EXHIBIT 10.22
ENGLOBAL 401(K) PLAN
AND ALL SUPPORTING FORMS HAVE BEEN PRODUCED FOR
SCHWAB
Copyright 2005 SunGard Corbel
All Rights Reserved
ENGLOBAL 401 (K) PLAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER..........................14
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY..............................15
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES........................15
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR...............................15
2.5 RECORDS AND REPORTS..................................................17
2.6 APPOINTMENT OF ADVISERS..............................................17
2.7 INFORMATION FROM EMPLOYER............................................17
2.8 PAYMENT OF EXPENSES..................................................17
2.9 MAJORITY ACTIONS.....................................................17
2.10 CLAIMS PROCEDURE.....................................................18
2.11 CLAIMS REVIEW PROCEDURE..............................................19
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY............................................20
3.2 EFFECTIVE DATE OF PARTICIPATION......................................20
3.3 DETERMINATION OF ELIGIBILITY.........................................21
3.4 TERMINATION OF ELIGIBILITY...........................................21
3.5 OMISSION OF ELIGIBLE EMPLOYEE........................................21
3.6 INCLUSION OF INELIGIBLE EMPLOYEE.....................................21
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE..............................21
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION........................23
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION..............................23
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION.............................27
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS..............................27
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS.....................................30
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS.......................32
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS.................................35
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS...................37
4.9 MAXIMUM ANNUAL ADDITIONS.............................................40
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS............................42
4.11 ROLLOVERS AND PLAN-TO-PLAN TRANSFERS FROM QUALIFIED
PLANS...............................................................43
4.12 DIRECTED INVESTMENT ACCOUNT..........................................45
4.13 QUALIFIED MILITARY SERVICE...........................................47
4.14 2005 VOLUNTARY COMPLIANCE............................................47
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND..........................................47
5.2 METHOD OF VALUATION..................................................48
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT............................48
6.2 DETERMINATION OF BENEFITS UPON DEATH.................................48
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY.....................50
6.4 DETERMINATION OF BENEFITS UPON TERMINATION...........................50
6.5 DISTRIBUTION OF BENEFITS.............................................51
6.6 DISTRIBUTION OF BENEFITS UPON DEATH..................................57
6.7 TIME OF SEGREGATION OR DISTRIBUTION..................................59
6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY....................60
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN.......................60
6.10 PRE-RETIREMENT DISTRIBUTION..........................................60
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP....................................61
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION......................62
6.13 DIRECT ROLLOVER......................................................62
ARTICLE VII
AMENDMENT, TERMINATION, MERGERS AND LOANS
7.1 AMENDMENT.........................................................63
7.2 TERMINATION..........................................................64
7.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS..........................65
7.4 LOANS TO PARTICIPANTS................................................65
ARTICLE VIII
TOP HEAVY
8.1 TOP HEAVY PLAN REQUIREMENTS..........................................66
8.2 DETERMINATION OF TOP HEAVY STATUS....................................66
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS.................................................69
9.2 ALIENATION...........................................................70
9.3 CONSTRUCTION OF PLAN.................................................71
9.4 GENDER AND NUMBER....................................................71
9.5 LEGAL ACTION.........................................................71
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS...............................71
9.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE...........................72
9.8 INSURER'S PROTECTIVE CLAUSE..........................................72
9.9 Receipt and RELEASE FOR PAYMENTS.....................................72
9.10 ACTION BY THE EMPLOYER...............................................73
9.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY...................73
9.12 HEADINGS.............................................................73
9.13 APPROVAL BY INTERNAL REVENUE SERVICE.................................73
9.14 UNIFORMITY...........................................................74
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS..........................................74
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS..............................74
10.3 DESIGNATION OF AGENT.................................................74
10.4 EMPLOYEE TRANSFERS...................................................75
10.5 PARTICIPATING EMPLOYER CONTRIBUTION AND FORFEITURES..................75
10.6 AMENDMENT............................................................75
10.7 DISCONTINUANCE OF PARTICIPATION......................................75
10.8 ADMINISTRATOR'S AUTHORITY............................................76
ENGLOBAL 401(K) PLAN
THIS PLAN is hereby adopted by ENGlobal Engineering, Inc. (herein referred
to as the "Employer").
WITNESSETH:
WHEREAS, the Employer heretofore established a Profit Sharing Plan
effective January 1, 1990, (hereinafter called the "Effective Date") known as
ENGlobal 401(k) Plan (herein referred to as the "Plan") in recognition of the
contribution made to its successful operation by its employees and for the
exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has the ability to amend
the Plan, provided the Trustee joins in such amendment if the provisions of the
Plan affecting the Trustee are amended;
NOW, THEREFORE, effective October 1, 2005, except as otherwise provided,
the Employer in accordance with the provisions of the Plan pertaining to
amendments thereof, hereby amends the Plan in its entirety and restates the Plan
to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "Administrator" means the person or entity designated by the Employer
pursuant to Section 2.2 to administer the Plan on behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 8.2.
1.5 "Anniversary Date" means the last day of the Plan Year.
1.6 "Annuity Starting Date" means, with respect to any Participant, 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 in the form of an annuity, the first day on
which all events have occurred which entitles the Participant to such benefit.
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1.7 "Beneficiary" means the person (or entity) to whom the share of a
deceased Participant's total account is payable, subject to the restrictions of
Sections 6.2 and 6.6.
1.8 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.9 "Compensation" with respect to any Participant means such Participant's
wages as defined in Code Section 3401 (a) and all other payments of compensation
by the Employer (in the course of the Employer's trade or business) for a Plan
Year for which the Employer is required to furnish the Participant a written
statement under Code Sections 604l(d), 6051(a)(3) and 6052. Compensation must be
determined without regard to any rules under Code Section 3401 (a) that limit
the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall be
made by:
(a) excluding (even if includible in gross income) reimbursements or
other expense allowances, fringe benefits (cash or noncash), moving
expenses, deferred compensation, and welfare benefits.
(b) including amounts which are contributed by the Employer pursuant
to a salary reduction agreement and which are not includible in the gross
income of the Participant under Code Sections 125,132(f)(4), 402(e)(3),
402(h)(l)(B), 403(b) or 457(b), and Employee contributions described in
Code Section 414(h)(2) that are treated as Employer contributions.
For a Participant's initial year of participation, Compensation shall be
recognized as of such Employee's effective date of participation pursuant to
Section 3.2.
Compensation in excess of $150,000 (or such other amount provided in the
Code) shall be disregarded for all purposes other than for purposes of salary
deferral elections pursuant to Section 4,2. Such amount shall be adjusted for
increases in the cost of living in accordance with Code Section 401(a)(17)(B),
except that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such calendar
year. For any short Plan Year the Compensation limit shall be an amount equal to
the Compensation limit for the calendar year in which the Plan Year begins
multiplied by the ratio obtained by dividing the number of full months in the
short Plan Year by twelve (12).
If any class of Employees is excluded from the Plan, then Compensation for
any Employee who becomes eligible or ceases to be eligible to participate during
a Plan Year shall only include Compensation while the Employee is an Eligible
Employee.
For purposes of this Section, if the Plan is a plan described in Code
Section 413(c) or 414(f) (a plan maintained by more than one Employer), the
limitation applies separately with respect to the Compensation of any
Participant from each Employer maintaining the Plan.
1.10 "Contract" or "Policy" means any life insurance policy, retirement
income policy or annuity contract (group or individual) issued pursuant to the
terms of the Plan. In the event of any conflict between the terms of this Plan
and the terms of any contract purchased hereunder, the Plan provisions shall
control.
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1.11 "Deferred Compensation" with respect to any Participant means the
amount of the Participant's total Compensation which has been contributed to the
Plan in accordance with the Participant's deferral election pursuant to Section
4.2 excluding any such amounts distributed as excess "annual additions" pursuant
to Section 4.10(a).
1.12 "Designated Investment Alternative" means a specific investment
identified by name by the Employer (or such other Fiduciary who has been given
the authority to select investment options) as an available investment under the
Plan to which Plan assets may be invested by the Trustee pursuant to the
investment direction of a Participant.
1.13 "Directed Investment Option" means one or more of the following:
(a) a Designated Investment Alternative.
(b) any other investment permitted by the Plan and the Participant
Direction Procedures to which Plan assets may be invested by the Trustee
pursuant to the investment direction of a Participant.
1.14 "Early Retirement Date" means the date on which a Participant or
Former Participant attains age 55, and has completed at least 3 whole year
Periods of Service with the Employer (Early Retirement Age). A Participant shall
become fully Vested upon satisfying this requirement if still employed at Early
Retirement Age.
A Former Participant who separates from service after satisfying the
service requirement for Early Retirement and who thereafter reaches the age
requirement contained herein shall be entitled to receive benefits under this
Plan.
1.15 "Elective Contribution" means the Employer contributions to the Plan
of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.10(a). In addition, any Employer
Qualified Non-Elective Contribution made pursuant to Section 4.6(b) which is
used to satisfy the "Actual Deferral Percentage" tests shall be considered an
Elective Contribution for purposes of the Plan. Any contributions deemed to be
Elective Contributions (whether or not used to satisfy the "Actual Deferral
Percentage" tests or the "Actual Contribution Percentage" tests) shall be
subject to the requirements of Sections 4.2(b) and 4.2(c) and shall further be
required to satisfy the nondiscrimination requirements of Regulation
1.401(k)-l(b)(5) and Regulation 1.401(m)-l(b)(5), the provisions of which are
specifically incorporated herein by reference.
1.16 "Eligible Employee" means any Employee, subject to the following:
Employees who are Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall not be eligible to participate in this Plan.
Employees whose employment is governed by the terms of a collective
bargaining agreement between Employee representatives (within the meaning of
Code Section 7701(a)(46)) and the Employer under which retirement benefits were
the subject of good faith bargaining between the parties will not be eligible to
participate in this Plan unless such agreement expressly provides for coverage
in this Plan.
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Employees who are nonresident aliens (within the meaning of Code Section
7701(b)(l)(B)) and who receive no earned income (within the meaning of Code
Section 91 l(d)(2)) from the Employer which constitutes income from sources
within the United States (within the meaning of Code Section 861(a)(3)) shall
not be eligible to participate in this Plan.
Employees of Affiliated Employers shall not be eligible to participate in
this Plan unless such Affiliated Employers have specifically adopted this Plan
in writing.
Employees classified by the Employer as independent contractors who are
subsequently determined by the Internal Revenue Service to be Employees shall
not be Eligible Employees for the period during which they were classified as
independent contractors.
1.17 "Employee" means any person who is employed by the Employer or
Affiliated Employer, and excludes any person who is employed as an independent
contractor. Employee shall include Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a
plan described in Code Section 414(n)(5) and such Leased Employees do not
constitute more than 20% of the recipient's non-highly compensated work force.
1.18 "Employer" means ENGlobal Engineering, Inc. and any successor which
shall maintain this Plan; and any predecessor which has maintained this Plan.
The Employer is a corporation, with principal offices in the State of Texas. In
addition, where appropriate, the term Employer shall include any Participating
Employer (as defined in Section 10.1) which shall adopt this Plan.
1.19 "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of the aggregate amount of the Employer matching contributions made
pursuant to Section 4.1 (b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on behalf of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a) (determined
by hypothetically reducing contributions made on behalf of Highly Compensated
Participants in order of the actual contribution ratios beginning with the
highest of such ratios). Such determination shall be made after first taking
into account corrections of any Excess Deferred Compensation pursuant to Section
4.2 and taking into account any adjustments of any Excess Contributions pursuant
to Section 4.6.
1.20 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions used to satisfy the "Actual Deferral Percentage" tests
made on behalf of Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section 4.5(a) (determined
by hypothetically reducing contributions made on behalf of Highly Compensated
Participants in order of the actual deferral ratios beginning with the highest
of such ratios). Excess Contributions shall be treated as an "annual addition"
pursuant to Section 4.9(b).
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1.21 "Excess Deferred Compensation" means, with respect to any taxable year
of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.9(b) when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year. Additionally, for
purposes of Sections 8.2 and 4.4(g), Excess Deferred Compensation shall continue
to be treated as Employer contributions even if distributed pursuant to Section
4.2(f). However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for purposes of Section 4.5(a) to the
extent such Excess Deferred Compensation occurs pursuant to Section 4.2(d).
1.22 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.23 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1 of each year and ending the following December 31.
1.24 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of the Participant's
Account of a Former Participant who has severed employment with the
Employer, or
(b) the last day of the Plan Year in which a Former Participant who
has severed employment with the Employer incurs five (5) consecutive 1-Year
Breaks in Service.
Regardless of the preceding provisions, if a Former Participant is eligible
to share in the allocation of Employer contributions or Forfeitures in the year
in which the Forfeiture would otherwise occur, then the Forfeiture will not
occur until the end of the first Plan Year for which the Former Participant is
not eligible to share in the allocation of Employer contributions or
Forfeitures. Furthermore, the term "Forfeiture" shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.25 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.26 "415 Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401 (a) and all other payments
of compensation by the Employer (in the course of the Employer's trade or
business) for a Plan Year for which the Employer is required to furnish the
Participant a written statement under Code Sections 604 l(d), 6051(a)(3) and
6052. "415 Compensation" must be determined without regard to any rules under
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Code Section 3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of "415 Compensation" shall
include any elective deferral (as defined in Code Section 402(g)(3))f and any
amount which is contributed or deferred by the Employer at the election of the
Participant and which is not includible in the gross income of the Participant
by reason of Code Sections 125, 132(f}(4) or 457.
1.27 "414(s) Compensation" means any definition of compensation that
satisfies the nondiscrimination requirements of Code Section 414(s) and the
Regulations thereunder. The period for determining 414(s) Compensation must be
either the Plan Year or the calendar year ending with or within the Plan Year.
An Employer may further limit the period taken into account to that part of the
Plan Year or calendar year in which an Employee was a Participant in the
component of the Plan being tested. The period used to determine 414(s)
Compensation must be applied uniformly to all Participants for the Plan Year.
1.28 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means any Employee
who:
(a) was a "five percent owner" as defined in Section 1,34(c) at any
time during the "determination year" or the "look-back year"; or
(b) for the "look-back year" had "415 Compensation" from the Employer
in excess of $80,000. The $80,000 amount is adjusted at the same time and
in the same manner as under Code Section 415(d), except that the base
period is the calendar quarter ending September 30, 1996.
The "determination year" means the Plan Year for which testing is being
performed, and the "look-back year" means the immediately preceding twelve (12)
month period.
A highly compensated former Employee is based on the rules applicable to
determining Highly Compensated Employee status as in effect for the
"determination year," in accordance with Regulation 1.414(q)-lT, A-4 and IRS
Notice 97-45 (or any superseding guidance).
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911 (d)(2) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
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1.29 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the component of the Plan being tested.
1.30 "Hour of Service" means, for purposes of eligibility for participation
and vesting, each hour for which an Employee is paid or entitled to payment for
the performance of duties for the Employer.
1.31 "Hour of Service" means, for purposes of benefit accrual, (1) each
hour for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer for the performance of duties (these hours will be
credited to the Employee for the computation period in which the duties are
performed); (2) each hour for which an Employee is directly or indirectly
compensated or entitled to compensation by the Employer (irrespective of whether
the employment relationship has terminated) for reasons other than performance
of duties (such as vacation, holidays, sickness, jury duty, disability, lay-off,
military duty or leave of absence) during the applicable computation period
(these hours will be calculated and credited pursuant to Department of Labor
regulation 2530.200b~2 which is incorporated herein by reference); (3) each hour
for which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages (these hours will be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made).
The same Hours of Service shall not be credited both under (1) or (2), as the
case may be, and under (3).
Notwithstanding (2) above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of (2) above, a payment shall be deemed to be made by or due
from the Employer regardless of whether such payment is made by or due from the
Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
For purposes of this Section, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.32 "Income" means the income or losses allocable to "excess amounts"
which shall equal the allocable gain or loss for the "applicable computation
period". The income allocable to "excess amounts" for the "applicable
computation period" is determined by multiplying the income for the "applicable
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computation period" by a fraction. The numerator of the fraction is the "excess
amount" for the "applicable computation period." The denominator of the fraction
is the total "account balance" attributable to "Employer contributions" as of
the end of the "applicable computation period", reduced by the gain allocable to
such total amount for the "applicable computation period" and increased by the
loss allocable to such total amount for the "applicable computation period". The
provisions of this Section shall be applied;
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess amounts";
(2) "taxable year of the Participant" for "applicable computation
period";
(3) "Deferred Compensation" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Elective Contributions" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer matching contributions made pursuant to Section 4.1 (b)
and any qualified non-elective contributions or elective
deferrals taken into account pursuant to Section 4.7(c)" for
"Employer contributions"; and
(4) "Participant's Account" for "account balance."
Income allocable to any distribution of Excess Deferred Compensation on or
before the last day of the taxable year of the Participant shall be calculated
from the first day of the taxable year of the Participant to the date on which
the distribution is made pursuant to either the "fractional method" or the "safe
harbor method." Under such "safe harbor method," allocable Income for such
period shall be deemed to equal ten percent (10%) of the Income allocable to
such Excess Deferred Compensation multiplied by the number of calendar months in
such period. For purposes of determining the number of calendar months in such
period, a distribution occurring on or before the fifteenth day of the month
shall be treated as having been made on the last day of the preceding month and
a distribution occurring after such fifteenth day shall be treated as having
been made on the first day of the next subsequent month.
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1.33 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
1.34 "Key Employee" means an Employee as defined in Code Section 416(i) and
the Regulations thereunder. Generally, any Employee or former Employee (as well
as each of the Employee's or former Employee's Beneficiaries) is considered a
Key Employee if the Employee, at any time during the Plan Year that contains the
"Determination Date" or any of the preceding four (4) Plan Years, has been
included in one of the following categories:
(a) an officer of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) having annual "415
Compensation" greater than 50 percent of the amount in effect under Code
Section 415(b)(l)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from the
Employer for a Plan Year greater than the dollar limitation in effect under
Code Section 415(c)(l)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning of Code Section
318) both more than one-half percent interest and the largest interests in
the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner" means
any person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of the total
combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than five percent (5%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent owner"
means any person who owns (or is considered as owning within the meaning of
Code Section 318) more than one percent (1%) of the outstanding stock of
the Employer or stock possessing more than one percent (1%) of the total
combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than one percent (1%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as separate
employers. However, in determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation" from each employer
required to be aggregated under Code Sections 414(b), (c), (m) and (o)
shall be taken into account.
9
For purposes of this Section, the determination of "415 Compensation" shall
be made by including amounts which are contributed by the Employer pursuant to a
salary reduction agreement and which are not includible in the gross income of
the Participant under Code Sections 125, 132(f)(4), 402(e)(3), 402(h)(l)(B),
403(b) or 457(b), and Employee contributions described in Code Section 414(h)(2)
that are treated as Employer contributions.
1.35 "Late Retirement Date" means a Participant's actual Retirement Date
after having reached Normal Retirement Date.
1.36 "Leased Employee" means any person (other than an Employee of the
recipient Employer) who pursuant to an agreement between the recipient Employer
and any other person or entity ("leasing organization") has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially foil time basis for a
period of at least one year, and such services are performed under primary
direction or control by the recipient Employer, Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable to
services performed for the recipient Employer shall be treated as provided by
the recipient Employer. Furthermore, Compensation for a Leased Employee shall
only include Compensation from the leasing organization that is attributable to
services performed for the recipient Employer. A Leased Employee shall not be
considered an Employee of the recipient Employer:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3);
(2) immediate participation;
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient Employer's nonhighly compensated work force.
1.37 "Non-Elective Contribution" means the Employer contributions to the
Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2 and any Qualified Non-Elective
Contribution used in the "Actual Deferral Percentage" tests,
1.38 "Non-Highly Compensated Participant" means any Participant who is not
a Highly Compensated Employee. However, for purposes of Section 4.5(a) and
Section 4.6, if the prior year testing method is used, a Non-Highly Compensated
Participant shall be determined using the definition of Highly Compensated
Employee in effect for the preceding Plan Year.
1.39 "Non-Key Employee" means any Employee or former Employee (and such
Employee's or former Employee's Beneficiaries) who is not, and has never been a
Key Employee.
10
1.40 "Normal Retirement Age" means the Participant's 65th birthday, or the
Participant's 3rd anniversary of joining the Plan, if later. A Participant shall
become fully Vested in the Participant's Account upon attaining Normal
Retirement Age.
1.41 "Normal Retirement Date" means the Participant's Normal Retirement
Age.
1.42 " 1 -Year Break in Service" means, for purposes of eligibility for
participation and vesting, a Period of Severance of at least 12 consecutive
months.
1.43 "Participant" means any Eligible Employee who participates in the Plan
and has not for any reason become ineligible to participate further in the Plan.
1.44 "Participant Direction Procedures" means such instructions, guidelines
or policies, the terms of which are incorporated herein, as shall be established
pursuant to Section 4.12 and observed by the Administrator and applied and
provided to Participants who have Participant Directed Accounts.
1.45 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to such Participant's
total interest in the Plan and Trust resulting from the Employer Non-Elective
Contributions.
1.46 "Participant's Combined Account" means the total aggregate amount of
each Participant's Elective Account and Participant's Account.
1.47 "Participant's Directed Account" means that portion of a Participant's
interest in the Plan with respect to which the Participant has directed the
investment in accordance with the Participant Direction Procedure.
1.48 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to the
Participant's total interest in the Plan and Trust resulting from the Employer
Elective Contributions used to satisfy the "Actual Deferral Percentage" tests. A
separate accounting shall be maintained with respect to that portion of the
Participant's Elective Account attributable to such Elective Contributions
pursuant to Section 4,2 and any Employer Qualified Non-Elective Contributions.
1.49 "Participant's Transfer/Rollover Account" means the account
established and maintained by the Administrator for each Participant with
respect to the Participant's total interest in the Plan resulting from amounts
transferred to this Plan from a direct plan-to-plan transfer and/or with respect
to such Participant's interest in the Plan resulting from amounts transferred
from another qualified plan or "conduit" Individual Retirement Account in
accordance with Section 4.11,
A separate accounting shall be maintained with respect to that portion of
the Participant's Transfer/Rollover Account attributable to transfers (within
the meaning of Code Section 414(1)) and "rollovers."
1.50 "Period of Service" means the aggregate of all periods commencing with
the Employee's first day of employment or reemployment with the Employer or
Affiliated Employer and ending on the date a 1-Year Break in Service begins. The
first day of employment or reemployment is the first day the Employee performs
11
an Hour of Service. An Employee will also receive partial credit for any Period
of Severance of less than twelve (12) consecutive months. Fractional periods of
a year will be expressed in terms of days.
Periods of Service with the following employers shall be recognized:
Triangle Engineers & Constructors, Inc.; RPM Engineering, Inc.; Petrocon of
Louisiana, Inc.; Constant Power Manufacturing, Inc.; IDS Engineering, Inc.;
ENGlobal Engineering, Inc.; ENGlobal Construction Resources, Inc. (formerly
known as Petrocon Construction Resources, Inc.); ENGlobal Systems, Inc.
(formerly known as Petrocon Systems, Inc.); ENGlobal Automation Group, Inc.
(formerly known as Petrocon Technologies, Inc.); ENGlobal Corporate Services,
Inc. (formerly known as Industrial Data Systems, Inc.); ENGlobal Design Group,
Inc. (formerly known as Engineering Design Group, Inc.)
1.51 "Period of Severance" means a continuous period of time during which
the Employee is not employed by the Employer. Such period begins on the date the
Employee retires, quits or is discharged, or if earlier, the twelve (12) month
anniversary of the date on which the Employee was otherwise first absent from
service.
In the case of an individual who is absent from work for maternity or
paternity reasons, the twelve (12) consecutive month period beginning on the
first anniversary of the first day of such absence shall not constitute a 1-Year
Break in Service. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (a) by reason of the pregnancy
of the individual, (b) by reason of the birth of a child of the individual, (c)
by reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (d) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
1.52 "Plan" means this instrument, including all amendments thereto.
1.53 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1 of each year and ending the following December 31.
1.54 "Qualified Non-Elective Contribution" means any Employer contributions
made pursuant to Section 4.6(b) and Section 4.8(f). Such contributions shall be
considered an Elective Contribution for the purposes of the Plan and used to
satisfy the "Actual Deferral Percentage" tests or the "Actual Contribution
Percentage" tests.
1.55 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or a delegate of the Secretary of the Treasury, and as
amended from time to time.
1.56 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.57 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 6.1).
12
1.58 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.59 "Top Heavy Plan" means a plan described in Section 8.2(a).
1.60 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.61 "Total and Permanent Disability" means a condition, certified by a
physician selected by the Employer, in which a person is unable to engage in any
substantial gainful activity due to physical or mental impairment. The physician
must certify that the condition:
(a) has lasted (or is expected to last) at least 12 consecutive
months; or
(b) is expected to result in death.
1.62 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
1.63 "Trust Agreement" means any trust agreement between the Employer and
the Trustee with respect to the Plan, as such may be in effect from time to
time, the provisions of which are incorporated herein by reference.
1.64 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.65 "Valuation Date" means the Anniversary Date and may include any other
date or dates deemed necessary or appropriate by the Administrator for the
valuation of the Participants' accounts during the Plan Year, which may include
any day that the Trustee, any transfer agent appointed by the Trustee or the
Employer or any stock exchange used by such agent, are open for business.
1.66 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.67 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
The computation period shall be the Plan Year if not otherwise set forth
herein.
Notwithstanding the foregoing, for any short Plan Year, the determination
of whether an Employee has completed a Year of Service shall be made in
accordance with Department of Labor regulation 2530.203-2(c).
Years of Service with the following employers shall be recognized; Triangle
Engineers & Constructors, Inc.; RPM Engineering, Inc.; Petrocon of Louisiana,
Inc.; Constant Power Manufacturing, Inc.; IDS Engineering, Inc.; ENGlobal
Engineering, Inc.; ENGlobal Construction Resources, Inc. (formerly known as
13
Petrocon Construction Resources, Inc.); ENGlobal Systems, Inc. (formerly known
as Petrocon Systems, Inc.); ENGlobal Automation Group, Inc. (formerly known as
Petrocon Technologies, Inc.); ENGlobal Corporate Services, Inc. (formerly known
as Industrial Data Systems, Inc.); ENGlobal Design Group, Inc. (formerly known
as Engineering Design Group, Inc.)
Years of Service with any Affiliated Employer shall be recognized,
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities otherwise
provided for in this Plan, the Employer shall be empowered to appoint and
remove the Trustee and the Administrator from time to time as it deems
necessary for the proper administration of the Plan to ensure that the Plan
is being operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the Code, and the
Act. The Employer may appoint counsel, specialists, advisers, agents
(including any nonfiduciary agent) and other persons as the Employer deems
necessary or desirable in connection with the exercise of its fiduciary
duties under this Plan. The Employer may compensate such agents or advisers
from the assets of the Plan as fiduciary expenses (but not including any
business (settlor) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer may, by written agreement or designation, appoint at
its option an Investment Manager (qualified under the Investment Company
Act of 1940 as amended), investment adviser, or other agent to provide
direction to the Trustee with respect to any or all of the Plan assets.
Such appointment shall be given by the Employer in writing in a form
acceptable to the Trustee and shall specifically identify the Plan assets
with respect to which the Investment Manager or other agent shall have
authority to direct the investment.
(c) The Employer shall establish a "funding policy and method," i.e.,
it shall determine whether the Plan has a short run need for liquidity
(e.g., to pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current need, or shall
appoint a qualified person to do so. The Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate such
Plan needs with its investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive to the
Trustee as to the investment of the Trust Funds. Such "funding policy and
method" shall be consistent with the objectives of this Plan and with the
requirements of Title I of the Act.
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or allocated
by it under the provisions of this Plan or pursuant to procedures
14
established hereunder. This requirement may be satisfied by formal periodic
review by the Employer or by a qualified person specifically designated by
the Employer, through day-to-day conduct and evaluation, or through other
appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person,
including, but not limited to, the Employees of the Employer, shall be eligible
to serve as an Administrator. Any person so appointed shall signify acceptance
by filing written acceptance with the Employer. An Administrator may resign by
delivering a written resignation to the Employer or be removed by the Employer
by delivery of written notice of removal, to take effect at a date specified
therein, or upon delivery to the Administrator if no date is specified.
The Employer, upon the resignation or removal of an Administrator, shall
promptly designate a successor to this position. If the Employer does not
appoint an Administrator, the Employer will function as the Administrator.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the responsibilities
of each Administrator may be specified by the Employer and accepted in writing
by each Administrator. In the event that no such delegation is made by the
Employer, the Administrators may allocate the responsibilities among themselves,
in which event the Administrators shall notify the Employer and the Trustee in
writing of such action and specify the responsibilities of each Administrator.
The Trustee thereafter shall accept and rely upon any documents executed by the
appropriate Administrator until such time as the Employer or the Administrators
file with the Trustee a written revocation of such designation.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the Plan
for the exclusive benefit of the Participants and their Beneficiaries, subject
to the specific terms of the Plan. The Administrator shall administer the Plan
in accordance with its terms and shall have the power and discretion to construe
the terms of the Plan and to determine all questions arising in connection with
the administration, interpretation, and application of the Plan. Any such
determination by the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the purpose of the
Plan; provided, however, that any procedure, discretionary act, interpretation
or construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan shall continue to be deemed a qualified plan under the terms of Code
Section 401(a), and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish the Administrator's duties under the Plan.
15
The Administrator shall be charged with the duties of the general
administration of the Plan as set forth under the terms of the Plan, including,
but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant hereunder
and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to the
amount and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
discretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of the
Plan;
(e) to interpret the provisions of the Plan and to make and publish
such rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any Contract to be purchased
from any insurer, and to designate the insurer from which such Contract
shall be purchased;
(g) to compute and certify to the Employer and to the Trustee from
time to time the sums of money necessary or desirable to be contributed to
the Plan;
(h) to prepare and implement a procedure for notifying Participants
and Beneficiaries of their rights to elect joint and survivor annuities as
required by the Act and regulations thereunder;
(i) to prepare and implement a procedure to notify Eligible Employees
that they may elect to have a portion of their Compensation deferred or
paid to them in cash;
(j) to act as the named Fiduciary responsible for communications with
Participants as needed to maintain Plan compliance with Act Section 404(c),
including, but not limited to, the receipt and transmitting of
Participant's directions as to the investment of their account(s) under the
Plan and the formulation of policies, rules, and procedures pursuant to
which Participants may give investment instructions with respect to the
investment of their accounts;
(k) to determine the validity of, and take appropriate action with
respect to, any qualified domestic relations order received by it; and
(1) to assist any Participant regarding the Participant's rights,
benefits, or elections available under the Plan,
16
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall keep
all other books of account, records, policies, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the Administrator,
may appoint counsel, specialists, advisers, agents (including nonfiduciary
agents) and other persons as the Administrator or the Trustee deems necessary or
desirable in connection with the administration of this Plan, including but not
limited to agents and advisers to assist with the administration and management
of the Plan, and thereby to provide, among such other duties as the
Administrator may appoint, assistance with maintaining Plan records and the
providing of investment information to the Plan's investment fiduciaries and to
Plan Participants.
2.7 INFORMATION FROM EMPLOYER
The Employer shall supply full and timely information to the Administrator
on all pertinent facts as the Administrator may require in order to perform its
function hereunder and the Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee's duties under the Plan. The
Administrator may rely upon such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.
2.8 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless
paid by the Employer. Such expenses shall include any expenses incident to the
functioning of the Administrator, or any person or persons retained or appointed
by any named Fiduciary incident to the exercise of their duties under the Plan,
including, but not limited to, fees of accountants, counsel, Investment
Managers, agents (including nonfiduciary agents) appointed for the purpose of
assisting the Administrator or the Trustee in carrying out the instructions of
Participants as to the directed investment of their accounts and other
specialists and their agents, the costs of any bonds required pursuant to Act
Section 412, and other costs of administering the Plan. Until paid, the expenses
shall constitute a liability of the Trust Fund. Notwithstanding the foregoing,
the Employer, on a uniform and nondiscriminatory basis, may direct that expenses
and fees that are allocable to the accounts of a specific Participant shall be
paid from that Participant's accounts.
2.9 MAJORITY ACTIONS
Except where there has been an allocation and delegation of administrative
authority pursuant to Section 2.3, if there is more than one Administrator, then
they shall act by a majority of their number, but may authorize one or more of
them to sign all papers on their behalf.
17
2.10 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Notice of the disposition of a claim shall be furnished to the
claimant within ninety (90) days after the application is filed, or such period
as is required by applicable law or Department of Labor regulation, unless the
Administrator determines that special circumstances require an extension of time
for processing the claim. If it is determined that an extension is needed,
written notice of the extension shall be furnished to the claimant prior to the
termination of the initial 90-day period specifying the special circumstances
requiring the extension and the date by which the plan expects to render a
decision. In no event shall such extension exceed a period of 90 days from the
end of such initial period.
In the case of a claim for disability benefits, notice of the disposition
of a claim shall be furnished to the claimant within forty-five (45) days after
the application is filed, or such period as is required by applicable law or
Department of Labor regulation, unless the Administrator determines that
circumstances beyond the Plan's control require an extension of time of up to
thirty (30) days for processing the claim. If it is determined that an extension
is needed, notice of the extension shall be furnished to the claimant prior to
the termination of the initial 45-day period specifying the circumstances
requiring the extension and the date by which the Plan expects to render a
decision. If prior to the end of the first 30-day extension period, the
Administrator determines that circumstances beyond the Plan's control require an
additional extension of time of up to thirty (30) days, the period for deciding
the claim may be extended. If an additional 30-day extension is needed, notice
of the extension shall be furnished to the claimant prior to the termination of
the first 30-day extension period specifying the circumstances requiring the
further extension and the date by which the Plan expects to render a decision.
For any extension, the notice must explain the standards on which entitlement to
a benefit is based, the issues that prevent a decision on the claim, and the
additional information needed to resolve those issues. The claimant will be
given at least 45 days to respond to the request for additional information.
In the event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be understood by
the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will be
provided. In addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure and the time limits applicable to such
procedure. In the case of a claim for disability benefits, the claimant will be
provided with a copy of any internal rule, guideline, protocol or other similar
criterion that was relied upon in denying the claim, or the claimant will be
provided with a statement that the rule, guideline, protocol or similar
criterion was relied upon and that a copy of the rule, guideline, protocol or
similar criterion will be provided to the claimant free of charge upon request.
Also, in the case of a claim for disability benefits that was denied based on
medical necessity or experimental treatment or similar exclusion or limit, the
claimant will be provided with an explanation of the specific or clinical
judgment (applying the terms of the Plan to the medical circumstances) that was
relied upon to deny the claim, or a statement that such explanation will be
provided to the claimant free of charge upon request.
18
2.11 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.10
shall be entitled to request the Administrator to give further consideration to
a claim by filing with the Administrator a written request for a full and fair
review. Such request, together with a written statement of the reasons why the
claimant believes the claim should be allowed and any written comments,
documents, records and other information relating to the claim, shall be filed
with the Administrator no later than sixty (60) days after receipt of the
notification provided for in Section 2.10.
If the claim is for disability benefits, the request for review must be
filed with the Administrator no later than one hundred-eighty (180) days after
receipt of the notification provided for in Section 2.10.
A claimant shall be provided, upon request and free of charge, reasonable
access to (and copies of) all documents, records and other information relevant
to the claim. The Administrator shall then conduct a review of such claim that
takes into account all comments, documents, records and other information
submitted by the claimant relating to the claim, regardless of whether such
information was submitted or considered in the initial benefit determination.
If the claim is for disability benefits, the review will be conducted
without regard to the initial adverse benefit determination by an appropriate
named fiduciary of the Plan who is neither the individual nor the subordinate of
the individual who made the initial adverse benefit determination. If the
initial adverse benefit determination is based in whole or in part on medical
judgment, the appropriate named fiduciary will consult with a health care
professional who has appropriate training and experience in the field of
medicine involved in the medical judgment and who was neither the individual nor
a subordinate of the individual consulted in connection with the initial adverse
benefit determination. Any medical or vocational experts whose advise was
obtained on behalf of the Plan in connection with the initial adverse benefit
determination will be identified, regardless of whether the advice was relied
upon in making the adverse benefit determination.
A final decision as to the allowance of the claim shall be made by the
Administrator within sixty (60) days of receipt of the appeal (unless there has
been an extension of sixty (60) days due to special circumstances, provided the
delay, the special circumstances occasioning it, and the expected decision date
are communicated to the claimant within the sixty (60) day period). If the claim
relates to disability benefits, then the previous sentence will apply but with
the substitution of "forty-five (45)" for every instance in which the phrase
"sixty (60)" appears in the sentence.
Such communication shall be written in a manner calculated to be understood
by the claimant and shall include: specific reasons for the decision, specific
references to the pertinent Plan provisions on which the decision is based, a
statement that the claimant is entitled to receive reasonable access to (and
copies of) all documents, records and other information relevant to the claim, a
statement describing any voluntary appeal procedures offered by the Plan and the
claimant's right to obtain information about such procedures, and a statement of
the claimant's right to bring an action under Act Section 502(a).
19
In the case of a claim for disability benefits, the claimant will be
provided with a copy of any internal rule, guideline, protocol or other similar
criterion that was relied upon in denying the claim, or the claimant will be
provided with a statement that the rule, guideline, protocol or similar
criterion was relied upon and that a copy of the rule, guideline, protocol or
similar criterion will be provided to the claimant free of charge upon request.
Also, in the case of a claim for disability benefits that was denied based on
medical necessity or experimental treatment or similar exclusion or limit, the
claimant will be provided with an explanation of the specific or clinical
judgment (applying the terms of the Plan to the medical circumstances) that was
relied upon to deny the claim, or a statement that such explanation will be
provided to the claimant free of charge upon request,
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed a 60 day Period of Service and has
attained age 21 shall be eligible to participate hereunder as of the date such
Employee has satisfied such requirements. However, any Employee who was a
Participant in the Plan prior to the effective date of this amendment and
restatement shall continue to participate in the Plan.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the first
day of the Plan Year quarter coinciding with or next following the date such
Employee met the eligibility requirements of Section 3.1, provided said Employee
was still employed as of such date (or if not employed on such date, as of the
date of rehire if a 1-Year Break in Service has not occurred or, if later, the
date that the Employee would have otherwise entered the Plan had the Employee
not terminated employment).
If an Eligible Employee satisfies the Plan's eligibility requirement
conditions by reason of recognition of service with a predecessor employer, such
Employee will become a Participant as of the day the Plan credits service with a
predecessor employer or, if later, the date the Employee would have otherwise
entered the Plan had the service with the predecessor employer been service with
the Employer.
If an Employee, who has satisfied the Plan's eligibility requirements and
would otherwise have become a Participant, shall go from a classification of a
noneligible Employee to an Eligible Employee, such Employee shall become a
Participant on the date such Employee becomes an Eligible Employee or, if later,
the date that the Employee would have otherwise entered the Plan had the
Employee always been an Eligible Employee.
If an Employee, who has satisfied the Plan's eligibility requirements and
would otherwise become a Participant, shall go from a classification of an
Eligible Employee to a noneligible class of Employees, such Employee shall
become a Participant in the Plan on the date such Employee again becomes an
Eligible Employee, or, if later, the date that the Employee would have otherwise
entered the Plan had the Employee always been an Eligible Employee. However, if
such Employee incurs a 1-Year Break in Service, eligibility will be determined
under the Break in Service rules set forth in Section 3.7.
20
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review pursuant to Section 2.11.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an Eligible
Employee to an ineligible Employee, such Former Participant shall continue to
vest in the Plan for each Period of Service completed while a noneligible
Employee, until such time as the Participant's Account is forfeited or
distributed pursuant to the terms of the Plan. Additionally, the Former
Participant's interest in the Plan shall continue to share in the earnings of
the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a Participant
in the Plan is erroneously omitted and discovery of such omission is not made
until after a contribution by the Employer for the year has been made and
allocated, then the Employer shall make a subsequent contribution so that the
omitted Employee receives a total amount which the Employee would have received
(including both Employer contributions and earnings thereon) had the Employee
not been omitted. Such contribution shall be made regardless of whether it is
deductible in whole or in part in any taxable year under applicable provisions
of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such inclusion
is not made until after a contribution for the year has been made and allocated,
the Employer shall be entitled to recover the contribution made with respect to
the ineligible person provided the error is discovered within twelve (12) months
of the date on which it was made. Otherwise, the amount contributed with respect
to the ineligible person shall constitute a Forfeiture for the Plan Year in
which the discovery is made. Notwithstanding the foregoing, any Deferred
Compensation made by an ineligible person shall be distributed to the person
(along with any earnings attributable to such Deferred Compensation).
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE
(a) If any Participant becomes a Former Participant due to severance
from employment with the Employer and is reemployed by the Employer before
a 1-Year Break in Service occurs, the Former Participant shall become a
Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to severance
from employment with the Employer and is reemployed after a 1 -Year Break
in Service has occurred, Periods of Service shall include Periods of
Service prior to the 1-Year Break in Service subject to the following
rules:
21
(1) In the case of a Former Participant who under the Plan does not
have a nonforfeitable right to any interest in the Plan resulting from
Employer contributions, Periods of Service before a period of 1-Year
Break in Service will not be taken into account if the number of
consecutive 1-Year Breaks in Service equal or exceed the greater of
(A) five (5) or (B) the aggregate number of pre-break Periods of
Service. Such aggregate number of Periods of Service will not include
any Periods of Service disregarded under the preceding sentence by
reason of prior 1-Year Breaks in Service.
(2) A Former Participant shall participate in the Plan as of the date
of reemployment.
(c) After a Former Participant who has severed employment with the
Employer incurs five (5) consecutive 1-Year Breaks in Service, the Vested
portion of said Former Participant's Account attributable to pre-break
service shall not be increased as a result of post-break service. In such
case, separate accounts will be maintained as follows:
(1) one account for nonforfeitable benefits attributable to pre-break
service; and
(2) one account representing the Participant's Employer derived
account balance in the Plan attributable to post-break service.
(d) If any Participant becomes a Former Participant due to severance
of employment with the Employer and is reemployed by the Employer before
five (5) consecutive 1-Year Breaks in Service, and such Former Participant
had received a distribution of the entire Vested interest prior to
reemployment, then the forfeited account shall be reinstated only if the
Former Participant repays the full amount which had been distributed. Such
repayment must be made before the earlier of five (5) years after the first
date on which the Participant is subsequently reemployed by the Employer or
the close of the first period of five (5) consecutive 1-Year Breaks in
Service commencing after the distribution. If a distribution occurs for any
reason other than a severance of employment, the time for repayment may not
end earlier than five (5) years after the date of distribution. In the
event the Former Participant does repay the full amount distributed, the
undistributed forfeited portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring subsequent to
the Valuation Date preceding the distribution. The source for such
reinstatement may be Forfeitures occurring during the Plan Year. If such
source is insufficient, then the Employer will contribute an amount which
is sufficient to restore any such forfeited Accounts.
22
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be deemed
an Employer Elective Contribution.
(b)(i) For Participants who are classified on the payroll records of
the Employer as "regular employees," 50% of elective deferrals up to the
first 4% of Compensation; and (ii) for all other Participants, 25% of
elective deferrals up to the first 4% of Compensation. In other words, we
are no longer referring to contract or project employees, and the match for
the first group would be a maximum of 2% of pay, and for the second group,
a maximum of 1% of pay.
(c) Additionally, to the extent necessary, the Employer shall
contribute to the Plan the amount necessary to provide the top heavy
minimum contribution. All contributions by the Employer shall be made in
cash or in such property as is acceptable to the Trustee.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of Compensation
which would have been received in the Plan Year (except for the deferral
election) by up to the maximum amount which will not cause the Plan to
violate the provisions of Sections 4,5(a) and 4.9. A deferral election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election. For purposes of this Section,
Compensation shall be determined prior to any reductions made pursuant to
Code Sections 125, 132(f)(4), 402(e)(3), 402(h)(l)(B), 403(b) or 457(b),
and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer Elective
Contribution and allocated to that Participant's Elective Account.
(b) The balance in each Participant's Elective Account shall be fully
Vested at all times and, except as otherwise provided herein, shall not be
subject to Forfeiture for any reason.
(c) Notwithstanding anything in the Plan to the contrary, amounts held
in the Participant's Elective Account may not be distributable (including
any offset of loans) earlier than:
23
(1) a Participant's separation from service, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the existence at the time of
Plan termination of another defined contribution plan or the
establishment of a successor defined contribution plan by the Employer
or an Affiliated Employer within the period ending twelve months after
distribution of all assets from the Plan maintained by the Employer.
For this purpose, a defined contribution plan does not include an
employee stock ownership plan (as defined in Code Section 4975(e)(7)
or 409), a simplified employee pension plan (as defined in Code
Section 408(k)), or a simple individual retirement account plan (as
defined in Code Section 408(p));
(4) the date of disposition by the Employer to an entity that is not
an Affiliated Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) used in a trade or business of such
corporation if such corporation continues to maintain this Plan after
the disposition with respect to a Participant who continues employment
with the corporation acquiring such assets;
(5) the date of disposition by the Employer or an Affiliated Employer
who maintains the Plan of its interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) to an entity which is not an
Affiliated Employer but only with respect to a Participant who
continues employment with such subsidiary; or
(6) the proven financial hardship of a Participant, subject to the
limitations of Section 6.11.
(d) For each Plan Year, a Participant's Deferred Compensation made
under this Plan and all other plans, contracts or arrangements of the
Employer maintaining this Plan shall not exceed, during any taxable year of
the Participant, the limitation imposed by Code Section 402(g), as in
effect at the beginning of such taxable year. If such dollar limitation is
exceeded, a Participant will be deemed to have notified the Administrator
of such excess amount which shall be distributed in a manner consistent
with Section 4.2(f). The dollar limitation shall be adjusted annually
pursuant to the method provided in Code Section 415(d) in accordance with
Regulations.
(e) In the event a Participant has received a hardship distribution
from the Participant's Elective Account pursuant to Section 6.1 l(b) or
pursuant to Regulation 1.401(k)-l(d)(2)(iv)(B) from any other plan
maintained by the Employer, then such Participant shall not be permitted to
elect to have Deferred Compensation contributed to the Plan for a period of
twelve (12) months following the receipt of the distribution. Furthermore,
the dollar limitation under Code Section 402(g) shall be reduced, with
respect to the Participant's taxable year following the taxable year in
24
which the hardship distribution was made, by the amount of such
Participant's Deferred Compensation, if any, pursuant to this Plan (and any
other plan maintained by the Employer) for the taxable year of the hardship
distribution.
(f) If a Participant's Deferred Compensation under this Plan together
with any elective deferrals (as defined in Regulation 1.402(g)-l(b)) under
another qualified cash or deferred arrangement (as described in Code
Section 401(k)), a simplified employee pension (as described in Code
Section 408(k)(6)), a simple individual retirement account plan (as
described in Code Section 408(p)), a salary reduction arrangement (within
the meaning of Code Section 3121(a)(5)(D)), a deferred compensation plan
under Code Section 457(b), or a trust described in Code Section 501(c)(18)
cumulatively exceed the limitation imposed by Code Section 402(g) (as
adjusted annually in accordance with the method provided in Code Section
415(d) pursuant to Regulations) for such Participant's taxable year, the
Participant may, not later than March 1 following the close of the
Participant's taxable year, notify the Administrator in writing of such
excess and request that the Participant's Deferred Compensation under this
Plan be reduced by an amount specified by the Participant. In such event,
the Administrator may direct the Trustee to distribute such excess amount
(and any Income allocable to such excess amount) to the Participant not
later than the first April 15th following the close of the Participant's
taxable year. Any distribution of less than the entire amount of Excess
Deferred Compensation and Income shall be treated as a pro rata
distribution of Excess Deferred Compensation and Income. The amount
distributed shall not exceed the Participant's Deferred Compensation under
the Plan for the taxable year (and any Income allocable to such excess
amount). Any distribution on or before the last day of the Participant's
taxable year must satisfy each of the following conditions:
(1) the distribution must be made after the date on which the Plan
received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution as Excess
Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
Matching contributions which relate to Excess Deferred Compensation
which is distributed pursuant to this Section 4.2(f) shall be forfeited.
(g) Notwithstanding Section 4,2(f) above, a Participant's Excess
Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 4.6(a) for the
Plan Year beginning with or within the taxable year of the Participant.
(h) At Normal Retirement Date, or such other date when the Participant
shall be entitled to receive benefits, the fair market value of the
Participant's Elective Account shall be used to provide additional benefits
to the Participant or the Participant's Beneficiary.
25
(i) Employer Elective Contributions made pursuant to this Section may
be segregated into a separate account for each Participant in a federally
insured savings account, certificate of deposit in a bank or savings and
loan association, money market certificate, or other short-term debt
security acceptable to the Trustee until such time as the allocations
pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall implement the salary
reduction elections provided for herein in accordance with the following:
(1) A Participant must make an initial salary deferral election within
a reasonable time, not to exceed thirty (30) days, after entering the
Plan pursuant to Section 3.2. If the Participant fails to make an
initial salary deferral election within such time, then such
Participant may thereafter make an election in accordance with the
rules governing modifications. The Participant shall make such an
election by entering into a written salary reduction agreement with
the Employer and filing such agreement with the Administrator. Such
election shall initially be effective beginning with the pay period
following the acceptance of the salary reduction agreement by the
Administrator, shall not have retroactive effect and shall remain in
force until revoked.
(2) A Participant may modify a prior election at any time during the
Plan Year and concurrently make a new election by filing a written
notice with the Administrator within a reasonable time before the pay
period for which such modification is to be effective. Any
modification shall not have retroactive effect and shall remain in
force until revoked.
(3) A Participant may elect to prospectively revoke the Participant's
salary reduction agreement in its entirety at any time during the Plan
Year by providing the Administrator with thirty (30) days written
notice of such revocation (or upon such shorter notice period as may
be acceptable to the Administrator), Such revocation shall become
effective as of the beginning of the first pay period coincident with
or next following the expiration of the notice period. Furthermore,
the termination of the Participant's employment, or the cessation of
participation for any reason, shall be deemed to revoke any salary
reduction agreement then in effect, effective immediately following
the close of the pay period within which such termination or cessation
occurs.
26
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
The Employer may make its contribution to the Plan for a particular Plan
Year at such time as the Employer, in its sole discretion, determines. If the
Employer makes a contribution for a particular Plan Year after the close of that
Plan Year, the Employer will designate to the Trustee the Plan Year for which
the Employer is making its contribution.
Notwithstanding anything contained herein to the contrary, Deferred
Compensation must be remitted to the Trust on the earliest day on which such
Deferred Compensation can reasonably be segregated from the Employer's general
assets, but in no event later than the 15th business day of the month following
the month in which the Participant's Deferred Compensation would otherwise have
been payable to such Participant in cash, as set forth in DOL Regulation
ss.2510.3-102(b)(l).
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS
(a) The Administrator shall establish and maintain an account in the
name of each Participant to which the Administrator shall credit as of each
Anniversary Date, or other Valuation Date, all amounts allocated to each
such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the Employer
contributions for each Plan Year. Within a reasonable period of time after
the date of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) With respect to the Employer Elective Contribution made pursuant
to Section 4.1 (a), to each Participant's Elective Account in an
amount equal to each such Participant's Deferred Compensation for the
year.
(2) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(b), to each Participant's Account in
accordance with Section 4. l(b).
(c) On or before each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date may be made available to
reinstate previously forfeited account balances of Former Participants, if
any, in accordance with Section 3.7(d), be used to satisfy any contribution
that may be required pursuant to Section 3.5 and/or 6.9, or be used to pay
any administrative expenses of the Plan. The remaining Forfeitures, if any,
shall be used to reduce the contribution of the Employer hereunder for the
Plan Year in which such Forfeitures occur.
(d) For any Top Heavy Plan Year, Non-Key Employees not otherwise
eligible to share in the allocation of contributions as provided above,
shall receive the minimum allocation provided for in Section 4.4(g) if
eligible pursuant to the provisions of Section 4.4(i).
27
(e) Notwithstanding the foregoing, Participants who do not complete
the allocation eligibility requirements specified above due to Retirement
(Early, Normal or Late), Total and Permanent Disability or death shall
share in the allocation of contributions for that Plan Year.
(f) As of each Valuation Date, before the current valuation period
allocation of Employer contributions, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund shall be allocated in
the same proportion that each Participant's and Former Participant's
nonsegregated accounts bear to the total of all Participants' and Former
Participants' nonsegregated accounts as of such date. Earnings or losses
with respect to a Participant's Directed Account shall be allocated in
accordance with Section 4,12.
Participants' transfers from other qualified plans deposited in the
general Trust Fund shall share in any earnings and losses (net appreciation
or net depreciation) of the Trust Fund in the same manner provided above.
Each segregated account maintained on behalf of a Participant shall be
credited or charged with its separate earnings and losses.
(g) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the
Employer contributions allocated to the Participant's Combined Account of
each Non-Key Employee shall be equal to at least three percent (3%) of such
Non-Key Employee's "415 Compensation" (reduced by contributions and
forfeitures, if any, allocated to each Non-Key Employee in any defined
contribution plan included with this Plan in a Required Aggregation Group).
However, if (1) the sum of the Employer contributions allocated to the
Participant's Combined Account of each Key Employee for such Top Heavy Plan
Year is less than three percent (3%) of each Key Employee's "415
Compensation" and (2) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet the requirements
of Code Section 401(a)(4) or 410, the sum of the Employer contributions
allocated to the Participant's Combined Account of each Non-Key Employee
shall be equal to the largest percentage allocated to the Participant's
Combined Account of any Key Employee, However, in determining whether a
Non-Key Employee has received the required minimum allocation, such Non-Key
Employee's Deferred Compensation and matching contributions needed to
satisfy the "Actual Contribution Percentage" tests pursuant to Section
4.7(a) shall not be taken into account.
However, no such minimum allocation shall be required in this Plan for
any Non-Key Employee who participates in another defined contribution plan
subject to Code Section 412 included with this Plan in a Required
Aggregation Group.
(h) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer
contributions allocated on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
28
(i) For any Top Heavy Plan Year, the minimum allocations set forth
above shall be allocated to the Participant's Combined Account of all
Non-Key Employees who are Participants and who are employed by the Employer
on the last day of the Plan Year, including Non-Key Employees who have (1)
failed to complete a Year of Service; and (2) declined to make mandatory
contributions (if required) or, in the case of a cash or deferred
arrangement, elective contributions to the Plan.
(j) For the purposes of this Section, "415 Compensation" in excess of
$150,000 (or such other amount provided in the Code) shall be disregarded.
Such amount shall be adjusted for increases in the cost of living in
accordance with Code Section 401(a)(17)(B), except that the dollar increase
in effect on January 1 of any calendar year shall be effective for the Plan
Year beginning with or within such calendar year. If "415 Compensation" for
any prior determination period is taken into account in determining a
Participant's minimum benefit for the current Plan Year, the "415
Compensation" for such determination period is subject to the applicable
annual "415 Compensation" limit in effect for that prior period. For this
purpose, in determining the minimum benefit in Plan Years beginning on or
after January 1, 1989, the annual "415 Compensation" limit in effect for
determination periods beginning before that date is $200,000 (or such other
amount as adjusted for increases in the cost of living in accordance with
Code Section 415(d) for determination periods beginning on or after January
1, 1989, and in accordance with Code Section 401(a)(17)(B) for
determination periods beginning on or after January 1, 1994). For
determination periods beginning prior to January 1, 1989, the $200,000
limit shall apply only for Top Heavy Plan Years and shall not be adjusted.
For any short Plan Year the "415 Compensation" limit shall be an amount
equal to the "415 Compensation" limit for the calendar year in which the
Plan Year begins multiplied by the ratio obtained by dividing the number of
full months in the short Plan Year by twelve (12).
(k) Notwithstanding anything herein to the contrary, Participants who
terminated employment for any reason during the Plan Year shall share in
the salary reduction contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
(1) Notwithstanding anything in this Section to the contrary, all
information necessary to properly reflect a given transaction may not be
available until after the date specified herein for processing such
transaction, in which case the transaction will be reflected when such
information is received and processed. Subject to express limits that may
be imposed under the Code, the processing of any contribution, distribution
or other transaction may be delayed for any legitimate business reason
(including, but not limited to, failure of systems or computer programs,
failure of the means of the transmission of data, force majeure, the
failure of a service provider to timely receive values or prices, and the
correction for errors or omissions or the errors or omissions of any
service provider). The processing date of a transaction will be binding for
all purposes of the Plan.
29
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation; For each Plan Year, the annual
allocation derived from Employer Elective Contributions to a Highly
Compensated Participant's Elective Account shall satisfy one of the
following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group (for the
preceding Plan Year if the prior year testing method is used to
calculate the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group) multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral Percentage"
for the Non-Highly Compensated Participant group (for the preceding
Plan Year if the prior year testing method is used to calculate the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participant group) shall not be more than two percentage points.
Additionally, the "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not exceed the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group (for the
preceding Plan Year if the prior year testing method is used to
calculate the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group) multiplied by 2. The provisions of Code
Section 401(k)(3) and Regulation 1,401(k)-l(b) are incorporated herein
by reference.
However, in order to prevent the multiple use of the alternative
method described in (2) above and in Code Section 401(m)(9)(A), any
Highly Compensated Participant eligible to make elective deferrals
pursuant to Section 4.2 and to make Employee contributions or to
receive matching contributions under this Plan or under any other plan
maintained by the Employer or an Affiliated Employer shall have a
combination of such Participant's Elective Contributions and Employer
matching contributions reduced pursuant to Section 4.6(a) and
Regulation 1.401(m)-2, the provisions of which are incorporated herein
by reference.
(b) For the purposes of this Section "Actual Deferral Percentage"
means, with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group for a Plan Year, the average of
the ratios, calculated separately for each Participant in such group, of
the amount of Employer Elective Contributions allocated to each
Participant's Elective Account for such Plan Year, to such Participant's
"414(s) Compensation" for such Plan Year. The actual deferral ratio for
each Participant and the "Actual Deferral Percentage" for each group shall
be calculated to the nearest one-hundredth of one percent. Employer
Elective Contributions allocated to each Non-Highly Compensated
30
Participant's Elective Account shall be reduced by Excess Deferred
Compensation to the extent such excess amounts are made under this Plan or
any other plan maintained by the Employer.
Notwithstanding the above, if the prior year test method is used to
calculate the "Actual Deferral Percentage" for the Non-Highly Compensated
Participant group for the first Plan Year of this amendment and
restatement, the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group for the preceding Plan Year shall be
calculated pursuant to the provisions of the Plan then in effect.
(c) For the purposes of Sections 4.5(a) and 4.6, a Highly Compensated
Participant and a Non-Highly Compensated Participant shall include any
Employee eligible to make a deferral election pursuant to Section 4.2,
whether or not such deferral election was made or suspended pursuant to
Section 4.2.
Notwithstanding the above, if the prior year testing method is used to
calculate the "Actual Deferral Percentage" for the Non-Highly Compensated
Participant group for the first Plan Year of this amendment and
restatement, for purposes of Section 4.5(a) and 4.6, a Non-Highly
Compensated Participant shall include any such Employee eligible to make a
deferral election, whether or not such deferral election was made or
suspended, pursuant to the provisions of the Plan in effect for the
preceding Plan Year.
(d) For the purposes of this Section and Code Sections 401 (a)(4),
410(b) and 401 (k), if two or more plans which include cash or deferred
arrangements are considered one plan for the purposes of Code Section
401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)), the cash or
deferred arrangements included in such plans shall be treated as one
arrangement. In addition, two or more cash or deferred arrangements may be
considered as a single arrangement for purposes of determining whether or
not such arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k).
In such a case, the cash or deferred arrangements included in such plans
and the plans including such arrangements shall be treated as one
arrangement and as one plan for purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k). Any adjustment to the Non-Highly Compensated
Participant actual deferral ratio for the prior year shall be made in
accordance with Internal Revenue Service Notice 98-1 and any superseding
guidance. Plans may be aggregated under this paragraph (d) only if they
have the same plan year. Notwithstanding the above, if two or more plans
which include cash or deferred arrangements are permissively aggregated
under Regulation 1.410(b)-7(d), all plans permissively aggregated must use
either the current year testing method or the prior year testing method for
the testing year.
Notwithstanding the above, an employee stock ownership plan described
in Code Section 4975(e)(7) or 409 may not be combined with this Plan for
purposes of determining whether the employee stock ownership plan or this
Plan satisfies this Section and Code Sections 401(a)(4), 410(b) and 401
(k).
(e) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two or more cash or deferred
arrangements (other than a cash or deferred arrangement which is part of an
31
employee stock ownership plan as defined in Code Section 4975(e)(7) or 409)
of the Employer or an Affiliated Employer, all such cash or deferred
arrangements shall be treated as one cash or deferred arrangement for the
purpose of determining the actual deferral ratio with respect to such
Highly Compensated Participant. However, if the cash or deferred
arrangements have different plan years, this paragraph shall be applied by
treating all cash or deferred arrangements ending with or within the same
calendar year as a single arrangement,
(f) For the purpose of this Section, when calculating the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant group, the
current year testing method shall be used. Any change from the current year
testing method to the prior year testing method shall be made pursuant to
Internal Revenue Service Notice 98-1, Section VII (or superseding
guidance), the provisions of which are incorporated herein by reference.
(g) Notwithstanding anything in this Section to the contrary, the
provisions of this Section and Section 4.6 may be applied separately (or
will be applied separately to the extent required by Regulations) to each
plan within the meaning of Regulation 1.401(k)-l(g)(l 1). Furthermore, the
provisions of Code Section 401(k)(3)(F) may be used to exclude from
consideration all Non-Highly Compensated Employees who have not satisfied
the minimum age and service requirements of Code Section 410(a)(l)(A).
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event (or if it is anticipated) that the initial allocations of the
Employer Elective Contributions made pursuant to Section 4.4 do (or might) not
satisfy one of the tests set forth in Section 4.5(a), the Administrator shall
adjust Excess Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, but in no event later than the close of the
following Plan Year, the Highly Compensated Participant having the largest
dollar amount of Elective Contributions shall have a portion of such
Participant's Elective Contributions distributed until the total amount of
Excess Contributions has been distributed, or until the amount of such
Participant's Elective Contributions equals the Elective Contributions of
the Highly Compensated Participant having the second largest dollar amount
of Elective Contributions. This process shall continue until the total
amount of Excess Contributions has been distributed. In determining the
amount of Excess Contributions to be distributed with respect to an
affected Highly Compensated Participant as determined herein, such amount
shall be reduced pursuant to Section 4.2(f) by any Excess Deferred
Compensation previously distributed to such affected Highly Compensated
Participant for such Participant's taxable year ending with or within such
Plan Year.
32
(1) With respect to the distribution of Excess Contributions pursuant
to (a) above, such distribution:
(i) may be postponed but not later than the close of the Plan
Year following the Plan Year to which they are allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as a distribution of
Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of Excess
Contributions and Income.
(3) Matching contributions which relate to Excess Contributions shall
be forfeited unless the related matching contribution is distributed
as an Excess Aggregate Contribution pursuant to Section 4.8.
(b) Notwithstanding the above, within twelve (12) months after the end
of the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution in accordance with one of the following provisions which
contribution shall be allocated to the Participant's Elective Account of
each Non-Highly Compensated Participant eligible to share in the allocation
in accordance with such provision. The Employer shall provide the
Administrator with written notification of the amount of the contribution
being made and for which provision it is being made pursuant to:
(1) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 4.5(a). Such contribution shall be allocated in
the same proportion that each Non-Highly Compensated Participant's
414(s) Compensation for the year (or prior year if the prior year
testing method is being used) bears to the total 414(s) Compensation
of all Non-Highly Compensated Participants for such year.
(2) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 4.5(a). Such contribution shall be allocated in
the same proportion that each Non-Highly Compensated Participant
electing salary reductions pursuant to Section 4.2 in the same
proportion that each such Non-Highly Compensated Participant's
Deferred Compensation for the year (or at the end of the prior Plan
Year if the prior year testing method is being used) bears to the
total Deferred Compensation of all such Non-Highly Compensated
Participants for such year.
33
(3) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 4.5(a). Such contribution shall be allocated in
equal amounts (per capita).
(4) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants electing salary
reductions pursuant to Section 4.2 in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth
in Section 4.5(a). Such contribution shall be allocated for the year
(or at the end of the prior Plan Year if the prior year testing method
is used) to each Non-Highly Compensated Participant electing salary
reductions pursuant to Section 4.2 in equal amounts (per capita).
(5) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 4.5(a). Such contribution shall be allocated to
the Non-Highly Compensated Participant having the lowest 414(s)
Compensation, until one of the tests set forth in Section 4,5(a) is
satisfied (or is anticipated to be satisfied), or until such
Non-Highly Compensated Participant has received the maximum "annual
addition" pursuant to Section 4.9. This process shall continue until
one of the tests set forth in Section 4.5(a) is satisfied (or is
anticipated to be satisfied).
Notwithstanding the above, at the Employer's discretion, Non-Highly
Compensated Participants who are not employed at the end of the Plan Year
(or at the end of the prior Plan Year if the prior year testing method is
being used) shall not be eligible to receive a special Qualified
Non-Elective Contribution and shall be disregarded.
Notwithstanding the above, if the testing method changes from the
current year testing method to the prior year testing method, then for
purposes of preventing the double counting of Qualified Non-Elective
Contributions for the first testing year for which the change is effective,
any special Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants used to satisfy the "Actual Deferral Percentage"
or "Actual Contribution Percentage" test under the current year testing
method for the prior year testing year shall be disregarded.
(c) If during a Plan Year, it is projected that the aggregate amount
of Elective Contributions to be allocated to all Highly Compensated
Participants under this Plan would cause the Plan to fail the tests set
forth in Section 4.5(a), then the Administrator may automatically reduce
the deferral amount of affected Highly Compensated Participants, beginning
with the Highly Compensated Participant who has the highest deferral ratio
until it is anticipated the Plan will pass the tests or until the actual
deferral ratio equals the actual deferral ratio of the Highly Compensated
34
Participant having the next highest actual deferral ratio. This process may
continue until it is anticipated that the Plan will satisfy one of the
tests set forth in Section 4.5(a). Alternatively, the Employer may specify
a maximum percentage of Compensation that may be deferred.
(d) Any Excess Contributions (and Income) which are distributed on or
after 2 1/2 months after the end of the Plan Year shall be subject to the
ten percent (10%) Employer excise tax imposed by Code Section 4979.
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the Highly Compensated
Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group); or
(2) the lesser of 200 percent of such percentage for the Non-Highly
Compensated Participant group (for the preceding Plan Year if the
prior year testing method is used to calculate the "Actual
Contribution Percentage" for the Non-Highly Compensated Participant
group), or such percentage for the Non-Highly Compensated Participant
group (for the preceding Plan Year if the prior year testing method is
used to calculate the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group) plus 2 percentage points.
However, to prevent the multiple use of the alternative method
described in this paragraph and Code Section 401(m)(9)(A), any Highly
Compensated Participant eligible to make elective deferrals pursuant
to Section 4.2 or any other cash or deferred arrangement maintained by
the Employer or an Affiliated Employer and to make Employee
contributions or to receive matching contributions under this Plan or
under any plan maintained by the Employer or an Affiliated Employer
shall have a combination of Elective Contributions and Employer
matching contributions reduced pursuant to Regulation 1.401(m)-2 and
Section 4.8(a). The provisions of Code Section 401(m) and Regulations
1.40 l(m)-l(b) and 1.401(m)-2 are incorporated herein by reference.
(b) For the purposes of this Section and Section 4.8, "Actual
Contribution Percentage" for a Plan Year means, with respect to the Highly
Compensated Participant group and Non-Highly Compensated Participant group
(for the preceding Plan Year if the prior year testing method is used to
calculate the "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group), the average of the ratios (calculated
separately for each Participant in each group and rounded to the nearest
one-hundredth of one percent) of:
(1) the sum of Employer matching contributions made pursuant to
Section 4.1(b)on behalf of each such Participant for such Plan Year;
35
(2) the Participant's "414(s) Compensation" for such Plan Year.
Notwithstanding the above, if the prior year testing method is used to
calculate the "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group for the first Plan Year of this amendment and
restatement, for purposes of Section 4.7(a), the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group for the
preceding Plan Year shall be determined pursuant to the provisions of the
Plan then in effect.
(c) For purposes of determining the "Actual Contribution Percentage,"
only Employer matching contributions contributed to the Plan prior to the
end of the succeeding Plan Year shall be considered. In addition, the
Administrator may elect to take into account, with respect to Employees
eligible to have Employer matching contributions pursuant to Section 4.1(b)
allocated to their accounts, elective deferrals (as defined in Regulation
1.402(g)-l(b)) and qualified non-elective contributions (as defined in Code
Section 401(m)(4)(C)) contributed to any plan maintained by the Employer.
Such elective deferrals and qualified non-elective contributions shall be
treated as Employer matching contributions subject to Regulation
1.401(m)-l(b)(5) which is incorporated herein by reference. However, the
Plan Year must be the same as the plan year of the plan to which the
elective deferrals and the qualified non-elective contributions are made.
(d) For purposes of this Section and Code Sections 401 (a)(4), 410(b)
and 401(m), if two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made are treated as one
plan for purposes of Code Sections 401(a)(4) or 410(b) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii)), such plans
shall be treated as one plan. In addition, two or more plans of the
Employer to which matching contributions, Employee contributions, or both,
are made may be considered as a single plan for purposes of determining
whether or not such plans satisfy Code Sections 401(a)(4), 410(b) and
401(m). In such a case, the aggregated plans must satisfy this Section and
Code Sections 401(a)(4), 410(b) and 401 (m) as though such aggregated plans
were a single plan. Any adjustment to the Non-Highly Compensated
Participant actual contribution ratio for the prior year shall be made in
accordance with Internal Revenue Service Notice 98-1 and any superseding
guidance. Plans may be aggregated under this paragraph (d) only if they
have the same plan year. Notwithstanding the above, if two or more plans
which include cash or deferred arrangements are permissively aggregated
under Regulation 1.410(b)-7(d), all plans permissively aggregated must use
either the current year testing method or the prior year testing method for
the testing year.
Notwithstanding the above, an employee stock ownership plan described
in Code Section 4975(e)(7) or 409 may not be aggregated with this Plan for
purposes of determining whether the employee stock ownership plan or this
Plan satisfies this Section and Code Sections 401(a)(4), 410(b) and 401(m).
(e) If a Highly Compensated Participant is a Participant under two or
more plans (other than an employee stock ownership plan as defined in Code
Section 4975(e)(7) or 409) which are maintained by the Employer or an
36
Affiliated Employer to which matching contributions, Employee
contributions, or both, are made, all such contributions on behalf of such
Highly Compensated Participant shall be aggregated for purposes of
determining such Highly Compensated Participant's actual contribution
ratio. However, if the plans have different plan years, this paragraph
shall be applied by treating all plans ending with or within the same
calendar year as a single plan.
(f) For purposes of Sections 4.7(a) and 4.8, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any
Employee eligible to have Employer matching contributions (whether or not a
deferral election was made or suspended) allocated to the Participant's
account for the Plan Year.
Notwithstanding the above, if the prior year testing method is used to
calculate the "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group for the first Plan Year of this amendment and
restatement, for the purposes of Section 4.7(a), a Non-Highly Compensated
Participant shall include any such Employee eligible to have Employer
matching contributions (whether or not a deferral election was made or
suspended) allocated to the Participant's account for the preceding Plan
Year pursuant to the provisions of the Plan then in effect.
(g) For the purpose of this Section, when calculating the "Actual
Contribution Percentage" for the Non-Highly Compensated Participant group,
the current year testing method shall be used. Any change from the current
year testing method to the prior year testing method shall be made pursuant
to Internal Revenue Service Notice 98-1, Section VII (or superseding
guidance), the provisions of which are incorporated herein by reference.
(h) Notwithstanding anything in this Section to the contrary, the
provisions of this Section and Section 4.8 may be applied separately (or
will be applied separately to the extent required by Regulations) to each
plan within the meaning of Regulation 1.401(k)-l(g)(l 1). Furthermore, the
provisions of Code Section 401(k)(3)(F) may be used to exclude from
consideration all Non-Highly Compensated Employees who have not satisfied
the minimum age and service requirements of Code Section 410(a)(l)(A).
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event (or if it is anticipated) that the "Actual
Contribution Percentage" for the Highly Compensated Participant group
exceeds (or might exceed) the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group pursuant to Section 4.7(a), the
Administrator (on or before the fifteenth day of the third month following
the end of the Plan Year, but in no event later than the close of the
following Plan Year) shall direct the Trustee to distribute to the Highly
Compensated Participant having the largest dollar amount of contributions
determined pursuant to Section 4.7(b)(l), the Vested portion of such
contributions (and Income allocable to such contributions) and, if
37
forfeitable, forfeit such non-Vested contributions attributable to Employer
matching contributions (and Income allocable to such forfeitures) until the
total amount of Excess Aggregate Contributions has been distributed, or
until the Participant's remaining amount equals the amount of contributions
determined pursuant to Section 4.7(b)(l) of the Highly Compensated
Participant having the second largest dollar amount of contributions. This
process shall continue until the total amount of Excess Aggregate
Contributions has been distributed.
If the correction of Excess Aggregate Contributions attributable to
Employer matching contributions is not in proportion to the Vested and
non-Vested portion of such contributions, then the Vested portion of the
Participant's Account attributable to Employer matching contributions after
the correction shall be subject to Section 6,5(j).
(b) Any distribution and/or forfeiture of less than the entire amount
of Excess Aggregate Contributions (and Income) shall be treated as a pro
rata distribution and/or forfeiture of Excess Aggregate Contributions and
Income. Distribution of Excess Aggregate Contributions shall be designated
by the Employer as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall be treated in
accordance with Section 4.4.
(c) Excess Aggregate Contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes of
Code Sections 404 and 415 even if distributed from the Plan.
Forfeited matching contributions that are reallocated to Participants'
Accounts for the Plan Year in which the forfeiture occurs shall be treated
as an "annual addition" pursuant to Section 4.9(b) for the Participants to
whose Accounts they are reallocated and for the Participants from whose
Accounts they are forfeited.
(d) The determination of the amount of Excess Aggregate Contributions
with respect to any Plan Year shall be made after first determining the
Excess Contributions, if any, to be treated as after-tax voluntary Employee
contributions due to recharacterization for the plan year of any other
qualified cash or deferred arrangement (as defined in Code Section 401(k))
maintained by the Employer that ends with or within the Plan Year or which
are treated as after-tax voluntary Employee contributions due to
recharacterization pursuant to Section 4.6(a).
(e) If during a Plan Year the projected aggregate amount of Employer
matching contributions to be allocated to all Highly Compensated
Participants under this Plan would, by virtue of the tests set forth in
Section 4.7(a), cause the Plan to fail such tests, then the Administrator
may automatically reduce proportionately or in the order provided in
Section 4.8(a) each affected Highly Compensated Participant's projected
share of such contributions by an amount necessary to satisfy one of the
tests set forth in Section 4.7(a).
38
(f) Notwithstanding the above, within twelve (12) months after the end
of the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution in accordance with one of the following provisions which
contribution shall be allocated to the Participant's Account of each
Non-Highly Compensated eligible to share in the allocation in accordance
with such provision. The Employer shall provide the Administrator with
written notification of the amount of the contribution being made and for
which provision it is being made pursuant to:
(1) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated in the same proportion that each Non-Highly
Compensated Participant's 414(s) Compensation for the year (or
prior year if the prior year testing method is being used) bears
to the total 414(s) Compensation of all Non-Highly Compensated
Participants for such year.
(2) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated in the same proportion that each Non-Highly
Compensated Participant electing salary reductions pursuant to
Section 4.2 in the same proportion that each such Non-Highly
Compensated Participant's Deferred Compensation for the year (or
at the end of the prior Plan Year if the prior year testing
method is being used) bears to the total Deferred Compensation of
all such Non-Highly Compensated Participants for such year.
(3) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated in equal amounts (per capita),
(4) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants electing salary
reductions pursuant to Section 4.2 in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the
tests set forth in Section 4.7. Such contribution shall be
allocated for the year (or at the end of the prior Plan Year if
the prior year testing method is used) to each Non-Highly
Compensated Participant electing salary reductions pursuant to
Section 4,2 in equal amounts (per capita).
(5) A special Qualified Non-Elective Contribution may be made on
behalf of Non-Highly Compensated Participants in an amount
sufficient to satisfy (or to prevent an anticipated failure of)
one of the tests set forth in Section 4.7. Such contribution
shall be allocated to the Non-Highly Compensated Participant
39
having the lowest 414(s) Compensation, until one of the tests set
forth in Section 4.7 is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has
received the maximum "annual addition" pursuant to Section 4.9.
This process shall continue until one of the tests set forth in
Section 4.7 is satisfied (or is anticipated to be satisfied).
Notwithstanding the above, at the Employer's discretion, Non-Highly
Compensated Participants who are not employed at the end of the Plan Year
(or at the end of the prior Plan Year if the prior year testing method is
being used) shall not be eligible to receive a special Qualified
Non-Elective Contribution and shall be disregarded.
Notwithstanding the above, if the testing method changes from the
current year testing method to the prior year testing method, then for
purposes of preventing the double counting of Qualified Non-Elective
Contributions for the first testing year for which the change is effective,
any special Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants used to satisfy the "Actual Deferral Percentage"
or "Actual Contribution Percentage" test under the current year testing
method for the prior year testing year shall be disregarded.
(g) Any Excess Aggregate Contributions (and Income) which are
distributed on or after 2 1/2 months after the end of the Plan Year shall
be subject to the ten percent (10%) Employer excise tax imposed by Code
Section 4979.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall equal
the lesser of: (1) S30,000 adjusted annually as provided in Code Section
415(d) pursuant to the Regulations, or (2) twenty-five percent (25%) of the
Participant's "415 Compensation" for such "limitation year." If the
Employer contribution that would otherwise be contributed or allocated to
the Participant's accounts would cause the "annual additions" for the
"limitation year" to exceed the maximum "annual additions," the amount
contributed or allocated will be reduced so that the "annual additions" for
the "limitation year" will equal the maximum "annual additions," and any
amount in excess of the maximum "annual additions," which would have been
allocated to such Participant may be allocated to other Participants. For
any short "limitation year," the dollar limitation in (1) above shall be
reduced by a fraction, the numerator of which is the number of full months
in the short "limitation year" and the denominator of which is twelve (12).
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts for
any "limitation year" of (1) Employer contributions, (2) Employee
contributions, (3) forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code Section
415(1)(2) which is part of a pension or annuity plan maintained by the
Employer and (5) amounts derived from contributions paid or accrued after
40
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare benefit plan (as defined in Code Section 419(e)) maintained by the
Employer. Except, however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
"annual addition," or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(1)(1).
(c) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an "annual
addition." In addition, the following are not Employee contributions for
the purposes of Section 4.9(b)(2): (1) rollover contributions (as defined
in Code Sections 402(e)(6), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section 41
l(a)(7)(B) (cash-outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 41 l(a)(3)(D) (mandatory contributions);
and (5) Employee contributions to a simplified employee pension excludable
from gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section 415, the
"limitation year" shall be the Plan Year,
(e) For the purpose of this Section, all qualified defined
contribution plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
(f) For the purpose of this Section, if the Employer is a member of a
controlled group of corporations, trades or businesses under common control
(as defined by Code Section 1563(a) or Code Section 414(b) and (c) as
modified by Code Section 415(h)), is a member of an affiliated service
group (as defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under Code
Section 414(o), all Employees of such Employers shall be considered to be
employed by a single Employer.
(g) If this is a plan described in Code Section 413(c) (other than a
plan described in Code Section 413(f)), then all of the benefits or
contributions attributable to a Participant from all of the Employers
maintaining this Plan shall be taken into account in applying the limits of
this Section with respect to such Participant. Furthermore, in applying the
limitations of this Section with respect to such a Participant, the total
"415 Compensation" received by the Participant from all of the Employers
maintaining the Plan shall be taken into account.
(h)( 1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan shall
equal the maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited to such Participant's accounts
during the "limitation year."
41
(2) If a Participant participates in both a defined contribution plan
subject to Code Section 412 and a defined contribution plan not
subject to Code Section 412 maintained by the Employer which have the
same Anniversary Date, "annual additions" will be credited to the
Participant's accounts under the defined contribution plan subject to
Code Section 412 prior to crediting "annual additions" to the
Participant's accounts under the defined contribution plan not subject
to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, the maximum "annual
additions" under this Plan shall equal the product of (A) the maximum
"annual additions" for the "limitation year" minus any "annual
additions" previously credited under subparagraphs (1) or (2) above,
multiplied by (B) a fraction (i) the numerator of which is the "annual
additions" which would be credited to such Participant's accounts
under this Plan without regard to the limitations of Code Section 415
and (ii) the denominator of which is such "annual additions" for all
plans described in this subparagraph.
(i) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed in
this Section shall at all times comply with the provisions of Code Section
415 and the Regulations thereunder.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3)) that may
be made with respect to any Participant under the limits of Section 4.9 or
other facts and circumstances to which Regulation 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would cause the maximum
"annual additions" to be exceeded for any Participant, the "excess amount"
will be disposed of in one of the following manners, as uniformly
determined by the Administrator for all Participants similarly situated.
(1) Any matched Deferred Compensation and Employer matching
contributions which relate to such Deferred Compensation will be
proportionately reduced to the extent they would reduce the "excess
amount." The Deferred Compensation (and any gains attributable to such
Deferred Compensation) will be distributed to the Participant and the
Employer matching contributions (and any gains attributable to such
matching contributions) will be used to reduce the Employer
contribution in the next "limitation year";
(2) If, after the application of subparagraph (1) above, an "excess
amount" still exists, and the Participant is covered by the Plan at
the end of the "limitation year," the "excess amount" will be used to
reduce the Employer contribution for such Participant in the next
"limitation year," and each succeeding "limitation year" if necessary;
42
(3) If, after the application of subparagraphs (1) and (2) above, an
"excess amount" still exists, and the Participant is not covered by
the Plan at the end of the "limitation year," the "excess amount" will
be held unallocated in a "Section 415 suspense account." The "Section
415 suspense account" will be applied to reduce future Employer
contributions for all remaining Participants in the next "limitation
year," and each succeeding "limitation year" if necessary;
(4) If a "Section 415 suspense account" is in existence at any time
during the "limitation year" pursuant to this Section, it will not
participate in the allocation of investment gains and losses of the
Trust Fund. If a "Section 415 suspense account" is in existence at any
time during a particular "limitation year," all amounts in the
"Section 415 suspense account" must be allocated and reallocated to
Participants' accounts before any Employer contributions or any
Employee contributions may be made to the Plan for that "limitation
year," Except as provided in (1) above, "excess amounts" may not be
distributed to Participants or Former Participants.
(b) For purposes of this Article, "excess amount" for any Participant
for a "limitation year" shall mean the excess, if any, of (1) the "annual
additions" which would be credited to the Participant's account under the
terms of the Plan without regard to the limitations of Code Section 415
over (2) the maximum "annual additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense account" shall
mean an unallocated account equal to the sum of "excess amounts" for all
Participants in the Plan during the "limitation year."
4.11 ROLLOVERS AND PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be transferred
(within the meaning of Code Section 414(1)) to this Plan from other tax
qualified plans under Code Section 401 (a) by Eligible Employees, provided
the trust from which such funds are transferred permits the transfer to be
made and the transfer will not jeopardize the tax exempt status of the Plan
or Trust or create adverse tax consequences for the Employer. Prior to
accepting any transfers to which this Section applies, the Administrator
may require an opinion of counsel that the amounts to be transferred meet
the requirements of this Section. The amounts transferred shall be set up
in a separate account herein referred to as a Participant's
Transfer/Rollover Account. Furthermore, for vesting purposes, the
Participant's portion of the Participant's Transfer/Rollover Account
attributable to any transfer shall be subject to Section 6.4(b).
Except as permitted by Regulations (including Regulation 1.411 (d)-4),
amounts attributable to elective contributions (as defined in Regulation
1.401(k)-l(g)(3)), including amounts treated as elective contributions,
which are transferred from another qualified plan in a plan-to-plan
transfer (other than a direct rollover) shall be subject to the
distribution limitations provided for in Regulation 1.401(k)-l(d).
43
(b) With the consent of the Administrator, the Plan may accept a
"rollover" by Eligible Employees, provided the "rollover" will not
jeopardize the tax exempt status of the Plan or create adverse tax
consequences for the Employer. Prior to accepting any "rollovers" to which
this Section applies, the Administrator may require the Employee to
establish (by providing opinion of counsel or otherwise) that the amounts
to be rolled over to this Plan meet the requirements of this Section. The
amounts rolled over shall be set up in a separate account herein referred
to as a "Participant's Transfer/Rollover Account." Such account shall be
fully Vested at all times and shall not be subject to Forfeiture for any
reason.
For purposes of this Section, the term "qualified plan" shall mean any
tax qualified plan under Code Section 401 (a), or, any other plans from
which distributions are eligible to be rolled over into this Plan pursuant
to the Code. The term "rollover" means: (i) amounts transferred to this
Plan directly from another qualified plan; (ii) distributions received by
an Employee from other "qualified plans" which are eligible for tax-free
rollover to a "qualified plan" and which are transferred by the Employee to
this Plan within sixty (60) days following receipt thereof; (iii) amounts
transferred to this Plan from a conduit individual retirement account
provided that the conduit individual retirement account has no assets other
than assets which (A) were previously distributed to the Employee by
another "qualified plan," (B) were eligible for tax-free rollover to a
"qualified plan" and (C) were deposited in such conduit individual
retirement account within sixty (60) days of receipt thereof; (iv) amounts
distributed to the Employee from a conduit individual retirement account
meeting the requirements of clause (iii) above, and transferred by the
Employee to this Plan within sixty (60) days of receipt thereof from such
conduit individual retirement account; and (v) any other amounts which are
eligible to be rolled over to this Plan pursuant to the Code. (
c) Amounts in a Participant's Transfer/Rollover Account shall be held
by the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in paragraph (d) of this Section. The Trustee shall have
no duty or responsibility to inquire as to the propriety of the amount,
value or type of assets transferred, nor to conduct any due diligence with
respect to such assets; provided, however, that such assets are otherwise
eligible to be held by the Trustee under the terms of this Plan.
(d) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute all or a portion of the amount credited to
the Participant's Transfer/Rollover Account. Any distributions of amounts
held in a Participant's Transfer/Rollover Account shall be made in a manner
which is consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent requirements of Code
Sections 417 and 411(a)(11) and the
44
Regulations thereunder. Furthermore, such amounts shall be considered as
part of a Participant's benefit in determining whether an involuntary
cash-out of benefits may be made without Participant consent.
(e) The Administrator may direct that Employee transfers and rollovers
made after a Valuation Date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan have
been made, at which time they may remain segregated or be invested as part
of the general Trust Fund or be directed by the Participant pursuant to
Section 4.12.
(f) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction having
the effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 41 l(d)(6) protected
benefit" as described in Section 7.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) Participants may, subject to a procedure established by the
Administrator (the Participant Direction Procedures) and applied in a
uniform nondiscriminatory manner, direct the Trustee, in writing (or in
such other form which is acceptable to the Trustee), to invest all of their
accounts in specific assets, specific funds or other investments permitted
under the Plan and the Participant Direction Procedures. That portion of
the interest of any Participant so directing will thereupon be considered a
Participant's Directed Account.
(b) As of each Valuation Date, all Participant Directed Accounts shall
be charged or credited with the net earnings, gains, losses and expenses as
well as any appreciation or depreciation in the market value using publicly
listed fair market values when available or appropriate as follows:
(1) to the extent that the assets in a Participant's Directed Account
are accounted for as pooled assets or investments, the allocation of
earnings, gains and losses of each Participant's Directed Account
shall be based upon the total amount of funds so invested in a manner
proportionate to the Participant's share of such pooled investment;
and
(2) to the extent that the assets in the Participant's Directed
Account are accounted for as segregated assets, the allocation of
earnings, gains and losses from such assets shall be made on a
separate and distinct basis.
(c) Investment directions will be processed as soon as
administratively practicable after proper investment directions are
received from the Participant. No guarantee is made by the Plan, Employer,
Administrator or Trustee that investment directions will be processed on a
daily basis, and no guarantee is made in any respect regarding the
processing time of an investment direction. Notwithstanding any other
provision of the Plan, the Employer, Administrator or Trustee reserves the
right to not value an investment option on any given Valuation Date for any
reason deemed appropriate by the Employer, Administrator or Trustee.
Furthermore, the processing of any investment
45
transaction may be delayed for any legitimate business reason (including,
but not limited to, failure of systems or computer programs, failure of the
means of the transmission of data, force majeure, the failure of a service
provider to timely receive values or prices, and correction for errors or
omissions or the errors or omissions of any service provider). The
processing date of a transaction will be binding for all purposes of the
Plan and considered the applicable Valuation Date for an investment
transaction.
(d) The Participant Direction Procedures shall provide an explanation
of the circumstances under which Participants and their Beneficiaries may
give investment instructions, including, but need not be limited to, the
following:
(1) the conveyance of instructions by the Participants and their
Beneficiaries to invest Participant Directed Accounts in Directed
Investment Options;
(2) the name, address and phone number of the Fiduciary (and, if
applicable, the person or persons designated by the Fiduciary to act
on its behalf) responsible for providing information to the
Participant or a Beneficiary upon request relating to the Directed
Investment Options;
(3) applicable restrictions on transfers to and from any Designated
Investment Alternative;
(4) any restrictions on the exercise of voting, tender and similar
rights related to a Directed Investment Option by the Participants or
their Beneficiaries;
(5) a description of any transaction fees and expenses which affect
the balances in Participant Directed Accounts in connection with the
purchase or sale of Directed Investment Options; and
(6) general procedures for the dissemination of investment and other
information relating to the Designated Investment Alternatives as
deemed necessary or appropriate, including but not limited to a
description of the following:
(i) the investment vehicles available under the Plan, including
specific information regarding any Designated Investment
Alternative;
(ii) any designated Investment Managers; and
(iii) a description of the additional information which may be
obtained upon request from the Fiduciary designated to provide
such information.
(e) Any information regarding investments available under the Plan, to
the extent not required to be described in the Participant Direction
Procedures,
46
may be provided to the Participant in one or more written documents (or in
any other form including, but not limited to, electronic media) which are
separate from the Participant Direction Procedures and are not thereby
incorporated by reference into this Plan.
(f) The Administrator may, in its discretion, include in or exclude by
amendment or other action from the Participant Direction Procedures such
instructions, guidelines or policies as it deems necessary or appropriate
to ensure proper administration of the Plan, and may interpret the same
accordingly,
4.13 QUALIFIED MILITARY SERVICE
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service will be provided in accordance with Code Section 414(u).
4.14 2005 VOLUNTARY COMPLIANCE
As to any person that received a distribution upon the termination of the
Industrial Data Systems, Inc. 401(k) Profit Sharing Plan, is actively employed
by the Employer or Affiliated Employer on the date that the Internal Revenue
Service approves the voluntary compliance filing made pursuant to the terms of
Revenue Procedure 2003-44 on June 3, 2005, and who elects to repay the
distribution received upon such termination, an Account will be established for
such repayment, reflecting the repayment in its appropriate source of funds.
Such Account will be held pursuant to the terms of the Plan, until such time
that payment of the Account can be made in accordance with the normal terms of
the Plan.
As to any person that received a distribution upon the termination of the
Industrial Data Systems, Inc. 401(k) Profit Sharing Plan, who rolled over such
distribution to the Plan, and is actively employed by the Employer or Affiliated
Employer on the date that the Internal Revenue Service approves the voluntary
compliance filing made pursuant to the terms of Revenue Procedure 2003-44 on
June 3, 2005, the amount in such Rollover Account will be reallocated under the
Plan to reflect its appropriate source of funds. Such Account will be held
pursuant to the terms of the Plan, until such time that payment of the Account
can be made in accordance with the normal terms of the Plan.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date, to
determine the net worth of the assets comprising the Trust Fund as it exists on
the Valuation Date. In determining such net worth, the Trustee shall value the
assets comprising the Trust Fund at their fair market value (or their
contractual value in the case of a Contract or Policy) as of the Valuation Date
and shall deduct all expenses for which the Trustee has not yet obtained
reimbursement from the Employer or the Trust Fund. The Trustee may update the
value of any
47
shares held in the Participant Directed Account by reference to the number of
shares held by that Participant, priced at the market value as of the Valuation
Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust Fund
which are listed on a registered stock exchange, the Administrator shall direct
the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the Valuation Date, If such
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 shall be valued at the prices at which they were last traded prior to
the Valuation Date. Any unlisted security held in the Trust Fund shall be valued
at its bid price next preceding the close of business on the Valuation Date,
which bid price shall be obtained from a registered broker or an investment
banker. In determining the fair market value of assets other than securities for
which trading or bid prices can be obtained, the Trustee may appraise such
assets itself, or in its discretion, employ one or more appraisers for that
purpose and rely on the values established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate employment with the Employer and retire for
the purposes hereof on the Participant's Normal Retirement Date or Early
Retirement Date. However, a Participant may postpone the termination of
employment with the Employer to a later date, in which event the participation
of such Participant in the Plan, including the right to receive allocations
pursuant to Section 4.4, shall continue until such Participant's Late Retirement
Date. Upon a Participant's Retirement Date, or as soon thereafter as is
practicable, the Trustee shall distribute, at the election of the Participant,
all amounts credited to such Participant's Combined Account in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before the Participant's
Retirement Date or other termination of employment, all amounts credited to
such Participant's Combined Account shall become fully Vested. The
Administrator shall direct the Trustee, in accordance with the provisions
of Sections 6.6 and 6.7, to distribute the value of the deceased
Participant's accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall
direct the Trustee, in accordance with the provisions of Sections 6.6 and
6.7, to distribute any remaining Vested amounts credited to the accounts of
a deceased Former Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an outstanding
loan to the Participant or Former Participant shall be taken into account
in determining the amount of the death benefit.
48
(d) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of the
account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(e) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however, the Participant
may designate a Beneficiary other than the spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been abandoned (within
the meaning of local law) and the Participant has a court order to
such effect (and there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or (4) the spouse cannot be
located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time
revoke a designation of a Beneficiary or change a Beneficiary by filing
written (or in such other form as permitted by the Internal Revenue
Service) notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing (or in such
other form as permitted by the Internal Revenue Service) to any change in
Beneficiary unless the original consent acknowledged that the spouse had
the right to limit consent only to a specific Beneficiary and that the
spouse voluntarily elected to relinquish such right.
(f) In the event no valid designation of Beneficiary exists, or if the
Beneficiary is not alive at the time of the Participant's death, the death
benefit will be paid to the Participant's estate. If the Beneficiary does
not predecease the Participant, but dies prior to distribution of the death
benefit, the death benefit will be paid to the Beneficiary's estate.
(g) Any consent by the Participant's spouse to waive any rights to the
death benefit must be in writing (or in such other form as permitted by the
Internal Revenue Service), must acknowledge the effect of such waiver, and
be witnessed by a Plan representative or a notary public. Further, the
spouse's consent must be irrevocable and must acknowledge the specific
nonspouse Beneficiary.
49
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to the
Participant's Retirement Date or other termination of employment, all amounts
credited to such Participant's Combined Account shall become fully Vested. In
the event of a Participant's Total and Permanent Disability, the Administrator,
in accordance with the provisions of Sections 6.5 and 6.7, shall direct the
distribution to such Participant of all Vested amounts credited to such
Participant's Combined Account.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is terminated for
any reason other than death, Total and Permanent Disability or retirement,
then such Participant shall be entitled to such benefits as are provided
hereinafter pursuant to this Section 6.4.
Distribution of the funds due to a Terminated Participant shall be
made on the occurrence of an event which would result in the distribution
had the Terminated Participant remained in the employ of the Employer (upon
the Participant's death, Total and Permanent Disability, Early or Normal
Retirement). However, at the election of the Participant, the Administrator
shall direct the Trustee that the entire Vested portion of the Terminated
Participant's Combined Account be payable to such Terminated Participant.
Any distribution under this paragraph shall be made in a manner which is
consistent with and satisfies the provisions of Section 6.5, including, but
not limited to, all notice and consent requirements of Code Sections 417
and 41 l(a)(l 1) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit derived from
Employer and Employee contributions does not exceed $5,000, then the
Administrator shall direct the Trustee to cause the entire Vested benefit
to be paid to such Participant in a single lump sum.
(b) The Vested portion of any Participant's Account shall be a
percentage of the total amount credited to the Participant's Account
determined on the basis of the Participant's number of whole year Periods
of Service according to the following schedule:
Vesting Schedule
Periods of Service Percentage
1 25 %
2 50 %
3 100 %
(c) Notwithstanding the vesting schedule above, the Vested percentage
of a Participant's Account shall not be less than the Vested percentage
attained as of the later of the effective date or adoption date of this
amendment and restatement.
50
(d) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer contributions to the Plan or upon any full
or partial termination of the Plan, all amounts then credited to the
account of any affected Participant shall become 100% Vested and shall not
thereafter be subject to Forfeiture.
(e) The computation of a Participant's nonforfeitable percentage of
such Participant's interest in the Plan shall not be reduced as the result
of any direct or indirect amendment to this Plan. In the event that the
Plan is amended to change or modify any vesting schedule, or if the Plan is
amended in any way that directly or indirectly affects the computation of
the Participant's nonforfeitable percentage, or if the Plan is deemed
amended by an automatic change to a top heavy vesting schedule, then each
Participant with at least three (3) whole year Periods of Service as of the
expiration date of the election period may elect to have such Participant's
nonforfeitable percentage computed under the Plan without regard to such
amendment or change. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of the
amendment and shall end sixty (60) days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the amendment
from the Employer or Administrator.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the Participant,
shall direct the Trustee to distribute to a Participant or such
Participant's Beneficiary any amount to which the Participant is entitled
under the Plan in one of the following methods:
(1) One lump-sum payment in cash or in property allocated to the
Participant's account. This shall be the normal form of payment,
except as otherwise provided below.
(2) Payments over a period certain in monthly, quarterly, semiannual,
or annual cash installments. In order to provide such installment
payments, the Administrator may (A) segregate the aggregate amount
thereof in a separate, federally insured savings account, certificate
of deposit in a bank or savings and loan association, money market
certificate or other liquid short-term security or (B) purchase a
nontransferable annuity contract for a term certain (with no life
contingencies) providing for such payment. The period over which such
payment is to be made shall not extend beyond the Participant's life
expectancy (or the life expectancy of the Participant and the
Participant's designated Beneficiary).
51
(3) Purchase of or providing an annuity subject to the provisions of
Section 6.5(b).
(b) Special rules applicable to annuity payments:
(1) Unless otherwise elected as provided below, a Participant who is
married on the Annuity Starting Date and who does not die before the
Annuity Starting Date shall receive the value of all of such
Participant's benefits in the form of a joint and survivor annuity.
The joint and survivor annuity is an annuity that commences
immediately and shall be equal in value to a single life annuity. Such
joint and survivor benefits following the Participant's death shall
continue to the spouse during the spouse's lifetime at a rate equal to
fifty percent (50%) of the rate at which such benefits were payable to
the Participant, This joint and survivor annuity shall be considered
the designated qualified joint and survivor annuity and automatic form
of payment for the purposes of this Plan. However, the Participant
may, without spousal consent, elect to receive a smaller annuity
benefit with continuation of payments to the spouse at a rate of
seventy-five percent (75%) or one-hundred percent (100%) of the rate
payable to a Participant during the Participant's lifetime, which
alternative joint and survivor annuity shall be equal in value to the
automatic joint and fifty percent (50%) survivor annuity. An unmarried
Participant shall receive the value of such Participant's benefit in
the form of a life annuity. Such unmarried Participant, however, may
elect in writing to waive the life annuity. The election must comply
with the provisions of this Section as if it were an election to waive
the joint and survivor annuity by a married Participant, but without
the spousal consent requirement. The Participant may elect to have any
annuity provided for in this Section distributed upon the attainment
of the "earliest retirement age" under the Plan. The "earliest
retirement age" is the earliest date on which, under the Plan, the
Participant could elect to receive retirement benefits.
(2) Any election to waive the joint and survivor annuity must be made
by the Participant in writing (or in such other form as permitted by
the Internal Revenue Service) during the election period and be
consented to in writing (or in such other form as permitted by the
Internal Revenue Service) by the Participant's spouse. If the spouse
is legally incompetent to give consent, the spouse's legal guardian,
even if such guardian is the Participant, may give consent. Such
election shall designate a Beneficiary (or a form of benefits) that
may not be changed without spousal consent (unless the consent of the
spouse expressly permits designations by the Participant without the
requirement of further consent by the spouse). Such spouse's consent
shall be irrevocable and must acknowledge the effect of such election
and be witnessed by a Plan representative or a notary public. Such
consent shall not be required if it is established to the satisfaction
of the Administrator that the required consent cannot be obtained
52
because there is no spouse, the spouse cannot be located, or other
circumstances that may be prescribed by Regulations. The election made
by the Participant and consented to by such Participant's spouse may
be revoked by the Participant in writing (or in such other form as
permitted by the Internal Revenue Service) without the consent of the
spouse at any time during the election period. A revocation of a prior
election shall cause the Participant's benefits to be distributed as a
joint and survivor annuity. The number of revocations shall not be
limited. Any new election must comply with the requirements of this
paragraph. A former spouse's waiver shall not be binding on a new
spouse.
(3) The election period to waive the joint and survivor annuity shall
be the ninety (90) day period ending on the Annuity Starting Date.
(4) For purposes of this Section, spouse or surviving spouse means the
spouse or surviving spouse of the Participant, provided that a former
spouse will be treated as the spouse or surviving spouse and a current
spouse will not be treated as the spouse or surviving spouse to the
extent provided under a qualified domestic relations order as
described in Code Section 414(p).
(5) With regard to the election, the Administrator shall provide to
the Participant no less than thirty (30) days and no more than ninety
(90) days before the Annuity Starting Date a written (or in such other
form as permitted by the Internal Revenue Service) explanation of:
(i) the terms and conditions of the joint and survivor annuity,
(ii) the Participant's right to make, and the effect of, an
election to waive the joint and survivor annuity,
(iii) the right of the Participant's spouse to consent to any
election to waive the joint and survivor annuity, and
(iv) the right of the Participant to revoke such election, and
the effect of such revocation.
(6) Notwithstanding the above, if the Participant elects (with spousal
consent, if applicable) to waive the requirement that the explanation
be provided at least thirty (30) days before the Annuity Starting
Date, the election period shall be extended to the thirtieth (30th)
day after the date on which such explanation is provided to the
Participant, unless the thirty (30) day period is waived pursuant to
the following provisions.
Any distribution provided for in this Section 6.5(b) may commence less
than thirty (30) days after the notice required by Code Section 417(a)(3)
is given provided the following requirements are satisfied:
53
(i) the Administrator clearly informs the Participant that the
Participant has a right to a period of thirty (30) days after
receiving the notice to consider whether to waive the joint and
survivor annuity and to elect (with spousal consent) to a form of
distribution other than a joint and survivor annuity;
(ii) the Participant is permitted to revoke an affirmative
distribution election at least until the Annuity Starting Date, or, if
later, at any time prior to the expiration of the seven (7) day period
that begins the day after the explanation of the joint and survivor
annuity is provided to the Participant;
(iii) the Annuity Starting Date is after the date that the explanation
of the joint and survivor annuity is provided to the Participant.
However, the Annuity Starting Date may be before the date that any
affirmative distribution election is made by the Participant and
before the date that the distribution is permitted to commence under
(iv) below; and
(iv) distribution in accordance with the affirmative election does not
commence before the expiration of the seven (7) day period that begins
the day after the explanation of the joint and survivor annuity is
provided to the Participant.
(c) In the event a married Participant duly elects pursuant to
paragraph (b)(2) above not to receive benefits in the form of a joint and
survivor annuity, or if such Participant is not married, in the form of a
life annuity, the Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a Participant or
Beneficiary any such amount to which the Participant or Beneficiary is
entitled under the Plan in one or more of the following methods:
(1) One lump-sum payment in cash or in property allocated to the
Participant's account.
(2) Payments over a period certain in monthly, quarterly, semiannual,
or annual cash installments. In order to provide such installment
payments, the Administrator may (A) segregate the aggregate amount
thereof in a separate, federally insured savings account, certificate
of deposit in a bank or savings and loan association, money market
certificate or other liquid short-term security or (B) purchase a
nontransferable annuity contract for a term certain (with no life
contingencies) providing for such payment. The period over which such
payment is to be made shall not extend beyond the Participant's life
expectancy (or the life expectancy of the Participant and the
Participant's designated Beneficiary).
(d) The present value of a Participant's joint and survivor annuity
derived from Employer and Employee contributions may not be paid without
the Participant's and the Participant's spouse's written (or in such form
as permitted by the Internal Revenue Service) consent if the value exceeds
$5,000 and the benefit
54
is "immediately distributable." However, spousal consent is not required if
the distribution will be made in the form of a joint and survivor annuity
and the benefit is "immediately distributable." A benefit is "immediately
distributable" if any part of the benefit could be distributed to the
Participant (or surviving spouse) before the Participant attains (or would
have attained if not deceased) the later of the Participant's Normal
Retirement Age or age 62. Any consent required by this Section 6.5(d) must
be obtained not more than ninety (90) days before commencement of the
distribution and shall be made in a manner consistent with Section
6.5(b)(2).
If the value of the Participant's benefit derived from Employer and
Employee contributions does not exceed $5,000, then the Administrator shall
direct the Trustee to immediately distribute such benefit in a lump sum
without the Participant's and the Participant's spouse's written consent.
No distribution may be made under the preceding sentence after the Annuity
Starting Date unless the Participant and the Participant's spouse consent
in writing (or in such form as permitted by the Internal Revenue Service)
to such distribution.
(e) Any distribution to a Participant who has a benefit which exceeds
$5,000, shall require such Participant's written (or in such other form as
permitted by the Internal Revenue Service) consent if such distribution
commences prior to the time the benefit is "immediately distributable." A
benefit is "immediately distributable" if any part of the benefit could be
distributed to the Participant (or surviving spouse) before the Participant
attains (or would have attained if not deceased) the later of the
Participant's Normal Retirement Age or age 62,
(f) The following rules will apply to the consent requirements set
forth in subsections (d) and (e):
(1) No consent shall be valid unless the Participant has received a
general description of the material features and an explanation of the
relative values of the optional forms of benefit available under the
Plan that would satisfy the notice requirements of Code Section 417.
(2) The Participant must be informed of the right to defer receipt of
the distribution. If a Participant fails to consent, it shall be
deemed an election to defer the commencement of payment of any
benefit. However, any election to defer the receipt of benefits shall
not apply with respect to distributions which are required under
Section 6.5(g).
(3) Notice of the rights specified under this paragraph shall be
provided no less than thirty (30) days and no more than ninety (90)
days before the Annuity Starting Date.
Notwithstanding the above, the Annuity Starting Date may be a date
prior to the date the explanation is provided to the Participant if
the distribution does not commence until at least thirty (30) days
after such explanation is provided, subject to the waiver of the
thirty (30) day period as provided for in Section 6.5(b)(6).
55
(4) Written (or such other form as permitted by the Internal Revenue
Service) consent of the Participant to the distribution must not be
made before the Participant receives the notice and must not be made
more than ninety (90) days before the Annuity Starting Date.
(5) No consent shall be valid if a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution.
Any such distribution may commence less than thirty (30) days, subject
to Section 6.5(b)(6), after the notice required under Regulation 1.411(a)-l
l(c) is given, provided that: (1) the Administrator clearly informs the
Participant that the Participant has a right to a period of at least thirty
(30) days after receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular distribution
option), and (2) the Participant, after receiving the notice, affirmatively
elects a distribution.
(g) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits, whether under the Plan or through
the purchase of an annuity contract, shall be made in accordance with the
following requirements and shall otherwise comply with Code Section
401(a)(9) and the Regulations thereunder (including Regulation
1.401(a)(9)-2), the provisions of which are incorporated herein by
reference:
(1) A Participant's benefits shall be distributed or must begin to be
distributed not later than April 1st of the calendar year following
the later of (1)the calendar year in which the Participant attains age
70 1/2 or (ii) the calendar year in which the Participant retires,
provided, however, that this clause (ii) shall not apply in the case
of a Participant who is a "five (5) percent owner" at any time during
the Plan Year ending with or within the calendar year in which such
owner attains age 70 1/2. Such distributions shall be equal to or
greater than any required distribution.
Alternatively, distributions to a Participant must begin no later than
the applicable April 1st as determined under the preceding paragraph
and must be made over the life of the Participant (or the lives of the
Participant and the Participant's designated Beneficiary) or the life
expectancy of the Participant (or the life expectancies of the
Participant and the Participant's designated Beneficiary) in
accordance with Regulations.
(2) Distributions to a Participant and the Participant's Beneficiaries
shall only be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
With respect to distributions under the Plan made on or after October
19, 2001 for calendar years beginning on or after January 1,2001, the Plan
will apply the minimum distribution requirements of Code Section 401(a)(9)
in accordance with the regulations under Code Section 401(a)(9) that were
proposed on January 17, 2001 (the 2001 proposed Regulations),
notwithstanding any provision of
56
the Plan to the contrary. If the total amount of required minimum
distributions made to a Participant for 2001 prior to October 19, 2001 are
equal to or greater than the amount of required minimum distributions
determined under the proposed 2001 Regulations, men no additional
distributions are required for such Participant for 2001 on or after such
date. If the total amount of required minimum distributions made to a
Participant for 2001 prior to October 19,2001 are less than the amount
determined under the 2001 proposed Regulations, then the amount of required
minimum distributions for 2001 on or after such date will be determined so
that the total amount of required minimum distributions for 2001 is the
amount determined under the 2001 proposed Regulations. This amendment shall
continue in effect until the last calendar year beginning before the
effective date of the final regulations under Code Section 401(a)(9) or
such other date as may be published by the Internal Revenue Service.
(h) For purposes of this Section, the life expectancy of a Participant
and a Participant's spouse (other than in the case of a life annuity) shall
not be redetermined in accordance with Code Section 401(a)(9)(D). Life
expectancy and joint and last survivor expectancy shall be computed using
the return multiples in Tables V and VI of Regulation 1.72-9.
(i) Ail annuity Contracts under this Plan shall be non-transferable
when distributed. Furthermore, the terms of any annuity Contract purchased
and distributed to a Participant or spouse shall comply with all of the
requirements of the Plan.
(j) If a distribution is made to a Participant who has not severed
employment and who is not fully Vested in the Participant's Account and the
Participant may increase the Vested percentage in such account, then, at
any relevant time the Participant's Vested portion of the account will be
equal to an amount ("X") determined by the formula:
X equals P(AB plus D) - D
For purposes of applying the formula: P is the Vested percentage at
the relevant time, AB is the account balance at the relevant time, and D is
the amount of distribution.
(k) Effective November 1, 2005, no Participant may elect to receive
their benefit in the form of an annuity. Any Participant who elects an
annuity form of benefit prior to November 1, 2005, will receive, or
continue to receive, his benefit in such form of an annuity.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a)(l) The death benefit payable pursuant to Section 6.2 shall be paid
to the Participant's Beneficiary within a reasonable time after the
Participant's death by either of the following methods, as elected by the
Participant (or if no election has been made prior to the Participant's
death, by the Participant's Beneficiary) subject, however, to the rules
specified in Section 6.6(b):
57
(i) One lump-sum payment in cash or in property allocated to the
Participant's account.
(ii) Payment in monthly, quarterly, semi-annual, or annual cash
installments over a period to be determined by the Participant or the
Participant's Beneficiary. After periodic installments commence, the
Beneficiary shall have the right to direct the Trustee to reduce the
period over which such periodic installments shall be made, and the
Trustee shall adjust the cash amount of such periodic installments
accordingly.
(2) In the event the death benefit payable pursuant to Section 6.2 is
payable in installments, then, upon the death of the Participant, the
Administrator may direct the Trustee to segregate the death benefit into a
separate account, and the Trustee shall invest such segregated account
separately, and the funds accumulated in such account shall be used for the
payment of the installments.
(b) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance
with the following requirements and shall otherwise comply with Code
Section 40l(a)(9) and the Regulations thereunder. If it is determined,
pursuant to Regulations, that the distribution of a Participant's interest
has begun and the Participant dies before the entire interest has been
distributed, the remaining portion of such interest shall be distributed at
least as rapidly as under the method of distribution selected pursuant to
Section 6.5 as of the date of death. If a Participant dies before receiving
any distributions of the interest in the Plan or before distributions are
deemed to have begun pursuant to Regulations, then the death benefit shall
be distributed to the Participant's Beneficiaries by December 31st of the
calendar year in which the fifth anniversary of the Participant's date of
death occurs.
However, the 5-year distribution requirement of the preceding
paragraph shall not apply to any portion of the deceased Participant's
interest which is payable to or for the benefit of a designated
Beneficiary. In such event, such portion may, at the election of the
Participant (or the Participant's designated Beneficiary) be distributed
over a period not extending beyond the life expectancy of such designated
Beneficiary provided such distribution begins not later than December 31st
of the calendar year immediately following the calendar year in which the
Participant died. However, in the event the Participant's spouse
(determined as of the date of the Participant's death) is the designated
Beneficiary, the requirement that distributions commence within one year of
a Participant's death shall not apply. In lieu thereof, distributions must
commence on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died; or
(2) December 31st of the calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies before distributions to
such spouse begin, then the 5-year distribution requirement of this Section
shall apply as if the spouse was the Participant.
58
(c) For purposes of Section 6.6(b), the election by a designated
Beneficiary to be excepted from the 5-year distribution requirement must be
made no later than December 31st of the calendar year following the
calendar year of the Participant's death. Except, however, with respect to
a designated Beneficiary who is the Participant's surviving spouse, the
election must be made by the earlier of: (1) December 31st of the calendar
year immediately following the calendar year in which the Participant died
or, if later, December 31st of the calendar year in which the Participant
would have attained age 70 1/2; or (2) December 31st of the calendar year
which contains the fifth anniversary of the date of the Participant's
death. An election by a designated Beneficiary must be in writing (or in
such other form as permitted by the Internal Revenue Service) and shall be
irrevocable as of the last day of the election period stated herein. In the
absence of an election by the Participant or a designated Beneficiary, the
5-year distribution requirement shall apply.
(d) For purposes of this Section, the life expectancy of a Participant
and a Participant's spouse shall not be redetermined in accordance with
Code Section 401(a)(9)(D). Life expectancy and joint and last survivor
expectancy shall be computed using the return multiples in Tables V and VI
of Regulation 1.72-9.
(e) For purposes of this Section, any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving spouse
if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(f) Effective November 1, 2005, no Participant or Beneficiary may
elect to receive their benefit in the form of an annuity. Any Participant
or Beneficiary who elects an annuity form of benefit prior to November 1,
2005, will receive, or continue to receive, his benefit in such form of an
annuity.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee is to make
a distribution or to commence a series of payments the distribution or series of
payments may be made or begun on such date or as soon thereafter as is
practicable. However, unless a Former Participant elects in writing to defer the
receipt of benefits (such election may not result in a death benefit that is
more than incidental), the payment of benefits shall begin not later than the
sixtieth (60th) day after the close of the Plan Year in which the latest of the
following events occurs: (a) the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified herein; (b) the tenth
(10th) anniversary of the year in which the Participant commenced participation
in the Plan; or (c) the date the Participant terminates service with the
Employer.
Notwithstanding the foregoing, the failure of a Participant and, if
applicable, the Participant's spouse, to consent to a distribution that is
"immediately distributable" (within the meaning of Section 6.5), shall be deemed
to be an election to defer the commencement of payment of any benefit sufficient
to satisfy this Section.
59
6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY
In the event a distribution is to be made to a minor or incompetent
Beneficiary, then the Administrator may direct that such distribution be paid to
the legal guardian, or if none in the case of a minor Beneficiary, to a parent
of such Beneficiary or a responsible adult with whom the Beneficiary maintains
residence, or to the custodian for such Beneficiary under the Uniform Gift to
Minors Act or Gift to Minors Act, if such is permitted by the laws of the state
in which said Beneficiary resides. Such a payment to the legal guardian,
custodian or parent of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or Beneficiary hereunder shall, at the later of the Participant's
attainment of age 62 or Normal Retirement Age, remain unpaid solely by reason of
the inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent effort,
to ascertain the whereabouts of such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the Plan.
Notwithstanding the foregoing, if the value of a Participant's Vested benefit
derived from Employer and Employee contributions does not exceed $5,000, then
the amount distributable may, in the sole discretion of the Administrator,
either be treated as a Forfeiture, or be paid directly to an individual
retirement account described in Code Section 408(a) or an individual retirement
annuity described in Code Section 408(b) at the time it is determined that the
whereabouts of the Participant or the Participant's Beneficiary cannot be
ascertained. In the event a Participant or Beneficiary is located subsequent to
the Forfeiture, such benefit shall be restored, first from Forfeitures, if any,
and then from an additional Employer contribution if necessary. However,
regardless of the preceding, a benefit which is lost by reason of escheat under
applicable state law is not treated as a Forfeiture for purposes of this Section
nor as an impermissible forfeiture under the Code.
6.10 PRE-RETIREMENT DISTRIBUTION
Unless otherwise provided, at such time as a Participant shall have
attained the age of 59 1/2 years, the Administrator, at the election of the
Participant who has not severed employment with the Employer, shall direct the
Trustee to distribute all or a portion of the elective deferral account
maintained on behalf of the Participant. In addition, a Pre-retirement
distribution may be taken from a Participant's Transfer/Rollover Account at any
time (see also Section 4.1 l(d)). In the event that the Administrator makes such
a distribution, the Participant shall continue to be eligible to participate in
the Plan on the same basis as any other Employee. Any distribution made pursuant
to this Section shall be made in a manner consistent with Section 6.5,
including, but not limited to, all notice and consent requirements of Code
Sections 417 and 41 l(a)(l 1) and the Regulations thereunder.
Any Participant who had accrued benefits in the RPM Engineering, Inc. Group
401(k) Profit Sharing Plan (The "RPM Plan") as of December 31, 1997, shall be
entitled to receive an in-service withdrawal of all or apart of the vested
account balance of employer nonelective (profit sharing) contribution or
matching contribution credited on his behalf to the RPM Plan as of December 31,
1997, if the Participant has completed at least five (5) Years of Service as a
Participant and subsequently merged with the Plan.
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6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan Year up
to the lesser of 100% of the Participant's Elective Account (and earnings
attributable thereto up to December 31,1988) valued as of the last
Valuation Date or the amount necessary to satisfy the immediate and heavy
financial need of the Participant. Any distribution made pursuant to this
Section shall be deemed to be made as of the first day of the Plan Year or,
if later, the Valuation Date immediately preceding the date of
distribution, and the Participant's Elective Account shall be reduced
accordingly. Withdrawal under this Section is deemed to be on account of an
immediate and heavy financial need of the Participant only if the
withdrawal is for:
(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, the Participant's spouse, or any of the Participant's
dependents (as defined in Code Section 152) or necessary for these
persons to obtain medical care as described in Code Section 213(d);
(2) The costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Payment of tuition, related educational fees, and room and board
expenses for the next twelve (12) months of post-secondary education
for the Participant and the Participant's spouse, children, or
dependents; or
(4) Payments necessary to prevent the eviction of the Participant from
the Participant's principal residence or foreclosure on the mortgage
on that residence.
(b) No distribution shall be made pursuant to this Section unless the
Administrator, based upon the Participant's representation and such other
facts as are known to the Administrator, determines that all of the
following conditions are satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant. The amount of the
immediate and heavy financial need may include any amounts necessary
to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution;
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the loan)
loans currently available under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by the Employer, provide
that the Participant's elective deferrals and after-tax voluntary
Employee contributions will be suspended for at least twelve (12)
months after
61
receipt of the hardship distribution or, the Participant, pursuant to
a legally enforceable agreement, will suspend elective deferrals and
after-tax voluntary Employee contributions to the Plan and all other
plans maintained by the Employer for at least twelve (12) months after
receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer, provide
that the Participant may not make elective deferrals for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of such
Participant's elective deferrals for the taxable year of the hardship
distribution.
(c) Notwithstanding the above, distributions from the Participant's
Elective Account pursuant to this Section shall be limited solely to the
Participant's total Deferred Compensation as of the date of distribution,
reduced by the amount of any previous distributions pursuant to this
Section and Section 6.10.
(d) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to, all notice and consent requirements of
Code Sections 417 and 41 l(a)(l 1) and the Regulations thereunder.
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a Participant in
this Plan shall be subject to the rights afforded to any "alternate payee" under
a "qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected Participant has not
separated from service and has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee," "qualified
domestic relations order" and "earliest retirement age" shall have the meaning
set forth under Code Section 414(p).
6.13 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a "distributee's" election under this Section, a
"distributee" may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an "eligible rollover distribution"
that is equal to at least $500 paid directly to an "eligible retirement
plan" specified by the "distributee" in a "direct rollover."
(b) For purposes of this Section the following definitions shall
apply:
(1) An "eligible rollover distribution" is any distribution of all or
any portion of the balance to the credit of the "distributee," except
that an "eligible rollover distribution" does not include: any
distribution that is one of a series of substantially equal periodic
payments (not less
62
frequently than annually) made for the life (or life expectancy) of
the "distributee" or the joint lives (or joint life expectancies) of
the "distributee" and the "distributee's" designated beneficiary, or
for a specified period often years or more; any distribution to the
extent such distribution is required under Code Section 401(a)(9); the
portion of any other distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); any hardship
distribution described in Code Section 401(k)(2)(B)(i)(IV); and any
other distribution that is reasonably expected to total less than $200
during a year.
(2) An "eligible retirement plan" is an individual retirement account
described in Code Section 408(a), an individual retirement annuity
described in Code Section 408 (b), an annuity plan described in Code
Section 403 (a), or a qualified trust described in Code Section 401
(a), that accepts the "distributee's" "eligible rollover
distribution." However, in the case of an "eligible rollover
distribution" to the surviving spouse, an "eligible retirement plan"
is an individual retirement account or individual retirement annuity.
(3) A "distributee" includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code Section 414(p), are "distributees" with regard to the interest
of the spouse or former spouse.
(4) A "direct rollover" is a payment by the Plan to the "eligible
retirement plan" specified by the "distributee."
ARTICLE VII
AMENDMENT, TERMINATION, MERGERS AND LOANS
7.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this Plan,
subject to the limitations of this Section. However, any amendment which
affects the rights, duties or responsibilities of the Trustee or
Administrator may only be made with the Trustee's or Administrator's
written consent. Any such amendment shall become effective as provided
therein upon its execution. The Trustee shall not be required to execute
any such amendment unless the amendment affects the duties of the Trustee
hereunder.
(b) No amendment to the Plan shall be effective if it authorizes or
permits any part of the Trust Fund (other than such part as is required to
pay taxes and administration expenses) to be used for or diverted to any
purpose other than for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the amount credited to
the account of any Participant; or
63
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(c) Except as permitted by Regulations (including Regulation 1.411
(d)-4) or other IRS guidance, no Plan amendment or transaction having the
effect of a Plan amendment (such as a merger, plan transfer or similar
transaction) shall be effective if it eliminates or reduces any "Section
411 (d)(6) protected benefit" or adds or modifies conditions relating to
"Section 41 l(d)(6) protected benefits" which results in a further
restriction on such benefits unless such "Section 41 l(d)(6) protected
benefits" are preserved with respect to benefits accrued as of the later of
the adoption date or effective date of the amendment. "Section 411(d)(6)
protected benefits" are benefits described in Code Section 41l(d)(6)(A)?
early retirement benefits and retirement-type subsidies, and optional forms
of benefit. A Plan amendment that eliminates or restricts the ability of a
Participant to receive payment of the Participant's interest in the Plan
under a particular optional form of benefit will be permissible if the
amendment satisfies the conditions in (1) and (2) below:
(1) The amendment provides a single-sum distribution form that is
otherwise identical to the optional form of benefit eliminated or
restricted. For purposes of this condition (1), a single-sum
distribution form is otherwise identical only if it is identical in
all respects to the eliminated or restricted optional form of benefit
(or would be identical except that it provides greater rights to the
Participant) except with respect to the timing of payments after
commencement.
(2) The amendment is not effective unless the amendment provides that
the amendment shall not apply to any distribution with an Annuity
Starting Date earlier than the earlier of: (i) the ninetieth (90th)
day after the date the Participant receiving the distribution has been
furnished a summary that reflects the amendment and that satisfies the
Act requirements at 29 CFR 2520.104b-3 (relating to a summary of
material modifications) or (ii) the first day of the second Plan Year
following the Plan Year in which the amendment is adopted.
7.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the
Plan by delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination, all amounts credited to
the affected Participants' Combined Accounts shall become 100% Vested as
provided in Section 6.4 and shall not thereafter be subject to forfeiture,
and all unallocated amounts, including Forfeitures, shall be allocated to
the accounts of all Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall direct
the distribution of the assets of the Trust Fund to Participants in a
manner which is consistent with and satisfies the provisions of Section
6.5. Distributions to a Participant shall be made in cash or in property
allocated to the Participant's
64
account or through the purchase of irrevocable nontransferable deferred
commitments from an insurer. Except as permitted by Regulations, the
termination of the Plan shall not result in the reduction of "Section 41
l(d)(6) protected benefits" in accordance with Section 7.1(c).
7.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
This Plan may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan and trust only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 41 l(d)(6) protected
benefits" in accordance with Section 7.1(c).
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans to
Participants and Beneficiaries under the following circumstances: (1) loans
shall be made available to all Participants and Beneficiaries on a
reasonably equivalent basis; (2) loans shall not be made available to
Highly Compensated Employees in an amount greater than the amount made
available to other Participants and Beneficiaries; (3) loans shall bear a
reasonable rate of interest; (4) loans shall be adequately secured; and (5)
loans shall provide for periodic repayment over a reasonable period of
time.
(b) Loans made pursuant to this Section (when added to the outstanding
balance of all other loans made by the Plan to the Participant) may, in
accordance with a uniform and nondiscriminatory policy established by the
Administrator, be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Participant during the one year
period ending on the day before the date on which such loan is made,
over the outstanding balance of loans from the Plan to the Participant
on the date on which such loan was made, or
(2) one-half (112) of the present value of the non-forfeitable accrued
benefit of the Participant under the Plan.
For purposes of this limit, all plans of the Employer shall be
considered one plan.
(c) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to exceed five
(5) years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as
a "principal residence" of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five (5) years.
For this purpose, a
65
"principal residence" has the same meaning as a "principal residence" under
Code Section 1034. Loan repayments may be suspended under this Plan as
permitted under Code Section 414(u)(4).
(d) Any loans granted or renewed shall be made pursuant to a
Participant loan program. Such loan program shall be established in writing
and must include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to administer
the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered; (
5) the procedure under the program for determining a reasonable rate
of interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken
to preserve Plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by reference
and made a part of the Plan, Furthermore, such Participant loan program may
be modified or amended in writing from time to time without the necessity
of amending this Section.
(e) Notwithstanding anything in this Section to the contrary, any
loans made prior to the date this amendment and restatement is adopted
shall be subject to the terms of the plan in effect at the time such loan
was made.
ARTICLE VIII
TOP HEAVY
8.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan and the
special minimum allocation requirements of Code Section 416(c) pursuant to
Section 4.4 of the Plan.
8.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in which, as
of the Determination Date, (1) the Present Value of Accrued Benefits of Key
Employees and (2) the sum of the Aggregate Accounts of Key Employees under
66
this Plan and all plans of an Aggregation Group, exceeds sixty percent
(60%) of the Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all plans of an
Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
Present Value of Accrued Benefit and/or Aggregate Account balance shall not be
taken into account for purposes of determining whether this Plan is a Top Heavy
Plan (or whether any Aggregation Group which includes this Plan is a Top Heavy
Group). In addition, if a Participant or Former Participant has not performed
any services for any Employer maintaining the Plan at any time during the five
year period ending on the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into account for the
purposes of determining whether this Plan is a Top Heavy Plan.
(b) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) the Participant's Combined Account balance as of the most recent
valuation occurring within a twelve (12) month period ending on the
Determination Date.
(2) an adjustment for any contributions due as of the Determination
Date. Such adjustment shall be the amount of any contributions
actually made after the Valuation Date but due on or before the
Determination Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any contributions made
after the Determination Date that are allocated as of a date in that
first Plan Year.
(3) any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years.
However, in the case of distributions made after the Valuation Date
and prior to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the extent that
such distributions are already included in the Participant's Aggregate
Account balance as of the Valuation Date, Notwithstanding anything
herein to the contrary, all distributions, including distributions
under a terminated plan which if it had not been terminated would have
been required to be included in an Aggregation Group, will be counted.
Further, distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified voluntary
employee contributions shall not be considered to be a part of the
Participant's Aggregate Account balance.
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(5) with respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another employer),
if this Plan provides the rollovers or plan-to-plan transfers, it
shall always consider such rollovers or plan-to-plan transfers as a
distribution for the purposes of this Section. If this Plan is the
plan accepting such rollovers or plan-to-plan transfers, it shall not
consider such rollovers or plan-to-plan transfers as part of the
Participant's Aggregate Account balance,
(6) with respect to related rollovers and plan-to-plan transfers (ones
either not initiated by the Employee or made to a plan maintained by
the same employer), if this Plan provides the rollover or plan-to-plan
transfer, it shall not be counted as a distribution for purposes of
this Section. If this Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account balance,
irrespective of the date on which such rollover or plan-to-plan
transfer is accepted.
(7) For the purposes of determining whether two employers are to be
treated as the same employer in (5) and (6) above, all employers
aggregated under Code Section 414(b), (c), (m) and (o) are treated as
the same employer.
(c) "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required Aggregation
Group hereunder, each plan of the Employer in which a Key Employee is
a participant in the Plan Year containing the Determination Date or
any of the four preceding Plan Years, and each other plan of the
Employer which enables any plan in which a Key Employee participates
to meet the requirements of Code Sections 401(a)(4) or 410, will be
required to be aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation Group
is a Top Heavy Group. No plan in the Required Aggregation Group will
be considered a Top Heavy Plan if the Required Aggregation Group is
not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include any
other plan not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would continue
to satisfy the provisions of Code Sections 401(a)(4) and 410. Such
group shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top Heavy
Plan if
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the Permissive Aggregation Group is a Top Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top Heavy Plan if
the Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination Dates
fall within the same calendar year shall be aggregated in order to
determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years ending on
the Determination Date.
(d) "Determination Date" means (a) the last day of the preceding Plan
Year, or (b) in the case of the first Plan Year, the last day of such Plan
Year.
(e) Present Value of Accrued Benefit: In the case of a defined benefit
plan, the Present Value of Accrued Benefit for a Participant other than a
Key Employee, shall be as determined using the single accrual method used
for all plans of the Employer and Affiliated Employers, or if no such
single method exists, using a method which results in benefits accruing not
more rapidly than the slowest accrual rate permitted under Code Section 41
l(b)(l)(C). The determination of the Present Value of Accrued Benefit shall
be determined as of the most recent Valuation Date that falls within or
ends with the 12-month period ending on the Determination Date except as
provided in Code Section 416 and the Regulations thereunder for the first
and second plan years of a defined benefit plan.
(f) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under all
defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group, exceeds sixty percent (60%)
of a similar sum determined for all Participants.
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the Employer
and any Participant or to be a consideration or an inducement for the employment
of any Participant or Employee. Nothing contained in this Plan shall be deemed
to give any Participant or Employee the right to be retained in the service of
the Employer or to interfere with the right of
69
the Employer to discharge any Participant or Employee at any time regardless of
the effect which such discharge shall have upon the Employee as a Participant of
this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, and as otherwise
permitted by the Code and the Act, no benefit which shall be payable out of
the Trust Fund to any person (including a Participant or the Participant's
Beneficiary) shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void; and no such benefit shall in any manner be
liable for, or subject to, the debts, contracts, liabilities, engagements,
or torts of any such person, nor shall it be subject to attachment or legal
process for or against such person, and the same shall not be recognized by
the Trustee, except to such extent as may be required by law.
(b) Subsection (a) shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, by reason of a loan made pursuant to
Section 7.4. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such proportion of the amount to be
distributed as shall equal such indebtedness shall be paid to the Plan, to
apply against or discharge such indebtedness. Prior to making a payment,
however, the Participant or Beneficiary must be given written notice by the
Administrator that such indebtedness is to be so paid in whole or part from
the Participant's Combined Account. If the Participant or Beneficiary does
not agree that the indebtedness is a valid claim against the Vested
Participant's Combined Account, the Participant or Beneficiary shall be
entitled to a review of the validity of the claim in accordance with
procedures provided in Sections 2.10 and 2.11.
(c) Subsection (a) shall not apply to a "qualified domestic relations
order" defined in Code Section 414(p), and those other domestic relations
orders permitted to be so treated by the Administrator under the provisions
of the Retirement Equity Act of 1984. The Administrator shall establish a
written procedure to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic relations
order," a former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.
(d) Subsection (a) shall not apply to an offset to a Participant's
accrued benefit against an amount that the Participant is ordered or
required to pay the Plan with respect to a judgment, order, or decree
issued, or a settlement entered into, on or after August 5, 1997, in
accordance with Code Sections 401(a)(13)(C) and (D). In a case in which the
survivor annuity requirements of Code Section 401(a)(l 1) apply with
respect to distributions from the Plan to the Participant, if the
Participant has a spouse at the time at which the offset is to be made:
70
(1) either such spouse has consented in writing to such offset and
such consent is witnessed by a notary public or representative of the
Plan (or it is established to the satisfaction of a Plan
representative that such consent may not be obtained by reason of
circumstances described in Code Section 417(a)(2)(B)), or an election
to waive the right of the spouse to either a qualified joint and
survivor annuity or a qualified pre-retirement survivor annuity is in
effect in accordance with the requirements of Code Section 417(a),
(2) such spouse is ordered or required in such judgment, order, decree
or settlement to pay an amount to the Plan in connection with a
violation of fiduciary duties, or
(3) in such judgment, order, decree or settlement, such spouse retains
the right to receive the survivor annuity under a qualified joint and
survivor annuity provided pursuant to Code Section 401(a)(ll)(A)(i)
and under a qualified pre-retirement survivor annuity provided
pursuant to Code Section 401(a)(11)(A)(ii).
9.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced according to the Code, the Act
and the laws of the State of Texas, other than its laws respecting choice of
law, to the extent not pre-empted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee, the Employer or the
Administrator may be a party, and such claim, suit, or proceeding is resolved in
favor of the Trustee, the Employer or the Administrator, they shall be entitled
to be reimbursed from the Trust Fund for any and all costs, attorney's fees, and
other expenses pertaining thereto incurred by them for which they shall have
become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by
law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other
means, for any part of the corpus or income of any Trust Fund maintained
pursuant to the Plan or any funds
71
contributed thereto to be used for, or diverted to, purposes other than the
exclusive benefit of Participants, Former Participants, or their
Beneficiaries.
(b) In the event the Employer shall make an excessive contribution
under a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer
may demand repayment of such excessive contribution at any time within one
(1) year following the time of payment and the Trustees shall return such
amount to the Employer within the one (1) year period. Earnings of the Plan
attributable to the contributions may not be returned to the Employer but
any losses attributable thereto must reduce the amount so returned.
(c) Except for Sections 3.5, 3.6, and 4.1(c), any contribution by the
Employer to the Trust Fund is conditioned upon the deducibility of the
contribution by the Employer under the Code and, to the extent any such
deduction is disallowed, the Employer may, within one (1) year following
the final determination of the disallowance, whether by agreement with the
Internal Revenue Service or by final decision of a competent jurisdiction,
demand repayment of such disallowed contribution and the Trustee shall
return such contribution within one (1) year following the disallowance.
Earnings of the Plan attributable to the contribution may not be returned
to the Employer, but any losses attributable thereto must reduce the amount
so returned.
9.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
The Employer, Administrator and Trustee, and their successors, shall not be
responsible for the validity of any Contract issued hereunder or for the failure
on the part of the insurer to make payments provided by any such Contract, or
for the action of any person which may delay payment or render a Contract null
and void or unenforceable in whole or in part.
9.8 INSURER'S PROTECTIVE CLAUSE
Except as otherwise agreed upon in writing between the Employer and the
insurer, an insurer which issues any Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
9.9 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, the Participant's legal representative,
Beneficiary, or to any guardian or committee appointed for such Participant or
Beneficiary in accordance with the provisions of the Plan, shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the Trustee and
the Employer, either of whom may require such Participant, legal representative,
Beneficiary, guardian or committee, as a condition precedent to such payment, to
execute a receipt and release thereof in such form as shall be determined by the
Trustee or Employer.
72
9.10 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required
to do or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority,
9.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator, and (3) any Investment Manager appointed hereunder. The named
Fiduciaries shall have only those specific powers, duties, responsibilities, and
obligations as are specifically given them under the Plan including, but not
limited to, any agreement allocating or delegating their responsibilities, the
terms of which are incorporated herein by reference. In general, the Employer
shall have the sole responsibility for making the contributions provided for
under Section 4.1; and shall have the authority to appoint and remove the
Trustee and the Administrator; to formulate the Plan's "funding policy and
method"; and to amend or terminate, in whole or in part, the Plan. The
Administrator shall have the sole responsibility for the administration of the
Plan, including, but not limited to, the items specified in Article II of the
Plan, as the same may be allocated or delegated thereunder. The Administrator
shall act as the named Fiduciary responsible for communicating with the
Participant according to the Participant Direction Procedures. The Administrator
shall have the sole responsibility of management of the assets held under the
Trust, except with respect to those assets, the management of which has been
assigned to an Investment Manager, who shall be solely responsible for the
management of the assets assigned to it, or as otherwise specifically provided
in the Plan and Trust Agreement. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action, Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the Plan as
specified or allocated herein. No named Fiduciary shall guarantee the Trust Fund
in any manner against investment loss or depreciation in asset value. Any person
or group may serve in more than one Fiduciary capacity.
9.12 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.13 APPROVAL BY INTERNAL REVENUE SERVICE
Notwithstanding anything herein to the contrary, if, pursuant to an
application for qualification filed by or on behalf of the Plan by the time
prescribed by law for filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date that the Secretary of the Treasury may
prescribe, the Commissioner of Internal Revenue Service or the Commissioner's
delegate should determine that the Plan does not initially qualify as a
tax-exempt plan under Code Sections 401 and 501, and such determination is not
contested, or if contested,
73
is finally upheld, then if the Plan is a new plan, it shall be void ab initio
and all amounts contributed to the Plan by the Employer, less expenses paid,
shall be returned within one (1) year and the Plan shall terminate, and the
Trustee shall be discharged from all further obligations. If the
disqualification relates to an amended plan, then the Plan shall operate as if
it had not been amended,
9.14 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. In the event of any conflict between the terms of this
Plan and any Contract purchased hereunder, the Plan provisions shall control.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any other corporation or entity, whether an affiliate or
subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such Participating
Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to use the same
Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to, commingle, hold and
invest as one Trust Fund all contributions made by Participating Employers,
as well as all increments thereof.
c) Any expenses of the Plan which are to be paid by the Employer or
borne by the Trust Fund shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to the
credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates the contrary, the word "Employer"
shall be deemed to include each Participating Employer as related to its
adoption of the Plan.
74
10.4 EMPLOYEE TRANSFERS
In the event an Employee is transferred between Participating Employers,
accumulated service and eligibility shall be carried with the Employee involved.
No such transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during each Plan Year
shall be allocated only among those Participants of the Employer or
Participating Employers making the contribution or by which the forfeiting
Participant was employed. However, if the contribution is made, or the
forfeiting Participant was employed, by an Affiliated Employer, in which event
such contribution or Forfeiture shall be allocated among all Participants of all
Participating Employers who are Affiliated Employers in accordance with the
provisions of this Plan. On the basis of the information furnished by the
Administrator, the Trustee may keep separate books and records concerning the
affairs of each Participating Employer hereunder and as to the accounts and
credits of the Employees of each Participating Employer. The Trustee may, but
need not, register Contracts so as to evidence that a particular Participating
Employer is the interested Employer hereunder, but in the event of an Employee
transfer from one Participating Employer to another, the employing Participating
Employer shall immediately notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of the
Employer.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan at any time. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets allocable to
the Participants of such Participating Employer to such new trustee as shall
have been designated by such Participating Employer, in the event that it has
established a separate qualified retirement plan for its employees provided,
however, that no such transfer shall be made if the result is the elimination or
reduction of any "Section 411 (d)(6) protected benefits" as described in Section
7.1(c). If no successor is designated, the Trustee shall retain such assets for
the Employees of said Participating Employer pursuant to the provisions of the
Trust. In no such event shall any part of the corpus or income of the Trust Fund
as it relates to such Participating Employer be used for or diverted for
purposes other than for the exclusive benefit of the Employees of such
Participating Employer.
75
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary rules
or regulations, binding upon all Participating Employers and all Participants,
to effectuate the purpose of this Article.
76
IN WITNESS WHEREOF, this Plan has been executed on the day and year written
below.
- ------------------------------------- ENGlobal Engineering, Inc.
DATE
------------------------------
EMPLOYER
77
SUPPLEMENTAL PARTICIPATION AGREEMENT
A Participation Agreement made and entered into this 24 day of October ,
2005______________________, between EN Global Construction Resources, Inc.
(hereinafter referred to as the "Participating Employer"), ENGlobal Engineering,
Inc. (hereinafter referred to as the "Employer"), and The Charles Schwab Trust
Company (hereinafter referred to as the "Trustees").
WHEREAS, the Participating Employer desires to reward its employees for
faithful service, to establish a bond between employer and employee, to provide
an incentive for efficient and conscientious work, to provide a fund for
retirement, disability, or death, and to retain high-calibre fellow employees;
and
WHEREAS, there exists a Profit Sharing Plan entered into on the 24 day of
October, 2005 namely the ENGlobal 401(k) Plan, called the "Plan"; and
WHEREAS, Plan Section 10,1 provides that any other Participating Employer
may, with the consent of the Employer, adopt the Plan and participate therein by
a properly executed document evidencing said intent of said Participating
Employer;
NOW, THEREFORE, the Participating Employer hereby becomes a party to the
Plan, effective the 2*^ day of 0cf^6>f<! 2-o-osr_______________________, and the
Employer and the Trustees hereby consent to such adoption and participation upon
the following terms:
(1) Wherever a right or obligation is imposed upon the Employer by the
terms of the Plan, the same shall extend to the Participating Employer as
the "Employer" under the Plan and shall be separate and distinct from that
imposed upon the Employer. It is the intention of the parties that the
Participating Employer shall be a party to the Plan and treated in all
respects as the Employer thereunder, with its employees to be considered as
the Employees or Participants, as the case may be, thereunder. However, the
participation of the Participating Employer in the Plan shall in no way
diminish, augment, modify, or in any way affect the rights and duties of
the Employer, its Employees, or Participants, under the Plan.
(2) The Trustees hereby agree to receive and allocate contributions made to
the Plan by the Employer and by the Participating Employer, as well as to
do and perform all acts that are necessary to keep records and accounts of
all funds held for Participants who are Employees of the respective
employers.
(3) The execution of this Agreement by this Participating Employer shall be
construed as the adoption of the Plan in every respect as if said Plan had
this date been executed between the Participating Employer and the
Trustees, except as otherwise expressly provided herein or in any amendment
that may subsequently be adopted hereto.
(4) All actions required by the Plan to be taken by the Employer shall be
effective with respect to the Participating Employer if taken by the
Employer and pursuant to Plan Section 10.3, the Participating Employer
hereby irrevocably designates the Employer as its agent for such purposes.
This shall include the (1) ability to amend the Plan or any other Plan
document, in accordance with Plan Section 10.6.
IN WITNESS WHEREOF, the Participating Employer, the Employer and the
Trustees have caused this Supplemental Participation Agreement to be executed in
their respective names on the day and date first above written.
ENGlobal Construction Resources, Inc.
--------------------------------------
PARTICIPATING EMPLOYER
EMPEOYER ENGlobal Engineering, Inc.
By
--------------------------------------
EMPLOYER
The Charles Schwab Trust Company
--------------------------------------
TRUSTEE
ENGLOBAL 401(K) PLAN
FUNDING POLICY AND METHOD
A pension benefit plan (as defined in the Employee Retirement Income
Security Act of 1974) has been adopted by the company for the purpose of
rewarding long and loyal service to the company by providing to employees
additional financial security at retirement. Incidental benefits are provided in
the case of disability, death or other termination of employment.
Since the principal purpose of the plan is to provide benefits at normal
retirement age, the principal goal of the investment of the funds in the plan
should be both security and long-term stability with moderate growth
commensurate with the anticipated retirement dates of participants. Investments,
other than "fixed dollar" investments, should be included among the plan's
investments to prevent erosion by inflation. However, investments should be
sufficiently liquid to enable the plan, on short notice, to make some
distributions in the event of the death or disability of a participant.
SUPPLEMENTAL PARTICIPATION AGREEMENT
A Participation Agreement made and entered into this 24 day of October,
2005 between ENGlobal Systems, Inc. (hereinafter referred to as the
"Participating Employer"), ENGlobal Engineering, Inc. (hereinafter referred to
as the "Employer") and The Charles Schwab Trust Company (hereinafter referred to
as the "Trustees").
WHEREAS, the Participating Employer desires to reward its employees for
faithful service, to establish a bond between employer and employee, to provide
an incentive for efficient and conscientious work, to provide a fund for
retirement, disability, or death, and to retain high-calibre fellow employees;
and
WHEREAS, there exists a Profit Sharing Plan entered into on the 24 day of
October, 2005____namely the ENGlobal 401 (k) Plan, called the "Plan"; and
WHEREAS, Plan Section 10.1 provides that any other Participating Employer
may, with the consent of the Employer, adopt the Plan and participate therein by
a properly executed document evidencing said intent of said Participating
Employer;
NOW, THEREFORE, the Participating Employer hereby becomes a party to the
Plan, effective the .24th day of October, 2005__________________________, and
the Employer and the Trustees hereby consent to such adoption and participation
upon the following terms:
(1) Wherever a right or obligation is imposed upon the Employer by the
terms of the Plan, the same shall extend to the Participating Employer as
the "Employer" under the Plan and shall be separate and distinct from that
imposed upon the Employer. It is the intention of the parties that the
Participating Employer shall be a party to the Plan and treated in all
respects as the Employer thereunder, with its employees to be considered as
the Employees or Participants, as the case may be, thereunder. However, the
participation of the Participating Employer in the Plan shall in no way
diminish, augment, modify, or in any way affect the rights and duties of
the Employer, its Employees, or Participants, under the Plan.
(2) The Trustees hereby agree to receive and allocate contributions made to
the Plan by the Employer and by the Participating Employer, as well as to
do and perform all acts that are necessary to keep records and accounts of
all funds held for Participants who are Employees of the respective
employers.
(3) The execution of this Agreement by this Participating Employer shall be
construed as the adoption of the Plan in every respect as if said Plan had
this date been executed between the Participating Employer and the
Trustees, except as otherwise expressly provided herein or in any amendment
that may subsequently be adopted hereto.
(4) All actions required by the Plan to be taken by the Employer shall be
effective with respect to the Participating Employer if taken by the
Employer and pursuant to Plan Section 10.3, the Participating Employer
hereby irrevocably designates the Employer as its agent for such purposes.
This shall include the (1) ability to amend the Plan or any other P!an
document, in accordance with Plan Section 10.6.
IN WITNESS WHEREOF, the Participating Employer, the Employer and the
Trustees have caused this Supplemental Participation Agreement to be executed in
their respective names on the day and date first above written,
ENGlobal Systems, Inc.
PARTICIPATING
EMPLOYER ENGlobal Engineering, Inc.
EMPLOYER
The Charles Schwab Trust Company
By
----------------------------------
TRUSTEE
ENGLOBAL 401(K) PLAN
FUNDING POLICY AND METHOD
A pension benefit plan (as defined in the Employee Retirement Income
Security Act of 1974) has been adopted by the company for the purpose of
rewarding long and loyal service to the company by providing to employees
additional financial security at retirement. Incidental benefits are provided in
the case of disability, death or other termination of employment.
Since the principal purpose of the plan is to provide benefits at normal
retirement age, the principal goal of the investment of the funds in the plan
should be both security and long-term stability with moderate growth
commensurate with the anticipated retirement dates of participants. Investments,
other than "fixed dollar" investments, should be included among the plan's
investments to prevent erosion by inflation. However, investments should be
sufficiently liquid to enable the plan, on short notice, to make some
distributions in the event of the death or disability of a participant.