AGREEMENT ADOPTION
FOR
STATE MUTUAL OF AMERICA GROUP PROTOTYPE 401(k) PROFIT SHARING PLAN NO.3
AS USED IN PUERTO RICO
For the benefit of its employees, the undersigned adopts this Profit Sharing
Plan and in connection therewith makes the following statements and
designations, which designations are subject to change as required to obtain
approval by the Department of Revenue of Puerto Rico. This Adoption Agreement
should only be used with State Mutual Basic Plan Document No. 5.
NON-INTEGRATED AND INTEGRATED
PROFIT SHARING FORMULAS
ITEMS
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1. Name of Employer:
First Federal Savings Bank
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2. Address of Employer: 3. Employer's Telephone Number:
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Santurce. PR 00908 (▇▇▇) ▇▇▇-▇▇▇▇
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4. Name and Address of Other Participating Employers Adopting Plan:
Are all of the Employers under common control adopting the Plan?: [ ] Yes [ ] No
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5. Name of Employer's Profit Sharing Plan:
First Federal Savings Bank 401(k) Retirement Plan (Puerto Rico)
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6. (a) Original Effective Date 7. Date of
of plan and Trust: Adoption Agreement:
May 15, 1965 December 9, 1991
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(b) Effective Date of this 8. Plan Number Assigned by the
Restated Plan and Trust: Employer (Circle One): 001,002,
September 1,1991 003,004
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9. Name and Address of Trustee(s):
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ same address as item # 2
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10. Name, Address and EIN/Tax I.D. Number of Plan Administrator (if other than Employer):
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11. Designation of Profit Sharing Committee (if applicable):
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12. Is this Employer a member of: 13. Type of Entity:
(a) Affiliated Service Group
[ ] Yes [X] No [X] Corporation [ ] Partnership
(b) Control Group? [ ]"Sub S" Corporation [ ] Other (specify):
[ ] Yes [x] No [ ] Sole Proprietor _________________
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14. Nature of Employer's Business, 15. Employer Identification
and Standard Industrial Number (Tax I.D. Number):
Classification No. of Employer: ▇▇-▇▇▇▇▇▇▇
Federal Savings Bank -6022
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16. Predecessor Employers (Service with Employers named below shall be treated as
Service with the Employer - see Section 2.42 of the Plan):
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17. Fiscal Year for Income Tax Purposes:
[X] Calendar Year [ ] Year Beginning first day of ____________ (month)
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18. First Plan Anniversary: January 1, 1992 (Each Plan Anniversary thereafter shall be an
anniversary of such date)
Note: The Plan Anniversary must be the first day of the Employer's fiscal year. See Section 2.34
of the Plan.
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DESIGNATED PLAN PROVISIONS
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Section 2.08 Plan Compensation of Earned Income shall be limited as follows (check
COMPENSATION or complete (a), (b) or (c) below, if any are applicable):
LIMITATIONS * [ ] (a) For the firs year of plan Participation, Compensation
shall exclude compensation received prior to the date
the Employee becomes a Participant.
[x] (b) Maximum Compensation for Plan purposes: $200,000;
* [ ] (c) Compensation for the Plan Year which is actually paid or
accrued within such Year, but excluding:
[ ] (i) overtime pay
[ ] (ii) commissions
[ ] (iii) bonuses
[ ] (iv) other (specify):_______________________________
*NOTE: Choices (a) and (c) may not be elected if the Plan is intended
to benefit a Self-Employed Individual; choice (c) may not be
elected if an Integrated Allocation Formula is used.
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Section 2.22 Hours of Service shall be determined on the basis of the method selected
HOURS OF SERVICE below. The method selected shall be applied to all Employees covered under
the Plan (Check one of the following):
[x] (a) On the basis of actual hours for which an Employee is paid
or entitled to payment.
[ ] (b) On the basis of days worked.
An Employee shall be credited with 10 Hours of Service if
under Section 2.22 of the Plan such Employee would be
credited with at least one Hour of Service during the day.
[ ] (c) On the basis of weeks worked.
An Employee shall be credited with 45 Hours of Service if
under Section 2.22 of the Plan such Employee would be
credited with at least one Hour of Service during the week.
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[ ] (d) On the basis of months worked.
An Employee shall be credited with 190 Hours of Service if
under Section 2.22 of the Plan such Employee would be
credited with at least one Hour of Service during the month.
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Section 2.26 The limitation Year of the Plan shall be (Check or complete one of the
LIMITATION YEAR following):
[x] (a) Calendar Year
[ ] (b) Plan Year
[ ] (c) Other 12 consecutive month period (specify):________________
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Section 2.29 The Normal Retirement Age of a Participant shall be (Check and complete
NORMAL one of the following):
RETIREMENT
AGE [ ] (a) the date the Participant attains Age 65 (Up to Age 65).
[ ] (b) the ______ (up to 10th) anniversary of the date the
Participant commenced Participation in the Plan or the date
he attains Age 65, whichever is later.
[ ] (c) the _____ (up to 10th) anniversary of the date the
Participant commenced participation in the Plan or the date
he attains Age 65, whichever is later, but in no event later
than Age 70.
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Section 3.02(1) The following Employees are eligible to become Participants
PARTICIPATION (Check or complete on of the following):
REQUIREMENTS
(Classification) [ ] All Employees of the Employer maintaining the Plan.
[ ] All Employees of the Employer maintaining the Plan or of any other
Employer required to be aggregated under Section 414(b), (c) or (m)
of the Internal Revenue Code. Any individual deemed under
Section 414(n) of the Code to be an employee of any employer
described in the previous sentence shall also be considered an
Employee.
[ ] All Employees of the Employer maintaining the Plan compensated on an
hourly basis.
[ ] All Employees of the Employer maintaining the Plan compensated on a
salaried basis.
[ ] All Employees of the Employer maintaining the Plan not eligible to
participate in another qualified pension of profit sharing plan to
which the Employer is making contributions.
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[x] All Employees of the Employer maintaining the Plan who are residents
of Puerto Rico except lease employees and Employees included in a
unit of Employees covered by a collective bargaining agreement
between the Employer and Employee representatives, if retirement
benefits were the subject of good faith bargaining. For this
purpose, the term "employee representative" does not include any
organization more than half of whose members are Employees who are
owners, officers or executives of the Employer.
[ ] All Employees of the Employer maintaining the Plan covered by a
collective bargaining agreement between the Employer and Employee
representatives (as described above).
[ ] All Employees except Employees who are nonresident aliens and who
receive no earned income from the Employer which constitutes
income from sources within the United States.
[ ] Other Employee classification (specify):____________________________
__________________________________________________________________________
__________________________________________________________________________
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Section 3.02(2) The Plan eligibility requirements are (Check and complete (a), (b) and (c)
PARTICIPATION below:
REQUIREMENTS
(Entry Date) (a) Entry Date (Check (i) or (ii) and (iii) if applicable):
[ ] (i) Semiannual Entry: Each eligible Employee who complies with
the requirements set forth in the Plan and Trust shall
become a Participant on whichever of the following dates
first occurs after the Employee meets the Age and Service
Requirements specified in (b) and (c) below, if he is then
employed:
(aa) The following Plan Anniversary; or
(bb) The date six months following the Effective Date or
thereafter the date six months following each Plan
Anniversary.
[x] (ii) Monthly Entry: Each eligible Employee who complies with the
requirements set forth in the Plan and Trust shall become a
Participant on the first day of the month coincident with or
next following the date the Employee meets the Age and
Service requirements specified in (b) and (c) below, if he
is then employed.
[ ] (iii) An eligible employee who is employed on the Effective Date,
and who complies with the requirements set forth in the Plan
and Trust, shall become a Participant on the Effective Date
without regard to any Plan Age and Service Requirements
specified in (b) or (c) below.
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(b) Service Requirement:
[ ] (i) No Service requirement.
[X] (ii) The Employee has completed 1 year of Service (not more
than 1).
NOTE: If the Year(s) of Service elected is or includes a fractional
year, an Employee shall not be required to complete any
specified number of Hours of Service to receive credit for such
fractional year.
(c) Age Requirement
[X] (i) No Age requirement.
[ ] (ii) The Employee has attained Age___________ (not more than 21).
Notwithstanding (a)(i) and (a)(ii) above, an eligible Employee who
satisfies the Plan Age and Service requirements on the Effective Date
and who complies with the requirements set forth in the Plan and Trust
will become a Participant on such date if he is then employed.
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Section 3.02(3) In determining when an Employee is eligible to participate, the
PARTICIPATION following periods of Service shall be disregarded (Check (a) or (b),
REQUIREMENTS if applicable):
(Service Exclusions)
[ ] (a) In the case of a Participant who does not have any
nonforfeitable right to an Accrued Benefit derived from
N/A Employer contributions, Years of Service before a period of
consecutive One Year Breaks in Service will not be taken
into account in computing eligibility service if the number
of consecutive One Year Breaks in Service in such period
equals or exceeds the greater of five or the aggregate
number of 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 Breaks in
Service.
[ ] (b) If an Employee had a One Year Break in Service before he had
become a Participant, Service before the Break shall not be
counted (applicable only if the Plan provides full and
immediate vesting, i.e., when Section 13.01 (1)(a) of the
adoption Agreement is checked).
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Section 4.01 (1) 401(a) Employer Contributions (Check or complete (a), (b) or (c)
4.01(a) and, if applicable, (d), (e) and (f) below):
EMPLOYER
CONTRIBUTIONS, [X] (a) The Employer does not intend to make 401(a) Employer
401(k) Contributions.
EMPLOYER
CONTRIBUTIONS, [ ] (b) For each Plan Year the Board of Directors or other
EMPLOYER governing authority of the Employer shall determine the
401(a) and amount of 401(a) Employer Contributions.
401(k)
EMPLOYER [ ] (c) For each Plan Year the Board of Directors or other
MATCH governing authority of the Employer shall determine the
CONTRIBUTIONS amount of 401(a) Employer Contributions. However, if no
resolve is made, the amount contributed shall be
____________% of each Participant's Plan Compensation for
such Plan Year.
*[ ] (d) In order to share in 401(a) Employer Contributions for a
Plan Year, a Participant must complete _________ (0 - 1,000)
Hours of Service during such Plan Year.
*[ ] (e) A Participant whose employment is terminated before the end
of a Plan Year but after he has completed the Hours of
Service specified in (d) above (Check (i) or (ii) below):
[ ] (i) shall share in 401(a) Employer Contributions for such
Plan Year.
[ ] (ii) shall not share in 401(a) Employer Contributions for
such Plan Year unless termination is due to (check
whichever of the following is applicable below):
[ ] (aa) no exceptions [ ] (bb) death
[ ] (cc) disability [ ] (dd) attainment of Normal
Retirement Age
[ ] (f) Profits [ ] are [ ] are not required for 401(a) Employer
Contributions.
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(2) 401(k) Employer Contributions (Check or complete (a), (b) or (c)
and, if applicable, (d), (e) and (f) below):
[X] (a) The Employer does not intend to make 401(k) Employer
Contributions.
[ ] (b) For each Plan Year the Board of Directors or other governing
authority of the Employer shall determine the amount of 401(k)
Employer Contributions.
- 6 -
[ ] (c) For each Plan Year the Board of Directors or other
governing authority of the Employer shall determine the
amount of 401(k) Employer Contributions. However, if no
resolve is made, the amount contributed shall be__________%
of each Participant's Plan Compensation for such Plan Year.
*[ ] (d) In order to share in 401(k) Employer Contributions for a
Plan Year, a Participant must complete____________(0-1,000)
Hours of Service during such Plan Year.
*[ ] (e) A Participant whose employment is terminated before the end
of a Plan Year but after he has completed the Hours of
Service specified in (d) above (Check (i) or (ii) below):
[ ] (i) shall share in 401(k) Employer Contributions for such
Plan Year.
[ ] (ii) shall not share in 401(k) Employer Contributions for
such Plan Year unless termination is due to (check
whichever of the following is applicable below):
[ ] (aa) no exceptions [ ] (bb) death
[ ] (cc) disability [ ] (dd) attainment of Normal
Retirement Age
[ ] (f) Profits [ ] are [ ] are not required for 401(k) Employer
Contributions.
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(3) Employer Match Contributions (Check or complete (a), (b) or (c),
and, if applicable, (d), (e), (f), (g) below):
[ ] (a) The Employer does not intend to make Employer Match
Contributions.
[ ] (b) For each Plan Year the Board of Directors or other governing
authority of the Employer shall determine a percentage(s) to
contribute of each eligible Participant's Salary Savings
Contributions.
[X] (c) For each Plan Year the Board of Directors or other governing
authority of the Employer shall determine a percentage(s) to
contribute of each eligible Participant's Salary Savings
Contributions; however, if no resolve is made, the amount
contributed shall be 25% of each eligible Participant's
Salary Savings Contributions. No match shall be provided for
Salary Savings Contributions made in excess of 1% of
Compensation. (Complete last sentence if applicable.)**
*[X] (d) In order to share in Employer Match Contributions for a Plan
Year, a Participant must complete 0 (0-1,000) Hours of
Service during such Plan Year.
**This amount will be contributed on a monthly basis. In addition to this
monthly contribution, for each Plan Year the Board of Directors or other
governing authority of the Employer shall determine a percentage to contribute
at the end of each Plan Year of each eligible Participant's Salary Savings
Contributions.
- 7 -
*[x] (e) A Participant whose employment is terminated before the
end of a Plan Year but after he has completed the Hours of
Service specified in (d) above (Check (i) or (ii) below):
[x] (i) shall share in 401(k) Employer Match Contributions for
such Plan Year.
[x] (ii) shall not share in 401(a) Employer Match Contributions
for such Plan Year unless termination is due to (check
whichever of the following is applicable below):
[x] (aa) no exceptions [ ] (bb) death
[ ] (cc) disability [ ] (dd) attainment of Normal
Retirement Age
[x] (f) Profits [x] are [ ] are not required for Employer Match
Contributions.
[x] (g) Employer Match Contributions shall be allocated to a
Participant's account (check (i) or (ii) below, whichever is
applicable):
[X] (i) 401(k) Employer Match Contribution account, and thus
shall be nonforfeitable when made for match contribution
allocated on a monthly basis only.
[x] (ii) 401(a) Employer Match Contribution account, and thus
shall be subject to the vesting schedule applicable to
401(a) Employer contributions for match contributions
allocated on an annual basis only.
*Note: When contributions are allocated monthly, all options (d)
should be filled out with "0" and options (e)(i) should be selected.
Note to Section 4.01: Employer Match and 401(k) Employer Contributions
may be reduced to comply with the Average Deferral Test.
(See Plan Article VIII.)
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Section 4.3 For each Plan Year Participants may direct the Employer to reduce their
SALARY Compensation in order that the Employer may make Salary Savings
SAVINGS Contributions, subject to the following (Complete (a), (b) and (c) below):
CONTRIBUTIONS
(a) Minimum Salary Savings Contribution permitted:
[ ] (i) No minimum
[x] (ii) (Other, specify amount or percentage, and period)
1% of compensation per pay period
_________________________________________________
_________________________________________________
(b) Maximum Salary Savings Contribution permitted (not greater
than ten): 10% of Compensation per Plan Year.
- 8 -
(c) Change in Savings Amount
[ ] (i) no limit on frequency
[x] (ii) limited to: (specify) 1/1, 4/1, 7/1 and 10/1
(at least once every calender year)
NOTE: Salary Savings Contributions are limited to 10% of Plan
Compensation. The Plan Administrator may further limit
Salary Savings Contributions if required to comply with
Article VIII.
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Section 4.04 After-Tax Contributions (Check (a) or (b) and, if applicable, complete
AFTER-TAX (c) and (d):
CONTRIBUTIONS
[x] (a) are permitted
[ ] (b) are not permitted
[x] (c) Minimum permitted (Check and complete,
if applicable):
[x] (i) No minimum
[ ] (ii)________% of annual total compensation
[ ] (iii) $________ per _________ (week, month, year)
[x] (d) will be maintained and accounted for in
[x] (i) one After-Tax Contribution Account.
[ ] (ii) two After-Tax Contribution Accounts, one for
contributions made before 1987 and one for contributions
made after 1986.
NOTE: The maximum a Participant may contribute to the Plan on a
voluntary basis is specified in Plan Section 4.04.
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Section 5.02 Allocation formula (choose (a) or (b) below):
METHOD OF
ALLOCATING [ ] (a) Non-Integrated Allocation Formula
401(a) EMPLOYER
CONTRIBUTIONS Any additional 401(a) Employer Contributions for each Plan
Year shall be allocated among the accounts of eligible
N/A Participants in amounts determined in accordance with the
ratio which each eligible Participant's Plan Compensation
bears to the total Plan Compensation of all Participants
eligible to share in 401(a) Employer Contributions for such
Year.
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[ ] (b) Integrated Allocation Formula:
Any additional 401(a) Employer Contributions for each Plan
Year shall be allocated among the Participant's accounts in
amounts determined as follows:
Each Participant's share will be determined in accordance
with the ratio that his Plan Compensation in excess of:
[ ] $____________
[ ] the Taxable Wage Base
bears to the total Plan Compensation in excess of such
amount of all Participants eligible to share in 401(a)
Employer Contributions for such Year; however, in no event
may a Participant's share exceed ___________________% of his
Compensation in excess of such amount.
Any remaining 401(a) Employer Contributions will be
allocated to all eligible Participants in accordance with
the ratio which each eligible Participant's Plan
Compensation bears to the total Plan Compensation of all
Participants eligible to share in 401(a) Employer
Contributions for such Year.
The maximum percentage share of Compensation above the
dollar amount used is the OASDI tax rate in effect at the
beginning of the Plan Year. If the dollar amount used
exceeds the Taxable Wage Base, the maximum percentage share
is produced by the following formula:
(Taxable Wage Base) X the OASDI tax rate in effect
------------------------ at the beginning of the Plan
(Designated Dollar Amount) Year
Note: All reference to the Taxable Wage Base are to the Base in effect
at the beginning of the Plan Year.
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Section 5.03 Amounts forfeited for each Plan Year shall be applied as follows
METHOD OF (Check one):
ALLOCATING PLAN
FORFEITURES [ ] (a) Forfeitures shall be allocated per the same method as 401(a) Employer
Contributions are allocated for the Plan Year in which the forfeiture
occurs.
[x] (b) Forfeitures shall be used to reduce Employer contributions for the
Plan Year following that in which the forfeiture occurs.
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- 10 -
Section 5.04 Any dividend paid by Insurer pursuant to the terms of any group
GROUP ANNUITY annuity contract issued to the Trustee shall be (Check (a) or (b)
CONTRACT below, if applicable):
DIVIDENDS
[x] (a) added to the Employer's contribution for the Plan Year during
which the dividend is credited to the Contract.
[ ] (b) applied to reduce the Employer's contribution for the Plan
Year during which the dividend is credited to the Contract.
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Article VII If the Employer maintains or ever maintained another qualified plan in
LIMITATION OF which any Participant in this Plan is (or was) a participant or could
ALLOCATIONS possibly become a participant, this section must be completed.
(Other Defined 1. If the Participant is covered under another qualified defined
Contribution contribution plan maintained by the Employer, other than a Master or
Plans) Prototype Plan:
[x] (i) The determination of the maximum permissible contribution
under the other defined contribution plan shall be made only
after crediting a participant with his Annual Addition for a
Limitation Year under this defined contribution plan.
[ ] (ii) The determination of the maximum permissible contribution
under this defined contribution plan shall be only after
crediting a participant with his Annual Addition under the
other defined contribution plan.
[ ] (iii) Specify _____________________________________________________
_____________________________________________________________
_____________________________________________________________
(Other Defined 2. If the Participant is or has ever been a participant in a defined
Benefit Plans) benefit plan maintained by the Employer (the adopting Employer
must provide language which will satisfy the 1.0 limitation of
Section 415(e) of the Internal Revenue Code. Such language must
preclude employer discretion. See Section 1.415-1 of the Income
Tax Regulations for guidance).
[x] (i) The determination of the maximum permissible contribution
under any defined contribution plan shall be made only after
crediting a participant with his earned benefit for a
Defined benefit Limitation Year under any defined benefit plan in which he
plan has is also participating.
terminated
[ ] (ii) Other (Specify):_____________________________________________
__________________________________________________________________
__________________________________________________________________
- 11-
Section 10.02A In-Service Withdrawals by the Participant of the amount in his Salary
IN-SERVICE Savings Contribution and 401(k) Employer and 401(k) Employer Match
WITHDRAWALS Contribution accounts, for any reason, after he attains age 59 1/2
(after age 591/2) (Check one):
[x] (a) are permitted
[ ] (b) are not permitted
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Section 10.02B Determinations of "financial hardship" under Plan Section 10.02 shall
HARDSHIP be made using the following criteria:
WITHDRAWALS **
(Criteria) [x] (a) Safe Harbor
Immediate and Heavy Financial Needs: Such a need exists when
the withdrawal will be used to pay any of the following:
(1) deductible medical expenses incurred by the Participant,
Participant's spouse or any dependent of the Participant; (2)
down payment on the principal residence of the Participant;
(3) tution for the next semester or quarter of post-secondary
education for the Participant, his or her spouse, children or
other dependents; or (4) to prevent eviction of the
Participant from his or her principal residence or
foreclosure on the mortgage of the Participant's principal
residence.
Amount of Above: The amount withdrawn, less any income and
penalty taxes, must be less than or equal to the amount
identified by the Participant as needed for the above.
Reasonable Availability of Other Financial Resources: The
Participant will be ineligible and must acknowledge that he
or she is ineligible to make Salary Savings Contributions or
After Tax Contributions under this or any other plan
maintained by the Employer: (1) for one year from the date
of withdrawal; and (2) such that the sum of any Salary
Savings Contributions made (a) prior to the above suspension
in the calendar year in which the suspension begins and (b)
after the suspension in the calendar year in which the
suspension ends is less than or equal to (c) the limit set
forth in Code Section 402(g)(1) as applicable in the year in
which the suspension ends. Further, the Participant must
have obtained all distributions, other than hardship
distributions, and all non-taxable loans available as of the
above acknowledgement under all plans maintained by the
Employer.
[ ] (b) Other
Attach a description of the criteria for determining: (1)
the immediacy and weight of a Participant's financial need;
(2) the amount of any heavy and immediate financial need and
(3) the reasonable availability of other financial resources
of the Participant.
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**Hardship withdrawals of profit sharing plan and defined benefit plan assets
transferred or existing in this plan prior to 9/1/91 are permitted at any time
for health, education or welfare.
- 12 -
Section 11.01 Participant Loans (Check One):
PARTICIPANT
LOANS [X] (a) are permitted
[ ] (b) are not permitted
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Section 12.02 Check and complete one of the below, and any applicable subparts:
EARLY
RETIREMENT AGE [X] (a) There is no Early Retirement Age.
(if any)
[ ] (b) The Early Retirement Age of a Participant shall be the
first day of any month selected by the Participant
coincident with or next following the date he satisfies
the following requirements (Check and complete the
applicable requirements set forth below);
[ ] Termination of employment within _________ years of Normal
Retirement Age
[ ] Attainment of Age ____________
[ ] Completion of ___________ Years of Service
[ ] Completion of ___________ Years of Plan Participation
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Section 13.01(1) A Participant's 401(a) Employer and 401(a) Employer Match
VESTING Contributions, if any, shall be vested to the extent designated
SCHEDULES below:
[X] (a) 100% at all times for all assets transferred from prior
defined benefit plan and profit sharing plan.
[X] (b) 100% after 5 (1 to 10) Years of Service for all 401(a)
Employer Match Contributions received after 9/1/91.
[ ] (c) A percentage determined in accordance with the following
schedule (5-15 vesting):
Nonforfeitable
Years of Service Percentage
---------------- --------------
Less than 5 0%
5 25
6 30
7 35
8 40
9 45
10 50
11 60
12 70
13 80
14 90
15 or more 100
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[ ] (d) A percentage which is the greater of (i) or (ii) below (Rule
of 45):
(i) A Participant with at least 5 Years of Service whose
Age and Years of Service at least equal 45 shall be
vested in accordance with the following schedule:
then the Non
If Completed Years and sum of Age and forfeitable
of Service equal Service equals Percentage is
------------------ ------------------ -------------
5 45 or 46 50%
6 47 or 48 60
7 49 or 50 70
8 51 or 52 80
9 53 or 54 90
10 or more 55 or more 100
(ii) After completion of 10 Years of Service, all
Participants shall be 50% vested, plus 10% for each of
the next 5 Years of Service.
[ ] (e) A percentage determined in accordance with the following
schedule (4-40 vesting):
Nonforfeitable
Years of Service Percentage
---------------- --------------
Less than 4 0%
4 40
5 45
6 50
7 60
8 70
9 80
10 90
11 or more 100
[ ] (f) other _______________________________________________________
______________________________________ full vesting after
completion of ___________ Years of Service (not to exceed 10).
[ ] (g) A percentage determined in accordance with the following
schedule:
Nonforfeitable
Years of Service Percentage
---------------- --------------
Less than 2 0%
2 20
3 40
4 60
5 80
6 or more 100
- 14 -
[ ] (h) A percentage determined in accordance with the
following schedule:
Nonforfeitable
Years of Service Percentage
---------------- --------------
Less than 3 0%
3 20
4 40
5 60
6 80
7 or more 100
NOTE: Notwithstanding the above, in any event a
Participant's vesting percentage shall be 100% on the
date he attains his Normal Retirement Age, or, if
earlier, on the date he attains his Early Retirement
Age.
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Section 13.01(3) In determining a Participant's Vesting Percentage, the
VESTING following periods of Service shall be disregarded (Check one
(Service or more boxes, if applicable):
Exclusions)
NOTE: If all Years of Service are to be counted, no boxes
should be checked.
[ ] *(a) Years of Service before Age 18 (except that if
N/A Section 13.01(1)(d) of the Adoption Agreement is
checked, such Years during which the Employee was a
Participant shall not be disregarded).
[ ] *(b) Periods during which the Plan or a predecessor plan
was not maintained by the Employer.
[ ] (c) If a Participant has a One Year Break in Service,
Service before the Break shall not be taken into
account until he has completed a Year of Service
after such Break in Service.
[ ] (d) In a case of a Participant who has 5 or more
consecutive One Year Breaks in Service, the
Participant's pre-break service will count in
vesting of the Employer-derived accrued benefit
only if either:
(i) such Participant has any nonforfeitable
interest in the Accrued Benefit attributable
to Employer contributions at the time of
separation from service, or
(ii) upon returning to service the number of
consecutive One Year Breaks in Service is
less than the number of Years of Service.
- 15 -
[ ] (e) Years of Service before January 1, 1971, unless the Employee has
had at least 3 Years of Service after December 31,1970.
[ ] (f) Years of Service before the Plan Year in which Internal Revenue
Code Section 411 became applicable to the Plan, if such Service
would have been disregarded under the rules of the plan with
regard to Breaks in Service as in effect on the applicable date.
For this purpose, Break in Service rules are rules which result
in loss of prior vesting or benefit accruals, or which deny an
employee eligibility to participate, by reason of separation or
failure to complete a required period of service within a
specified period of time.
NOTE: In all events Years of Service during which the Employee did not
complete at least 1,000 Hours of Service shall be disregarded.
*Subsection (a) and (b) may not be checked if Section 13.01(1)(e) of the
Adoption Agreement has been elected.
---------------------------------------------------------------------------------------------------
Section 13.02(1) A terminated Participant (or his Beneficiary) may request that the
DISTRIBUTION participant's deferred Normal Retirement Benefit be distributed (Check one
OF of the following ):
DEFERRED
NORMAL [X] (a) at any time after the date the Participant terminates employment
RETIREMENT with the Employer.
BENEFIT
[ ] (b) No earlier than the earliest of the terminated Participant's death,
attainment of the Participant's Normal or Early Retirement Date or
Normal Retirement Age.
[ ] (c) If earlier than (b) above, at any time after the end of the Plan
Year in which the Participant terminated employment with the Employer.
[ ] (d) If earlier than (b) above, at any time after the end of the _____
Plan Year following the plan year in which the Participant terminated
employment with the Employer.
[ ] (e) If earlier than (b) above, __________________________________
________________________________________________________________
(Specify the time when or other objective criteria under which a
Participant may request a distribution of his deferred Normal
Retirement Benefit.)
NOTE: Employers may not eliminate or restrict the availability of
distribution options except in accordance with Code Sections 401(a)(4)
and 411(d)(6) and Rules and Regulations promulgated thereunder.
- 16 -
Section 17.01 (a) Without limiting the Trustee's powers in any other respect,
INVESTMENT contributions made by or on behalf of each Participant shall be
IN LIFE invested in life insurance Policies as follows (Check and complete one
INSURANCE of the following):
POLICIES
[ ] (i) Subject to any restrictions specified in (b) below, the
percentage of plan contributions allocated to the purchase of
life insurance Policies shall be as elected by each Participant.
[X] (ii) No life insurance Policies shall be purchased by the Trustee.
(b) If item (a)(i) above is checked, the purchase of life insurance
policies shall be subject to the following restrictions (Check and
complete the following, if applicable):
[ ](i) All Policies will have a common issue date (the plan
Anniversary) i.e., no Policies will be issued by the Insurer on
other than the Plan Anniversary.
[ ](ii) The amount of life insurance issued on the life of any
Participant shall not exceed $____________.
NOTE: Any purchase of life insurance Policies shall be subject to the rules
and restrictions specified in Section 2.38 and in Article XVII of the
Plan.
NOTE: In no event may Tax Deductible Voluntary Contributions be used to
purchase life insurance - See Section 17.01(1) of the Plan.
- 17 -
EXECUTION AND ACCEPTANCE
BY
EMPLOYER AND TRUSTEE(S)
STATE MUTUAL OF AMERICA GROUP PROTOTYPE 401(k) PROFIT SHARING PLAN NO.3
AS USED IN PUERTO RICO
The Employer hereby agrees that the Insurer is not responsible for the
qualification of the Plan or Trust, assumes full responsibility therefor, hereby
accepts the provisions of State Mutual of America Group Prototype 401(k) Profit
Sharing Plan No. 3, agrees to be bound by the provisions thereof, and adopts
such Profit Sharing Plan by causing its name to be signed hereto by its duly
authorized officer, all as of this 9th day of December, 1991.
In order to obtain reliance with respect to the qualification of Plan
provisions, the Employer must apply to the Puerto Rico Department of Revenue for
a determination letter.
Employer First Federal Savings Bank Employer _______________________
By ▇▇▇▇ ▇. ▇▇▇▇▇▇ - Vice President By _______________________
-------------------------------
Title: Human Resources Director Title:
================================================================================
The undersigned Trustee(s), hereby accepts the provisions of State Mutual of
America Group Prototype 401(k) Profit Sharing Plan No. 3 and the trusts provided
for therein, and hereby declares, and agrees with the aforesaid Employer to
receive, hold, invest, expend and distribute all funds deposited with,
contributed to, earned or otherwise received by, the Trustee(s), all in
accordance with the terms and provisions of said Plan and Trust.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ Date December 9,1991
-----------------------------------------------
Name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
Title (if any) Senior Vice President (Trustee)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Date December 9, 1991
-----------------------------------------------
Name ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title (if any) Senior Vice President (Trustee)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Date December 9, 1991
-----------------------------------------------
Name ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title (if any) Senior Vice President (Trustee)
- 18 -
State Mutual of America
Group Prototype 401(k) Profit Sharing Plan No. 3
Puerto Rico Amendment No. 1
The Group Prototype 401(k) Profit Sharing Plan No. 3 is hereby amended as
follows:
1. Section 2.21: "Highly Compensated Employee" means, for any Plan Year,
any Employee who receives compensation higher than that received by
two-thirds of the eligible employees during that Plan Year.
2. Section 2.27 is replaced by the following: "Non-Highly Compensated
Employee" means any Employee who is not a Highly Compensated Employee.
3. Section 2.25, 2.28, 2.43, 2.46, 2.47, and 4.02, Article VI, Article IX,
and the third paragraphs of Section 7.14 and 7.15 are deleted.
4. Article VIII is replaced by the following:
ATTACHMENT A
ARTICLE VIII
REFUND OR REALLOCATION OF EXCESS 401(k) CONTRIBUTIONS
8.01 SPECIFIC DEFINITIONS - For purposes of this Article, the following
definitions shall be used:
(a) "Actual Deferral Percentage" means the ratio (expressed as a
percentage) of Salary Savings Contributions, made on behalf of an
Eligible Participant to that Participant's compensation for the Plan
Year. The Plan Administrator may include 401(k) Employer Contributions
and 401(k) Employer Match Contributions made for the Participant in the
above described numerator, if such inclusion is made on a uniform
nondiscriminatory basis for all Participants.
Additionally, if one or more other plans allowing contributions under
Puerto Rico Income Tax Code Section 165(3) are considered with this
Plan as one for purposes of Puerto Rico Income Tax Code Section
165(a)(3) or (4), the Actual Deferral Percentages for all Eligible
Participants under all such plans shall be determined as if this Plan
and all such other plans were one. If any Highly Compensated Employee
is also an Eligible Participant in one or more other Plans allowing
contributions under Code Section 165(e), the Actual Deferral Percentage
for that Employee shall be determined as if this Plan and all such
other plans were one.
(b) "Average Actual Deferral Percentage" means the average (expressed as a
percentage) of the Actual Deferral Percentages of a group.
(c) "Eligible Participant' means a Participant eligible to have Salary
Savings Contributions made on his behalf.
(d) "Excess 401(k) Contributions" means the excess of: (i) the
numerator of the Actual Deferral Percentage of a Highly
Compensated Employee over (ii) the maximum numerator permitted
under Plan Section 8.02, determined by reducing the numerators
of Highly Compensated Employees in order of their Actual
Deferral Percentages beginning with the highest of such
percentages.
(e) "Excess Deferrals" means: (1) the excess of Salary Reduction
Contributions for any Participant over $7,000 (or such amount
as the Secretary of the Treasury may designate); (2) any
amount identified in Plan Section 8.07; and (3) any amount
over 10% of the Participant's Compensation.
8.02 AVERAGE ACTUAL DEFERRAL PERCENTAGE TEST - The Average Actual Deferral
percentage for Highly Compensated Employees for each Plan Year and the
Average Actual Deferral Percentage for Non-Highly compensated Employees
for the same Plan Year must satisfy one of the following tests:
(a) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Eligible Participants who are Non-Highly Compensated
Employees for the Plan Year multiplied by 1.25; or
(b) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage
for Eligible Participants who are Non-Highly Compensated
Employees for the Plan Year multiplied by 2, provided that the
Average Actual Deferral Percentage for Eligible Participants
who are Highly Compensated Employees does not exceed The
Average Actual Deferral Percentage for Eligible Participants
who are Non-Highly Compensated Employees by more than two (2)
percentage points.
8.03 REFUND OF EXCESS 401(k) CONTRIBUTIONS - Notwithstanding any other
provision of this Plan, except Section 8.05 herein, Excess 401(k)
Contributions and income allocable thereto shall be distributed to the
affected Participant, or, at the Participant's election, and in
accordance with regulations, recharacterized as Voluntary After Tax
Contributions. The Plan Administrator shall make every effort to refund
or recharacterize Excess 401(k) Contributions within 2 1/2 months of
the end of the affected Plan Year.
8.04 ACCOUNTING FOR EXCESS 401(k) CONTRIBUTIONS - Amounts distributed and
reallocated under this Article shall be treated as being made from
Salary Savings Contributions, 401(k) Employer Contributions and 401(k)
Employer Match Contributions as determined by the Plan Administrator on
a uniform nondiscriminatory basis.
8.05 SPECIAL 401(k) EMPLOYER CONTRIBUTIONS - Notwithstanding any other
provisions of this Plan, except Section 8.09, in lieu of reallocating
or distributing Excess 401(k) Contributions as provided in Section
8.03, the employer may make 401(k) Employer Contributions and or 401(k)
Employer Match Contributions on behalf of Non-Highly Compensated
Employees that are sufficient to satisfy either of the Average Actual
Deferral Percentage Tests; any such 401(k) Employer Contributions must
be allocated among the Non-Highly Compensated Employees in proportion
to Compensation.
8.06 MAXIMUM SALARY SAVINGS CONTRIBUTIONS - No employee shall be permitted
to have Salary Savings Contributions made under this Plan during any
calendar year in excess of the lesser of $7,000 (or such other amount
as the Secretary of the Treasury may designate) or 10% of their
compensation. The foregoing limit will not apply to Salary Savings
Contributions attributable to services performed in 1986 and described
on Sections 1105(c)(4) or (5) of the Tax Reform Act of 1986.
8.07 PARTICIPANT CLAIMS - Participants under other plans described in Code
Section 165(e) may submit a claim to the Plan Administrator specifying
the amount of their Excess Deferral. Such claim shall: (1) be in
writing; (2) be submitted no later than March 1 of the year after the
Excess Deferral was made; and (3) state that such amount, when added to
amounts deferred under other plans described in Code Section 165(e),
exceeds $7,000 (or such other amount as the Secretary of the Treasury
may designate).
8.08 DISTRIBUTION OF EXCESS DEFERRALS - The plan Administrator shall make
every effort to see that Excess Deferrals and income allocable thereto
shall be distributed to the affected Participant no later than the
April 15 following the calendar year in which such Excess Deferrals
were made.
8.09 OPERATION IN ACCORDANCE WITH REGULATIONS - The determination and
treatment of Actual Deferral Percentages and Excess 401(k)
Contributions, and the operation of the Average Actual Deferral
Percentage Test shall be in accordance with such additional
requirements as may be prescribed by the Secretary of the Treasury.
GROUP PROTOTYPE
401(k) PROFIT SHARING
PLAN
Prototype Plan No. 3
FORM 07244
TABLE OF CONTENTS
STATE MUTUAL OF AMERICA
GROUP PROTOTYPE 401(k) PROFIT SHARING PLAN NO. 3
ARTICLE TITLE
------- -----
I NAME, PURPOSE AND EFFECTIVE DATE OF PLAN ..................................... 1
II DEFINITIONS .................................................................. 1
III PARTICIPATION REQUIREMENTS ................................................... 12
IV EMPLOYER AND PARTICIPANT CONTRIBUTIONS ....................................... 16
V PARTICIPANT ACCOUNTS, ALLOCATION OF CONTRIBUTIONS
AND VALUATION OF ASSETS .................................................... 19
VI PROVISIONS APPLICABLE TO TOP HEAVY PLANS ..................................... 21
VII 415 LIMITATIONS ON ALLOCATION ................................................ 25
VIII REFUND OR REALLOCATION OF EXCESS 401(k) CONTRIBUTIONS ........................ 30
IX REFUND OR FORFEITURE OF EXCESS 401(m) CONTRIBUTIONS .......................... 33
X IN-SERVICE WITHDRAWALS ....................................................... 35
XI PARTICIPANT LOANS ............................................................ 36
XII RETIREMENT AND DEATH BENEFITS ................................................ 38
XIII BENEFITS UPON TERMINATION OF EMPLOYMENT ...................................... 48
XIV PLAN FIDUCIARY RESPONSIBILITIES .............................................. 51
XV TRUSTEE AND TRUST FUND INVESTMENTS ........................................... 55
XVI THE INSURER .................................................................. 59
XVII LIFE INSURANCE POLICIES ...................................................... 59
XVIII TRANSFER OF ASSETS, ROLLOVER CONTRIBUTIONS ................................... 61
XIX CLAIMS PROCEDURE ............................................................. 62
XX AMENDMENT AND TERMINATION .................................................... 63
XXI MISCELLANEOUS ................................................................ 66
FORM 7244 (IRS-88)
STATE MUTUAL OF AMERICA
GROUP PROTOTYPE 401(k) PROFIT SHARING PLAN NO. 3
State Mutual Life Assurance Company of America is the sponsor of this Prototype
401(k) Profit Sharing Plan, which an Employer may adopt by executing a Plan
Adoption Agreement. The three Adoption Agreements available have been designated
Plan Nos. 001 (Non-Standardized), 002 (Standardized) and 003 (Simplified
Standardized) by the internal Revenue Service. The Trustee who is to act as
Trustee hereunder shall indicate acceptance of the provisions of this plan and
Trust upon the page and in the manner provided for that purpose, whereupon this
instrument shall be a valid and binding Plan and Trust in accordance with its
terms and provisions.
ARTICLE I
NAME, PURPOSE AND EFFECTIVE DATE OF PLAN
1.01 This Plan shall be known as State Mutual of America Group Prototype
401(k) Profit Sharing Plan No. 3. This Plan is State Mutual Basic Plan
Document No. 05.
1.02 This Plan and Trust has been established for the exclusive benefit of
the eligible Employees of each Employer and their Beneficiaries, and as
far as possible shall be interpreted and administered in a manner
consistent with this intent and consistent with the requirements of
Code Section 401. If the Employer's plan fails to attain or retain
qualification under Code Section 401, such plan shall no longer
participate under this Prototype Plan and will be considered an
individually designed plan.
1.03 Subject to Article VII and to Section 20.05, under no circumstances
shall any property of the Trust, or any contributions made by the
Employer under its Plan or Trust, be used for, or diverted to, purposes
other than for the exclusive benefit of the Employees of such Employer,
or their Beneficiaries.
1.04 The Effective Date of this Plan and Trust shall be the date specified
as such in Item 6 of the Adoption Agreement.
ARTICLE II
DEFINITIONS
As used in this Agreement, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context.
2.01 "Accrued Benefit" means the sum of the balances of the separate
accounts maintained on a Participant's behalf pursuant to Section 5.01.
2.02 "Administrator" means the person or persons designated by the Employer
in Item 10 of the Adoption Agreement to administer the Plan on behalf
of the Employer.
2.03 "Adoption Agreement" means the separate agreement executed by each
Employer adopting the Plan, in which the Employer's selection of
options under the Plan are indicated.
- 1 -
2.04 "After-Tax Contribution" means a contribution made to the Trust
pursuant to Section 4.04 of the Plan and Adoption Agreement.
2.05 "Age" means the age of a person at his last birthday.
2.06 "Beneficiary" means the person, trust, organization or estate
designated to receive Plan benefits payable on or after the death of a
Participant.
2.07 "Code" means the Internal Revenue Code of 1986 as amended and any
future Internal Revenue Code or similar Internal Revenue laws.
2.08 "Compensation" means:
(i) for purposes of applying the limitations of Article VII, the
compensation includible in gross income for the Limitation
Year ending with or within the Plan Year.
(ii) for purposes of Section 4.02 (minimum Employer Contributions
for Top Heavy Plans) and Section 2.25 (Definition of "Key
Employee"), the compensation includible in gross income for
the Plan Year.
(iii) for all other purposes, except as noted below, the
compensation includible in gross income for the Plan Year, and
salary reduction Contributions contributed in the
Participant's behalf for the Plan Year under Code Sections
401(k), 408(k), 403(b) and 125.
If an incorporated Employer adopts a Non Standardized Plan and
the allocation formula is not integrated with Social Security,
the Employer may specify that certain items of compensation
may be excluded for purposes of allocating 401(a) Employer
Contributions.
Additionally, if the Employer is incorporated, for the first
year of Plan participation, compensation paid before the date
the Employee becomes a Participant shall be excluded for
purposes of making all contributions and for purposes of
Articles VIII and IX if the Employer so specifies in Adoption
Agreement Section 2.08.
Compensation of any Self-Employed Individual for any year shall mean
his Earned Income for such year.
Notwithstanding the above definitions, for any Top Heavy Plan Year and
for Plan Years beginning after 1988, Compensation in excess of $200,000
(or such other amount as the Secretary of the Treasury may designate)
shall be disregarded.
2.09 "Control Group" means a group of corporations which are members of a
controlled group of corporations (as defined in Section 414(b) of the
Internal Revenue Code) and all trades or businesses (whether or not
incorporated) which are under common control (as defined in Code
Section 414(c)).
- 2 -
The term "Control Group" shall also include all members of an
affiliated service group (as defined in Code Section 414(m)).
2.10 "Earned Income" means net earnings from self-employment for services
actually rendered to the trade or business for which this Plan is
established, in which trade or business personal services of an
Owner-Employee or a Self-Employed Individual are a material
income-producing factor. Earned Income of such trade or business shall
also include gains (other than gains from the sale of a capital asset,
as defined in the Code) and net earnings derived from the sale or other
disposition of, the transfer of any interest in, or the licensing of
the use of, property (other than good will) by an individual whose
personal efforts created such property. Net earnings will be determined
without regard to items not included in gross income and the deductions
allocable to such items. Net earnings shall be reduced by contributions
by the Employer to a qualified retirement plan to the extent deductible
under Code Section 404. For Plan Years beginning after 1988, net
earnings shall be reduced by amounts deductible under Code Section
164(f).
2.11 "Employee" means any Self-Employed Individual and any common-law
employee who is employed by the Employer.
In addition, any leased employee shall be treated as an Employee of the
recipient Employer; however, contributions or benefits provided by the
leasing organization which are attributable to services performed for
the recipient Employer shall be treated as provided by the recipient
Employer. The preceding sentence shall not apply to any leased employee
if no more than 20% of the Non-Highly Compensated Employees of the
Employer are leased employees, and if such employee is covered by a
money purchase pension plan providing:
(a) a nonintegrated employer contribution rate of at least 10
percent of compensation,
(b) immediate participation, and
(c) full and immediate vesting.
For purposes of this section, the term "leased employee" means any
person who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the
recipient (or for the Employer and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time
basis for a period of at least one year and such services are of a type
historically performed by employees in the business field of the
recipient Employer.
2.12 "Employer" means the entity specified in Item 1 of the Adoption
Agreement, any Participating Employer who completed and executed the
Adoption Agreement, any successor employer which shall maintain this
Plan and any Predecessor Employer which has maintained this Plan.
Participating Employers shall be listed in Item 4 of the Adoption
Agreement. Predecessor Employers shall be listed in Item 16 of the
Adoption Agreement.
- 3 -
Except as provided in Section 7.16, for purposes of Code Sections 401,
408(k), 410, 411 and 415, all employees of the members of a control
Group shall be treated as employed by a single employer.
2.13 "Family member" means, with respect to any Employee, such Employee's
spouse and lineal ascendants and descendants, and the spouses of lineal
ascendants and descendants.
2.14 "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, including, but not limited to, the
Trustee, the Employer and the Plan Administrator.
2.15 "Five Percent Owner" means, in the case of a corporation, any person
who owns (or is considered as owning within the meaning of Code Section
318) more than five percent of the outstanding stock of the Employer or
stock possessing more than five percent of the total combined voting
power of all stock of the Employer. In the case of an Employer that is
not a corporation, "Five Percent Owner" means any person who owns or
under applicable regulations is considered as owning more than five
percent 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), and (m) shall
be treated as separate employers.
2.16 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
2.17 "401(a) Employer Contribution" means a 401(a) Plan contribution made by
the Employer to the Trust pursuant to Plan Section 4.01 and Adoption
Agreement Section 4.01(1).
2.18 "401(a) Employer Match Contribution" means a match contribution made to
the Trust pursuant to Plan Section 4.01 and Adoption Agreement Section
4.01(3) and subject to the vesting schedule applicable to 401(a)
Employer Contributions pursuant to Adoption Agreement Section
4.01(3)(f)(ii) of Plan 001 or Plan 002 ( the Non Standardized and
Standardized Plans) or when made pursuant to Adoption Agreement Section
4.01(3)(c)(ii) of Plan 003 (the Simplified Standardized Plan).
2.19 "401(k) Employer Contribution" means a 401(k) Plan contribution made by
the Employer to the Trust pursuant to Section 4.01 of the Plan and
Section 4.01(2) of the Adoption Agreement.
2.20 "401(k) Employer Match Contribution" means a match contribution made to
the Trust pursuant to Plan Section 4.01 and Adoption Agreement Section
4.01(3), and nonforfeitable when made pursuant to Adoption Agreement
Section 4.01(3)(f)(i) of Plan 001 or Plan 002 (the Non Standardized and
Standardized Plans) or when made pursuant to Adoption Agreement Section
4.01(3)(c)(i) of Plan 003 (the Simplified Standardized Plan).
- 4 -
2.21 "Highly Compensated Employee" means any Employee who, at any time
during the current or preceding Plan Year:
(a) is a 5% owner;
(b) received annual compensation in excess of $75,000 (or such
other amount as the Secretary of the Treasury may designate);
(c) received annual compensation in excess of $50,000 (or such
other amount as the Secretary of the Treasury may designate)
and who is in the group consisting of the top twenty percent
of Employees when ranked on the basis of compensation for such
year. In determining the number of Employees in the top twenty
percent, those Employees described in Code Section 414(q)(8)
shall be excluded;
(d) is an officer described in Plan Section 2.25(a); or
(e) is a former Employee described in Code Section 414(q)(9).
Notwithstanding the foregoing, any Employee described in (b), (c) or
(d) above for the current but not the previous Plan Year shall not be
considered a Highly Compensated Employee unless such Employee is one of
the one hundred most highly compensated Employees for the current Plan
Year.
2.22 "Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These
hours shall be credited to the Employee for the computation
period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than 501
hours of service shall be credited under this paragraph for
any single continuous period (whether or not such period
occurs in a single computation period). Hours under this
paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same hours of service shall not be credited both under
paragraph (a) or paragraph (b), as the case may be, and under
this paragraph (c). These hours shall be credited to the
Employee for the computation period or periods to which the
award or agreement pertains rather than the computation period
in which the award, agreement or payment is made.
- 5 -
In addition to the foregoing rules, hours of service will be
credited for employment with other members of an affiliated
service group (under Section 414(m) of the Internal Revenue
Code), a controlled group of corporations (under Section
414(b) of the Internal Revenue Code), or a group of trades or
businesses under common control (under Section 414(c) of the
Internal Revenue Code), of which the adopting Employer is a
member.
Hours of Service will also be credited for any individual
considered an Employee for purposes of the Plan under Section
414(n) of the Internal Revenue Code.
Solely for purposes of determining whether a One Year Break in
Service, as defined in Section 2.30, for participation and
vesting purposes has occurred in a computation period, an
individual who is absent from work for maternity or paternity
reasons shall receive credit for the Hours of Service which
would otherwise have been credited to such individual but for
such absence, or in any case in which such Hours cannot be
determined, 8 Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of a birth of a
child of the individual, (3) by reason of the placement of a
child with the individual in connection with the adoption of
such child by such individual, or (4) for purposes of caring
for such child for a period beginning immediately following
such birth of placement. The Hours of Service credited under
this paragraph shall be credited (1) in the computation period
in which the absence begins if the crediting is necessary to
prevent a break in service in that period, or (2) in all other
cases, in the following computation period.
Hours of Service shall be determined on the basis of the
method selected in Adoption Agreement Section 2.22.
2.23 "Insurer" means State Mutual Life Assurance Company of America or any
affiliate thereof, all employees and agents thereof, and with the
consent of State Mutual, any other legal reserve life insurance or
annuity company.
2.24 "Investment Manager" means any person, firm or corporation who is a
registered investment adviser under the Investment Advisers Act of 1940
or a bank, and (a) who has the power to manage, acquire, or dispose of
Plan assets, and (b) who acknowledges in writing his fiduciary
responsibility to the Plan.
In no event may the Insurer be an Investment Manager for the Plan.
2.25. "Key Employee" means any Employee or former Employee (and the
beneficiaries of any such Employee) who, at any time during the Plan
Year or any of the preceding four Plan Years, is:
- 6 -
(a) an officer of the Employer (as that term is defined within the
meaning of the regulations under Code Section 416) having an
annual Compensation (as defined for purposes of Article VII)
for the Plan Year which exceeds 150% of the dollar limitation
under Code Section 415(c)(1)(A) in effect for the calendar
year in which such Plan Year ends. If there are 500 or more
Employees, in no event will more than 50 Employees be
considered Key Employees by reason of being officers. If there
are fewer than 500 Employees, in no event will more than the
greater of 3 Employees or 10% of all Employees be considered
Key Employees by reason of being officers.
(b) one of the ten Employees owning (or considered as owning
within the meaning of Code Section 318) both more than a 1/2
percent ownership interest in value and the largest percentage
ownership interests in value of any employers required to be
aggregated under Code Sections 414(b), (c) and (m). Only those
Employees whose Compensation (as defined for purposes of
Article VII) for the Plan Year exceeds the dollar limitation
under Code Section 415(c)(1)(A) in effect for the calendar
year in which such Plan Year ends shall be considered an owner
under this Subsection (b). For purposes of this Subsection (b)
if more than one Employee owns the same interest in the
Employer, the Employee having the highest annual compensation
(as defined for purposes of Article VII) shall be treated as
owning a larger interest.
(c) a "five percent owner" of the Employer.
(d) a "one percent owner" of the Employer having an annual
Compensation (as defined for purposes of Article VII) for the
Plan Year from the Employer of more than $150,000. In the case
of a corporation, "one percent owner" means any person who
owns (or is considered as owning within the meaning of Code
Section 318) more than one percent of the outstanding stock of
the Employer or stock possessing more than one percent of the
total combined voting power of all stock of the Employer. In
the case of an Employer that is not a corporation, "one
percent owner" means any person who owns (or under applicable
regulations is considered as owning) more than one percent 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)
and (m) shall be treated as separate employers. However, in
determining whether an individual has Compensation of more
than $150,000, Compensation from each employer required to be
aggregated under Sections 414(b), (c) and (m) of the Internal
Revenue Code shall be taken into account.
2.26 "Limitation Year" means a calendar year or any other twelve consecutive
month period elected by the Employer. The Limitation Year shall be
specified by the Employer in Section 2.26 of the Adoption Agreement.
All qualified plans of the Employer must use the same Limitation Year.
If the Limitation Year is amended to a different twelve consecutive
month period, the new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made.
- 7 -
2.27 "Non-Highly Compensated Employee" means any employee who is neither:
(a) a Highly Compensated Employee nor (b) a Family Member of either:
(1) a Five Percent Owner or (2) a Highly Compensated Employee who is
also one of the ten most highly compensated Employees for the current
Plan Year.
2.28 "Non-Key Employee" means any Employee who is not a Key Employee.
2.29 "Normal Retirement Age" means the age specified in Adoption Agreement
Section 2.29 at which time a Participant shall become eligible to
receive his normal retirement benefit. A Participant shall become fully
vested in his Accrued Benefit upon attaining his Normal Retirement Age.
In the event a mandatory retirement age is enforced by the Employer
Which is less than the Normal Retirement Age specified in the Adoption
Agreement, such mandatory age shall be deemed to be the Normal
Retirement Age.
2.30 (a) "One Year Break in Service" means, except for purposes of
determining plan entry under Article III (Participation
Requirements), any Plan Year or any corresponding twelve
consecutive month period for periods Prior to the commencement
of the first twelve-month Plan Year during which the Employee
has not completed more than 500 Hours of Service.
(b) For purposes of determining plan entry under Article III, "One
Year Break in Service" means a twelve consecutive month
period, computed with reference to the date the Employee's
employment commenced, during which the Employee does not
complete more than 500 Hours of Service.
Notwithstanding the above, an authorized leave of absence shall not
cause a One Year, Break in Service. An "authorized leave of absence"
means a temporary cessation from active employment with the Employer
pursuant to an established nondiscriminatory policy, due to illness,
military service, or other reason.
2.31 "Owner-Employee" means with respect to an unincorporated business, a
sole proprietor who owns the entire interest in the Employer or a
partner who owns more than 10% of either the capital interest or the
profits interest in the Employer.
2.32 "Participant" means any eligible Employee who participates in the Plan
as provided in Article III and has not for any reason become ineligible
to participate further in the Plan.
2.33 "Plan" means the Prototype 401(k) Profit Sharing Plan as herein set
forth, together with the Adoption Agreement.
2.34 "Plan Anniversary" means the first day of any Plan Year.
2.35 "Plan Year" means the twelve consecutive month period which corresponds
to the fiscal Year of the Employer, except that the first Plan Year
shall be the period commencing on the Plan Effective Date and ending on
- 8 -
the day preceding the First Plan Anniversary. The First Plan
Anniversary shall be the date so specified in Item 18 of the
Adoption Agreement.
2.36 "Policy" means any form of individual life insurance contract,
including any supplementary agreements or riders in connection
therewith, issued by the Insurer on the life of a Participant. Any life
insurance death benefits referred to in the following paragraph of this
Section 2.36 pertain to amounts purchased with other than Voluntary
After-Tax Contributions. A Policy may include a provision for waiver of
premium or waiver of premiums and monthly income during disability.
(a) If ordinary life insurance contracts are purchased for a
Participant, the aggregate life insurance premium for a
Participant shall be less than 50% of the aggregate Employer
contributions made on behalf of such Participant Plus
allocations of any forfeitures credited to the account of such
Participant. For purposes of these incidental insurance
provisions, ordinary life insurance contracts are contracts
with both non-decreasing death benefits and non-increasing
premiums.
(b) If term insurance or universal life policies are used, the
aggregate life insurance premium for a Participant shall not
exceed 25% of the aggregate Employer contributions made on
behalf of such Participant plus allocation of any forfeitures
credited to the account of such Participant.
(c) If a combination of ordinary life insurance and other life
insurance policies is used, the aggregate premium for the
ordinary life insurance plus twice the aggregate premium for
the other life insurance shall be less than 50% of the
aggregate Employer contributions made by the Employer on
behalf of the Participant plus allocations of any forfeitures
credited to the account of such Participant.
The limitation on aggregate life insurance premium payments stated in
this Section 2.36 shall not apply to any funds, from whatever source,
which have accumulated in the Participant's Account for a period of two
(2) or more years, and are applied toward the purchase of such life
insurance. Provided, however, that in no event may Tax Deductible
voluntary Contributions be invested in Policies of life insurance.
Subject to Section 12.08, at the election of the Participant, the
Policies on a Participant's life will be converted to cash or an
annuity or distributed to the Participant upon commencement of
benefits.
2.37 "Profits" means, for any taxable year of the Employer, the net income
or profits of the Employer for such year without any deduction for
taxes, based upon its income or contributions to the Trust, and the
accumulated net earnings or profits of the Employer, as the Employer
shall determine upon the basis of its books of account in accordance
with its regular accounting practices.
- 9 -
2.38 "Qualified Joint and Survivor Annuity" means an annuity for the life of
the Participant, with a survivor annuity for the life of his spouse, if
any, in a amount equal to 50% of the amount of the annuity payable
during the joint lives of the Participant and his spouse, and which is
the amount of benefit which can be purchased with the Participant's
Accrued Benefit.
2.39 "Rollover Contribution" means a contribution made to the Trust pursuant
to Plan Section 18.01.
2.40 "Salary Savings Contribution" means a contribution made by the Employer
to the Trust pursuant to Section 4.03 of the Plan and Adoption
Agreement.
2.41 "Self-Employed Individual" means a person who has Earned Income under
the trade or business or partnership with the respect to which this
Plan was adopted; also, an individual who would have had Earned Income
but for the fact that the trade or business had no Profits for the
taxable year. A partner who owns 10% or less of the capital or profits
interest in a partnership and all Owner-Employees are Self-Employed
Individuals.
2.42 "Service" means the entire period of an Employee's employment with the
Employer. If an Employer is maintaining a Plan of a predecessor
Employer, service with the predecessor shall be treated as service with
the Employer. Predecessor Employers shall be listed in Item 16 of the
Adoption Agreement.
2.43 "Super Top Heavy Plan" means for any Plan Year beginning after December
31, 1983 that any of the following conditions exists:
(a) If the top Heavy ratio (as defined in Article VI) for this
Plan exceeds 90 percent and this Plan is not part of any
required aggregation group or permissive aggregation group of
Plans.
(b) If this Plan is a the part of a required aggregation group of
plans but not part of a permissive aggregation group and the
top heavy ratio for the group of plans exceeds 90 percent.
(c) If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top
heavy ratio for the permissive aggregation group exceeds 90
percent.
See Article VI for requirements and additional definitions applicable
to Super Top Heavy Plans.
2.44 "Suspense Account" means the account established by the Trustee or
Insurer for maintaining contributions and forfeitures which have not
yet been allocated to Participants.
2.45 "Tax Deductible Voluntary Contribution" means a deductible employee
contribution described in Code Section 72(o)(5). Such contributions
will be 100% vested and nonforfeitable at all times. No such
contributions will be accepted for tax years beginning after 1986.
- 10 -
2.46 "Top Heavy Plan" means for any Plan Year beginning after December 31,
1983 that any of the following conditions exists:
(a) If the top heavy ratio (as defined in Article VI) for this
Plan exceeds 60 percent and this Plan is not part of any
required aggregation group or permissive aggregation group of
plans.
(b) If this Plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the
top heavy ratio for the group of plans exceeds 60 percent.
(c) If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top
heavy ratio for the permissive aggregation group exceeds 60
percent.
See Article VI for requirements and additional definitions applicable
to Top Heavy Plans.
2.47 "Top Heavy Plan Year" means that, for a particular Plan Year commencing
after December 31, 1983, the Plan is a Top Heavy Plan.
2.48 "Total and Permanent Disability" means the inability of a Participant
to engage in any substantial gainful activity by reason of a physical
or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not
less than 12 months. The permanence and degree of such impairment shall
be supported by medical evidence.
In determining the nature, extent and duration of any Participant's
disability, the Plan Administrator may select a physician to examine
the Participant. The final determination of the nature, extent and
duration of such disability shall be made solely by the Plan
Administrator upon the basis of such evidence as he deems necessary and
acting in accordance with uniform principles consistently applied.
2.49 "Trust" means the Plan and Trust set forth herein, as adopted by the
Employer. The Trust of the Employer shall be separate and apart from
the Trust of any other employer which adopts this Plan.
2.50 "Trustee" means the Individual(s), Bank or Trust Company which has
agreed to be Trustee of the Employer's Plan.
2.51 "Trust Fund" means any and all property held by the Trustee pursuant to
the Plan and Trust.
2.52 "Valuation Date" means the last day of the Plan Year or, if more
frequently, such other date or dates as may be directed by the
Employer.
2.53 "Year of Service" means, except for any periods otherwise disregarded
in the Adoption Agreement, any Plan Year or any corresponding twelve
consecutive month period for periods prior to the commencement of the
first twelve consecutive month Plan Year during which the Employee
completes at least 1,000 Hours of Service; provided, however, that for
- 11 -
purposes of determining eligibility for participation under Article
III, Year of Service shall mean any twelve consecutive month period
during which he completes 1,000 Hours of Service computed from the date
an Employee first performs an Hour of Service, or any anniversary
thereof (or again performs an Hour of Service upon re-employment
following a termination resulting in a One Year Break in Service).
ARTICLE III
PARTICIPATION REQUIREMENTS
3.01 ACTION BY EMPLOYER - An Employer may adopt this Plan and Trust by:
(a) signing the Adoption Agreement and such other forms as the
Trustee may require,
(b) designating the Trustee to act as Trustee under the Plan and
Trust,
(c) having the designated Trustee execute this Trust and accept
the Employer's participation by signing the Adoption Agreement
as completed by the Employer.
3.02 (a) EMPLOYEE PARTICIPATION - 401(k) Plan and 401(a) Plan - Those
Employees eligible to become Participants shall be specified
in Section 3.02(1) of the Adoption Agreement.
If the Employer specifies in Section 4.01 of the Adoption
Agreement that the Employer will make 401(k) Employer
Contributions or 401(a) Employer Contributions to the Trust,
each eligible Employee who complies with the requirements set
forth in this Plan and Trust shall become a Participant on the
entry date specified in Section 3.02(2) of the Adoption
Agreement if he is employed on such date.
(b) EMPLOYEE PARTICIPATION - Salary savings Plan - If specified by
the Employer in Adoption Agreement Section 4.03, on or after
an eligible Employee's entry date the Employee may direct the
Employer to reduce his Compensation or Earned Income in order
that the Employer may make Salary Savings Contributions to the
Trust on the Employee's behalf. Any such Employee shall become
a Participant in the Salary Savings Plan on the date his
compensation reduction agreement becomes effective. Any such
direction shall be made by filing an appropriate form with the
Plan Administrator. The Compensation or Earned Income of any
eligible Employee electing salary savings shall be reduced by
the percentage or dollar amount requested by the Employee
(which percentage or dollar amount may not be less than any
minimum or more than any maximum specified by the Employer in
Adoption Agreement Section 4.03); provided, however, that the
Plan Administrator may reduce the Employee's Compensation by
smaller percentage or dollar amount or refuse to enter into or
comply with a salary savings agreement with the Employee if
the requirements of the Code Section 401(k) would otherwise be
violated or if the Participant has previously discontinued a
salary savings
- 12 -
agreement. Any salary savings agreement shall become effective
on the first day of the first payroll period which begins at
least 15 days after an appropriate form is received by the
Plan Administrator. The reduction in Compensation will remain
in effect until terminated in accordance with the rules set
forth in the Plan and Trust.
A Participant may elect at any time to discontinue his salary
savings agreement with the Employer, and may change his salary
savings agreement subject to any limitation specified by the
Employer in Adoption Agreement Section 4.03. Any such change
or discontinuance shall become effective on the first day of
the first payroll period which begins at least 15 days after a
written notice thereof is received by the Plan Administrator.
(c) REELIGIBILITY OF FORMER EMPLOYEES - Notwithstanding the rules
set forth in Section 3.02(a), in the case of a Plan to which
the Employer is making 401(a) Employer Contributions or 401(k)
Employer Contributions, a former Employee who had previously
met the age and service requirements specified in Adoption
Agreement Section 3.02 or a Former Participant, either of whom
again becomes eligible to participate in the Plan, will become
a Participant on the date of his recommencement of Service,
unless his prior Service is disregarded under the rules set
forth in Adoption Agreement Sections 3.02(3)(a) or 3.02(3)(b),
if designated as applicable by the Employer. Any other former
Employee or Participant who again becomes eligible will become
a Participant on the entry date determined under the rules set
forth in Section 3.02(a).
Notwithstanding the rules set forth in Plan Section 3.02(b), a
former Employee who had previously met the age and service
requirements specified in Adoption Agreement Section 3.02 or
a Former Participant, either of whom again becomes eligible to
participate in the Plan, will again be eligible to enter into
a compensation reduction agreement with the Employer on the
date of his recommencement of Service, unless his prior
Service is disregarded under the rules set forth in Adoption
Agreement Sections 3.02(3)(a) or 3.02(3)(b), if designated as
applicable by the Employer. Any other former Employee or
Participant who again becomes eligible may enter into a
compensation reduction agreement with the Employer on or after
his entry date, as determined under the rules set forth in
Section 3.02(a).
(d) INELIGIBILITY, PARTICIPATION IN OTHER PLANS - In the event
that the Employer specifies in the Adoption Agreement that
Employees eligible for other qualified pension or profit
sharing plans to which the Employer contributes are not
eligible to participate in this Plan, a Participant for whom a
contribution is subsequently made under such other qualified
pension or profit sharing plan shall no longer participate
under this Plan; and in the event of such subsequent
contribution the further rights of such Participant shall be
determined in accordance with Section 3.04.
- 13 -
3.03 CHANGE IN EMPLOYEE STATUS - The plan Administrator shall notify the
Trustee in the event a Participant's status with respect to the Plan
shall change, and shall furnish the Trustee with such additional
information relative to the Plan as the Trustee may from time to time
request.
3.04 CLASSIFICATION CHANGES - In the event of a change in job classification
or in the event Section 3.02(d) becomes applicable to a Participant,
such that an Employee, although still in the employment of the
Employer, no longer is an eligible Employee, all contributions and
forfeitures to be allocated on his behalf shall cease and any amount
credited to the Employee's accounts on the date the Employee shall
become ineligible shall continue to vest, become payable or be
forfeited, as the case may be, in the same manner and to the same
extent as if the Employee had remained a Participant.
In the case of a plan under which an Employer is to make 401(a) or
401(k) Employer Contributions, if a Participant becomes ineligible to
share in future Employer contributions and forfeitures because he is no
longer a member of an eligible class of Employees, but has not incurred
a One Year Break in Service (as defined in Section 2.30(a)), such
Employee shall again be eligible to share in Employer contributions and
forfeitures immediately upon his return to an eligible class of
Employees. If such Participant incurs such a One Year Break in Service,
his eligibility to again participate shall be determined pursuant to
Section 3.02(c).
In the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee shall
participate immediately if such Employee has satisfied the minimum Age
and Service requirements and would have previously become a Participant
had he been in the eligible class.
3.05 LEAVE OF ABSENCE - The accounts of a Participant who is an authorized
leave of absence (as described in Plan Section 2.30) shall share in the
allocation of 401(a),401(k) Employer and Employer Match Contributions
and forfeitures to the extent that the Participant receives
Compensation from the Employer, if such Participant otherwise satisfies
the requirements of Section 4.01 of the Adoption Agreement, and such
accounts shall continue to share in allocation of Trust Fund income or
losses under the provisions of Article V.
3.06 ADDITIONAL RULES FOR PLANS COVERING OWNER-EMPLOYEES - If this Plan
provides contributions or benefits for one or more Owner-Employees who
control both the business for which this Plan is established and one or
more other trades or businesses, this Plan and the plan established for
other trades or businesses must, when looked at as a single plan,
satisfy Code Sections 401(a) and (d) for the employees of this and all
other trades or businesses.
- 14 -
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trades or businesses
which are controlled must be as favorable as those provided for him
under the most favorable plan or the trade or business which is not
controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated trade or
business, or
(2) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
3.07 OMISSION OF ELIGIBLE EMPLOYEE - If, in any Plan Year, any Employee who
should be included as a Participant in the Plan is erroneously omitted
and discovery of such omission is not made until after a contribution
by his Employer for the year has been made and allocated, the Employer
shall make a subsequent contribution with respect to the omitted
Employee in the amount which the Employer would have contributed with
respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part by
the Employer in any taxable year under applicable provisions of the
Code.
3.08 INCLUSION OF INELIGIBLE EMPLOYEE - If, in any Plan Year, any person who
should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not
made until after a contribution for the year has been made and
allocated, the Employer shall not be entitled to recover the
contribution made with respect to the ineligible person regardless of
whether or not a deduction is allowable with respect to such
contribution.
- 15 -
ARTICLE IV
EMPLOYER AND PARTICIPANT CONTRIBUTIONS
4.01 401(a) EMPLOYER CONTRIBUTIONS, 401(k) EMPLOYER CONTRIBUTIONS AND
EMPLOYER MATCH CONTRIBUTIONS - The Employer shall make 401(a) Employer,
401(k) Employer and Employer Match contributions to the Trust for each
Plan Year to the extent and in the manner specified in Section 4.01 of
the Adoption Agreement.
The Employer shall pay its 401(a) Employer, 401(k) Employer and
Employer Match contributions for each Plan Year to the Trustee on any
date or dates which the Employer may select, subject to the consent of
the Trustee; provided that, to then be deductible, the total
contributions for each Plan Year shall be paid within the time
prescribed by law for the deduction of such contributions for purposes
of the Employer's Federal Income Tax for such year.
4.02 MINIMUM EMPLOYER CONTRIBUTIONS FOR TOP HEAVY PLANS
(a) Minimum Allocation for Non-Key Employees - Notwithstanding
anything in the Plan to the contrary except (b) through (f)
below, for any Top Heavy Plan year, the sum of the Employer's
contributions and forfeitures allocated to the Accounts of
each Non-Key Employee Participant shall be equal to at least
three percent of such Non-Key Employee's Compensation (as
defined for purposes of Article VII) for the Plan Year.
However, should the sum of the Employer's contributions and
forfeitures allocated to the Accounts of each Key Employee for
such Top Heavy Plan Year be less than three percent of each
Key Employee's Compensation, the sum of the Employer's
contributions and forfeitures allocated to the Accounts of
each Non-Key Employee shall be equal to the largest percentage
allocated to Accounts of a Key Employee. For Plan Year
beginning after 1988, Salary Savings Contributions will not be
considered in determining such percentages. The preceding two
sentences do not apply to any plan required to be included in
an Aggregation Group if such plan enables a defined benefit
plan required to be included in such group to meet the
requirements of Sections 401(a) (4) or 410 of the Internal
Revenue Code.
The minimum contribution provided for in this Section shall be
determined without regard to any Social Security contribution.
For Plan Years beginning after 1988, the minimum contribution
provided for in this Section shall be determined without
regard to Salary Savings Contributions.
(b) Extra Minimum Allocation Permitted for Top Heavy Plans other
than Super Top Heavy Plans - If a Key Employee is a
Participant in both a defined contribution plan and a defined
benefit plan that are both part of a Required or Permissive
Aggregation Group of Top Heavy Plans (but neither of such
plans is a Super Top Heavy plan), the defined contribution and
the defined benefit fractions described in Article VII shall
remain unchanged, provided each Non-Key Employee who is
Participant receives an extra allocation
- 16 -
(in addition to the minimum allocation set forth above) equal
to not less then one percent of such Non-Key Employees' total
annual Compensation (as defined for purposes of Article VII)
for the Plan Year.
(c) For purposes of the minimum allocations set forth above, the
percentage allocated to the Accounts of any Key Employee shall
be equal to the ratio of the sum of the Employer's
contribution and forfeitures allocated on behalf of such Key
Employee divided by the first $200,000 of annual Compensation
(as defined for purposes of Article VII) for such Key Employee
for the Plan Year.
(d) For any Top Heavy Plan Year, the minimum allocations set forth
above shall be allocated to the Accounts of all Non-Key
Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including (1)
Non-Key Employee Participants who have failed to complete a
Year of Service; (2) Non-Key Employees otherwise eligible to
participate in the Plan who declined to make any Required or
Salary Savings Contributions to the Plan, and (3) Non-Key
Employees whose compensation is less than a stated amount.
(e) Notwithstanding anything herein to the contrary, in any Plan
Year in which a Non-Key Employee is a Participant in both this
Plan and a defined benefit pension plan included in a Required
or Permissive Aggregation Group of Top Heavy Plans, the
Employer shall not be required to proved a Non-Key Employee
with both the full separate minimum defined benefit plan
benefit and the full separate minimum defined contribution
plan allocation described in this Section. Therefore, if the
Employer maintains such a defined benefit and defined
contribution plan, the top-heavy minimum benefits shall be
provided as follows:
(i) If an Non-Key Employee is a participant in such
defined benefit plan but is not a participant in this
defined contribution plan, the minimum benefits
provided for Non-Key Employees in the defined benefit
plan shall be provided to the employee if the defined
benefit plan is a Top Heavy or Super Top Heavy Plan
and the minimum contributions described in this
Section 4.02 shall not be provided.
(ii) If an Non-Key Employee is participant in such defined
benefit plan and is also a participant in this
defined contribution plan, the provisions of
Subsections (a) and (b) above shall be applicable to
each such Non-Key Employee meeting the requirements
of Subsection (d) above, except that the minimum
contribution shall be increased from 3% to 5% and the
extra minimum contribution, if applicable, shall be
increased from 1% to 2 1/2%. The minimum benefits for
Non-Key Employee participants in Top Heavy or Super
Top Heavy Plans provided in the defined benefit plan
shall not be applicable to any such Non-Key Employee
who receives the full maximum contribution described
in the preceding sentence.
- 17 -
Notwithstanding anything herein to the contrary, no minimum
contribution will be required under this Plan (or the minimum
contribution under this Plan will be reduced, as the case may
be) for any Plan Year if the Employer maintains another
qualified defined contribution plan and the Employer has
specified in Section 4.02 of the Adoption Agreement that the
minimum allocation requirement applicable to Top Heavy or
Super Top Heavy Plans will be met in the other plan.
(f) The minimum allocation required under this Section 4.02 (to
the extent required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Sections 411(a)(3)(B)
or 411(a)(3)(D)).
4.03 SALARY SAVINGS CONTRIBUTIONS - The Employer shall make Salary Savings
Contributions to the Trust for each Plan Year to the extent and in the
manner specified in Article III and in Section 4.03 of the Adoption
Agreement.
The Employer shall pay its Salary Savings Contributions to the Trustee
within 30 days of the date such contributions would have been payable
to the Employee in the absence of the Salary Savings Agreement.
4.04 AFTER-TAX CONTRIBUTIONS - If and to the extent permitted by
Section 4.04 of the Adoption Agreement, a Participant may make
After-Tax Contributions to the Trust, provided that the Plan
Administrator may refuse to accept such contributions if the
requirements of Code Section 401(m) would otherwise be violated. There
shall be no obligation to maintain them at any level, provided that
such contributions shall not in total exceed ten percent of the
Participant's compensation. In the event a Participant participates in
more than one retirement plan sponsored by his Employer, the total
After-Tax Contributions that can be made to all plans in which he
participates cannot exceed ten percent of the Participant's
compensation.
"Ten percent of the Participant's compensation" means ten percent of
the Participant's aggregate W-2 compensation or Earned Income for all
periods of his participation under this Plan and under all qualified
plans of the Employer reduced by his prior After-Tax Contributions
under this Plan and under such other qualified plans.
A Participant shall have the right at any time to request a withdrawal
in cash of the portion of his Accrued Benefit attributable to his
After-Tax Contributions. If necessary to comply with the requirements
of Section 12.08, the Plan Administrator shall require the consent of
the Participant's spouse before making any withdrawal. Any such consent
shall satisfy the requirements of Section 12.08. Any such amount
requested to be withdrawn shall be paid within 90 days following the
date written request therefor is received by the Plan Administrator.
Values not so withdrawn, including any increments earned on withdrawn
amounts prior to withdrawal, shall be distributed to the Participant or
his beneficiary at such time and in such manner as the Trust otherwise
provides for Account distributions.
- 18 -
No forfeitures will occur solely as a result of an Employee's
withdrawal of After-Tax Contributions.
The portion of a Participant's Accrued Benefit attributable to
After-Tax Contributions shall be 100% vested and nonforfeitable at all
times.
4.05 PAYMENT OF CONTRIBUTIONS TO TRUSTEE - The Employer shall make payment
of all contributions, including Participant contributions which shall
be remitted to the Employer by payroll deduction or otherwise, directly
to the Trustee in accordance with this Article IV but subject to
Section 4.06.
4.06 RECEIPT OF CONTRIBUTIONS BY TRUSTEE - The Trustee shall accept and hold
under the Trust such contributions of money, or other property approved
by the Employer for acceptance by the Trustee, on behalf of the
Employer and Participants as it may receive from time to time from the
Employer, other than cash it is instructed to remit to the Insurer for
deposit with the Insurer. However, the Employer may pay contributions
directly to the Insurer and such payment shall be deemed a contribution
to the Trust to the same extent as if payment had been made to the
Trustee. All such contributions shall be accompanied by written
instructions from the Employer accounting for the manner in which they
are to be credited and specifying the appropriate Participant Account
to which they are to be allocated. All Employer contributions shall be
credited by the Trustee or Insurer to a Suspense Account until
allocated to Participants as provided in the Trust.
ARTICLE V
PARTICIPANT ACCOUNTS, ALLOCATION OF
CONTRIBUTIONS AND VALUATION OF ASSETS
5.01 PARTICIPANT ACCOUNTS - Separate accounts shall be maintained for the
portion of a Participant's Accrued Benefit attributable to the
following: (1) Salary Savings Contributions; (2) 401(a) Employer
Contributions; (3) 401(k) Employer Contributions; (4) 401(k) Match
Contributions; (5) 401(a) Match Contributions; (6) After-Tax
Contributions; (7) Tax Deductible contributions; and (8) Rollover
Contributions. Each separate account shall be credited with the
applicable contributions, earnings and losses, distributions, and other
applicable adjustments.
Additionally, there will be separate accounts for After-Tax
Contributions made before 1987, and those made after 1986, if the
Employer has so elected in the Adoption Agreement.
5.02 METHOD FOR ALLOCATION OF 401(a) EMPLOYER, 401(k) EMPLOYER AND EMPLOYER
MATCH CONTRIBUTIONS TO EMPLOYEES - For each Plan Year, 401(k) Employer
Contributions to be made by the Employer, shall be allocated among
eligible Participants in proportion to Compensation. 401(a) Employer
contributions will be allocated as specified by the Employer in
- 19 -
Adoption Agreement Section 5.02 among all eligible Employees who were
Participants in the Plan for such year. For purposes of Adoption
Agreement Section 5.02, "Taxable Wage Base" means the maximum amount of
earnings which may be considered wages for such year under Section
3121(a)(l) of the Internal Revenue Code; "OASDI Tax Rate" means the
rate of tax applicable under Code Section 3111(a), and "OAI Tax Rate"
means the rate of tax applicable under Code Section 3111(a) which is
attributable to old-age insurance.
Employer Match Contributions shall be allocated among eligible
Participants as specified by the Employer in Section 4.01(3)(b) or (c)
of the Adoption Agreement.
In order to be eligible to share in 401(a) Employer Contributions,
401(k) Employer Contributions and Employer Match Contributions for a
Plan Year, an Employer must complete during such Plan Year the Hours of
Service specified in Adoption Agreement Section 4.01 and, in addition,
if so specified in such Section of the Adoption Agreement, must be
employed on the last day of the Plan Year, subject to any exceptions
there specified.
5.03 APPLICATION OF FORFEITURES - For each Plan Year, amounts forfeited
during such year pursuant to Article XIII (Benefits upon Termination of
Employment) shall be allocated or applied as specified in Adoption
Agreement Section 5.03.
No forfeitures will occur solely as a result of an Employee's
withdrawal of employee contributions.
Forfeitures arising hereunder will be allocated only for the benefit of
Employees of the Employer who adopted this Plan.
5.04 GROUP ANNUITY CONTRACT DIVIDENDS - Any dividend payable by the Insurer
in accordance with the terms of any group annuity contract purchased by
the Trustee will be added to the Employer's contribution for the Plan
Year during which the dividend is credited to the contract or shall be
applied to reduce the Employer's contribution for such year, whichever
is elected by the Employer in Adoption Agreement Section 5.04.
The Insurer shall credit any group annuity contract dividend to the
Suspense Account maintained pursuant to the terms of the group annuity
contract until the dividend is allocated or applied.
5.05 ANNUAL VALUATION OF TRUST FUND - The Trustee, as of the last Valuation
Date of each Plan Year and prior to the allocation of contributions as
provided under Section 5.02 or the allocation of forfeitures or
dividends if so specified in the Adoption Agreement under Sections 5.03
and 5.04, shall determine the net value of the Trust Fund assets and
the amount of net income or net loss and shall report such value to the
Employer in writing. In determining such value the Trustee shall value
such assets as have a fair market value at market value, and all other
- 20 -
assets shall be appraised by the Trustee at fair and reasonable value,
in the discretion of the Trustee. The determination of such value shall
not include any contributions made by the Employer or Participants for
such Plan Year, amounts allocated to any group annuity contract funding
the plan or any Policies purchased as investments for Participant
accounts. However, the net value of the Trust Fund shall include any
life insurance Policies held by the Trustee on the lives of key
employees pursuant to Section 17.03. Key man life insurance policies
shall be valued at their respective cash surrender values as of the
Valuation Date. The resulting net income or loss of the Trust Fund
shall then be debited or credited to each Participant's accounts in the
same ratio as each such account bears to the aggregate of all such
accounts. After such crediting of the valuation to each Participant's
account, contributions and forfeitures shall be allocated to each such
account as set forth in the Adoption Agreement pursuant to Sections
5.02 and 5.03.
5.06 GROUP ANNUITY CONTRACT EXPENSES - Expenses charged by the Insurer shall
be deducted as provided in any group annuity contract funding the Plan,
unless the Employer pays the Insurer directly and such item of expenses
in addition to Employer contributions.
5.07 STATEMENT OF ACCRUED BENEFIT - As soon as practicable after the end of
each Plan Year, the Plan Administrator shall present to each
Participant a statement of his Accrued Benefit showing the credit to
his Accrued Benefit at the beginning of such Year, any changes during
the Year, the credit to this Accrued Benefit at the end of the Year,
and such other information as the Plan Administrator may determine.
However, the statements of Accrued Benefit shall not operate to vest in
any Participant any right or interest to any assets of the Trust except
as the Trust specifically provides.
ARTICLE VI
PROVISIONS APPLICABLE TO TOP HEAVY PLANS
6.01 TOP HEAVY PLAN REQUIREMENTS
(a) For any Top Heavy Plan Year, the Plan shall provide the
following:
(i) the minimum vesting requirements set forth in
Adoption Agreements Section 13.01(1) if a
Standardized Plan, or Adoption Agreement Section
13.01(2) if a Non-Standardized Plan;
(ii) the minimum contribution requirements set forth in
Section 4.02 of the Plan; and
(iii) the special Compensation limitations applicable to
Top Heavy Plan Years set forth in Section 2.08 of the
Plan.
- 21 -
(b) Once a Plan has become a top Heavy Plan, if the Employer so
Specifies in Section 6.01(b) of Adoption Agreement, the
Requirement for Top Heavy Plans described in Section 6.01(a)
shall be applicable in all subsequent Plan years, regardless
of whether such years are Top Heavy plan years.
(c) In the case of a nonstandardized Plan, once a Plan has become
a Top Heavy plan, the vesting requirements described in
Section 13.01 (2) of the Adoption Agreement shall be
applicable to all subsequent Plan Years, regardless of whether
such years are Top Heavy Plan years.
If the Plan is or become a Top Heavy Plan in any Plan Year beginning
after December 31, 1983, the provision of this Article VI will
supersede any conflicting provision in the Plan or Adoption Agreement.
The top heavy minimum vesting schedule applies to all benefits within
the meaning of Code Section 411(a) (7) except those attributable to
Employee contributions, including benefits accrued before the effective
date of Section 416 of the Code and benefits accrued before the plan
became top heavy. Further, no reduction in vested benefits may occur in
the event the plan's status as top heavy changes for any Plan Year.
However, this Section does not apply to the Account balances of any
Employee who does not have an Hour of Service after the Plan has
initially become top heavy and such Employee's Account balance
attributable to Employer contribution and forfeitures will be
determined without regard to this Section.
6.02 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year
commencing after December 31, 1983, if any of the following
conditions exists:
(i) If the top heavy ratio for this Plan exceeds 60
percent and this Plan is not part of any required
aggregation group or permissive aggregation group of
plans.
(ii) If this Plan is a part of a required aggregation
group of plans but not part of a permissive
aggregation group and the top heavy ratio for the
group of plans exceeds 60 percent.
(iii) If this Plan is a part of a required aggregation
group and part of a permissive aggregation group of
plans and the top heavy ratio for the permissive
aggregation group exceeds 60 percent.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
commencing After December 31, 1983 if any of the following
conditions exists:
(i) If the top heavy ratio for this Plan exceeds 90
percent and this Plan is not part of any required
aggregation group or permissive aggregation group of
plans.
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(ii) If this Plan is a part of a required aggregation
group of plans but not part of a permissive
aggregation group and the top heavy ratio for the
group of plans exceeds 90 percent.
(iii) If this Plan is a part of a required aggregation
group and part of a permissive aggregation group of
plans and the top heavy ratio for the permissive
aggregation group exceeds 90 percent.
(c) The plan top heavy ratio shall be determined as follows:
(i) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had
accrued benefits, the top-heavy ratio for this Plan
alone or for the required or permissive aggregation
group, as appropriate, is a fraction, the numerator
of which is the sum of the account balances of all
Key Employees as of the determination date(s)
(including any part of any account balance
distributed in the 5-year period ending on the
determination date(s)), and the denominator of which
is the sum of all account balances (including any
part of any account balance distributed in the 5-year
period ending on the determination date(s)), both
computed in accordance with Code Section 416 and the
regulations thereunder. Both the numerator and
denominator of the top-heavy ratio are adjusted to
reflect any contribution not actually made as of the
determination date, but which is required to be taken
into account on that date under Section 416 of the
Code and the regulations thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the determination
date(s) has or has had any accrued benefits, the
top-heavy ration for any required or permissive
aggregation group, as appropriate, is a fraction, the
numerator of which is the sum of account balances
under the aggregated defined contribution plan or
plans for all Key Employees, determined in accordance
with (i) above, and the present value of accrued
benefits under the aggregated defined benefit plan or
plans for all Key Employees as of the determination
date(s), and the denominator of which is the sum of
the account balances under the aggregated defined
contribution plan or plans for all Employees,
determined in accordance with (i) above, and the
present value of accrued benefits under the defined
benefit plan or plans for all Employees as of the
determination date(s), all determined in accordance
with Code Section 416 and the regulations thereunder.
The
- 23 -
accrued benefits under a defined benefit plan in both
the numerator and denominator of the top-heavy ratio
are adjusted for any distribution of an accrued
benefit made in the five-year period ending on the
determination date.
(iii) For purposes of (i) and (ii) above the value of
Account balances and the present value of accrued
benefits will be determined as of the most recent
valuation date that falls within or ends with the
12-month period ending on the determination date,
except as provided in code Section 416 and the
regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances
and accrued benefits of an Employee (1) who is not a
key Employee but who was a key Employee in a prior
year, or (2) who has not had at least one Hour of
Service with any Employer maintaining the Plan at any
time during the 5-year period ending on the
determination date will be disregarded. The
calculation of the top-heavy ratio, and the extent to
which distributions, rollovers, and transfers are
taken into account will be made in accordance with
Section 416 of the Code and the regulations
thereunder. Deductible employee contributions will
not be taken into account for purposes of computing
the top-heavy ratio. To the extent required by Code
Section 401(k)(4), Salary Savings Contributions made
for Plan Years beginning after 1988 will not be taken
into account for purposes of computing the top heavy
ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with
reference to the determination dates that fall within
the same calendar year.
(d) Permissive aggregation group: The required aggregation group
of plans plus any other plan or plans of the Employer which,
when considered as a group with the required aggregation
group, would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.
(e) Required aggregation group: (1) Each qualified plan of the
Employer in which at least one Key Employee participates, and
(2) any other qualified plan of the Employer which enables a
plan described in (1) to meet the requirements of Code
Sections 401(a)(4) or 410.
(f) Determination date: For any Plan Year subsequent to the first
Plan year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that year.
(g) Valuation date: The date elected by the employer in Adoption
Agreement Section 6.02(g) as of which Account balances or
accrued benefits are valued for purposes of calculating the
top heavy ratio.
(h) Present value: Present value shall be based only on the
interest and mortality rates specified in Adoption Agreement
Section 6.02(h).
- 24 -
ARTICLE VII
415 LIMITATIONS ON ALLOCATIONS
(See Section 7.13 - 7.21 for definitions applicable to this Article VII).
7.01 If the Participant does not participate in, and has never participated
in another qualified plan or a welfare benefit fund, as defined in Code
Section 419(c), maintained by the adopting Employer, the amount of
Annual Additions which may be credited to the Participant's Accounts
for any Limitation Year will not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or
allocated to the Participant's Accounts would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that the
Annual Additions for the Limitation Year will equal the Maximum
Permissible Amount.
7.02 Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount on the basis of a reasonable estimation of the Participant's
annual Compensation for the Limitation Year, uniformly determined for
all Participants similarly situated.
7.03 As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual compensation for
the Limitation Year.
7.04 If there is an Excess Amount, the excess will be disposed of as
follows:
(a) Any After-Tax Contributions, to the extent they would reduce
the Excess Amount, will be returned to the Participant;
(b) If after the application of paragraph (a) an Excess Amount
still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the Excess Amount in the
Participant's Account will be used to reduce Employer
contributions (including any allocation of forfeitures) for
such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(c) If after the application of paragraph (a) an Excess Amount
still exists, and the Participant is not covered by the Plan
at the end of the Limitation Year, the Excess Amount will be
held unallocated in a Suspense Account. The Suspense Account
will be applied to reduce future Employer contributions
(including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(d) If a Suspense Account is in existence at any time during the
Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust's investment gains
and losses.
- 25 -
Sections 7.05 through 7.10 (These Sections apply if, in addition to
this Plan, the Participant is covered under another qualified Master or
Prototype defined contribution plan or a welfare benefit fund, as
defined in Code Section 419(e), maintained by the Employer during any
Limitation Year.)
7.05 The Annual Additions which may be credited to a Participant's accounts
under this Plan for any such Limitation Year will not exceed the
Maximum Permissible Amount reduced by the Annual Additions credited to
a Participant's account under the other plans and welfare benefit funds
for the same Limitation Year. If the Annual Additions with respect to
the Participant under other defined contribution plans maintained by
the Employer are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or allocated
to the Participant's Accounts under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated will be reduced so that the Annual Additions
under all such plans for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with respect to the
Participant under such other defined contribution plans and welfare
benefit funds in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to the
Participant's Accounts under this Plan for the Limitation Year.
7.06 Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount in the manner described in Section 7.02.
7.07 As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for
the Limitation Year.
7.08 If, pursuant to Section 7.07, a Participant's Annual Additions under
this Plan and such other plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the
Annual Additions last allocated.
7.09 If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product of,
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of (i) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (ii) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified Master or Prototype defined
contribution plans.
7.10 Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 7.04.
- 26 -
(This Section applies only to Employers who, in addition to this Plan,
maintain one or more qualified defined contribution plan other than a
Master or Prototype Plan.)
7.11 If the Employer also maintains another qualified defined contribution
plan which is not a Master or Prototype plan, Annual Additions which
may be credited to any Participant's Accounts under this Plan for any
Limitation Year will be limited in accordance with Sections 7.05
through 7.10 as though the other plan were a Master or Prototype plan
unless the Employer provides other limitations in Article VII of the
Adoption Agreement.
(This Section applies to Employers who, in addition to this Plan,
maintain or have maintained a defined benefit plan.)
7.12 If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit plan fraction and defined
contribution plan fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's Account
under this Plan for any Limitation Year will be limited in accordance
with Article VII of the Adoption Agreement.
(Section 7.13 - 7.21 are definitions used in Article VII.)
7.13 Annual Additions - The sum of the following amounts credited to a
Participant's Accounts for the Limitation Year:
(a) Employer Contributions;
(b) Forfeitures;
(c) After-Tax Contributions; and
(d) Salary Savings Contributions.
For this purpose, any Excess Amount applied under Sections 7.04 or 7.10
in the Limitation Year to reduce Employer contributions will be
considered Annual Additions for such Limitation Year.
Amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Section 415(l)(2) of the Internal Revenue Code,
which is part of a defined benefit plan maintained by the Employer, are
treated as Annual Additions to a defined contribution plan. Also,
amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the separate account
of a key employee, as defined in Code Section 419A(d)(2), under a
welfare benefit fund, as defined in Code Section 419(e), maintained by
the Employer, are treated as Annual Additions to a defined contribution
plan.
- 27 -
7.14 Defined Benefit Fraction - A fraction, the numerator of which is the
sum of the Participant's Projected Annual Benefits under all the
defined benefit plan (whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser of 125 percent of
the dollar limitation in effect for the Limitation Year under Section
415(b)(1)(A) of the Internal Revenue Code or 140 percent of the Highest
Average Compensation.
Notwithstanding the above, if the Participant was a participant in one
or more defined benefit plans maintained by the Employer which were in
existence on July 1, 1982, the denominator of this fraction will not be
less than 125 percent of the sum of the annual benefits under such
plans which the Participant had accrued as of the later of September
30, 1983, or the end of the last Limitation Year beginning before
January 1, 1983. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Code Section 415 as in effect at the end of the 1982
limitation year. For purposes of this paragraph, a Master or Prototype
Plan with an opinion letter issued before January 1, 1983, which was
adopted by the Employer on or before September 30, 1983, is treated as
a plan in existence on July 1, 1982.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100 percent
shall be substituted for 125 percent unless the extra minimum
allocation is made pursuant to Section 4.02 of the Plan. However, for
any Plan Year in which this Plan is a Super Top Heavy Plan, 100 percent
shall be substituted for 125 percent in any event.
7.15 Defined Construction Fraction - A fraction, the numerator of which is
the sum of the Annual Additions to the Participant's accounts under all
the defined contribution plans (whether or not terminated) maintained
by the Employer for the current and all prior Limitation Years
(including the Annual Additions attributable to the Participant's
nondeductible employee contributions to all defined benefit plans,
whether or not terminated, maintained by the Employer and the Annual
Additions attributable to all welfare benefit funds, as defined in Code
Section 419(e), maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and
all prior Limitation Years of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer).
The maximum aggregate amount in any Limitation Year is the lesser of
125 percent of the dollar limitation in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's Compensation for such
year.
If the Employee was a participant in one or more defined contribution
plans maintained by the Employer which were in existence on July 1,
1982, the numerator of this fraction will be adjusted if the sum of
this fraction and the defined benefit fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment, an amount equal
to the product of (1) the excess of the sum fractions over 1.0 times
(2) the denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is
- 28 -
calculated using the fractions as they would be computed as of the
later of September 30, 1983, or the end of the last Limitation year
beginning before January 1, 1983. This adjustment also will be made if
at the end of the last Limitation Year beginning before January 1,
1984, the sum of the fractions exceeds 1.0 because of accruals or
additions that were made before the limitations of this Article became
effective to any plans of the Employer in existence on July 1,1982. For
purposes of this paragraph, a Master or Prototype Plan with an opinion
letter issued before January 1, 1983, which is adopted by the Employer
on or before September 30, 1983, is treated as a plan in existence on
July 1, 1982.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100 percent
shall be substituted for 125 percent unless the extra minimum
allocation is made pursuant to Section 4.02. However, for any Plan Year
in which this Plan is a Super Top Heavy Plan, 100 percent shall be
substituted for 125 percent in any event.
7.16 Employer - The employer that adopts this plan and all members of a
controlled group of corporations (as defined in Code Section
414(b)) as modified by Code Section 415(h), all trades or businesses
under common control (as defined in Section 414(c) as modified by Code
Section 415(h)), or all members of an affiliated service group ( as
defined in code Section 414(m)) of which the adopting Employer is a
part.
7.17 Excess Amount - The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount.
7.18 Highest Average Compensation - The average Compensation for the three
consecutive years of service with the Employer that produce the highest
average. A year of service with the Employer is the 12-consecutive
month period defined in Section 2.55 of the plan.
7.19 Master or Prototype Plan - A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
7.20 Maximum Permissible Amount - The lesser of $ 30,000 (or, beginning
January 1, 1988, such larger amount determined by the Commissioner for
the Limitation Year) or 25 percent of the Participant's Compensation
for the Limitation Year. If a short Limitation Year is created because
of an amendment changing the Limitation Year to a different twelve
consecutive month period, the Maximum Permissible Amount will not
exceed the lesser of (1) $30,000 (or larger permissible limitation)
multiplied by the following fraction:
number of months in the short limitation year
---------------------------------------------
12
or (2) 25 percent of the Participant's Compensation for the short
Limitation Year.
- 29 -
7.21 Projected Annual Benefits - The annual retirement benefit (adjusted to
an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified
joint and survivor annuity) to which the Participant would be entitled
under the terms of the Plan assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year
and all other relevant factors used to determine benefits
under the Plan will remain constant for all future Limitation
Years.
7.22 SPECIAL RULES FOR PLANS ADOPTED BEFORE 1987- Notwithstanding the
foregoing, the Annual Additions for any Limitations Year beginning
before 1987 shall not be recomputed to treat all Employee Contributions
as an Annual Addition. Additionally, if the Plan satisfied the
applicable requirements of Code Section 415 as in effect for all
Limitation Years beginning before 1987, an amount shall be subtracted
from the numerator of the defined contribution fraction (not exceeding
such numerator) as prescribed by the Secretary of the Treasury so that
the sum of the defined benefit fraction and defined contribution
fraction computed under Code Section 415(e)(1) does not exceed 1.0 for
such Limitation Year.
ARTICLE VIII
REFUND OR REALLOCATION OF EXCESS 401(k) CONTRIBUTIONS
8.01 SPECIFIC DEFINITIONS - For purposes of this Article, the following
definitions shall be used:
(a) " Actual Deferral Percentage" means the ratio (expressed as a
percentage) of Salary Savings Contributions, made on behalf of
an Eligible Participant to that Participant's compensation for
the Plan Year. The Plan Administrator may include 401(k)
Employer Contributions and 401(k) Employer Match Contributions
made for the Participant in the above described numerator, if
such inclusion is made on a uniform nondiscriminatory basis
for all Participants; however, 401(k) Employer Match
Contributions that are included in the Actual Deferral
Percentage of the Participant may not be included in the
numerator of the Contribution Percentage of the Participant as
defined in Plan Section 9.01(b).
For purposes of determining the Actual Deferral Percentage of
a Highly Compensated Employee who is either: (1) a Five
Percent Owner; or (2) one of the ten most highly compensated
employees for the current Plan Year, the Salary Savings
Contribution of any Family Member of the Participant shall be
included in the numerator, and the Compensation of any such
Family Member shall be included in the denominator.
Additionally, the 401(k) Employer Contributions and 401(k)
Employer Match Contributions made on behalf of each Family
Member shall be included in the numerator, if such
contributions are being included in the numerators for all
Eligible Participants on a uniform nondiscriminatory basis.
- 30 -
Additionally, if one or more other plans allowing
contributions under Code Section 401(k) are considered with
this plan as one for purposes of Code Section 401(a)(4) or
410(b), the Actual Deferral Percentages for all Eligible
Participants under all such plans shall be determined as if
this Plan and all such other plans were one. If any Highly
Compensated Employee is also an Eligible Participant in one or
more other plans allowing contributions under Code Section
401(k), the Actual Deferral Percentage for that Employee shall
be determined as if this Plan and all such other plans were
one.
(b) "Average Actual Deferral Percentage" means the average
(expressed as a percentage) of the Actual Deferral Percentages
of a group.
(c) "Eligible Participant" means a Participant eligible to have
Salary savings Contributions made on his behalf.
(d) "Excess 401(k) Contributions" means the excess of: (i) the
numerator of the Actual Deferral Percentage of a Highly
Compensated Employee over (ii) the maximum numerator permitted
under Plan Section 8.02, determined by reducing the
numerators of Highly Compensated Employees in order of their
Actual Deferral Percentage beginning with the highest of such
percentages.
(e) "Excess Deferral" means: (1) the excess of salary Reduction
Contributions for any Participant over $7,000; and (2) any
amount identified in plan Section 8.07.
8.02 AVERAGE ACTUAL DEFERRAL PERCENTAGE TEST - The Average Actual Deferral
percentage for Highly Compensated Employees for each Plan Year and the
Average Actual Deferral Percentage for Non-Highly Compensated Employees
for the same Plan Year must satisfy on of the following tests:
(a) The Average Actual Deferral percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral percentage
for Eligible Participants who are Non-Highly Compensated
Employees for the Plan Year multiplied by 1.25; or
(b) The Average Actual Deferral percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral percentage
for Eligible Participants who are Non-Highly Compensated
Employees for the Plan Year multiplied by 2, provided that the
Average Actual Deferral Percentage for Eligible Participants
who are Highly Compensated Employees does not exceed the
Average Actual Deferral percentage for Eligible Participant
who are Non-Highly Compensated Employees by more than two (2)
percentage points.
8.03 REFUND OF EXCESS 401(k) CONTRIBUTIONS - Notwithstanding any other
provisions of this Plan, except Section 8.05 herein, Excess 401(k)
Contribution and income allocable thereto shall be distributed to
- 31 -
the affected Participant. The Plan Administrator shall make every
effort to make all required distributions within 2 1/2 months of the
end of the affected Plan Year; however, in no event shall such
distributions be made later than the end of the following Plan Year.
Distributions made later than 2 1/2 months after the end of the
affected Plan Year will be subject to tax under Code Section 4979.
8.04 ACCOUNTING FOR EXCESS 401(k) CONTRIBUTIONS - Amounts distributed and
reallocated under this Article shall be treated as being made from
Salary Saving Contributions, 401(k) Employer Contributions and 401(k)
Employer match Contributions as determined by the Plan Administrator on
a uniform nondiscriminatory basis.
8.05 SPECIAL 401(k) EMPLOYER CONTRIBUTION - Notwithstanding any other
provisions of this plan except Section 8.09, in lieu of reallocating or
distributing Excess 401(k) Employer Contributions provided in Section
8.03, the Employer may make 401(k) Employer Contributions and or 401(k)
Employer Match Contributions on behalf of Non-Highly Compensated
Employees that are sufficient to satisfy either of the Average Actual
Deferral Percentage Tests; any such 401(k) Employer Contribution must
be allocated among the Non-Highly Compensated Employees in proportion
to Compensation.
8.06 MAXIMUM SALARY SAVING CONTRIBUTIONS - No Employee shall be permitted to
have Salary Savings Contributions made under this Plan during any
calendar year in excess of $7,000 (or such other amount as the
Secretary of the Treasury may designate). The foregoing limit will not
apply to Salary Saving Contributions attributable to services performed
in 1986 and described in Sections 1105(c )(4) or (5) of the Tax Reform
Act of 1986.
8.07 PARTICIPANT CLAIMS - Participants under other plans described in Code
Sections 401(k), 401(k) or 403(b) may submit a claim to the plan
Administrator specifying the amount of their Excess Deferral. Such
claim shall: (1) be in writing; (2) be submitted no later than March 1
of the year after the Excess Deferral was made; and (3) state that such
amount, when added to amounts deferred under other plans described in
Code Sections 401(k), 408(k) or 403(b), exceeds $7,000 (or such other
amount as the Secretary of the Treasury may designate).
8.08 DISTRIBUTION OF EXCESS DEFERRAL - Notwithstanding any other provision
of this plan, Excess Deferrals and income allocable thereto shall be
distributed to the affected Participant no later than the April 15
following the calendar year in which such Excess Deferrals were made.
8.09 OPERATION IN ACCORDANCE WITH REGULATIONS - The determination and
treatment of Actual Deferral Percentages and Excess 401(k)
Contributions, and the operation of the Average Actual Deferral
Percentage Test shall be in accordance with such additional
requirements as may be prescribed by the Secretary of the Treasury.
- 32 -
ARTICLE IX
REFUND OR FORFEITURE OF EXCESS 401(m) CONTRIBUTIONS
9.01 DEFINITION - For purpose of this Article, the following Definitions
shall be used:
(a) "Average Contribution Percentage" means the average (expressed
as a percentage) of the Contribution Percentage of a group.
(b) "Contribution Percentage" means the ratio (expressed as a
percentage) of the: (1) After-Tax Contributions made by an
Eligible Participant and (2) the 401(k) and 401(a) Employer
Match Contributions made on behalf of the Participant; to (3)
the Participant's Compensation for the Plan Year. The Plan
Administrator may include 401(k) Employer Contributions for
the Participant in the above described numerator, if such
inclusion is made on a uniform nondiscriminatory basis for
all participants. The Plan Administrator may not include
401(k) Employer Match Contributions in the numerator to the
extent such Contributions are included in the numerator of the
actual Deferral Percentage of the Participant, as defined in
Plan Section 8.01(a).
For purposes of determining the Contribution Percentage of a
Highly Compensated Employee who is either: (1) a Five Percent
Owner; or (2) one of the ten most highly compensated employees
for the current Plan Year, the After-Tax Contributions of any
Family Member of the Participant and 401(k) and 401(a)
Employer Match Contributions made on behalf of such Family
Members shall be included in the numerator, and the
Compensation of any such Family Member shall be included in
the denominator. Additionally, the 401(k) Employer
Contributions and Salary Savings Contributions made for such
Family Member shall be included in the numerator, if such
contributions are being included in the numerators of all
Eligible Participants on a uniform nondiscriminatory basis.
Additionally, if one or more other Plans allowing
contributions under Code Section 401(k), after tax employee
contributions or matching contributions, are considered with
this Plan as one for purpose of Code Section 410(b), the
Contribution Percentages for all Eligible Participants under
all such plans shall be determined as if this Plan and all
such others were one. The Contribution Percentage of Highly
Compensated Employees shall be determined as if this Plan and
all other Plans allowing contributions under Code Section
401(k), after tax employee contributions or matching
contributions and in which the Highly Compensated Employee is
also an Eligible Participant were one plan.
(c) "Eligible Participant" means a Participant eligible to have
voluntary After-Tax Contributions or 401(k) or 401(a) Employer
Match Contributions made on his behalf.
- 33 -
(d) "Excess 401(m) Contributions" means the excess of: (i) the
numerator of the Contribution Percentage of Highly Compensated
Employee; over (ii) the maximum numerator permitted under Plan
Section 9.02 determined by reducing the numerators of Highly
Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages.
9.02 AVERAGE CONTRIBUTION TEST - The Average Contribution Percentage for
Highly Compensated Employees for each plan Year and the Average
Contribution Percentage for Non-Highly Compensated Employees for the
same plan Year must satisfy one of the following tests:
(a) The Average Contribution Percentage for Eligible Participants
who are highly Compensated Employees for the plan year shall
not exceed the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees for the
Plan Year multiplied by 1.25; or
(b) The Average Contribution Percentage for Eligible Participants
who are highly Compensated Employees for the plan year shall
not exceed the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees for the
Plan Year multiplied by 2, provided that the Average
Contribution Percentage for Eligible Participants who are
highly Compensated Employees does not exceed the Average
Contribution Percentage for Eligible Participants who are
Non-Highly Compensated Employees by more than two (2)
percentage points.
9.03 REFUND AND FORFEITURE OF EXCESS 401(m) CONTRIBUTIONS - Notwithstanding
any other provision of this plan, except Sections 9.05 and 9.06, Excess
401(m) Contributions and income allocable thereto treated: (1) as
After-Tax Contributions, 401(k) Employer match Contributions or 401(k)
Employer Contributions shall be distributed to the affected Highly
Compensated Employee; (2) as 401(a) Employer match Contributions shall
be forfeited and applied or allocated as specified in Adoption
Agreement Section 5.03, provided, forfeitures arising under this
Section shall not be allocated to the account of any affected Highly
Compensated Employee. The Plan Administrator shall make every effort to
refund and forfeit all Excess 401(m) Contributions within 2 1/2 months
of the end of the affected Plan Year; however, in no event shall Excess
401(m) Contributions be refunded or forfeited later than the end of the
following Plan Year. Distributions made later than 2 1/2 months after
the end of the affected Plan Year will be subject to tax under Code
Section 4979.
9.04 ACCOUNTING FOR EXCESS 401(m) CONTRIBUTIONS - Amounts distributed and
forfeited under this Article shall be treated as being made form
After-Tax Contributions, 401(k) and 401(a) Employer Match Contributions
and 401(k) Employer Contributions as determined by the Plan
Administrator on a uniform nondiscriminatory basis.
- 34 -
9.05 SPECIAL 401(k) EMPLOYER CONTRIBUTIONS - Notwithstanding any other
provisions of this Plan, except Section 9.08, in lieu of refunding or
forfeiting Excess 401(m) Contribution as provided in Section 9.03, the
Employer may make 401(k) Employer Contributions, allocated in
proportion to Compensation, on behalf of Non-Highly Compensated
Employees that are sufficient to satisfy either of the Average
Contribution Tests.
9.06 SPECIAL EMPLOYER MATCH CONTRIBUTIONS - Notwithstanding any other
provision of this Plan except Section 9.08, in lieu of refunding or
forfeiting excess 401(m) Contributions as provided in Section 9.03, the
Employer may make 401(k) or 401(a) Employer Match Contribution on
behalf of Non-Highly Compensated Employees that are sufficient to
satisfy either of the Average Contribution Tests.
9.07 ORDER OF DETERMINATIONS - The determinations of Excess 401(m)
Contribution shall be made after first determining Excess Deferrals and
then determining Excess 401(k) Contribution.
9.08 OPERATION IN ACCORDANCE WITH REGULATIONS - The determination and
treatment of Contribution Percentages and Excess 401(m) Contributions,
and the operation of the Average Contribution Percentages Test shall be
in accordance with such additional requirement as may be prescribed by
the Secretary of the Treasury.
ARTICLE X
IN-SERVICE WITHDRAWALS
10.01 WITHDRAWALS OF TAX DEDUCTIBLE VOLUNTARY CONTRIBUTIONS AND AFTER-TAX
CONTRIBUTIONS - A Participant shall have the right at any time to
request the Plan Administrator for a withdrawal in cash of amounts in
his tax Deductible Contribution account or After-Tax Contribution
account.
10.02 WITHDRAWAL FROM 401(k) ACCOUNTS - For Plan Years beginning before 1989,
a Participant shall have the right at any time to request the Plan
Administrator for a withdrawal in cash of amounts in his Salary Savings
Contribution and 401(k) Employer and 401(k) Employer Match Contribution
accounts for "financial hardship." For Plan Years beginning after 1998,
a Participant shall have the right at any time to request the Plan
Administrator for a withdrawal in cash of Salary Savings Contribution
without interest thereon for "financial hardship". The profit sharing
Committee shall determined whether an event constitutes a financial
hardship. Such determination shall be based upon non-discriminatory
rules and procedures adopted by the Committee, which shall be
conclusive and binding upon all persons. Such procedures shall specify
the requirements for requesting and receiving distributions on account
of hardship, including what forms must be submitted and to whom. All
determinations regarding financial hardship must be made in accordance
with any application regulations and the objective criteria set forth
in Section 10.02B of the Adoption
- 35 -
Agreement, except as otherwise allowed under any applicable
regulations. The processing of applications and any distributions of
amounts under this section shall by made as soon as administratively
feasible. A distribution based upon financial hardship cannot exceed
the amount required to meet the immediate financial need created by the
hardship and not reasonably available from other resources of the
Participant, except as otherwise allowed under applicable regulations.
In addition, if permitted by the Adoption Agreement, the Participant
may request a withdrawal of the amount in his 401(k) and Salary Savings
Contribution accounts for any reason, at any time after he attains age
59 1/2.
10.03 RULES FOR IN-SERVICE WITHDRAWALS - The Plan Administrator may impose a
dollar minimum for partial withdrawals. If the amount in the
Participant's appropriate Account is less than the minimum, the Plan
Administrator shall pay the Participant the entire amount then in the
Participant's Account from which the withdrawal is to be made if a
withdrawal of the entire amount is otherwise permissible under the
rules set forth in this Article. If the entire amount cannot be paid
under such rules, whatever amount is permissible shall be paid.
Any amount to be withdrawn shall be paid within 90 days following the
date written request therefor is received by the Plan Administrator.
All requests must be consented to by the Participant's spouse in a
Qualified Election as described in Section 12.08(c)(iii), unless the
withdrawal is from the Participant's Tax Deductible Contribution
account or an account to which Section 12.08(e) applies.
Notwithstanding the foregoing, any request for a withdrawal of amounts
allocated to a group annuity contract shall be subject to any time
limits, restrictions or penalties that may be provided in the contract.
ARTICLE XI
PARTICIPANT LOANS
11.01 GENERAL RULES - If permitted by the Employer in Section 11.01 of the
Adoption Agreement, loans may be made to Participants from time to time
by the Trustee when directed by the Plan Administrator upon the written
request of the Participant.
Plan loans shall be granted on a uniform nondiscriminatory basis. Such
loans shall be adequately secured, shall bear a reasonable rate of
interest and shall provide for periodic repayment over a reasonable
period of time. No Participant loan shall exceed the value of the
Participant's vested Accrued Benefit. For all purposes of this Article
XI, the Participant's Accrued Benefit shall not include amounts
allocated to his Tax Deductible Contribution Account.
Notwithstanding the above, loans may not be made to an Owner-Employee
or a shareholder-employee if the loan is not permissible under the
applicable provisions of the Internal Revenue Code or the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
- 36 -
A "shareholder employee" is an employee of officer of an electing small
business (Subchapter S) corporation who owns (or is considered as
owning within the meaning of Code Section 318(a)(1), on any day during
the taxable year of such corporation, more than five percent of the
outstanding stock of such corporation.
Tax Deductible Voluntary Contributions plus earnings thereon, may not
be used as security for Participant loans.
11.02 LOAN AMOUNTS AND REPAYMENTS -
(a) No loan shall be made to the extent such loan when added to
the outstanding balance of all other loans to the Participant
would exceed the greater of:
(i) $10,000, or if less, the present value of the
Participant's nonforfeitable Accrued Benefit; or
(ii) one-half (1/2) of the present value of the
nonforfeitable Accrued Benefit of the Participant
under the Plan (but not more than $50,000 reduced by
the difference between the highest outstanding
balance during the previous 365 days and the current
outstanding balance).
(b) Loans shall provide for periodic repayment, with payment to be
no less frequent than quarterly, over a period not to exceed
five (5) years; provided, however, that loans used to acquire
any dwelling unit which, within a reasonable time, is to be
used (determined at the time the loan is made) as a principal
residence of the Participant may provide for periodic
repayment, with payment to be no less frequent than quarterly
over a reasonable period of time that exceeds five (5) years.
Loans shall not be granted to any Participant that provide for a
repayment period extending beyond such Participant's Normal Retirement
Age.
In the event of default, attachment of the Participant's Accrued
Benefit will not occur until a distributable event occurs in the Plan;
all loans will be considered in default on the death of the
Participant.
Notwithstanding the foregoing, no loans may be made to a married
Participant in the absence of a valid spousal consent to such loan in
accordance with Section 12.08(c)(iii) if the loan is secured by an
account other than one to which Section 12.08(e) applies. Such consent
must be given within 90 days of the making of the loan. In addition,
any request for a withdrawal of amounts allocated to a group annuity
contract for purposes of providing Plan loans shall be subject to any
time limits, restrictions or penalties that may be provided in the
contract.
- 37 -
ARTICLE XII
RETIREMENT AND DEATH BENEFITS
12.01 NORMAL RETIREMENT BENEFIT - Each Participant's Accrued Benefit shall
become 100% vested and nonforfeitable when the Participant attains his
Normal Retirement Age; provided, however, that each Participant's
401(k) Employer Match Contribution account, 401(k) Employer
Contribution account, Salary Savings Contribution account, Rollover
account, Tax Deductible Contribution account and After-Tax Contribution
account shall be 100% vested and nonforfeitable at all times.
Every Participant may terminate his employment with the Employer
and retire upon the attainment of his Normal Retirement Age. Upon such
date all amounts credited to such Participant's Accounts shall become
distributable to him in accordance with this Article.
The Plan Administrator shall notify the Trustee and Insurer when the
Normal Retirement Age of each Participant shall occur and shall also
advise the Trustee and Insurer as to the manner in which retirement
benefits are to be distributed to a Participant, subject to the
provisions of this Article. Upon receipt of such notification and
subject to the other provisions of this Article, the Trustee and
Insurer shall take such action as may be necessary in order to
distribute the Participant's Accrued Benefit.
12.02 EARLY RETIREMENT BENEFIT - If there shall be a termination of a
Participant's employment on or after he attains his Early Retirement
Age, if nay, (as defined in Section 12.02 of the Adoption Agreement),
he shall be deemed to have retired early and such Participant shall be
vested in the amount credited to his Accounts as of the date of his
early retirement.
12.03 LATE RETIREMENT BENEFIT - If a Participant shall continue in active
employment following his Normal Retirement Age, he shall continue to
Participate under the Plan and Trust. Upon actual retirement, such
Participant shall be entitled to the amount then credited to his
Accounts.
12.04 DISABILITY BENEFIT - A Participant whose employment shall be terminated
prior to his Normal Retirement Age as a result of Total and Permanent
Disability shall be vested in the amount credited to his Accounts as of
the date of such termination.
12.05 DEATH BENEFIT - If a participant or Former Participant shall die prior
to the commencement of any benefit otherwise provided under this
Article XII, his Beneficiary shall be entitled to a death benefit. The
amount of the death benefit shall be equal to the amount credited to
his Participant's Accounts as of the date of death, including the death
proceeds of any Policies allocated to such Accounts.
If a participant shall die subsequent to the commencement of any
benefit otherwise provided under this Article XII, the death benefit,
if any, shall be determined in accordance with the benefit option in
effect for the participant.
- 38 -
The Plan Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of
the Account of a deceased Participant or a deceased Former Participant
as the Plan Administrator deems necessary. The Plan Administrator's
determination of death and of the right of any person to receive
payment shall be conclusive and binding on all persons.
12.06 DESIGNATION OF BENEFICIARY - Each Participant shall designate his
Beneficiary on a form provided by the Plan Administrator and such
designation may include primary and contingent Beneficiaries; provided,
however, that if a Participant or Former Participant is married on the
date of his death, the Participant's then spouse shall be the
Participant's Beneficiary unless such spouse consented to the
designation of another Beneficiary in accordance with Section 12.08.
Notwithstanding the foregoing, Policy proceeds shall be paid to the
Trustee as beneficiary and the Trustee shall pay over the proceeds to
the appropriate Plan beneficiary.
12.07 DISTRIBUTION OF BENEFITS - The Plan Administrator shall direct the
Trustee to make, or cause the Insurer to make, payment of any benefits
provided under this Article XII. Unless the Participant elects
otherwise, distribution of benefits will begin no later than the 60th
day after the latest of the close of the Plan Year in which:
(1) the Participant attains Age 65 ( or Normal Retirement Age, if
earlier);
(2) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or,
(3) the Participant terminates service with the Employer.
In no event will benefits begin to be distributed prior to the later of
age 62 or Normal Retirement Age without the consent of the Participant,
except as indicated below. The consent of the Participant's spouse will
also be required for any such distribution unless (i) the plan is a
profit sharing plan described in Subsection 12.08(e) or (ii) the
benefit is paid in the form of a qualified Joint and Survivor Annuity.
Neither the consent of the Participant or his or her spouse is required
if the present value of the Participant's vested Accrued Benefit
attributable to all Contributions other than Tax Deductible Voluntary
Contributions is $3,500 or less. In such event the Plan Administrator
shall pay such benefit to the Participant or his Beneficiary in a lump
sum and no other settlement option shall be available. However, unless
the Plan is a plan described in Subsection 12.08(e), no distribution
shall be made pursuant to the preceding sentence after the first day of
the first period for which an amount is received as an annuity unless
the Participant and his or her spouse ( or the Participant's surviving
spouse) consent in writing to such distribution. Except as provided
below and in Sections 12.05 and 12.08, a Participant, with spousal
consent where applicable, shall have the sole right to receive his
benefit in accordance with one or more of the following ways, and which
may be paid in cash or in kind, or a combination of them:
- 39 -
(a) one sum.
(b) an annuity for the life of the Participant.
(c) an annuity for the life of the Participant and upon his death
100%, 66 2/3% or 50% (whichever is specified when this option
is elected) of the annuity amount will be continued to his
contingent annuitant. No further annuity benefits are payable
after the death of both the Participant and his contingent
annuitant.
(d) an annuity for the joint lives of the Participant and his
joint annuitant which 100%, 66 2/3% or 50% (whichever is
specified when this option is elected) of such amount payable
as an annuity for life to the survivor. No further benefits
are payable after the death of both the Participant and his
joint annuitant.
(e) an annuity for the life of the Participant with installment
payments for a period certain not longer than the life
expectancy of the Participant.
(f) installment payments for a period certain not longer than the
life expectancy of the Participant and his designated
beneficiary.
All optional forms of benefits shall be actuarially equivalent.
Notwithstanding the above requirements:
(a) Minimum Amounts to be Distributed. If the Participant's entire
interest is to be distributed in other than a lump-sum, then
the amount to be distributed each year must be at least an
amount equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy of the
Participant or joint and last survivor expectancy of the
participant and designated Beneficiary. Life expectancy and
joint and last survivor expectancy are computed by the use of
the return multiples contained in Section 1.72-9 of the Income
Tax Regulations. For purposes of this computation, a
Participant's life expectancy may be recalculated no more
frequently than annually, however, the life expectancy of a
nonspouse Beneficiary may not be recalculated. If the
participant's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least 50
percent of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
(b) Commencement of Benefits.
(i) For Plan Years Beginning Before 1989.
(A) Distributions to Five Percent Owners.
Distribution to a Participant who is a Five
Percent Owner at any time during the five
Plan Year period ending in the calendar year
in which he attains age 70 1/2 must commence
no later than the first day of April
following such calendar year.
- 40 -
(B) Distributions to Non-Five Percent Owners.
Distributions to a Participant other than a
Five Percent Owner must commence no later
than the first day of April following the
calendar year in which the later of
termination of employment or attainment of
age 70 1/2 occurs.
(ii) For Plan Years Beginning After 1988.
Distributions to all Participants must commence no
later than the first day of April following the
calendar year in which the participant attains
age 70 1/2, unless the Participant attains age
70 1/2 before January 1, 1988 and was never a Five
Percent Owner at age 66 1/2 or anytime thereafter.
(c) Death Distribution Provisions.
Upon the death of the Participant, the following distribution
provisions shall take effect:
(i) If the Participant dies after distribution of his or
her interest has commenced, the remaining portion of
such interest will continue to be distributed at
least as rapidly as under the method of distribution
being used prior to the Participant's death.
(ii) If the Participant dies before distribution of his or
her interest commences, the Participant's entire
interest will be distributed no later than 5 years
after the Participant's death except to the extent
that an election is made to receive distributions in
accordance with (A) or (B) below:
(A) if any portion of the Participant's interest
is payable to a designated Beneficiary,
distributions may be made in substantially
equal installments over the life or life
expectancy of the designated Beneficiary
commencing no later than 1 year after the
Participant's death;
(B) if the designated beneficiary is the
Participant's surviving spouse, the date
distributions are required to begin in
accordance with (A) above shall not be
earlier than the date on which the
Participant would have attained age 70 1/2,
and, if the spouse dies before payments
begin, subsequent distributions shall be
made as if the spouse had been the
Participant.
(iii) For purposes of paragraph (ii) above, payments will
be calculated by use of the return multiples
specified in Section 1.72-9 of the Income Tax
Regulations. Life expectancy of a surviving spouse
may be recalculated annually, however, in the case of
any other designated
- 41 -
Beneficiary, such life expectancy will be calculated
at the time payment first commences without further
recalculation.
(iv) For purpose of this Subsection (c), 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.
(d) Transitional Rule
(i) Notwithstanding the other requirements of this
Section 12.07 and subject to the requirements of
Section 12.08, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee,
including a 5-percent owner, may be made in
accordance with all of the following requirements
(regardless of when such distribution commences):
(A) The distribution by the trust is one which
would not have disqualified such trust under
Section 401(a)(9) of the Internal Revenue
Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(B) The distribution is in accordance with a
method of distribution designated by the
Employee whose interest in the trust is
being distributed or, if the Employee is
deceased, by a Beneficiary of such Employee.
(C) Such designation was in writing, was signed
by the Employee or the Beneficiary, and was
made before January 1, 1984.
(D) The Employee had accrued a benefit under the
plan as of December 31, 1983.
(E) The method of distribution designated by the
Employee or the Beneficiary specifies the
time at which distribution will commence,
the period over which distributions will be
made, and in the case of any distribution
upon the Employee's death, the Beneficiaries
of the Employee Listed in order of priority.
(ii) A distribution upon death will not be covered by this
transitional rule unless the information in the
designation contains the required information
described above with respect to the distributions to
be made upon the death of the Employee.
(iii) For any distribution which commenced before January
1, 1984, but continues after December 31, 1983, the
Employee, or the Beneficiary, to whom such
distribution is being made, will be presumed to have
designated the method of
- 42 -
distribution under which the distribution is being
made if the method of distribution was specified in
writing and the distribution satisfies the
requirements in paragraphs (i)(A) and (E) above.
(iv) If a designation is revoked, any subsequent
distribution must satisfy the requirements of Section
401(a)(9) of the Code, as amended. Any changes in
the designation will be considered to be a revocation
of the designation. However, the mere substitution or
addition of another Beneficiary (one not named in the
designation) under the designation will not be
considered to be a revocation of the designation, so
long as such substitution or addition does not alter
the period over which distributions are to be made
under the designation, directly or indirectly (for
example, by altering the relevant measuring life).
12.08 JOINT AND SURVIVOR ANNUITY REQUIREMENTS - The provisions of this
Section shall take precedence over any conflicting provision in this
Plan.
Except as provided with respect to certain profit sharing plans
described in Subsection (e), the provisions of this Section 12.08 shall
apply to any Participant who is credited with at least one Hour of
Service with the Employer on or after August 23, 1984, and such other
Participants as provided in Subsection (f).
(a) Qualified Joint and Survivor Annuity.
Unless an optional form of benefit is selected pursuant to a
qualified election within the 90-day period ending on the date
benefit payments would commence, a Participant's vested
Account balance will be paid in the form of a Qualified Joint
and Survivor Annuity, as described in Section 2.38.
(b) Qualified Preretirement Survivor Annuity.
Unless an optional form of benefit has been selected within
the election period pursuant to a qualified election, if a
Participant dies before benefits have commenced, then the
Participant's vested Account balance shall be applied toward
the purchase of an annuity for the life of the surviving
spouse.
(c) Definitions.
(i) Election period: The period which begins on the
first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the
Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in
which age 35 is attained, with respect to the Account
balance as of the date of separation, the election
period shall begin on the date of separation.
- 43 -
(ii) Earliest retirement age: The earliest date on which,
under the Plan, the Participant could elect to
receive retirement benefits.
(iii) Qualified election: A Waiver of a Qualified Joint and
Survivor Annuity or a qualified preretirement
survivor annuity. The waiver must be in writing and
must be consented to by the Participant's spouse, if
any. The spouse's consent to a waiver must be
witnessed by a Plan representative or notary public
and must be limited to a specific benefit for a
specific alternate beneficiary. Notwithstanding this
consent requirement, if the Participant establishes
to the satisfaction of a Plan representative that
such written consent may not be obtained because
there is no spouse or the spouse cannot be located, a
waiver will be deemed a qualified election. Any
consent necessary under this provision will not be
valid with respect to any other spouse. Additionally,
a revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any
time before the commencement of benefits. The number
of revocations shall not be limited. Any new waiver
or change of beneficiary will require a new spousal
consent.
(iv) Spouse (surviving spouse): The spouse or surviving
spouse of the Participant, provided that a former
spouse will be treated as the spouse or surviving
spouse to the extent provided under a qualified
domestic relations order as described in Section
414(p) of the Internal Revenue Code.
(d) Notice Requirements.
(i) In the case of a Qualified Joint and Survivor Annuity
as described in Subsection (a), the Plan
Administrator shall provide each Participant within a
reasonable period prior to the commencement of
benefits a written explanation of: (i) the terms and
conditions of a Qualified Joint and Survivor Annuity;
(ii) the Participant's right to make and the effect
of an election to waive the Qualified Joint and
Survivor Annuity form of benefit; (iii) the rights of
a Participant's spouse; and (iv) the right to make,
and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor
Annuity.
(ii) In the case of a qualified preretirement survivor
annuity as described in Subsection (b), the Plan
Administrator shall provide each Participant a
written explanation of the qualified preretirement
survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for
meeting the requirements of paragraph (d)(i)
applicable to a Qualified joint and Survivor Annuity
within whichever of the periods listed below ends
last:
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(A) the period beginning with the first day of
the Plan Year in which the Participant
attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in
which the Participant attains age 35;
(B) a reasonable period (as determined under any
applicable regulations) after which the
Employee becomes a Participant;
(C) a reasonable period (as determined under any
applicable regulations) ending after
Subparagraph (iii) below ceases to apply;
(D) a reasonable period (as determined under any
applicable regulations) after the
Termination of Employment of a Participant
before his attainment of age 35.
(iii) Notwithstanding the other requirements of this
Subsection (d), the respective notices prescribed by
this Section need not be given to a Participant if
his Plan "fully subsidizes" the costs of a Qualified
joint and Survivor Annuity or qualified preretirement
survivor annuity. For purposes of this paragraph
(iii), a Plan fully subsidizes the costs of a benefit
if under the Plan the failure to waive such benefit
by a Participant would not result in a decrease in
any Plan benefit with respect to such Participant and
would not result in increased contributions from the
Participant.
(e) Special Rule for Profit-Sharing Plans.
(i) This section applies to a profit sharing plan if the
following two conditions are met: (A) the Participant
cannot or does not elect payments in the form of a
life annuity, and (B) on the death of the
Participant, the Participant's vested account balance
will be paid to the Participant's surviving spouse,
but if there is no surviving spouse, or, if the
surviving spouse has already consented in a manner
conforming to a qualified election, then to the
Participant's designated Beneficiary. However, this
Subsection (e) shall not be operative with respect to
the Participant if it is determined that this profit
sharing plan is a direct or indirect transferee of a
defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus, or
profit sharing plan which would otherwise provide for
a life annuity form of payment to the Participant. If
this Subsection (e) is operative, then except to the
extent otherwise provided in Subsection (f), the
other provisions of this Section 12.08 shall be
inoperative.
- 45 -
(f) Transitional Rules.
(i) Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the
benefits prescribed by the previous Subsections of
this Section 12.08 must be given the opportunity to
elect to have the prior sections of this Section
12.08 apply if such Participant is credited with at
least one Hour of Service under this Plan or a
predecessor Plan in a Plan Year beginning on or after
January 1, 1976, and such Participant had at least 10
years of vesting service when he or she separated
from service.
(ii) Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one
Hour of Service under this plan or a predecessor plan
on or after September 2, 1974, and who is not
otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given
the opportunity to have his or her benefits paid in
accordance with paragraph (f)(iv) below.
(iii) The respective opportunities to elect (as described
in paragraphs (f)(i) and (ii) above) must be afforded
to the appropriate Participants during the period
commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to said
Participants.
(iv) Any Participant who has elected pursuant to paragraph
(f)(ii) and any Participant who does not elect under
paragraph (f)(i) or who meets the requirements of
paragraph (f)(i) except that such Participant does
not have at least 10 years of vesting service when he
or she separates from service, shall have his or her
benefits distributed in accordance with all of the
following requirements if benefits would have been
payable in the form of a life annuity:
(A) Automatic joint and survivor annuity. If
benefits in the form of a life annuity
become payable to a married Participant who:
(1) begins to receive payments under
the Plan on or after Normal
Retirement Age; or
(2) dies on or after Normal Retirement
Age while still working for the
Employer; or
(3) begins to receive payments on or
after the Qualified Early
Retirement Age; or
(4) separates from service on or after
attaining Normal Retirement Age (or
the Qualified Early Retirement Age)
and after satisfying the
- 46 -
eligibility requirements for the
payment of benefits under the Plan
and thereafter dies before
beginning to receive such benefits;
then such benefits will be received under
this plan in the form of Qualified Joint and
Survivor Annuity, unless the Participant has
elected otherwise during the election
period. The election period must begin at
least 6 months before the Participant
attains Qualified Early Retirement Age and
end not more than 90 days before the
commencement of benefits. Any election
hereunder will be in writing and may be
changed by the Participant at any time.
(B) Election of early survivor annuity. A
Participant who is employed after attaining
the Qualified Early Retirement Age will be
given the opportunity to elect, during the
election period, to have a survivor annuity
payable on death. If the Participant elects
the survivor annuity, payments under such
annuity must not be less than the payments
which would have been made to the spouse
under the Qualified Joint and Survivor
Annuity if the Participant had retired on
the day before his or death. Any election
under this provision will be in writing and
may be changed by the Participant at any
time. The election period begins on the
later of (1) the 90th day before the
Participant attains the Qualified Early
Retirement Age, or (2) the date on which
participation begins, and ends on the date
the Participant terminates employment.
(C) For purposes of this paragraph (f)(iv):
(1) Qualified Early Retirement Age is
the latest of:
(i) the earliest date, under
the Plan, on which the
Participant may elect to
receive retirement
benefits,
(ii) the first day of the 120th
month beginning before the
Participant reaches Normal
Retirement Age, or
(iii) the date the Participant
begins participation.
(2) Qualified joint and survivor
annuity is an annuity for the life
of the Participant with a survivor
annuity for the life of the spouse
as described in Section 2.38.
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12.09 DISTRIBUTION TO A MINOR PARTICIPANT OR BENEFICIARY - In the event a
distribution is to be made to a minor, then the Plan Administrator may,
in the Administrator's sole discretion, direct that such distribution
be paid to the legal guardian of the minor, or if none, to a parent of
such minor or a responsible adult with whom the minor maintains his
residence, or to the custodian for such minor under the Uniform Gift to
Minors Act, if such is permitted by the laws of the state in which said
minor resides. Such a payment to the legal guardian or parent of a
minor or to such a custodian shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
12.10 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN - In the event that all,
or any portion, of the distribution payable to a Participant or his
Beneficiary hereunder shall, at the expiration of five years after it
shall become payable, remain unpaid solely by reason of the inability
of the Plan Administrator, after sending a registered letter, return
receipt requested, to the payee's last known address, and after further
diligent effort, to ascertain the whereabouts of such Participant or
his Beneficiary, the amount so distributable shall be forfeited and
allocated in accordance with the terms of this Plan. In the event a
Participant or Beneficiary is located subsequent to his benefit being
forfeited, such benefit shall be restored.
ARTICLE XIII
BENEFITS UPON TERMINATION OF EMPLOYMENT
13.01 GENERAL - Upon a Participant's termination of employment, for any
reason other than death, disability, Normal, Early or Late Retirement,
the interests and rights of any Participant shall be limited to those
contained in this Article XIII.
(a) Fully Vested and Nonforfeitable Portion of a Participant's
Accrued Benefit. Each Participant's 401(k) Employer and Match
accounts, Salary Savings account, Rollover account, Tax
Deductible Contribution account and After-Tax Contribution
account shall be fully vested and nonforfeitable at all times.
(b) Vested Employer Contributions. Each Participant's 401(a)
Employer and Match accounts shall be vested to the extent
specified in Section 13.01 of the Adoption Agreement, and the
remainder, if any, shall be forfeited in accordance with Plan
Sections 13.03 and 13.04 and applied as specified in the
Adoption Agreement pursuant to Section 5.03.
13.02 FORFEITURES; DISTRIBUTION OF VESTED AMOUNTS - If a Participant
terminates employment, and the present value of the
Participant's vested Accrued Benefit attributable to all
Contributions other than Tax Deductible Voluntary
Contributions is not greater than $3,500, the Participant will
receive a lump sum distribution of the present value of the
entire vested portion of such Accrued Benefit and the
nonvested portion will be forfeited and applied in accordance
with Section 13.03. However, unless the Plan is a profit
sharing plan described in
- 48 -
Subsection 12.08(e), no distribution shall be made pursuant to the
preceding sentence after the first day of the first period for which an
amount is received an annuity unless the Participant and his of her
spouse (or the Participant's surviving spouse) consent in writing to
such distribution.
If a Participant terminates employment, and the present value of the
Participant's vested Accrued Benefit attributable to both Employer and
Employee Contributions and plan transfers (other than Tax Deductible
Voluntary Contributions) exceeds $3,500, the payment of such vested
benefit shall be deferred to the earliest of the Participant's death,
Total and Permanent Disability of attainment of Normal Retirement Age,
at which time such vested benefit shall be payable in accordance with
Article XII. Notwithstanding the foregoing, such a Participant may
elect to have payments commence at any time after the date specified in
Section 13.02(1) of the Adoption Agreement. Partial distributions of
vested benefits will not be permitted. Unless the Plan is a profit
sharing plan described in Subsection 12.08(e), the Participant's spouse
(or surviving spouse) must consent to any distribution of vested
benefits. The Participant may request any form of distribution
permissible under Article XII, including the distribution of a
nontransferable annuity contract. The benefit payable as a result of
any election pursuant to this paragraph will be the benefit which can
be provided by the current value of the Participant's vested Accrued
Benefit. If the provisions of this paragraph become operative, the
nonvested portion of the Participant's Accrued Benefit shall be
forfeited when the Participant incurs five consecutive One Year Breaks
in Service or, if earlier, when the Participant or his spouse (or
surviving spouse) receives a distribution of his vested Accrued
Benefit. Any such forfeitures shall be applied in accordance with
Section 13.03.
13.03 APPLICATION OF FORFEITURES - The nonvested portion of the Accrued
Benefit of any terminated Participant will be used to reduce Employer
Contributions for the Plan Year following the Plan Year in which the
forfeiture occurs (or, if the Employer so specifies in Section 5.03 of
the Adoption Agreement, such nonvested amounts shall be allocated in
the same manner as Employer Contributions at the end of the Plan Year
in which the forfeiture occurs).
13.04 RESUMPTION OF SERVICE: RESTORATION OF BENEFITS UPON REEMPLOYMENT -
(a) A Participant who terminate service and who subsequently
resumes employment with the Employer will again become a
Participant on the entry date determined in accordance with
Section 3.02 of the Plan.
(b) If a Former Participant is subsequently reemployed, the
following rule shall also be applicable:
(i) If any Former Participant shall be reemployed be the
Employer before incurring five consecutive One Year
Breaks in Service, and such Former Participant had
received a distribution of his vested Accrued Benefit
prior to his reemployment, his forfeited Account
balance shall be
- 49 -
reinstated if he repays the full amount attributable
to Employer Contributions which was distributed to
him. Such repayment must be made by the Former
Participant before the date on which the individual
incurs five consecutive One Year Breaks in Service
following the date of distribution. In the event the
Former Participant does repay the full amount
distributed to him, the forfeited portion of the
Participant's Account must be restored in full,
unadjusted be any gains of losses occurring
subsequent to the date of distribution.
(ii) If any Former Participant who has not received a
distribution of his vested Accrued Benefit is rehired
before incurring five consecutive One Year Breaks in
Service, the amount of any prior forfeiture shall be
restored in full, unadjusted by any gains or losses
occurring subsequent to the date of forfeiture.
(iii) Restorations of forfeitures will be made, in the case
of (i) above, as of the date that the Plan
Administrator is notified that the required repayment
has been received by the Trustee and, in the case of
(ii) above, as of the date the Plan Administrator is
notified by the Employer that the Participant has
resumed service with the Employer. Any forfeiture
amount that must be restored to a Participant's
Account will be taken from any forfeitures that have
not yet been applied and, if the amount of
forfeitures available for this purpose is
insufficient, the Employer will make a timely
supplemental contribution of an amount sufficient to
enable the Trustee to restore the forfeiture amount
to the Participant's Account.
(iv) If a Former Participant resumes Service after
incurring five consecutive One Year Breaks in
Service, forfeited amounts will not be restored under
any circumstances, but unless the Rule of Parity has
been elected in Section 13.01(3)(d) of the Adoption
Agreement and such Rule applies, both pre-break and
post-break service will count for the purposes of
vesting the employer-derived account balance that
accrued after such Breaks.
If a Former Participant resumes service before
incurring five consecutive One Year Breaks in
Service, both the pre-break and post-break service
will count in vesting both any restored pre-break and
past-break employer-derived Account balance.
13.05 SERVICE WITH AFFILIATES - As indicated in Plan Section 2.22, in
determining a participant's vesting percentage and in determining for
purposes of this Article whether an Employee has terminated his
employment or has a One Year Break in Service, Hours of Service
completed with a member of a Control Group shall be deemed to be Hours
of Service completed with the Employer.
- 50 -
13.06 EARLY RETIREMENT ELECTION - Notwithstanding anything in the Plan to the
contrary, a Participant who satisfied the Service requirement for early
retirement specified in Section 12.02 of the Adoption Agreement and
terminated employment with a right to a benefit deferred to his Normal
Retirement Age may elect to receive an immediate early retirement
benefit at any time on and after the date he attains Early Retirement
Age (as specified in Section 12.02 of the Adoption Agreement) and prior
to this Normal Retirement Age. A Participant eligible to make an
election under this Section may request any optional benefit permitted
under Section 12.07.
The monthly benefit payable as a result of any election pursuant to
this Section will be the monthly benefit which can be provided by the
current value of the Participant's Accounts.
13.07 AMENDMENT TO VESTING SCHEDULE - No amendment to the Vesting Schedule
shall deprive a Participant of his nonforfeitable rights to benefits
accrued to the date of the amendment. Further, if the Vesting Schedule
of the Plan is amended, or the Plan is amended in any way that directly
or indirectly affects the computation of a Participant's nonforfeitable
percentage, certain Participants may elect, within a reasonable period
after the adoption of the amendment, to have their nonforfeitable
percentage computed under the Plan without regard to such amendment.
For Plan Years beginning before 1989, such certain Participants are
those with at least 5 Years of Service with the Employer; for Plan
Years beginning after 1988, such certain Participants are those with at
least 3 Years of Service with the Employer. The period during which the
election may be made shall commence with the date the amendment is
adopted and shall end on the latest of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of the
amendment by the Employer of Plan Administrator.
ARTICLE XIV
PLAN FIDUCIARY RESPONSIBILITIES
14.01 PLAN FIDUCIARIES - The Plan Fiduciaries shall be:
(a) the Employer;
(b) the Trustee of the Plan;
(c) the Plan Administrator;
(d) the Profit Sharing Committee;
and such other person or persons as may be designated as a Fiduciary by
the Employer in accordance with the further provisions of this Article.
- 51 -
14.02 GENERAL FIDUCIARY DUTIES - Each Plan Fiduciary shall discharge his
duties solely in the interest of the Participants and their
beneficiaries and act:
(a) for the exclusive purpose of providing benefits to
Participants and their beneficiaries and defraying reasonable
expenses of administering the Plan;
(b) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in
a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and with like
aims;
(c) by diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is
clearly prudent not to do so, if the Fiduciary has the
responsibility to invest plan assets; and
(d) in accordance with the documents and instruments governing the
Plan insofar as such documents and instruments are consistent
with the provisions of current laws and regulations.
Each Plan Fiduciary shall perform the duties specifically assigned to
him. No Plan Fiduciary shall have any responsibility for the
performance or non-performance of any duties not specifically allocated
to him.
14.03 POWERS, DUTIES AND RESPONSIBILITIES OF THE EMPLOYER -
(a) The Employer shall be empowered to appoint and remove the
Trustee, the Plan Administrator and the Profit Sharing
Committee from time to time as it deems necessary for the
proper administration of the Plan, to assure that the Plan is
being operated for the exclusive benefit of the Participants
and their beneficiaries in accordance with the terms of this
Agreements, the Internal Revenue Code, and the Employee
Retirement Income Security Act of 1974 (ERISA), as amended.
(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
"funding policy and method" shall not, however, constitute a
directive to the Trustee as to the Investment of the Trust
Fund. Such "funding policy and method" shall be consistent
with the objectives of this Plan and with the requirements of
Title I of ERISA.
(c) The Employer may in its discretion appoint an Investment
Manager to manage all or a designated portion of the assets of
the Plan. In such event, the Trustee shall follow the
directives of the
- 52 -
Investment Manager in investing the assets of the Plan managed
by the Investment Manager. While there is an Investment
Manager, the Employer shall have no obligation under this Plan
with regard to the performance or non-performance of the
duties delegated to the Investment Manager.
(d) The Employer shall periodically, but not less frequently than
annually, 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.
14.04 POWERS, DUTIES AND RESPONSIBILITIES OF THE TRUSTEE -The specific
powers, duties and responsibilities of the Trustee are set forth in
Article XV. In general the Trustee shall:
(a) invest plan assets, subject to direction from the Employer,
from any duly appointed Investment Manager or from
Participants if the Plan permits participants to direct the
Investment of their Accounts in life insurance policies;
(b) maintain adequate records of receipts, disbursements and other
transactions involving the plan; and
(c) prepare such reports, statements, tax returns and other forms
as may be required under the Trust or applicable laws and
regulations.
14.05 POWERS, DUTIES AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR - The
Employer may appoint one or more Plan Administrators. Any person,
including, but not limited to, the directors, shareholders, officers
and Employees shall be eligible to serve as the Administrator. Any
person so appointed shall signify his acceptance by filing written
acceptance with the Employer. An Administrator may resign by delivering
his written resignation to the Employer or be removed by the Employer
by delivery of written notice of removal.
The Employer, upon the resignation or removal of an Administrator, may
designate in writing a successor the this position. If the Employer
does not appoint an Administrator, the Employer will function as the
Plan Administrator. The Insurer may not be appointed as the Plan
Administrator.
The specific powers and responsibilities of the Plan Administrator are
to:
(a) administer the Plan on a day-to-day basis in accordance with
the provisions of this Plan and all other pertinent documents;
(b) retain and maintain Plan records including Participant census
data, participation dates, compensation records, and such
other records as may be necessary or desirable for proper Plan
administration;
- 53 -
(c) prepare and arrange for delivery to Participants such
summaries, descriptions, announcements and reports as are
required to be given to Participants under applicable laws and
regulations;
(d) file with the U.S. Department of Labor, the Internal Revenue
Service and other regulatory agencies on a timely basis all
required reports, forms and other documents; and
(e) prepare and furnish to the Trustee sufficient records and data
to enable the Trustee to properly perform its obligations
under the Trust.
14.06 POWERS, DUTIES AND RESPONSIBILITIES OF THE PROFIT SHARING COMMITTEE -
The Employer may appoint a Profit Sharing Committee consisting of three
or more members, one of whom shall be designated by the Employer as
chairman. Each member of the Committee and its chairman shall serve at
the pleasure of the Employer.
If a Committee is not appointed, the duties and responsibilities set
forth in this Section and in Article XIX shall be those of the Plan
Administrator.
If the Employer appoints a Profit Sharing Committee, the Committee
shall:
(a) interpret and construe the Plan;
(b) determine questions of eligibility and of rights of
Participants and their beneficiaries;
(c) provide guidelines for the Plan Administrator, as required for
the orderly and uniform administration of the plan; and
(d) exercise overall control of the operation and administration
of the Plan in matters not allocated to some other Fiduciary
either by the terms of this Plan or by delegation from the
Employer.
14.07 APPOINTMENT OF ADVISORS - The Trustee, the Plan Administrator and the
Profit Sharing Committee, with the consent of the Employer, may appoint
counsel, specialists, advisors and such other persons as they deem
necessary or desirable in connection with the administration of this
Plan.
14.08 INFORMATION FROM EMPLOYER - To enable the Plan Administrator to perform
his functions, the Employer shall supply full and timely information to
the Plan Administrator on all matters relating to the Compensation of
all Participants, their Hours of Service, their Years of Service, their
retirement, death, disability, or termination of employment, and such
other pertinent facts as the Administrator may require; and the
Administrator shall advise the Trustee and the Profit Sharing Committee
of such of the foregoing facts as may be pertinent to their duties
under the Plan. All Fiduciaries may rely upon such information as is
supplied by the Employer and shall have no duty or responsibility to
verify such information.
- 54 -
14.09 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 Plan Administrator, the
Trustee and the Profit Sharing Committee, including, but not limited
to, fees of accountants, counsel, and other specialists, and other
costs of administering the Plan. Until paid, the expenses shall
constitute a liability of the Trust Fund. However, the Employer may
reimburse the Trust for any administration expense incurred pursuant to
the above. Any administration expense paid to the Trust as a
reimbursement shall not be considered as an Employer contribution.
14.10 ALLOCATION AND DELEGATION OF PLAN ADMINISTRATOR AND TRUSTEE
RESPONSIBILITIES - If more than one person is appointed as Plan
Administrator or Trustee, the responsibilities of each Administrator
and Trustee may be specified by the Employer and accepted in writing by
each Fiduciary. In the event that no such delegation is made by the
Employer, the Plan Administrators and trustees may allocate their
responsibilities among themselves, in which event they shall notify the
Employer in writing of such action and indicate their specific
responsibilities. The Employer and other Fiduciaries thereafter shall
accept and rely upon any documents executed by the appropriate
Fiduciary until such time as the Employer revokes any such allocation
or designation.
14.11 MAJORITY ACTIONS - Except where there has been an allocation and
delegation of Fiduciary responsibilities pursuant to Section 14.10, if
there shall be more than one Plan Administrator or Trustee, They shall
act by majority vote, but may authorize one or more of them to sign all
papers on their behalf. The Profit Sharing Committee shall act by
majority vote of all members.
All actions, determinations, interpretations and decisions of Plan
Fiduciaries with respect to any matter within their jurisdiction will
be conclusive and binding an all persons. Any person may rely
conclusively upon any action if certified by the appropriate Fiduciary.
14.12 RECORDS AND REPORTS - Each Fiduciary shall keep a record of all actions
taken and shall keep all other books of account, records, and other
data that may be necessary for proper administration of the Plan. The
Plan Administrator 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.
ARTICLE XV
TRUSTEE AND TRUST FUND INVESTMENTS
15.01 IN GENERAL - Subject to the direction of the Employer or any duly
appointed Investment Manager in accordance with Section 15.05 (or
subject to the direction of Participants if the Plan permits
Participants to direct the purchase of life insurance Policies), the
Trustee shall receive all contributions to the Trust and shall hold,
- 55 -
invest, manage, and control the whole or any part of the assets in
accordance with the provisions of the Trust. The Trustee, in signing
the Trust, accepts and agrees to carry out all of the provisions of the
Trust.
15.02 APPOINTMENT, RESIGNATION AND REMOVAL OF TRUSTEE - The Employer shall
select an individual or individuals or institution to serve as Trustee.
The Employer may remove a Trustee by delivering to such Trustee a
written notice of removal. A Trustee may resign as Trustee upon giving
written notice to the Employer. Such removal or resignation shall
become effective upon the date specified in such written notice, which
date shall not be less than thirty (30) days subsequent to the delivery
of such written notice. In the event of such removal or resignation, a
successor Trustee shall be appointed by the Employer. Such successor
Trustee, upon accepting the appointment by an instrument in writing
delivered to the Employer, shall become vested with all rights, power,
duties, privileges and immunities as Trustee as if he, they, or it had
originally been designated as Trustee of the Trust. Upon such
appointment and acceptance, the replaced Trustee shall execute any
instruments necessary to transfer to the successor Trustee all assets
held under the Trust.
15.03 POWERS OF TRUSTEE - The Trustee shall have all of the power necessary
for carrying out the purposes of this Trust, and without limiting the
powers and authority of the Trustee, the Trustee shall have the right
at any time and from time to time with respect to any or all of the
property which shall at any time or times form part of the principal or
income of the Trust:
(a) To sell, grant options to purchase, exchange or alter assets
of the Trust Fund or any of them; to enter into any contract
without personal liability thereon;
(b) To invest and reinvest all funds from time to time available
for investment or reinvestment in any kind of income-producing
property, real or personal, as the Trustee shall deem proper
and for the best interests of the Trust;
(c) To cause any of the investments to be registered in its name
or in the name of its nominee; any corporation or its transfer
agent may presume conclusively that such nominee is the actual
owner of any investment submitted for transfer;
(d) To delegate powers, discretionary or otherwise, for any
purpose to one or more nominees or proxies with or without
power of substitution and to make assignments to, and deposits
with, committees, trustees, agents, depositaries and other
representatives; to retain any investment received in exchange
in any reorganization or recapitalization;
(e) To settle, compromise, contest or abandon claims or demands in
favor of or against the Trust Fund;
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(f) To borrow money, assume indebtedness, extend mortgages and
encumber by mortgage or pledge;
(g) To vote and exercise all stockholder's or other rights with
respect to any share of stock or security held by the
Trustees;
(h) To determine the market value of any investment of the Trust
Fund for any purpose on the basis of such quotations,
evidence, date or information as the Trustee may deem
pertinent and reliable without any limitation whatever;
(i) To collect principal and income due or payable to the Trust
and to give a receipt therefore;
(j) To take any and all further action necessary or advisable in
order to carry out the provisions and purpose of the Trust.
15.04 INVESTMENT OF TRUST FUND - In order to provide retirement benefits for
Participants, the Trustee may invest Plan assets in a group annuity
contract or in life insurance Policies issued by the Insurer. The
Insurer shall only issue group annuity contracts and in life insurance
Policies which conform to the terms of the Plan. Notwithstanding the
foregoing, in no event may amounts allocated to a Participant's Tax
Deductible Contribution Account be invested in Policies of life
insurance.
In addition to the above, the Trustee shall have power to invest all or
part of the Trust Fund in such funds including any common trust fund or
funds, whether operated by the Trustee as a part of its trust or
banking operations or by any bank or trust company, stocks, bonds,
mutual funds or other securities, contracts, savings bank accounts,
savings certificates, or other investments of any and every nature
permissible under applicable laws and regulations.
15.05 EMPLOYER OR INVESTMENT MANAGER MAY DIRECT INVESTMENT PROGRAM - The
Employer, at its discretion, shall have full authority to direct the
Trustee in the investments of the Trust Fund or the Employer may
appoint an Investment Manager to so direct the Trustee. Any such
direction shall be in writing bearing an authorized signature, and may
be of a continuing nature or otherwise.
15.06 PARTICIPANT DIRECTED INVESTMENTS - If so specified in Section 17.01 of
the Adoption Agreement, each Participant may direct the Trustee to
invest amounts allocated to his Accounts in Policies of life insurance.
Provided, however, that amounts allocated to a Participant's Tax
Deductible Contribution Account may not be invested in such Policies.
Any such investment shall be subject to the restrictions on payment of
life insurance premiums described in Section 2.36 and shall also be
subject to the rules and requirements of Article XVII. Neither the
Trustee nor any other person, including the Plan Administrator, shall
be under any duty to question any such direction of the Participant or
to make any suggestions to the Participant in connection therewith, and
the Trustee shall comply as promptly as practicable with directions
given by the Participant hereunder. Any
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such direction may be of a continuing nature or otherwise and may be
revoked by the Participant at any time in such form as the Trustee may
require. The Trustee shall not be responsible or liable for any loss or
expense which may arise from or result from compliance with any
directions from the Participant nor shall the Trustee be responsible
for, or liable for, any loss or expense which may result from the
Trustee's refusal or failure to comply with any directions from the
Participant. The Trustee may refuse to comply with any direction from
the Participant in the event the Trustee, in its sole and absolute
discretion, deems such directions improper by virtue of applicable law.
Any costs and expenses related to compliance with the Participant's
directions shall be borne by the appropriate Account of the
Participant.
15.07 RELIANCE ON INSTRUCTIONS - The Trustee may rely on any order, request,
or other paper believed by the Trustee to be genuine and to be signed
or presented by the proper party or parties and may rely upon the Plan
Administrator for the mailing addresses of Participants and Employees.
15.08 BANK ACCOUNTS - The Trustee shall have the right to maintain one or
more bank accounts for funds belonging to the Trust and to make
deposits in and withdrawals therefrom.
15.09 VOTING AND OTHER ACTION - The Trustee shall deliver or cause to be
delivered to the Plan Administrator, all notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating
to investment company shares, stocks, securities and other such
investments held by the Trustee as part of the Trust Fund.
15.10 RECORDS AND ACCOUNTING - The Trustee shall keep accurate and detailed
records of all receipts, investments, disbursements and other
transactions required to be performed under the Trust. No later than
sixty days after the close of each Plan year (or after the Trustee's
resignation), the Trustee shall file with the Employer a written report
or reports which shall indicate the receipts, disbursements and other
transactions effected by it during such year (or period ending with
such resignation) and the assets and liabilities of the Trust at its
close. Such report or reports shall be open to inspection by the
Employer for a period of sixty days immediately following the date on
which it is filed with the Employer.
15.11 RETURNS AND REPORTS - The Plan Administrator shall furnish to the
Trustee, and the Trustee shall furnish to the Plan Administrator, such
information relevant to the Trust as may be required under the Internal
Revenue Code and Regulations and by the Federal Department of Labor.
The Trustee shall keep such records and file with the Internal Revenue
Service such returns and other information concerning the Trust as may
be required of it under the Internal Revenue Code and Regulations
issued or forms adopted thereunder.
15.12 FEES TAXES AND EXPENSES - The Trustee shall pay out of the Trust Fund
all real and personal taxes and other taxes of any and all kinds levied
or assessed under existing or future laws against the Trust Fund. The
Trustee shall be paid such reasonable compensation as shall from time
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to time be agreed upon by the Employer and the Trustee. Such
compensation and all expenses of administration of the Trust, including
counsel fees, shall be withdrawn by the Trustee out of the Trust Fund
unless paid by the Employer. Provided, however, compensation shall not
be provided for any Trustee who is employed on a full-time basis by the
Employer.
ARTICLE XVI
THE INSURER
16.01 INSURER NOT A PARTY TO THE TRUST - the Insurer shall be protected in
treating the Trustee as absolute owner of any group annuity contract or
life insurance Policy issued to the Trustee and may rely on directions
received from the Trustee. The Insurer shall not be required to take or
permit any action contrary to the provisions of any group annuity
contract or life insurance Policy issued hereunder, or be bound to
allow any benefit or privilege to any Plan Participant covered by the
contract which is not provided for in such contract or Policy.
The Insurer shall deal with and accept the signature of the Trustee in
connection with any changes or actions under its group annuity contract
or Policy and shall have no liability to inquire as to the Trustee's
authority nor to determine that the Trustee has obtained any necessary
direction, signature, or consents. Any sums paid out by the Insurer
under any of the terms of any group annuity contract or life insurance
Policy to the Trustee or in accordance with his direction or to any
other person or persons to whom payment should be made shall be a
complete and full discharge of liability of such payment, and the
Insurer shall have no obligations as to the disposition of any funds to
be paid.
The Insurer shall be fully protected in accepting premiums on any group
annuity contract or life insurance Policy it may issue under this Trust
and shall have no responsibility to make any inquiry as to the
Trustee's authority to make such payment.
The Insurer shall be fully protected at all times in dealing with the
person or corporation who is Trustee according to the latest
notification received by the Insurer at its Home Office.
No amendment to this Trust shall, regardless of its provisions, deprive
the Insurer of any of its exemptions and immunities hereunder.
ARTICLE XVII
LIFE INSURANCE POLICIES
17.01 GENERAL RULES - If and to the extent permitted by Section 17.01 of the
Adoption Agreement, at the request and direction of a Participant the
Trustee shall invest in life insurance Policies, subject to the
following:
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(a) each Policy shall be issued by the Insurer to the Trustee only
and shall provide for premiums payable in accordance with the
terms of the Policy. Purchase of Policies in accordance with
this Section 17.01 shall constitute an investment of amounts
allocated to the appropriate Account of the Participant, and
each such Account shall be reduced by the amount paid for such
Policies,
(b) as provided in Section 12.06, the Trustee shall be designated
as beneficiary of any Policy issued hereunder, and upon the
death of the Participant the Trustee shall pay or apply the
Policy proceeds for the benefit of the appropriate Plan
Beneficiary,
(c) each Policy shall be a Policy between the Insurer and Trustee
and shall reserve to the Trustee all rights, options and
benefits,
(d) each life insurance Policy shall provide a full or increasing
death benefit,
(e) each Policy shall provide settlement options (including lump
sum cash payment in the event of the surrender or maturity of
such Policy) subject, however, to Section 12.07,
(f) any dividend payable while a Policy is on a premium paying
basis shall be applied or accumulated as indicated on the
Policy application for the benefit of the Participant on whose
life the Policy was issued,
(g) all classes of life insurance Policies purchased hereunder
shall be alike or substantially alike as to settlement option
provisions, cash values, and as to other Policy provisions,
subject, however, to the provisions of Sections 17.01(h),
17.01(i) and 17.01(j),
(h) if an eligible Employee is determined to be insurable by the
Insurer at its standard rates, a Policy shall be obtained upon
his life, if available from the Insurer, which provides a life
insurance death benefit prior to retirement to which the
eligible Employee is entitled,
(i) if an eligible Employee is not insurable at the standard rates
of such Insurer, if permitted under the Policy being issued,
the Policy shall provide for a reduced but increasing death
benefit as determined by the Insurer (usually called
increasing or graded death benefit),
(j) if an eligible Employee is not insurable at the standard rates
of the Insurer, each Employee may elect to pay any excess
premium that may be required in order to obtain a Policy
providing for full death benefits described in Section
17.01(h), if the Insurer shall agree to issue such a Policy,.
(k) the Insurer shall only issue Policies which conform to the
terms of the Plan,
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(1) in no event may amounts allocated to a Participant's Tax
Deductible Contribution Account be invested in Policies of
life insurance.
17.02 PROCEDURE FOLLOWED TO OBTAIN POLICIES - The Trustee shall apply to the
Insurer for Policies on the lives of Participants with completed
applications as may be required by the Insurer, such Policies to have
benefits which are purchasable by a premium equal to the portion of the
contribution allocated for that purpose.
17.03 KEY MAN INSURANCE - The Trustee shall have the power, which shall be
exercised upon direction of the Employer or any duly appointed
Investment Manager, to invest in life insurance Policies on the lives
of key Employees of the Employer, payable on death to the Trust as
beneficiary. Such Policies shall be vested exclusively in the Trustee
for the benefit of the Trust, and death proceeds received under any
such Policy shall be considered to be an additional Employer
Contribution.
17.04 SUPPLEMENTARY POLICY BENEFITS - Subject to the limitations of Section
4.04 (Voluntary After-Tax Contribution), the Trustee upon the request
of any Participant upon whose life a Policy of life insurance is in
existence may apply for supplementary agreements to such Policy
providing for family income, additional death benefits, reducing or
level term insurance benefits, or waiver of premiums or waiver of
premiums and monthly income during total and permanent disability in
accordance with the rules and practices of the Insurer. The premiums
for such benefits shall be paid by the Participant through his Employer
to the Trustee who shall pay the premium to the Insurer. The death
benefit payable under the supplementary agreement shall be payable to
the beneficiary or beneficiaries designated by the Participant through
the Trustee and in the manner requested in such designation, subject to
the terms of such supplementary agreement and to the rules and
practices of the Insurer. The Trustee shall continue to have title and
control of all Policies subject to this Plan in manner provided for
herein. If such supplementary agreements shall be entered into, the
Trustee and each Participant who requests and receives such
supplementary agreement shall enter into a letter agreement generally
explaining the rights and duties of said Participant with respect to
said supplementary agreement, one copy of which shall be filed with the
Trustee, the Participant and the Employer.
Any payments made by a Participant under this Section 17.04 or Section
17.01(j) shall be considered as After-Tax Contributions and will be
subject to the limitations of Section 4.04.
ARTICLE XVIII
TRANSFER OF ASSETS, ROLLOVER CONTRIBUTIONS
18.01 TRANSFER FROM OTHER QUALIFIED PLANS - With the consent of the Plan
Administrator, the Trustee may accept funds and property transferred
from other pension, profit sharing or stock bonus plans qualified under
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Code Section 401(a) or Rollover Contributions, provided that the plan
from which such funds and property are transferred permits the transfer
to be made.
In the event of a transfer to this Plan, the Trustee shall maintain a
100% vested and nonforfeitable account for the amount transferred and
its share of the Trust Fund's accretions or losses, to be known as the
Participant's Rollover Account.
"Rollover Contribution" means any rollover amount or rollover
contribution described in Code Section 402(a)(5), 403(a)(4), 408(d) or
409(b)(3)(c).
An Employee who makes a contribution to the Plan described in this
Section shall become a Plan Participant on the date the Trustee accepts
the contribution. However, no 401(k) or Regular Employer contributions
will be made on behalf of such Employee nor will the Employee be
eligible to enter into a salary reduction agreement, to share in Plan
forfeitures or to make Voluntary After-Tax Contributions until the
Employee satisfies the Plan eligibility requirements set forth in
Adoption Agreement Section 3.02.
18.02 PARTICIPANT TRANSFER TO OTHER QUALIFIED PLANS - Upon the request of a
Participant upon his termination of employment, the Trustee at the
direction of the Plan Administrator shall transfer the vested portion
of his Accrued Benefit, if any, to another pension, profit sharing or
stock bonus plan maintained by such Participant's employer and meeting
the requirements of Code Section 401(a), provided that the plan to
which such transfer is to be made permits the transfer.
ARTICLE XIX
CLAIMS PROCEDURE
19.01 CLAIMS FIDUCIARY - The Profit Sharing Plan Committee will act as Claims
Fiduciary except to the extent that the Board of Directors of the
Employer has allocated the function to someone else.
19.02 CLAIMS FOR BENEFITS - Claims for benefits under the Plan must be made
in writing to the Plan Administrator. For the purpose of this
procedure, "claim" means a request for a Plan benefit by a Participant
or a Beneficiary of a Participant. If the basis of the claim includes
documentation not a part of the records of the Plan or of the Employer,
all such documentation must be included with the
claim.
19.03 NOTICE OF DENIAL OF CLAIM - If a claim if wholly or partially denied,
the Plan Administrator shall notify the claimant of the denial of the
claim within a reasonable period of time. Such notice of denial (i)
shall be in writing, (ii) shall be written in a manner calculated to be
understood by the claimant, and (iii) shall contain (a) the specific
reason or reasons for denial of the claim, (b) a specific reference to
the pertinent Plan provisions upon which the denial is based, (c) a
description of any additional material or information necessary for the
claimant to perfect the claim, along with the explanation why such
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material or information is necessary, and (d) an explanation of the
Plan's claim review procedure. Unless special circumstances require an
extension of time for processing the claim, the Plan Administrator
shall notify the claimant of the claim denial no later than 90 days
after the Administrator's receipt of the claim. If such an extension is
required, written notice of the extension shall be furnished to the
claimant prior to the termination of the initial 90-day period. In no
event shall such extension exceed a period of 90 days from the end of
such initial period. The extension notice shall indicate the special
circumstances requiring the extension of time and the date by which the
Plan Administrator expects to render the final decision.
19.04 REQUEST FOR REVIEW OF DENIAL OF CLAIM - Within 120 days of the receipt
by the claimant of the written notice of denial of the claim or if the
claim has not been granted within a reasonable period of time, the
claimant or his duly authorized representative may file a written
request with the Claims Fiduciary to conduct a full and fair review of
the denial of the claimant's claim for benefit. In connection with the
claimant's appeal of the denial of his benefit, the claimant or his
duly authorized representative may review pertinent documents and may
submit issues and comments in writing.
19.05 DECISION ON REVIEW OF DENIAL OF CLAIM - The Claims Fiduciary shall
deliver to the claimant a written decision on the claim promptly, but
not later than 60 days after the receipt of the claimant's request for
review, except that if there are special circumstances which require an
extension of time for processing, the aforesaid 60-day period may be
extended to 120 days by written notice delivered to the claimant prior
to the expiration of the initial 60-day period. Such decision shall (i)
be written in a manner calculated to be understood by the claimant,
(ii) include specific reasons for the decision, and (iii) contain
specific references to the pertinent plan provisions upon which the
decision is based.
ARTICLE XX
AMENDMENT AND TERMINATION
20.01 AMENDMENT OF PLAN - The right is reserved to the employer to amend its
plan at any time and from time to time and all parties or any person
claiming any interest hereunder shall be bound thereby; except no
person having an already vested interest in such plan shall be deprived
of any interest already existing nor have such interest adversely
affected. No such amendment shall have the effect of vesting in the
Employer any right, title or interest to any Policy, group annuity
contract or funds held under the Trust. The decision of the Employer
shall be binding upon the Participants and all other persons and
parties interested, as to whether or not any amendment does deprive a
Participant or any other person or adversely affects such interest. The
consent of the Trustee shall not be necessary to any Plan amendment
unless in his opinion his duties or liabilities have been increased. No
amendment to the Adoption Agreement shall be made or shall be valid if
it would result in causing the Employer's Plan to become disqualified
under the controlling provisions of the Internal Revenue
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Code or any its applicable Regulations or applicable and controlling
rulings of the Secretary of the Treasury or his delegate, or under
final decisions of any Federal Court. Participants shall be notified of
any Plan amendments. No such amendment shall affect any other Employer
who had adopted this Plan.
No amendment to the Plan shall decrease a Participant's Account balance
or eliminate an optional form of distribution. Furthermore, no
amendment to the Plan shall have the affect of decreasing a
Participant's vested interest determined without regard to such
amendment as of the later of the date such amendment is adopted or the
date it becomes effective.
An adopting Employer may amend the Plan by adding overriding plan
language to the Adoption Agreement where such language is necessary to
satisfy Sections 415 or 416 of the Internal Revenue Code because of the
required aggregation of multiple plans under these Sections.
Except for (i) changes to the choice of options in the Adoption
Agreement or (ii) amendments stated in the Adoption Agreement which
allow the plan to satisfy Section 415 of the Internal revenue Code or
to avoid duplication of minimums under section 416 of the Code because
of the required aggregation of multiple plans, if the adopting Employer
amends the Plan or nonelective portions of the Adoption Agreement, it
will no longer participate in the master or prototype plan, but will be
considered to have an individually designed plan.
In the case of any merger, consolidation with or transfer of assets or
liabilities by the Employer to another Plan, each Participant in
the Plan on the date of the transaction shall have a benefit in the
surviving Plan (determined as if such Plan were terminated immediately
after the transaction) at least equal to the benefit to which he would
have been entitled to receive immediately prior to the transaction if
the Plan had then terminated. However, this provision shall not be
construed to be a termination or discontinuance of Plan or to be a
guarantee of a specific level of benefits from this Plan.
20.02 AMENDMENT OF PROTOTYPE PLAN AND ADOPTION AGREEMENT - Subject to Section
20.01, State Mutual Life Assurance Company of America may amend this
Prototype Plan and Trust and Adoption Agreement, and, if amended, shall
mail or deliver to each adopting Employer who has registered with State
Mutual a copy of such amendment as it has been approved by the Internal
Revenue Service. Each employer and Trustee shall deemed to have
consented to any such amendment by its original execution of the
Adoption Agreement for this Plan and Trust unless the State Mutual Life
Assurance Company of America is otherwise advised in writing by the
Employer.
20.03 EMPLOYER MAY DISCONTINUE PLAN - The Employer reserves the right at any
time to reduce its annual payments, to partially terminate the Plan or
to terminate the Plan in its entirety. Any such termination or partial
termination of such Plan shall become effective immediately upon
receipt by the Trustee of a written notice from the Employer of such
action.
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In the event of the liquidation of the Employer or the bona fide sale
of the controlling interest thereof, such Employer or its successors or
assigns shall not be obligated to continue this Plan.
In the event of termination of the Plan there shall be a 100% vesting
and nonforfeitability of all rights and benefits under this Trust and
Plan of all affected Participants irrespective of their length of
participation under the Plan. However, the Trust shall remain in
existence, and all of the provisions of the Trust shall remain in force
which are necessary in the sole opinion of the Trustees, other than the
provisions relating to Employer contributions. All of the assets on
hand on the date of termination or discontinuance of contributions
shall be held, administered and distributed by the Trustees in the
manner provided in the Plan, except that a participant shall have a
100% vested and nonforfeitable interest in his Accrued Benefit, subject
to Section 20.05.
Subject to Section 20.05, in the event of Plan termination any other
remaining assets of the Trust Fund shall also be vested in Participants
on a pro rata basis based on their respective account balances (other
than their Tax Deductible Voluntary Contributions and Rollover
accounts) in relation to the aggregate of all such account balances.
In the event of a partial termination of Plan, this section will only
apply to those Participants who are affected by such partial
termination of Plan.
In the event that the Employer shall decide to terminate completely the
Plan and Trust, they shall be terminated as of a date to be specified
in a notice to be delivered to the Trustees. Upon termination of the
Plan and Trust, after payment of all expenses and proportional
adjustment of Participants' accounts to reflect such expenses, fund
profits or losses and reallocations to the date of termination, each
Participant shall be entitled to receive any amounts then credited to
his accounts. The Trustee may make payment of such amounts in cash, in
assets of the fund, or in the form of an immediate or deferred annuity,
whichever the Plan Administrator may direct.
20.04 DISCONTINUANCE OF CONTRIBUTIONS - In the event that the Employer shall
completely discontinue its contributions, the account of each affected
Participant shall be fully vested and nonforfeitable. After a
discontinuance of contributions, Plan benefits shall be payable to
Participants or their Beneficiary upon death, disability, retirement,
termination of employment or termination of Plan in accordance with the
provisions of the Plan applicable upon the occurrence of any such
event.
20.05 RETURN OF EMPLOYER CONTRIBUTIONS UNDER SPECIAL CIRCUMSTANCES -
Notwithstanding any provisions of this Plan and Trust to the
contrary:
(a) Any contributions made by the Employer because of a mistake of
fact must be returned to the Employer within one year of the
contributions.
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(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Internal Revenue Code, any contribution made incident to that
initial qualification by the Employer must be returned to the
Employer within one year after date the initial qualification
is denied, but only if the application for the qualification
is made 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 as the Secretary of the Treasury
may prescribe.
ARTICLE XXI
MISCELLANEOUS
21.01 PROTECTION OF EMPLOYEE INTEREST - To the extent permitted by law, none
of the benefits, proceeds, payments, or amounts held or paid by the
Trustee or Insurer under the terms of this Trust shall be subject to
the claims of creditors of Participants or beneficiaries of this Trust.
Wherever possible, any Policy, group annuity contract or certificate
providing for the payment or retirement benefits to the Plan
Participants shall contain a provision which shall substantially
provide that such proceeds shall be free from claims of creditors of
the annuitant, payee or beneficiary under such Policy, contract or
certificate to the extent permitted by the law of the state having
jurisdiction over the proceeds of such contract or certificate.
If any Participant shall attempt to alienate or assign his interest
provided by the Trust, the Trustee shall take such steps as it deems
necessary to preserve such interest for the benefit of the Participant
or his Beneficiary.
This provision does not preclude the Trustee from complying with a
qualified domestic relations order, as defined in Code Section 414(p)
or any domestic relations order entered before January 1, 1985.
21.02 MEANING OF WORDS USED IN PLAN AND TRUST - Wherever any words are used
herein in the masculine gender, they shall be construed as though they
were also used in the feminine or neuter gender in all cases where they
would so apply. Wherever any words are used herein in the singular
form, they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
Titles used herein are for general information only and this Plan and
Trust is not to be construed by reference thereto.
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