hereunder conflict with the terms of this Plan, the provisions
of the Plan will control.
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(h) DISPOSITION OF POLICIES UPON TERMINATION: If a Terminated
Participant's Vested Interest equals or exceeds the cash
surrender value of any Policies issued on his life, the
Trustee, with the consent of both the Administrator and the
Terminated Participant, will transfer such Policies to the
Terminated Participant, together with any restrictions the
Administrator may impose concerning the Terminated
Participant's right to surrender, assign, or otherwise realize
cash on such Policies prior to his Normal Retirement Date. If
the Terminated Participant's Vested Interest in his
Participant's Account is less than the cash surrender values
of such Policies, the Administrator may permit him to pay the
Trustee the sum required to make distribution equal to the
value of the Policies being assigned or transferred, or the
Trustee may borrow the cash surrender values of the Policies
from the insurer and then assign the Policies to the
Terminated Participant.
(i) DISPOSITION OF POLICIES AT RETIREMENT: When a Participant
retires, the Trustee, at the direction of the Administrator,
must, with respect to any Policies purchased on the life of
such Participant under paragraph (b), either (1) transfer them
to the Participant, (2) with the Participant's consent, borrow
their cash surrender values and transfer them to the
Participant subject to the loan, or (3) surrender them for
their cash surrender values. If options (2) or (3) are
elected, the cash surrender values will be added to the
Participant's Account for distribution in accordance with
Section 5.1.
(j) FIDUCIARIES AND INSURERS PROTECTED: Neither the Trustee,
Employer, Administrator, nor any Fiduciary will be responsible
for the validity of any Policy or the failure of any insurer
to make payments thereunder, or for the action of any person
which may delay payment or render a Policy void in whole or in
part. No insurer which issues a Policy will be deemed a party
to this Plan for any purpose or to be responsible for its
validity; nor will it be required to look into the terms of
the Plan nor to question any action of the Trustee. The
obligations of the insurer will be determined solely by the
Policy's terms and any other written agreements between it and
the Trustee. The insurer will act only at the written
direction of the Trustee, and will be discharged from all
liability with respect to any amount paid to the Trustee. The
insurer will not be obligated to see that any money paid by it
to the Trustee or any other person is properly distributed or
applied.
(k) ESTABLISHMENT OF ADMINISTRATIVE PROCEDURES: The Administrator
may in a separate written document establish rules or
procedures regarding the conditions under which Policies can
be purchased by the Trustee. Such separate written document,
when properly executed, will be deemed incorporated in this
Plan. The rules or procedures therein may be modified or
amended by the Administrator without the necessity of amending
this Section, but any such modifications must be communicated
to Participants in the manner described in Section 8.9.
Notwithstanding the foregoing, (1) a summary plan description
or summary of material modifications thereto in which the
rules or procedures regarding the purchase of insurance
Policies is described will be considered a separate written
document sufficient to satisfy the requirements (including the
execution requirement) of this paragraph; and (2) any rules or
procedures established under this paragraph must be applied by
the Administrator in a uniform nondiscriminatory manner.
7.14 LOANS TO PARTICIPANTS
Subject to any rules or procedures set forth in a written loan policy
that may be established by the Administrator under paragraph (m) below,
the Trustee may permit loans to be made from the Trust Fund to
Participants and Beneficiaries, and subject to any such rules or
procedures, all loans will be made in accordance with the following
provisions:
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(a) LOANS MUST BE NONDISCRIMINATORY: The Administrator will have
the sole right to approve or disapprove a loan application,
but loans will be made available to all Participants on a
reasonably equivalent basis. Loans will not be made available
to HCEs in an amount greater than the amount made available to
other Employees.
(b) LOANS TO OWNER-EMPLOYEES OR SHAREHOLDER-EMPLOYEES: No loan
will be made to or continued in effect for a Participant who
is or who becomes an Owner-Employee or a Shareholder-Employee
except to the extent any such loan is treated as a prohibited
transaction (if required) under Code ss.4975 or other
applicable Code provision.
(c) WRITTEN LOAN AGREEMENT: All loans must be evidenced by a
legally enforceable agreement (which may include more than one
document) set forth in writing or in such other form as may be
approved by the Internal Revenue Service, and the terms of
such agreement must specify the amount and term of the loan,
and the repayment schedule.
(d) MINIMUM PERMITTED LOAN AMOUNT: The Administrator, as part of
the written loan policy, may set a minimum permitted loan
amount not to exceed $1,000.
(e) MAXIMUM PERMITTED LOAN AMOUNT: No loan, when added to the
outstanding balance of all other loans to the Participant,
will exceed the lesser of (1) $50,000 reduced by the excess,
if any, of the Participant's highest outstanding balance of
loans during the 1-year period ending on the day before the
loan was made, over the Participant's outstanding balance of
loans on the day the loan was made; or (2) one-half of the
Participant's Vested Aggregate Account. However,
notwithstanding the limitation in (2), the Administrator may,
as part of a written loan policy, permit a Participant whose
Vested Aggregate Account balance is $20,000 or less to borrow
an amount that does not exceed the lesser of $10,000 or 100%
of the Participant's Vested Aggregate Account balance if
adequate security is provided on the loan amount in excess of
that determined in (2) above.
(f) AGGREGATION OF PLANS: In applying the limitations in paragraph
(e) above, all loans from all plans of the Employer and
Affiliated Employers will be aggregated. An assignment or
pledge of any portion of the Participant's Vested Aggregate
Account balance, and a loan, pledge, or assignment with
respect to any insurance contract purchased by the Plan, will
be treated as a loan under the terms of this Section.
(g) LOANS MUST BEAR REASONABLE INTEREST: Any loan must bear
interest at a rate reasonable at the time of application,
considering the purpose of the loan and the rate being charged
by representative commercial banks in the local area for a
similar loan, unless the Administrator sets forth a different
method for determining loan interest rates in its loan
procedures such as using the prime rate or some other rate
based on the prime rate. The loan agreement will also provide
for the payment of principal and interest not less frequently
than quarterly. Such interest will be credited either directly
to the Participant's Account, or in the alternative to the
general Trust Fund, as set forth in the loan policy.
(h) LOANS MUST BE SECURED: If a Participant's loan application is
approved by the Administrator, such Participant will be
required to execute a note, a loan agreement and an assignment
of his or her Vested Aggregate Account as collateral for the
loan. The Administrator, on a nondiscriminatory basis, may
permit a Participant to pledge outside security in lieu of
pledging his or her Vested Aggregate Account as collateral.
(i) TERMS OF REPAYMENT: The term of a loan will not exceed five
years except, if permitted by the loan policy, in the case of
a loan made for the purpose of acquiring any house, apartment,
condominium, or mobile home (not used on a transient basis)
which is used or is to be used within a reasonable time as the
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principal residence of the Participant. The term of a loan
will be determined by the Administrator considering the
maturity dates quoted by representative commercial banks in
the local area for a similar loan.
(j) SUSPENSION OF INSTALLMENT PAYMENTS: The loan policy may
provide that loan installment payments will be suspended as
permitted under Code ss.414(u)(4) effective December 12, 1994.
The loan policy may also provide that installment payments
will be suspended for a period not longer than one year in
which the Participant is on a leave of absence, either without
pay or at a rate of pay (after income and employment tax
withholding) that is less than the amount of the installment
payments required under the terms of the loan. However, even
if installments payment are suspended due to a leave of
absence, the loan must still be repaid by the latest date
permitted under the original terms of the loan and the
installments due after the leave ends (or, if earlier, after
the first year of the leave) must not be less than those
required under the original terms of the loan.
(k) LOANS MAY BE LIMITED TO HARDSHIP: The loan policy may provide
that loans will only be made to Participants who have a
financial hardship and lack available resources to satisfy the
hardship. The loan policy will set forth the criteria for
financial hardship.
(l) CONTRIBUTIONS THAT CAN BE LOANED: As part of the loan policy,
the Administrator may limit loans to a Participant's balance
in a specified account or accounts.
(m) ESTABLISHMENT OF ADMINISTRATIVE PROCEDURES: The Administrator
may, in a separate written loan policy, establish rules or
procedures regarding the conditions under which the Trustee
can make loans to Participants. Such separate written
document, when properly executed, will be deemed incorporated
in this Plan. The rules or procedures therein may be modified
or amended by the Administrator without the necessity of
amending this Section, but any such modifications must be
communicated to Participants in the manner described in
Section 8.9. Notwithstanding the foregoing, (1) a summary plan
description or summary of material modifications thereto in
which the rules or procedures regarding loans to Participants
are described will be considered a separate written document
sufficient to satisfy the requirements (including the
execution requirement) of this paragraph; and (2) any rules or
procedures established hereunder must be applied by the
Administrator in a uniform nondiscriminatory manner.
7.15 DIRECTED INVESTMENT ACCOUNTS
Subject to any rules or procedures that may be established by the
Administrator under paragraph (h) below, the Trustee may permit
Participants to direct the investment of one or more of their accounts,
and subject to any such rules or procedures, investment directives will
be given in accordance with the following provisions:
(a) ACCOUNTS THAT CAN BE DIRECTED: The Administrator will
designate which accounts a Participant or other payee can
direct, and whether the Participant or payee can direct all or
only a portion of each such account. Any such designation can
be changed by the Administrator from time to time by
communicating new procedures to the Participants.
(b) INVESTMENT FUNDS: Any amount a Participant or other payee
directs will be put into a segregated investment selected by
the Participant; or alternative investment funds established
by the Trustee as part of the overall Trust Fund. Such
alternative investment funds will be under the full control
and management of the Trustee. Alternatively, if investments
outside the Trustee's control are allowed, Participants and
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other payees may not direct that investments be made in
collectibles, other than U.S. Government gold and silver
coins. The Administrator or Trustee will have the authority to
refuse any investment directed by the Participant or other
payee if that investment would be administratively burdensome,
or if for any reason the Administrator or Trustee believes
such investment would or might constitute a prohibited
transaction as defined in ERISA ss.406 or Code ss.4975. In the
event a Participant or other payee fails to make a timely
investment election, at the Administrator's discretion either
no election will be deemed to have been made or the
Participant or other payee will be considered to have made an
election to invest 100% of his or her account in an investment
option, the primary objective of which is the preservation of
principal, until such time as an investment decision by the
Participant or other payee becomes effective.
(c) INVESTMENT DESIGNATION FORM: A Participant's investment
direction will be made in a form acceptable to, and in
accordance with procedures established by, the Administrator.
Unless changed by procedures established by the Administrator
and communicated to Participants and other payees, (1) a
Participant or other payee may change an investment election
by filing a new investment designation form with the
Administrator or the Administrator's designee; (2) any change
will be effective no later than the first day of the next
investment election period; and (3) investment election
periods will be established at the discretion of the
Administrator but in any event will occur no less frequently
than once in every 12-month period or, at the discretion of
the Administrator and the Trustee, once in every 3-month or
6-month period or at such other more frequent time which is
uniformly available as determined and promulgated by the
Administrator and the Trustee.
(d) TRANSFERS BETWEEN FUNDS: Unless changed by procedures
established by the Administrator and communicated to
Participants and other payees, if multiple investment fund
options are made available, a Participant or other payee may
elect to transfer all or part of his or her Account in one or
more of the investment funds from one investment fund to
another investment fund by filing an investment designation
form with the Administrator or with the Administrator's
designee within a reasonable administrative period prior to
the next period for which investment options may be elected to
be transferred. The funds will be transferred by the Trustee
or the Administrator's designee as soon as practicable prior
to, or by the start of, the new election period. If made
available, telephone or other electronic or computer transfers
will be permitted under uniform procedures approved adopted by
the Administrator and agreed to by the Trustee.
(e) ADMINISTRATOR RESPONSIBILITY: Either the Administrator or the
Administrator's designee will be responsible when transmitting
Employer and Employee contributions or other Trust Fund assets
to indicate the dollar amount which is to be credited to each
investment fund on behalf of each Participant or other payee.
(f) NO ADMINISTRATOR LIABILITY: Except as otherwise provided
herein, neither the Trustee, nor the Administrator, nor the
Employer, nor any Fiduciary of the Plan will be liable to the
Participant or other payee (or to his or her Beneficiaries)
for any loss resulting from action taken under this Section at
the direction of the Participant or other payee.
(g) CHARGES AND FEES: Any charge or fee which may be imposed by
the Trustee or by any broker, investment advisor, or
otherwise, including legal fees, incurred in connection with a
Participant's direction under this Section of any Plan account
maintained on the Participant's behalf may be charged to and
paid from the assets of such account.
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(h) ESTABLISHMENT OF ADMINISTRATIVE PROCEDURES: All investment
designations made by Participants are to be made subject to
and in accordance with such rules or procedures as the
Administrator may adopt. At the discretion of the
Administrator and the Trustee, such rules or procedures will
permit sufficient selection among investment alternatives to
satisfy the provisions of DOL Regulation ss.2550.404(c)-1.
Such rules or procedures, when properly executed in a written
document, will be deemed incorporated in this Plan. The rules
or procedures therein may be modified or amended by the
Administrator without the necessity of amending this Section,
but any such modifications must be communicated to
Participants in the manner described in Section 8.9.
Notwithstanding the foregoing, (1) a summary plan description
or summary of material modifications thereto in which the
rules or procedures regarding investment designations are
described will be considered a separate written document
sufficient to satisfy the requirements (including the
execution requirement) of this paragraph; and (2) any rules or
procedures established under this paragraph must be applied in
a uniform nondiscriminatory manner.
7.16 SUPERSEDING TRUST OR CUSTODIAL AGREEMENT
If any assets of the Plan are invested in a separate trust or custodial
account maintained by a Trustee or custodian, the provisions of such
separate trust or custodial agreement will supersede all provisions of
this Article 7 except Sections 7.11, 7.12, 7.13 and 7.14. In addition,
in the absence of a specific provision in such separate trust or
custodial agreement regarding the valuation of securities held by the
Trust Fund, Section 7.3 will not be superseded by any such separate
trust or custodial account. If such separate trust or custodial account
should for any reason fail, be found invalid or terminate prior to the
termination of this Plan and the distribution of all the assets hereof,
this Article 7 will be deemed to have again become effective
immediately prior to such failure, invalidity or termination.
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ARTICLE 8
DUTIES OF THE ADMINISTRATOR
8.1 APPOINTMENT, RESIGNATION, REMOVAL AND SUCCESSION
Each Administrator appointed by the Sponsor will continue until his or
her death, resignation, or removal at any time, with or without cause,
by the Sponsor, and any Administrator may resign by giving 30 days
written notice to the Sponsor. If an Administrator dies, resigns, or is
removed by the Sponsor, such Administrator's successor will be
appointed as promptly as possible, and such appointment will become
effective upon its acceptance in writing by such successor
Administrator. Pending the appointment and acceptance of any successor
Administrator, any then acting or remaining Administrator will have
full power to act.
8.2 POWERS AND DUTIES OF THE ADMINISTRATOR
The powers and duties of the Administrator will include (a) appointing
the Plan's attorney, accountant, actuary, or any other party needed to
administer the Plan; (b) directing the Trustees with respect to
payments from the Trust Fund; (c) deciding if an applicant is entitled
to a benefit from the Plan, which will be paid only if the
Administrator in its sole discretion decides that the applicant is
entitled to it; (d) communicating with Employees regarding their
participation and benefits, including the administration of all claims
procedures; (e) filing any returns and reports with the Internal
Revenue Service, Department of Labor, or any other governmental agency;
(f) reviewing and approving any financial reports, investment reviews,
or other reports prepared by any party under (a) above; (g)
establishing a funding policy and investment objectives consistent with
the purposes of the Plan and the Employee Retirement Income Security
Act of 1974; (h) construing and resolving any question of Plan
interpretation; and (i) making any findings of fact the Administrator
deems necessary to proper Plan administration.
8.3 APPOINTMENT OF ADMINISTRATIVE COMMITTEE
The Employer may elect to appoint one or more members to an
Administrative/Advisory Committee (to be known as the "Committee"), to
which the Sponsor may elect to delegate certain of its responsibilities
as Plan Administrator. Members of the Committee need not be
Participants or Beneficiaries, and officers and directors of the
Sponsor will not be precluded from serving as members. A member will
serve until his or her resignation, death, or disability, or until
removed by the Sponsor. In the event of any vacancy arising by reason
of the death, disability, removal, or resignation of a member of the
Committee, the Sponsor may, but is not required to, appoint a successor
to serve in his or her place. The Committee will select a chairman and
a secretary from among its members. Members of the Committee will serve
in such capacity without compensation. The Committee will act by
majority vote.
8.4 FINALITY OF ADMINISTRATIVE DECISIONS
The Administrator's interpretation of Plan provisions, and any findings
of fact, including eligibility to participate and eligibility for
benefits, are final and will not be subject to "de novo" review unless
shown to be arbitrary and capricious.
8.5 MULTIPLE ADMINISTRATORS
If there is more than one Administrator, the Administrators may
delegate specific responsibilities among themselves, including the
authority to execute documents unless the Sponsor revokes such
delegation. The Sponsor and Trustee will be notified in writing of any
such delegation of responsibilities, and the Trustee thereafter may
rely upon any documents executed by the appropriate Administrator.
8.6 COMPENSATION AND EXPENSES
The Administrator, the Committee and any party appointed by the
Administrator under Section 8.7 may receive such compensation as agreed
upon by the Sponsor, provided that any person who already receives
full-time pay from the Employer may not receive any fees for services
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to the Plan as Administrator or in any other capacity. The Sponsor will
pay all "settlor" expenses (as described in DOL Advisory Opinion
2001-01-A) incurred by the Administrator, the Committee or any party
appointed under Section 8.7 in the performance of their duties. The
Sponsor may, but is not required to pay, all "non-settlor" expenses
incurred by the Administrator, the Committee, or any party appointed
under Section 8.7 in the performance of their duties. Any "non-settlor"
expenses incurred by the Administrator, the Committee or any party
appointed under Section 8.7 that the Sponsor elects not to pay will be
reimbursed from Trust Fund assets. Any expenses paid from the Trust
Fund will be charged to each Adopting Employer in the ratio that each
Adopting Employer's Participants' Accounts bears to the total of all
the Participants' Accounts maintained by this Plan, or in any other
reasonable method elected by the Administrator.
8.7 APPOINTMENT OF AGENTS AND COUNSEL
The Administrator (or Committee) may appoint such actuaries,
accountants, custodians, counsel, agents, consultants, and other
persons the Administrator (or Committee) deems necessary to the
administration and operation of the Plan. The actions of any such third
parties will be subject to the limitations described in Section 7.8 of
the Plan; and no such third parties will be given any authority or
discretion concerning the management and operation of the Plan that
would cause them to become Fiduciaries of the Plan.
8.8 CORRECTING ADMINISTRATIVE ERRORS
The Administrator may take such steps as it considers necessary and
appropriate in its discretion to remedy administrative or operational
errors. Such steps may include, but will not be limited to the
following: (a) taking any action required under the employee plans
compliance resolution system of the Internal Revenue Service, any asset
management or fiduciary conduct error correction program available
through the Internal Revenue Service, United States Department of Labor
or other governmental administrative agency; (b) a reallocation of Plan
assets; (c) adjustments in amounts of future payments to Participants,
Beneficiaries or Alternate Payees; and (d) institution and prosecution
of actions to recover benefit payments made in error or on the basis of
incorrect or incomplete information.
8.9 PROMULGATING NOTICES AND PROCEDURES
The Sponsor and Administrator are given the power and responsibility to
promulgate certain written notices, policies and/or procedures under
the terms of the Plan and disseminate same to the Participants, and the
Administrator may satisfy such responsibility by the preparation of any
such notice, policy and/or procedure in a written form which can be
published and communicated to a Participant in one or more of the
following ways: (a) by distribution in hard copy; (b) through
distribution of a summary plan description or summary of material
modifications thereto which sets forth the policy or procedure with
respect to a right, benefit or feature offered under the Plan; (c) by
e-mail, either to a Participant's personal e-mail address or his or her
Employer-maintained e-mail address; and (d) by publication on a
web-site accessible by the Participant, provided the Participant is
notified of the web-site publication. Any notice, policy and/or
procedure provided through an electronic medium will only be valid if
the electronic medium which is used is reasonably designed to provide
the notice, policy and/or procedure in a manner no less understandable
to the Participant than a written document, and under such medium, at
the time the notice, policy and/or procedure is provided, the Employee
may request and receive the notice, policy and/or procedure on a
written paper document at no charge.
8.10 CLAIMS PROCEDURES
The procedures in this Section will be the sole and exclusive remedy
for an Employee, Participant or Beneficiary ("Claimant") to make a
claim for benefits under the Plan. These procedures will be
administered and interpreted in a manner consistent with the
requirements of ERISA ss.503 and the regulations thereunder. Any
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electronic notices provided by the Administrator will comply with the
standards imposed under regulations issued by the Department of Labor.
All claims determinations made by the Administrator (and when
applicable by the Committee if one has been appointed under Section
8.3) and will be made in accordance with the provisions of this Section
and the Plan, and will be applied consistently to similarly situated
Claimants. For purposes of this Section 8.10, if a Committee has not
been appointed under Section 8.3, any reference to Committee will be
considered a reference to the Administrator.
(a) WRITTEN CLAIM: A Claimant, or the Claimant's duly authorized
representative, may file a claim for a benefit to which the
Claimant believes that he or she is entitled under the Plan.
Any such claim must be filed in writing with the
Administrator.
(b) DENIAL OF CLAIM: The Administrator, in its sole and complete
discretion, will make all initial determinations as to the
right of any person to benefits. If the claim is denied in
whole or in part, the Administrator will send the Claimant a
written or electronic notice, informing the Claimant of the
denial. The notice must be written in a manner calculated to
be understood by the Claimant and must contain the following
information: the specific reason(s) for the denial; a specific
reference to pertinent Plan provisions on which the denial is
based; if additional material or information is necessary for
the Claimant to perfect the claim, a description of such
material or information and an explanation of why such
material or information is necessary; and an explanation of
the Plan's claim review (i.e., appeal) procedures, the time
limits applicable to such procedures, and the Claimant's right
to request arbitration if the claim denial is upheld in whole
or in part on appeal. Written or electronic notice of the
denial will be given within a reasonable period of time (but
no later than 90 days) from the date the Administrator
receives the claim, unless special circumstances require an
extension of time for processing the claim. In no event may
the extension exceed 90 days from the end of the initial
90-day period. If an extension is necessary, prior to the
expiration of the initial 90-day period, the Administrator
will send the Claimant a written notice, indicating the
special circumstances requiring an extension and the date by
which the Administrator expects to render a decision.
(c) REQUEST FOR APPEAL: If the Administrator denies a claim in
whole or in part, the Claimant may elect to appeal the denial.
If the Claimant does not appeal the denial pursuant to the
procedures set forth herein, the denial will be final, binding
and unappealable. A written request for appeal must be filed
by the Claimant (or the Claimant's duly authorized
representative) with the Committee within 60 days after the
date on which the Claimant receives the Administrator's notice
of denial. If a request for appeal is timely filed, the
Claimant will be afforded a full and fair review of the claim
and the denial. As part of this review, the Claimant may
submit written comments, documents, records, and other
information relating to the claim, and the review will take
into account all such comments, documents, records, or other
information submitted by the Claimant, without regard to
whether such information was submitted or considered in the
Administrator's initial benefit determination. The Claimant
also may obtain, free of charge and upon request, records and
other information relevant to the claim, without regard to
whether such information was relied upon by the Administrator
in making the initial benefit determination.
(d) REVIEW OF APPEAL: The Committee will determine, in its sole
and complete discretion, whether to uphold all or a portion of
the initial claim denial. If, on appeal, the Committee
determines that all or a portion of the initial denial should
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be upheld, the Committee will send the Claimant a written or
electronic notice informing the Claimant of its decision to
uphold all or a portion of the initial denial, written in a
manner calculated to be understood by the Claimant and
containing the following information: the specific reason(s)
for the denial; a specific reference to pertinent Plan
provisions on which the denial is based; a statement that the
Claimant is entitled to receive, upon request and free of
charge, reasonable access to and copies of all documents and
other information relevant to the claim; and an explanation of
the Claimant's right to request arbitration and the applicable
time limits for doing so. Written or electronic notice will be
given within a reasonable period of time (but no later than 60
days) from the date the Committee receives the request for
appeal, unless special circumstances require an extension of
time for reviewing the claim, but in no event may the
extension exceed 60 days from the end of the initial 60-day
period. If an extension is necessary, prior to the expiration
of the initial 60-day period, the Committee will send the
Claimant a written notice, indicating the special
circumstances requiring an extension and the date by which the
Committee expects to render a decision.
(e) ALTERNATIVE TIME FOR AN APPEAL TO BE DECIDED: Notwithstanding
paragraph (d), if the Committee holds regularly scheduled
meetings on a quarterly or more frequent basis, the Committee
may make its determination of the claim on appeal at its next
regularly scheduled meeting if the Committee receives the
written request for appeal more than 30 days prior to its next
regularly scheduled meeting or at the regularly scheduled
meeting immediately following the next regularly scheduled
meeting if the Committee receives the written request for
appeal within 30 days of the next regularly scheduled meeting.
If special circumstances require an extension, the decision
may be postponed to the third regularly scheduled meeting
following the Committee's receipt of the written request for
appeal if, prior to the expiration of the initial time period
for review, the Claimant is provided with written notice,
indicating the special circumstances requiring an extension
and the date by which the Committee expects to render a
decision. If the extension is required because the Claimant
has not provided information that is necessary to decide the
claim, the Committee may suspend the review period from the
date on which notice of the extension is sent to the Claimant
until the date on which the Claimant responds to the request
for additional information.
(f) RIGHT OF ARBITRATION: If a Claimant wishes to contest a final
decision of the Committee, the Claimant may request
arbitration. If the Claimant does not request arbitration
pursuant to the procedures herein, the decision of the
Committee will be final, binding and unappealable. A written
request for arbitration must be filed by the Claimant (or the
Claimant's authorized representative) with the Committee
within 15 days after the date the Claimant receives the
written decision of the Committee. If a request for
arbitration is timely filed, the Claimant and the Committee
will each name an arbitrator within 20 days after the
Committee receives the Claimant's written request for
arbitration. The two arbitrators will jointly name a third
arbitrator within 15 days after their appointment. If either
party fails to select an arbitrator within the 20 day period,
or if the two arbitrators fail to select a third arbitrator
within 15 days after their appointment, then the presiding
judge of the county court (or its equivalent) in the county in
which the principal office of the Sponsor is located will
appoint such other arbitrator or arbitrators. The arbitrators
will render a decision within 60 days after their appointment
- 80 -
and will conduct all proceedings pursuant to the laws of the
state in which the Sponsor's principal place of business is
located and the then current Rules of the American Arbitration
Association governing commercial transactions, to the extent
that such rules are not inconsistent with applicable state
law. The cost of the arbitration procedure will be borne by
the losing party or, if the decision is not clearly in favor
of one party or the other, in the manner determined by the
arbitrators. The arbitration proceeding provided for in this
Section will be the sole and exclusive remedy of a Claimant to
contest decisions of the Committee under this Plan, and the
arbitrators' decision will be final, binding and unappealable.
8.11 QUALIFIED DOMESTIC RELATIONS ORDERS
A Qualified Domestic Relations Order, or QDRO, is a signed domestic
relations order issued by a State Court that creates, recognizes or
assigns to an alternate payee(s) the right to receive all or part of a
Participant's Plan benefit. An alternate payee is a Spouse, former
Spouse, child, or other dependent of a Participant who is treated as a
Beneficiary under the Plan as a result of the QDRO. The Administrator
may establish QDRO procedures, but in the absence of such procedures,
the Administrator will determine if a domestic relations order is a
Qualified Domestic Relations Order in accordance with the following
provisions:
(a) ADMINISTRATOR'S DETERMINATION: Promptly upon receipt of a
domestic relations order, the Administrator will notify the
Participant and any alternate payee(s) named in the order of
such receipt, and will include a copy of this Section. Within
a reasonable time after receipt of the order, the
Administrator will make a determination as to whether or not
the order is a QDRO as defined in Code ss.414(p) and will
promptly notify the Participant and any alternate payee(s) in
writing of the determination.
(b) SPECIFIC REQUIREMENTS OF QDRO: In order for a domestic
relations order to be a Qualified Domestic Relations Order, it
must specifically state all of the following: (1) the name and
last known mailing address (if any) of the Participant and
each alternate payee covered by the order; (2) the dollar
amount or percentage of the benefit to be paid to each
alternate payee, or the manner in which the amount or
percentage will be determined; (3) the number of payments or
period for which the order applies; and (4) the name of the
plan to which the order applies. The domestic relations order
will not be deemed a Qualified Domestic Relations Order if it
requires the Plan to provide any type or form of benefit, or
any option not already provided for in the Plan, or increased
benefits, or benefits in excess of the Participant's Vested
Interest, or payment of benefits to an alternate payee
required to be paid to another alternate payee under another
QDRO.
(c) DISPUTED ORDERS: If there is a question as to whether or not a
domestic relations order is a Qualified Domestic Relations
Order, there will be a delay in any payout to any payee
including the Participant, until the status is resolved. In
such event, the Administrator will segregate the amount that
would have been payable to the alternate payee(s) if the order
had been deemed a QDRO. If the order is not determined to be a
QDRO, or the status is not resolved (for example, it has been
sent back to the Court for clarification or modification)
within 18 months beginning with the date the first payment
would have to be made under the order, the Administrator will
pay the segregated amounts plus interest to the person(s) who
would have been entitled to the benefits had there been no
order. If a determination as to the Qualified status of the
order is made after the 18-month period, then the order will
only be applied on a prospective basis. If the order is
determined to be a QDRO, the Participant and alternate
payee(s) will again be notified promptly after such
determination. Once an order is deemed a QDRO, the
Administrator will pay to the alternate payee(s) all the
amounts due under the QDRO, including segregated amounts plus
interest that may have accrued during a dispute as to the
order's qualification.
(d) PAYMENT PRIOR TO TERMINATION OF EMPLOYMENT: A QDRO may provide
for the payment of benefits to an alternate payee prior to the
time a Participant has terminated employment. Further, such
payment can be made even if the affected Participant has not
yet reached the Earliest Retirement Age, which is the earlier
of (1) the date on which the Participant is entitled to a
distribution under this Plan, or (2) the later of the date the
Participant attains age 50 or the earliest date on which the
Participant could receive benefits hereunder if the
Participant terminated employment with the Employer.
- 81 -
(e) EFFECT OF QDRO ON SURVIVOR ANNUITY REQUIREMENTS:
Notwithstanding Sections 5.1, 5.2, 5.3 and 5.4 to the
contrary, a Participant's benefits which are payable in the
form of a Qualified Joint and Survivor Annuity or in the form
of a Qualified Preretirement Survivor Annuity need not be paid
in such form if such payment is inconsistent with, or has been
modified by, the terms of a Qualified Domestic Relations
Order.
- 82 -
ARTICLE 9
AMENDMENT, TERMINATION AND MERGER
9.1 AMENDMENT OF THE PLAN
The Sponsor, or, if there is no Sponsor, the Trustee, will have the
right to amend the Plan at any time subject to the following
provisions:
(a) GENERAL REQUIREMENTS: Amendments must be in writing and cannot
(1) increase the responsibilities of the Trustee or
Administrator without written consent; (2) deprive any
Participant or Beneficiary of benefits to which he or she is
entitled; (3) decrease the amount of any Participant's Account
except as permitted under Code ss.412(c)(8); (4) permit any
part of the Trust to be used for or diverted to purposes other
than the exclusive benefit of the Participants or their
Beneficiaries except as required to pay taxes and
administration expenses, or cause or permit any portion of the
Trust Fund to revert to or become the property of the
Employer; or (5) have the effect of eliminating or restricting
the ability of a Participant or other payee to receive payment
of his or her Account balance or benefit entitlement under a
particular optional form of benefit provided under the Plan
unless the provisions of subparagraphs (1) and (2) below are
satisfied:
(1) LUMP SUM REQUIREMENT: The amendment provides a lump
sum distribution form that is otherwise identical to
the optional form of benefit that is restricted or
eliminated. For this purpose, a lump 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 payee)
except with respect to the timing of payments after
commencement.
(2) EFFECTIVE DATE: The amendment cannot apply to any
distribution with an Annuity Starting Date which is
earlier than the earlier of (A) the 90th day after a
Participant has been furnished with a summary plan
description or other summary that reflects the
amendment and that satisfies the ERISA requirements
at 29 CFR 2520.104b-3 relating to a summary of
material modifications; or (B) the first day of the
second Plan Year following the Plan Year in which
this amended Plan is adopted.
(b) CERTAIN CORRECTIVE AMENDMENTS: For purposes of satisfying the
minimum coverage requirements of Code ss.410(b), the
nondiscriminatory amount requirement of regulation
ss.1.401(a)(4)-1(b)(2), or the nondiscriminatory plan
amendment requirement of regulation ss.1.401(a)(4)-1(b)(4), a
corrective amendment may retroactively increase allocations
for Employees who benefited under the Plan during the Plan
Year being corrected, or may grant allocations to Employees
who did not benefit under the Plan during the Plan Year being
corrected. In addition, to satisfy the nondiscriminatory
current availability requirement of regulation
ss.1.401(a)(4)-4(b) for benefits, rights or features, a
corrective amendment may make a benefit, right or feature
available to Employees to whom it was previously not
available. A corrective amendment will not be taken into
account prior to the date of its adoption unless the amendment
satisfies the applicable requirements of regulation
ss.1.401(a)(4)-11(g)(3)(ii) through (vii), including the
requirement that, in order to be effective for the preceding
Plan Year, such amendment must be adopted by the 15th day of
the 10th month after the close of the preceding Plan Year.
9.2 TERMINATION OF PLAN BY SPONSOR
The Sponsor at any time can terminate the Plan and Trust in whole or in
part in accordance with the following provisions:
- 83 -
(a) TERMINATION OF PLAN: The Sponsor can terminate the Plan and
Trust by filing written notice thereof with the Administrator
and Trustee and by completely discontinuing contributions to
the Plan. Upon any such termination, the Trustee will continue
to administer the Trust until distribution has been made to
the Participants and other payees, which distribution must
occur as soon as administratively feasible after the
termination of the Plan, and must be made in accordance with
the provisions of Article 5 of the Plan, including Section
5.6(g) where applicable. However, the Administrator may elect
not to distribute the Accounts of Participants and other
payees upon termination of the Plan but instead to transfer
the entire Trust Fund assets and liabilities attributable to
this terminated Plan to another qualified plan maintained by
the Employer or its successor.
(b) VESTING REQUIREMENT: Upon complete termination of the Plan, or
upon a complete discontinuance of contributions, all
Participants who are affected by the termination, all
Participants who have not incurred a Termination of
Employment, and all Participants who have incurred a
Termination of Employment but have not incurred a 5-year Break
in Service will have a 100% Vested Interest in their unpaid
Participant's Accounts. Upon partial termination of the Plan
only those Participants who have incurred a Termination of
Employment on account of the event which caused the partial
termination but have not incurred a 5-year Break in Service
will automatically have a 100% Vested Interest in their unpaid
Participant's Accounts to the date of partial termination.
(c) DISCONTINUANCE OF CONTRIBUTIONS ONLY: The Sponsor may elect at
any time to completely discontinue contributions to the Plan
but continue the Plan in operation in all other respects, in
which event the Trustee will continue to administer the Trust
until eventual full distribution of all benefits has been made
to the Participants and other payees in accordance with
Article 5 after their death, retirement, Disability or
Termination of Employment. Any such discontinuance of
contributions without an additional notice of termination from
the Sponsor to the Administrator and Trustee will not
constitute a termination of the Plan.
9.3 TERMINATION OF PARTICIPATION BY ADOPTING EMPLOYER
Any Adopting Employer may by written resolution terminate participation
in the Plan at any time by notification to the Sponsor, the
Administrator, and the Trustee. Such Adopting Employer may thereupon
request a transfer of Trust Fund assets attributable to its Employees
from this Plan to any successor qualified retirement plan maintained by
the Adopting Employer or its successor. The Administrator may, however,
refuse to make such transfer if in its considered opinion such transfer
would operate to the detriment of any Participant, jeopardize the
continued qualification of the Plan, or if such transfer does not
comply with any requirements of the Internal Revenue Service. If no
transfer is made, the provisions in the definition of Adopting Employer
in Article 1 will apply with respect to the payment of benefits for
Employees of such Adopting Employer.
9.4 MERGER OR CONSOLIDATION
This Plan and Trust may not be merged or consolidated with, nor may any
of its assets or liabilities be transferred to, any other plan, unless
the benefits payable to each Participant if the Plan was terminated
immediately after such merger, consolidation or transfer would be equal
to or greater than the benefits such Participant would have been
entitled to if this Plan had been terminated immediately before such
merger, consolidation or transfer.
- 84 -
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 NO CONTRACT OF EMPLOYMENT
Except as otherwise provided by law, neither the establishment of this
Plan, nor any modification hereto, nor the creation of any fund or
account, nor the payment of any benefits, will be construed as giving
any Participant or other person any legal or equitable rights against
the Employer, any officer or Employee thereof, or the Trustee, except
as herein provided; and the terms of employment of any Participant will
not be modified or affected by this Plan.
10.2 TITLE TO ASSETS
No Participant or Beneficiary will have any right to, or any interest
in, any assets of the Trust upon separation from service with the
Employer, Affiliated Employer, or Adopting Employer, except as
otherwise provided by the terms of the Plan.
10.3 QUALIFIED MILITARY SERVICE
Notwithstanding any other provision of the Plan to the contrary,
effective December 12, 1994, contributions, benefits and service credit
with respect to qualified military service will be provided in
accordance with the requirements of Code ss.414(u).
10.4 BONDING OF FIDUCIARIES
Fiduciaries of this Plan will have only those duties that are
specifically given to the Fiduciaries under the terms of this Plan. In
addition, every Fiduciary other than a bank, an insurance company, or a
Fiduciary of an Employer which has no common-law employees, will be
bonded in an amount not less than 10% of the amount of funds under such
Fiduciary's supervision, but such bond will not be less than $1,000 or
more than $500,000. The bond will provide protection to the Plan
against any loss for acts of fraud or dishonesty by a Fiduciary acting
alone or in concert with others. The cost of such bond will be an
expense of either the Employer or the Trust, at the election of the
Employer.
10.5 SEVERABILITY OF PROVISIONS
If any Plan provision is held invalid or unenforceable, such invalidity
or unenforceability will not affect any other provision of this Plan,
and this Plan will be construed and enforced as if such provision had
not been included.
10.6 GENDER AND NUMBER
Words used in the masculine gender will be construed as though they
were also used in the feminine or neuter gender where applicable, and
words used in the singular will be construed as though they were also
used in the plural where applicable.
10.7 HEADINGS AND SUBHEADINGS
Headings and subheadings are inserted for convenience of reference.
They constitute no part of this Plan and are not to be considered in
its construction.
10.8 LEGAL ACTION
In any claim, suit or proceeding concerning the Plan and/or Trust which
is brought against the Trustee or Administrator, the Plan and Trust
will be construed and enforced according to the laws of the state in
which the Employer maintains its principal place of business, to the
extent that it is not preempted by ERISA; and unless otherwise
prohibited by law, either the Employer or the Trust, in the sole
discretion of the Employer, will reimburse the Trustee and/or
Administrator for all costs, attorneys fees and other expenses
associated with any such claim, suit or proceeding.
- 85 -
10.9 QUALIFIED PLAN STATUS
This Plan and the related Trust Agreement are intended to be a
qualified retirement plan under the provisions of Code ss.401(a) and
ss.501(a).
10.10 MAILING OF NOTICES TO ADMINISTRATOR, EMPLOYER OR TRUSTEE
Any notices, documents or forms required to be given to or filed with
the Administrator, the Employer or the Committee will be hand delivered
or mailed by first class mail, postage prepaid, to the Committee or
Employer at the Employer's principal place of business. Any notices,
documents or forms required to be given to or filed with the Trustee
will be hand delivered or mailed by first class mail, postage prepaid,
to the Trustee at its principal place of business.
10.11 PARTICIPANT NOTICES AND WAIVERS OF NOTICES TO PARTICIPANTS
Whenever written notice is required to be given under the terms of this
Plan, such notice will be deemed to be given on the date that such
written notice is either hand delivered to the recipient or deposited
at a United States Postal Service Station, first class mail, postage
paid. Notice may be waived by any party otherwise entitled to receive
written notice concerning any matter under the terms of this Plan.
10.12 NO DUPLICATION OF BENEFITS
There will be no duplication of benefits under the Plan because of
employment by more than one participating employer.
10.13 EVIDENCE FURNISHED CONCLUSIVE
Anyone required to give evidence under the terms of the Plan may do so
by certificate, affidavit, document or other information which the
person to act in reliance may consider pertinent, reliable and genuine,
and to have been signed, made or presented by the proper party or
parties. The Fiduciaries under the Plan will be fully protected in
acting and relying upon any evidence described under this Section.
10.14 RELEASE OF CLAIMS
Any payment to any Participant or Beneficiary, his or her legal
representative, or to any guardian or committee appointed for such
Participant or Beneficiary, will, to the extent thereof, be in full
satisfaction of all claims hereunder against the Administrator and the
Trustee, 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 determined by the Administrator or the Trustee.
10.15 MULTIPLE COPIES OF PLAN AND/OR TRUST
This Plan and the related Trust Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same Agreement or Trust Agreement, as
the case may be, and will be binding on the respective successors and
assigns of the Employer and all other parties.
10.16 LIMITATION OF LIABILITY AND INDEMNIFICATION
In addition to and in furtherance of any other limitations provided in
the Plan, and to the extent permitted by applicable law, the Employer
will indemnify and hold harmless its board of directors (collectively
and individually), if any, the Administrative/Advisory Committee
(collectively and individually), if any, and its officers, partners who
serve as a Trustee, Employees, and agents against and with respect to
any and all expenses, losses, liabilities, costs, and claims, including
legal fees to defend against such liabilities and claims, arising out
of their good-faith discharge of responsibilities under or incident to
the Plan, excepting only expenses and liabilities resulting from
willful misconduct. This indemnity will not preclude such further
- 86 -
indemnities as may be available under insurance purchased by the
Employer or as may be provided by the Employer under any by-law,
agreement, vote of shareholders or disinterested directors, or
otherwise, as such indemnities are permitted under state law. Payments
with respect to any indemnity and payment of expenses or fees under
this Section will be made only from assets of the Employer, and will
not be made directly or indirectly from assets of the Trust Fund.
- 87 -
IN WITNESS WHEREOF, this Plan and Trust have been executed by the
Employer and the Trustees as of the day, month and year set forth on page 1 of
this Agreement.
HOT TOPIC, INC.
By___________________________________________
TRUSTEES
_____________________________________________
James McGinty
_____________________________________________
Elizabeth McLaughlin
_____________________________________________
Jane Cruz
_____________________________________________
Gerald Cook
_____________________________________________
George Wehlitz
- 88 -
CERTIFICATE OF CORPORATE RESOLUTIONS
OF
HOT TOPIC, INC.
The undersigned Secretary of the above named corporation certifies that the
following resolutions were adopted by the board of directors on the date set
forth below.
RESOLVED, that the Hot Topic, Inc. 401(k) Profit Sharing Plan,
as amended and restated effective January 1, 2003, a copy of
which is attached hereto, is hereby adopted;
RESOLVED, that the amendment regarding minimum distribution
requirements under Internal Revenue Service final regulations
under Code ss.401(a)(9) and Internal Revenue Service
Announcement 2002-29, a copy of which is attached hereto, is
hereby adopted;
RESOLVED, that the "Good Faith" amendment to the Plan for
conformance with EGTRRA, a copy of which is attached hereto,
is hereby adopted;
RESOLVED, that the amendment to increase the maximum Elective
Deferral amount, a copy of which is attached hereto, is hereby
adopted;
RESOLVED, that an authorized representative should deliver an
executed copy of the Plan to the trustees named therein; and
RESOLVED, that an authorized representative should take any
and all steps necessary to effectuate the foregoing
resolutions.
THIS CERTIFICATE is executed this __________ day of _________________________,
200____.
_____________________________________________
Corporate Secretary
PARTICIPANT LOAN POLICY
HOT TOPIC, INC.
401(K) PROFIT SHARING PLAN
(the "Plan")
The Administrator for the Plan hereby adopts this loan policy pursuant to
the terms of the Plan:
A. LOAN REQUEST
A Participant's request for a Plan loan will be made in the manner
specified by the Trustee and/or Plan Administrator. Any Plan Participant
may obtain a loan from the Plan. For purposes of this loan policy, the term
"Participant" means any Participant who is an Employee of an Adopting
Employer and any former Participant who is an Employee of an Affiliated
Employer.
B. SOURCE OF LOAN AMOUNT
A Participant may borrow funds from the following sources: a Participant's
voluntary contributions, rollover contributions, or other transferred
monies for which an account balance is maintained and/or a Participant's
vested account balance.
C. PARTICIPANT FEES
1. LOAN PROCESSING FEES: No loan processing fees will be charged to the
Participant for the initiation of each loan or refinancing or
replacement of a loan.
2. LOAN MAINTENANCE FEES: No annual maintenance fee for the loan will be
charged to the Participant.
D. LIMITATIONS ON LOAN AMOUNT / PURPOSE OF LOAN
1. LOAN AMOUNT: No loan amount may exceed the lesser of (a) or (b)
following, from all Plans of the Employer and any Affiliated Employer:
(a) 50% of the sum of (i) a Participant's vested account plus (ii) a
Participant's voluntary contributions, rollover contributions, or
other transferred or segregated monies for which an account
balance is maintained; both as reflected by the books and records
of the Plan at the end of the most recent computation period for
which an accounting has been completed.
(b) $50,000 reduced by the excess, if any, of the Participant's
highest outstanding balance of loans during the 1-year period
ending the day before the loan was made, over the Participant's
outstanding balance of loans on the day the loan was made.
A Participant may not request a loan for less than $1,000.
2. PURPOSE OF LOAN: A loan may be made to a Participant for any purpose.
Page -1-
E. TERMS OF LOAN
1. SECURITY FOR LOAN: A Participant must secure each loan with an
irrevocable pledge and assignment of the sum of a Participant's
voluntary contributions, rollover contributions, or other transferred
or segregated monies for which an account balance is maintained, plus
a Participant's vested account balance; both as reflected by the books
and records of the Plan at the end of the most recent computation
period for which an accounting has been completed. In addition, other
security or substitute collateral acceptable to the Administrator will
also be permitted for a loan.
2. SOURCE OF LOAN: If a loan is secured by and obtained from more than
one Participant-directed investment account for which an account
balance is maintained under the Plan, the source of the loan will be
in proportion to the respective Participant-directed accounts of the
Participant unless otherwise directed by election of the Participant
and approved by the Administrator.
3. TERM OF LOAN REPAYMENT: The term of repayment may not be greater than
five years.
PARTICIPANTS SHOULD NOTE THAT THE LAW MAY TREAT THE AMOUNT OF ANY LOAN
THAT IS NOT REPAID WITHIN FIVE YEARS AFTER THE DATE OF THE LOAN AS A
TAXABLE DISTRIBUTION ON THE LAST DAY OF THE FIVE-YEAR PERIOD OR, IF
SOONER, AT THE TIME THE LOAN IS IN DEFAULT. IF A PARTICIPANT EXTENDS A
LOAN HAVING A TERM OF FIVE YEARS OR LESS BEYOND FIVE YEARS, THE
BALANCE OF THE LOAN AT THE TIME OF THE EXTENSION MAY BE A TAXABLE
DISTRIBUTION.
4. LOAN DOCUMENTATION AND LOAN INTEREST RATE: Every loan will be
documented with a promissory note signed by the Participant for the
face amount of the loan, with an interest rate established at the
inception of the loan set as determined by the Administrator on the
basis of relevant factors including but not limited to the rates
charged by commercial U.S. banks available within a reasonable
geographic vicinity for loans of similar duration and security level.
The rate of interest on the loan will be fixed and will not change for
the duration of the loan repayment period.
5. ALLOCATION OF LOAN INTEREST: If the Participant's loan is secured by
an account balance which is a Participant-directed investment,
interest will be credited directly to such Participant-directed
investment account. If the Participant's loan is not secured by an
account balance which is a Participant-directed investment, then
interest repayments for any Participant loan will be credited directly
to the Participant's account.
6. LOAN REPAYMENT: The loan must provide for repayment on a level
amortization schedule by regular payroll deduction repayments (not
less than quarterly) as of each payroll withholding period. If a
Participant revokes his or her payroll deduction election, the entire
unpaid principal sum, accrued interest and all other amounts due under
the loan will become due and payable. If a Participant ceases
employment with an Adopting Employer but continues employment with an
Affiliated Employer who is not an Adopting Employer, payroll
withholding for loan repayments will continue from such Affiliated
Employer.
7. TERMINATION OF EMPLOYMENT: If a Participant who is employed by an
Adopting Employer or an Affiliated Employer terminates employment with
an outstanding loan, the entire unpaid principal sum, accrued interest
and all other amounts due under the loan will become due and payable.
8. EARLY REPAYMENT: Early repayment of the outstanding loan may be made
at any time in either full or partial repayments of the outstanding
loan balance.
Page -2-
9. APPROVED LEAVE OF ABSENCE: Suspension of loan repayments during an
approved leave of absence is permitted for a period not exceeding one
(1) year which occurs during an approved leave of absence either
without pay from the Adopting Employer or an Affiliated Employer at a
rate of pay (after income and employment tax withholding) that is less
than the amount of the installment repayments required under the terms
of the loan. In no event may the suspension of repayments cause the
term of the loan to exceed five years from the original date of the
loan.
10. REPAYMENT SUSPENSION WHILE ON QUALIFIED MILITARY SERVICE: Suspension
of loan repayments during leave due to qualified military service will
be as permitted under Section 414(u)(4) of the Internal Revenue Code.
F. NEW LOANS, REPLACEMENT (REFINANCED) LOANS
1. ADDITIONAL LOAN OR REPLACEMENT LOAN: A Participant may, subject to D.
above and F.2. and F.3. below, elect to receive a new additional loan
in addition to an existing loan, or a replacement loan of an existing
loan, provided that no more than two loans are issued in any calendar
year.
NOTE: IF THE AMOUNT OF THE REPLACEMENT LOAN EXCEEDS THE OUTSTANDING
BALANCE OF THE PRIOR EXISTING LOAN, OR THE TERM OF THE REPLACEMENT
LOAN EXCEEDS THE REMAINING TERM OF THE PRIOR EXISTING LOAN, IRS
REGULATIONS MAY REQUIRE THAT THE MAXIMUM LOAN LIMITS BE COMPUTED
APPLYING THE SUM OF THE AMOUNT OF THE REPLACEMENT LOAN PLUS THE
OUTSTANDING BALANCE OF THE PRIOR EXISTING LOAN. ANY LOAN IN EXCESS OF
SUCH LIMIT MAY BE CONSIDERED A DEEMED DISTRIBUTION. SEE 3. BELOW. THE
MAXIMUM LOAN LIMITS FOR TWO SEPARATE LOANS DO NOT REQUIRE SUCH
CALCULATION.
2. REPLACEMENT LOAN AVAILABILITY: A replacement loan will be permitted
regardless of the applicable interest rate on either the existing loan
or the new refinanced loan.
The Administrator will permit the refinancing of an existing loan only
under the following conditions: (a) the remaining number of repayments
on the existing loan is at least the equivalent of six months of
payments; (b) the existing loan has been in effect for at least six
months; (c) the minimum reduction in the amount of each periodic
repayment is (or could be, if the number of repayments were to be the
same as was remaining on the prior loan) at least the equivalent of
$20 per month; and (d) a loan may be refinanced a maximum of two
times.
3. REPLACEMENT LOAN RULES: The following rules will apply to a
replacement loan:
(a) If the amount of the replacement loan is the same as the
outstanding loan balance of the prior existing loan, and the
amortization period of the replacement loan is equal to or less
than the remaining repayment period for the outstanding loan
balance of the prior existing loan, then the repayment amount of
the replacement loan will be determined based on the applicable
interest rate and amount of the replacement loan/outstanding loan
balance. In such event the maximum loan amount will be determined
as in D1.
(b) If either (i) the amount of the replacement loan is the same as
the outstanding loan balance of the prior existing loan and the
amortization period of the replacement loan is greater than the
remaining repayment period for the outstanding loan balance of
the prior existing loan, or (ii) the amount of the replacement
loan exceeds the outstanding loan balance of the prior existing
loan, then the repayment amount of the replacement loan will be
determined based on the applicable interest rate and amount of
the replacement loan. In such event the maximum loan will be
determined as in D1. provided the provisions of Q&A-20(a)(2) of
Page -3-
IRS proposed regulations under IRC Section 72(p) issued in 2000
are satisfied. Otherwise, the maximum loan amount will be
determined by applying the SUM of the amount of the replacement
loan plus the outstanding balance of the prior existing loan to
the maximum limits in D1.
G. SPOUSAL CONSENT FOR LOAN
If the portion of the Participant's assets which is used to secure the loan
is subject to the Qualified Joint and Survivor rules regarding benefit
distributions, any loan pledge or agreement will be signed by the
Participant and consented to by the eligible Spouse of a Participant who is
or was an Employee of an Adopting Employer within the 90-day period ending
on the date of the inception of the loan.
In addition, if the portion of the Participant's assets which is used to
secure the loan is not subject to the Qualified Joint and Survivor rules
regarding benefit distributions, the Administrator may in its discretion
applied on a consistent basis (after taking into account the amount of the
required loan repayment and the Employee's net after-tax take home pay)
determine that the eligible Spouse of a Participant who is or was an
Employee of an Adopting Employer must consent to any loan within the 90-day
period ending on the date of the inception of the loan.
H. REPAYMENT OF LOANS AND DEFAULT ON LOANS
1. REQUIRED REPAYMENT OF LOANS
(a) If a Participant has an outstanding balance remaining on a loan
and the Participant (or the Participant's spouse or beneficiary)
is entitled to a payment from the Trust Fund before the loan is
repaid in full, the Trustee will offset at the time of
distribution the unpaid loan balance (including accrued interest)
from the total amount otherwise due.
(b) In the event of the failure of a Participant to repay the loan in
a timely manner, the Administrator may charge the Participant's
account balance or other benefit with expenses directly related
to the implementation, administration and collection of the loan.
2. DEFAULT ON LOANS
(a) A loan will be considered in default if any scheduled repayment
remains unpaid as of the end of the "cure period". For these
purposes the "cure period" will end on the last day of the
calendar quarter following the calendar quarter in which the
required repayment(s) was/were due, or such later date if
permitted by Internal Revenue Service rules and regulations.
(b) After default occurs, if a distribution to the Participant
(1) is currently permissible under the Plan, the vested amount
of the Participant's account balance will be reduced or
offset by the outstanding principal and interest of the
defaulted loan. In such event the loan will be considered to
have been repaid and the amount of such reduction or offset
will be deemed to have been distributed from the Plan; or
(2) is not currently permissible under the Plan, the entire
outstanding balance of the loan will be treated as a deemed
distribution. A deemed distribution is treated as a
distribution to the Participant only for certain tax
purposes (income, premature distribution penalty, etc.) and
is not a distribution of the account or accrued benefit.
Pending final disposition of the note, the Participant
remains obligated to repay the outstanding balance of the
defaulted loan including any unpaid principal and accrued
interest to the date of repayment in full.
Page -4-
If the Participant's vested account balance is less than the loan
amount due in (1) or (2) above, the Administrator will take any
steps necessary to collect the balance due directly from the
Participant. However, no foreclosure on the promissory note or
attachment of the vested account balance will occur until a
distributable event occurs in the Plan.
By_________________________________________ Dated______________________
PLAN ADMINISTRATOR
Page -5-
EGTRRA "GOOD FAITH" PLAN AMENDMENT
FOR DEFINED CONTRIBUTION PLANS WHICH INCLUDE 401(k) PROVISIONS
PER IRS NOTICES 2001-42, 2001-56, AND 2001-57 AND THE
JOB CREATION AND WORKER ASSISTANCE ACT OF 2002 (THE 2002 TAX ACT)
NAME OF PLAN: Hot Topic, Inc. 401(k) Profit Sharing Plan (the "Plan")
PLAN SPONSOR: Hot Topic, Inc. (the "Sponsor")
THIS AMENDMENT is adopted by the Sponsor to reflect certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), is
intended as good faith compliance with the requirements of EGTRRA, and is to be
construed in accordance with EGTRRA and guidance issued thereunder, including
IRS Notices 2001-42, 2001-56, and 2001-57, and with the Job Creation and Worker
Assistance Act of 2002 (the 2002 Tax Act). This amendment will supersede the
provisions of the Plan to the extent they are inconsistent with the provisions
of this amendment, and except as otherwise indicated, is effective as of the
first day of the first Plan Year beginning after December 31, 2001.
o SS.611(b) AND SS.632 OF EGTRRA - LIMITATIONS ON CONTRIBUTIONS
MAXIMUM ANNUAL ADDITION: Except to the extent permitted under this
amendment which provides for catch-up contributions under EGTRRA ss.631 and
Code ss.414(v), if applicable, the Annual Addition that may be contributed
or allocated to a Participant's Account under the Plan for any Limitation
Year will not exceed the lesser of (a) $40,000, as adjusted for increases
in the cost-of-living under Code ss.415(d), or (b) 100 percent of the
Participant's Compensation, within the meaning of Code ss.415(c)(3), for
the Limitation Year. The Compensation limit referred to in (b) will not
apply to any contribution for medical benefits after separation from
service (within the meaning of Code ss.401(h) or Code ss.419A(f)(2)) which
is otherwise treated as an Annual Addition.
o SS.611(c) OF EGTRRA - INCREASE IN COMPENSATION LIMIT
The annual Compensation of each Participant used in determining allocations
(including Top-Heavy Minimum Allocations) will not exceed $200,000 as
adjusted for cost-of-living increases under Code ss.401(a)(17)(B). Annual
Compensation means Compensation during the plan year or such other
consecutive 12-month period over which Compensation is otherwise determined
under the Plan (the determination period). The cost-of-living adjustment in
effect for a calendar year applies to annual Compensation for the
determination period that begins with or within such calendar year.
o SS.612 OF EGTRRA - PLAN LOANS FOR OWNER-EMPLOYEES / SHAREHOLDER EMPLOYEES
Effective for Plan loans made after December 31, 2001, Plan provisions
prohibiting or otherwise restricting loans to any Owner-Employee or
Shareholder-Employee will cease to apply.
o SS.613 OF EGTRRA - MODIFICATION OF TOP-HEAVY RULES
1. EFFECTIVE DATE: This section will apply for purposes of determining
whether the Plan is a Top-Heavy Plan under Code ss.416(g) for Plan
Years beginning after December 31, 2001, and whether the Plan satisfies
the minimum benefits requirements of Code ss.416(c) for such years.
This section amends the sections of the Plan that include Top-Heavy
provisions.
2. DETERMINATION OF TOP-HEAVY STATUS:
(a) KEY EMPLOYEE: Key Employee means any employee or former Employee
(including any deceased Employee) who at any time during the Plan
Year that includes the determination date was an officer of the
Employer having annual Compensation greater than $130,000 (as
adjusted under Code ss.416(i)(1) for Plan Years beginning after
December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual Compensation of more
than $150,000. For this purpose, annual Compensation means
Compensation within the meaning of Code ss.415(c)(3). The
determination of who is a Key Employee will be made in accordance
with Code ss.416(i)(1) and the applicable regulations and other
guidance of general applicability issued thereunder.
(b) DETERMINATION OF PRESENT VALUES AND AMOUNTS: This section 2 will
apply for purposes of determining the present values of accrued
benefits and the amounts of Account balances of Employees as of
the determination date.
(1) DISTRIBUTIONS DURING THE YEAR ENDING ON THE DETERMINATION
DATE: The present values of accrued benefits and the amounts
of Account balances of an Employee as of the determination
date will be increased by the distributions made with respect
to the Employee under the Plan and any Plan aggregated with
the Plan under Code ss.416(g)(2) during the 1-year period
ending on the determination date. The preceding sentence will
also apply to distributions under a terminated Plan which had
it not been terminated would have been aggregated with the
Plan under Code ss.416(g)(2)(A)(i). In the case of a
distribution made for a reason other than severance from
employment, death, or disability, this provision will apply by
substituting "5-year period" for "1-year period."
(2) EMPLOYEES NOT PERFORMING SERVICES DURING THE YEAR ENDING ON
THE DETERMINATION DATE: The accrued benefits and the amounts
of Account balances of any individual who has not performed
services for the Employer during the 1-year period ending on
the determination date will not be taken into account.
3. MINIMUM BENEFITS
(a) MATCHING CONTRIBUTIONS: Employer Matching Contributions will be
taken into account for purposes of satisfying the minimum
contribution requirements of Code ss.416(c)(2). The preceding
sentence will apply with respect to Matching Contributions under
the Plan or, if the Plan provides that the minimum contribution
requirement will be met in another Plan, such other Plan. Matching
Contributions that are used to satisfy the minimum contribution
requirements will be treated as Matching Contributions for
purposes of the actual contribution percentage test and other
requirements of Code ss.401(m).
(b) CONTRIBUTIONS UNDER OTHER PLANS: The Sponsor may provide that the
minimum benefit requirement will be met in another Plan
(including one that consists solely of a cash or deferred
arrangement which meets the requirements of Code ss.401(k)(12)
and Matching Contributions with respect to which the requirements
of Code ss.401(m)(11) are met).
o SS.631 OF EGTRRA - CATCH-UP CONTRIBUTIONS
All Employees eligible to make Elective Deferrals under this Plan and who
have attained age 50 before the close of the Plan Year will be eligible to
make catch-up contributions in accordance with, and subject to the
limitations of, Code ss.414(v) and the 2002 Tax Act. Such catch-up
contributions will not be taken into account for purposes of the provisions
of the Plan implementing the required limitations of Code ss.402(g) and
ss.415. The Plan will not be treated as failing to satisfy the provisions
of the Plan implementing the requirements of Code ss.401(k)(3),
ss.401(k)(11), ss.401(k)(12), ss.410(b), or ss.416, as applicable, by
reason of the making of such catch-up contributions.
In accordance with the 2002 Tax Act, (a) the amount of catch-up
contributions that a Participant may exclude from income is limited to the
catch-up contribution limit, which will apply on an aggregate basis to all
plans of the Employer and the group of Affiliated Employers of which the
Employer is a part (except that for this purpose an Affiliated Employer
will not include a trade or business which is acquired as part of an asset
or stock acquisition, merger, or similar Code ss.410(b)(6)(C) transaction
involving a change in the employer of the employees of a trade or business,
during the period beginning on the date of the transaction and ending on
the last day of the first Plan Year beginning after the date of the
transaction); and (b) a Participant who attains Age 50 during a Plan Year
will be considered to be Age 50 on the first day of the Plan Year. Catch-up
contributions will apply to contributions on or after January 1, 2002.
o SS.641, SS.642 AND SS.643 OF EGTRRA - DIRECT ROLLOVERS OF PLAN
DISTRIBUTIONS
1. EFFECTIVE DATE: This section will apply to distributions made after
December 31, 2001.
2. MODIFICATION OF DEFINITION OF ELIGIBLE RETIREMENT PLAN: For purposes of
the Direct Rollover section of the Plan, an eligible retirement plan
will also mean an annuity contract described in Code ss.403(b) and an
eligible plan under Code ss.457(b) which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state and which agrees to
separately account for amounts transferred into such plan from this
Plan. The definition of eligible retirement plan will also apply in the
case of a distribution to a surviving spouse, or to a spouse or former
spouse who is the alternate payee under a qualified domestic relation
order, as defined in Code ss.414(p).
3. MODIFICATION OF DEFINITION OF ELIGIBLE ROLLOVER DISTRIBUTION TO INCLUDE
AFTER-TAX EMPLOYEE CONTRIBUTIONS: For purposes of the Direct Rollover
provisions of the Plan, a portion of a distribution will not fail to be
an eligible rollover distribution merely because the portion consists
of after-tax or non-deductible Employee contributions which are not
includible in gross income. However, such portion may be paid only to
an individual retirement account or annuity described in Code ss.408(a)
or (b), or to a qualified defined contribution plan described in Code
ss.401(a) or ss.403(a) that agrees to separately account for amounts so
transferred, including separately accounting for the portion of such
distribution which is includible in gross income and the portion of
such distribution which is not so includible. In accordance with the
2002 Tax Act, when a distribution includes after-tax Employee
contributions which are not includible in gross income, the amount that
is rolled over will first be attributed to amounts includible in gross
income.
4. MODIFICATION OF THE DEFINITION OF ELIGIBLE ROLLOVER DISTRIBUTION TO
EXCLUDE HARDSHIP DISTRIBUTIONS: For purposes of the Direct Rollover
provisions of the Plan, any amount distributed on account of hardship
will not be an eligible Rollover distribution and the distributee may
not elect to have any portion of such a distribution paid directly to
an eligible retirement plan.
5. ADDITIONAL TYPES OF ROLLOVERS ACCEPTED PURSUANT TO EGTRRA SS.641,
SS.642 AND SS.643
(a) DIRECT ROLLOVERS OR PARTICIPANT ROLLOVER CONTRIBUTIONS FROM OTHER
PLANS: The Plan will accept a direct rollover of an eligible
rollover distribution of a Participant contribution of an eligible
rollover distribution from the following: (1) a qualified Plan
described in IRC Section 401(a) or 403(a), excluding after-tax
Employee Contributions; (2) an annuity contract described in IRC
Section 403(b), excluding after-tax Employee Contributions; and(3)
an eligible Plan under IRC Section 457(b) which is maintained by a
state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state.
(b) PARTICIPANT ROLLOVER CONTRIBUTIONS FROM IRAS: The Plan will accept
a Participant rollover contribution of the portion of a
distribution from an individual retirement account or annuity
described in Code ss.408(a) or ss.408(b) that is eligible to be
rolled over and would otherwise be includible in gross income.
6. EFFECTIVE DATE OF DIRECT ROLLOVER AND PARTICIPANT ROLLOVER CONTRIBUTION
PROVISIONS: This section will be effective January 1, 2002 for
rollovers to and from the Plan.
o SS.646 OF EGTRRA - DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT
1. EFFECTIVE DATE: This section will apply for distributions and severance
from employment occurring after January 1, 2002 regardless of when the
severance from employment occurred.
2. NEW DISTRIBUTABLE EVENT: A Participant's Elective Deferrals, Qualified
Non-Elective Contributions, Qualified Matching Contributions, and
earnings attributable to these contributions will be distributed on
account of the Participant's severance from employment. However, such a
distribution will be subject to the other provisions of the Plan
regarding distributions, other than provisions that require a severance
from employment before such amounts may be distributed.
o SS.648 OF EGTRRA - ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS
For purposes of the Plan provisions that provide for the involuntary
distribution of vested Accrued Benefits of $5,000 or less, the value of a
Participant's nonforfeitable Account balance shall be determined without
regard to that portion of the Account balance that is attributable to
Rollover Contributions (and earnings allocable thereto) within the meaning
of Code ss.402(c), ss.403(a)(4), ss.403(b)(8), ss.408(d)(3)(A)(ii), and
ss.457(e)(16). If the value of the Participant's non-forfeitable Account
balance as so determined is $5,000 or less, the Participant's entire
non-forfeitable Account balance shall be considered immediately
distributable. This election shall apply with respect to distributions made
on or after January 1, 2002 with respect to Participants who separated from
service with the Employer or an Affiliated Employer on or after January 1,
2002.
o SS.666 OF EGTRRA - REPEAL OF MULTIPLE USE TEST
The multiple use test described in Treasury Regulation Code ss.1.401(m)-2
and in the Plan will not apply for Plan Years beginning after December 31,
2001.
o SS.636(a) OF EGTRRA - SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION
A Participant who receives a distribution of Elective Deferrals after
December 31, 2001 on account of hardship will be prohibited from making
Elective Deferrals and Employee contributions under this and all other
Plans of the Employer for 6 months after receipt of the distribution. A
Participant who receives a distribution of Elective Deferrals in calendar
year 2001 on account of hardship will be prohibited from making Elective
Deferrals and Employee contributions under this and all other Plans of the
Employer for the period specified in the provisions of the Plan relating to
suspension of Elective Deferrals that were in effect prior to this
amendment.
In addition, the following phrase at the end of Section 5.17(d) is hereby
deleted:
" ; and for the Participant's taxable year immediately following the
taxable year of the hardship distribution, the Participant cannot make
Elective Deferrals to this Plan or any other plan maintained by the
Employer in excess of the applicable limit under Code ss.402(g)(5) for such
taxable year, minus the amount of such Participant's Elective Deferrals
made for the taxable year in which the financial hardship distribution was
made"
HOT TOPIC, INC.
By_________________________
Date_______________________
AMENDMENT TO INCREASE THE MAXIMUM ELECTIVE DEFERRAL AMOUNT
NAME OF PLAN: Hot Topic, Inc. 401(k) Profit Sharing Plan (the "Plan")
PLAN SPONSOR: Hot Topic, Inc. (the "Sponsor")
THIS AMENDMENT is hereby adopted by the Sponsor in order to increase the maximum
allowable Elective Deferral contributions under the Plan to up to 100% of each
Eligible Participant's Compensation. Accordingly, the following amendment shall
be effective for the Plan Year which begins in 2002:
SECTION 3.1(a)(1) IS HEREBY AMENDED IN ITS ENTIRETY TO READ AS FOLLOWS:
- -----------------------------------------------------------------------
(1) DEFERRAL PERCENTAGE: For each contribution period, a Participant may
elect that up to 100% of his or her Compensation received during the
contribution period be withheld as an Elective Deferral, inclusive of
any other amounts allocated to such Participant and counted under Code
ss.415(c) and ss.ss.611(b) and 632 of the Economic Growth and Tax
Relief Reconciliation Act (EGTRRA), to the maximum dollar amount
permitted under Code ss.402(g). Elective Deferrals may be made in whole
percentages (or if permitted by the Administrator, in fractional
percentages) of Compensation or in specific dollar amounts as
designated by the Participant. The Administrator will have the right to
direct that such percentages of Compensation be rounded to the next
highest or lowest dollar. Furthermore, on a uniform nondiscriminatory
basis, the Administrator may permit a Participant to identify separate
components of the Participant's Compensation (such as base salary,
bonuses, etc.) and to specify that a different percentage (or dollar
amount) apply to each such component.
SECTION 3.1(a)(5) IS HEREBY AMENDED IN ITS ENTIRETY TO READ AS FOLLOWS:
- -----------------------------------------------------------------------
(5) PARTICIPANT ELECTION TO DEFER UP TO 100% OF COMPENSATION: On a uniform
nondiscriminatory basis, the Administrator may permit a Participant
whose Salary Deferral Agreement has not authorized the Employer to
withhold at the maximum rate permitted under subparagraph (1) above to
increase the total amount withheld for a Plan Year to the maximum rate
permitted under subparagraph (1), in which event the Participant may
authorize the Employer to withhold a supplemental amount up to 100% of
his or her eligible Compensation for one or more pay periods. In no
event can the sum of the amount withheld under the Salary Deferral
Agreement plus the supplemental withholding exceed the lesser of (A)
the maximum amount permitted under subparagraph (1) above; or (B) the
maximum dollar amount permitted for that Plan Year under Code
ss.402(g)(5); or (C) 100% of the Participant's Code ss.415 Compensation
for that Plan Year.
SECTION 1.16(a)(2) IS HEREBY AMENDED IN ITS ENTIRETY TO READ AS FOLLOWS:
- ------------------------------------------------------------------------
(2) TREATMENT OF ELECTIVE DEFERRALS: For purposes of this paragraph (a),
Employer contribution amounts made pursuant to a salary reduction
agreement which are not currently includible in the gross income of an
Employee by reason of Code ss.125, ss.402(e)(3), ss.402(h)(1)(B), or
ss.403(b) will be included in determining Compensation. In addition, if
elected by the Administrator on a non-discriminatory basis,
Compensation will also include elective amounts not includible in the
gross income of the Employee by reason of Code ss.132(f)(4), beginning
with the Plan Year elected by the Administrator but not earlier than
the Plan Year beginning on or after January 1, 1998.
HOT TOPIC, INC.
By_________________________
Date_______________________
FINAL CODE SS.401(a)(9) AMENDMENT
REGARDING MINIMUM DISTRIBUTION REQUIREMENTS
NAME OF PLAN: Hot Topic, Inc. 401(k) Profit Sharing Plan (the "Plan")
PLAN SPONSOR: Hot Topic, Inc. (the "Sponsor")
THIS AMENDMENT is hereby adopted by the Sponsor to permit the Plan to make
required minimum distributions in accordance with final Internal Revenue Service
regulations under Code ss.401(a)(9) effective no later than for calendar years
which begin in 2003 in accordance with Rev. Proc. 2002-29.
SECTION 1. GENERAL RULES
1.1. EFFECTIVE DATE. The provisions of this amendment will apply for purposes
of determining required minimum distributions for calendar years
beginning with the 2002 calendar year.
1.2. COORDINATION WITH MINIMUM DISTRIBUTION REQUIREMENTS PREVIOUSLY IN EFFECT.
Required minimum distributions for calendar 2002 will be determined as
follows: If the total amount of 2002 required minimum distributions under
the Plan made to a distributee for calendar 2002 (a) equals or exceeds
the required minimum distributions determined under this amendment, then
no additional distributions will be required to be made for 2002 on or
after such date to the distribute; or (b) is less than the amount
determined under this amendment, then required minimum distributions for
2002 on and after such date will be determined so that the total amount
of required minimum distributions for 2002 made to the distributee will
be the amount determined under this amendment.
1.3. PRECEDENCE. The requirements of this amendment will take precedence over
any inconsistent provisions of the Plan and any prior amendments thereto.
1.4. REQUIREMENTS OF INTERNAL REVENUE SERVICE REGULATIONS INCORPORATED. All
distributions required under this amendment will be determined and made
in accordance with the Internal Revenue Service regulations under Code
ss.401(a)(9).
1.5. TEFRA SS.242(B)(2) ELECTIONS. Notwithstanding the other provisions of
this amendment, distributions may be made under a designation made before
January 1, 1984, in accordance with ss.242(b)(2) of the Tax Equity and
Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that
relate to ss.242(b)(2) of TEFRA.
SECTION 2. TIME AND MANNER OF DISTRIBUTION
2.1. REQUIRED BEGINNING DATE. The Participant's entire interest will be
distributed, or begin to be distributed, to the Participant no later than
the Participant's Required Beginning Date.
2.2. DEATH OF PARTICIPANT BEFORE DISTRIBUTION BEGIN. If the Participant dies
before distributions begin, his or her entire interest will be
distributed, or begin to be distributed, no later than as follows:
(a) If the Participant's surviving Spouse is the Participant's sole
designated Beneficiary, then subject to section 2.2 (e) below
distributions to the surviving Spouse will begin by December 31 of
the calendar year immediately following the calendar year in which
the Participant died, or by December 31 of the calendar year in
which the Participant would have attained age 70 1/2, if later.
Page -1-
(b) If the Participant's surviving Spouse is not the Participant's
sole designated Beneficiary, then subject to section 2.2(e) below
distributions to the designated Beneficiary will begin by December
31 of the calendar year immediately following the calendar year in
which the Participant died.
(c) If there is no designated Beneficiary as of September 30 of the
year following the year of the Participant's death, the
Participant's entire interest will be distributed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death.
(d) If the Participant's surviving Spouse is the Participant's sole
designated Beneficiary and the surviving Spouse dies after the
Participant but before distributions to the surviving Spouse
begin, this section 2.2, other than section 2.2(a), will apply as
if the surviving Spouse were the Participant.
(e) If the Participant dies before distributions begin and there is a
designated Beneficiary, distribution to the designated
Beneficiary is not required to begin by the date specified in
sections 2.2(a) or (b) above if the Participant's entire interest
is distributed to the designated Beneficiary by December 31 of
the calendar year containing the fifth anniversary of the
Participant's death. In addition, a designated Beneficiary who is
receiving payments under this 5-year rule may make a new election
to receive payments under the life expectancy rule until December
31, 2003, provided that all amounts that would have been required
to be distributed under the life expectancy rule for all
distribution calendar years before 2004 are distributed by the
earlier of December 31, 2003 or the end of the 5-year period.
For purposes of this section 2.2 and section 4, unless section 2.2(d)
applies, distributions are considered to begin on the Participant's
Required Beginning Date. If section 2.2(d) applies, distributions are
considered to begin on the date distributions are required to begin to
the surviving Spouse under section 2.2(a). If distributions under an
annuity purchased from an insurance company irrevocably commence to the
Participant before the Participant's Required Beginning Date (or to the
Participant's surviving Spouse before the date distributions are
required to begin to the surviving Spouse under section 2.2(a)), the
date distributions are considered to begin is the date distributions
actually commence.
2.3. FORMS OF DISTRIBUTION. Unless the Participant's interest is distributed
in the form of an annuity purchased from an insurance company or in a
single sum on or before the Required Beginning Date, as of the first
distribution calendar year distributions will be made in accordance with
sections 3 and 4 of this amendment. If the Participant's interest is
distributed in the form of an annuity purchased from an insurance
company, distributions thereunder will be made in accordance with the
requirements of Code ss.401(a)(9) and the IRS regulations.
SECTION 3. REQUIRED MINIMUM DISTRIBUTIONS DURING PARTICIPANT'S LIFETIME
3.1. AMOUNT OF REQUIRED MINIMUM DISTRIBUTION FOR EACH DISTRIBUTION CALENDAR
YEAR. During the Participant's lifetime, the minimum amount that will be
distributed each distribution calendar year is the lesser of (a) the
quotient obtained by dividing the Participant's account balance by the
distribution period in the Uniform Lifetime Table in ss.1.401(a)(9)-9 of
the IRS regulations using the Participant's age as of his or her birthday
in the distribution calendar year; or (b) if the Participant's sole
designated Beneficiary for the distribution calendar year is the
Participant's Spouse, the quotient obtained by dividing the Participant's
account balance by the number in the Joint and Last Survivor Table in
ss.1.401(a)(9)-9 of the IRS regulations using the Participant's and
Spouse's attained ages as of the Participant's and Spouse's birthdays in
the distribution calendar year.
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3.2. LIFETIME REQUIRED MINIMUM DISTRIBUTIONS CONTINUE THROUGH YEAR OF
PARTICIPANT'S DEATH. Required minimum distributions will be determined
under this section 3 beginning with the first distribution calendar year
and up to and including the distribution calendar year that includes the
Participant's date of death.
SECTION 4. REQUIRED MINIMUM DISTRIBUTIONS AFTER PARTICIPANT'S DEATH
4.1. DEATH ON OR AFTER DATE DISTRIBUTIONS BEGIN
(a) PARTICIPANT SURVIVED BY DESIGNATED BENEFICIARY. If the Participant
dies on or after the date distributions begin and there is a
designated Beneficiary, the minimum amount that will be
distributed for each distribution calendar year after the year of
the Participant's death is the quotient obtained by dividing the
Participant's account balance by the longer of the remaining life
expectancy of the Participant or the remaining life expectancy of
the Participant's designated Beneficiary, determined as follows:
(1) the Participant's remaining life expectancy is calculated
using the age of the Participant in the year of death, reduced by
one for each subsequent year; (2) if the Participant's surviving
Spouse is the sole designated Beneficiary, the remaining life
expectancy of the surviving Spouse is calculated for each
distribution calendar year after the year of the Participant's
death using the surviving Spouse's age as of the Spouse's birthday
in that year. For distribution calendar years after the year of
the surviving Spouse's death, the remaining life expectancy of the
surviving Spouse is calculated using the age of the surviving
Spouse as of the Spouse's birthday in the calendar year of the
Spouse's death, reduced by one for each subsequent calendar year;
and (3) if the Participant's surviving Spouse is not the
Participant's sole designated Beneficiary, the designated
Beneficiary's remaining life expectancy is calculated using the
age of the Beneficiary in the year following the year of the
Participant's death, reduced by one for each subsequent year.
(b) NO DESIGNATED BENEFICIARY. If the Participant dies on or after the
date distributions begin and there is no designated Beneficiary as
of September 30 of the year after the year of the Participant's
death, the minimum amount that will be distributed for each
distribution calendar year after the year of the Participant's
death is the quotient obtained by dividing the Participant's
account balance by the Participant's remaining life expectancy
calculated using the age of the Participant in the year of death,
reduced by one each subsequent year.
4.2. DEATH BEFORE DATE DISTRIBUTIONS BEGIN
(a) PARTICIPANT SURVIVED BY DESIGNATED BENEFICIARY. If the Participant
dies before the date distributions begin and there is a designated
Beneficiary, the minimum amount that will be distributed for each
distribution calendar year after the year of the Participant's
death is the quotient obtained by dividing the Participant's
account balance by the remaining life expectancy of the
Participant's designated Beneficiary, as determined in section
4.1.
(b) NO DESIGNATED BENEFICIARY. If the Participant dies before
distributions begin and there is no designated Beneficiary as of
September 30 of the year following the year of the Participant's
death, distribution of the Participant's entire interest will be
completed by December 31 of the calendar year containing the 5th
anniversary of the Participant's death.
(c) DEATH OF SURVIVING SPOUSE BEFORE DISTRIBUTIONS TO SURVIVING SPOUSE
ARE REQUIRED TO BEGIN. If the Participant dies before the date
distributions begin, the Participant's surviving Spouse is the
Participant's sole designated Beneficiary, and the surviving
Spouse dies before distributions are required to begin to the
surviving Spouse under section 2.2(a), this section 4.2 will apply
as if the surviving Spouse were the Participant.
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SECTION 5. DEFINITIONS
5.1. DESIGNATED BENEFICIARY. The Beneficiary designated by the Participant is
the designated Beneficiary under Code ss.401(a)(9) and ss.1.401(a)(9)-1,
Q&A-4 of the IRS regulations.
5.2. DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum
distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first distribution calendar year is the
calendar year in which distributions are required to begin under section
2.2. The required minimum distribution for the Participant's first
distribution calendar year will be made on or before the Participant's
Required Beginning Date. The required minimum distribution for other
distribution calendar years, including the required minimum distribution
for the distribution calendar year in which the Participant's Required
Beginning Date occurs, will be made on or before December 31 of that
distribution calendar year.
5.3. LIFE EXPECTANCY. Life expectancy as computed by use of the Single Life
Table in ss.1.401(a)(9)-9 of the IRS regulations.
5.4. PARTICIPANT'S ACCOUNT BALANCE. For purposes of determining minimum
distributions the Account balance as of the last Valuation Date in the
calendar year immediately preceding the distribution calendar year
(valuation calendar year) increased by the amount of any contributions
made and allocated or forfeitures allocated to the Account balance as of
dates in the valuation calendar year after the Valuation Date and
decreased by distributions made in the valuation calendar year after the
Valuation Date. The Account balance for the valuation calendar year
includes any amounts rolled over or transferred to the Plan either in the
valuation calendar year or in the distribution calendar year if
distributed or transferred in the valuation calendar year.
HOT TOPIC, INC.
By_________________________
Date_______________________
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