EXHIBIT 4.1
ADOPTION AGREEMENT
PROFIT SHARING 401(k) PLAN
Name of Employer: ▇▇▇ Research Corporation
Name of Plan: Savings Plus Plan, ▇▇▇ Research 401(k)
Former Name of Plan: ▇▇▇ Research 401(k) Savings Plan
Name of Trust: Savings Plus Plan, ▇▇▇ Research 401(k)
Name of Trustee(s): Pacific Trust Company, currently Comerica Bank-California
Appointed Plan Administrator: ▇▇▇ Research Corporation
Effective Date of Plan: July 1, 1985
Effective Date of Amendment-in-Entirety: January 1, 1989
EFFECTIVE PROVISIONS
The following Elective Provisions of this Profit Sharing Plan are hereby
adopted:
2.08 "Compensation" shall mean all W-2 wages or salary for the Plan Year
paid by the Employer for services, as reportable on the Employee's
Federal Income Tax Withholding Statement (Form W-2) excluding
overtime and bonuses, and elective deferrals with respect to
employment with the Employer: (i) under a qualified cash or deferred
arrangement described in Section 401(k) of the Code; (ii) to a tax
sheltered annuity described in Section 403(b) of the Code; or
(iii) to a plan qualified under Section 402(h) of the Code.
2.12 "Eligible Employee" means any employee of the Employer including any
corporation, trade or business acquired directly or indirectly by the
Company, who completes fifteen (15) days of service.
2.17 "Entry Date" means January 1, April 1, July 1 or October 1 of the
Plan Year following completion of eligibility in Section 2.12.
2.22 "Hours of Service" shall mean the Hour of Service method as defined
in 2.22(a)(i).
2.30 "Normal Retirement Age" shall mean attainment of age sixty-five.
"Early Retirement Age" shall mean attainment of age fifty-five.
2.37 "Plan Year" shall mean the twelve month period ending on December 31,
which shall also be the "Limitation Year" for this Plan.
2.46 "Year of Service" method shall mean the twelve (12) consecutive month
period as defined under the Hour of Service method Section 2.46(a).
3.04(c) Costs and Expenses will be paid by the Employer.
5.01(a) "Salary Deferral Contributions" shall not be less than 2% nor more
than 20% of compensation.
5.01(b) "Matching Contributions" shall be discretionary and be allocated
according to the formula below, effective January 1, 1994. Matching
contributions shall be allocated as follows: 50% of the first 6% of
Salary Deferred Contribution and shall be credited to each
participant on a biweekly basis.
5.01(d) "Profit Sharing Contributions" shall not apply.
5.02(a) "Voluntary Employee Contributions" shall not apply.
5.02(b) Rollover Contributions shall apply.
6.01(b) "Nonelective Contributions" shall be determined by the Employer and
shall be allocated in an equal amount to each eligible Participant
who is still employed at the end of the Plan Year.
6.01(e) Forfeitures shall not apply.
6.02 Minimum Allocation shall be made under this Plan.
6.04(e) Limitation Years shall mean the Employers' fiscal year ending
December 31.
7.03(c) Vesting Schedules
All Salary Deferral Contributions, Employer Matching Contributions,
and Nonelective Contributions are 100% vested at all times.
8.04 Inservice Withdrawals (Employer Contributions) shall not be
permitted.
8.10 Loan to Participants shall be permitted.
10.02 Participant Directed Investments shall be permitted on a limited
basis as described in Section 10.02(c).
By the execution of this Adoption Agreement, the Employer hereby adopts
the Plan and Trust which, together with this Adoption Agreement, shall be read
and interpreted as one instrument.
Employer: ▇▇▇ Research Corporation
12/16/94 /s/ ▇▇▇▇ ▇▇▇▇▇
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Dated By
The undersigned Trustee hereby accepts appointment as Trustee of said
trust funds.
Trustee: Pacific Trust Company
Currently Comerica Bank-California
12/21/94 /s/ [Signature Illegible]
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Dated By
AMENDMENT TO THE
SAVING PLUS PLAN, ▇▇▇ RESEARCH 401(K)
Article VII, Section 7.2 of the Saving Plus Plan, ▇▇▇ Research 401(k) ("the
Plan") is hereby amended by adding a new paragraph that reads as follows:
"With respect to distributions under the Plan made in calendar years
beginning on or after January 1, 2001, the Plan will apply the minimum
distribution requirements of Section 401(a)(9) of the Internal Revenue
code in accordance with the regulations under Section 401(a)(9) that
were proposed on January 17, 2001, notwithstanding any provision of the
Plan to the contrary. This Amendment shall continue in effect until the
end of the last calendar year beginning before the effective date of
final regulations under Section 401(a)(9) or such other date specified
in guidance published by the Internal Revenue Service."
This Amendment is adopted effective as of January 1, 2001.
IN WITNESS WHEREOF, this Amendment has been executed this 21 day of December,
2001.
Signed and delivered in the presence of:
▇▇▇ RESEARCH CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
NAME: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
TITLE: Sr. Benefits Mgr.
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AMENDMENT NUMBER 2
TO THE
▇▇▇ RESEARCH
401(K) SAVINGS PLAN
Under the provisions of Article XI of the ▇▇▇ Research 401(k) Savings Plan,
amendment-in-entirety effective July 1, 1989, the plan is hereby amended
effective April 1, 1992 as follows:
1. Section 2.14 of the Adoption Agreement is hereby amended by its deletion
and substitution of the following:
2.14 "Eligible Employee" means any Employee of the Employer who has
completed fifteen (15) days of service.
Except as hereby amended, the ▇▇▇ Research 401(k) Savings Plan and Trust
and all provisions thereof not in conflict with this amendment shall remain in
full force and effect.
IN WITNESS WHEREOF, the Company and the Trustee have caused this amendment
to be executed by their respective authorized officers on the 20th day of April,
1992.
▇▇▇ RESEARCH CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
PRESIDENT
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
SECRETARY
TRUSTEE:
by ______________________
by _____________________
AMENDMENT NUMBER 1
TO THE
SAVINGS PLUS PLAN, ▇▇▇ RESEARCH 401(K)
Under the provisions of Article IX of the SAVINGS PLUS PLAN, ▇▇▇
RESEARCH 401(k) amendment-in-entirety effective January 1, 1989, the Plan is
hereby amended effective January 1, 1996 as follows:
Section 5.01 under the Adoption Agreement is hereby amended by the
deletion of "20%" and the substitution of "15%."
Except as hereby amended, the SAVINGS PLUS PLAN, ▇▇▇ RESEARCH 401(k) and
all provisions thereof not in conflict with this amendment shall remain in full
force and effect.
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PROFIT SHARING 401(K) PLAN
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PROFIT SHARING 401(K) PLAN
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The Employer named in the Adoption Agreement hereby establishes a Profit Sharing
401(k) Plan for the benefit of its Employees who are eligible to be Participants
as defined below. If the Employer named in the Adoption Agreement designates
that the adoption of this Plan is an amendment to a previously adopted Plan,
this Plan shall be an amendment and restatement in its entirety of the prior
plan.
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ARTICLE I. -- ESTABLISHMENT OF THE PLAN
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1.01 ADOPTION:
The Employer adopts this Plan by stating the attached Adoption Agreement as a
self-employed individual, as the sole proprietor of an unincorporated business,
or by causing a partner authorized to sign on behalf of all partners of the
partnership or an officer authorized to sign on behalf of the corporation to
sign.
1.02 PURPOSE:
The Plan and its related Trust Agreement are intended to permit eligible
Employees of the Employer to share in the Employer's profits and to permit a
Participant to defer a portion of his or her Compensation for his or her
retirement.
1.03 QUALIFICATION:
The Plan and the Trust are intended to qualify under Section 401(a) and 401(k)
and be exempt from tax under Section 501(a) of the Internal Revenue Code of
1986, as amended, or any sections of similar substance of any statute which
supersedes or amends the Internal Revenue Code of 1986.
1.04 EXCLUSIVE BENEFIT:
Except as otherwise provided herein, it shall be impossible for any Plan assets
to be used for or diverted or purposes other than the exclusive benefit of the
Plan Participants and their Beneficiaries or the defrayal of reasonable expenses
of administering the Plan and the Trust.
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ARTICLE II. -- DEFINITIONS
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2.01 ACCOUNT OR ACCOUNTS:
The accounts established and maintained under the Plan for each Participant with
respect to his or her interest in the Trust, including, as appropriate, the
Participant's Employer Contributions Account. Salary Deferral Account, Employee
Contributions Account, and Rollover Contributions Account.
2.02 ADJUSTMENT FACTOR:
The cost of living adjustment factor prescribed by the Secretary of the Treasury
under section 415(d) of the Code for years beginning after 1937, as applied to
such items and in such manner as the Secretary shall provide.
2.03 ADOPTION AGREEMENT:
The document executed by the Employer and Trustee in which the Employer adopts
the Plan and Trust and makes certain elections with respect to the terms and
conditions of the Plan and Trust
2.04 AFFILIATED EMPLOYER:
The Employer and any corporation which is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes the
Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in section 414(c) of the Code) with the Employer; any
organization (whether or not incorporated) which is a member of an affiliated
service group (as defined in section 414(m) of the Code) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to regulations under section 414(c) of the Code.
2.05 ANNIVERSARY DATE:
The last day of the Plan Year.
2.06 BENEFICIARY:
The person to receive benefits by reason of a Participant's death, as determined
in accordance with Section 9.01 of Article IX.
2.07 CODE:
The Internal Revenue Code of 1986, as amended, or any law which supersedes it.
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2.08 COMPENSATION:
The compensation specified in the Adoption Agreement and paid to the Participant
during the taxable year ending with or within the Plan Year which is required to
be reported as wages on the Participant's Form W-2; and, if the provisions of
the Plan so provide, the compensation which is not currently includible in the
Participant's gross income by reason of application of sections 125,402(a)(8),
402(h)(1)(B), or 403(b) of the Code. Such compensation shall be limited to
$200,000 annually for each Participant, which limit shall be adjusted at the
same time an in the same manner as the dollar limit for the defined benefit
plans adjusted under Section 415(d) of the Code. In determining the compensation
of an employee, the rules of section 414(q)(6) shall apply, except that in
applying such rules, the term "family" shall include only the spouse of the
employee and any lineal descendants of the employee who have not attained age 19
before the close of the year. For any Sell-Employed Individual covered under the
Plan, Compensation means Earned Income. In the event that the Plan is Top-Heavy,
the annual Compensation (or Earned Income) of each Participant taken into
account under this Plan shall not exceed the first 5200,000 of Compensation, as
such amount is adjusted by the Secretary of Treasury in accordance with the
provisions of Section 416(d)(2) of the Code. For purposes of applying the
$200,000 limit m compensation a highly compensated employee's family unit as
defined in section 2.21(6)(B) will be treated as a single employee with one
compensation and the $5200,000 limit shall be allocated among the members of the
family unit in proportion to each member's compensation (except for the purpose
of determining compensation below the plan's integration level), if applicable.
For plan years beginning after December 31, 1993, the $200,000 limit above shall
be changed to $150,000.
2.09 DISABILITY:
The inability to engage in any substantial gainfully activity for the Employer
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or be of long-continued and indefinite duration.
Such disability must be supported by medical evidence approved by the Employer,
pursuant to uniform and nondiscriminatory rules applied to all Participants
similarly situated and pursuant to such rules and regulations as may be
promulgated from time to time by the Secretary of the Treasury, or his or her
delegate.
2.10 EARNED INCOME:
Net earnings from sell-employment in the trade or business with respect to which
the Plan is established for which personal services of the Employee are a
material income-producing factor. Net earnings will be determined in accordance
with the provisions of Section 401(c)(2) of the Code, which provides, in part,
that net earnings shall be determined without regard to items not included in
gross income and the deductions
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allocable to such items, and that net earnings shall be reduced by contributions
by the Employer to this Plan and any other plan maintained by the Employer to
the extent that such contributions are deductible under Section 404 of the Code;
provided, however, that for purposes of determining the Salary Deferral
Contributions to the Plan for any Self-Employed Individual, net earnings shall
include the amount of the Salary Deferral Contribution made on behalf of such
Sell-Employed Individual.
2.11 EFFECTIVE DATE:
The date selected in the Adoption Agreement.
2.12 ELIGIBLE EMPLOYEE:
Any Employee of the Employer who is not explicitly excluded under the Adoption
Agreement.
2.13 EMPLOYEE:
An individual who renders service to the Employer, and whose compensation is
subject to the withholding of income tax by the Employer. The term "Employee"
shall also include Self-Employed Individuals, Owner-Employees and five-Percent
Owners, and any individuals considered to be leased employees as and to the
extent required under Section 414(n) of the Code. Notwithstanding the foregoing,
if such leased employees constitute less than twenty percent (20%) of the
Employer's nonhighly compensated work force within the meaning of section
414(n)(l)(C)(ii) of the Code, the term Employee" shall not include those leased
employees covered by a plan described in section 414(n)(5) of the Code unless
otherwise provided by this Plan.
2.14 EMPLOYEE CONTRIBUTIONS:
Contributions to the Plan made by a Participant during the Plan Year. The term
"Employee Contributions" shall not include Salary Deferral Contributions.
2.15 EMPLOYER:
The Employer named in the Adoption Agreement or any successor thereto assuming
the liabilities hereunder and any predecessor employer named in the Adoption
Agreement; any other organization which has adopted the Plan with the consent of
such Employer; and any successor of such Employer.
2.16 EMPLOYER DEFERRAL CONTRIBUTION:
The qualified nonelective contribution taken into account under the terms of the
Plan in computing the Actual Deferral Percentage for purposes of determining the
Average Actual Deferral Percentage and the Salary Deferral Contribution
Limitation.
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2.17 ENTRY DATE:
The dates specified in the Adoption Agreement.
2.18 ERISA:
The Employee Retirement Income Security Act of 1974, as amended.
2.19 FAMILY MEMBER:
Any individual described in section 414(q)(6)(B) of the Code.
2.20 FIVE-PERCENT OWNER
If the Employer is not a corporation, an individual who owns more than 5 percent
of the capital or profits interest in the Employer if the Employer is a
corporation, an individual who owns (or is considered as owning, within the
meaning of code Section 318) more than 5 percent of the outstanding stock of the
corporation or stock possessing more than 5 percent of the total combined voting
power of all stock of the corporation.
2.21 HIGHLY COMPENSATED EMPLOYEE:
(1) An Employee who performs service during the Determination Year
and is described in one or more of the following groups during
the year or the preceding year:
(A) was at any time a 5-percent owner, as defined in Section
416(i)(1)(iii),
(B) received Compensation from the Employer in excess of
$75,000,
(C) received compensation from the Employer in excess of
$50,000 and was in the top-paid group of Employees for
such year, or
(D) was at any time an officer and received compensation
greater than 50 percent of the amount in effect under
Section 415(c)(1)(A) for such year.
For purposes of the above:
1. The Determination Year is the Plan Year for which the
determination of who is highly compensated is being
made.
2. The preceding year is the twelve-month period
immediately preceding the Determination Year, or if the
employer elects, the calendar year ending with or within
the Determination Year.
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3. The top-paid group consists of the top 20% of employees
ranked m the basis of compensation received during the
year. For purposes of determining the number of
employees in the top-paid group, employees described in
section 414(q)(S) and Q & A 9(b) of section 1.414(q)-IT
of the regulations are excluded.
4. The number of officers is limited to 50 (or, if lesser,
the greater of 3 employees or 10% of employees).
5. When no officer has compensation in excess of 150% of
the section 415(c) limit, the highest paid officer is
treated as highly compensated.
6. Compensation is compensation within the meaning of
section 415(c)(3) including elective or salary reduction
contributions to a cafeteria plan, cash or deferred
arrangement or tax-sheltered annuity.
7. Employers aggregated under section 414(c), (in), or
(0) are treated as a single employer.
For purposes of the requirements of IRC section 401(m), a highly
compensated employee who is either a 5-percent owner or one of
the ten most highly compensated employees is subject to the
family aggregation rules of section 414(q)(6). The definition of
family member as the spouse and the lineal ascendants and
descendants (and spouses of such ascendants and descendants) of
any employee or former employee. The definition of a highly
compensated employee, a former employee who had a separation
year prior to the determination year and who was a highly
compensated active employee for either (1) such employee's
separation year or (2) any determination year ending on or after
the employee's 55th birthday. Generally, a separation year is
the determination year the employee separates from service.
For purposes of the actual deferral :percentage test of section
401(k) and the determination of excess contributions, as all
compensation, other than qualified or previously qualified
deferred compensation, that is currently includible in gross
income; and, for a self-employed individual, as earned income
(within the meaning of section 401(c)(1)) derived from the
individual's trade or business. The employer shall include in
this definition elective deferrals provided this election is
made m a uniform and consistent basis with respect to all
employees and all plans of the employer.
(2) In the case of the year for which the relevant determination is
being made, an Employee not described in subparagraph (B), (C),
or (D) of
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paragraph (1) for the preceding year (without regard to this
paragraph shall not be treated as described in subparagraph
(B), (C), or (D) of paragraph (1) unless such Employee is a
member of the group consisting of the 100 Employees paid the
greatest compensation during the year for which such
determination is being made.
For the purposes of the definition of Highly Compensated
Employees the determination year is the plan year for which the
determination of who is highly compensated is being made. The
preceding year is the twelve-month period immediately preceding
the determination year, or, if the Employer elects, the calendar
year ending with or within the determination year.
(3) 5-PERCENT OWNER -- An Employee shall be treated as a 5-percent
owner for any year if at any time during such year such Employee
was a 5-percent owner (as defined in Section 416(i)(1) of the
Employer.
(4) TOP-PAID GROUP -- An Employee is n the top-paid group of
employees for any year if such employee is in the group
consisting of the top 20 percent of the employees when ranked on
the basis of Compensation paid during such year.
(5) SPECIAL RULES FOR TREATMENT OF OFFICERS. --
(A) Not more than 50 officers taken into account. -- For
purposes of paragraph (1)(D), cc more than 50 Employees
(or d lesser, the greater of 3 Employees or 10 percent
of the Employees) shall be treated as officers.
(B) At least 1 officer taken into account. -- If for any
year no officer of the Employer is described in
paragraph (PD), the highest paid officer the Employer
for such year shall be treated as described in such
paragraph.
(6) TREATMENT OF CERTAIN FAMILY MEMBERS. --
(A) In general. -- If any individual is a member of the
family of a 5-percent owner or of a Highly Compensated
Employee in the group consisting of the 10 Highly
Compensated Employees paid the greatest compensation
during the year, then --
(i) such individual shall not be considered a separate
Employee, and
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(ii) any compensation paid to such individual (and any
applicable contribution or benefit on behalf of such
individual) shall be treated as if it were paid to (or
on behalf of) the 5-percent owner or Highly Compensated
Employee.
(B) Family.--For purposes of subparagraph (A), the term
"family" means, with respect to any Employee, such
Employee's spouse and lineal ascendants or descendants
and the spouses of such lineal ascendants or
descendants.
(7) COMPENSATION. -- For purposes of this subsection --
(A) In general- -- The term "compensation" means
compensation within the meaning of Section 415(c)(3).
(B) Certain provisions not taken into account. -- The
determination under subparagraph (a) shall be made --
(i) without regard to Sections 125, 402(a)(8), and
402(h)(1)(B), and
(ii) in the case of employer contributions made pursuant
to a salary reduction agreement, without regard to
Section 403(b).
(8) EXCLUDED EMPLOYEES -- For purposes of subsection (r) and for
purposes of determining the number of Employees in the top-paid
group under paragraph (4), the following employees shall be
excluded --
(A) Employees who have not completed 6 months of service.
(B) Employees who normally work less than 17 1/2 hours per
week,
(C) Employees who normally work during not more than 6
months during any year,
(D) Employees who have not attained age 21,
(E) except to the extent provided in regulations, employees
who are included in a unit of employees covered by an
agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee
representatives and the employer, and
(F) Employees who are nonresident aliens and who receive no
earned income (within the meaning of Section 91l(d)(2))
from the employer
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which constitutes income from sources within the United
States (within the meaning of Section 861(a)(3)).
The Employer may elect to apply subparagraph (A), (B),
(C), or (D) by substituting shorter period of service,
smaller number of hours or months, or lower age for the
period of service, number of hours or months, or age (as
the case may be) than that specified in such
subparagraph.
(9) FORMER EMPLOYEES. -- A former Employee shall be treated
as a highly compensated employee if --
(A) such Employee was a Highly Compensated Employee
when such employee separated from service, or
(B) such Employee was a Highly Compensated Employee
at any time after attaining age 55.
2.22 HOURS OF SERVICE:
Hours of Service shall be determined on the basis of the method selected in the
Adoption Agreement. Each Employee or Participant shall be credited with Hours of
Service as follows:
(a) Each hour for which an Employee is paid, or entitled to payment,
by the Employer for the performance of duties for the Employer,
which hours shall be credited to the Employee for the
computation period or periods 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 (whether or not the employment relationship
has terminated) due to vacation, holiday, illness, incapacity
(including disability) layoff, jury duty, military duty or leave
of absence; provided, however, that 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 of Service under this paragraph shall
be calculated and credited pursuant to section 2530.200b-2(b) or
the Department of Labor Regulations which are incorporated
herein by this reference;
(c) Each hour for which back pay, without regard to the 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 of service shall be credited to the
Employee for the computation period or periods to which the
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award or agreement pertains, rather than to the computation
period in which the award, agreement or payment is made;
(d) Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as
service for the Employer;
(e) Where the Employer is a member of an affiliated service group
(within the meaning of Section 414(m) of the Code), a controlled
group of corporations (within the meaning of Section 414(b) of
the Code), or a group of trades or businesses under common
control (within the meaning of Section 414(c) of the Code),
Hours of service with such affiliated service group, controlled
group of corporations, or group of trades or businesses under
common control shall be treated as Hours of Service for the
Employer;
(f) Hours of Service will be credited for service with the Employer
by any individual considered an Employee under Section 414(n) of
the Code; and
(g) For Plan Years beginning on or after January 1, 1985, for
purposes of determining whether a One Year Break in Service has
occurred, an Employee who is absent from work for any period (i)
by reason of the pregnancy of such Employee, (ii) by reason of
the birth of a child of such Employee, (iii) by reason of the
placement of a child with such Employee in connection with the
adoption of such child by such Employee, or (iv) for purposes of
caring for such child for a period beginning immediately after
such birth or placement, shall receive credit for (i) each hour
for which such Employee would otherwise normally have beer,
credited, but for such absence, or (ii) eight hours per day in
any case in which the Plan is unable to determine the exact
number of hours of service; provided, however, that no more than
501 Hours of Service shall be credited under this paragraph by
reason of such absence. Hours of Service under this paragraph
shall be credited only (i) in the Year in which the absence from
work begins, if the Employee would be prevented from incurring a
One Year Break in Service in such Year solely because the period
of absence is treated as Hours of Service, or (ii) in the
immediately following Year.
Notwithstanding the foregoing, in order to receive credit for
Hours of Service as provided in this paragraph, the Employer may
request, pursuant to uniform and nondiscriminatory rules it may
adopt, the Employee to furnish such information as the Employer
may deem appropriate to establish that the absence from work is
for the above reasons and the number of days for which there was
such an absence.
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2.23 INACTIVE PARTICIPANT:
Any Employee or former Employee who has ceased to be a Participant and on whose
behalf an account is maintained under the Plan.
2.24 INSURANCE COMPANY:
A legal reserve life insurance company selected by the Employer.
2.25 MATCHING CONTRIBUTION:
Any contribution to the Plan made by the Employer for the Plan Year and
allocated to a Participant's account by reason of the Participant's Employee
Contributions or Salary Deferral Contributions.
2.26 NAMED FIDUCIARY:
The Employer.
2.27 NET PROFITS:
The current and accumulated earnings of the Employer before federal and state
taxes and contributions to this and any other qualified plan.
2.28 NON-HIGHLY COMPENSATED EMPLOYEE:
An Employee of the Employer who is neither a Highly Compensated Employee nor a
Family Member.
2.29 NONTRANSFERABLE CONTRACT:
An Annuity Contract providing that the contract or the benefits accruing
thereunder shall not be transferable, sold, assigned, discounted or pledged as
security for any purpose.
2.30 NORMAL RETIREMENT AGE:
The age specified in the Adoption Agreement.
2.31 NORMAL RETIREMENT DATE:
The first day of the month following the Participant's attaining Normal
Retirement Age.
2.32 ONE YEAR BREAK IN SERVICE:
A One Year Break in Service shall be determined as follows:
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(a) If the hours of service method of determining service is
selected by the in the Employer Adoption Agreement, a One Year
Break in service shall mean the 12-consecutive month period used
in determining Years of Service during which an Employee does
not complete more than 500 Hours of Service.
(b) If the elapsed time method of determining service is selected by
the Employer in the Adoption Agreement, a One Year Break in
Service shall mean any Period of Severance of a least
12-consecutive months, during which the Employee does not
perform an Hour of Service for the Employer. Notwithstanding the
foregoing sentence, for Plan Years beginning on or after January
1, 1985, the 12-consecutive month period beginning on the first
anniversary of the first date of an Employee's absence from work
for maternity or paternity reasons shall not constitute a One
Year Break in Service. For purposes of the foregoing sentence,
an absence (i) by reason of the pregnancy of such Employee, (ii)
by reason of the birth of a child of such Employee, (iii) by
reason of the placement of a child with such Employee in
connection with the adoption of such child by the Employer, or
(iv) for purposes of caring for such child for a period
beginning immediately after such birth or placement.
Notwithstanding the foregoing, in order to receive credit for
maternity or paternity leave as provided in this paragraph, the
Employer may request, pursuant to uniform and nondiscriminatory
rules it may adopt, the Employee to furnish such information as
the Employer may deem appropriate to establish that the absence
from work is for the reasons described in the preceding
sentence.
2.33 OWNER-EMPLOYEE:
An Employee who is the sole proprietor of, or a partner owning more than 10% of
either a capital interest or a profits interest in, the business of the
Employer.
2.34 PARTICIPANT:
Each Eligible Employee who has become a Participant in accordance with the rules
set forth in Article IV. A leased employee within the meaning of section
414(n)(2) of the Code shall become a Participant in and accrue benefits under
the Plan based upon service as a leased employee as provided hereunder.
2.35 PERIOD OF SEVERANCE:
A continuous period of time during which an Employee is not employed by the
Employer. Such period shall begin on the earlier of the date the Employee
retires, quits, dies or is discharged, or the 12-month anniversary of the date
on which the Employee is otherwise absence from service.
12
2.36 PLAN:
The plan established by the Employer by the execution of the Adoption Agreement.
2.37 PLAN YEAR:
The 12-consecutive month period adopted by the Employer for reporting its
federal income tax, as set forth in the Adoption Agreement as the Employer's
taxable year.
2.38 QUALIFIED NONELECTIVE CONTRIBUTIONS:
Contributions (other than Matching Contributions) made by the Employer and
allocated to Participant's accounts that the Participant may not elect to
receive in cash until distributed from the Plan; that are fully (100%) vested
and nonforfeitable when made; and that are not distributable under the terms of
the Plait to Participants or their Beneficiaries earlier than the first to occur
of the following:
(a) separation from service, death, or disability of the
Participant;
(b) attainment of the age 59-1/2 by the Participant;
(c) termination of the Plan without establishment of a successor
plan;
(d) the date of distribution of amounts attributable to Salary
Deferral Contributions or Qualified Nonelective Contributions
upon Plan termination, sale of assets or sale of a subsidiary,
as provided in Section 8.12 hereunder;
2.39 SALARY DEFERRAL CONTRIBUTIONS:
Contributions made to the Plan during the Plan Year by the Employer, at the
election of the Participant, in lieu of cash compensation, including
contributions made pursuant to a salary reduction agreement.
2.40 SELF-EMPLOYED INDIVIDUAL:
Any individual who has Earned Income for the taxable year from the trade or
business for which the Plan is established, or who would have had Earned Income
but for the fact that the trade or business had no Net Profits for the taxable
year.
2.41 TOP-HEAVY:
A plan shall be top-Heavy for any Plan Year beginning after December 31, 1983,
if the top-heavy ratio exceeds 60%. A plan shall be Super Top-Heavy if the
top-heavy ratio exceeds 90%. The top-heavy ratio is the ratio, determined as of
the Determination Date,
13
of (i) the aggregate of the accounts of all Key Employees, to (ii) the aggregate
of the accounts of all Employees under the Plan, as computed in accordance with
the provisions of Code Section 416(g)(4)(E), Section 416(g)(3), Section
416(g)(4)(A), Section 416(g)(4)(B) and Treasury Regulations section 1.416-1,
T-24. In determining whether this Plan is Top-Heavy for any Plan Year, this Plan
and all other plans of the Employer which are required to be aggregated with the
Plan will be Top-Heavy only if the Required Aggregation Group for such Plan Year
is a top-heavy group, as defined in Section 416(g)(2)(B) of the Code. This Plan
shall not be Top-Heavy if it is part of a Required or Permissive Aggregation
Group which is not a top-heavy group for such Plan Year.
Solely for purposes of determining if the Plan, or any other plan included in a
Required Aggregation Group of which this Plan is a part, is top-heavy, the
accrued benefit of an Employee other than a Key Employee shall be determined
under the method, if any, that uniformly applies for accrual purposes under all
plans maintained by the Affiliated Employers, or if there is no such method, as
if such benefits accrued not more rapidly than the slowest accrual rate
permitted under the fractional accrual rate of section 411(b)(1)(C) of the Code.
For purposes of the foregoing, the following terms shall have the following
meanings:
(a) COMPENSATION:
For all top-heavy purposes, Compensation shall have the meaning set
forth in Section 6.04(e)(iii), subject to the limitation
provided in Section 2.10. For the purpose of determining whether
an employee is a Key employee, the compensation to be used is as
defined in IRS Code Section 415(c)(3) but including employer
contributions made pursuant to a salary reduction agreement.
(b) DETERMINATION DATE:
With respect to any Plan Year, the Determination Date shall be
(i) the last day of the preceding Plan Year, or (ii), in the
case of the first Plan Year of the Plan, the last day of such
Plan Year.
(c) KEY EMPLOYEE:
In accordance with the rules of Code Section 416(i) and the
Regulations thereunder, any Employee or former Employee (and the
beneficiaries of such Employee) who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is or was:
14
(i) An officer of the Employer having an annual Compensation
greater than 50 percent of the amount of the dollar
limitation of the Maximum Permissible Amount, as set
forth in Section 6.04(e)(ix)(A) of Article VI;
(ii) One of the ten Employees having annual compensation from
the employer of more than the limitation in effect under
IRS Code Section 415(c)(1)(A) and owning (or considered
as owning within the meaning of Section 318) both more
than a 1/2 percent interest as well as one of the ten
largest interests in the employer;
(iii) A Five-Percent Owner of the Employer;
(iv) A One-Percent Owner of the Employer having an annual
Compensation from the Employer of more than $150,000.
(d) PERMISSIVE AGGREGATION GROUP:
Any group of plans not required to be aggregated in a Required
Aggregation Group, if the group will continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) REQUIRED AGGREGATION GROUP:
(i) Each plan of the Employer in which a Key Employee is a
Participant, or (ii) each other plan of the Employer which
enables any plan described in clause (i) to meet the
requirements of Code Sections 401(a)(4) and 410.
2.42 TRUST:
The trust established by the Employer in connection with the adoption of this
Plan by the execution of the Adoption Agreement. The terms of the Trust are set
forth, attached hereto, which is incorporated herein as if set forth in full and
made a part of the Plan by this reference.
2.43 TRUST FUND:
The Trust Fund established pursuant to this Plan and administered by the
Trustee.
2.44 TRUSTEE:
Such persons or persons, including any successor or successors thereto,
designated in the Adoption Agreement, to act as Trustee of the Trust and to hold
the Trust assets in accordance with the Trust and Article Ill hereof.
15
2.45 VALUATION DATE:
The last day of the Plan Year and any other date on which the assets of the Plan
are valued.
2.46 YEAR OF SERVICE:
(a) (i) If the hours of service method of determining service is
selected by the Employer in the Adoption Agreement. Year of
Service shall mean a 12-consecutive month period, during which
an Employee or Participant completes at least 1,000 Hours of
Service, commencing on the date the Employee first performs an
Hour of Service for the Employer and any 12-consecutive month
period commencing on an anniversary date thereof
(ii) If the elapsed time method of determining service is
selected by the Employer in the Adoption Agreement, Years of
Service shall mean a 12-consecutive month period, during which
the Employee is employed by the Employer, commencing on the date
the Employee first performs an Hour of Service for the Employer
and each anniversary date thereof, including any Period of
Severance of less than 12- consecutive months, and ending on the
date a One Year Break in service begins. If the Employer
maintains the plan of a predecessor employer, Years of Service
for such predecessor employer shall be treated as Years of
Service for the Employer. If the Employer is a member of an
affiliated service group (within the meaning of Section 414(m)
of the Code), a controlled group of corporations (within the
meaning of Section 414(b) of the Code), or a group of trades or
businesses under common control (within the meaning of Section
414(c) of the Code), service with such affiliated service group,
controlled group of corporations, or group of trades or
businesses under common control shall be treated as service for
the Employer. Service will be credited for service with the
Employer by any individual considered an Employee under Section
414(n) of the Code to the extent required thereunder. Any
fractional period of a year shall be expressed in terms of days.
(b) For purposes of determining whether and when an Employee becomes
a Participant (the eligibility computation period), the Year of
Service shall commence on the date the Employee first performs
an Hour of Service for the Employer upon employment and
reemployment and any subsequent 12-consecutive month period
commencing on an anniversary date thereof. For all other Plan
purposes, if the Employer has selected the hour of service
method for determining service, the Year of Service shall be the
Plan Year.
(c) For purposes of crediting service, the hour of service method
for crediting service for an Employee shall mean a computation
based upon the actual
16
counting of hours of service during the applicable
12-consecutive month computation period; and the elapsed time
method for crediting service for an Employee shall mean a
computation based upon a reference to the total period of time
which elapses while the Employee is employed with the Employer,
regardless of the number of hours of service completed during
such period. The elapsed time method shall be consistent with
such regulations as the Secretary of Treasury may prescribe.
2.47 NON-KEY EMPLOYEE:
Any Employee who is not a Key Employee, including Employees who are former Key
Employees
17
--------------------------------------------------------------------------------
ARTICLE III. -- ADMINISTRATION
--------------------------------------------------------------------------------
3.01 DUTIES AND RESPONSIBILITIES OF THE EMPLOYER:
The Employer shall administer the Plan, shall be responsible for its operation
in accordance with its terms and shall have sole authority to enforce the Plan
and the Trust for and on behalf of any and all parties interested therein to the
extent that the Employer has not designated, in accordance with Section 3.01(g),
another person or organization to be responsible for its operation and
administration. The Employer shall be the agent for service of process under
this Plan. Without limitation the generality of the foregoing, the Employer
shall:
(a) Establish a funding policy and method which is consistent with
the objectives of the Plan and ERISA;
(b) Determine the amount of the Employer contributions to the Plan
and allocate such contributions among Participants in accordance
with the terms of the Plan;
(c) Determine all questions relating to the eligibility of Employees
to participate in the Plan, the time and manner of payment of
benefits and all questions concerning the administration and
interpretation of the Plan, and such determination, subject to
the provisions of Section 12.05 of Article XII hereof, shall be
conclusive and binding on all Participants and Beneficiaries;
(d) Keep and maintain all records necessary for the administration
of the Plan;
(e) Prepare and file all tax and non-tax returns and forms,
including but not limited to the Plan's annual report, required
by the Code, ERISA and any other federal or state law relating
to qualified employee benefit plans;
(f) Prepare and distribute all notices and information required by
the reporting and disclosure provisions of the Code, ERISA and
any other federal or state law relating to qualified employee
benefit plans;
(g) Have the authority to employ or designate any person or
organization to advise or perform services with respect to the
Employer's responsibilities under the Plan and the Trust and to
allocate to such person or organization all, or a part of, the
responsibility for the operation and administration of the Plan
and the Trust, including the authority to employ an investment
manager or managers to direct the investment of all or a portion
of the Trust Fund, to the extent not so directed by Participants
hereunder, provided such
18
investment manager is a registered investment advisor under the
Investment Adviser's Act of 1940, a bank or an insurance
company, who (i) has the power to manage, acquire, or dispose of
Plan assets, and (ii) acknowledges in writing his or her
fiduciary responsibility to the Plan;
(h) Determine whether a domestic relations order received by the
Plan is a qualified domestic relations order, within the meaning
of Section 414(p) of the Code;
(i) Provide to the recipient of a distribution from the Plan a
written explanation of rollover treatment, pursuant to the rules
of Code Section 402(a)(5), under which such distribution will
not be subject to tax if transferred to an eligible retirement
plan within sixty (60) days after the date on which the
recipient receives the distribution and of the provisions
relating to the tax treatment of a lump san distribution under
Code Section 402(a)(2) and (e); and
3.02 DUTIES AND RESPONSIBILITIES OF SERVICE PROVIDERS:
If the Employer employees or designates, pursuant to section 3.01(g) above, any
person or organization to give advice or render services with respect to its
duties and responsibilities hereunder, no person or organization who is so
employed shall have any discretionary responsibility in the management,
operation or administration of the Plan other than that specifically de -- the
legated by Employer. Compensation of such persons shall be as mutually agreed
from time to time.
3.03 DUTIES AND RESPONSIBILITIES OF THE TRUSTEE:
The Trustee shall hold, invest and reinvest all contributions to the Plan and
the earnings thereon, except to the extent that the authority to manage, control
and invest any part of the assets of the Trust Fund has been delegated to an
investment manager employed by the Employer pursuant to section 3.01(g) or
assumed by the Employer or the Participants in the manner provided in Section
10.02 of Article X. To the extent the assets of the Trust Fund are subject to
the management, control and investment of an investment manager, the Employer,
or a Participant, the Trustee shall retain custody of such assets and shall
follow the directions of the investment manager, the Employer or Participant in
accordance with the provisions of section 10.02 of Article X and the relevant
provisions of the Trust, and shall perform all such duties and responsibilities
in the manner provided in the Trust, and, except as provided herein, shall have
no discretionary authority with respect to the management of the Plan, the
management or disposition of the Plan assets, or the administration of the Plan.
19
3.04 GENERAL:
(a) Anyone may serve in more than one fiduciary capacity with
respect to the Plan and the Trust.
(b) It is intended that each of the fiduciaries with respect to the
Plan and the Trust shall be solely responsible for their own
acts or omissions. Except to the extent imposed by ERISA, cc
fiduciary shall have the duty to question whether any other
fiduciary is fulfilling all of the responsibilities imposed upon
such other fiduciary by ERISA, or by any regulation or ruling
issued thereunder. No fiduciary shall have any liability for a
breach of fiduciary responsibility of another fiduciary with
respect to the Plan and the Trust unless the former fiduciary
participates knowingly in such breach, knowingly undertakes to
conceal such breach, has actual knowledge of such breach and
fails to take reasonable remedial action to remedy said breach,
or through such fiduciary's negligence in performing its own
specific fiduciary responsibilities which give rise to his
status as a fiduciary has enabled such other fiduciary to commit
a breach of the latter's fiduciary responsibilities.
(c) All costs and expenses incurred in the administration of the
Plan and the Trust shall be paid by the Employer, if the
Employer fails to pay such costs within sixty (60) days, or if
the Employer so provides in the Adoption Agreement, the costs
and expenses shall be charged against and deducted from the
Trust fund.
20
--------------------------------------------------------------------------------
ARTICLE IV. -- PARTICIPATION
--------------------------------------------------------------------------------
4.01 ELIGIBLE EMPLOYEES:
All Eligible Employees who have met the eligibility requirements specified in
the Adoption Agreement as of the Effective Date, those Participants referred to
in Section 13.01 of Article XIII and all Employees who are participants in a
plan which is amended by the adoption of this Plan, shall be Participants as of
the Effective Date. Any Employee who does not become a Participant on the
Effective Date shall become a Participant on the Entry Date specified in the
Adoption Agreement coincident with or immediately following the date on which he
or she meets the eligibility requirements specified in the Adoption Agreement.
4.02 EMPLOYEE WHO BECOMES ELIGIBLE EMPLOYEE:
Notwithstanding the foregoing, an Employee who becomes an Eligible Employee
after satisfying the eligibility requirements shall commence participation as of
the date the Employee becomes an Eligible Employee.
4.03 ABSENT ON ENTRY DATE:
Notwithstanding the provisions of Section 4.01 and 4.02, an Eligible Employee
who is not employed by the Employer on the Entry date on which such Eligible
Employee would otherwise enter the Plan shall enter the Plan on the following
date:
(a) If the Employer has selected the elapsed time method of
determining service, retroactively as of the missed Entry Date,
if the Employee returns of employment prior to the commencement
of a Period of Severance;
(b) As of the date the Employee returns to employment as an Eligible
Employee, if the Employee returns at any other time.
4.04 FORMER PARTICIPANT:
A former Participant shall become a Participant immediately upon returning to
the employ of the Employer.
4.05 EMPLOYEE WHO CEASES TO BE ELIGIBLE EMPLOYEE:
A Participant who ceases to be an Eligible Employee but who has not terminated
employment with the Employer shall become a suspended Participant. During the
period of suspension, no Employer contributions shall be credited to the
Participant's Employer Contributions Account which are based on the
Participant's Compensation from and after the date of suspension. However,
amounts previously credited to a Participant's Account
21
shall continue to vest, and the Participant shall be entitled to benefits in
accordance with the other provisions of the Plan throughout the period during
which the Participant is in suspended status. A suspended Participant who
returns to the status of an Eligible Employee without incurring a One-Year Break
in Service shall participate in the Plan immediately upon becoming again an
Eligible Employee. If such suspended Participant incurs a One-Year Break in
Service, participation shall be determined in accordance with the provisions of
Section 4.03.
22
--------------------------------------------------------------------------------
ARTICLE V. -- CONTRIBUTIONS AND FORFEITURES
--------------------------------------------------------------------------------
5.01 EMPLOYER CONTRIBUTIONS:
The Employer shall contribute to the Trust for each Plan Year amounts which
shall be determined as provided below:
(a) Salary Deferral Contributions:
Each Participant may elect to enter into a written salary
deferral agreement with the Employer to defer payment of a
portion of his or her Compensation. The Employer shall pay the
amount designated to be deferred in the salary deferral
agreement to the Trustee on the Participant's behalf to be
credited to the Participant's Salary Deferral Account. The
amount of Compensation which the Participant may elect to defer
shall be expressed as a percentage of the Participant's
Compensation and shall not exceed the percentage set forth in
the Adoption Agreement For all purposes under this Plan other
than the application of the vesting schedule for Employer
contributions, the amount deferred by the Participant shall be
deemed to be a contribution made by the Employer.
The salary deferral agreement shall be in such form as provided
by the Employer and shall apply to each payroll period after the
salary deferral agreement has been completed by the Participant
and submitted to the Employer. The salary deferral agreement may
be amended or terminated for future payroll periods at such
times and in such manner as permitted under nondiscriminatory
rules and procedures established by the Employer.
(b) (i) NONELECTIVE CONTRIBUTIONS:
If the Employer elects in the Adoption Agreement to make
nonelective contributions, the Employer shall contribute to
each Participant's Employer Nonelective Contributions
Account an amount which shall be allocated according to the
Adoption Agreement to all active participants. The amount
shall not exceed the amount set forth in the Adoption
Agreement. Such nonelective contributions shall be
immediately 100% vested.
(ii) MATCHING CONTRIBUTIONS:
if the Employer elects in the Adoption Agreement to make
matching contributions, the Employer shall contribute to
each Participant's Salary Deferral Account or to each
Participant's Employer Contributions Account, as specified
in the Adoption Agreement, an amount for each Participant
which shall equal a percentage of the
23
amount deferred by each such Participant pursuant to the
Participant's salary deferral agreement, as described in
Subsection (a). The amount shall not exceed the amount set
forth in the Adoption Agreement.
(c) ADDITIONAL SALARY DEFERRAL ACCOUNT CONTRIBUTIONS:
The Employer may contribute to the Trust an amount to be
determined by the Employer, which shall be allocated as provided
in Section 6.01(c) of Article VI, to the Salary Deferral
Accounts of those Participants who are not part of - the group
of highly compensated Employees as defined in Section 5.01(e).
(d) PROFIT SHARING CONTRIBUTIONS:
The Employer may contribute to the Trust an additional
discretionary amount to be determined by the Employer, which
shall be allocated as provided in Section 6.01(d) of Article VI,
to the Employer Contributions .Account of each Participant.
(e) LIMITATIONS ON CONTRIBUTIONS:
The amount of the Employer's contributions shall not exceed (i)
the amount which may be allocated to any Participant's Account
because of the application of the limitations provided in
Section 6.04 of Article VI, or (ii) the maximum amount
deductible under the provisions of Section 404 of the Code. In
addition, the sum of the Salary Deferral Contributions, any
Matching Contributions allocated to the Participant's Salary
Deferral
Account and any Additional Deferral Contributions must satisfy
one of the actual deferral percentage tests of Section 401(k) of
the Code.
(f) PAYMENT OF CONTRIBUTIONS:
The Employer shall contribute Salary Deferral Contributions for
each Plan Year These amounts shall be paid in cash to the Trust
as of the end of each month for which a salary deferral
agreement is in existence, but in no event later than thirty
(30) days after the end of the Plan Year. Any Matching
Contributions, Additional Deferral Contributions and Profit
Sharing Contributions for each Plan Year shall be paid in cash
and contributed to the Trust by the Employer on or before the
close of business on the date prescribed by law (including
extensions thereof) for filing the Employer's income tax return
for the Employer's taxable year which ends coincident with the
end of the Plan Year for which the contributions are made.
24
(g) VESTING OF CONTRIBUTIONS TO DEFERRAL ACCOUNTS:
Salary Deferral Contributions, Additional Deferral
Contributions, and any Matching Contributions contributed to
Participants' Salary Deferral Accounts shall be fully vested and
nonforfeitable at all times.
(h) REVERSION OF CONTRIBUTIONS:
Employer Matching, Additional Deferral, Profit Sharing, and
Nonelective Contributions may not be returned or revert to the
Employer except as specifically provided in this Subsection (h).
(i) Any such contribution made by the Employer because of a
mistake of fact may be returned to the Employer within
one year of contribution.
(ii) Any such contribution made by the Employer that is
conditioned on the Plan's initial qualification under
the Code may be returned to the Employer within one year
after the date the initial qualification is denied.
(iii) Any such contribution made by the Employer that is
conditioned m the deductibility of the amount under
Section 404 of the Code may be returned to the Employer,
to the extent of the amount disallowed, within one year
after the disallowance of the deductions.
(iv) Any contribution made by the Employer that is
conditioned upon the qualification of the Plan as
amended may be returned to the Employer within one year
after the date the qualification of the amendment to the
Plan is denied, if the Plan amendment is submitted to
the Internal Revenue Service for qualification within
one year from the date the amendment is adopted.
5.02 VOLUNTARY EMPLOYEE CONTRIBUTIONS:
(a) EMPLOYEE CONTRIBUTIONS:
(i) If the Employer has elected in the Adoption Agreement to
permit Participants to make Employee Contributions, each
Participant may, at his or her sole option, contribute
in cash on his or her own behalf an amount which does
not exceed 10% of his or her total Compensation for all
years during which the Participant is a Participant in
this and all other qualified plans maintained by the
Employer.
25
(ii) Each Participant's Employee Contributions and the
earnings thereon shall be maintained in his or her
Employee Contributions Account.
(iii) Upon a written application in a form and substance
satisfactory to Employer and Trustee, upon the
Employer's approval and with the written consent of the
Participant's spouse, a Participant may withdraw at any
time all or any part of his or her Employee Contribution
Account, including the earnings on such Employee
Contributions.
(iv) All Employee Contributions shall be paid to the Trustee
no later than thirty (30) days after the end of the Plan
Year for which they are credited.
(b) ROLLOVER CONTRIBUTIONS:
(i) If the Employer has elected in the Adoption Agreement to
permit Participants to make Rollover Contributions, any
Participant may transfer to the Trust Fund all or any
portion of a qualified total distribution, as defined in
Code Section 402(a)(5)(E)(i), received from a plan which
is qualified under Code Section 401(a)(ii) or Section
417, the trust of which is exempt from tax under Code
Section 501(a), provided such distribution is not
attributable to contributions made on behalf of such
Participant while a Key Employee, as defined in Code
Section 416(i), in a top-heavy plan, as defined in Code
Section 416(g). Any Participant, including a Participant
who was a Key Employee while the plan from which the
transfer is made was top-heavy, or a Participant who was
a Self-Employed Individual while a Participant in the
plan from which the transfer is made, may direct the
trustee of such plan to transfer directly to the Trustee
of this Plan assets held on behalf of the Participant
either as a common law employee or as a Self-Employed
Individual, provided that the trust from which the
assets are transferred permits the transfer to be made.
Any Participant may transfer to the Trust any rollover
contribution, as defined in Code Section
408(d)(3)(A)(ii), from an individual retirement account
("▇▇▇"), as defined in Code Section 408, plus the
earnings thereon, provided no part of such rollover
contribution is attributable to contributions made while
the Participant was a Self-Employed Individual and
provided further that such rollover otherwise meets the
requirements of Code Section 408(d)(3).
(ii) The Employer shall develop such procedures, and may
require such information from a Participant desiring to
make such a rollover
26
transfer, as it deems necessary or desirable to
determine that the proposed transfer will meet the
requirements of this Paragraph and will meet the
requirements of a qualified total distribution.
(iii) Each Participant's Rollover Contributions and the
earnings thereon shall be maintained in his or her
Rollover Contributions Account.
(iv) Upon a written application in a form and substance
satisfactory to the Employer and the Trustee, a
Participant may withdraw at any time all or any part of
his or her Rollover Contributions account, including the
earnings thereon.
(c) VESTING OF EMPLOYEE CONTRIBUTION ACCOUNTS:
Each Participant's Employee Contribution Account and Rollover
Contribution Account shall be fully vested and not subject to
forfeiture for any reason.
5.03 LIMITATION ON SALARY DEFERRAL CONTRIBUTIONS.
The amount of Salary Deferral Contributions, Employer Deferral Contributors, and
Nonelective Contributions allocated to an account of an Eligible Participant in
any Plan Year shall not exceed the limitations set out below:
(a) MAXIMUM DOLLAR AMOUNT.
No Eligible Participant shall be permitted to have Salary
Deferral Contributions made under the Plan during any calendar
year in excess of $7,000 multiplied by the Adjustment Factor as
provided by the Secretary of the Treasury.
(b) MAXIMUM PERCENTAGE OF COMPENSATION.
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 Nonhighly Compensated Employees for the
Plan year multiplied by:
(i) 1.25; or
(ii) 2.00, provided that 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 Nonhighly Compensated Employees for
the Plan year by more than two percent
27
(2%) or such lesser amount as the Secretary of the
Treasury shall prescribe to prevent the multiple use of
this alternative limitation with respect to any Highly
Compensated Employee.
(c) DEFINITIONS.
For purposes of this Section 5.03, the following definitions
shall be used:
(i) Actual Deferral Percentage.
The ratio (expressed as a percentage) of Salary Deferral
Contributions, Employer Deferral Contributions, and
Nonelective Contributions on behalf of an Eligible
Participant for the Plan Year to the Eligible
Participant's Compensation for the Plan Year.
(ii) AVERAGE ACTUAL DEFERRAL PERCENTAGE.
The average (expressed as a percentage) of the Actual
Deferral Percentages of the Eligible Participants in a
group.
(iii) ELIGIBLE PARTICIPANT.
Any Employee of the Employer who is otherwise authorized
under the terms of the Plan to have Salary Deferral
Contributions, Employer Deferral Contributions, or
Nonelective Contributions allocated to his account for
the Plan Year.
(d) SPECIAL RULES.
For purposes of this Section 5.03, the Actual Deferral
Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Salary Deferral Contributions, Employer Deferral
Contributions, or Nonelective Contributions allocated to his
account under two or more plans or arrangements described in
section 401(k) of the Code that are maintained by the Employer
or an Affiliated Employer shall be determined as if all such
Salary Deferral Contributions, Employer Deferral Contributions,
and Nonelective Contributions were made under a single plan or
arrangement. For purposes of determining the Actual Deferral
Percentage of an Eligible Participant who is a Highly
Compensated Employee, the Salary Deferral Contributions,
Employer Deferral Contributions, Nonelective Contributions and
Compensation of the Eligible Participant shall include the
Salary Deferral Contributions, Employer Deferral Contributions,
Nonelective Contributions and Compensation of Family Members,
and such Family Members shall be disregarded in determining the
Actual Deferral Percentage for Eligible
28
Participants who are Nonhighly Compensated Employees. The
determination and treatment of the Salary Deferral
Contributions, Qualified Nonelective Contributions and Actual
Deferral Percentage of any Eligible Participant shall satisfy
such other requirements as may be prescribed by the Secretary of
the Treasury. In the case of a Highly Compensated employee who
is either a 5-percent owner or one of the ten most highly
compensated employees and is thereby subject to the family
aggregation rules of section 414(q)(6), the actual deferral
ratio (ADR) for the family group (which is treated as one highly
compensated employee) is the greater of (1) the .ADR determined
by combining the contributions and compensation of all eligible
family members who are highly compensated without regard to
family aggregation, and (2) the ADR determined by combining the
contributions and compensation of all eligible family members.
Except to the extent taken into account in the preceding
sentence, the contributions and compensation of all family
members are disregarded in determining the actual deferral
percentages for the groups of highly compensated employees and
nonhighly compensated employees. All elective contributions that
are made under two or more plans that are aggregated for purpose
of section 401(a)(4) or 410(b) (other than section
410(b)(2)(A)(ii)) are to be treated as made under a single plan
and that if two or more plans are permissively aggregated for
purposes of section 401(k), the aggregated plans must also
satisfy sections 401(a)(4) and 410(b) as though they were a
single plan.
(e) AMENDMENT AND REVOCATION OF ELECTION.
In order to ensure compliance with the limitations referred to
in this Section 5.03, the Employer may amend or revoke its
salary deferral agreement with any Eligible Participant in order
to reduce the amount of the Salary Deferral Contributions. To
the extent that an amendment or a revocation of the salary
deferral agreement ~uses a reduction in the amount of the Salary
Deferral Contributions to any Eligible Participant's account,
the Eligible Participant shall receive in cash an amount equal
to the amount of such reduction, which shall constitute
Compensation received by the Eligible Participant.
Alternatively, if the amount of Salary Deferral Contributions
has caused the limitations described in this Section to be
exceeded or the Plan to fail to meet one of the actual deferral
percentage tests, the Employer shall refund such excess
contributions together with earnings attributable to such excess
contribution.
(f) Notwithstanding the above, an elective Salary Deferral
Contribution will be taken into account under the Actual
Deferral Percentage test for a Plan Year only if it relates to
Compensation that either would have been received by
29
the Employee in the Plan Year (but for the deferral election) or
is attributable to services performed by the Employee in the
Plan Year and would have been received by the employee within
two and a half (2 1/2) months after the close of the Plan Year
(but for the deferral election). Furthermore, an elective
contribution will be taken into account under the Actual
Deferral Percentage test for a Plan Year only if it is allocated
to the employee as a date within that Plan Year. For this
purpose, an elective Salary Deferral Contribution is considered
allocated as of a date within a Plan Year if the allocation is
not contingent on participation or performance of services after
such date and the elective Salary Deferral Contribution is
actually paid to the Trust no later than twelve months after the
Plan Year to which the contribution relates.
5.04 LIMITATION ON MATCHING CONTRIBUTIONS.
The amount of Matching Contributions allocated to an account of an Eligible
Participant in any Plan Year shall not exceed an amount based upon the maximum
percentage of Compensation set out below:
(a) MAXIMUM PERCENTAGE OF COMPENSATION.
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 Nonhighly Compensated Employees for the
Plan year multiplied by:
(i) 1.25; or
(ii) 2.00, provided that 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 Nonhighly Compensated Employees for the Plan year by
more than two percent (2%) or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect
to any Highly Compensated Employee. The following
contributions shall be taken into account: An Employee
Contribution paid to the Trust during the Plan Year or
paid to an agent of the Plan and transmitted to the
Trust within a reasonable period of time after the end
of the Plan Year. An excess contribution to this Plan
that is recharacterized is to be taken into account in
the Plan Year in which the excess amount is includible
in the employee's gross income. A matching contribution
is taken into account for a Plan year only if it is (1)
made an account of the employee's elective or employee
30
contribution for the Plan year, (2) allocated to the
employee's account during that year, and (3) paid to the
Trust by the end of the twelfth month following the
close of that Year. Qualified matching contributions
which are used to meet the requirements of section 401
(k)(3)(A) are not to be taken into account for the
purposes of the average Contribution percentage test for
this section.
(c) DEFINITIONS.
For purposes of this Section 5.04, the following definitions shall be
used:
(i) AVERAGE CONTRIBUTION PERCENTAGE.
The average (expressed as a percentage) of the
Contribution Percentages of the Eligible Participants in
a group.
(ii) CONTRIBUTION PERCENTAGE.
The ratio (expressed as a percentage) of the Matching
Contributions, if any under the Plan on behalf of an
Eligible Participant for the Plan Year to the Eligible
Participant's Compensation for the Plan Year.
(iii) ELIGIBLE PARTICIPANT.
Any Employee who is directly or indirectly eligible to
receive an allocation of matching contributions or to
make employee contributions and includes: an employee
who would be a plan participant but for the failure to
make required contributions; an Employee whose right to
make employee deferral contributions or receive matching
contributions has been suspended because of an election
(other than certain one-time elections) not to
participate; and an Employee who is unable to make an
employee deferral contribution or receive a matching
contribution because his/her compensation is less than a
stated dollar amount.
(d) SPECIAL RULES.
For purposes of this Section 5.04, the Contribution Percentage
for any Eligible Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to receive
Matching Contributions, Salary Deferral Contributions or
Employer Deferral Contributions allocated to his account under
two or more plans described in section 401(a) of the Code or
arrangements described in section 401(k) of the Code that are
maintained by the Employer or an Affiliated Employer shall be
determined as if all such contributions were made under a single
plan. In the event that this Plan satisfies the requirements of
IRC Section 401 (a)(4) and 410(b) of the Code, or if one or more
other plans satisfy the requirements of IRC
31
Section 401 (a)(4) and 410(b) of the Code only if aggregated
with this Plan, then this Section 5.04 shall be applied by
determining the Contribution Percentages of Eligible
Participants as if all such plans were a single plan. For
purposes of determining the Contribution Percentage of an
Eligible Participant who is a Highly Compensated Employee, the
Matching Contributions and Compensation of the Eligible
Participant shall include the Matching Contributions and
Compensation of Family Members, and such Family Members shall be
disregarded in determining the Contribution Percentage for
Eligible Participants who are Nonhighly Compensated Employees.
The determination and treatment of the Contribution Percentage
of any Eligible Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(e) MULTIPLE USE
If one or more Highly Compensated Employees are eligible to
participate in both a cash or deferred arrangement subject to
section 401(k) of the Internal Revenue Code and a plan
maintained by the employer subject to section 401(m) of the
Internal Revenue Code, then the plan(s) must comply with the
Multiple Use of Alternative Limitation as described in IRC
Regulation l.401(m)-2.
5.05 FORFEITURES:
Any portion of the Account or Accounts of a Participant which is not nonvested
upon separation from service shall be considered a Forfeiture, and subject to
reallocation as provided in Section 6.01(e) of Article VI.
5.06 SEPARATE ACCOUNTS:
All contributions made by or on behalf of a Participant shall be credited to the
Participant's Accounts maintained by the Trustee for each Participant.
Notwithstanding the foregoing, the Trustee must maintain separate accounts for
accounting purposes only, and the segregation of the assets of the Trust Fund
for each account is not required.
32
--------------------------------------------------------------------------------
ARTICLE VI. -- ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES
--------------------------------------------------------------------------------
6.01 GENERAL RULES.
(a) SALARY DEFERRAL CONTRIBUTIONS.
Salary Deferral Contributions, as defined in Section 5.01(a) of
Article V, made pursuant to a written salary deferral agreement
with a Participant shall be allocated and credited to such
Participant's Salary Deferral Account as of the date contributed
to the Trust.
(b) (i) NONELECTIVE CONTRIBUTIONS.
Employer Nonelective Contributions, as defined in
Section 5.01(b)(i) of Article V, shall be allocated as
of the Anniversary Date and credited to each
Participant's Employer Nonelective Contributions Account
in an amount which shall be allocated as specified in
the Adoption Agreement.
(ii) MATCHING CONTRIBUTIONS.
Employer Matching Contributions, as defined in Section
5.01(b)(ii) of Article V, shall be allocated as of the
Anniversary Date and credited to each Participant's
Salary Deferral Account or to each Participant's
Employer Contributions Account, as specified in the
Adoption Agreement, in an amount equal to a uniform
percentage, specified in the Adoption Agreement, of the
amount deferred by such Participant pursuant to his or
her written salary deferral agreement.
(c) ADDITIONAL SALARY DEFERRAL CONTRIBUTIONS.
Additional Employer Deferral Contributions, shall be allocated
as of the Anniversary Date and credited to the Salary Deferral
Account of each Participant in an amount which bears the same
ratio to the total Employer's Deferral Contributions for the
Plan Year that such Participant's Compensation bears to the
Compensation of all Participants for the Plan Year.
(d) PROFIT SHARING CONTRIBUTIONS.
Employer Profit Sharing Contributions, as defined in Section
5.01(d) of Article V, shall be allocated as of the Anniversary
Date and credited to each Participant's Employer Contributions
account in an amount which bears the same ratio to the total
Profit sharing Contributions for the Plan Year that
33
each Participant's Compensation bears to the Compensation of all
Participants. For purposes of this Section 6.01(d):
(i) if the Employer has selected the Hours of Service method
of determining service, the Employer shall make an
allocation for any Participant who has completed 1,000
Hours of Service during the Plan Year.
(ii) If the Employer has selected the elapsed time method for
determining service, the Employer shall make an
allocation for any Participant who has participated in
the Plan for any period of time during the Plan Year.
(e) FORFEITURES.
Forfeitures, as defined in Section 5.05 of Article V, shall be
allocated as of the Anniversary Date, subject to the provision
elected in the Adoption Agreement.
6.02 MINIMUM ALLOCATION.
Notwithstanding the foregoing, and except as otherwise provided below, for any
Plan Year in which this Plan is Top-Heavy, the sum of forfeitures, if any, and
Employer contributions (including the Salary Deferral Contributions made
pursuant to a salary deferral agreement, Employer Matching Contributions,
Employer Additional Deferral Contributions and Employer Profit Sharing
Contributions) allocated to each Participant who is not a Key Employee shall not
be less in the aggregate than the lesser of (i) 3% of such Participant's
Compensation, or (ii) the largest percentage of Compensation which such
contributions and forfeitures allocated on behalf of any Key Employee for such
Plan Year represent. The minimum allocation for any no n-Key Employee shall be
determined without regard to any Social Security contribution. The minimum
allocation for any Participant shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to receive an
allocation of Employer contributions because (i) the Participant fails to
complete 1,000 Hours of Service, even if such Participant is a Participant as of
the last day of the Plan Year or (ii) the Participant fails to enter into a
salary deferral agreement with respect to the Plan or (iii) the Participant's
Compensation is less than a stated amount. To the extent Employer contributions
and forfeitures allocated to any Participant are less than the required minimum
allocation, the Employer shall contribute an amount to be allocated to the
Employer Contributions Account of each such Participant which shall provide the
required minimum contribution to each Participant who is not a Key Employee. The
minimum contribution under this Plan shall be made for any Participant who is
covered under any other plan or plans of the Employer, unless the Employer has
specified in the Adoption Agreement that this minimum contribution requirement
will be made under such other plan or plans.
34
Notwithstanding the foregoing, the minimum allocation shall be made for any
Participant to whom an allocation is to be made under the Plan pursuant to the
Adoption Agreement. Neither Salary Deferral Contributions or Employer Matching
Contributions shall be taken into account for the purpose of satisfying the
minimum top-heavy contribution requirement described above.
6.03 RESTORATION PROCEDURES:
In the event the Employer improperly fails to make an allocation to a
Participant's Account for any Plan Year, the Employer shall make an additional
contribution for such Participant's Account in order to restore it to its proper
Account balance. The restoration contribution shall reflect Trust Fund income,
gain or loss which would have been allocated to the amount of the missed
allocation which is being restored.
6.04 LIMITATIONS ON ALLOCATIONS:
Notwithstanding anything herein to the contrary, the following limitations on
allocations to Participant Accounts shall apply:
(a) if the Participant does not participate and has never
participated in any other qualified plan or welfare benefit
fund, as defined in Section 419(e) of the Code, maintained by
the Employer, the amount of the Annual Addition which may be
allocated under the Plan as of any Allocation Date to any
Participant's, Accounts for any Limitation Year shall not exceed
the Maximum Permissible Amount (based upon the Participant's
Compensation up to such Allocation Date) reduced by the sum of
any allocations of Annual Additions made to the Participant's
Account under this Plan as for any preceding Allocation Date
within the Limitation Year. If the Maximum Permissible Amount
would be exceeded by the Annual Additions contributed under this
Plan on behalf of a Participant as of any Allocation Date, the
amount contributed or allocated shall be reduced, so that the
Annual Additions for the Limitation Year will equal the Maximum
Permissible Amount, as follows:
(i) Any Employee Contributions made Participant shall be
returned to the Participant to the extent necessary.
(ii) If after the application of Paragraph (i) 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 Employer Contributions
(including any allocation of any forfeitures) for such
Participant in the next Limitation Year, and each
succeeding Limitation Year, if necessary.
35
(iii) If after the application of Paragraph (i) 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.
(iv) If a suspense account is in existence at any time during
the Limitation Year pursuant to this paragraph, it will
not participate in the allocation of the Trust's
investment gains and losses.
(b) if the Employer maintains one or more other qualified defined
contribution plans, without regard as to whether such other plan
is a master or prototype plan, or a welfare benefit fund, as
defined in Section 419(e) of the Code, in which a Participant in
this Plan also participates, the amount of the Annual Additions
which may be allocated under this Plan to any Participant's
Accounts as of any Allocation Date shall not exceed the Maximum
Permissible Amount (based upon Compensation paid up to such
Allocation Date) reduced by the sum of any allocations of Annual
Additions made to the Participant's Accounts under this Plan and
any other such plans or welfare benefit funds maintained by the
Employer as of any preceding Allocation Date within the
Limitation Year, if the Annual Additions with respect to the
Participant under such other defined contribution plans or
welfare benefit funds are less than the Maximum Permissible
Amount and the Employer contribution that would otherwise be
contributed or allocated to the Participant's Account under this
Plan would cause the Annual Additions for the Limitation Year to
exceed this limitation, the amount contributed or allocated
shall be reduced so that the Annual Additions under all such
plans and funds for the Limitation Year will equal the Maximum
Permissible Amount if the Annual Additions made 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 shall be
contributed or allocated to the Participant's Account under this
Plan for the Limitation Year.
if the Annual Additions allocated to a Participant under this
Plan and any other such 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, except that
Annual Additions attributable to a welfare benefit fund will be
deemed to have been allocated first regardless of the actual
allocation date.
36
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:
(i) the total Excess Amount allocated as of such date,
multiplied by
(ii) a fraction, the numerator of which is the Annual
Additions allocated to the Participant for the
Limitation Year as of such date under this Plan, and the
denominator of which is the total Annual Additions
allocated to the Participant for the Limitation Year as
of such date under this and all the other qualified
defined contribution plans.
Any Excess Amount attributable to this Plan shall be disposed of
in the manner described in Section 6.04(a). Notwithstanding any
other provision to the contrary, the Employer shall not
contribute any amount that would cause an allocation to the
suspense account as of the date the contribution is allocated.
If the contribution is made prior to the date as of which it is
to be allocated, then such contribution shall not exceed an
amount that would cause an allocation to the suspense account if
the date of contribution were an Allocation Date.
(c) For purposes of applying the rules of Section 6.04(a) and
6.04(b), prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine
the Maximum Permissible Amount for a Participant on the basis of
a reasonable estimation of the Participant's Compensation for
the Limitation Year, uniformly determined for all Participants,
similarly situated. 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.
(d) 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 Fraction and
Defined Contribution Fraction shall not exceed 1.0 in any
Limitation Year. The Annual Additions which may be credited to
the Participant's Accounts under this Plan for any Limitation
Year will be limited in accordance with the applicable provision
contained in the Adoption Agreement.
(e) For purposes of this Section 6.04, the following terms shall be
defined as follows:
(i) Annual Additions
37
With respect to any Participant, the Annual Additions
shall be the sum, for the Limitation Year, of:
(A) Employer contributions allocated to the
Participant's Account;
(B) Employee Contributions; provided, however, that
the Annual Addition for any Limitation Year
beginning before 1987 shall not be recomputed to
treat all Employees Contributions as an Annual
Addition, for any Limitation Year in which the
Plan is subject to the overall limitations under
section 415(e) of the Code;
(C) Forfeitures allocated to the Participant's
Account, if any;
(D) Contributions allocated to any individual
medical account, as defined in Section 415(1) of
the Code, which is part of a defined benefit
plan maintained by the Employer; and
(E) Contributions which are attributable to
post-retirement medical benefits which are
allocated to the separate account of a Key
Employee, as defined in Section 419A(d)(3) of
the Code, under a welfare benefit fund, as
defined in Section 419(e) of the Code,
maintained by the employer.
(ii) ALLOCATION DATE:
The date with respect to which all or any portion of
Employer contributions, Employee Contributions, and
forfeitures, if any, are allocated to Participants'
Accounts.
(iii) COMPENSATION:
Compensation for a Limitation Year is the Compensation
actually paid or includible in the Participant's gross
income during such year, including a Participant's
Earned Income, wages, salaries, and fees for
professional services and other amounts received for
personal services actually rendered in the course of
employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid sales
people, compensation for services on the basis of a
percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the
following:
(A) Employer contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year in
which contributed, or Employer
38
contributions under a simplified employee
pension plan to the extent such contributions
are deductible by the Employee, or any
distributions from a plan of deferred
compensation;
(B) Amounts realized from the exercise of a
non-qualified stock option, or when restricted
stock (or property) held by the Employee either
becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option: and
(D) Other amounts which receive special tax
benefits, or contributions made by the Employer
(whether or not under a salary reduction
agreement) towards the purchase of an annuity
described in Section 403(b) of the Code (whether
or not the amounts are actually excludable from
the gross income of the Employee; and
(E) Any contribution for medical benefits (within
the meaning of section 419-A(f)(2) of the Code)
after separation from service which is otherwise
treated as an Annual Addition; and
(F) Any amount otherwise treated as an Annual
Addition under section 415(l)(1) of the Code.
(ix) DEFINED BENEFIT FRACTION:
A fraction, the numerator of which is the sum of the
Participant's projected annual benefits under all the
defined benefit plans (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 Code or 140 percent of the highest
average compensation. Notwithstanding the foregoing, in
any Plan Year in which the Plan is Top-Heavy, within the
meaning of Section 2.45 of Article II above, the
denominator of the Defined Benefit Fraction shall be
computed using 100 percent of the dollar limitation
instead of 125 percent. For purposes of this Paragraph,
projected annual benefit is 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 (or current age, if
39
later) under the plan, and (B) the Participant's
Compensation, as defined in Paragraph (iii) above, 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; and the
highest average Compensation is the average
Compensation, as defined in Paragraph (iii) hereof, for
the three consecutive Years of Service with the Employer
that produces the highest average.
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 end of the last Limitation Year
beginning before 1983. The preceding sentence applies
only if such defined benefit plans individually and in
the aggregate satisfied the requirements of Section 415
of the Code 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.
(v) DEFINED CONTRIBUTION FRACTION:
A fraction, the numerator of which is the sum of the
Annual Additions to the Participant's account 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 Employee
Contributions to all defined benefit plans, whether or
not terminated, 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 Section 415(c)(1)(A)
of the Code or 35 percent of the Participant's
Compensation for such year. Notwithstanding the
foregoing, in any Plan Year in which the Plan is
top-Heavy, within the meaning of section 2.45 of Article
II above, the maximum aggregate amount shall be computed
by using 100% of the dollar limitation instead of 125%.
40
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 of the fraction over 1.0 times (2) the denominator
of this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed
as of 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 Section
6.04 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.
If the Plan satisfied the applicable requirements of
section 415 of the Code as in effect for all Limitation
Years 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 size of the Defined Benefit
Fraction and the Defined Contribution Fraction computed
under section 415(e)(1) of the Code does not exceed 1.0
for such Limitation Year.
(vi) EMPLOYER:
For purposes of applying the limitations of this Section
6.4, Employer shall mean the Employer that adopts this
Plan and all members of a controlled group of
corporations (as defined in Section 414(b) of the Code,
as modified by Section 415(h) of the Code), trades or
businesses (whether or not incorporated) which are under
common control (as defined in Section 414(c) of the Code
as modified by Section 415(h) of the Code) or members of
an affiliated service group (as defined in Section
414(m) of the Code) of which the adopting Employer is a
part.
(vii) EXCESS AMOUNT:
The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount.
41
(viii) LIMITATION YEAR:
The Plan Year or any other 12-consecutive month period
adopted for all plans of the Employer, as designated in
the Adoption Agreement. If the Limitation Year is
amended to a different 12-consecutive month period, the
new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made.
(ix) MAXIMUM PERMISSIBLE AMOUNT:
For any Limitation Year, the Maximum Permissible Amount
with respect to any Participant shall be the lesser of
(A) 530,000 or, if greater, one-fourth of the defined
benefit dollar limitation set forth in section
415(b)(1) of the Code as in effect for the Limitation
Year, and (B) twenty-five percent (25%) 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
12-consecutive month period, the Maximum Permissible
Amount will not exceed the amount set forth in (A)
above, multiplied by a fraction, the numerator of which
is the number of months in the short Limitation Year and
the denominator of which is 12.
42
--------------------------------------------------------------------------------
ARTICLE VII. -- VESTING
--------------------------------------------------------------------------------
7.01 PARTICIPANT ACCOUNTS:
A Participant's Employee Contributions Account, and Rollover Contributions
Account shall be fully vested at all times and shall not be forfeitable for any
reason. Upon termination of employment for any reason, and at any time, a
Participant or the Participant's Beneficiary, if applicable, shall be entitled
to receive a distribution of these Accounts in accordance with the provisions of
Section 7.04.
7.02 SALARY DEFERRAL ACCOUNT:
Each Participant's Salary Deferral Account to which Employer Salary Deferral
Contributions, Matching Contributions and/or Additional Deferral Contributions
have been allocated, shall be fully vested at all times and shall not be
forfeitable for any reason. Upon termination of employment for any reason, and
at any time, a Participant or the Participant's Beneficiary, if applicable,
shall be entitled to receive a distribution of these Accounts in accordance with
the provisions of Section 7.04.
7.03 EMPLOYER CONTRIBUTIONS ACCOUNT
(a) UPON ATTAINMENT OF NORMAL RETIREMENT AGE:
Each Participant's Employer Contributions Account to which
Employer Nonelective Contributions, Employer Matching
Contributions and/or Profit Sharing Contributions have been
allocated, shall be fully vested upon the Participant attaining
Normal Retirement Age. Upon termination of employment on or
after the Participant has attained his or her Normal Retirement
Age, the Participant shall be entitled to receive a distribution
of his or her entire Account in accordance with the provisions
of Section 7.04.
(b) UPON BECOMING DISABLED OR UPON DEATH:
Upon termination of employment with the Employer prior to the
attainment of Normal Retirement Age by reason of Disability or
death, the Participant's Employer Contributions Account shall be
fully vested, and the Participant or the Participant's
Beneficiary shall be entitled to receive a distribution of the
Participant's entire Account in accordance with the provisions
of Section 7.04.
(c) UPON TERMINATION OF EMPLOYMENT:
(i) Subject to the provisions of Paragraph (ii), upon a
Participant's termination of employment for any reason
other than Disability or
43
death prior to the Participant's retirement at Normal
Retirement Age, for Plan Years in which the Plan is not
Top-Heavy, as defined in Section 2.43 of Article II, the
Participant's interest in all amounts allocated to his
or her Employer Contributions Account and earnings
thereon shall be vested in accordance with the vesting
schedule selected in the Adoption Agreement.
(ii) If the Plan is or has ever been Top-Heavy, the Top-Heavy
vesting schedule selected by the Employer in the
Adoption Agreement shall determine the vested portion of
the Participant's Employer Contributions Account, and
shall apply to all amounts in the Participant's Employer
Contributions Account, including amounts contributed
before January 1, 1984 and before the Plan became
Top-Heavy. If the Plan ceases or has ceased to be
Top-Heavy, the non-Top-Heavy vesting schedule under
Paragraph (i) hereof shall apply; provided, however, no
reduction in vested benefits may occur in the event the
Plan ceases to be Top-Heavy in any year. If the Plan
shifts from Top-Heavy to non-Top-Heavy stat-us from Plan
Year to Plan Year, such shift constitutes an amendment
of the vesting provisions of the Plan retroactive to the
beginning of the subject Plan Year, and the provisions
of Section 11.01(c) of Article XI shall apply. The
Top-Heavy vesting provision does not apply to any
Participant who does not have an Hour of Service after
the Plan has initially become Top-Heavy, and such
Participants vested interest in his or her Employer
Contributions Account shall be determined without regard
to this Paragraph (ii).
(iii) For purposes of determining the vested portion of a
Participant's Employer Contributions Account under
Paragraph (i) or (ii), when a Participant incurs five
(5) consecutive One-Year Breaks in Service, Years of
Service after the Break in Service shall not be taken
into account for purposes of determining the vested
portion of the Participant's Employer Contributions
Account which accrued before such Break in Service.
7.04 DETERMINATION OF BENEFITS:
Upon termination of employment with the Employer, the Participant's Account
shall be valued as of the Valuation Date coincident with or immediately
preceding the date of termination, and the amount shall be divided into two
accounts: a Distribution Account and a Suspense Account. The Distribution
Account shall be credited with the amount of the Participant's vested interest
in the Plan determined in accordance with the provisions of Sections 7.01,
7.02, and 7.03. The remainder of the Participant's Account balance shall be
credited to the Suspense Account. The balance allocated to the Participant's
44
Distribution Account shall be subject to distribution in accordance with
Articles VIII and IX, whichever is applicable. At the earlier of distribution or
a 5-year consecutive break-in-service, the balance allocated to the
Participant's Suspense Account shall:
(a) Be forfeited after the close of the Plan Year in which the
Participant terminates employment with the Company and receives
a distribution of his vested balance. Such forfeited amounts
shall be reallocated as a forfeiture in the manner provided in
Article VI of the Plan; or
(b) Be maintained as a separate account for the Participant, which
shall be adjusted in accordance with Section 10.02 or 10.02,
whichever is applicable, of Article X of the Plan, until such
time as the Participant has incurred five (5) consecutive
One-Year Breaks in Service, at which time the Suspense Account
shall be forfeited and reallocated as provided in Article VI of
the Plan. If the Participant is re-employed prior to incurring
five (5) consecutive One-Year Breaks in Service, the following
rules shall apply:
(i) If the Suspense Account is forfeited, the forfeited
amount, plus an amount which is the equivalent of the
adjustments that would have been made, pursuant to
section 10.01 of the Plan, to such forfeited amounts if
the Suspense Account had been invested by the Trustee as
part of the Trust Fund, shall be restored to the
Participant's Account in order to restore it to its
proper account balance. For purposes of the foregoing,
such amounts shall be restored first from the current
Plan Year's forfeitures and, ii such forfeitures are not
sufficient to restore fully the Participant's Suspense
Account, from additional contributions made by the
Employer. At any relevant time, the Participant's vested
interest in the restored account shall be determined in
accordance with the following formula:
X = P (AB / (R x D)) - (R x D),
where "P" is the Participant's vested percentage
determined under the vesting schedule at the time the
Participant's interest in the Suspense Account is to be
determined, "AB" is the balance of the Suspense Account
at the time that the Participant's interest in the
Suspense Account is to be determined, "R" is the ratio
of the balance of the Suspense Account at the time the
Participant's interest in the Suspense Account is to be
determined to the amount originally credited to the
Suspense Account, and "D" is the amount originally
credited to the Distribution Account.
(ii) If the Suspense Account is maintained as a separate
account for the Participant, the balance in the Suspense
Account, together with any
45
gains or losses thereon, shall be restored as a separate
part of the Participant's Account, and, at any relevant
time, the Participant's vested interest in the amounts
contained in such separate account shall be determined
in accordance with the formula provided above.
7.05 SUBSEQUENT ALLOCATIONS:
If any amount is allocated to a Participant's Account after a distribution is
made or commences, the amount allocated shall be paid to the Participant in cash
in one lump sum within sixty (60) days of the date such amount is allocated to
the Participant's Account.
46
--------------------------------------------------------------------------------
ARTICLE VIII. -- DISTRIBUTION OF BENEFITS DURING PARTICIPANT'S LIFE
--------------------------------------------------------------------------------
8.01 TIME OF PAYMENT:
(a) Each Participant shall be entitled to receive the full value of
his or her Distribution Account, as determined in Section 7.04
of Article VI), upon termination of his or her employment with
the Employer. Subject to the terms of Section 8.01(b) below,
unless a Participant elects otherwise in writing, the payment of
benefits to a Participant shall begin no later than the 60th day
after the close of the Plan Year during which the Participant
becomes entitled to benefits or attains Normal Retirement Age,
whichever is later. Notwithstanding the foregoing, the
distribution of benefits to any Participant shall be made or
commence not later than April 1 of the calendar year following
the calendar year in which the Participant attains age 70-1/2.
Distributions shall be made in accordance with the requirements
of IRS Code Section 401(a)(9), including the minimum
distribution and incidental benefit requirements of IRS
regulation Section 1.401(a)(9)2.
(b) if the aggregate balances of the Participant's Accounts at the
time the Participant becomes entitled to receive benefits under
the Plan do not exceed $3,500, the Plan may distribute the
Participant's entire Distribution account within sixty (60) days
after the close of the Plan Year during which the Participant
terminates employment with the Employer. If the aggregate
balances of the Accounts exceed $3,500, the Plan may distribute
the Distribution Account in a lump sum prior to the time
provided in Section 8.01(a) above only if the Participant
consents in writing to the distribution. If at any time of any
distribution a participant's account ever exceeded $3,500, then
the participant's account will be deemed to exceed $3,500 at the
time of final distribution.
8.02 PAYMENT OF BENEFITS:
(a) The Participant's Distribution Account shall be distributed to
the Participant in any one or a combination of the following
methods:
(i) In a single lump sum;
(ii) In annual, semi-annual, quarterly, or monthly payments
made by the Trustee for a term certain not to exceed 20
years; provided, however, in no event shall such period
extend beyond the life expectancy of the Participant or
the joint life and last survivor expectancy of the
Participant and the Participant's designated
Beneficiary; or
47
(iii) By purchase from an Insurance Company and distribution
of an immediate or deferred Nontransferable Contract to
provide benefits, in substantially equal annual
payments, for a term certain, not to exceed the life
expectancy of the Participant or the joint lives of the
Participant and the Participant's designated
Beneficiary.
For purposes of Paragraph (ii) and (iii) of this Section
8.02(b), for Plan Years beginning before January 1,
1985, the term "the Participant's spouse" shall be
substituted for the term "the Participant's designated
Beneficiary" each place it appears.
(b) DISTRIBUTION IN CASH OR IN KIND:
To the extent the Participant's Account is invested in whole or
in part as an earmarked investment account, the distribution of
the Account may be in cash or in kind, as the Participant shall
direct. If no directions are provided, the distribution shall be
in kind.
(c) PROCEDURE FOR ANNUAL PAYMENTS:
If the Trustee is directed to distribute annual, semi-annual,
quarterly, or monthly payments to a Participant, the
Participant's Distribution Account shall continue to be invested
as directed by the Employer pursuant to Article X. If no
directions are provided, the Participant's Distribution Account
may be liquidated, and the proceeds therefrom may be invested in
a deposit account of the Trustee's own banking department which
bears a reasonable rate of interest.
The minimum amount to be distributed each year must be at least
an amount equal to the quotient obtained by dividing the
Participant's entire Account by the life expectancy of the
Participant or the joint and last survivor expectancy of the
Participant and the Participant's 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 Regulations. For purposes of this computation, the life
expectancy of the Participant and the Participant's spouse may
be recalculated, but no more frequently than annually. 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 ensure that at least
50% of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
(d) This Section applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the plan to the
contrary that would
48
otherwise limit a distributee's election, under this Section, a
distributee may elect, at the time and in the manner prescribed
by the plan administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
(e) DEFINITIONS.
(i) ELIGIBLE ROLLOVER DISTRIBUTION:
An eligible rollover distribution is any distribution of
all or any portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include: any distribution that is
one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint
lives (or joint life expentancies) of the distributee
and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution
to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
(ii) ELIGIBLE RETIREMENT PLAN:
An eligible retirement plan is an individual retirement
account described in section 408(a) of the Code, an
individual retirement annuity described in section
408(b) of the Code, an annuity plan described 403(a) of
the Code, or a qualified trust described in section
401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) DISTRIBUTEE:
A distributee includes an employee or former employee.
In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's
spouse or former spouse who is the alternate payee under
a qualified domestic relations order, as defined in
section 414(p) of the Code, are distributees with regard
to the interest of the spouse or former spouse.
(iv) DIRECT ROLLOVER:
A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
49
8.03 TRANSITIONAL RULE:
(a) Notwithstanding the provisions of Sections 8.01 and 8.02,
distribution on behalf of any Participant, including a
Five-Percent Owner, may be made as provided below, (regardless
of when such distribution commences), if
(i) The distribution is one which would not have
disqualified the Trust under Section 401(a)(9) of the
Internal Revenue Code as in effect prior to amendment by
the Deficit Reduction Act of 1984;
(ii) The distribution is in accordance with a method of
distribution designated by the Participant whose
interest in the Trust is being distributed, or, if the
Participant is deceased, by a Beneficiary of such
Participant;
(iii) Such designation was in writing, was signed by the
Participant or the Beneficiary, and was made before
January 1, 1984;
(iv) The Participant had accrued a benefit under the Plan as
of December 31, 1983; and
(v) The method of distribution designated by the Participant
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 Participant's death, the
beneficiaries of the Participant listed in order of
priority.
(b) 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
Participant.
(c) For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Participant, or the
Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in subsections (i) and (v).
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Sections 8.01 and 8.02 above. 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
50
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).
8.04 HARDSHIP WITHDRAWALS OF CONTRIBUTIONS:
Subject to the provisions of Article V above and Section 8.05 below, and only if
the Employer has elected to permit hardship withdrawals from the Participants'
Accounts, upon a written application in a form and substance satisfactory to the
Employer and Trustee, any Participant may withdraw, at any time, all or any part
of the vested interest in his or her Participant Accounts; provided, however,
that, if the Employer has elected in the Adoption Agreement to permit
withdrawals from the Participant's Salary Deferral Account, a Participant who
has not attained age 59-1/2 may not withdraw any portion of his or her
Participant Salary Deferral Account unless the Employer determines, under rules
established by the Employer and uniformly applied in a nondiscriminatory manner,
that the purpose of the withdrawal is to meet the immediate heavy financial
needs of the Participant, the amount of the withdrawal does not exceed such
financial need, and the amount of the withdrawal is not reasonably available
from other resources of the Participant. A Participant may not make a withdrawal
election more frequently than once a year. A distribution will be deemed
necessary to satisfy a financial need if all of the following requirements are
met:
(1) the Employee has obtained all distributions, other than hardship
distributions, and all nontaxable loans available under all
plans maintained by the Employer;
(2) the plan, and all other plans maintained by the Employer,
provide that an Employee's Salary Deferral Contributions (and
Employee Contributions) will be suspended for at least 712
months after receipt of the hardship distribution;
(3) the plan, and all other plans maintained by the Employer,
provide that the maximum amount of Salary Deferral Contributions
for the Employee for his taxable year following the taxable year
in which the Employee received the hardship distribution is the
excess of the applicable limit under IRS Code Sec. 402(g) for
such next taxable year over such Employee's Salary Deferral
Contributions for the taxable year in which the Employee
received the hardship distribution; and
(4) the distribution is not in excess of the amount of the immediate
and heavy financial need of the Employee.
51
Hardship distributions will be limited to Salary Deferral
Contributions themselves. No earnings on such Salary Deferral
Contributions shall be allowable as hardship distributions.
An immediate and heavy financial need shall be deemed to include the following:
(i) Expenses incurred or necessary for medical care described in
Section 213(d) of the Internal Revenue Code for the Participant,
his or her Spouse, or any dependents of the Participant (as
defined in Section 152 of the Internal Revenue Code);
(ii) Cost (excluding mortgage payments) relating to the purchase of a
principal residence for the Participant;
(iii) Payment of tuition and related educational fees for the next
twelve months of post-secondary education for the Participant,
his or her Spouse, children, or dependents; or
(iv) The need to prevent the eviction of the Participant from his or
her principal residence or foreclosure on the mortgage of the
Participant's principal residence.
8.05 PENALTY ON DISTRIBUTION TO FIVE-PERCENT OWNER PRIOR TO AGE 59-1/2:
If any distribution under the Plan, including a withdrawal under the preceding
Section 8.4, is made to a Participant who is or has been a Five-Percent Owner
prior to his or her attainment of age 59-1/2, for any reason other than the
disability of such Participant, then a penalty for a premature distribution
under Section 72(m) of the Code may apply.
8.06 TRUSTEE MAY WITHHOLD DISPUTED PAYMENTS:
The Trustee shall not be required to make any investigation to determine the
identity or mailing address of any person entitled to benefits under this Plan,
and the Trustee may refrain from making payments until the identity and mailing
address of any person entitled to benefits are certified by the Employer. In the
event that any dispute arises as to the identity or rights of persons entitled
to benefits hereunder, the Trustee may withhold payment of benefits until such
dispute is resolved by a court of competent jurisdiction or is settled by
written stipulation of the parties concerned.
8.07 DISTRIBUTION TO INCOMPETENTS:
If a Participant or a Beneficiary who is entitled to a distribution hereunder is
a minor or is leg ally incompetent, the Employer may instruct the Trustee to
make payment to such Participant or Beneficiary, the legal representative or a
near relative of such Participant or
52
Beneficiary, or directly for such Participant's or Beneficiary's support, care,
maintenance or education, as the Employer may determine to be in the best
interests of such Participant or Beneficiary.
8.08 TREATMENT OF LOST PARTICIPANT'S ACCOUNT:
If all or a portion of a Participant's vested Accounts becomes payable and the
Employer cannot locate the Participant or the Participant's Beneficiary (if such
Beneficiary is en titled to payment) after a reasonable search, the vested
balance of the Participant's Accounts shall be reallocated in accordance with
Section 6.01(d) on the day the Participant incurs a Break in Service or such
later date as the Employer may determine. If the Participant or the
Participant's Beneficiary subsequently presents a valid claim for benefits to
the Employer, the Employer shall reinstate the benefit from the current Plan
Year's forfeitures and, if such forfeitures are not sufficient, from an
additional Employer Contribution.
8.09 PAYMENT OF BENEFITS TO AN ALTERNATE PAYEE:
Benefits shall be paid to an alternate payee, as that term is defined in Section
414(p)(8) of the Code, in accordance with the terms of a qualified domestic
relations order, as that term is defined in Section 4l4(p) of the Code, and the
provisions of such Section 414(p) of the Code. If the alternate payee cannot be
located, the amount payable to such alternate payee may be treated as a
forfeiture as provided in Section 7.03(b)(i); provided, however, that such
amounts shall be fully reinstated and paid to such alternate payee, if such
alternate payee presents a valid claim for such benefits to the Employer. For
purposes of the foregoing, the amounts shall be reinstated first from the
current Plan Year's forfeitures and, if such forfeitures are not sufficient to
reinstate the full amount payable to the alternate payee, from additional
contributions made by the Employer.
8.10 LOANS TO PARTICIPANTS:
(a) If the Employer has elected in the Adoption Agreement to permit
loans to Participants, the Trustee shall, at the Employer's
direction, make loans to Participants, upon written application
of the Participant and consent in writing of the Participant's
Spouse, in accordance with the following rules: (i) loans shall
be made available to all Participants on a reasonably equivalent
basis; (ii) loans shall not be made available to highly
compensated Employees, officers, or shareholders in an amount
greater than the amount made available to other Participants;
(iii) loans shall bear a reasonable rate of interest; (iv) loans
shall be adequately secured; and (v) loans shall provide for
periodic repayments over a reasonable period of time as provided
in Section 8.10(c) below.
53
Spousal consent to such loan must be received during the ninety
day period ending on the date on which the loan is secured.
Notwithstanding the foregoing, no loans shall be made to any
Participant who is an Owner-Employee or a shareholder-employee
of a Subchapter S corporation (an employee or officer of the
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 the corporation, more than 5% of the
outstanding stock of the corporation).
(b) Loans made pursuant to this Section 8.10 shall be limited to the
lesser of:
(i) $50,000, reduced by the excess (if any) of --
(I) the highest outstanding balance of loans from
the plan during the 1-year period ending on the
day before the date on which such loan was made,
over
(II) the outstanding balance of loans from the plan
on the date on which such loan was made, or
(ii) The greater of (A) one-half (1/2) of the vested
interest of the Participant's Employer Contributions
Account, Salary Deferral Account and Rollover
Contributions Account (not taking into account any
deductible voluntary contributions rolled over into the
Rollover Contributions Account) maintained on behalf of
the Participant under the Plan, or (B) $10,000, or
(iii) the total of the Participant's Accounts.
For purposes of the foregoing limitations, all loans
from all plans maintained by the Employer and other
members of the group of employers described in Code
Sections 414(b), 414(c) and 414(m) shall be aggregated.
Notwithstanding the foregoing limitations, the Employer
may further limit the amount that may be loaned to a
Participant in order to maintain a sufficient reserve
for income taxes which would have to be withheld from
the Participant's Account in the event the loan is
deemed to be a distribution, pursuant to Code Section
72(p).
(c) Loans shall provide for periodic repayment at least quarterly
over a period not to exceed five (5) years; provided, however,
loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan
is made) as a principal residence of the Participant or a
54
member of his or her family (within the meaning of Section
267(c)(4) of the Code), shall provide for periodic repayment at
least quarterly over a reasonable period of time that may exceed
five (5) years. Not withstanding the foregoing, loans shall not
be granted to any Participant that provide for a repayment
period extending beyond the Participant's Normal Retirement
Date.
(d) No more than 50% of a Participant's vested interest in his or
her Employer Contributions Account, Salary Deferral Account,
Employee Contributions Account, and Rollover Contributions
Account may be used to secure a participant loan. Loans in
excess of the 500/a limit must have outside collateral provided
to secure that excess.
(e) If the Participant terminates employment with the Employer or
files for relief under the United States Bankruptcy Code or the
Plan is terminated prior to the full repayment of the loan, the
loan shall become immediately due and payable and shall be
repaid from the Participant's Employer Contributions Account.
(f) A Participant loan under this Section 8.10 shall be deemed to
have been made from a Participant's Account and such loan shall
be deemed to be a directed investment which shall be segregated
and administrated as a separate investment of such Participant
in accordance with the provisions of section 10.02 of Article X.
The interest paid m the Participant's loan shall be accounted
for separately and credited to the directed investment account
of the Participant in accordance with the provisions of Section
10.02(e) of Article X.
8.11 EXCESS DEFERRALS AND CONTRIBUTIONS:
(a) DISTRIBUTION OF EXCESS DEFERRALS:
Notwithstanding any other provision of the Plan, Excess Deferral
Amounts and income attributable thereto shall be distributed no
later than April 15 to Participants who claim such Allocable
Excess Deferral Amounts for the preceding calendar year. "Excess
Deferral Amount" shall mean the amount of Salary Deferral
Contributions for a calendar year that the Participant allocates
to the Plan pursuant to a written claim. The claim in writing
shall be submitted to the Plan Administrator no later than the
March 1 preceding the applicable April 15; shall specify the
Participant's Excess Deferral Amount for the preceding calendar
year; and shall be accompanied by the Participant's written
statement that if such amounts are not distributed, such Excess
Deferral Amount, when added to amounts deferred under other
plans or arrangements described in sections 401(k), 408(k), or
403(b) of the
55
Code, exceeds the limit imposed on the Participant by section
402(g) of the Code for the year in which the deferral occurred.
(b) DISTRIBUTION OF EXCESS CONTRIBUTIONS:
Notwithstanding any other provision of the Plan, Excess
Contributions and income attributable thereto shall be
distributed no later than the last day of each Plan Year, to
Participant's on whose behalf such Excess Contributions were
made for the preceding Plan Year. For purposes of this Section
8.11(b), "Excess Contributions" shall mean the amount described
in section 401(k)(8)(B) of the Code. The distribution of excess
deferral contributions shall include the income allocable
thereto which includes both income for the plan year for which
excess contributions were made and income for the period between
the end of the plan year and the date of distribution. Such
income shall be calculated in accordance with IRS Section
401(k)(8)(A) and IRS regulation I.401(k)-1(f)(4).
(i) DETERMINATION OF INCOME.
The income allocable to Excess Contributions shall be
determined by multi plying income allocable to the
Participant's Salary Deferral Contributions and
Qualified Employer Deferral Contributions for the Plan
Year by a fraction, the numerator of which is the Excess
Contribution on behalf of the Participant for the
preceding Plan Year and the denominator of which is the
sum of the Participant's account balances attributable
to Salary Deferral Contributions and Qualified Employer
Deferral Contributions on the last day of the preceding
Plan Year. The distribution of excess deferral
contributions shall include the income allocable thereto
which includes both income for the plan year for which
excess contributions were made and income for the period
between the end of the plan year and the date of
distribution. Such income shall be calculated in
accordance with IRS Section 401(k)(8)(A) and IRS
regulation l.401(k)-1(f)(4).
(ii) MAXIMUM DISTRIBUTION AMOUNT.
The Excess Contributions which would otherwise be
distributed to the Participant shall be adjusted for
income; shall be reduced, in accordance with regulations
by the amount of Excess Deferrals distributed to the
Participant; and, shall, if there is a loss allocable to
the Excess Contributions, in no event be less than the
lesser of the Participant's account under the Plan or
the Participant's Salary Deferral Contributions and
Qualified Employer Deferral Contributions for the Plan
Year.
(iii) ACCOUNTING FOR EXCESS CONTRIBUTIONS.
56
Amounts distributed under this Section 8.11(b) shall
first be treated as distributions from the Participant's
Salary Deferral Contribution Account and shall be
treated as distributed from the Participant's Qualified
Employer Deferral Contribution account only to the
extent such Excess Contributions exceed the balance in
the Participant's Salary Deferral account.
(c) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
Excess Aggregate Contributions and income allocable thereto
shall be forfeited, if otherwise forfeitable under the terms of
the Plan, or if not forfeitable, distributed no later than the
last day of each Plan Year, to Participants to whose accounts
Employee Contributions or Matching Contributions were allocated
for the preceding Plan Year. "Excess Aggregate Contributions"
shall mean the amount described in section 401(m)(6)(B) of the
Code.
(i) DETERMINATION OF INCOME.
The income allocable to Excess Aggregate Contributions
shall be determined by multiplying income allocable to
the Participant's Employee Contributions and Matching
Employer Contributions for the Plan Year by a fraction,
the numerator of which is the Excess Aggregate
Contributions on behalf of the Participant for the
preceding Plan Year and the denominator of which is the
sum of the Participant's account balances attributable
to Employee Contributions and Matching Employer
Contributions on the last day of the preceding Plan
Year.
(ii) MAXIMUM DISTRIBUTION AMOUNT.
The Excess Contributions which would otherwise be
distributed to the Participant shall be adjusted for
income, and if there is a loss allocable to the Excess
Aggregate Contribution, shall in no event be less than
the lesser of the Participant's account under the Plan
or the Participant's Employee Contributions and Matching
Contributions for the Plan Year.
(iii) ACCOUNTING EXCESS AGGREGATE CONTRIBUTIONS.
Excess Aggregate Contributions shall be distributed from
the Participant's Employee Contribution account, and
forfeited if otherwise forfeitable under the terms of
the Plan (or, if not forfeitable, distributed) from the
Participant's Matching Contribution account in
proportion to the Participant's Employee Contributions
and Matching Contributions for the Plan Year.
57
(d) FORFEITURE LIMITATION.
Notwithstanding the foregoing, no forfeitures arising from this
section 8.11 shall be allocated to the account of any Highly
Compensated Employee.
(e) AMOUNT OF EXCESS CONTRIBUTIONS.
The amount of excess contributions for a highly compensated
employee will be determined in the following manner. First, the
actual deferral ratio (ADR) of the highly compensated employee
with the highest ADR is reduced to the extent necessary to
satisfy the actual deferral percentage (ADP) test or cause such
ratio to equal the ADR of the highly compensated employee with
the next highest ratio. Second, this process is repeated until
the ADP test is satisfied. The amount of excess contributions
for a highly compensated employee is then equal to the total of
elective and other contributions taken into account for the ADP
test minus the product of the employee's contribution ratio as
determined above and the employee's compensation. In the case of
a highly compensated employee whose actual deferral ratio (ADR)
is determined under the family aggregation rules, the
determination of the amount of excess contributions shall be
made as follows:
(1) If the highly compensated employee's ADR is determined by
combining the contributions and compensated of all family
members, then the ADR is reduced in accordance with the
"leveling" method described in section I.401(k)-1(f)(2) of the
regulations and the excess contributions for the family unit are
allocated among the family members in proportion to the
contributions of each family member that have been combined.
(2) If the highly compensated employee's ADR is determined by
combining the contributions
and compensation of only those family members who are highly
compensated without regard to family aggregation, then the ADR
is reduced in accordance with the leveling method but not below
the ADR of eligible nonhighly compensated family members. Excess
contributions are determined by taking into account the
contributions of the eligible family members who are highly
compensated without regard to family aggregation and are
allocated among such family members in proportion to their
contributions. If further reduction of the ADR is required,
excess aggregate contributions resulting from this reduction are
determined by taking into account the contributions of all
eligible family members and are allocated among such family
members in proportion to their contributions.
58
The amount of excess contributions to be distributed shall be
reduced by excess deferrals previously distributed for the
taxable year ending in the same plan year and excess deferrals
to be distributed for a taxable year will be reduced by excess
contributions previously distributed or recharacterized for the
plan beginning in such taxable year.
Failure to correct excess contributions by the close of the plan
year following the plan year for which they were made will cause
the cash or deferred arrangement to fail to satisfy the
requirements of section 401(k)(3) for the plan year for which
the excess contributions were made and for all subsequent years
they remain in the trust. Also, the employer will be liable for
a 10% excise tax on the amount of excess contributions unless
they are corrected within 2 1/2 months after the close of the
plan year for which they were made.
(f) For purposes of this section highly compensated shall have the
meaning set forth in Section 2.21.
(g) AMOUNT OF EXCESS AGGREGATE CONTRIBUTIONS.
The amount of excess contributions for a highly compensated
employee will be determined in the following manner. First, the
actual contribution (ACR) of the highly compensated employee
with the highest ACR is reduced to the extent necessary to
satisfy the actual contribution percentage (ACP) test or cause
such ratio to equal the ACR of the highly compensated employee
with the next highest ratio. Second, this process is repeated
until the ACP test is satisfied. The amount of excess
contributions for a highly compensated employee is then equal to
the total of elective and other contributions taken into account
for the ACP test minus the product of the employee's
contribution ratio as determined above and the employee's
compensation. In the case of a highly compensated employee whose
actual contribution ratio (ACR) is determined under the family
aggregation rules the determination of the amount of excess
contribution shall be made as follows:
(1) If the highly compensated employee's ACR is determined by
combining the contributions and compensated of all family
members, the ACR is reduced in accordance with the "leveling"
method described in section I.401(m)-I(e)(2) of the regulations
and the excess contributions for the family unit are allocated
among the family members in proportion to the contributions of
each family member that have been combined.
(2) If the highly compensated employee's ACR is determined by
combining the contributions and compensation of only those
family members who are
59
highly compensated without regard to family aggregation, then
the ACR is reduced in accordance with the leveling method but
not below the ACR of eligible nonhighly compensated family
members. Excess contributions are determined by taking into
account the contributions of eligible family members who are
highly compensated without regard to a family aggregation and
are allocated among such family members in proportion to their
contributions. If further reduction of the ACR is required,
excess aggregate contributions resulting from this reduction are
determined by talking into account the contributions of all
eligible family members and are allocated among such family
members in proportion to their contributions.
The amount of excess contributions to be distributed or
recharacterized shall be reduced by excess contributions
previously distributed for the taxable year ending in the same
plan year and excess contributions to be distributed for a
taxable year will be reduced by excess contributions previously
distributed or characterized for the plan beginning in such
taxable year.
Failure to correct excess contributions by the close of the plan
year following the plan year for which they were made will cause
the plan to fail to satisfy the requirements of section
401(a)(4) for the plan year for which the excess aggregate
contributions were made and for all subsequent years they remain
in the trust. Also, the employer will be liable for a 10% excise
tax on the amount of excess aggregate contributions unless they
are corrected within 2 1/2 months after the close of the plan
year for which they were made.
The distribution of excess aggregate contributions shall include
the income allocable thereto which includes both income for the
plan year for which excess contributions were made and income
for the period between the end of the plan year and the date of
distribution. Such income shall be calculated in accordance with
IRS Section 401(m)(6)(A) and IRS regulation I.401(m)-(1)(e)(3).
(h) When excess employee deferral contributions are distributed,
employer Matching contributions attributable to those excess
deferral contributions shall not remain allocated to the
participant. Such amount of employer Matching contributions
shall be used to reduce employer Matching contributions for the
plan year in which the excess employee deferrals are
distributed.
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8.12 PLAN TERMINATION, DISPOSITION OF ASSETS OR DISPOSITION OF SUBSIDIARY:
Salary Deferral Contributions Qualified Employer Deferral Contributions and
income attributable thereto, shall be distributed to Participants or their
Beneficiaries as soon as administratively feasible. Upon an event described in
subparagraph (A) as provided herein:
(A) Plan Termination -- The termination of the plan without
establishment or maintenance of another defined contribution
plan [other than an employer stock ownership plan as defined
contribution plan (other than an employer stock ownership plan
as defined in section 4975(e)(7))].
Disposition of assets -- The disposition by a corporation of
substantially all of the assets (within the meaning of section
409(d)(2)) used by such corporation in a trade or business of
such corporation, but only with respect to an employee who
continues employment with the corporation acquiring such assets.
Disposition of subsidiary -- The disposition by a corporation of
such corporation's interest in a subsidiary (within the meaning
of section 409(d)(3)), but only with respect to an employee who
continues employment with such subsidiary.
(B) Distributions must be lump sum distributions --
(i) In general --An event shall not be treated as described
in subparagraph (A) with respect to any employee unless
the employer receives a lump sum distribution by reason
of the event.
(ii) Lump--sum distribution -- For purposes of this
subparagraph, the term "lump--sum distribution" has the
meaning given such term by section 402(e)(4), without
regard to clauses (i), (ii), (iii), and (iv) of
subparagraph (A), subparagraph (B), or subparagraph
(I-I) thereof.
(C) Transferor corporation must maintain plan -- An event
shall not be treated as described in clause (ii) or
(iii) of subparagraph (A) unless the transferor
corporation continues to maintain the plan after the
disposition.
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--------------------------------------------------------------------------------
ARTICLE IX. -- DISTRIBUTION OF DEATH BENEFITS
--------------------------------------------------------------------------------
9.01 DESIGNATION OF BENEFICIARY:
(a) Each Participant may designate one or more Beneficiaries;
provided, however, that no person other than the spouse of a
married Participant may be designated as a Beneficiary without
the prior written consent of such spouse. The Participant may
revoke the designation at any time, which shall revoke the
spouse's consent, and designate a new Beneficiary provided the
Participant's spouse executes a new consent.
(b) If the designated Beneficiary does not survive the Participant,
or if there is no designation, the benefits shall be distributed
to the Participant's surviving spouse, or, if none, to such
Participant's surviving issue by right of representation, or, if
the Participant leaves no surviving spouse or issue, to the
personal representative of the Participant's estate. The
designation shall be in the form and manner satisfactory to the
Employer.
9.02 PAYMENT OF BENEFITS:
In the event of the death of a Participant, the Participant's Distribution
Account shall be distributed as follows:
(a) TIME OF DISTRIBUTION:
(i) For Plan Years beginning after December 371, 1984, if a
Participant dies after distribution of the Participant's
Account has begun but before the entire Account has been
distributed, the remaining portion of the Account shall
be distributed to the Participant's Beneficiary over the
remainder of the period during which the distribution
was to be made to the Participant and in the same manner
as such benefits were being distributed to the
Participant; provided, however, the Beneficiary may
elect to receive the remaining portion of the Account
over a shorter period of time, in which case the amount
of each payment shall be adjusted accordingly. In no
event may the Beneficiary extend the period during which
the benefits shall be distributed.
(ii) For Plan Years beginning after December 31, 1984, if the
Participant dies before the distribution of his or her
Account has begun, the entire interest shall be
distributed within five (5) years after the death of
such Participant; provided however, that if any portion
is payable to or for the benefit of a designated
Beneficiary, and such
62
distribution begins no later than one year after the
date of the Participant's death, such portion may be
distributed over the life of such designated Beneficiary
or over a period not extending beyond the life
expectancy of such Beneficiary. If the designated
Beneficiary is the surviving spouse of the Participant,
the distribution need not begin earlier than the date on
which the Participant would have attained age 70-1/2.
If the surviving spouse dies before the distribution
begins, the Participant's Account shall be distributed
in accordance with the rules of this Section 9.02 as if
the surviving spouse were the Participant.
(b) FORM OF BENEFITS:
(i) Subject to the provisions of Section 9.02(a) above, upon
the Participant's death, all distributions to the
Beneficiary of the remaining balance of the
Participant's Account shall be made or commence within
60 days after the Employer has received notification of
the death of the Participant or the Participant's
surviving spouse or other Beneficiary. The method of
payment shall be limited to the following:
(A) A single lump sum;
(B) Annual, semi-annual, quarterly or monthly
payments from the Trust Fund for a period
certain not extending beyond the Beneficiary's
life expectancy, determined in accordance with
the rules provided in Section 8.02(b) of Article
VIII above. Any undistributed interest remaining
in the
Participant's Account upon the death of the
Beneficiary shall be paid to such Beneficiary's
designated beneficiary in a lump Sum;
(C) Distribution to the Beneficiary of an immediate
Nontransferable Contract to provide benefits for
the life of, or over a term certain not
extending beyond the life expectancy of, the
Beneficiary.
(ii) Notwithstanding the foregoing, if the aggregate balances
of the Participant's Accounts at the time of the
Participant's death do not exceed $3,500, the Plan may
distribute the Participant's Accounts within 60 days
after the close of the Plan Year during which the
Participant dies. If the aggregate balances of the
Participant's Accounts exceed $3,500, the Plan may
distribute the Participant's
63
Accounts in a lump sum prior to the time provided in
Section 9.02(a) only if the surviving spouse consents in
writing to the distribution.
9.03 TRANSITIONAL RULE:
Notwithstanding the provisions of Sections 9.01 and 9.02, distribution on behalf
of any Participant, including a Five-Percent Owner, may be made in accordance
with the terms of Sections 8.03, if all the requirements of Section 8.03(a) are
met.
64
--------------------------------------------------------------------------------
ARTICLE X. -- INVESTMENT AND VALUATION OF TRUST FUND AND PARTICIPANT ACCOUNTS
--------------------------------------------------------------------------------
10.01 INVESTMENTS:
(a) All contributions required or permitted under the Plan shall be
paid to the Trustee, and the Trustee shall have the exclusive
responsibility to manage the investments of the Trust Fund as
provided in the Trust, subject only to the provisions of Section
10.02 below and except to the extent such responsibility is
delegated to other persons pursuant to Section 3.01(g) of
Article III of this Plan and the applicable provisions of the
Trust.
(b) The assets of the Trust Fund not attributable to Participants'
directed investment accounts shall be valued annually at their
fair market value as of the Valuation Date. All gains and losses
attributable to the Trustee's investment accounts shall be
allocated annually in the same proportion that each
Participant's non-directed investment account bears to the total
of all Participants' non-directed investment accounts.
10.02 PARTICIPANT DIRECTED INVESTMENTS:
(a) If the Employer elects in the Adoption Agreement to permit
Participants to direct the investment of their respective
Accounts, each Participant may direct the investment of all or
any portion of his or her Accounts in accordance with the rules
of Section 10.02(b) below. At the discretion of the Employer,
the Employer may select a limited number of investment options
in which a Participant may direct the investment of all or a
portion of his or her Participant Account, as provided in
Section 10.02(c) below, or the Employer may permit each
Participant to direct the investment of all or a portion of his
or her Participant Account as the Participant deems appropriate.
To the extent so directed, and to the extent provided in Section
404 of ERISA, the Trustee is relieved of its fiduciary
responsibilities as provided therein. That portion of the
Account of any Participant so directing shall be considered an
earmarked investment account which shall not share in Trust Fund
earnings, as provided in Section 10.01(b) above, but shall be
charged or credited as appropriate with the net earning, gains,
losses and expenses as well as appreciations or depreciations in
market value during each Plan Year attributable to such account,
as provided in Section 10.02(e).
(b) To direct the Trustee with respect to the investment of all or a
portion of his or her Account, the Participant shall provide
written directions to the Employer in such form as the Employer
and the Trustee may require concerning the investment of the
Participant's earmarked investment
65
account, which directions shall be followed by the Employer in
directing the Trustee as to the investment of the earmarked
investment account Neither the Trustee in any other persons,
including the Employer, shall be under any duty to question any
such direction of the Participant or to review any securities or
other property, real or personal, 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 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 Participant's directed investment account.
(c) LIMITED INVESTMENT OPTIONS:
The Employer may permit Participants to direct the investment of
all or any portion of his or her Accounts in one or more of the
investment options or investment funds selected by the Employer
and the Trustee. The Participant shall provide written
directions to the Employer in such form as the Employer and
Trustee may require concerning the investment of the Accounts in
the investment options provided. To the extent that the Trustee
has received no written directions regarding the investment of
the Accounts, all funds, except cash held in non-interest
bearing deposits or a cash balance with the Trustee temporarily
waiting investment or payment of benefits or expenses, shall be
invested as part of the Trust Fund as provided in Section 10.01
above. Neither the Trustee nor any other persons, including the
Employer, shall be under any duty to question any such direction
of the Participant or to make any suggestions to the Participant
in connection with any such directions, and the Trustee shall
comply as promptly as practicable with directions given by the
Participant to the Employer hereunder. Any such direction may be
revoked by the Participant at any time in such form as the
Employer and the Trustee may require. The Participant may elect
to have a portion of his or her interest in any investment
option transferred to another investment option as of January 1,
April 1, July 1, or October 1 of each year. The election must be
in writing and delivered to the Employer at least fifteen days
prior to the
66
date of the transfer and may be with respect to only integral
increments of the Participant's Accounts.
Each Participant's Account shall be charged or credited as
appropriate with the net earnings, gains, losses and expenses as
well as appreciations or depreciations in market value during
each Plan Year attributable to the specific investments of such
Accounts, and such amounts shall not be considered in
determining Trust Fund gains or losses.
(d) INVESTMENT IN INSURANCE
A Participant may direct a Trustee to invest any portion of his
or her Participant Account in ordinary or group term life
insurance policy or policies or individual Annuity Contract or
Contracts issued by one or more insurance companies. Each
ordinary or group term policy or Contract shall be considered a
directed investment of the Participant's Account Notwithstanding
the foregoing, not more than forty-nine percent (49%) of the
aggregate amount of Employer contributions made on behalf of
such Participant may be invested in ordinary life insurance
contracts on the life of such Participant, nor more than
twenty-five percent (25%) of the aggregate amount of Employer
contributions may be invested in group term life insurance
policies. If both ordinary and group term life insurance
policies are purchased for the Participant, the sun-i of the
annual group term insurance premium plus one-half (1/2) of the
ordinary insurance premium may not exceed twenty-five percent
(25%) of Employer contributions made for the Plan Year in which
such premiums are paid, and the additional premium, if any, paid
for ordinary life insurance shall not exceed an additional
twenty-four percent (24%) of Employer contributions for such
Plan Year. Any dividends which become payable on any such
policies or Annuity Contracts shall be considered earnings
attributable to the assets of such Participant's directed
investment account which shall be allocated to such
Participant's Account, in accordance with the provisions of
subsection (e). Upon a Participant's retirement, the Trustee
shall distribute the policies or Annuity Contracts to the
Participant as part of his or her benefit, unless the
Participant directs the Employer to direct the Trustee to
convert into cash the entire value of the insurance policies or
Annuity Contracts purchased for the Participant. The method of
settlement on any life insurance policy distributed to the
Participant must be limited to those provided under Article IX
of the Plan, and such policies must be in the form of a
Nontransferable Contract. The Participant's spouse shall be the
designated beneficiary of the proceeds of the insurance policies
or Annuity Contracts, unless the Participant's spouse has
consented to the designation of a different beneficiary in
accordance with the provisions of
67
Section 9.01 of Article IX. In the case of any conflict between
the provisions of the Plan and Trust Agreement and the terms of
any insurance policy or Contract, the provisions of the Plan and
Trust Agreement shall control.
(e) VALUATION OF DIRECTED INVESTMENT ACCOUNTS:
The assets of each Participant's directed investment account in
the Trust shall be valued annually at their fair market value as
of the Valuation Date. As of such date, the earnings and losses
attributable to the assets of such Participant's directed
investment account shall be allocated to such Participant's
Account.
10.03 PARTICIPANT STATEMENTS:
Within one hundred eighty (180) days after the close of each Plan Year, the
Employer shall furnish each Participant with statements of amounts credited or
charged to his or her Accounts during and a the end of the Plan Year, including
but not limited to the current market value of the assets of the Account at the
end of the Plan Year, in such form and containing such supplementary information
as the Employer shall, in its sole discretion, deem appropriate in the
circumstances.
68
--------------------------------------------------------------------------------
ARTICLE XI. -- AMENDMENT AND TERMINATION OF PLAN;
MERGER OR CONSOLIDATION OF PLAN
--------------------------------------------------------------------------------
11.01 AMENDMENT BY EMPLOYER
The Employer reserves the right to amend the Plan at any time, provided,
however:
(a) No amendment or modification of the Plan shall be made which
would cause or permit any part of the Trust Fund to be diverted
for purposes other than for the exclusive benefit of
Participants or their Beneficiaries or would cause or permit any
portion of the Trust Fund (other than amounts credited to the
Account of an Owner-Employee who is also the Employer) to revert
to or become the property of the Employer; and
(b) No amendment or modification of the Plan shall be made
retroactively so as to deprive any Participant or such
Participant's Beneficiary of any benefit to which such
Participant or Beneficiary was entitled under the Plan by reason
of contributions made by the Employer prior to the modification
or amendment except for modifications or amendments necessary to
conform the Plan or the Trust established in connection
therewith to the requirements of the Code, as amended, or other
applicable law, regulation or ruling and the Employer is
authorized expressly to make retroactive modifications and
amendments that are necessary such purposes.
(c) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects the
computation of the Participant's nonforfeitable percentage, or
if the Plan is deemed amended by an automatic change to or from
a Top-Heavy vesting schedule, each Participant with at least (3)
Years of Service with the Employer may elect within a reasonable
period after the adoption of the amendment or change, to have
the nonforfeitable percentage computed under the Plan without
regard to such amendment or change. The period during which the
election may be made shall commence on the date the amendment is
adopted or deemed to be made and shall end on the latest of (i)
sixty (60) days after the amendment is adopted; (ii) sixty (60)
days after the amendment becomes effective; (iii) sixty (60)
days after the Participant is issued written notice of the
amendment by the Employer.
(d) No amendment to the Plan shall be effective to the extent that
it has the effect of decreasing a Participant's accrued benefit
or Account balance. For purposes of this Section 11.01(d), a
Plan amendment which has the effect of (1) eliminating or
reducing an early retirement benefit or a retirement-type
subsidy, or (2) eliminating an optional form of benefit, with
respect to
69
benefits attributable to service before the amendment, shall be
treated as reducing accrued benefits. In the case of a
retirement-type subsidy, the preceding sentence shall apply only
with respect to a Participant who satisfies (either before or
after the amendment) the pre-amendment conditions for the
subsidy. In general, a retirement-type subsidy is a subsidy that
continues after retirement, but does not include a qualified
disability benefit, a medical benefit, a Social Security
supplement, a death benefit (including life insurance), or a
plant shutdown benefit (that does not continue after retirement
age). Furthermore, no amendment to the Plan shall have the
effect 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 becomes effective.
(e) No amendment or modification of the Plan shall be made to modify
or increase the duties or responsibilities of the Trustee
without the written consent of the Trustee.
11.02 TERMINATION:
While the Employer expects and intends to continue the Plan indefinitely, the
Employer may terminate the Plan at any time upon thirty (30) days' written
notice to the Trustee of the Employer's intent to terminate the Plan or to
discontinue completely contributions under the Plan. The Plan shall terminate
without further action by the Employer, upon the Employer's incapacity,
bankruptcy, discontinuance of the business or profession designated in the
attached Adoption Agreement (unless with the Trustee's consent, a successor to
such business elects in writing to continue the Plan) or upon the Employer's
failure and refusal for a period of sixty (60) days after resignation or removal
of the Trustee to appoint a successor Trustee and obtain acceptance of such
appointment pursuant to the Trust; provided that, until the Trustee has received
written notice of any such event, the Trustee shall incur no liability for
payments or distributions made, or any other action taken or omitted by the
Trustee in good faith, to any person whose interest may have been affected by
such event.
Upon termination or partial termination of the Plan or upon complete
discontinuance of contributions, the rights of all affected Participants to
amounts credited to their Accounts shall be and remain fully vested and
nonforfeitable. The Accounts of each such Participant (i) shall be held by the
Trustee and distributed at the time and in the manner as provided in Articles
VIII and IX. whichever is applicable, or (ii) shall be liquidated and, after
deduction of expenses and the Trustee's fees, the proceeds shall be distributed
to the Participant pursuant to the provisions of Article VIII. The Employer
shall direct the Trustee as to whether alternative (i) or (ii) above shall
apply.
Upon termination of the Plan and upon instructions from the Employer, in lieu of
making distributions to the Participants, the Trustee may transfer the funds
directly to an
70
individual retirement plan, the qualified retirement plan of an entity
succeeding to the business of the Employer, or to any other qualified plan
providing for acceptance of such a transfer in which the Participant
participates.
11.03 MERGER OR CONSOLIDATION OF THE PLAN.
In the case of any merger or consolidation with, or transfer of assets or
liabilities to, any other plan, provisions shall be made so that each
Participant in the Plan on the date thereof would receive (if the Plan is then
terminated) a benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit the Participant would have been
entitled to receive immediately prior to the merger, consolidation or transfer
if the Plan had then terminated.
71
--------------------------------------------------------------------------------
ARTICLE XII. -- MISCELLANEOUS
--------------------------------------------------------------------------------
12.01 RIGHTS OF PARTICIPANTS:
Neither the establishment of this Plan and the Trust nor any modification
thereof, nor the creation of any fund or account or payment of benefits pursuant
to the Plan, shall be construed to give any Participant or other person any
legal or equitable right against the Employer or the Trustee, or any right,
title or interest in the Trust Fund except as expressly herein provided. The
establishment of this Plan and the Trust shall not be deemed to give any
employee of the Employer any right to be retained in the Employer's employ or to
interfere with the right of the Employer to discharge any Employee at any time.
12.02 RECORDS:
The Employer shall provide the Trustee promptly upon request with all
information and records deemed necessary or desirable by the Trustee for its use
in performing the Trustee's duties hereunder, including, but not by way of
limitation, all information requested by the Trustee for preparation of tax
returns the Trustee is requested by the Employer or required by law to file with
respect to the Trust Fund.
12.03 TRUST AGREEMENT:
The provisions of the Profit sharing 401(k) Trust are incorporated by this
reference as though set forth in full. The Employer and each Participant and his
or her Beneficiary shall be bound by the provisions of the Trust pertaining to
the rights, duties and responsibilities of the Trustee, and if the provisions of
this Plan and the Trust shall be in conflict on any matter or question
concerning the Trustee's rights, duties or liabilities, the Trust shall control.
Except to the extent otherwise expressly provided in the Plan, at no time shall
the assets held by the Trustee in accordance with such Trust, or any part
thereof, revert to or become the property of the Employer or be used for or
diverted to purposes other than for the exclusive benefit of the Participants or
their respective Beneficiaries or estates, or for the administrative expenses of
the Trust or the Plan.
12.04 INALIENABILITY OF BENEFITS:
Each and every person at any time entitled to payments or benefits hereunder is
hereby restrained from selling, transferring, assigning, hypothecating, or
alienating them and shall be without power to do so, except to the extent such
benefits are used to secure a loan to the Participant from his or her Accounts,
as permitted under Section 8.09 of this Plan, nor shall such property, interest
or estate be subject to such person's liabilities, obligations, judgments,
bankruptcy proceedings, claims or creditors or other legal process.
Notwithstanding the foregoing, the preceding sentence shall not preclude the
72
Trustee from complying with a qualified domestic relations order, as that term
is defined in Section 4l4(p) of the Code, which creates, assigns, or recognizes
a right to any benefit payable to an alternate payee at such time and in such
manner as provided in the qualified domestic relations order, or any domestic
relations order entered before January 1, 1985. This does not, however, permit
the Trustee to comply with a domestic relations order which is entered after
December 31, 1984 which is not a qualified domestic relations order.
12.05 CLAIM PROCEDURE AND REVIEW:
Claims for benefits under the Plan shah be filed with the Employer on forms
supplied by the Employer. Written notice of the disposition of a claim shall be
furnished the claimant within a reasonable time after receipt of the clam-i. In
the event that the claim is denied in whole or in part, the notice shall set
forth in a manner calculated to be understood by the claimant: (i) the specific
reasons for the denial; (ii) the specific reference to the pertinent Plan
provisions on which the denial is based; (iii) a description of any additional
material or information necessary for the claimant to perfect the claim and an
explanation as to why such material or information is necessary; and (iv) an
explanation of the procedure under which the claim can be reviewed. If any claim
is denied in whole or in part, a claimant or his or her duly authorized
representative: (i) may request a review by the Employer upon written request;
(ii) may review all pertinent documents; and (iii) may submit issues and
comments in writing to the Employer. The request for review must be filed with
the Employer within 60 days after receipt of the notification of denial. The
Employer shall make a decision not later than 60 days after the Employee's
receipt of a request for review unless special circumstances require an
extension of time for processing, in which case a decision shall be rendered as
soon as possible, but not later than 120 days after receipt of a request for
review. The Employer's decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
12.06 GOVERNING LAW:
This agreement shall be governed by and interpreted in accordance with
California law to the extent that it is not preempted by the laws of the United
States of America.
12.07 NOTIFICATION OF ADOPTION OF THE PLAN:
The Employer shall properly notify all interest parties of the adoption of this
Plan in accordance with the provisions of applicable rules, procedures, and
regulations.
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12.08 RELATED EMPLOYERS CONTROL]ED BY ONE OR MORE OWNER-EMPLOYEES:
(a) If the Plan provides contributions or benefits for one or more
Owner-Employees who control both the trade or business with
respect to which this Plan is established and one or more other
trades or businesses, this Plan and the plans established with
respect to such other trades or businesses must, when looked at
as a single plan, satisfy Sections 401(a) and (d) of the Code
with respect to the Employees of this and all such other trades
or businesses.
(b) If this Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or
businesses, the employees of each such other trade or business
must be included in a plan which satisfies Sections 401(a) and
(d) of the Code and which provides contributions and benefits
not less favorable than provided for such Owner-Employees under
this Plan.
(c) If this Plan provides contributions or benefits for an
Owner-Employee who is also covered under the plan of one or more
other trades or businesses which the Owner-Employer does not
control, and such Owner-Employer controls another trade or
business, the employees of such controlled trade or business
must be included in a plan which satisfies Sections 401(a) and
(d) of the Code and which provides contributions or benefits
which are as favorable as those provided for such Owner-Employee
under the most favorable plan of the trade or business which
such Owner-Employee does not control.
(d) For purposes of Sections 12.08(a), 12.08(b) and 12.08(c) above,
an Owner-Employee, or two or more Owner-Employees, shall be
considered to control a trade or business if such
Owner-Employee, or such two or more Owner-Employees together:
(i) Own the entire interest in an unincorporated trade or
business, or either the capital interest or the profits
interest in such 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.
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12.09 CONTROLLED GROUPS, AFFILIATED SERVICE GROUPS, AND LEASED EMPLOYEES:
Except as provided in Section 6.04(e)(vi), all employees of all corporations
which are members with the Employer of a controlled group of corporations (as
defined in Section 414(b) of the Code), all employees of a group of trades or
businesses (whether or not incorporated) under common control (as defined in
Section 414(c) of the Code) with the Employer, and all employees of all members
of an affiliated service group (as defined in Section 414(m) of the Code), shall
be treated as employed by a single employer. In addition, any leased employee,
as defined in Section 414(n) of the Code, shall be treated as an Employee of the
Employer or any Employer described in the preceding sentence, if and to the
extent required to be so treated pursuant to the provisions of Section 414(n) of
the Code.
12.10 TITLES AND SUBTITLES:
The titles and subtitles used herein are for convenience only, and, in the event
of any conflict between the title or subtitle and the text, the text shall
control.
12.11 PROVISIONS OF PLAN CONTROL:
In the event of any conflict between the provisions of this Plan and the terms
of any policy or contract issued thereunder, the provisions of this Plan shall
control.
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