Exhibit 10.13
PRESIDENTIAL REALTY CORPORATION
DEFINED BENEFIT PLAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER...........................13
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY...............................14
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR................................14
2.4 RECORDS AND REPORTS...................................................15
2.5 APPOINTMENT OF ADVISERS...............................................16
2.6 PAYMENT OF EXPENSES...................................................16
2.7 CLAIMS PROCEDURE......................................................16
2.8 CLAIMS REVIEW PROCEDURE...............................................16
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY.............................................17
3.2 EFFECTIVE DATE OF PARTICIPATION.......................................17
3.3 DETERMINATION OF ELIGIBILITY..........................................18
3.4 TERMINATION OF ELIGIBILITY............................................18
3.5 REHIRED EMPLOYEES AND BREAKS IN SERVICE...............................18
3.6 ELECTION NOT TO PARTICIPATE...........................................19
ARTICLE IV
CONTRIBUTION AND VALUATION
4.1 PAYMENT OF CONTRIBUTIONS..............................................19
4.2 ACTUARIAL METHODS.....................................................19
4.3 QUALIFIED MILITARY SERVICE............................................20
ARTICLE V
BENEFITS
5.1 RETIREMENT BENEFITS...................................................20
5.2 MINIMUM BENEFIT REQUIREMENT FOR TOP HEAVY PLAN........................22
5.3 PAYMENT OF RETIREMENT BENEFITS........................................23
5.4 DISABILITY RETIREMENT BENEFITS........................................23
5.5 DEATH BENEFITS........................................................23
5.6 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT...........................26
5.7 DISTRIBUTION OF BENEFITS..............................................28
5.8 DISTRIBUTION OF BENEFITS UPON DEATH...................................33
5.9 TIME OF SEGREGATION OR DISTRIBUTION...................................36
5.10 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY.....................37
5.11 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN........................37
5.12 EFFECT OF SOCIAL SECURITY ACT.........................................37
5.13 LIMITATIONS ON DISTRIBUTIONS..........................................37
5.14 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION.......................38
5.15 LIMITATION OF BENEFITS ON TERMINATION.................................38
ARTICLE VI
CODE SECTION 415 LIMITATIONS
6.1 ANNUAL BENEFIT........................................................39
6.2 MAXIMUM ANNUAL BENEFIT................................................40
6.3 ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS.........................41
6.4 ANNUAL BENEFIT NOT IN EXCESS OF $10,000...............................42
6.5 PARTICIPATION OR SERVICE REDUCTIONS...................................42
6.6 ELIMINATION OF MULTIPLE PLAN REDUCTION................................43
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE.................................43
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE...........................44
7.3 OTHER POWERS OF THE TRUSTEE...........................................44
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS..............................46
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES.........................47
7.6 ANNUAL REPORT OF THE TRUSTEE..........................................47
7.7 AUDIT ................................................................48
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE........................48
7.9 TRANSFER OF INTEREST..................................................49
7.10 TRUSTEE INDEMNIFICATION...............................................49
7.11 DIRECT ROLLOVER.......................................................49
ARTICLE VIII
PLAN AMENDMENT
8.1 AMENDMENT.............................................................50
ARTICLE IX
PLAN TERMINATION
9.1 TERMINATION...........................................................51
9.2 LIMITATION OF BENEFITS ON PLAN TERMINATION............................54
ARTICLE X
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
10.1 REQUIREMENTS..........................................................54
ARTICLE XI
TOP HEAVY
11.1 TOP HEAVY PLAN REQUIREMENTS...........................................55
11.2 DETERMINATION OF TOP HEAVY STATUS.....................................55
ARTICLE XII
MISCELLANEOUS
12.1 PARTICIPANT'S RIGHTS..................................................58
12.2 ALIENATION............................................................58
12.3 CONSTRUCTION OF PLAN..................................................60
12.4 GENDER AND NUMBER.....................................................60
12.5 LEGAL ACTION..........................................................60
12.6 PROHIBITION AGAINST DIVERSION OF FUNDS................................60
12.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE............................60
12.8 INSURER'S PROTECTIVE CLAUSE...........................................61
12.9 RECEIPT AND RELEASE FOR PAYMENTS......................................61
12.10 ACTION BY THE EMPLOYER................................................61
12.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY....................61
12.12 HEADINGS..............................................................62
12.13 APPROVAL BY INTERNAL REVENUE SERVICE..................................62
12.14 UNIFORMITY............................................................62
PRESIDENTIAL REALTY CORPORATION
DEFINED BENEFIT PLAN
THIS AGREEMENT, hereby made and entered into this 10th day of
September , 2003, by and between Presidential Realty Corporation (herein
referred to as the "Employer") and Robert Feder and Thomas Viertel (herein
referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Pension Plan
and Trust effective January 1, 1994, (hereinafter called the "Effective Date")
known as Presidential Realty Corporation Defined Benefit 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;
WHEREAS, the Employer has previously adopted an "EGTRRA Good
Faith Amendment, and such amendment shall remain as an amendment to this
restated Plan as set forth below;
NOW, THEREFORE, effective January 1, 1997, except as otherwise
provided, the Employer and the Trustee in accordance with the provisions of the
Plan pertaining to amendments thereof, hereby amend the Plan in its entirety and
restate the Plan to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Accrued Benefit" means the retirement benefit a Participant is
entitled to receive pursuant to the retirement benefit formula set forth in
Section 5.1. In the event a Participant terminates employment prior to Normal
Retirement Date, the Participant's Accrued Benefit shall be equal to the amount
determined under the retirement benefit formula computed as of the Participant's
date of termination of employment.
Notwithstanding anything herein to the contrary, a Participant's
Accrued Benefit attributable to the retirement benefit formula at the close of
any Plan Year coinciding with or next following the Participant's attainment of
Normal Retirement Age shall be equal to the monthly retirement benefit formula
determined pursuant to Section 5.1(d) based upon service and Average Monthly
Compensation determined at the close of any such Plan Year.
Notwithstanding the above, a Participant's Accrued Benefit derived
from Employer contributions shall not be less than the minimum Accrued Benefit,
if any, provided pursuant to Section 5.2.
1
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.3 "Actuarial Equivalent" means a form of benefit differing in time,
period, or manner of payment from a specific benefit provided under the Plan but
having the same value when computed using Pre-Retirement Table: None;
Post-Retirement Table: 1983 Group Annuity converted to Unisex and Pre-Retirement
Interest: 8%; Post-Retirement Interest:
Notwithstanding the foregoing, effective with the later of (1) the
adoption date of an amendment that changes the interest rate or the mortality
table assumptions, or (2) the first day of the Plan Year beginning in 1995, the
mortality table and the interest rate for the purposes of determining an
Actuarial Equivalent amount (other than nondecreasing life annuities payable for
a period not less than the life of a Participant or, in the case of a
Pre-Retirement Survivor Annuity, the life of the surviving spouse) shall be the
"Applicable Mortality Table" and the "Applicable Interest Rate" described below.
However, if prior to such effective date, the Plan used an interest rate other
than the Pension Benefit Guaranty Corporation interest rate (or an interest rate
or rates based on the Pension Benefit Guaranty Corporation interest rate) in
determining the present value of a Participant's Accrued Benefit, the mortality
table and the interest rate for the purposes of determining an Actuarial
Equivalent amount (other than nondecreasing life annuities payable for a period
not less than the life of a Participant or, in the case of a Pre-Retirement
Survivor Annuity, the life of the surviving spouse) shall be the mortality table
and the interest rate specified above or the "Applicable Mortality Table" and
the "Applicable Interest Rate" described below, whichever produces the greater
benefit:
(a) The "Applicable Mortality Table" means the table prescribed by
the Secretary of the Treasury. Such table shall be based on the prevailing
commissioner's standard table (described in Code Section 807(d)(5)(A))
used to determine reserves for group annuity contracts issued on the date
as of which present value is being determined (without regard to any other
subparagraph of Code Section 807(d)(5)).
(b) The "Applicable Interest Rate" means the annual rate of interest
on 30-year Treasury securities determined as of the first calendar month
preceding the first day of the Plan Year during which the Annuity Starting
Date occurs. However, except as provided in Regulations, if a Plan
amendment (including this amendment and restatement) changes the time for
determining the "Applicable Interest Rate" (including an indirect change
as a result of a change in the Plan Year), any distribution for which the
Annuity Starting Date occurs in the one-year period commencing at the time
the Plan amendment is effective (if the amendment is effective on or after
the adoption date) must use the interest rate as provided under the terms
of the Plan after the effective date of the amendment, determined at
either the date for determining the interest rate before the amendment or
the date for determining the interest rate after the amendment, whichever
results in the larger distribution. If the Plan amendment is adopted
retroactively (that is, the amendment is effective prior to the adoption
date), the Plan must use the interest rate determination date resulting in
the larger distribution for the period beginning with the effective date
and ending one year after the adoption date.
2
Notwithstanding the above, if a benefit is distributed in a form
other than a nondecreasing annuity payable for a period not less than the
life of a Participant or, in the case of a Pre-Retirement Survivor
Annuity, the life of the surviving spouse, the interest rate used in
determining the Actuarial Equivalent of the portion of the excess/offset
portion of the monthly retirement benefit pursuant to Section 5.1(a) shall
not be less than the lesser of 7.5% or the "Applicable Interest Rate."
In the case of a distribution (other than nondecreasing life
annuities payable for a period not less than the life of a Participant or, in
the case of a Pre-Retirement Survivor Annuity, the life of the surviving spouse)
that was made in a Plan Year beginning after December 31, 1994, and before the
later of (1) the adoption date of an amendment that changes the interest rate or
the mortality table assumptions, or (2) the first day of the Plan Year beginning
in 1995, the calculation shall be made by using the interest rate determined
under the regulations of the Pension Benefit Guaranty Corporation for
determining the present value of a lump sum distribution on plan termination
that were in effect on September 1, 1993, and using the provisions of the Plan
as in effect on the day before December 8, 1994; but only if such provisions of
the Plan met the requirements of Code Section 417(e)(3) and Regulation
1.417(e)-1(d) as in effect on the day before December 8, 1994.
In the event this Section is amended, the Actuarial Equivalent of a
Participant's Accrued Benefit on or after the date of change shall be determined
(unless otherwise permitted by law or Regulation) as the greater of (1) the
Actuarial Equivalent of the Accrued Benefit as of the date of change computed on
the old basis, or (2) the Actuarial Equivalent of the total Accrued Benefit
computed on the new basis.
1.4 "Administrator" means the Employer unless another person or entity has
been designated by the Employer pursuant to Section 2.2 to administer the Plan
on behalf of the Employer.
1.5 "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).
1.6 "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, used to determine Top Heavy Plan status
under the provisions of a defined contribution plan included in any Aggregation
Group (as defined in Section 11.2).
1.7 "Anniversary Date" means January 1.
1.8 "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.
3
1.9 "Average Monthly Compensation" means the monthly Compensation of a
Participant averaged over the 5 consecutive Plan Years which produce the highest
monthly average within the last ten (10) completed years of participation. If a
Participant has less than 5 consecutive Plan Years of service from date of
participation to date of termination, the Participant's Average Monthly
Compensation will be based on the Participant's monthly Compensation during the
Participant's months of service from date of participation to date of
termination. Compensation subsequent to termination of participation pursuant to
Section 3.4 shall not be recognized.
1.10 "Beneficiary" means the person (or entity) designated as provided in
Section 5.5 to receive the benefits which are payable under the Plan upon or
after the death of a Participant.
1.11 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.12 "Compensation" with respect to any Participant means such
Participant's wages for the Plan Year within the meaning of Code Section 3401(a)
(for the purposes of income tax withholding at the source) but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or the services performed (such as
the exception for agricultural labor in Code Section 3401(a)(2)).
Notwithstanding the foregoing, if compensation for any prior determination
period is taken into account in determining a Participant's benefits for the
current Plan Year, Compensation means compensation determined pursuant to the
terms of the Plan then in effect.
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) for Plan
Years beginning after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b)
or 457(b), and Employee contributions described in Code Section 414(h)(2)
that are treated as Employer contributions.
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 Years beginning with or within such calendar year. If
Compensation for any prior determination period is taken into account in
determining a Participant's benefits for the current Plan Year, the compensation
for such prior determination period is subject to the applicable annual
compensation limit in effect for that prior period. For this purpose, in
determining benefits in Plan Years beginning on or after January 1, 1989, the
annual 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 to Top Heavy Plan Years and shall not be adjusted. 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).
4
For Plan Years beginning after December 31, 1996, for purposes of
determining Compensation, the family member aggregation rules of Code Section
401(a)(17) and Code Section 414(q)(6) (as in effect prior to the Small Business
Job Protection Act of 1996) are eliminated. In determining Average Monthly
Compensation, the elimination of the family member aggregation rules are treated
as having been in effect for earlier years.
1.13 "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.
1.14 "Covered Compensation" with respect to any Participant for a Plan
Year means the average (without indexing) of the Taxable Wage Bases in effect
for each calendar year during the 35-year period (regardless of the
Participant's year of birth) ending with the last day of the calendar year in
which the Participant attains (or will attain) Social Security Retirement Age.
The determination of each Participant's Covered Compensation shall be made with
reference to Regulation 1.401(l)-1(c)(7). A Participant's Covered Compensation
shall be adjusted each Plan Year and no increase in Covered Compensation shall
decrease a Participant's Accrued Benefit. In determining the Participant's
Covered Compensation for a Plan Year, the Taxable Wage Base for all calendar
years beginning after the first day of the Plan Year is assumed to be the same
as the Taxable Wage Base in effect as of the beginning of the Plan Year. A
Participant's Covered Compensation for a Plan Year before the 35-year period
described above is the Taxable Wage Base in effect as of the beginning of the
Plan Year. A Participant's Covered Compensation for a Plan Year after the
35-year period described above is the Participant's Covered Compensation for the
Plan Year during which the 35-year period ends. Any change in a Participant's
Covered Compensation shall not cause any reduction in the Participant's Accrued
Benefit.
1.15 "Earliest Retirement Age" means the earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.
1.16 "Early Retirement Date." This Plan does not provide for a retirement
date prior to Normal Retirement Date.
1.17 "Eligible Employee" means any Employee, except that:
Employees who are Receptionists shall not be eligible to participate
in this Plan.
5
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.
Employees who are nonresident aliens (within the meaning of Code
Section 7701(b)(1)(B)) and who receive no earned income (within the meaning of
Code Section 911(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.
1.18 "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.
1.19 "Employer" means Presidential Realty Corporation 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 New
York.
1.20 "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.
1.21 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1 of each year and ending the following December 31.
1.22 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.23 "415 Compensation" with respect to any Participant means such
Participant's wages for the Plan Year within the meaning of Code Section 3401(a)
(for the purposes of income tax withholding at the source) but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or the services performed (such as
the exception for agricultural labor in Code Section 3401(a)(2)).
6
For "limitation years" beginning after December 31, 1997, for
purposes of this Section, the determination of "415 Compensation" shall include
any elective deferral (as defined in Code Section 402(g)(3)), and any amount
which is contributed or deferred by the Employer at the election of the
Participant and which is not includible in the gross income of the Participant
by reason of Code Sections 125, 132(f)(4) for "limitation years" beginning after
December 31, 2000 or 457.
1.24 "Highly Compensated Employee" means, for Plan Years beginning after
December 31, 1996, an Employee described in Code Section 414(q) and the
Regulations thereunder, and generally means any Employee who:
(a) was a "five percent owner" as defined in Section 1.28(c) at any
time during the "determination year" or "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)-1T, A-4 and IRS
Notice 97-45 (or any superseding guidance).
In determining whether an Employee is a Highly Compensated Employee
for a Plan Year beginning in 1997, the amendments to Code Section 414(q) stated
above are treated as having been in effect for years beginning in 1996.
For purposes of this Section, for Plan Years beginning prior to
January 1, 1998, the determination of "415 Compensation" shall be made by
including amounts that would otherwise be excluded from a Participant's gross
income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B), and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b).
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."
7
1.25 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the component of the Plan being
tested.
1.26 "Hour of Service" means, for purposes of eligibility for
participation, vesting and 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.
8
1.27 "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.
1.28 "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)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from
the Employer for a Plan Year greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year in which such Plan
Year ends and owning (or considered as owning within the meaning of Code
Section 318) both more than one-half percent interest and the largest
interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the meaning
of Code Section 318) more than five percent (5%) of the outstanding stock
of the Employer or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Employer or, in the case
of an unincorporated business, any person who owns more than five percent
(5%) of the capital or profits interest in the Employer. In determining
percentage ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated
as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent owner"
means any person who owns (or is considered as owning within the meaning
of Code Section 318) more than one percent (1%) of the outstanding stock
of the Employer or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the Employer or, in the case
of an unincorporated business, any person who owns more than one percent
(1%) of the capital or profits interest in the Employer. In determining
percentage ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated
as separate employers. However, in determining whether an individual has
"415 Compensation" of more than $150,000, "415 Compensation" from each
employer required to be aggregated under Code Sections 414(b), (c), (m)
and (o) shall be taken into account.
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) for
Plan Years beginning after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
1.29 "Late Retirement Date" means the first day of the month coinciding
with or next following a Participant's actual Retirement Date after having
reached Normal Retirement Date.
1.30 "Leased Employee" means, for Plan Years beginning after December 31,
1996, any person (other than an Employee of the recipient Employer) who pursuant
to an agreement between the recipient Employer and any other person or entity
("leasing organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year,
and such services are performed under primary direction or control by the
recipient Employer. Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient Employer.
Furthermore, Compensation for a Leased Employee shall only include Compensation
from the leasing organization that is attributable to services performed for the
recipient Employer. A Leased Employee shall not be considered an Employee of the
recipient Employer:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Code Section 415(c)(3), but, for Plan
Years beginning prior to January 1, 1998, 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, 402(e)(3), 402(h)(1)(B), 403(b)
or 457(b), and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions, and, for Plan
Years beginning prior to January 1, 2001, excluding amounts that are
not includible in gross income under Code Section 132(f)(4);
(2) immediate participation;
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient Employer's nonhighly compensated work force.
1.31 "Non-Highly Compensated Participant" means, for Plan Years beginning
after December 31, 1996, any Participant who is not a Highly Compensated
Employee.
1.32 "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
1.33 "Normal Retirement Age" means the Participant's 65th birthday, or the
Participant's 5th anniversary of joining the Plan, if later. A Participant shall
become fully Vested in the Participant's Normal Retirement Benefit upon
attaining Normal Retirement Age.
1.34 "Normal Retirement Date" means the first day of the month coinciding
with or next following the Participant's Normal Retirement Age.
1.35 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or,
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed the number of Hours of Service needed to prevent the Employee
from incurring a 1-Year Break in Service.
1.36 "Participant" means any Eligible Employee who participates in the
Plan and has not for any reason become ineligible to participate further in the
Plan.
1.37 "Participant's Cumulative Permitted Disparity Limit" is equal to
thirty-five (35) minus the number of years credited to the Participant for
purposes of the benefit formula or the accrual method under the plan under one
or more qualified plans or simplified employee pensions (whether or not
terminated) ever maintained by the Employer, other than years for which a
Participant earned a year of credited service under this Plan. For purposes of
determining the Participant's Cumulative Permitted Disparity Limit, all years
ending in the same calendar year are treated as the same year. If the
Participant's Cumulative Permitted Disparity Limit is less than the period of
years specified in Section 5.1(a), then for years after the Participant reaches
the Cumulative Permitted Disparity Limit and through the end of the period
specified in Section 5.1(a), the Participant's benefit will be equal to the
excess benefit percentage, or, if the Participant's benefit after the latest
Fresh-Start Date is not accrued under the fractional accrual rule and the plan
does not satisfy Code Section 411(b)(1)(f), 133 1/3 percent of the base benefit
percentage, if lesser, times Average Monthly Compensation.
11
1.38 "Plan" means this instrument, including all amendments thereto.
1.39 "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.
1.40 "Plan Year of Service" means a Plan Year during which an Employee is
a Participant and completes 1000 Hours of Service. However, in determining
whether a Participant has completed a Plan Year of Service in a short Plan Year,
the number of the Hours of Service required shall be proportionately reduced
based on the number of full months in the short Plan Year.
1.41 "Pre-Retirement Survivor Annuity" means an immediate annuity for the
life of the surviving spouse of a Participant who dies prior to the
Participant's Annuity Starting Date.
1.42 "Present Value of Accrued Benefit" means the Actuarial Equivalent
lump-sum amount of a Participant's Accrued Benefit at date of valuation.
Notwithstanding the foregoing, the Present Value of Accrued Benefit for the
determination of Top Heavy Plan status shall be made exclusively pursuant to the
provisions of Section 11.
1.43 "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.
1.44 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.45 "Retirement Date" means the date as of which a Participant retires
whether such retirement occurs on a Participant's Normal Retirement Date or Late
Retirement Date (see Section 5.1).
1.46 "Social Security Retirement Age" means the age used as the retirement
age under Section 216(l) of the Social Security Act, except that such section
shall be applied without regard to the age increase factor and as if the early
retirement age under Section 216(l)(2) of such Act were 62.
1.47 "Taxable Wage Base" means, with respect to any calendar year, the
contribution and benefit base in effect under Section 230 of the Social Security
Act at the beginning of the calendar year.
1.48 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death or retirement.
1.49 "Top Heavy Plan" means a plan described in Section 11.2(a).
1.50 "Top Heavy Plan Year" means a Plan Year during which the Plan is a
Top Heavy Plan.
12
1.51 "Trustee" means the person or entity named as trustee herein or in
any separate trust forming a part of this Plan, and any successors.
1.52 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.53 "Vested" means the portion of a Participant's benefits under the Plan
that are nonforfeitable.
1.54 "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.
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service. The participation computation period beginning
after a 1-Year Break in Service shall be measured from the date on which an
Employee again performs an Hour of Service. The participation computation period
shall shift to the Plan Year which includes the anniversary of the date on which
the Employee first performed an Hour of Service. An Employee who is credited
with the required Hours of Service in both the initial computation period (or
the computation period beginning after a 1-Year Break in Service) and the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service, shall be credited with two (2) Years of Service
for purposes of eligibility to participate.
For vesting purposes, the computation periods shall be the Plan
Year, including periods prior to the Effective Date of the Plan.
The computation period shall be the Plan Year if not otherwise set
forth herein.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c).
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.
13
(b) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run goal
and investment growth (and stability of same) is a more current need, or
shall appoint a qualified person to do so. The Employer or its delegate
shall communicate such needs and goals to the Trustee, who shall
coordinate such Plan needs with its investment policy. The communication
of such a "funding policy and method" shall not, however, constitute a
directive to the Trustee as to the investment of the Trust Funds. Such
"funding policy and method" shall be consistent with the objectives of
this Plan and with the requirements of Title I of the Act.
(c) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or allocated
by it under the provisions of this Plan or pursuant to procedures
established hereunder. This requirement may be satisfied by formal
periodic review by the Employer or by a qualified person specifically
designated by the Employer, through day-to-day conduct and evaluation, or
through other appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint
any person, including, but not limited to, the Employees of the Employer, to
perform the duties of the Administrator. Any person so appointed shall signify
acceptance by filing written acceptance with the Employer. Upon the resignation
or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.
2.3 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.
14
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. All Policies shall be issued on a uniform basis as of
each Anniversary Date with respect to all Participants under similar
circumstances;
(g) to compute and certify to the Employer and to the Trustee from
time to time the sums of money necessary or desirable to be contributed to
the Plan;
(h) to consult with the Employer and the Trustee regarding the short
and long-term liquidity needs of the Plan in order that the Trustee can
exercise any investment discretion in a manner designed to accomplish
specific objectives;
(i) to prepare and implement a procedure for notifying Participants
and Beneficiaries of their rights to elect joint and survivor annuities
and Pre-Retirement Survivor Annuities as required by the Act and
regulations thereunder;
(j) to determine the validity of, and take appropriate action with
respect to, any qualified domestic relations order received by it; and
(k) to assist any Participant regarding the Participant's rights,
benefits, or elections available under the Plan.
2.4 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.
15
2.5 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.
2.6 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, and other specialists and their agents, the costs of any
bonds required pursuant to Act Section 412, and other costs of administering the
Plan. Until paid, the expenses shall constitute a liability of the Trust Fund.
2.7 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within ninety (90) days after the application is filed, or such
period as is required by applicable law or Department of Labor regulation. In
the event the claim is denied, the reasons for the denial shall be specifically
set forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an explanation of the Plan's
claims review procedure.
2.8 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 2.7
shall be entitled to request the Administrator to give further consideration to
a claim by filing with the Administrator a written request for a hearing. Such
request, together with a written statement of the reasons why the claimant
believes the claim should be allowed, shall be filed with the Administrator no
later than sixty (60) days after receipt of the written notification provided
for in Section 2.7. The Administrator shall then conduct a hearing within the
next sixty (60) days, at which the claimant may be represented by an attorney or
any other representative of such claimant's choosing and expense and at which
the claimant shall have an opportunity to submit written and oral evidence and
arguments in support of the claim. At the hearing (or prior thereto upon five
(5) business days written notice to the Administrator) the claimant or the
claimant's representative shall have an opportunity to review all documents in
the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within sixty (60) days of receipt of the appeal
(unless there has been an extension of sixty (60) days due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the sixty (60) day period). Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
16
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year 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
earlier of the first day of the Plan Year or the first day of the seventh month
of such Plan Year 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 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 3.5.
17
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 2.8.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in the Plan for each Year of Service completed while a
noneligible Employee, until such time as the Former Participant's Accrued
Benefit shall be forfeited or distributed pursuant to the terms of the Plan.
3.5 REHIRED EMPLOYEES AND BREAKS IN SERVICE
(a) If any Participant becomes a Former Participant due to severance
from employment with the Employer and is reemployed by the Employer before
a 1-Year Break in Service occurs, the Former Participant shall become a
Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to severance
from employment with the Employer and is reemployed after a 1-Year Break
in Service has occurred, Years of Service shall include Years of Service
prior to the 1-Year Break in Service subject to the following rules:
(1) In the case of a Former Participant who under the Plan does not
have a nonforfeitable right to any interest in the Plan resulting
from Employer contributions, Years of Service before a period of
1-Year Break in Service will not be taken into account if the number
of consecutive 1-Year Breaks in Service equal or exceed the greater
of (A) five (5) or (B) the aggregate number of pre-break Years of
Service. Such aggregate number of Years of Service will not include
any Years of Service disregarded under the preceding sentence by
reason of prior 1-Year Breaks in Service.
(2) A Former Participant who has not had Years of Service before a
1-Year Break in Service disregarded pursuant to (1) above, shall
participate in the Plan as of the date of reemployment.
(c) If any Participant becomes a Former Participant due to severance
of employment with the Employer and again becomes a Participant, such
renewed participation shall not result in duplication of benefits.
Accordingly, if such Participant has received a distribution of a Vested
Accrued Benefit under the Plan by reason of prior participation (and such
distribution has not been repaid to the Plan with interest within a period
of 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), the Participant's Accrued Benefit shall be
reduced by the Actuarial Equivalent (at the date of distribution) of the
Present Value of the Accrued Benefit as of the date of distribution. Any
repayment by a Participant shall be equal to the total of:
18
(1) the amount of the distribution,
(2) interest on such distribution compounded annually at the rate of
five percent (5%) per annum from the date of distribution to the
date of repayment or to the last day of the first Plan Year ending
on or after December 31, 1987, if earlier, and
(3) interest on the sum of (1) and (2) above compounded annually at
the rate of one-hundred-twenty percent (120%) of the federal
mid-term rate (as in effect under Code Section 1274 for the first
month of a Plan Year) from the beginning of the first Plan Year
beginning after December 31, 1987 or the date of distribution,
whichever is later, to the date of repayment.
3.6 ELECTION NOT TO PARTICIPATE
An Employee, for Plan years beginning on or after the later of the
adoption date or effective date of this amendment and restatement, may, subject
to the approval of the Employer, elect voluntarily not to participate in the
Plan. The election not to participate must be irrevocable and communicated to
the Employer, in writing, within a reasonable period of time before the
beginning of the first Plan Year.
ARTICLE IV
CONTRIBUTION AND VALUATION
4.1 PAYMENT OF CONTRIBUTIONS
No contribution shall be required under the Plan from any
Participant. The Employer shall pay to the Trustee from time to time such
amounts in cash as the Administrator and Employer shall determine to be
necessary to provide the benefits under the Plan determined by the application
of accepted actuarial methods and assumptions. The method of funding shall be
consistent with Plan objectives.
4.2 ACTUARIAL METHODS
In establishing the liabilities under the Plan and contributions
thereto, the enrolled actuary will use such methods and assumptions as will
reasonably reflect the cost of the benefits. The Plan assets are to be valued on
the last day of the Plan Year (or on any other date determined by the
Administrator) using any reasonable method of valuation that takes into account
fair market value pursuant to Regulations. There must be an actuarial valuation
of the Plan at least once every year.
19
4.3 QUALIFIED MILITARY SERVICE
Notwithstanding any provision of this Plan to the contrary,
effective December 12, 1994, contributions, benefits and service will be
provided in accordance with Code Section 414(u).
ARTICLE V
BENEFITS
5.1 RETIREMENT BENEFITS
(a) The amount of monthly retirement benefit to be provided for each
Participant who retires on the Participant's Normal Retirement Date shall
be equal to the Participant's Accrued Benefit (herein called the
Participant's Normal Retirement Benefit).
For Plan Years commencing prior to January 1, 2000, the amount of
monthly retirement benefit to be provided for each Participant who retires
on his Normal Retirement Date prior to January 1, 2000 shall be equal to
his Accrued Benefit equal to the sum of (1) 6.5% of such Participant's
Average Monthly Compensation multiplied by the Participant's total number
of Plan Years of Service (up to a maximum of 10 years), plus (2) 0.62% of
such Average Monthly Compensation in excess of one-twelfth of Covered
Compensation multiplied by the Participant's total number of Plan Years of
Service (up to a maximum of 10 years), computed to the nearest dollar.
Effective January 1, 2000, and solely for Participants who are
Eligible Employees on and after January 1, 2000, a Participant's Accrued
Benefit is based on a retirement benefit formula equal to the sum of (1)
7.15% of such Participant's Average Monthly Compensation multiplied by the
Participant's total number of Plan Years of Service (up to a maximum of 10
years), plus (2) 0.62% of such Average Monthly Compensation in excess of
one-twelfth of Covered Compensation multiplied by the Participant's total
number of Plan Years of Service (up to a maximum of 10 years), computed to
the nearest dollar.
No other qualified plan or simplified employee pension, as defined
in Code Section 408(k), maintained by the Employer shall (1) impute
disparity pursuant to Regulation 1.401(a)(4)-7 for any Participant and (2)
provide for permitted disparity pursuant to Code Section 401(l).
Additionally, the number of Plan Years of Service taken into account for
any Participant will not exceed the Participant's Cumulative Permitted
Disparity Limit as defined in Section 1.37.
The "Normal Retirement Benefit" of each Participant shall not be
less than the largest periodic benefit that would have been payable to the
Participant upon separation from service at or prior to Normal Retirement
Age under the Plan exclusive of social security supplements, premiums on
disability or term insurance, and the value of disability benefits not in
excess of the "Normal Retirement Benefit." For purposes of comparing
periodic benefits in the same form, commencing prior to and at Normal
Retirement Age, the greater benefit is determined by converting the
benefit payable prior to Normal Retirement Age into the same form of
annuity benefit payable at Normal Retirement Age and comparing the amount
of such annuity payments. In the case of a Top Heavy Plan, the "Normal
Retirement Benefit" shall not be smaller than the minimum benefit to which
the Employee is entitled under Section 5.2.
20
(b) This Plan does not provide for a retirement date prior to Normal
Retirement Date. In the event a Participant retires prior to the
Participant's Normal Retirement Date, the Participant's benefit shall be
the benefit payable per Section 5.6(a).
(c) The Normal Retirement Benefit payable to a Participant pursuant
to this Section 5.1 shall be a monthly pension commencing on the
Participant's Retirement Date and continuing for life. However, the form
of distribution of such benefit shall be determined pursuant to the
provisions of Section 5.7.
(d) At the request of a Participant, the Participant may be
continued in employment beyond Normal Retirement Date. In such event,
effective September 1, 2003, the Participant may elect one of the
following:
(1) To postpone receiving the payment of monthly retirement
benefits until actual retirement. At the close of each Plan
Year prior to actual Retirement Date, a Participant shall be
entitled to a retirement benefit equal to the greater of (i)
the Actuarial Equivalent of the monthly retirement benefit
such Participant was entitled to at the close of the prior
Plan Year, or (ii) the Participant's Accrued Benefit
determined at the close of the Plan Year. The monthly
retirement benefit calculated pursuant to this Section
5.1(d)(1) shall be offset by the actuarial value (determined
pursuant to Section 1.3) of the total benefit distributions
(pursuant to Section 5.7(e)) made by the close of the Plan
Year.
(2) To commence receiving the payment of monthly retirement
benefits provided for in the Plan (including a lump sum) as
though actual retirement had occurred on a Normal Retirement
Date. At the close of each Plan Year prior to actual
Retirement Date, such Participant shall be entitled to a
monthly retirement benefit payable each subsequent Plan Year
equal to the greater of (i) the Participant's monthly
retirement benefit determined at the close of the prior Plan
Year, or (ii) the Participant's Accrued Benefit determined at
the close of the Plan Year, offset by the actuarial value
(determined pursuant to Section 1.3) of the total benefit
distributions made by the close of the Plan Year.
Except with respect to a "five (5) percent owner," a Participant's
Accrued Benefit is actuarially increased to take into account the period
after age 70 1/2 in which the Participant does not receive any benefits
under the Plan. The actuarial increase begins on the April 1 following the
calendar year in which the Participant attains age 70 1/2 (January 1, 1997
in the case of a Participant who attained age 70 1/2 prior to 1996), and
ends on the date on which benefits commence after retirement in an amount
sufficient to satisfy Code Section 401(a)(9).
21
The amount of actuarial increase payable as of the end of the period
for actuarial increases must be no less than the Actuarial Equivalent of
the Participant's retirement benefits that would have been payable as of
the date the actuarial increase must commence plus the Actuarial
Equivalent of additional benefits accrued after that date, reduced by the
Actuarial Equivalent of any distributions made after that date. The
actuarial increase is generally the same as, and not in addition to, the
actuarial increase required for that same period under Code Section 411 to
reflect the delay in payments after normal retirement, except that the
actuarial increase required under Code Section 401(a)(9)(C) must be
provided even during the period during which a Participant is in Act
Section 203(a)(3)(B) service.
5.2 MINIMUM BENEFIT REQUIREMENT FOR TOP HEAVY PLAN
(a) The minimum Accrued Benefit derived from Employer contributions
to be provided under this Section for each Non-Key Employee who is a
Participant during a Top Heavy Plan Year shall equal the product of (1)
one-twelfth (1/12th) of "415 Compensation" averaged over the five (5)
consecutive "limitation years" (or actual number of "limitation years," if
less) which produce the highest average, and (2) the lesser of (i) two
percent (2%) multiplied by Plan Years of Service, or (ii) twenty percent
(20%), expressed as a single life annuity.
(b) For purposes of providing the minimum benefit under Code Section
416, a Non-Key Employee who is not a Participant solely because (1) such
Employee's Compensation is below a stated amount or (2) such Employee
declined to make mandatory contributions (if required) to the Plan will be
considered to be a Participant. Furthermore, such minimum benefit shall be
provided regardless of whether such Non-Key Employee is employed on a
specified date.
(c) For purposes of this Section, Plan Years of Service for any Plan
Year beginning before January 1, 1984, or for any Plan Year during which
the Plan was not a Top Heavy Plan shall be disregarded.
(d) For purposes of this Section, "415 Compensation" for any
"limitation year" ending in a Plan Year which began prior to January 1,
1984, subsequent to the last "limitation year" during which the Plan is a
Top Heavy Plan, or in which the Participant failed to complete a Plan Year
of Service, shall be disregarded.
(e) 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).
22
(f) If Section 5.1(c) provides for the Normal Retirement Benefit to
be paid in a form other than a single life annuity, the Accrued Benefit
under this Section shall be the Actuarial Equivalent of the minimum
Accrued Benefit under (a) above pursuant to Section 1.3.
(g) If payment of the minimum Accrued Benefit commences at a date
other than Normal Retirement Date, the minimum Accrued Benefit shall be
the Actuarial Equivalent of the minimum Accrued Benefit commencing at
Normal Retirement Date pursuant to Section 1.3.
(h) To the extent required to be nonforfeitable under Section 5.6,
the minimum Accrued Benefit under this Section may not be forfeited under
Code Section 411(a)(3)(B) or Code Section 411(a)(3)(D).
5.3 PAYMENT OF RETIREMENT BENEFITS
When a Participant retires, the Administrator shall immediately take
pursuant to the Plan all necessary steps and execute all required documents to
cause the payment of the Participant's Accrued Benefit pursuant to the Plan.
5.4 DISABILITY RETIREMENT BENEFITS
No disability benefits, other than those payable upon termination of
employment, are provided in this Plan.
5.5 DEATH BENEFITS
(a) If a Participant dies prior to the Participant's Retirement
Date, such Participant's Beneficiary shall receive a death benefit equal
to the Actuarial Equivalent of the Accrued Benefit determined as of the
Anniversary Date subsequent to or coinciding with the date of death.
23
(b) Death benefits payable by reason of the death of a Participant
or a Retired Participant shall be paid to such Participant's Beneficiary
in accordance with the following provisions:
(1) Upon the death of a Participant subsequent to the Participant's
Retirement Date, but prior to the Annuity Starting Date, the
Participant's Beneficiary shall be entitled to a death benefit in an
amount equal to the Actuarial Equivalent of the benefit the
Participant would have received at the Participant's Retirement
Date, credited with interest subsequent to such date at the rate
determined under Code Section 411(c)(2)(C), if applicable.
(2) Upon the death of a Participant subsequent to the Annuity
Starting Date, the Participant's Beneficiary shall be entitled to
whatever death benefit may be available under the settlement
arrangements pursuant to which the Participant's benefit is made
payable.
(3) In the event of a Terminated Participant's death subsequent to
the Participant's termination of employment, the Participant's
Beneficiary shall receive the Present Value of such Participant's
Vested Accrued Benefit as of the Anniversary Date coinciding with or
next following the date of the Participant's death.
(c) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive the death benefit
payable as a result of the death of a Participant as the Administrator may
deem desirable. The Administrator's determination of death and the right
of any person to receive payment shall be conclusive.
(d) Unless otherwise elected in the manner prescribed in Section
5.8, the Beneficiary of the death benefit shall be the Participant's
surviving spouse, who shall receive such benefit in the form of a
Pre-Retirement Survivor Annuity pursuant to Section 5.8. Except, however,
the Participant may designate a Beneficiary other than the spouse if:
(1) the Participant and the Participant's spouse have validly waived
the Pre-Retirement Survivor Annuity in the manner prescribed in
Section 5.8, and 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 which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
24
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. 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 shall be
payable to the Participant's estate. Additionally, if the Beneficiary does
not predecease the Participant, but dies prior to the distribution of the
death benefit, the death benefit will be paid to the Beneficiary's estate.
(e) The benefit payable under this Section shall be paid pursuant to
the provisions of Sections 5.8 and 5.9.
(f) In no event shall the death benefit payable to a surviving
spouse be less than the Actuarial Equivalent of the "minimum spouse's
death benefit."
(g) For the purposes of this Section, the "minimum spouse's death
benefit" means a death benefit for a Vested married Participant payable in
the form of a Pre-Retirement Survivor Annuity. Such annuity payments shall
be equal to the amount which would be payable as a survivor annuity under
the joint and survivor annuity provisions of the Plan if:
(1) in the case of a Participant who dies after the Earliest
Retirement Age, such Participant had retired with an immediate joint and
survivor annuity on the day before the Participant's date of death, or
(2) in the case of a Participant who dies on or before the Earliest
Retirement Age, such Participant had:
(i) separated from service on the earlier of the actual time
of separation or the date of death,
(ii) survived to the Earliest Retirement Age,
(iii) retired with an immediate joint and survivor annuity at
the Earliest Retirement Age based on the Participant's Vested
Accrued Benefit on date of death, and
(iv) died on the day after the day on which said Participant
would have attained the Earliest Retirement Age.
25
5.6 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT
(a) Payment to a Former Participant of the Vested portion of such
Former Participant's Accrued Benefit, unless such Former Participant
otherwise elects, shall begin not later than the 60th day after the close
of the Plan Year in which the latest of the following events occurs: (1)
the date on which the Participant attains the earlier of age 65 or the
Normal Retirement Age specified herein; (2) the 10th anniversary of the
year in which the Participant commenced participation in the Plan; or (3)
the date the Participant terminates service with the Employer.
However, for Plan Years beginning after August 5, 1997, the
Administrator shall direct the earlier payment of the entire Vested
portion of the Present Value of Accrued Benefit, but only if it does not
exceed $5,000 ($3,500 for Plan Years beginning prior to August 6, 1997)
and, if the distribution is made prior to October 17, 2000, has never
exceeded $5,000 ($3,500 for Plan Years beginning prior to August 6, 1997)
at the time of any prior distribution.
That portion of a Terminated Participant's Accrued Benefit that is
forfeited shall be used only to reduce future costs of the Plan at such
time as it becomes a forfeiture.
That portion of a Terminated Participant's Accrued Benefit that is
not Vested shall become a forfeiture on the last day of the Plan Year
following the Plan Year in which the Participant terminates employment.
Notwithstanding the foregoing, if a Terminated Participant is reemployed
prior to incuring five (5) consecutive 1-Year Breaks in Service, the
Accrued Benefit that is not vested shall be restored to such Participant,
if applicable pursuant to Section 3.5 of the Plan.
For purposes of this Section 5.6, if the value of a Terminated
Participant's Vested Accrued Benefit is zero, the Terminated Participant
shall be deemed to have received a distribution of such zero percent
Vested Accrued Benefit.
(b) The Vested portion of any Participant's Accrued Benefit shall be
a percentage of the Participant's Accrued Benefit determined on the basis
of the Participant's number of Years of Service according to the following
schedule:
Vesting Schedule
Years of Service Percentage
Less than 3 0 %
3 20 %
4 40 %
5 60 %
6 80 %
7 100 %
26
(c) Notwithstanding the vesting provided for in paragraph (b) above,
for any Top Heavy Plan Year, the Vested portion of the Accrued Benefit of
any Participant who has an Hour of Service after the Plan becomes top
heavy shall be a percentage of the Participant's Accrued Benefit
determined on the basis of the Participant's number of Years of Service
according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0 %
2 20 %
3 40 %
4 60 %
5 80 %
6 100 %
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plan, the Administrator shall revert to the vesting schedule in effect
before this Plan became a Top Heavy Plan. Any such reversion shall be
treated as a Plan amendment pursuant to the terms of the Plan.
(d) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Accrued Benefit shall not be less than the
Vested percentage attained as of the later of the effective date or
adoption date of this amendment and restatement.
(e) The computation of a Participant's nonforfeitable percentage of
such Participant's interest in the Plan shall not be reduced as the result
of any direct or indirect amendment to this Plan. In the event that the
Plan is amended to change or modify any vesting schedule, or if the Plan
is amended in any way that directly or indirectly affects the computation
of the Participant's nonforfeitable percentage, or if the Plan is deemed
amended by an automatic change to a top heavy vesting schedule, then each
Participant with at least three (3) Years of Service as of the expiration
date of the election period may elect to have such Participant's
nonforfeitable percentage computed under the Plan without regard to such
amendment or change. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of the
amendment and shall end sixty (60) days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
27
(f) In determining Years of Service for purposes of vesting under
the Plan, Years of Service prior to the vesting computation period in
which an Employee attained age eighteen shall be excluded.
5.7 DISTRIBUTION OF BENEFITS
(a)(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 the
Actuarial Equivalent of 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 fifty percent (50%) survivor annuity shall be considered the
designated qualified joint and survivor annuity and automatic form of
payment for the purposes of this Plan. 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 joint and survivor annuity and the life annuity form of
distribution shall be the Actuarial Equivalent of the benefits due the
Participant.
(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 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.
28
(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, with respect to distributions made after
December 31, 1996, 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 5.7 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:
(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;
29
(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.
(b) In the event a married Participant duly elects pursuant to
paragraph (a)(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
such Participant's Beneficiary an amount which is the Actuarial Equivalent
of the monthly retirement benefit provided in Section 5.1(c) in one or
more of the following methods:
(1) One lump-sum payment in cash.
(2) Monthly pension payable over the life of the Participant.
(3) Reduced monthly pension payable over the life of the Participant
and the life of the Participant's designated Beneficiary (50% joint
and survivor annuity).
(4) Reduced monthly pension payable over the life of the Participant
and the life of the Participant's designated Beneficiary (75% joint
and survivor annuity).
(5) Reduced monthly pension payable over the life of the Participant
and the life of the Participant's designated Beneficiary (100% joint
and survivor annuity).
However, any such annuity may not be in any form that will provide
for payments over a period extending beyond either 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 expectancy of the Participant and the Participant's designated
Beneficiary).
30
(c) The present value of a Participant's joint and survivor annuity
derived from Employer and Employee contributions may not, for Plan Years
beginning after August 5, 1997, 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 ($3,500 for
Plan Years beginning prior to August 6, 1997) or, if the distribution is
made prior to October 17, 2000, has ever exceeded $5,000 ($3,500 for Plan
Years beginning prior to August 6, 1997) at the time of any prior
distribution and the benefit 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 5.7(c) must be obtained not more than
ninety (90) days before commencement of the distribution and shall be made
in a manner consistent with Section 5.7(a)(2).
If, for Plan Years beginning after August 5, 1997, the value of the
Participant's benefit derived from Employer and Employee contributions
does not exceed $5,000 ($3,500 for Plan Years beginning prior to August 6,
1997) and, if the distribution is made prior to October 17, 2000, has
never exceeded $5,000 ($3,500 for Plan Years beginning prior to August 6,
1997) at the time of any prior distribution, 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.
(d) The following rules will apply to the consent requirements set
forth in subsection (c):
(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 5.7(e).
(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 5.7(a)(6).
31
(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 5.7(a)(5), after the notice required under Regulation
1.411(a)-11(c) is given, provided that: (1) the Administrator clearly
informs the Participant that the Participant has a right to a period of at
least thirty (30) days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and (2) the Participant, after receiving
the notice, affirmatively elects a distribution.
(e) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits made on or after January 1, 1997,
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 (i) the calendar year in
which the Participant attains age 70 1/2 or (ii) the calendar
year in which the Participant retires, provided, however, that
this clause (ii) shall not apply in the case of a Participant
who is a "five (5) percent owner" at any time during the Plan
Year ending with or within the calendar year in which such
owner attains age 70 1/2. Such distributions shall be equal to
or greater than any required distribution.
Alternatively, if the distribution is to be in the form of a
joint and survivor annuity or single life annuity, then
distributions 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) 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.
32
With respect to distributions under the Plan made 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, notwithstanding any provision of the Plan to the contrary. This
amendment shall continue in effect until the end of the last calendar year
beginning before the effective date of final Regulations under Code
Section 401(a)(9) or such other date specified in guidance published by
the Internal Revenue Service.
(f) 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.
(g) All 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.
5.8 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested Participant
who dies before the Annuity Starting Date and who has a surviving spouse
shall have the death benefit paid to the surviving spouse in the form of a
Pre-Retirement Survivor Annuity. The Participant's spouse may direct that
payment of the Pre-Retirement Survivor Annuity commence within a
reasonable period after the Participant's death (but not later than the
month in which the Participant would have attained the Earliest Retirement
Age under the Plan if the Participant dies on or before the Earliest
Retirement Age). If the spouse does not so direct, payment of such benefit
will commence at the time the Participant would have attained the later of
Normal Retirement Age or age 62. However, the spouse may elect a later
commencement date, subject to the rules specified in Section 5.8(g).
(b) Any election to waive the Pre-Retirement Survivor Annuity before
the Participant's death 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 shall require the spouse's irrevocable consent in the
same manner provided for in Section 5.7(a)(2). Further, the spouse's
consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary and
that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor Annuity
shall begin on the first day of the Plan Year in which the Participant
attains age thirty-five (35) and end on the date of the Participant's
death. An earlier waiver (with spousal consent) may be made provided a
written (or in such other form as permitted by the Internal Revenue
Service) explanation of the Pre-Retirement Survivor Annuity is given to
the Participant and such waiver becomes invalid at the beginning of the
Plan Year in which the Participant turns age thirty-five (35). In the
event a Vested Participant separates from service prior to the beginning
of the election period, the election period shall begin on the date of
such separation from service.
33
(d) With regard to the election, the Administrator shall provide
each Participant within the applicable period, with respect to such
Participant (and consistent with Regulations), a written (or in such other
form as permitted by the Internal Revenue Service) explanation of the
Pre-Retirement Survivor Annuity containing comparable information to that
required pursuant to Section 5.7(a)(5). For the purposes of this
paragraph, the term "applicable period" means, with respect to a
Participant, whichever of the following periods ends last:
(1) The period beginning with the first day of the Plan Year
in which the Participant attains age thirty-two (32) and
ending with the close of the Plan Year preceding the Plan Year
in which the Participant attains age thirty-five (35);
(2) A reasonable period after the individual becomes a
Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity
with respect to the Participant;
(4) A reasonable period ending after Code Section 401(a)(11)
applies to the Participant; or
(5) A reasonable period after separation from service in the
case of a Participant who separates before attaining age
thirty-five (35). For this purpose, the Administrator must
provide the explanation beginning one (1) year before the
separation from service and ending one (1) year after such
separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
For purposes of applying this Section 5.8(d), a reasonable period
ending after the enumerated events described in paragraphs (2), (3) and
(4) is the end of the two (2) year period beginning one (1) year prior to
the date the applicable event occurs, and ending one (1) year after that
date.
(e) If the present value of the Pre-Retirement Survivor Annuity
derived from Employer and Employee contributions does not exceed $5,000
($3,500 for Plan Years beginning prior to August 6, 1997) and, if the
distribution is made prior to October 17, 2000, has never exceeded $5,000
($3,500 for Plan Years beginning prior to August 6, 1997) at the time of
any prior distribution, then the Administrator shall direct the immediate
distribution of the present value of the Pre-Retirement Survivor Annuity
to the Participant's spouse. No distribution may be made under the
preceding sentence after the Annuity Starting Date unless the spouse
consents in writing (or in such other form as permitted by the Internal
Revenue Service) to such distribution. If the value exceeds $5,000 ($3,500
for Plan Years beginning prior to August 6, 1997) or, if the distribution
is made prior to October 17, 2000, has ever exceeded $5,000 ($3,500 for
Plan Years beginning prior to August 6, 1997) at the time of any prior
distribution, then an immediate distribution of the entire amount of the
Pre-Retirement Survivor Annuity may be made to the surviving spouse,
provided such surviving spouse consents in writing (or in such other form
as permitted by the Internal Revenue Service) to such distribution. Any
consent required under this paragraph must be obtained not more than
ninety (90) days before commencement of the distribution and shall be made
in a manner consistent with Section 5.7(a)(2).
34
The present value in this regard shall be determined as provided in
Section 1.42. Notwithstanding the foregoing, the present value of the
Pre-Retirement Survivor Annuity shall be determined as provided in Section
1.42.
(f)(1) To the extent the death benefit is not paid in the form of a
Pre-Retirement Survivor Annuity, it shall be paid to the Participant's
Beneficiary in one 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 to the rules specified in Section
5.8(g):
(i) One lump-sum payment in cash.
(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 5.5
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.
(g) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance
with the following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder. If it is determined,
pursuant to Regulations, that the distribution of a Participant's interest
has begun and the Participant dies before the entire interest has been
distributed, the remaining portion of such interest shall be distributed
at least as rapidly as under the method of distribution selected pursuant
to Section 5.7 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.
35
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 shall be distributed over the
life of such designated Beneficiary (or 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.
(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) 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.
5.9 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 5.7 and 5.8, 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 5.7), shall be
deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this Section.
36
5.10 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.
5.11 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 forfeited and shall be used to reduce the cost of the
Plan. Notwithstanding the foregoing, effective January 1, 1997, or if later, the
adoption date of this amendment and restatement, if the value of a Participant's
Vested benefit derived from Employer and Employee contributions does not exceed
$5,000 ($3,500 for Plan Years beginning prior to August 6, 1997), 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 benefit being
forfeited, such benefit shall be restored unadjusted for earnings or losses.
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 impermissable forfeiture under the Code.
5.12 EFFECT OF SOCIAL SECURITY ACT
Benefits being paid to a Participant or Beneficiary under the terms of the
Plan may not be decreased by reason of any post-separation Social Security
benefit increases or by the increase of the Social Security wage base under
Title II of the Social Security Act. Benefits to which a Former Participant has
a Vested interest may not be decreased by reason of an increase in a benefit
level or wage base under Title II of the Social Security Act.
5.13 LIMITATIONS ON DISTRIBUTIONS
In the event a Participant receives a distribution of the Vested Accrued
Benefit prior to Normal Retirement Age (determined without regard to any years
of participation), the excess/offset percentage, whichever is applicable in
Section 5.1(a), shall be limited to .75/26.25%, whichever is applicable, reduced
1/15th for each of the first five (5) years and 1/30th for each of the next five
(5) years and reduced actuarially for each additional year thereafter that the
date on which the benefit commences precedes the Participant's Social Security
Retirement Age. With respect to benefits commencing prior to the Participant
attaining age 55, the .75/26.25% shall be further reduced (on a monthly basis to
reflect the month in which benefits commence) to a percentage that is the
Actuarial Equivalent of the .75/26.25% (as reduced in accordance with the
preceding sentence) applicable to a benefit commencing in the month in which the
Participant attains age 55. For purposes of this paragraph, a benefit commences
on the first day of the period for which the benefit is paid. Notwithstanding
the above, if such benefit is distributed in a form other than a nondecreasing
life annuity payable for a period not less than the life of such Participant and
the Actuarial Equivalent of the Vested Accrued Benefit of such Participant
attributable to .75/26.25% is greater than the benefit calculated above, such
amount shall be the benefit limitation.
37
5.14 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. For the
purposes of this Section, "alternate payee" and "qualified domestic relations
order" shall have the meaning set forth under Code Section 414(p).
5.15 LIMITATION OF BENEFITS ON TERMINATION
(a) Benefits distributed to any of the twenty-five (25) Highly
Compensated Participants with the greatest compensation in the current or
prior year are restricted such that the monthly payments are no greater
than an amount equal to the monthly payment that would be made on behalf
of such individual under a straight life annuity that is the Actuarial
Equivalent of the sum of the individual's Accrued Benefit, the
individual's other benefits under the Plan (other than a social security
supplement within the meaning of Regulation 1.411(a)-7(c)(4)(ii)), and the
amount the individual is entitled to receive under a social security
supplement. However, the limitation of this Section 5.15 shall not apply
if:
(1) after payment of the benefit to an individual described above,
the value of Plan assets equals or exceeds one-hundred-ten percent
(110%) of the value of current liabilities, as defined in Code
Section 412(l)(7);
(2) the value of the benefits for an individual described above is
less than 1 percent of the value of current liabilities before
distribution; or
(3) the value of the benefits payable under the Plan to an
individual described above does not exceed $5,000 ($3,500 for Plan
Years beginning prior to August 6, 1997).
(b) For purposes of this Section, benefit includes any periodic
income, any withdrawal values payable to a living Participant, and any
death benefits not provided for by insurance on the individual's life.
38
(c) An individual's otherwise restricted benefit may be distributed
in full to the affected individual if, prior to receipt of the restricted
amount, the individual enters into a written agreement with the
Administrator to secure repayment to the Plan of the restricted amount.
The restricted amount is the excess of the amounts distributed to the
individual (accumulated with reasonable interest) over the amounts that
could have been distributed to the individual under the straight life
annuity described above (accumulated with reasonable interest). The
individual may secure repayment of the restricted amount upon distribution
by:
(1) entering into an agreement for promptly depositing in escrow
with an acceptable depositary, property having a fair market value
equal to at least one-hundred-twenty-five percent (125%) of the
restricted amount;
(2) providing a bank letter of credit in an amount equal to at least
one-hundred percent (100%) of the restricted amount; or
(3) posting a bond equal to at least one-hundred percent (100%) of
the restricted amount. The bond must be furnished by an insurance
company, bonding company or other surety for federal bonds.
(d) The escrow arrangement may permit an individual to withdraw from
escrow amounts in excess of one-hundred-twenty-five percent (125%) of the
restricted amount. If the market value of the property in an escrow
account falls below one-hundred-ten percent (110%) of the remaining
restricted amount, the individual must deposit additional property to
bring the value of the property held by the depositary up to
one-hundred-twenty-five percent (125%) of the restricted amount. The
escrow arrangement may provide that the individual has the right to
receive any income from the property placed in escrow, subject to the
individual's obligation to deposit additional property, as set forth in
the preceding sentence.
(e) A surety or bank may release any liability on a bond or letter
of credit in excess of one-hundred percent (100%) of the restricted
amount.
(f) If the Administrator certifies to the depositary, surety or bank
that the individual (or the individual's estate) is no longer obligated to
repay any restricted amount, a depositary may deliver to the individual
any property held under an escrow arrangement, and a surety or bank may
release any liability on an individual's bond or letter of credit.
ARTICLE VI
CODE SECTION 415 LIMITATIONS
6.1 ANNUAL BENEFIT
For purposes of this Article, effective with the first day of the first
"limitation year" beginning after December 31, 1994, "annual benefit" means the
benefit payable annually under the terms of the Plan (exclusive of any benefit
not required to be considered for purposes of applying the limitations of Code
Section 415 to the Plan) payable in the form of a straight life annuity with no
ancillary benefits. If the benefit under the Plan is payable in any other form,
the "annual benefit" shall be adjusted to the equivalent of a straight life
annuity pursuant to Section 6.3(c). Notwithstanding the foregoing, with respect
to the Code Section 415 limitations prior to the effective date of this Article
VI, the Old Law Benefit shall be determined on the basis of Code Section
415(b)(2)(E) as in effect on December 7, 1994.
39
6.2 MAXIMUM ANNUAL BENEFIT
(a) Notwithstanding the foregoing and subject to the exceptions
below, the maximum "annual benefit" payable to a Participant under this
Plan in any "limitation year" shall equal the lesser of: (1) $90,000
payable as a straight life annuity, or (2) one hundred percent (100%) of
the Participant's "415 Compensation" averaged over the three consecutive
"limitation years" (or actual number of "limitation years" for Employees
who have been employed for less than three consecutive "limitation years")
during which the Employee had the greatest aggregate "415 Compensation"
from the Employer.
(b) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Plan Year. All qualified plans
maintained by the Employer must use the same "limitation year." If the
"limitation year" is amended to a different twelve (12) consecutive month
period, the new "limitation year" must begin on a date within the
"limitation year" in which the amendment is made.
(c) The dollar limitation under Code Section 415(b)(1)(A) stated in
paragraph (a)(1) above shall be adjusted annually as provided in Code
Section 415(d) pursuant to the Regulations. The adjusted limitation is
effective as of January 1st of each calendar year and is applicable to
"limitation years" ending with or within that calendar year.
(d) The limitation stated in paragraph (a)(2) above for Participants
who have separated from service with a non-forfeitable right to an Accrued
Benefit shall be automatically adjusted by multiplying such limitation by
the cost-of-living adjustment factor prescribed by the Secretary of the
Treasury under Code Section 415(d) in such manner as the Secretary shall
prescribe. The adjusted limitation shall apply to "limitation years"
ending with or within the calendar year of the date of the adjustment.
(e) For the purpose of this Article, all qualified defined benefit
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined benefit plan.
If a Participant is, or has ever been, a participant in more than
one defined benefit plan maintained by the Employer, the sum of the
Participant's "annual benefits" from all such plans may not exceed the
maximum "annual benefit" of this Section 6.2. Where the Participant's
Employer-provided benefits under all defined benefit plans ever maintained
by the Employer (determined as of the same age) would exceed the maximum
"annual benefit" applicable at that age, the Employer will reduce the rate
of accrual in this Plan to the extent necessary so that the total "annual
benefit" payable at any time under such plans will not exceed the maximum
"annual benefit."
40
(f) For the purpose of this Article, 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)) or is a member of an affiliated
service group (as defined by Code Section 414(m)), all Employees of such
Employers shall be considered to be employed by a single Employer.
(g) For the purpose of this Article, if this Plan is a Code Section
413(c) plan, each Employer who maintains this Plan will be considered to
be a single Employer.
(h) Notwithstanding anything contained in this Article to the
contrary, the limitations, adjustments and other requirements prescribed
in this Article shall at all times comply with the provisions of Code
Section 415 and the Regulations thereunder.
6.3 ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS
(a) If the "annual benefit" begins before the Participant's Social
Security Retirement Age, but on or after age 62, the $90,000 limitation
shall be reduced by: (1) in the case of a Participant whose Social
Security Retirement Age is 65, 5/9 of 1% for each month by which benefits
commence before the month in which the Participant attains age 65, or (2)
in the case of a Participant whose Social Security Retirement Age is
greater than 65, 5/9 of 1% for each of the first 36 months and 5/12 of 1%
for each additional month (up to 24) by which benefits commence before the
month in which the Participant attains Social Security Retirement Age. If
the "annual benefit" begins before age 62, the $90,000 limitation shall be
the actuarial equivalent of the Participant's limitation for benefits
commencing at age 62, reduced for each month by which benefits commence
before the month in which the Participant attains age 62.
In order to determine actuarial equivalence for this purpose, the
lesser of the equivalent amount computed using the Plan interest rate and
Plan mortality table (or other tabular factor) and the amount computed
using five percent (5%) interest and the "Applicable Mortality Table"
shall be used. The mortality decrement shall be ignored to the extent that
a forfeiture does not occur at death.
(b) If the "annual benefit" begins after the Participant's Social
Security Retirement Age the $90,000 limitation shall be increased so that
it is the actuarial equivalent of the $90,000 limitation at the
Participant's Social Security Retirement Age. In order to determine
actuarial equivalence for this purpose, the lesser of the equivalent
amount computed using the Plan interest rate and Plan mortality table (or
other tabular factor) used for actuarial equivalence for late retirement
benefits under the Plan and the equivalent annual amount computed using
five percent (5%) and the "Applicable Mortality Table" shall be used. The
mortality decrement shall be ignored to the extent that a forfeiture does
not occur at death.
41
(c) For purposes of adjusting the "annual benefit" to a straight
life annuity, the equivalent "annual benefit" shall be the greater of the
equivalent "annual benefit" computed using the Plan interest rate and Plan
mortality table (or other tabular factor) and the equivalent "annual
benefit" computed using five percent (5%) interest rate assumption and the
"Applicable Mortality Table." If the "annual benefit" is paid in a form
other than a nondecreasing life annuity payable for a period not less than
the life of a Participant or, in the case of a Pre-Retirement Survivor
Annuity, the life of the surviving spouse, the "Applicable Interest Rate"
shall be substituted for five percent (5%) in the preceding
sentence.
(d) For purposes of Sections 6.1, 6.3(a) and 6.3(b), no adjustments
under Code Section 415(d) shall be taken into account before the
"limitation year" for which such adjustment first takes effect.
(e) For purposes of Section 6.1, no actuarial adjustment to the
benefit is required for (1) the value of a qualified joint and survivor
annuity, (2) benefits that are not directly related to retirement benefits
(such as a qualified disability benefit, pre-retirement death benefits,
and post-retirement medical benefits), and (3) the value of
post-retirement cost-of-living increases made in accordance with Code
Section 415(d) and Regulation 1.415-3(c)(2)(iii). The "annual benefit"
does not include any benefits attributable to Employee contributions or
rollover contributions, or the assets transferred from a qualified plan
that was not maintained by the Employer.
6.4 ANNUAL BENEFIT NOT IN EXCESS OF $10,000
This Plan may pay an "annual benefit" to any Participant in excess of the
Participant's maximum "annual benefit" if the "annual benefit" derived from
Employer contributions under this Plan and all other defined benefit plans
maintained by the Employer does not in the aggregate exceed $10,000 for the
"limitation year" or for any prior "limitation year" and the Employer has not at
any time maintained a defined contribution plan, a welfare benefit fund under
which amounts attributable to post-retirement medical benefits are allocated to
separate accounts of key employees (as defined in Code Section 419(A)(d)(3)), or
an individual medical account in which the Participant participated. For
purposes of this paragraph, if this Plan provides for voluntary or mandatory
Employee contributions, such contributions will not be considered a separate
defined contribution plan maintained by the Employer.
6.5 PARTICIPATION OR SERVICE REDUCTIONS
If a Participant has less than ten (10) years of participation in the Plan
at the time the Participant begins to receive benefits under the Plan, the
limitations in Sections 6.2(a)(1) and 6.3 shall be reduced by multiplying such
limitations by a fraction (a) the numerator of which is the number of years of
participation (or part thereof) in the Plan and (b) the denominator of which is
ten (10), provided, however, that said fraction shall in no event be less than
1/10th. The limitations of Sections 6.2(a)(2) and 6.4 shall be reduced in the
same manner except the preceding sentence shall be applied with respect to years
of service with the Employer rather than years of participation in the Plan.
42
6.6 ELIMINATION OF MULTIPLE PLAN REDUCTION
Effective as of the first day of the first "limitation year" beginning on
or after January 1, 2000 (the "effective date"), and notwithstanding any other
provision of the Plan, the Accrued Benefit for any Participant shall be
determined without applying the limitations of Code Section 415(e) as in effect
on the day immediately prior to the "effective date."
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method" determined by
the Employer, to invest, manage, and control the Plan assets
subject, however, to the direction of the Employer or an Investment
Manager if the Trustee should appoint such manager as to all or a
portion of the assets of the Plan;
(2) At the direction of the Administrator, to pay benefits required
under the Plan to be paid to Participants, or, in the event of their
death, to their Beneficiaries; and
(3) To maintain records of receipts and disbursements and furnish to
the Employer and/or Administrator for each Plan Year a written
annual report pursuant to Section 7.6.
(b) In the event that the Trustee shall be directed by the Employer,
or an Investment Manager with respect to the investment of any or all Plan
assets, the Trustee shall have no liability with respect to the investment
of such assets, but shall be responsible only to execute such investment
instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the written (or
other form acceptable to the Administrator and the Trustee,
including, but not limited to, voice recorded) instructions of the
Employer, or any Fiduciary or nonfiduciary agent of the Employer, in
the discharge of such duties, and shall not be liable for any loss
or other liability, resulting from such direction (or lack of
direction) of the investment of any part of the Plan assets.
43
(2) The Trustee may delegate the duty of executing such instructions
to any nonfiduciary agent, which may be an affiliate of the Trustee
or any Plan representative.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to
sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep the
Trust Fund invested without distinction between principal and income and
in such securities or property, real or personal, wherever situated, as
the Trustee shall deem advisable, including, but not limited to, stocks,
common or preferred, open-end or closed-end mutual funds, bonds and other
evidences of indebtedness or ownership, and real estate or any interest
therein. The Trustee shall at all times in making investments of the Trust
Fund consider, among other factors, the short and long-term financial
needs of the Plan on the basis of information furnished by the Employer.
In making such investments, the Trustee shall not be restricted to
securities or other property of the character expressly authorized by the
applicable law for trust investments; however, the Trustee shall give due
regard to any limitations imposed by the Code or the Act so that at all
times the Plan may qualify as a qualified Pension Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the
terms of its usual and customary bank agency agreement, under which the
duties of such bank or trust company shall be of a custodial, clerical and
record-keeping nature.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of the Plan, shall
have the following powers and authorities, to be exercised in the Trustee's sole
discretion:
(a) To purchase, or subscribe for, any securities or other property
and to retain the same. In conjunction with the purchase of securities,
margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to purchase,
or otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing with
the Trustee shall be bound to see to the application of the purchase money
or to inquire into the validity, expediency, or propriety of any such sale
or other disposition, with or without advertisement;
44
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights
or other options, and to make any payments incidental thereto; to oppose,
or to consent to, or otherwise participate in, corporate reorganizations
or other changes affecting corporate securities, and to delegate
discretionary powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an owner with
respect to stocks, bonds, securities, or other property. However, the
Trustee shall not vote proxies relating to securities for which it has not
been assigned full investment management responsibilities. In those cases
where another party has such investment authority or discretion, the
Trustee will deliver all proxies to said party who will then have full
responsibility for voting those proxies;
(d) To cause any securities or other property to be registered in
the Trustee's own name, in the name of one or more of the Trustee's
nominees, in a clearing corporation, in a depository, or in book entry
form or in bearer form, but the books and records of the Trustee shall at
all times show that all such investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any part,
of the Trust Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash balances
as the Trustee may, from time to time, deem to be in the best interests of
the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as Trustee
hereunder, whether or not such securities or other property would normally
be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or defend
suits or legal or administrative proceedings, and to represent the Plan in
all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or may
not be agent or counsel for the Employer;
45
(k) To apply for and procure from responsible insurance companies,
to be selected by the Administrator, as an investment of the Trust Fund
such annuity, or other Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or from time to
time, whatever rights and privileges may be granted under such annuity, or
other Contracts; to collect, receive, and settle for the proceeds of all
such annuity or other Contracts as and when entitled to do so under the
provisions thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or cash balances
without liability for interest thereon;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under the
Investment Company Act of 1940;
(o) To sell, purchase and acquire put or call options if the options
are traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if
the options are not traded on a national securities exchange, are
guaranteed by a member firm of the New York Stock Exchange regardless of
whether such options are covered;
(p) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(q) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
created by the Employer or any Affiliated Employer, and to commingle such
assets and make joint or common investments and carry joint accounts on
behalf of this Plan and Trust and such other trust or trusts, allocating
undivided shares or interests in such investments or accounts or any
pooled assets of the two or more trusts in accordance with their
respective interests;
(r) To do all such acts and exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may deem
necessary to carry out the purposes of the Plan.
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
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7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in the
Trustee's fee schedule (if the Trustee has such a schedule) or as agreed upon in
writing by the Employer and the Trustee. However, an individual serving as
Trustee who already receives full-time pay from the Employer shall not receive
compensation from the Plan. In addition, the Trustee shall be reimbursed for any
reasonable expenses, including reasonable counsel fees incurred by it as
Trustee. Such compensation and expenses shall be paid from the Trust Fund unless
paid or advanced by the Employer. All taxes of any kind whatsoever that may be
levied or assessed under existing or future laws upon, or in respect of, the
Trust Fund or the income thereof, shall be paid from the Trust Fund.
7.6 ANNUAL REPORT OF THE TRUSTEE
(a) Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer contribution for each Plan
Year, the Trustee, or its agent, shall furnish to the Employer and
Administrator a written statement of account with respect to the Plan Year
for which such contribution was made setting forth:
(1) the net income, or loss, of the Trust Fund;
(2) the gains, or losses, realized by the Trust Fund upon sales or
other disposition of the assets;
(3) the increase, or decrease, in the value of the Trust Fund;
(4) all payments and distributions made from the Trust Fund; and
(5) such further information as the Trustee and/or Administrator
deems appropriate.
(b) The Employer, promptly upon its receipt of each such statement
of account, shall acknowledge receipt thereof in writing and advise the
Trustee and/or Administrator of its approval or disapproval thereof.
Failure by the Employer to disapprove any such statement of account within
thirty (30) days after its receipt thereof shall be deemed an approval
thereof. The approval by the Employer of any statement of account shall be
binding on the Employer and the Trustee as to all matters contained in the
statement to the same extent as if the account of the Trustee had been
settled by judgment or decree in an action for a judicial settlement of
its account in a court of competent jurisdiction in which the Trustee, the
Employer and all persons having or claiming an interest in the Plan were
parties. However, nothing contained in this Section shall deprive the
Trustee of its right to have its accounts judicially settled if the
Trustee so desires.
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7.7 AUDIT
(a) If an audit of the Plan's records shall be required by the Act
and the regulations thereunder for any Plan Year, the Administrator shall
direct the Trustee to engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such accountant shall, after
an audit of the books and records of the Plan in accordance with generally
accepted auditing standards, within a reasonable period after the close of
the Plan Year, furnish to the Administrator and the Trustee a report of
the audit setting forth the accountant's opinion as to whether any
statements, schedules or lists that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and may,
at the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated, supervised, and
subject to periodic examination by a state or federal agency, then it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred twenty
(120) days after the end of the Plan Year or such other date as may be
prescribed under regulations of the Secretary of Labor.
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) Unless otherwise agreed to by both the Trustee and the Employer,
a Trustee may resign at any time by delivering to the Employer, at least
thirty (30) days before its effective date, a written notice of
resignation.
(b) Unless otherwise agreed to by both the Trustee and the Employer,
the Employer may remove a Trustee at any time by delivering to the
Trustee, at least thirty (30) days before its effective date, a written
notice of such Trustee's removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such successor,
upon accepting such appointment in writing and delivering same to the
Employer, shall, without further act, become vested with all the powers
and responsibilities of the predecessor as if such successor had been
originally named as a Trustee herein. Until such a successor is appointed,
the remaining Trustee or Trustees shall have full authority to act under
the terms of the Plan.
(d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation,
the successor shall, without further act, become vested with all the
powers and responsibilities of the predecessor as if such successor had
been originally named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of the predecessor.
48
(e) Whenever any Trustee hereunder ceases to serve as such, the
Trustee shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan Year during
which the individual or entity served as Trustee. This statement shall be
either (i) included as part of the annual statement of account for the
Plan Year required under Section 7.6 or (ii) set forth in a special
statement. Any such special statement of account should be rendered to the
Employer no later than the due date of the annual statement of account for
the Plan Year. The procedures set forth in Section 7.6 for the approval by
the Employer of annual statements of account shall apply to any special
statement of account rendered hereunder and approval by the Employer of
any such special statement in the manner provided in Section 7.6 shall
have the same effect upon the statement as the Employer's approval of an
annual statement of account. No successor to the Trustee shall have any
duty or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by Section
7.6 and this subparagraph.
7.9 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee at
the direction of the Administrator shall transfer the Vested interest, if any,
of a Participant to another trust forming part of a pension, profit sharing or
stock bonus plan maintained by such Participant's new employer and represented
by said employer in writing as meeting the requirements of Code Section 401(a),
provided that the trust to which such transfers are made permits the transfer to
be made.
7.10 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and hold harmless the Trustee against any
and all claims, losses, damages, expenses and liabilities the Trustee may incur
in the exercise and performance of the Trustee's power and duties hereunder,
unless the same are determined to be due to gross negligence or willful
misconduct.
7.11 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:
49
(1) An "eligible rollover distribution" is any distribution of all
or any portion of the balance to the credit of the "distributee,"
except that an "eligible rollover distribution" does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the "distributee" or the joint lives
(or joint life expectancies) of the "distributee" and the
"distributee's" designated beneficiary, or for a specified period of
ten years or more; any distribution to the extent such distribution
is required under Code Section 401(a)(9); the portion of any other
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities); any hardship distribution described
in Code Section 401(k)(2)(B)(i)(IV) made after December 31, 1999;
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 VIII
PLAN AMENDMENT
8.1 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.
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(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 Accrued Benefit
of any Participant (except to the extent permitted under Code Section
412(c)(8)); or causes or permits any portion of the Trust Fund to revert
to or become property of the Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger, plan
transfer or similar transaction) shall be effective to the extent it
eliminates or reduces any "Section 411(d)(6) protected benefit" or adds or
modifies conditions relating to "Section 411(d)(6) protected benefits"
which results in a further restriction on such benefit unless such
"Section 411(d)(6) protected benefits" are preserved with respect to
benefits accrued as of the later of the adoption date or effective date of
the amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
(d) If this Plan is amended and an effect of such amendment is to
increase current liability (as defined in Code Section 401(a)(29)(E))
under the Plan for a Plan Year, and the funded current liability
percentage of the Plan for the Plan Year in which the amendment takes
effect is less than sixty percent (60%), including the amount of the
unfunded current liability under the Plan attributable to the amendment,
the amendment shall not take effect until the Employer (or any member of a
controlled group which includes the Employer) provides security to the
Plan. The form and amount of such security shall satisfy the requirements
of Code Section 401(a)(29)(B) and (C). Such security may be released
provided the requirements of Code Section 401(a)(29)(D) are satisfied.
ARTICLE IX
PLAN TERMINATION
9.1 TERMINATION
(a) The Employer shall have the right to terminate the Plan by
delivering to the Trustee and Administrator written notice of such
termination. However, any termination (other than a partial termination or
an involuntary termination pursuant to Act Section 4042) must satisfy the
requirements and follow the procedures outlined herein and in Act Section
4041 for a Standard Termination or a Distress Termination. Upon any
termination (full or partial), all amounts shall be allocated in
accordance with the provisions hereof and the Accrued Benefit, to the
extent funded as of such date, of each affected Participant shall become
fully Vested and shall not thereafter be subject to forfeiture. However,
Participants who were not fully Vested at the time they received a
complete distribution of their benefits prior to the date of termination,
shall not become entitled to any additional benefits on account of Plan
termination. The preceding sentence does not apply to Participants
affected by a partial termination by operation of law.
51
(b) Standard Termination Procedure --
(1) The Administrator shall first notify all "affected parties" (as
defined in Act Section 4001(a)(21)) of the Employer's intention to
terminate the Plan and the proposed date of termination. Such
termination notice must be provided at least sixty (60) days prior
to the proposed termination date. However, in the case of a standard
termination, it shall not be necessary to provide such notice to the
Pension Benefit Guaranty Corporation (PBGC). As soon as practicable
after the termination notice is given, the Administrator shall
provide a follow-up notice to the PBGC setting forth the following:
(i) a certification of an enrolled actuary of the projected
amount of the assets of the Plan as of the proposed date of
final distribution of assets, the actuarial present value of
the "benefit liabilities" (as defined in Act Section
4001(a)(16)) under the Plan as of the proposed termination
date, and confirmation that the Plan is projected to be
sufficient for such "benefit liabilities" as of the proposed
date of final distribution;
(ii) a certification by the Administrator that the information
provided to the PBGC and upon which the enrolled actuary based
the certification is accurate and complete; and
(iii) such other information as the PBGC may prescribe by
regulation.
The certification of the enrolled actuary and of the Administrator
shall not be applicable in the case of a plan funded exclusively by
individual insurance contracts.
(2) No later than the date on which the follow-up notice is sent to
the PBGC, the Administrator shall provide all Participants and
Beneficiaries under the Plan with an explanatory statement
specifying each such person's "benefit liabilities," the benefit
form on the basis of which such amount is determined, and any
additional information used in determining "benefit liabilities"
that may be required pursuant to regulations promulgated by the
PBGC.
(3) A standard termination may only take place if at the time the
final distribution of assets occurs, the Plan is sufficient to meet
all "benefit liabilities" determined as of the termination date.
(c) Distress Termination Procedure --
52
(1) The Administrator shall first notify all "affected parties" of
the Employer's intention to terminate the Plan and the proposed date
of termination. Such termination notice must be provided at least
sixty (60) days prior to the proposed termination date. As soon as
practicable after the termination notice is given, the Administrator
shall also provide a follow-up notice to the PBGC setting forth the
following:
(i) a certification of an enrolled actuary of the amount, as
of the proposed termination date, of the current value of the
assets of the Plan, the actuarial present value (as of such
date) of the "benefit liabilities" under the Plan, whether the
Plan is sufficient for "benefit liabilities" as of such date,
the actuarial present value (as of such date) of benefits
under the Plan guaranteed under Act Section 4022, and whether
the Plan is sufficient for guaranteed benefits as of such
date;
(ii) in any case in which the Plan is not sufficient for
"benefit liabilities" as of such date, the name and address of
each Participant and Beneficiary under the Plan as of such
date;
(iii) a certification by the Administrator that the
information provided to the PBGC and upon which the enrolled
actuary based the certification is accurate and complete; and
(iv) such other information as the PBGC may prescribe by
regulation.
The certification of the enrolled actuary and of the Administrator
shall not be applicable in the case of a plan funded exclusively by
individual insurance contracts.
(2) A distress termination may only take place if:
(i) the Employer demonstrates to the PBGC that such
termination is necessary to enable the Employer to pay its
debts while staying in business, or to avoid unreasonably
burdensome pension costs caused by a decline in the Employer's
work force;
(ii) the Employer is the subject of a petition seeking
liquidation in a bankruptcy or insolvency proceeding which has
not been dismissed as of the proposed termination date; or
(iii) the Employer is the subject of a petition seeking
reorganization in a bankruptcy or insolvency proceeding which
has not been dismissed as of the proposed termination date,
and the bankruptcy court (or such other appropriate court)
approves the termination and determines that the Employer will
be unable to continue in business outside a Chapter 11
reorganization process and that such termination is necessary
to enable the Employer to pay its debts pursuant to a plan of
reorganization.
53
(d) Priority and Payment of Benefits: In the case of a distress
termination, upon approval by the PBGC that the Plan is sufficient for
"benefit liabilities" or for "guaranteed benefits," or in the case of a
standard termination, a letter of non-compliance has not been issued
within the sixty (60) day period (as extended) following the receipt by
the PBGC of the follow-up notice, the Administrator shall allocate the
assets of the Plan among Participants and Beneficiaries pursuant to Act
Section 4044(a). As soon as practicable thereafter, the assets of the
Trust shall be distributed to the Participants and Beneficiaries, in cash
or through the purchase of irrevocable commitments from an insurer, in a
manner consistent with Section 5.7. However, if all liabilities with
respect to Participants and Beneficiaries under the Plan have been
satisfied and there remains a balance in the Trust due to erroneous
actuarial computation, such balance, if any, shall be returned to the
Employer. In the case of a distress termination in which the PBGC is
unable to determine that the Plan is sufficient for guaranteed benefits,
the assets of the Plan shall only be distributed in accordance with
proceedings instituted by the PBGC.
(e) The termination of the Plan shall comply with such other
requirements and rules as may be promulgated by the PBGC under authority
of Title IV of the Act, including any rules relating to time periods or
deadlines for providing notice or for making a necessary filing.
9.2 LIMITATION OF BENEFITS ON PLAN TERMINATION
In the event of Plan termination, the benefit of any Highly Compensated
Participant or any highly compensated former employee shall be limited to a
benefit that is nondiscriminatory under Code Section 401(a)(4).
ARTICLE X
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
10.1 REQUIREMENTS
Before this Plan can be merged or consolidated with any other qualified
plan or its assets or liabilities transferred to any other qualified plan, the
Administrator must secure (and file with the Secretary of Treasury at least
thirty (30) days beforehand) a certification from a government-enrolled actuary
that the benefits which would be received by a Participant of this Plan, in the
event of a termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" as described in Section 8.1.
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ARTICLE XI
TOP HEAVY
11.1 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 5.6 of the Plan and the
special minimum benefit requirements of Code Section 416(c) pursuant to Section
5.2 of the Plan.
11.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in which,
as of the Determination Date, (1) the Present Value of Accrued Benefits of
Key Employees and (2) the sum of the Aggregate Accounts of Key Employees
under this Plan and all plans of an Aggregation Group, exceeds sixty
percent (60%) of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Key and Non-Key Employees under this Plan and all plans of
an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
Present Value of Accrued Benefit and/or Aggregate Account balance shall
not be taken into account for purposes of determining whether this Plan is
a Top Heavy Plan (or whether any Aggregation Group which includes this
Plan is a Top Heavy Group). In addition, if a Participant or Former
Participant has not performed any services for any Employer maintaining
the Plan at any time during the five year period ending on the
Determination Date, any accrued benefit for such Participant or Former
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 shall be determined under applicable provisions of the
defined contribution plan used in determining Top Heavy Plan status.
(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.
55
(2) Permissive Aggregation Group: The Employer may also include any
other plan not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would
continue to satisfy the provisions of Code Sections 401(a)(4) and
410. Such group shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is a Top Heavy Group.
No plan in the Permissive Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is not a Top Heavy
Group.
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years ending
on the Determination Date.
(d) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of such
Plan Year.
(e) Present Value of Accrued Benefit: In the case of a defined
benefit plan, a Participant's Present Value of Accrued Benefit shall be
determined:
(1) in the case of a Participant other than a Key Employee, using
the single accrual method used for all plans of the Employer and
Affiliated Employers, or if no such single method exists, using a
method which results in benefits accruing not more rapidly than the
slowest accrual rate permitted under Code Section 411(b)(1)(C).
(2) as of the most recent "actuarial valuation date," which is the
most recent valuation date within a twelve (12) month period ending
on the Determination Date.
(3) for the first Plan Year, as if (a) the Participant terminated
service as of the Determination Date; or (b) the Participant
terminated service as of the actuarial valuation date, but taking
into account the estimated Accrued Benefits as of the Determination
Date.
(4) for the second Plan Year, the Accrued Benefit taken into account
for a current Participant must not be less than the Accrued Benefit
taken into account for the first Plan Year unless the difference is
attributable to using an estimate of the Accrued Benefit as of the
Determination Date for the first Plan Year and using the actual
Accrued Benefit for the second Plan Year.
56
(5) for any other Plan Year, as if the Participant terminated
service as of the actuarial valuation date.
(6) the actuarial valuation date must be the same date used for
computing the defined benefit plan minimum funding costs, regardless
of whether a valuation is performed that Plan Year.
(7) by not taking into account proportional subsidies.
(8) by taking into account nonproportional subsidies.
(f) The calculation of a Participant's Present Value of Accrued
Benefit as of a Determination Date shall be the sum of:
(1) the Present Value of Accrued Benefit using the actuarial
assumptions of Section 1.3, which assumptions shall be identical for
all defined benefit plans being tested for Top Heavy Plan
status.
(2) 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 Present
Value of Accrued Benefit 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, benefits paid on account of death,
to the extent such benefits do not exceed the Present Value of
Accrued Benefits existing immediately prior to death, shall be
treated as distributions for the purposes of this paragraph.
(3) 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 Present Value of Accrued Benefit.
(4) 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 accepted after December 31, 1983, as part of the
Participant's Present Value of Accrued Benefit.
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(5) 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
rollovers or plan-to-plan transfers, it shall not be counted as a
distribution for purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it shall
consider such rollovers or plan-to-plan transfers as part of the
Participant's Present Value of Accrued Benefit, irrespective of the
date on which such rollovers or plan-to-plan transfers are accepted.
(6) for the purposes of determining whether two employers are to be
treated as the same employer in (4) and (5) above, all employers
aggregated under Code Section 414(b), (c), (m) or (o) are treated as
the same employer.
(g) "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 XII
MISCELLANEOUS
12.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon the Employee as a Participant of this Plan.
12.2 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.
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(b) Subsection (a) shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Administrator under the
provisions of the Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under such
qualified orders. Further, to the extent provided under a "qualified
domestic relations order," a former spouse of a Participant shall be
treated as the spouse or surviving spouse for all purposes under the Plan.
(c) Subsection (a) shall not apply to an offset to a Participant's
accrued benefit against an amount that the Participant is ordered or
required to pay the Plan with respect to a judgment, order, or decree
issued, or a settlement entered into, 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)(11) 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:
(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)(11)(A)(i) and under a qualified pre-retirement survivor
annuity provided pursuant to Code Section 401(a)(11)(A)(ii).
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12.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Code,
the Act and the laws of the State of New York, other than its laws respecting
choice of law, to the extent not pre-empted by the Act.
12.4 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.
12.5 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.
12.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by
law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other
means, for any part of the corpus or income of any Trust Fund maintained
pursuant to the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of Participants,
Former Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive contribution
under a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer
may demand repayment of such excessive contribution at any time within one
(1) year following the time of payment and the Trustees shall return such
amount to the Employer within the one (1) year period. Earnings of the
Plan attributable to the contributions may not be returned to the Employer
but any losses attributable thereto must reduce the amount so returned.
12.7 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.
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12.8 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.
12.9 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.
12.10 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.
12.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator, (3) the Trustee, and (4) any Investment Manager appointed
hereunder. The named Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them under the Plan,
including, but not limited to, any agreement allocating or delegating their
responsibilities, the terms of which are incorporated herein by reference. In
general, the Employer shall have the sole responsibility for making the
contributions provided for under Section 4.1; and shall have the authority to
appoint and remove the Trustee and the Administrator; to formulate the Plan's
"funding policy and method"; and to amend or terminate, in whole or in part, the
Plan. The Administrator shall have the sole responsibility for the
administration of the Plan, including, but not limited to, the items specified
at Article II of the Plan, as the same may be allocated or delegated thereunder.
The Trustee shall have the sole responsibility of management of the assets held
under the Trust, except to the extent directed pursuant to Article II or with
respect to those assets, the management of which has been assigned to an
Investment Manager, who shall be solely responsible for the management of the
assets assigned to it, all as specifically provided in the Plan. Each named
Fiduciary warrants that any directions given, information furnished, or action
taken by it shall be in accordance with the provisions of the Plan, authorizing
or providing for such direction, information or action. Furthermore, each named
Fiduciary may rely upon any such direction, information or action of another
named Fiduciary as being proper under the Plan, and is not required under the
Plan to inquire into the propriety of any such direction, information or action.
It is intended under the Plan that each named Fiduciary shall be responsible for
the proper exercise of its own powers, duties, responsibilities and obligations
under the Plan as specified or allocated herein. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity.
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12.12 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.
12.13 APPROVAL BY INTERNAL REVENUE SERVICE
Notwithstanding anything herein to the contrary, if, pursuant to an
application for qualification filed by or on behalf of the Plan by the time
prescribed by law for filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date that the Secretary of the Treasury may
prescribe, the Commissioner of Internal Revenue Service or the Commissioner's
delegate should determine that the Plan does not initially qualify as a
tax-exempt plan under Code Sections 401 and 501, and such determination is not
contested, or if contested, is finally upheld, then if the Plan is a new plan,
it shall be void ab initio and all amounts contributed to the Plan by the
Employer, less expenses paid, shall be returned within one (1) year and the Plan
shall terminate, and the Trustee shall be discharged from all further
obligations. If the disqualification relates to an amended plan, then the Plan
shall operate as if it had not been amended.
12.14 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.
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IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Presidential Realty Corporation
By Jeffrey F. Joseph
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EMPLOYER
ATTEST Elizabeth Delgado
---------------------------
Robert Feder and Thomas Viertel
By Thomas Viertel
-------------------------------
TRUSTEE
Robert Feder
-------------------------------
TRUSTEE
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