EXHIBIT 10.53
ADOPTION AGREEMENT FOR
MFS RETIREMENT SERVICES, INC.
NON-STANDARDIZED 401(K) PROFIT SHARING
PLAN AND TRUST
The undersigned Employer adopts the MFS Retirement Services, Inc. Prototype
Non-Standardized 401(k) Profit Sharing Plan and Trust and elects the following
provisions:
CAUTION: Failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION (An amendment to the Adoption Agreement is not needed
solely to reflect a change in the information in this Section.)
1. EMPLOYER'S NAME, ADDRESS AND TELEPHONE NUMBER
Name: ▇▇▇▇▇▇▇ Americas Corporation
___________________________________________________________________
Address: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
___________________________________________________________________
Street
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
_____________________ ________________ ____________
City State Zip
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
___________________
2. EMPLOYER'S TAXPAYER IDENTIFICATION NUMBER ▇▇-▇▇▇▇▇▇▇
__________________________________
3. TYPE OF ENTITY
a.[X] Corporation (including Tax-exempt or Non-profit Corporation)
b.[ ] Professional Service Corporation
c.[ ] S Corporation
d.[ ] Limited Liability Company that is taxed as:
1. [ ] a partnership or sole proprietorship
2. [ ] a Corporation
3. [ ] an S Corporation
e.[ ] Sole Proprietorship
f.[ ] Partnership (including Limited Liability)
g.[ ] Other
_______________________________________________________________
AND, the Employer is a member of...
h.[ ] a controlled group?
i.[ ] an affiliated service group?
4. EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Beginning on July 1st (e.g., January 1st)
_______________________________
month day
and ending on June 30th
_______________________________
month day
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PLAN INFORMATION
(An amendment to the Adoption Agreement is not needed solely to reflect a change
in the information in items 9 through 11 of this Section.)
5. PLAN NAME:
▇▇▇▇▇▇▇ Technology Profit Sharing and Savings Plan
____________________________________________________________________________
____________________________________________________________________________
6. EFFECTIVE DATE
a.[ ] This is a new Plan effective as of ____________ (hereinafter called
the "Effective Date").
b.[ ] This is an amendment and restatement of a previously established
qualified Plan and Trust of the Employer which was originally
effective ____________ (hereinafter called the "Effective Date").
The effective date of this amendment and restatement is
___________________________________________________________________.
c.[X] FOR GUST RESTATEMENTS: This is an amendment and restatement of a
previously established qualified Plan and Trust of the Employer to
bring the Plan into compliance with GUST (GATT, USERRA, SBJPA and
TRA '97). The original Plan effective date was June 29,1955
(hereinafter called the "Effective Date"). Except as specifically
provided in the Plan, the effective date of this amendment and
restatement is January 1st 2002. (Enter a date during the current
Plan Year. The Plan contains appropriate retroactive effective dates
with respect to provisions for the appropriate laws.)
7. PLAN YEAR means the 12 consecutive month period:
Beginning on January 1st (e.g., January 1st)
_______________________________
month day
and ending on December 31st
______________________________
month day
except that there will be a short Plan Year:
a.[X] N/A
b.[ ] beginning on (e.g., July 1, 2000)
_____________________________
month day, year
and ending on
_____________________________
month day, year
8. VALUATION DATE means:
a.[X] Every day that the Trustee, any transfer agent appointed by the
Trustee or the Employer, and any stock exchange used by such agent
are open for business (daily valuation).
b.[ ] Other (specify day or dates):_______________________________________
9. PLAN NUMBER assigned by the Employer (select one)
a.[X] 001
b.[ ] 002
c.[ ] 003
d.[ ] Other____________________________________
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10. TRUSTEE(S): (Please complete either a., b., or c. and d. and e. if
applicable)
a.[ ] NAME(S) AND TITLE(S) OF INDIVIDUAL TRUSTEE(S):
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
NOTE: An Individual Trustee may not act as a Directed (Nondiscretionary)
Trustee.
b.[ ] NAME(S) OF BANK OR TRUST COMPANY TRUSTEE(S):________________________
c.[X] MFS HERITAGE TRUST COMPANY (MHTC)
NOTE: MHTC serves only as Directed (Nondiscretionary) Trustee and only
when all Plan investments are maintained on a participant
recordkeeping system used by MFS Retirement Services, Inc. pursuant
to a contract for recordkeeping and administrative support services
and all other requirements imposed by MHTC are satisfied. The Plan
Administrator is responsible for directing MHTC in the performance
of the rights, powers, duties, and obligations of the Trustee,
including, without limitation, those rights, powers, duties and
obligations with respect to the investment and distribution of Plan
assets.
d. AND, if b. above is completed, is the Trustee a Directed
(Nondiscretionary) Trustee? (If so, Plan assets are invested in
accordance with directions provided by the Plan Administrator).
1. [ ] Yes 2. [ ] No 3. [ ] N/A
e. AND, shall a separate trust agreement be used with this Plan?
1. [ ] Yes 2. [ ] No
NOTE: If Yes, an executed copy of the trust agreement between the Trustee
and the Employer must be attached to this Plan. The Plan and trust
agreement will be read and construed together. The responsibilities,
rights and powers of the Trustee shall be those specified in the
trust agreement.
11. TRUSTEES' MAILING ADDRESS:
a. [ ] Use Employer Address and Telephone Number.
b. [ ] Use other Address:
____________________________________________________________________
Street
__________________________________ __________________ ____________
City State Zip
__________________________________
Telephone
c. [X] If MFS HERITAGE TRUST COMPANY is selected as trustee.
▇/▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
12. PLAN ADMINISTRATOR'S NAME, ADDRESS AND TELEPHONE NUMBER: (If none is named,
the Employer will become the Administrator.)
a.[X] Employer (Use Employer address and telephone number).
b.[ ] Use name, address and telephone number below:
Name:
____________________________________________________________
Address:
____________________________________________________________
Street
______________________________ ________________ __________
City State Zip
______________________________ ________________ __________
Telephone:
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13. CONSTRUCTION OF PLAN
This Plan shall be governed by the laws of the state or commonwealth where
the Employer's (or, in the case of a corporate Trustee, such Trustee's)
principal place of business is located unless another state or commonwealth
is specified:________
If MFS Heritage Trust Company is selected as directed (nondiscretionary)
Trustee in Section 10. above, the Plan shall be governed by the laws of the
state of New Hampshire.
ELIGIBILITY REQUIREMENTS
14. ELIGIBLE EMPLOYEES (Plan Section 1.18)
For all purposes of the Plan (except as elected below) Eligible Employees
are all Employees (including Leased Employees) except:
a.[ ] N/A. No exclusions.
b.[X] The following are excluded (select all that apply):
1. [ ] Union Employees (as defined in Plan Section 1.18)
2. [ ] Non-resident aliens (as defined in Plan Section 1.18)
3. [ ] Salaried Employees
4. [ ] Highly Compensated Employees
5. [X] Leased Employees
6. [ ] Other:_______________________________________________________
However, for purposes of Employer Matching Contributions, Eligible Employees are
all Employees (including Leased Employees) except:
c.[X] N/A. The option elected in a. above applies for Employer Matching
Contributions.
d.[ ] The following are excluded (select all that apply):
1. [ ] Union Employees (as defined in Plan Section 1.18)
2. [ ] Non-resident aliens (as defined in Plan Section 1.18)
3. [ ] Salaried Employees
4. [ ] Highly Compensated Employees
5. [ ] Leased Employees
6. [ ] Other:_______________________________________________________
And, for purposes of Employer Profit Sharing Contributions, Eligible Employees
are all Employees (including Leased Employees) except:
e. [X] N/A. The option elected in a. above applies for Employer Profit
Sharing Contributions.
f. [ ] No exclusions
g. [ ] The following are excluded (select all that apply):
1. [ ] Union Employees (as defined in Plan Section 1.18)
2. [ ] Non-resident aliens (as defined in Plan Section 1.18)
3. [ ] Salaried Employees
4. [ ] Highly Compensated Employees
5. [ ] Leased Employees
6. [ ] Other:_______________________________________________________
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15. THE FOLLOWING AFFILIATED EMPLOYERS (Plan Section 1.6) will adopt this Plan
as Participating Employers (if there is more than one, or if Affiliated
Employers adopt this Plan after the date the Adoption Agreement is executed,
attach additional executed "Affiliated Employer Participation Agreement(s)"
to this Adoption Agreement):
a.[X] N/A
b.[ ] Name of Employer:___________________________________________________
Address:__________________________________________________________________
City:_______________________________ State:__________________ Zip:________
Telephone:_________________ Federal Tax Identification Number:____________
Type of Entity (select one):
c.[ ] Corporation (including Tax-exempt or Non-profit Corporation)
d.[ ] Professional Service Corporation
e.[ ] S Corporation
f.[ ] Limited Liability Company
g.[ ] Sole Proprietorship
h.[ ] Partnership (including Limited Liability Partnership)
i.[ ] Other_________________________________________________________________
NOTE: Employees of an Affiliated Employer that does not adopt this
Adoption Agreement as a Participating Employer shall not be Eligible
Employees. This Plan could violate the Code Section 410(b) coverage
rules if all Affiliated Employers do not adopt the Plan.
16. CONDITIONS OF ELIGIBILITY (Plan Section 3.1) Any Eligible Employee will be
eligible to participate in the Plan upon satisfaction of the following:
NOTE: If the Year(s) of Service selected is or includes a fractional year,
an Employee will not be required to complete any specified number of
Hours of Service to receive credit for such fractional year. If
expressed in months of service, an Employee will not be required to
complete any specified number of Hours of Service in a particular
month, unless elected below.
Eligibility for all purposes of the Plan (except as elected below):
a.[X] No age or service required. (skip b. and c. below)
b.[ ] Completion of the following service requirement which is based on
Years of Service (or Periods of Service if the Elapsed Time Method
is elected):
1. [ ] No service requirement
2. [ ] 1/2 Year of Service or Period of Service
3. [ ] 1 Year of Service or Period of Service
4. [ ] _____ Hours of Service within _____ months from the Eligible
Employee's employment commencement date, but in no event more
than 1 Year of Service.
5. [ ] Other: _____ (may not exceed one (1) Year of Service or
Period of Service)
c.[X] Attainment of age:
1. [X] No Age Requirement
2. [ ] 20 -1/2
3. [ ] 21
4. [ ] Other: _____ (may not exceed 21)
d.[ ] The service and/or age requirements specified above shall be waived
with respect to any Eligible Employee who was employed on _____ and
such Eligible Employee shall enter the Plan as of such date. The
requirements to be waived are (select one or both):
1. [ ] service requirement
2. [ ] age requirement
NOTE: If d. is elected, the Plan may violate the nondiscrimination rules.
5
However, the following eligibility requirements will apply for purposes of
Employer Matching Contributions:
e.[X] N/A. The options elected in a. - d. above apply for Employer
Matching Contributions.
f.[ ] No age or service requirements. (skip g. and h. below)
g.[ ] Completion of the following service requirement which is based on
Years of Service (or Periods of Service if the Elapsed Time Method
is elected):
1. [ ] No service requirement
2. [ ] -1/2 Year of Service or Period of Service
3. [ ] 1 Year of Service or Period of Service
4. [ ] _____ Hours of Service within _____months from the Eligible
Employee's employment commencement date, but in no event more
than 1 Year of Service.
5. [ ] 2 Years of Service or Periods of Service
6. [ ] Other _____ (may not exceed two (2) Years of Service or
Periods of Service)
h.[ ] Attainment of age:
1. [ ] No Age Requirement
2. [ ] 20 -1/2
3. [ ] 21
4. [ ] Other _____ (may not exceed 21)
i.[ ] The service and/or age requirements specified above shall be waived
with respect to any Eligible Employee who was employed on _____ and
such Eligible Employee shall enter the Plan as of such date. The
requirements to be waived are (select one or both):
1. [ ] service requirement
2. [ ] age requirement
NOTE: If more than 1 Year of Service is elected 100% immediate vesting is
required. Also, if (i) is elected, the Plan may violate the
nondiscrimination rules.
And, the following eligibility requirements will apply for purposes of
Employer Profit Sharing Contributions:
j.[X] N/A. The options elected in a. - d. above apply for Employer Profit
Sharing Contributions.
k.[ ] No age or service requirements (skip l. and m. below).
l.[ ] Completion of the following service requirement which is based on
Years of Service (or Periods of Service if the Elapsed Time Method
is elected):
1. [ ] No service requirement
2. [ ] 1/2 Year of Service or Period of Service
3. [ ] 1 Year of Service or Period of Service
4. [ ] _____ Hours of Service within _____ months from the Eligible
Employee's employment commencement date, but in no event more
than 1 Year of Service.
5. [ ] 2 Years of Service or Periods of Service
6. [ ] Other _____ (may not exceed two (2) Years of Service or
Periods of Service)
m.[ ] Attainment of age:
1. [ ] No Age Requirement
2. [ ] 20 -1/2
3. [ ] 21
4. [ ] Other _____ (may not exceed 21)
n.[ ] The service and/or age requirements specified above shall be waived
with respect to any Eligible Employee who was employed on _____ and
such Eligible Employee shall enter the Plan as of such date. The
requirements to be waived are (select one or both):
1. [ ] service requirement
2. [ ] age requirement
NOTE: If more than 1 Year of Service is elected 100% immediate vesting is
required. Also, if n. is elected, the Plan may violate the nondiscrimination
rules.
6
17. EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee who has satisfied the applicable eligibility
requirements will become a Participant for all purposes of the Plan
(except as elected below) on (select one):
a. [X] the day on which such requirements are satisfied.
b. [ ] the first day of the month coinciding with or next
following the date on which such requirements are satisfied.
c. [ ] the first day of the Plan Year quarter coinciding with or
next following the date on which such requirements are satisfied.
d. [ ] the earlier of the first day of the seventh month or the
first day of the Plan Year coinciding with or next following the
date on which such requirements are satisfied.
e. [ ] the first day of the Plan Year next following the date on
which such requirements are satisfied. (Eligibility must be -1/2
Year of Service (or Period of Service) or less and age must be 20
-1/2 or less.)
f. [ ] Other: ________, provided that an Eligible Employee who
has satisfied the maximum age 21 and service requirements (one
(1) Year or Period of Service) and who is otherwise entitled to
participate, shall commence participation no later than the
earlier of (a) 6 months after such requirements are satisfied, or
(b) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such participation date.
However, an Eligible Employee who has satisfied the applicable
eligibility requirements will become a Participant for purposes of
Employer Matching Contributions on (select one):
g. [X] N/A. The options elected in a. - f. above apply for Employer
Matching Contributions.
h. [ ] the day on which such requirements are satisfied.
i. [ ] the first day of the month coinciding with or next
following the date on which such requirements are satisfied.
j. [ ] the first day of the Plan Year quarter coinciding with or
following the date on which such requirements are satisfied.
k. [ ] the first day of the Plan Year in which such requirements
are satisfied.
l. [ ] the first day of the Plan Year in which such requirements
are satisfied, if such requirements are satisfied in the first 6
months of the Plan Year, or as of the first day of the next
succeeding Plan Year if such requirements are satisfied in the
last 6 months of the Plan Year.
m. [ ] the earlier of the first day of the seventh month or the
first day of the Plan Year coinciding with or next following the
date on which such requirements are satisfied.
n. [ ] the first day of the Plan Year next following the date on
which such requirements are satisfied, (Eligibility must be -1/2
Year of Service (or Period of Service) or less and age 20 -1/2 or
less.)
o. [ ] Other: _________, provided that an Eligible Employee who
has satisfied the maximum age 21 and service requirements (one
(1) Year or Period of Service (or more than one (1) year if full
and immediate vesting)) and who is otherwise entitled to
participate, shall commence participation no later than the
earlier of (a) 6 months after such requirements are satisfied, or
(b) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such participation date.
And, an Eligible Employee who has satisfied the applicable eligibility
requirements will become a Participant for purposes of Employer Profit
Sharing Contributions on (select one):
p. [X] N/A. The options elected in a. - f. above apply for Employer
Profit Sharing Contributions.
q. [ ] the day on which such requirements are satisfied.
r. [ ] the first day of the month coinciding with or next
following the date on which such requirements are satisfied.
s. [ ] the first day of the Plan Year quarter coinciding with or
following the date on which such requirements are satisfied.
t. [ ] the first day of the Plan Year in which such requirements
are satisfied.
u. [ ] the first day of the Plan Year in which such requirements
are satisfied, if such requirements are satisfied in the first 6
months of the Plan Year, or as of the first day of the next
succeeding Plan Year if such requirements are satisfied in the
last 6 months of the Plan Year.
v. [ ] the earlier of the first day of the seventh month or the
first day of the Plan Year coinciding with or next following the
date on which such requirements are satisfied.
w. [ ] the first day of the Plan Year next following the date on
which such requirements are satisfied, (Eligibility must be -1/2
Year of Service (or Period of Service) or less and age 20 -1/2 or
less.)
x. [ ] Other:_________, provided that an Eligible Employee who
has satisfied the maximum age 21 and service requirements (one
(1) Year or Period of Service (or more than one (1) year if full
and immediate vesting)) and who is otherwise entitled to
participate, shall commence participation no later than the
earlier of (a) 6 months after such requirements are satisfied, or
(b) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such participation date.
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SERVICE
18. RECOGNITION OF SERVICE WITH PREDECESSOR EMPLOYER
a. [ ] No service with a predecessor employer shall be recognized.
b. [X] Service with:
1. [X] Kansa will be recognized except as follows
(select a. or all that apply of b. through d.):
a. [X] N/A, no limitations.
b. [ ] service will only be recognized for vesting
purposes.
c. [ ] service will only be recognized for eligibility
purposes.
d. [ ] service prior to _________ will not be
recognized.
2. [ ] ______ will be recognized except as follows (select a.
or all that apply of b. through d.):
a. [ ] N/A, no limitations.
b. [ ] service will only be recognized for vesting
purposes.
c. [ ] service will only be recognized for eligibility
purposes.
d. [ ] service prior to _________ will not be
recognized.
NOTE: If the predecessor Employer maintained this qualified Plan or
maintained a qualified plan that has been merged with this
qualified Plan, then Years of Service (and/or Periods of Service)
with such predecessor Employer shall be recognized pursuant to
Plan Sections 1.57 and 1.85 and b.(1) above must be marked.
Attach additional sections for other predecessor Employers.
19. SERVICE CREDITING METHOD
Elapsed Time Method (If the Plan only uses the Hours of Service Method,
skip to d. - h. below)
a. Shall be used for all money types under the Plan (except as selected
below) for purposes of:
1.[X] eligibility to participate.
2.[ ] vesting.
3.[ ] sharing in allocations or contributions.
b. However, for Employer Matching Contributions, the Elapsed Time
Method shall be used for purposes of:
1.[ ] N/A. The options elected in a. above apply for Employer
Matching Contributions.
2.[X] N/A. The Hours of Service Method will be used for Employer
Matching Contributions as selected in 19(d) - (h) below.
3.[ ] eligibility to participate.
4.[ ] vesting.
5.[ ] sharing in allocations or contributions.
c. And, for Employer Profit Sharing Contributions, the Elapsed Time
Method shall be used for purposes of:
1.[ ] N/A. The options elected in a. above apply for Employer
Profit Sharing Contributions.
2.[X] N/A. The Hours of Service Method will be used for Employer
Profit Sharing Contributions as selected in 19(d) - (h) below.
3.[ ] eligibility to participate.
4.[ ] vesting.
5.[ ] sharing in allocations or contributions.
Hours of Service Method. (If the Plan only uses the Elapsed Time
Method, skip to 20., Vesting)
d. Shall be used for all money types under the Plan (except as selected
below) for purposes of:
1.[ ] Eligibility Computation. The eligibility computation period
after the initial eligibility computation period shall...
a. [ ] be based on the date an Employee first performs an
Hour of Service (initial computation period) and
subsequent computation periods shall be based on each
anniversary date thereof.
b. [ ] shift to the Plan Year after the initial computation
period.
2.[X] Vesting. The vesting computation period shall be...
a. [ ] the date an Employee first performs an Hour of
Service and each anniversary thereof.
b. [X] the Plan Year.
3.[ ] Sharing in Allocations or Contributions (the computation
period shall be the Plan Year).
e. However, for Employer Matching Contributions, the Hours of Service
Method shall be used for purposes of:
1.[X] N/A. The options elected in d. above apply for Employer
Matching Contributions.
8
2.[ ] N/A. The Elapsed Time Method will be used for Employer
Matching Contributions as selected in 19(a) - (c) above.
3.[ ] Eligibility Computation. The eligibility computation period
after the initial eligibility computation period shall...
a. [ ] be based on the date an Employee first performs an
Hour of Service (initial computation period) and
subsequent computation periods shall be based on each
anniversary date thereof.
b. [ ] shift to the Plan Year after the initial computation
period.
4.[ ] Vesting. The vesting computation period shall be ...
a. [ ] the date an Employee first performs an Hour of
Service and each anniversary thereof.
b. [ ] the Plan Year.
5.[ ] Sharing in Allocations or Contributions (the computation
period shall be the Plan Year).
f. And, for Employer Profit Sharing Contributions, the Hours of Service
Method shall be used for purposes of:
1.[X] N/A. The options elected in d. above apply for Employer Profit
Sharing Contributions.
2.[ ] N/A. The Elapsed Time Method will be used for Employer
Profit Sharing Contributions as selected in 19(a) - (c) above.
3.[ ] Eligibility Computation. The eligibility computation period
after the initial eligibility computation period shall...
a. [ ] be based on the date an Employee first performs an
Hour of Service (initial computation period) and
subsequent computation periods shall be based on each
anniversary date thereof.
b. [ ] shift to the Plan Year after the initial computation
period.
4.[ ] Vesting. The vesting computation period shall be ...
a. [ ] the date an Employee first performs an Hour of
Service and each anniversary thereof.
b. [ ] the Plan Year.
5.[ ] Sharing in Allocations or Contributions (the computation
period shall be the Plan Year).
g. And, if the Hours of Service Method is being used, the Hours of
Service will be determined on the basis of the method selected
below. Only one method may be selected. The method selected below
will be applied to:
1.[ ] all Employees.
2.[ ] salaried Employees only (for hourly Employees, actual Hours
of Service will be used).
On the basis of:
3.[X] actual hours for which an Employee is paid or entitled to
payment.
4.[ ] days worked. An Employee will be credited with ten Hours of
Service if under the Plan such Employee would be credited with
at least one Hour of Service during the day.
5.[ ] weeks worked. An Employee will be credited with forty-five
Hours of Service if under the Plan such Employee would be
credited with at least one Hour of Service during the week.
6.[ ] semi-monthly payroll periods. An Employee will be credited
with ninety-five Hours of Service if under the Plan such
Employee would be credited with at least one Hour of Service
during the semi-monthly payroll period.
7.[ ] months worked. An Employee will be credited with one
hundred ninety Hours of Service if under the Plan such
Employee would be credited with at least one Hour of Service
during the month.
h. And, a Year of Service means the applicable computation period
during which an Employee has completed at least 1,000 (may not be more
than 1,000) Hours of Service (if left blank, the Plan will use 1,000
Hours of Service).
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VESTING
20. VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
Vesting for Employer Contributions (except as otherwise elected in
20(i) - (q). below for Employer Matching Contributions). The vesting
schedule, based on a Participant's Years of Service (or Periods of
Service if the Elapsed Time Method is elected), shall be as follows:
a. [ ] N/A. No Employer Contributions.
b. [ ] 100% upon entering Plan. (Required if eligibility requirement is
greater than one (1) Year of Service or Period of Service.)
c. [ ] 3 Year Cliff: d. [ ] 5 Year Cliff:
0-2 years 0 % 0-4 years 0 %
3 years 100 % 5 years 100 %
e. [X] 6 Year Graded f. [ ] 4 Year Graded:
0-1 year 0 % 1 year 25 %
2 years 20 % 2 years 50 %
3 years 40 % 3 years 75 %
4 years 60 % 4 years 100 %
5 years 80 %
6 years 100 %
g. [ ] 5 Year Graded: h. [ ] 7 Year Graded:
1 year 20 % 0-2 years 0 %
2 years 40 % 3 years 20 %
3 years 60 % 4 years 40 %
4 years 80 % 5 years 60 %
5 years 100 % 6 years 80 %
7 years 100 %
i. [ ] Other - Must be at least as liberal as either c. or g. above.
Service Percentage
1. _____________ ________________
2._____________ ________________
3._____________ ________________
4._____________ ________________
5._____________ ________________
6._____________ ________________
7._____________ ________________
10
VESTING FOR EMPLOYER MATCHING CONTRIBUTIONS
The vesting schedule for Employer matching contributions, based on a
Participant's Years of Service (or Periods of Service if the Elapsed
Time Method is elected) shall be as follows:
j. [ ] N/A. No Employer Contributions.
k. [ ] N/A. The schedule in 20(a) - (h) above shall also apply to
Employer Matching Contributions.
l. [X] 100% upon entering Plan. (Required if eligibility requirement is
greater than one (1) Year of Service or Period of Service.)
m. [ ] 3 Year ▇▇▇▇▇
▇. [ ] 5 Year ▇▇▇▇▇
▇. [ ] 6 Year Graded
p. [ ] 4 Year Graded
q. [ ] 5 Year Graded
r. [ ] 7 Year Graded
s. [ ] Other - Must be at least as liberal as either l. or p. above.
Service Percentage
1. _____________ ________________
2._____________ ________________
3._____________ ________________
4._____________ ________________
5._____________ ________________
6._____________ ________________
7._____________ ________________
21. FOR AMENDED PLANS (Plan Section 6.4(f)) If the vesting schedule has
been amended to a less favorable schedule, enter the pre-amended
schedule below:
a. [X] Vesting schedule has not been amended, amended schedule is more
favorable in all years or prior schedule was immediate 100%
vesting.
b. [ ] Pre-amended schedule for all Employer Contributions except
for [ ] Employer Profit Sharing Contributions, [ ] Employer
Matching Contributions, [ ] Other:___________
Service Percentage
1. _____________ ________________
2._____________ ________________
3._____________ ________________
4._____________ ________________
5._____________ ________________
6._____________ ________________
7._____________ ________________
22. TOP HEAVY VESTING (Plan Section 6.4(c)) If this Plan becomes a Top
Heavy Plan, the following vesting schedule, based on number of Years of
Service (or Periods of Service if the Elapsed Time Method is elected),
shall apply and shall be treated as a Plan amendment pursuant to this
Plan. Once effective, this schedule shall also apply to any
contributions made before the Plan became a Top Heavy Plan and shall
continue to apply if the Plan ceases to be a Top Heavy Plan unless an
amendment is made to change the vesting schedule.
a. [ ] N/A (the regular vesting schedule(s) already satisfies one
of the minimum top heavy schedules.)
b. [X] 6 Year Graded
c. [ ] 3 Year ▇▇▇▇▇
▇. [ ] Other - Must be at least as liberal as either b. or c. above.
Service Percentage
1. _____________ ________________
2._____________ ________________
3._____________ ________________
4._____________ ________________
5._____________ ________________
6._____________ ________________
11
7._____________ ________________
NOTE: This Section does not apply to the account balances of any
Participant who does not have an Hour of Service after the Plan
has initially become top heavy. Such Participant's Account
balance attributable to Employer contributions and Forfeitures
will be determined without regard to this Section.
23. FOR VESTING PURPOSES, Years of Service (or Periods of Service)
attributable to the following shall be excluded (select all that apply):
a. [X] No exclusions.
b. [ ] Service prior to the Effective Date of the Plan or a predecessor
plan.
c. [ ] Service prior to the time an Employee has attained age 18.
24. VESTING FOR DEATH AND TOTAL AND PERMANENT DISABILITY
Regardless of the vesting schedule(s), Participants shall become fully
Vested upon (select a. or all that apply of b. and c.)
a. [ ] N/A. Apply vesting schedule(s).
b. [X] Death.
c. [X] Total and Permanent Disability.
25. NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.45) means the:
a. [X] date of a Participant's 65th birthday (not to exceed 65th).
b. [ ] later of a Participant's ________ birthday (not to exceed 65th)
or the __________ (not to exceed 5th) anniversary of the:
1. [ ] first day of the Plan Year in which participation in
the Plan commenced.
2. [ ] Participant's date of hire.
26. NORMAL RETIREMENT DATE (Plan Section 1.46) means the:
a. [ ] Participant's "NRA."
b. [X] first day of the month...
1. [X] coinciding with or next following the Participant's "NRA."
2. [ ] nearest the Participant's "NRA."
c. [ ] Anniversary Date (Plan Section 1.7)...
1. [ ] coinciding with or next following the Participant's "NRA."
2. [ ] nearest the Participant's "NRA."
27. EARLY RETIREMENT DATE (Plan Section 1.15).
a. Early retirement date means the:
1.[ ] No Early Retirement provision provided.
2.[ ] date on which a Participant...
a. [ ] attains age _________
b. [ ] attains age _________ and completes at least _________
Years of Service (or Periods of Service) for vesting
purposes.
3.[ ] first day of the month coinciding with or next following
the date on which a Participant...
a. [ ] attains age _________
b. [ ] attains age _________ and completes at least _________
Years of Service (or Periods of Service) for
vesting purposes.
4.[X] Anniversary Date (Plan Section 1.7) coinciding with or next
following the date on which a Participant...
a. [X] attains age 55
b. [ ] attains age _________ and completes at least Years of
Service (or Periods of Service) for vesting purposes.
b. And, if 2., 3. or 4. is selected, shall a Participant become fully
Vested upon attainment of the Early Retirement Date?
1.[X] Yes
2.[ ] No
12
28. TOTAL AND PERMANENT DISABILITY (Plan Section 1.79) For purposes of
this Plan, Total and Permanent Disability shall mean:
a. [X] the inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
b. [ ] the inability to engage in any substantial, gainful
activity in the Employee's trade or profession for which the
Employee is best qualified through training or experience.
c. [ ] _________________________________________________________________
COMPENSATION (PLAN SECTION 1.11)
29. FOR ALL PURPOSES OF THE PLAN, other than Employer Matching
Contributions, Employer Profit Sharing Contributions, and 414(s)
Compensation, compensation:
a. With respect to any Participant means:
1.[X] Wages, tips and other compensation on Form W-2.
2.[ ] Section 3401(a) wages (wages for withholding purposes).
3.[ ] 415 safe-harbor compensation.
b. And, compensation shall be adjusted by (for salary deferral purposes
the Plan automatically includes amounts in 2 below): (select all
that apply)
1.[ ] N/A. No adjustments.
2.[X] including compensation which is not currently includible in
the Participant's gross income by reason of the application of
Code Sections 125 (cafeteria plan), 402(e)(3) (401(k) plan),
402(h)(1)(B) (simplified employee pension plan), 414(h)
(employer pickup contributions under a governmental plan),
403(b) (tax sheltered annuity) or 457(b) (eligible deferred
compensation plan).
3.[X] excluding reimbursements or other expense allowances, fringe
benefits (cash or non-cash), moving expenses, deferred
compensation (other than deferrals specified in b. above) to a
qualified plan and welfare benefits.
4.[X] excluding Compensation paid during the determination period
prior to the period of participation in the component of the
Plan for which the definition is being used.
5.[ ] excluding overtime.
6.[ ] excluding bonuses.
7.[ ] excluding commissions.
8.[X] other severance payments _____________________________________.
NOTE: If 5, 6, 7 or 8 is elected the definition of Compensation could
violate the nondiscrimination rules.
30. FOR PURPOSES OF EMPLOYER MATCHING CONTRIBUTIONS, compensation:
a. With respect to any Participant means:
1.[X] Wages, tips and other compensation on Form W-2.
2.[ ] Section 3401(a) wages (wages for withholding purposes).
3.[ ] 415 safe-harbor compensation.
b. And, compensation shall be adjusted by: (select all that apply)
1.[ ] N/A. No adjustments.
2.[X] including compensation which is not currently includible in
the Participant's gross income by reason of the application of
Code Sections 125 (cafeteria plan), 402(e)(3) (401(k) plan),
402(h)(1)(B) (simplified employee pension plan), 414(h)
(employer pickup contributions under a governmental plan),
403(b) (tax sheltered annuity) or 457(b) (eligible deferred
compensation plan).
3.[X] excluding reimbursements or other expense allowances, fringe
benefits (cash or non-cash), moving expenses, deferred
compensation (other than deferrals specified in b. above) to a
qualified plan and welfare benefits.
4.[X] excluding Compensation paid during the determination period
prior to the period of participation in the component of the
Plan for which the definition is being used.
5.[ ] excluding overtime.
6.[ ] excluding bonuses.
7.[ ] excluding commissions.
8.[X] other severance payments _____________________________________.
NOTE: If 5, 6, 7 or 8 is elected the definition of Compensation could
violate the nondiscrimination rules.
13
31. FOR PURPOSES OF EMPLOYER PROFIT SHARING CONTRIBUTIONS, compensation:
a. With respect to any Participant means:
1.[X] Wages, tips and other compensation on Form W-2.
2.[ ] Section 3401(a) wages (wages for withholding purposes).
3.[ ] 415 safe-harbor compensation.
b. And, compensation shall be adjusted by: (select all that apply)
1.[ ] N/A. No adjustments.
2.[X] including compensation which is not currently includible in
the Participant's gross income by reason of the application of
Code Sections 125 (cafeteria plan), 402(e)(3) (401(k) plan),
402(h)(1)(B) (simplified employee pension plan), 414(h)
(employer pickup contributions under a governmental plan),
403(b) (tax sheltered annuity) or 457(b) (eligible deferred
compensation plan).
3.[X] excluding reimbursements or other expense allowances, fringe
benefits (cash or non-cash), moving expenses, deferred
compensation (other than deferrals specified in b. above) to a
qualified plan and welfare benefits.
4.[X] excluding Compensation paid during the determination period
prior to the period of participation in the component of the
Plan for which the definition is being used.
5.[ ] excluding overtime.
6.[ ] excluding bonuses.
7.[ ] excluding commissions.
8.[X] other severance payments _____________________________________.
NOTE: If 5., 6., 7. or 8. is elected the definition of Compensation
could violate the nondiscrimination rules.
32. FOR PURPOSES OF 414(s) COMPENSATION (Plan Section 1.29), compensation:
a. With respect to any Participant means:
1.[X] Wages, tips and other compensation on Form W-2.
2.[ ] Section 3401(a) wages (wages for withholding purposes).
3.[ ] 415 safe-harbor compensation.
b. And, compensation shall be adjusted by: (select all that apply)
1.[ ] N/A. No adjustments.
2.[X] including compensation which is not currently includible in
the Participant's gross income by reason of the application of
Code Sections 125 (cafeteria plan), 402(e)(3) (401(k) plan),
402(h)(1)(B) (simplified employee pension plan), 414(h)
(employer pickup contributions under a governmental plan),
403(b) (tax sheltered annuity) or 457(b) (eligible deferred
compensation plan).
3.[X] excluding reimbursements or other expense allowances, fringe
benefits (cash or non-cash), moving expenses, deferred
compensation (other than deferrals specified in b. above) to a
qualified plan and welfare benefits.
4.[X] excluding Compensation paid during the determination period
prior to the period of participation in the component of the
Plan for which the definition is being used.
5.[X] other severance payments _____________________________________.
NOTE: If 5. is elected the definition of Compensation could violate
the nondiscrimination rules.
33. COMPENSATION, for all purposes of the plan, shall be based on the
following determination period:
1.[X] the Plan Year.
2.[ ] the Fiscal Year coinciding with or ending within the Plan
Year.
3.[ ] the calendar year coinciding with or ending within the Plan
Year.
NOTE: The Limitation Year for Code Section 415 purposes shall be the
same as the determination period for Compensation unless an
alternative period is specified:
14
CONTRIBUTIONS AND ALLOCATIONS
34. SALARY REDUCTION ARRANGEMENT - ELECTIVE DEFERRALS (Plan Section 12.2)
a. Each Participant may elect to have Compensation reduced by:
1.[ ] ________%.
2.[ ] up to_________%.
3.[X] from 1% to 20%.
4.[ ] up to the maximum percentage allowable not to exceed the
limits of Code Sections 401(k), 402(g), 404 and 415.
b. Highly Compensated Employees may only elect to reduce Compensation by:
1.[X] N/A. Same limits as specified above.
2.[ ] up to ________% (should not be greater than the limits
specified above).
3.[ ] the percentage equal to the deferral limit in effect under
Code Section 402(g)(3) for the calendar year that begins with
or within the Plan Year divided by the annual compensation
limit in effect for the Plan Year under Code Section
401(a)(17).
c. May a special salary reduction election with respect to bonuses be
made?
1.[ ] Yes, any Participant may elect to defer up to the entire
amount of any bonus.
2.[ ] Yes, any Participant may elect to defer up to _________% of any
bonus.
3.[ ] Yes, any Non-Highly Compensated Employee may elect to
defer up to the entire amount of any bonus.
4.[ ] Yes, any Non-Highly Compensated Employee may elect to
defer up to _______ % of a bonus.
5.[X] No.
d. Participants may commence salary deferrals on the effective date of
participation and on any payroll period thereafter. Participants may
modify salary deferral elections:
1.[X] as of each payroll period.
2.[ ] On the first day of the month.
3.[ ] On the first day of each Plan Year quarter.
4.[ ] On the first day of the Plan Year or the first day of the
7th month of the Plan Year.
5.[ ] Other ________ (specify a date or dates).
e. Automatic Election: Shall Participants who do not affirmatively
elect to receive cash or have at least the amount specified in 1.
below contributed to the Plan automatically have Compensation
reduced?
1.[ ] Yes, by _______% of Compensation.
2.[X] No.
NOTE: If 1. is selected, certain notices must be provided to employees.
f. Shall there be a special effective date for the salary deferral
component of the Plan?
1.[X] No.
2.[ ] Yes, the effective date of the salary deferral component of
the Plan is ________ (enter month, day and year).
35. 401(K) SAFE HARBOR PROVISIONS (Plan Section 12.8)
Will the ADP and/or ACP test safe harbor provisions be used? (select
a., b. or c.)
a. [ ] No. (If selected, skip to Question 36.)
b. [ ] Yes, but only the ADP (and NOT the ACP) Test Safe Harbor
provisions will be used.
c. [X] Yes, both the ADP and ACP Test Safe Harbor provisions will be
used.
IF c. is selected, does the Plan permit matching contributions in
addition to any safe harbor contributions elected in d. or e. below?
1.[X] No or N/A. Any matching contributions, other than any Safe
Harbor Matching Contributions elected in d. below, will be
suspended in any Plan Year in which the safe harbor provisions
are used.
2.[ ] Yes, the Employer may make matching contributions in
addition to any Safe Harbor Matching contributions elected in
d. below. (If elected, complete the provisions of the Adoption
Agreement relating to matching contributions that will apply
in addition to any elections made in d. below.) NOTE:
Regardless of any election made, the Plan automatically
provides that only Elective Deferrals up to 6% of Compensation
are taken into account in applying the match set forth in that
Question and that the maximum discretionary matching
contribution that may be made on behalf of any Participant is
4% of Compensation.
15
THE EMPLOYER WILL MAKE THE FOLLOWING ADP TEST SAFE HARBOR CONTRIBUTION
FOR THE PLAN YEAR:
NOTE: The ACP Test Safe Harbor is automatically satisfied if the only
matching contribution made to the Plan is either (1) a Basic
Matching Contribution or (2) an Enhanced Matching Contribution
that does not provide a match on Elective Deferrals in excess of
6% of Compensation.
d. [X] Safe Harbor Matching Contribution (select 1. or 2. AND 3.)
1.[X] BASIC MATCHING CONTRIBUTION. The Employer will make Matching
Contributions to the account of each "Eligible Participant" in
an amount equal to the sum of 100% of the amount of the
Participant's Elective Deferrals that do not exceed 3% of the
Participant's Compensation, plus 50% of the amount of the
Participant's Elective Deferrals that exceed 3% of the
Participant's Compensation but do not exceed 5% of the
Participant's Compensation.
2.[ ] ENHANCED MATCHING CONTRIBUTION. The Employer will make
Matching Contributions to the account of each "Eligible
Participant" in an amount equal to the sum of:
a.[ ] ________ % (may not be less than 100%) of the
Participant's Elective Deferrals that do not exceed
_______ % (if over 6% or if left blank, the ACP test
will still apply) of the Participant's Compensation, plus
b.[ ] ________ % of the Participant's Elective Deferrals
that exceed _________ % of the Participant's
Compensation but do not exceed ________ % (if over 6%
or if left blank the ACP test will still apply) of the
Participant's Compensation.
NOTE: a. and b. must be completed so that, at any rate of
Elective Deferrals, the matching contribution is at
least equal to the matching contribution receivable if
the Employer were making Basic Matching Contributions,
but the rate of match cannot increase as deferrals
increase. For example, if a. is completed to provide a
match equal to 100% of deferrals up to 4% of
Compensation, then b. need not be completed.
3.[X] The safe harbor matching contribution will be made on the
following basis (and Compensation for such purpose will be
based on the applicable period):
a.[X] the entire Plan Year.
b.[ ] each payroll period.
c.[ ] all payroll periods ending with or within each month.
d.[ ] all payroll periods ending with or within the Plan
Year quarter.
e. [ ] Nonelective Safe Harbor Contributions (select one)
1. [ ] The Employer will make a Safe Harbor Nonelective
Contribution to the account of each "Eligible Participant"
in an amount equal to _________ % (may not be less than
3%) of the Employee's Compensation for the Plan Year.
2. [ ] The Employer will make a Safe Harbor Nonelective
Contribution to another defined contribution plan
maintained by the Employer (specify the name of the other
plan): .
FOR PURPOSES OF THE ADP Test Safe Harbor contribution, the term
"Eligible Participant" means any Participant who is eligible to make
Elective Deferrals with the following exclusions:
f. [ ] Highly Compensated Employees.
g. [X] Employees who have not satisfied the greatest minimum age and
service conditions permitted under Code Section 410(a).
h. [ ] Other ____________________________________________________________
(must be a category that could be excluded under the permissive
or mandatory disaggregation rules of Regulations 1.401(k)-1(b)(3)
and 1.401(m)-1(b)(31)).
SPECIAL EFFECTIVE DATE OF ADP AND ACP TEST SAFE HARBOR PROVISIONS
i. [X] N/A. The safe harbor provisions are effective as of the later of
the Effective Date of this Plan or, if this is an amendment or
restatement, the effective date of the amendment or restatement.
j. [ ] The ADP and ACP Test Safe Harbor provisions are effective
for the Plan Year beginning:
_________________________________________(enter the first day
of the Plan Year for which the provisions are (or, for GUST
updates, were) effective and, if necessary, enter any other
special effective dates that apply with respect to the
provisions).
16
36. FORMULA FOR DETERMINING EMPLOYER MATCHING CONTRIBUTIONS (Plan Section
12.1(a)(2))
NOTE: Regardless of any election below, if the ACP test safe harbor is
being used then the Plan automatically provides that only
Elective Deferrals up to 6% of Compensation are taken into
account in applying the match set forth below and that the
maximum discretionary matching contribution that may be made on
behalf of any Participant is 4% of Compensation.
a. [X] N/A. There will not be any matching contributions (Skip to
Question 37).
b. [ ] The Employer will make matching contributions equal to
_______ % of the Participant's Elective Deferrals, plus:
1. [ ] N/A.
2. [ ] additional discretionary percentage, to be determined by
the Employer.
c. [ ] The Employer may make matching contributions equal to a
discretionary percentage of the Participant's Elective Deferrals,
to be determined by the Employer.
AND, in determining the matching contributions in b. and c.
above, only Elective Deferrals up to the percentage or dollar
amount specified below will be matched:
(select 3. and/or 4. OR 5.)
3. [ ] ________ % of a Participant's Compensation.
4. [ ] $_______ .
5. [ ] a discretionary percentage of a Participant's
Compensation or a discretionary dollar amount, the
percentage or dollar amount to be determined by the
Employer on a uniform basis to all Participants.
d. [ ] The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of
each tier, to be determined by the Employer, of the Participant's
Elective Deferrals.
e. [ ] The Employer will make matching contributions equal to the
sum of _________ % of the portion of the Participant's Elective
Deferrals which do not exceed _________ % of the Participant's
Compensation or $_________ plus __________ % of the
portion of the Participant's Elective Deferrals which exceed
__________ % of the Participant's Compensation or
$_________ , but does not exceed __________% of the
Participant's Compensation or $__________ .
f. [ ] The Employer will make matching contributions equal to the
percentage of Elective Deferrals determined under the following
schedule based on a Participant's Years of Service for Vesting
purposes (or Periods of Service if the Elapsed Time Method is
selected):
Participant's Total Service Matching Percentage
1.___________________________ ______________________________
2.___________________________ ______________________________
3.___________________________ ______________________________
4.___________________________ ______________________________
5.___________________________ ______________________________
g. [ ] Other Formula:__________________________________________
NOTE: If d., e., f. or g. above is elected, the Plan may violate the
Code Section 401(a)(4) nondiscrimination requirements if the rate
of matching contributions increases as a Participant's Elective
Deferrals or Years of Service (or Periods of Service) increase.
If g. is elected, matching contributions can only be made with
respect to a Participant's Elective Deferrals.
PERIOD OF DETERMINING MATCHING CONTRIBUTIONS
Matching contributions will be made on the following basis (and any
Compensation or dollar limitation used in determining the match will be
based on the applicable period):
h. [ ] the entire Plan Year.
i. [ ] each payroll period.
j. [ ] all payroll periods ending within each month.
k. [ ] all payroll periods ending with or within the Plan Year quarter.
l. [ ] Other: __________________________________________________
THE MATCHING CONTRIBUTION MADE ON BEHALF OF ANY PARTICIPANT for any
plan year will not exceed:
m. [ ] N/A.
n. [ ] $___________ .
17
MATCHING CONTRIBUTIONS WILL BE MADE ON BEHALF OF:
o. [ ] all Participants.
p. [ ] only Non-Highly Compensated Employees.
37. FORMULA FOR DETERMINING QUALIFIED MATCHING CONTRIBUTIONS (Plan Section
12.1(a)(2))
NOTE: Regardless of any election below, if the ACP test safe harbor is
being used then the Plan automatically provides that only
Elective Deferrals up to 6% of Compensation are taken into
account in applying the match set forth below and that the
maximum discretionary matching contribution that may be made on
behalf of any Participant is 4% of Compensation.
a. [X] N/A. There will not be any qualified matching contributions
except for ADP/ACP Test Safe Harbor contributions or as provided
in Section 12.5(c) and 12.7(g). (Skip to Question 38).
b. [ ] The Employer will make qualified matching contributions
equal to _________ % of the Participant's Elective Deferrals,
plus:
1. [ ] N/A.
2. [ ] additional discretionary percentage, to be determined
by the Employer.
c. [ ] The Employer may make matching contributions equal to a
discretionary percentage of the Participant's Elective Deferrals,
to be determined by the Employer.
AND, in determining the qualified matching contribution above,
only Elective Deferrals up to the percentage or dollar amount
specified below will be matched:
(select 3. and/or 4. OR 5.)
3. [ ] _______ % of a Participant's Compensation.
4. [ ] $________ .
5. [ ] a discretionary percentage of a Participant's
Compensation or a discretionary dollar amount, the
percentage or dollar amount to be determined by the
Employer on a uniform basis to all Participants.
d. [ ] The Employer may make qualified matching contributions
equal to a discretionary percentage, to be determined by the
Employer, of each tier, to be determined by the Employer, of the
Participant's Elective Deferrals.
e. [ ] The Employer will make qualified matching contributions
equal to the sum of ________ % of the portion of the
Participant's Elective Deferrals which do not exceed _________ %
of the Participant's Compensation or $ __________ plus
_________ % of the portion of the Participant's Elective
Deferrals which exceed _________ % of the Participant's
Compensation or $ _________ , but does not exceed _________ %
of the Participant's Compensation or $ _________ .
PERIOD OF DETERMINING QUALIFIED MATCHING CONTRIBUTIONS
Qualified Matching contributions will be made on the following basis
(and any Compensation or dollar limitation used in determining the
match will be based on the applicable period):
f. [ ] the entire Plan Year.
g. [ ] each payroll period.
h. [ ] all payroll periods ending within each month.
i. [ ] all payroll periods ending with or within the Plan Year quarter.
j. [ ] Other: ___________________________________________________
THE QUALIFIED MATCHING CONTRIBUTION MADE ON BEHALF OF ANY PARTICIPANT
for any plan year will not exceed:
k. [ ] N/A.
l. [ ] $_________.
QUALIFIED MATCHING CONTRIBUTIONS WILL BE MADE ON BEHALF OF:
m. [ ] all Participants.
n. [ ] only Non-Highly Compensated Employees.
38. MAY EMPLOYER MATCHING OR QUALIFIED MATCHING CONTRIBUTIONS BE MADE IN
EMPLOYER STOCK?
a. [ ] Yes.
b. [X] No.
18
39. ONLY PARTICIPANTS WHO SATISFY THE FOLLOWING CONDITIONS WILL BE ELIGIBLE
TO SHARE IN THE ALLOCATION OF MATCHING CONTRIBUTIONS OR QUALIFIED
MATCHING CONTRIBUTIONS (other than Qualified Matching Contributions
under Plan Sections 12.5(c) and 12.7(g)):
a. Requirements for Participants who are actively employed at the end
of the Plan Year.
1.[X] No additional conditions.
2.[ ] A Participant must complete more than _______ Hours of Service
(not more than 1000) (or _______ months of service (not more
than twelve (12)) if the Elapsed Time Method
is elected).
3.[ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected). (Could cause
Plan to violate coverage requirements under Code Section 410.)
b. Requirements for Participants who are not actively employed at the
end of the Plan Year (except as otherwise provided in c(1) through
c(3) below).
1.[X] No additional conditions.
2.[ ] A Participant must complete more than _______ Hours of
Service (not more than 1000) or, if the Elapsed Time Method is
elected, _______ months of service (not more than twelve
(12)).
3.[ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected).
4.[ ] Participants will not share in such allocations, regardless
of service.
NOTE: If 2., 3. or 4. is elected, the Plan may violate the coverage
rules of Code Section 410(b).
c. Participants who are not actively employed at the end of the Plan
Year due to the following shall be eligible to share in the
allocation of matching contributions regardless of the above
conditions (select all that apply):
1.[ ] death.
2.[ ] Total and Permanent Disability.
3.[ ] Early or Normal Retirement.
40. EMPLOYER PROFIT SHARING CONTRIBUTIONS (Plan Section 12.1(a)(3)).
a. Will a fixed Employer Profit Sharing Contribution be provided under
the Plan?
1.[X] No.
2.[ ] Yes, the Employer shall make a profit sharing contribution
each Plan Year in an amount equal to % of each
eligible Participant's Compensation.
3.[ ] Yes, the Employer shall make a profit sharing contribution
each Plan Year in an amount equal to $
for each eligible Participant.
4.[ ] Prevailing Wage Contribution. The Employer will make a
Prevailing Wage Contribution on behalf of each Participant who
performs services subject to the Service Contract Act,
▇▇▇▇▇-▇▇▇▇▇ Act or similar Federal, State, or Municipal
Prevailing Wage statutes. The Prevailing Wage Contribution
shall be an amount equal to the balance of the fringe benefit
payment for health and welfare for each Participant (after
deducting the cost of cash differential payments for the
Participant) based on the hourly contribution rate for the
Participant's employment classification, as designated on
Schedule A as attached to this Adoption Agreement. Schedule A
is incorporated herein by reference. Notwithstanding anything
in the Plan to the contrary, the Prevailing Wage Contribution
shall be fully Vested. Furthermore, the Prevailing Wage
Contribution shall not be subject to any age or service
requirements set forth in Question 16. nor to any service or
employment conditions set forth in Question 44.
If selected, is the Prevailing Wage Contribution considered a
Qualified Non-Elective Contribution?
1. [ ] Yes.
2. [ ] No.
b. Will a discretionary Employer Profit Sharing Contribution be
provided under the Plan?
1.[ ] No.
2.[ ] Yes, the Employer may make a discretionary profit sharing
contribution out of its current or accumulated Net Profit.
3.[X] Yes, the Employer may make a discretionary profit sharing
contribution which is not limited to its current or
accumulated Net Profit.
19
c. The Employer's discretionary profit sharing contribution for a Plan
Year will be allocated as follows:
1.[X] NON-INTEGRATED ALLOCATION
a. [X] In the same ratio as each Participant's Compensation
bears to the total of such Compensation of all
Participants.
b. [ ] In the same dollar amount to all Participants (per
capita).
c. [ ] In the same dollar amount per Hour of Service
completed by each Participant.
d. [ ] In the same proportion that each Participant's points
bears to the total of such points of all Participants. A
Participant's points with respect to any Plan Year shall
be computed as follows (select all that apply):
1. [ ] _______ point(s) shall be allocated for
each Year of Service (or Period of Service if the
Elapsed Time Method is elected). However, the maximum
Years of Service (or Periods of Service taken into
account shall not exceed _______ (leave blank if
no limit on service applies)).
2. [ ] _______ point(s) shall be allocated for each full
$_______ (may not exceed $200) of Compensation.
3. [ ] _______ point(s) shall be allocated for each year of
attained age as of the end of the Plan Year.
2.[ ] INTEGRATED ALLOCATION
In accordance with Plan Section 4.3(b)(2) based on a
Participant's Compensation in excess of:
a. [ ] The Taxable Wage Base.
b. [ ] _______ % (not to exceed 100%) of the Taxable
Wage Base. (See Note below)
c. [ ] 80% of the Taxable Wage Base plus $1.00.
d. [ ] $ ______ (not greater than the Taxable Wage Base). (See
Note below)
NOTE: The integration percentage of 5.7% shall be reduced to:
1. 4.3% if b. or d. above is more than 20% and less than or equal
to 80% of the Taxable Wage Base.
2. 5.4% if b. or d. above is more than 80% of the Taxable Wage
Base.
41. QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 12.1(a)(4))
a. Will a Qualified Non-Elective Contribution be provided under the
Plan?
1.[X] N/A. There will be no Qualified Non-Elective Contributions
except for ADP/ACP Test Safe Harbor contributions or as
provided in Section 12.5(c) and 12.7(g).
2.[ ] The Employer will make a Qualified Non-Elective
Contribution equal to _________ % of the total Compensation
of those Participants eligible to share in the allocations.
3.[ ] The Employer may make a Qualified Non-Elective Contribution
in an amount to be determined by the Employer, to be allocated
in proportion to the Compensation of those eligible to share
in the allocations.
4.[ ] The Employer may make a Qualified Non-Elective Contribution
in the same dollar amount, to be determined by the Employer,
to all Participants eligible to share in the allocations (per
capita).
b. And, Qualified Non-Elective Contributions will be made on behalf of:
1.[X] all Participants.
2.[ ] only Non-Highly Compensated Employees.
42. MAY EMPLOYER PROFIT SHARING OR QUALIFIED NON-ELECTIVE CONTRIBUTIONS BE
MADE IN EMPLOYER STOCK?
a. [ ] Yes
b. [X] No
20
43. ONLY PARTICIPANTS WHO SATISFY THE FOLLOWING CONDITIONS WILL BE ELIGIBLE TO
SHARE IN THE ALLOCATION OF EMPLOYER PROFIT SHARING CONTRIBUTIONS,
QUALIFIED NON-ELECTIVE CONTRIBUTIONS (other than Qualified Non-Elective
Contributions under Plan Sections 12.5(c) and 12.7(g)) AND FORFEITURES.
a. Requirements for Participants who are actively employed at the end of
the Plan Year.
1.[X] No additional conditions
2.[ ] A Participant must complete more than ____ Hours of Service (not
more than 1000) (or ____ months of service (not more than twelve
(12)) if the Elapsed Time Method is elected).
3.[ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected). (Could cause Plan
to violate coverage requirements under Code Section 410.)
b. Requirements for Participants who are not actively employed at the end
of the Plan Year (except as otherwise provided in c(1) through c(3)
below).
1.[ ] No additional conditions
2.[ ] A Participant must complete more than ____ Hours of Service (not
more than 1000) (or ____ months of service (not more than twelve
(12)) if the Elapsed Time Method is elected).
3.[ ] A Participant must complete a Year of Service (or Period of
Service if the Elapsed Time Method is elected).
4.[X] Participants will not share in such allocations, regardless of
service.
NOTE: If 2, 3 or 4 is elected, the Plan may violate the coverage rules of
Code Section 410(b).
c. Participants who are not actively employed at the end of the Plan Year
due to the following will be eligible to share in the allocations
regardless of the above conditions (select all that apply):
1.[X] death.
2.[X] Total and Permanent Disability.
3.[X] Early or Normal Retirement.
44. FORFEITURES (Plan Sections 1.27 and 4.3(e))
a. Except as provided in Plan Section 1.27, a Forfeiture will occur (if no
election is made, 1. will apply):
1.[X] as of the earlier of :
a. the last day of the Plan Year in which the Former Participant
incurs five (5) (or if lesser 5 (not to exceed five (5)))
consecutive 1-Year Breaks in Service, or
b. the distribution of the entire Vested portion of the
Participant's Account.
2.[ ] as of the last day of the Plan Year in which the Former
Participant incurs five (5) (or if lesser ____ (not to exceed
(5)) consecutive 1-Year Breaks in Service.
b. Except as otherwise provided in c. below with respect to Forfeitures
attributable to matching contributions, Forfeitures will be.....
1.[ ] added to any Employer profit sharing contribution.
2.[X] used to reduce any Employer contribution.
3.[ ] added to any Employer matching contribution and allocated as an
additional matching contribution.
4.[ ] allocated to all Participants eligible to share in the profit
sharing allocations in the same proportion that each
Participant's Compensation for the Plan Year bears to the
Compensation of all Participants for such year.
5.[ ] allocated to all Non-Highly Compensated Employees eligible to
share in the profit sharing allocations (regardless of whether a
Participant elected any salary reductions) in proportion to each
such Participant's Compensation for the year.
6.[ ] other: _________________________________________________________
NOTE: Plan Section 4.3(e) automatically provides that Forfeitures may be
used to pay administrative expenses.
21
c. Forfeitures of matching contributions will be...
1.[ ] N/A. Same as above or no matching contributions.
2.[X] used to reduce the Employer's matching contribution.
3.[ ] added to any Employer matching contribution and allocated as an
additional matching contribution.
4.[ ] added to any Employer profit sharing contribution.
5.[ ] allocated to all Participants eligible to share in the matching
allocations (regardless of whether a Participant elected any
salary reductions) in proportion to each such Participant's
Compensation for the year.
6.[ ] allocated to all Non-Highly Compensated Employees eligible to
share in the matching allocations (regardless of whether a
Participant elected any salary reductions) in proportion to each
such Participant's Compensation for the year.
7.[ ] other: _________________________________________________________
45. ALLOCATIONS OF EARNINGS (Plan Section 4.3(c))
Allocations of earnings with respect to amounts which are not subject to
Participant directed investments and which are contributed to the Plan
after the previous Valuation Date will be determined...
a. [X] N/A, all assets in the Plan are subject to Participant directed
investments.
b. [ ] by using the actual investment experience of individual accounts.
c. [ ] other: _________________________________________________________
22
46. LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a Master or
Prototype Plan, or if the Employer maintains a welfare benefit fund, as
defined in Code Section 419(e), or an individual medical account, as
defined in Code Section 415(l)(2), under which amounts are treated as
Annual Additions with respect to any Participant in this Plan:
1.[X] N/A. The Employer does not maintain another qualified defined
contribution plan.
2.[ ] The provisions of Section 4.4(b) of the Plan will apply as if the
other plan were a master or prototype plan.
3.[ ] Specify the method under which the plans will limit total
Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that precludes
Employer discretion: ___
b. If any Participant is a Participant in a qualified defined benefit plan
maintained by the Employer:
1.[X] N/A. The Employer does not maintain, and has never maintained, a
qualified defined benefit plan OR the provisions of Code Section
415(e) no longer apply to the Plan.
2.[ ] N/A. The provisions of Code Section 415(e) no longer apply to
this Plan effective with respect to Limitation Years beginning
after December 31, 1999, or if later ____(if a later date is
entered, this Plan will not be considered a safe harbor plan
under Code Section 401(a)(4) and the Regulations thereunder).
3.[ ] In any Limitation Year, the Annual Additions credited to the
Participant under this Plan may not cause the sum of the Defined
Benefit Plan Fraction and the Defined Contribution Fraction to
exceed 1.0. If the Employer's contribution that would otherwise
be made on the Participant's behalf during the Limitation Year
would cause the 1.0 limitation to be exceeded, the rate of
contribution under this Plan will be reduced so that the sum of
the fractions equals 1.0. If the 1.0 limitation is exceeded
because of an Excess Amount, such Excess Amount will be reduced
in accordance with Section 4.5 of the Plan.
4.[ ] Specify and attach to the Adoption Agreement the method under
which the plans involved will satisfy the 1.0 limitation in a
manner that precludes Employer discretion.
DISTRIBUTIONS
47. FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6)
a. Distributions under the Plan may be made in (select all that apply)...
1.[X] lump sums.
2.[X] substantially equal installments.
3.[ ] partial withdrawals provided the minimum withdrawal is $________.
b. And, pursuant to Plan Section 6.12,
1.[ ] no annuities are allowed (Plan Section 6.12(b) will apply and the
joint and survivor rules of Code Sections 401(a)(11) and 417 will
not apply to the Plan).
2.[X] annuities are allowed as the normal form of distribution (Plan
Section 6.12 will not apply and the joint and survivor rules of
Code Sections 401(a)(11) and 417 will automatically apply). If
elected, the Pre-Retirement Survivor Annuity (minimum spouse's
death benefit) will be equal to:
a. [X] 100% of Participant's interest in the Plan.
b. [ ] 50% of Participant's interest in the Plan.
c. [ ] ____% (may not be less than 50%) of a Participant's
interest in the Plan.
3.[ ] annuities are allowed but are not the normal form of
distribution (Plan Section 6.12(c) will apply and the joint and
survivor rules of Code Sections 401(a)(11) and 417 will only
apply if an annuity form of distribution is elected by a
Participant). If elected, the optional forms of annuities allowed
are:
a. [ ] Life annuity
b. [ ] Other: __________________________________________________
AND if 2. or 3. is elected, the normal form of the Qualified Joint and
Survivor Annuity will be a joint and 50% survivor annuity unless otherwise
elected below:
1.[X] N/A.
2.[ ] Joint and 100% survivor annuity.
3.[ ] Joint and 75% survivor annuity.
4.[ ] Joint and 66 2/3% survivor annuity.
NOTE: If this is an amendment to a plan which permitted annuities as a
form of distribution with respect to any portion of the Plan's
assets (or if this Plan has accepted a plan-to-plan transfer (other
than a direct rollover) of assets from a plan which permitted
annuities as a form of distribution) and the joint and survivor
annuity
23
rules only apply to a Participant's interest in the Plan
attributable to such amounts, then select b(1). AND b(2). or b(3).
(whichever is applicable to such amounts) and attach an addendum to
this Adoption Agreement specifying the assets subject to the joint
and survivor annuity provisions.
c. And, distributions may be made in...
1.[ ] cash only (except for insurance or annuity contracts).
2.[X] cash or property.
48. CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
Distributions upon termination of employment pursuant to Plan Section
6.4(a) of the Plan will not be made unless the following conditions have
been satisfied:
a. [ ] No distributions may be made until a Participant has reached Early
or Normal Retirement Date.
b. [X]Distributions may be made as soon as administratively feasible at
the Participant's election.
c. [ ] The Participant has incurred _______ 1-Year Break(s) in Service (or
Period(s) of Severance if the Elapsed Time Method is elected).
d. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after the Plan Year coincident with or next
following termination of employment.
e. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after the Plan Year quarter coincident with
or next following termination of employment.
f. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after the Valuation Date coincident with or
next following termination of employment.
g. [ ] Distributions may be made at the Participant's election as soon as
administratively feasible after _____ months following termination of
employment.
h. [ ] Other ____________________________________________________________
(must be objective conditions which are ascertainable and are not
subject to Employer discretion except as otherwise permitted in
Regulation 1.411(d)-4).
49. INVOLUNTARY DISTRIBUTIONS
Can involuntary distributions of amounts less than $5,000 be made in
accordance with the provisions of Sections 6.4, 6.5 and 6.6?
a. [ ] No.
b. [X] Yes
50. MINIMUM DISTRIBUTION TRANSITIONAL RULES (Plan Section 6.5(e))
NOTE: This Section does not apply to (1) a new Plan or (2) an amendment or
restatement of an existing Plan that never contained the provisions
of Code Section 401(a)(9) as in effect prior to the amendments made
by the Small Business Job Protection Act of 1996 (SBJPA).
The "required beginning date" for a Participant who is not a "five percent
(5%) owner" is:
a. [ ] N/A. (This is a new Plan or this Plan has never included the
pre-SBJPA provisions.)
b. [ ] April 1st of the calendar year following the year in which the
Participant attains age 70-1/2. (The pre-SBJPA rules will continue
to apply.)
c. [X] April 1st of the calendar year following the later of the year in
which the Participant attains age 70 -1/2 or retires (the
post-SBJPA rules), with the following exceptions (select one or
both and if no election is made, both will apply effective as of
January 1, 1996):
1. [X] A Participant who was already receiving required minimum
distributions under the pre-SBJPA rules as of January 1,
1996 (not earlier than January 1, 1996) may elect to stop
receiving distributions and have them recommence in
accordance with the post-SBJPA rules. Upon the
recommencement of distributions, if the Plan permits
annuities as a form of distribution then the following will
apply:
24
a. [ ] N/A. Annuity distributions are not permitted.
b. [X] Upon the recommencement of distributions, the
original Annuity Starting Date will be retained.
c. [ ] Upon the recommencement of distributions, a new
Annuity Starting Date is created.
2. [X] A Participant who had not begun receiving required
minimum distributions as of January 1, 1996 (not earlier
than January 1, 1996) may elect to defer commencement of
distributions until retirement. The option to defer the
commencement of distributions (i.e., to elect to receive
in-service distributions upon attainment of age 70 -1/2)
will apply to all such Participants unless the option below
is elected:
a. [ ] N/A.
b. [X] This in-service distribution option will be
eliminated with respect to Participants who attain
age 70 -1/2 in or after the calendar year that
begins after the later of (1) December 31, 1998, or
(2) the adoption date of the amendment and
restatement to bring the Plan into compliance with
SBJPA. (This option may only be elected if the
amendment to eliminate the in-service distribution
is adopted no later than the last day of the
remedial amendment period that applies to the Plan
for changes under SBJPA.)
51. LIFE EXPECTANCIES (Plan Section 6.5(f)) for minimum distributions required
pursuant to Code Section 401(a)(9) shall...
a. [X] be recalculated at the Participant's election.
b. [ ] be recalculated.
c. [ ] not be recalculated.
52. DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h))
Distributions upon the death of a Participant prior to receiving any
benefits shall...
a. [X] be made pursuant to the election of the Participant or beneficiary.
b. [ ] begin within 1 year of death for a designated beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such beneficiary, except that if the beneficiary is
the Participant's spouse, begin prior to December 31st of the year
in which the Participant would have attained age 70 -1/2.
c. [ ] be made within 5 years of death for all beneficiaries.
d. [ ] Other ________ (must comply with 401(a)(9)).
53. HARDSHIP DISTRIBUTIONS (Plan Sections 6.11 and/or 12.9)
a. Will hardship distributions be permitted?
1.[ ] No hardship distributions are permitted.
2.[X] Hardship distributions are permitted from the following accounts
(select all that apply):
a. [ ] all accounts (except as otherwise provided below).
b. [X] Participant's Elective Deferral Account.
c. [ ] Participant's Matching Contribution Account.
d. [ ] Participant's Profit Sharing Account.
e. [X] Participant's Rollover Account.
f. [ ] Participant's Transfer Account.
g. [ ] Participant's Voluntary Contribution Account.
h. [ ] Other:____________________________________
NOTE: Distributions from a Participant's Elective Deferral Account are
limited to the portion of such account attributable to such
Participant's Elective Deferrals (and earnings attributable thereto
up to December 31, 1988). Hardship distributions are not permitted
from a Participant's Qualified Non-Elective Account, Qualified
Matching Contribution Account or Safe Harbor Contribution Account.
b. Shall the safe harbor hardship rules of Section 12.9 apply to
distributions made from all accounts other than a Participant's
Elective Deferral Account?
1.[X] No or N/A. The provisions of Section 6.11 apply to distributions
from all accounts other than a Participant's Elective Deferral
Account.
2.[ ] Yes. The provisions of Section 12.9 apply to all distributions.
c. Are distributions restricted to those accounts selected above in which
a Participant is fully Vested?
1.[X] Yes, distributions may only be made from accounts which are fully
Vested.
2.[ ] No. (If elected, the fraction at Plan Section 6.5(i) shall apply
in determining vesting of the portion of the account balance not
withdrawn).
25
d. The minimum hardship distribution shall be...
1. [X] N/A. There is no minimum.
2. [ ] $__________ (may not exceed $1,000).
54. IN-SERVICE DISTRIBUTIONS (Plan Section 6.10)
a. [ ] In-service distributions may not be made (except as otherwise
elected for Hardship Distributions).
b. [X] In-service distributions may be made to a Participant who has
not separated from service provided any one of the following
conditions have been satisfied (select all that apply):
1. [X] the Participant has attained age 59 1/2.
2. [ ] the Participant has reached Normal Retirement Age.
3. [ ] the Participant has reached Early Retirement Age.
4. [ ] the Participant has been a Participant in the Plan for at
least __________ years (may not be less than five (5)).
5. [ ] the amounts being distributed have accumulated in the Plan
for at least two (2) years.
AND, in-service distributions are permitted from the following accounts
(select all that apply):
c. [X] all accounts (except as otherwise provided below).
d. [ ] Participant's Elective Deferral Account.
e. [ ] Participant's Matching Contribution Account.
f. [ ] Participant's Profit Sharing Account.
g. [ ] Participant's Safe Harbor Contribution Account.
h. [ ] Participant's Qualified Matching Contribution Account
i. [ ] Participant's Qualified Non-Elective Contribution Account.
j. [ ] Participant's Rollover Account.
k. [ ] Participant's Transfer Account.
l. [ ] Participant's Voluntary Contribution Account.
m. [ ] Other: ___________________________________________________________
NOTE: Distributions from a Participant's Elective Deferral Account,
Qualified Matching Contribution Account, Qualified Non-Elective
Account and Safe Harbor Contribution Account are subject to
restrictions and generally may not be distributed prior to age 59
-1/2.
AND, are distributions restricted to those accounts selected above in
which a Participant is fully Vested?
n. [ ] Yes, distributions may only be made from accounts which are fully
Vested.
o. [X] No. (If elected, the fraction at Section 6.5(i) will apply in
determining vesting of the portion of the account balance not
withdrawn.)
AND, the minimum in-service distribution shall be...
p. [X] N/A. There is no minimum.
q. [ ] $____________ (may not exceed $1,000).
26
NONDISCRIMINATION TESTING
55. HIGHLY COMPENSATED EMPLOYEE (Plan Section 1.31)
a. Shall the Top Paid Group election apply when determining Highly
Compensated Employees? (The election made below for the latest year
shall continue to apply to subsequent Plan Years unless the Plan is
amended to a different election.)
1.[ ] Yes, for Plan Years beginning in:
a. [ ] 1997 b. [ ] 1998 c. [ ] 1999 d. [ ] 2000 e. [ ] _____
2.[X] No, for Plan Years beginning in:
a. [X] 1997 b. [X] 1998 c. [X] 1999 d. [X] 2000 e. [ ] _____
b. Will the calendar year data election be used?
(For Plan Years beginning after 1997, the calendar year look-back year
data election may not be made if the Plan Year is a calendar year. The
election made below for the latest year shall continue to apply to
subsequent Plan Years unless the Plan is amended to a different
election.)
1.[ ] Yes, for Plan Years beginning in:
a. [ ] 1997 b. [ ] 1998 c. [ ] 1999 d. [ ] 2000 e. [ ] _____
2.[X] No, for Plan Years beginning in:
a. [ ] 1997 b. [ ] 1998 c. [ ] 1999 d. [ ] 2000 e. [ ] _____
56. ADP AND ACP TESTS (Plan Sections 12.4 and 12.6). The actual deferral ratio
and actual contribution ratio for Non-Highly Compensated Employees shall
be based on the following. The election made below for the latest year
shall continue to apply to subsequent Plan Years unless the Plan is
amended to a different election.
a. [ ] N/A. This Plan is using the ADP and ACP Test Safe Harbor rules for
all years after the later of the Effective Date of the Plan or, in
the case of an amendment and restatement, the effective date of the
amendment and restatement.
b. [ ] PRIOR YEAR TESTING: The prior year ratio shall be used for the
Plan Year beginning in the year specified below. Furthermore, in
the case of the first year the 401(k) or 401(m) feature is added to
this Plan (unless this Plan is a successor plan), the amount taken
into account as the ADP and ACP of Non-Highly Compensated Employees
for the preceding Plan Year shall be 3%.
1. [ ] 1997 2. [ ] 1998 3. [ ] 1999 4. [ ] 2000 5. [ ] _____
c. [X] CURRENT YEAR TESTING: The current year ratio shall be used for the
Plan Year beginning in the year specified below:
1. [X] 1997 2. [X] 1998 3. [X] 1999 4. [X] 2000 5. [ ]
57. TRANSITIONAL RULE FOR PLAN YEARS BEGINNING PRIOR TO THE PLAN YEAR IN WHICH
THE PLAN IS AMENDED TO REFLECT THE PROVISIONS OF SBJPA.
Notwithstanding the above, if the method used to determine the ADP is
different than the method used to determine the ACP, then the method
selected in 56 above will apply for determining the ADP and the method
selected below will be used to determine the ACP ratio for Non-Highly
Compensated Employees for Plan Years beginning prior to the date the Plan
is amended to reflect the provisions of SBJPA.
a. [X] N/A (Plan has already been amended for SBJPA or the ADP and ACP
ratios are determined using the same methods).
b. [ ] PRIOR YEAR TESTING: The prior year ratio shall be used for the
Plan Years beginning in the years specified below. Furthermore, in
the case of the first year the 401(m) feature is added to this Plan
(unless this Plan is a successor plan), the amount taken into
account as the ACP of Non-Highly Compensated Employees for the
preceding Plan Year shall be 3%.
1. [ ] 1997 2. [ ] 1998 3. [ ] 1999 4. [ ] 2000 5. [ ] _____
c. [ ] CURRENT YEAR TESTING: The current year ratio will be used for the
Plan Years beginning in the years specified below:
1. [ ] 1997 2. [ ] 1998 3. [ ] 1999 4. [ ] 2000 5. [ ] _____
27
TOP HEAVY REQUIREMENTS
58. TOP HEAVY DUPLICATIONS (Plan Section 4.3(i)): When a Non-Key Employee is a
Participant in this Plan and a Defined Benefit Plan maintained by the
Employer, indicate which method shall be utilized to avoid duplication of
top heavy minimum benefits (If b., c., d. or e. is elected, f. must be
completed)
a. [X] N/A. The Employer does not maintain a Defined Benefit Plan. (Go to
next Question)
b. [ ] The full top heavy minimum will be provided in each plan (if
selected, Plan Section 4.3(i) shall not apply).
c. [ ] 5% defined contribution minimum.
d. [ ] 2% defined benefit minimum.
e. [ ] Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions:
NOTE: If c., d., or e. is selected and the Defined Benefit Plan and this
Plan do not benefit the same Participants, the uniformity
requirement of the Section 401(a)(4) Regulations may be violated.
AND, the "Present Value of Accrued Benefit" (Plan Section 9.2) for Top
Heavy purposes shall be based on...
f. [ ] Interest Rate: ___________________________________________________
Mortality Table: __________________________________________________
59. TOP HEAVY DUPLICATIONS (Plan Section 4.3(f)): Employer maintaining two (2)
or more Defined Contribution Plans.
a. [X] N/A. The Employer does not maintain another qualified defined
contribution plan.
b. [ ] A minimum, non-integrated contribution of 3% of each Non-Key
Employee's 415 Compensation shall be provided in the Money Purchase
Plan (or other plan subject to Code Section 412), where the
Employer maintains two (2) or more non-paired Defined Contribution
Plans.
c. [ ] Specify and attach to the Adoption Agreement the method under
which the Plans will provide top heavy minimum benefits for Non-Key
Employees that will preclude Employer discretion and avoid
inadvertent omissions, including any adjustments required under
Code Section 415(e).
MISCELLANEOUS
60. LOANS TO PARTICIPANTS (Plan Section 7.6)
a. [X] Loans shall be permitted.
b. [ ] Loans shall not be permitted.
If loans are permitted (select all that apply)...
c. [ ] loans will only be made for hardship or financial necessity.
d. [X] the minimum loan will be $1,000 (may not exceed $1,000).
e. [X] a Participant may only have one (1) (e.g., one (1)) loan(s)
outstanding at any time.
Loans will only be permitted from the following accounts (select all that
apply):
f. [X] all accounts.
g. [ ] Participant's Elective Deferral Account.
h. [ ] Participant's Matching Contribution Account.
i. [ ] Participant's Profit Sharing Account.
j. [ ] Participant's Safe Harbor Contribution Account.
k. [ ] Participant's Qualified Matching Contributions Account.
l. [ ] Participant's Qualified Non-Elective Contribution Account.
m. [ ] Participant's Rollover Account.
n. [ ] Participant's Transfer Account.
o. [ ] Participant's Voluntary Contribution Account.
p. [ ] Other: ___________________________________________________________
NOTE: All loans will be treated as Participant directed investments under
the Plan. Department of Labor Regulations require the adoption of a
separate written loan program setting forth the requirements
outlined in Plan Section 7.6.
28
61. DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.10)
a. Does the Plan intend to comply with Act Section 404(c)?
1.[X] Yes.
2.[ ] No.
b. Will Participant directed investments be permitted?
1.[ ] No. Participant directed investments are not permitted.
2.[X] Participant directed investments are permitted for the following
accounts (select all that apply):
a. [X] all accounts.
b. [ ] Participant's Elective Deferral Account.
c. [ ] Participant's Matching Contribution Account.
d. [ ] Participant's Profit Sharing Account.
e. [ ] Participant's Safe Harbor Contribution Account.
f. [ ] Participant's Qualified Matching Contributions Account.
g. [ ] Participant's Qualified Non-Elective Contribution Account.
h. [ ] Participant's Rollover Account.
i. [ ] Participant's Transfer Account.
j. [ ] Participant's Voluntary Contribution Account.
k. [ ] Other: __________________________________________________
c. If Participant directed investments are permitted, investment in
Employer Stock will be limited to the following amounts:
a. [X] N/A, There will be no limitations.
b. [ ] ____% of a Participant's Elective Deferral Account.
c. [ ] ____% of a Participant's Matching Contribution Account.
d. [ ] ____% of a Participant's Profit Sharing Account.
e. [ ] ____% of a Participant's Safe Harbor Contribution Account.
f. [ ] ____% of a Participant's Qualified Matching Contributions
Account.
g. [ ] ____% of a Participant's Qualified Non-Elective Contribution
Account.
h. [ ] ____% of a Participant's Rollover Account.
i. [ ] ____% of a Participant's Transfer Account.
j. [ ] ____% of a Participant's Voluntary Contribution Account.
k. [ ] ____% of ______________________________________________________
d. If Participant directed investments are permitted, will voting rights
on directed investments be passed through to Participants?
1.[ ] No. Employer stock is not an alternative OR Plan is not intended
to comply with Act Section 404(c).
2.[X] Yes, for Employer stock only.
3.[ ] Yes, for all investments.
62. ROLLOVERS (Plan Section 4.6)
a. Will Rollovers be accepted by this Plan?
1.[ ] Rollovers will not be accepted by this Plan.
2.[X] Rollovers will be accepted by this Plan.
b. If Rollovers are accepted by this Plan, rollovers may be accepted ...
1.[X] from any Eligible Employee, even if not a Participant.
2.[ ] from Participants only.
c. And, distributions from a Participant's Rollover Account may be made...
1.[ ] at any time.
2.[X] only when the Participant is otherwise entitled to a distribution
under the Plan.
63. EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.8)
a. [ ] After-tax voluntary Employee contributions will not be allowed.
b. [X] After-tax voluntary Employee contributions will be allowed.
29
64. LIFE INSURANCE (Plan Section 7.5)
a. May life insurance be purchased?
1.[X] Life insurance may not be purchased.
2.[ ] Life insurance may be purchased at the option of the
Administrator.
3.[ ] Life insurance may be purchased at the option of the Participant.
b. If life insurance may be purchased, the purchase of initial or
additional life insurance will be subject to the following limitations
(select all that apply):
1.[ ] N/A, no limitations.
2.[ ] The following limitations:
a. [ ] each initial Contract will have a minimum face amount of
$_________.
b. [ ] each additional Contract will have a minimum face amount
of $_________.
c. [ ] the Participant has completed _________ Years of Service
(or Periods of Service).
d. [ ] the Participant has completed _________ Years of Service
(or Periods of Service) while a Participant in the Plan.
e. [ ] the Participant is under age _________ on the Contract
issue date.
f. [ ] the maximum amount of all Contracts on behalf of a
Participant may not exceed $_______.
g. [ ] the maximum face amount of any life insurance Contract
will be $______.
GUST TRANSITION RULES
The following questions only apply if this is a GUST RESTATEMENT (i.e.,
Question 6.c. is selected). If this is not a GUST restatement, then this
Plan will not be considered an individually designed plan merely because
the following questions are deleted from the Adoption Agreement.
65. COMPENSATION
The family aggregation rules of Code Section 401(a)(17) as in effect under
Code Section 414(q)(6) prior to the enactment of SBJPA do not apply to
this Plan effective as of:
a. [X]The first day of the first Plan Year beginning after 1996.
b. [ ](may not be prior to the first day of the first Plan Year beginning
in 1997 and may not be later than the first day of the Plan Year
following the Plan Year in which this GUST restatement is adopted).
NOTE: If family aggregation continued to apply after 1996, the Plan is not
a safe harbor plan for Code Section 401(a)(4) purposes.
66. LIMITATION ON ALLOCATIONS AND TOP HEAVY RULES
If any Participant is a Participant in this Plan and a qualified defined
benefit plan maintained by the Employer, then the limitations of Code
Section 415(e) as in effect under Code Section 414(q)(6) prior to the
enactment of SBJPA do not apply to this Plan effective with respect to
Limitation Years beginning in or after:
a. [X] N/A. The Employer does not maintain, and has never maintained, a
qualified defined benefit plan OR the provisions of Code Section
415(e) have already been removed from this Plan.
b. [ ] (may not be prior to the first Limitation Year beginning in 2000
and may not be later than the first Limitation Year beginning after
the Limitation Year in which this GUST restatement is adopted).
NOTE: If the Code Section 415(e) limits continued to apply to Limitation
Years beginning after 1999, the Plan is not a safe harbor plan for
Code Section 401(a)(4) purposes.
AND, if b. is selected with a date that is later than the effective date
of this GUST restatement, then with respect to the Limitation Year in
which this restatement is adopted, if any Participant is a Participant in
this Plan and a qualified defined benefit plan maintained by the Employer,
specify the method under which the plans involved will provide top heavy
minimum benefits for Non-Key Employees and will satisfy the limitations of
Code Section 415(e) in a manner that precludes Employer discretion:
c. [ ] N/A. The effective date of the GUST restatement is the date the
provisions of Code Section 415(e) no longer apply to this Plan.
d. [ ] __________________________________________________________________
NOTE: If the top heavy minimum benefit is only provided in one plan and
the Defined Benefit Plan and this Plan do not benefit the same
Participants, the uniformity requirement of the Section 401(a)(4)
Regulations may be violated.
30
67. INVOLUNTARY DISTRIBUTIONS
If the Plan provides for involuntary distributions (i.e., 49.b. is
elected) then the increase in the involuntary amount threshold from $3,500
to $5,000 became effective with respect to distributions made on or after:
a. [ ] N/A. The plan doesn't provide for involuntary distributions less
than $5,000.
b. [X] August 6, 1997, or if later January 1, 1998 (leave blank if not
applicable).
31
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the plan is qualified
under Code Section 401. In order to obtain reliance with respect to plan
qualification, the Employer must apply to Employee Plans Determinations of the
Internal Revenue Service for a determination letter.
This Adoption Agreement may be used only in conjunction with basic Plan document
#02. This Adoption Agreement and the basic Plan document shall together be known
as MFS Retirement Services, Inc. Non-Standardized 401(k) Profit Sharing Plan and
Trust # 001.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
MFS Retirement Services, Inc. will notify the Employer of any amendments made to
the Plan or of the discontinuance or abandonment of the Plan provided this Plan
has been acknowledged by MFS Retirement Services, Inc. or its authorized
representative. Furthermore, in order to be eligible to receive such
notification, we agree to notify MFS Retirement Services, Inc. of any change in
address.
The Employer fully acknowledges and agrees that MFS HERITAGE TRUST COMPANY
(MHTC) will act as Directed Trustee only when all Plan investments are
maintained on a participant recordkeeping system used by MFS Retirement
Services, Inc. pursuant to a contract for recordkeeping and administrative
support service and all other requirements imposed by MHTC are satisfied. The
Plan Administrator is responsible for directing MHTC in the performance of the
rights, powers, duties, and obligations of the Trustee, including without
limitation, those rights, powers, duties and obligations with respect to the
investment and distribution of Plan assets.
The Employer in adopting this prototype Plan hereby accepts full responsibility
for the tax and legal aspects of the Plan and Trust and hereby confirms that it
has received independent legal and tax advice from its own attorneys and
advisors. It is hereby agreed and understood by the parties hereto that neither
MFS nor any of its agents or employees has any responsibility with respect to
the legal or tax aspects of the Plan and Trust. The Employer acknowledges that
it has sole responsibility for maintaining all original documents relating to
this Plan.
32
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on this ________________ day of ________________________,
_______________. Furthermore, this Plan may not be used unless acknowledged by
MFS Retirement Services, Inc. or its authorized representative.
EMPLOYER:
▇▇▇▇▇▇▇ Americas Corporation
------------------------------
(enter name)
By:
---------------------------------
The signature of the Trustee appears on a separate trust agreement attached to
the Plan, or,
Individual Trustee(s) Corporate Trustee(s)
----------------------------------------------------------------------
TRUSTEE TRUSTEE
----------------------------------------------------------------------
TRUSTEE TRUSTEE
----------------------------------------------------------------------
TRUSTEE TRUSTEE
The following Acceptance of the MFS Heritage Trust Company will be completed if
MHTC is named as Trustee:
MFS Heritage Trust Company
By:
---------------------------
Authorized Officer
This Plan may not be used, and shall not be deemed to be a Prototype Plan,
unless an authorized representative of MFS Retirement Services, Inc. has
acknowledged the use of the Plan. Such acknowledgment is for administerial
purposes only. It acknowledges that the Employer is using the Plan but does not
represent that this Plan, including the choices selected on the Adoption
Agreement, has been reviewed by a representative of the prototype sponsor or
constitutes a qualified retirement plan.
MFS Retirement Services, Inc.
By:
---------------------------
With regard to any questions regarding the provisions of the Plan, adoption of
the Plan, or the effect of an opinion letter from the IRS, call or write (this
information must be completed by the sponsor of this Plan or its designated
representative):
Name ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------
Address MFS Retirement Services, Inc.
----------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------------------------------
Telephone (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------------------------------------
33
MFS RETIREMENT SERVICES, INC.
DEFINED CONTRIBUTION PLAN AND TRUST
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER .......................
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY ...........................
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES .....................
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR ............................
2.5 RECORDS AND REPORTS ...............................................
2.6 APPOINTMENT OF ADVISERS ...........................................
2.7 INFORMATION FROM EMPLOYER .........................................
2.8 PAYMENT OF EXPENSES ...............................................
2.9 MAJORITY ACTIONS ..................................................
2.10 CLAIMS PROCEDURE ..................................................
2.11 CLAIMS REVIEW PROCEDURE ...........................................
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY .........................................
3.2 EFFECTIVE DATE OF PARTICIPATION ...................................
3.3 DETERMINATION OF ELIGIBILITY ......................................
3.4 TERMINATION OF ELIGIBILITY ........................................
3.5 OMISSION OF ELIGIBLE EMPLOYEE .....................................
3.6 INCLUSION OF INELIGIBLE EMPLOYEE ..................................
3.7 REHIRED EMPLOYEES .................................................
3.8 ELECTION NOT TO PARTICIPATE .......................................
3.9 CONTROL OF ENTITIES BY OWNER-EMPLOYEE .............................
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION ...................
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION ........................
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS ..............
4.4 MAXIMUM ANNUAL ADDITIONS ..........................................
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS .........................
4.6 ROLLOVERS .........................................................
4.7 PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS .......................
4.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS ..................................
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS ........................
4.10 DIRECTED INVESTMENT ACCOUNT .......................................
4.11 INTEGRATION IN MORE THAN ONE PLAN .................................
4.12 UNIFORMED SERVICES ................................................
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND .......................................
5.2 METHOD OF VALUATION ...............................................
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT .........................
6.2 DETERMINATION OF BENEFITS UPON DEATH ..............................
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY ..................
6.4 DETERMINATION OF BENEFITS UPON TERMINATION ........................
6.5 DISTRIBUTION OF BENEFITS ..........................................
6.6 DISTRIBUTION OF BENEFITS UPON DEATH ...............................
6.7 TIME OF SEGREGATION OR DISTRIBUTION ...............................
6.8 DISTRIBUTION FOR MINOR BENEFICIARY ................................
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN ....................
6.10 IN-SERVICE DISTRIBUTION ...........................................
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP .................................
6.12 SPECIAL RULE FOR NON-ANNUITY PLANS ................................
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION ...................
6.14 DIRECT ROLLOVERS ..................................................
6.15 TRANSFER OF ASSETS FROM A MONEY PURCHASE PLAN ...................
ARTICLE VII
TRUSTEE AND CUSTODIAN
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE .............................
7.2 POWERS AND DUTIES OF DISCRETIONARY TRUSTEE ........................
7.3 DIRECTED TRUSTEE ..................................................
7.4 POWERS AND DUTIES OF CUSTODIAN ....................................
7.5 LIFE INSURANCE ....................................................
7.6 LOANS TO PARTICIPANTS .............................................
7.7 MAJORITY ACTIONS ..................................................
7.8 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES .....................
7.9 ANNUAL REPORT OF THE TRUSTEE ......................................
7.10 AUDIT .............................................................
7.11 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE ....................
7.12 TRANSFER OF INTEREST ..............................................
7.13 TRUSTEE INDEMNIFICATION ...........................................
7.14 EMPLOYER SECURITIES AND REAL PROPERTY .............................
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT .........................................................
8.2 TERMINATION .......................................................
8.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS .......................
ARTICLE IX
TOP HEAVY PROVISIONS
9.1 TOP HEAVY PLAN REQUIREMENTS .......................................
9.2 DETERMINATION OF TOP HEAVY STATUS .................................
ARTICLE X
MISCELLANEOUS
10.1 EMPLOYER ADOPTIONS ................................................
10.2 PARTICIPANT'S RIGHTS ..............................................
10.3 ALIENATION ........................................................
10.4 CONSTRUCTION OF PLAN ..............................................
10.5 GENDER AND NUMBER .................................................
10.6 LEGAL ACTION ......................................................
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS ............................
10.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE ........................
10.10 INSURER'S PROTECTIVE CLAUSE .......................................
10.11 RECEIPT AND RELEASE FOR PAYMENTS ..................................
10.12 ACTION BY THE EMPLOYER ............................................
10.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY ................
10.14 HEADINGS ..........................................................
10.15 APPROVAL BY INTERNAL REVENUE SERVICE ..............................
10.16 UNIFORMITY ........................................................
10.17 PAYMENT OF BENEFITS ...............................................
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER .......................
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS ...........................
11.3 DESIGNATION OF AGENT ..............................................
11.4 EMPLOYEE TRANSFERS ................................................
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES .............
11.6 AMENDMENT .........................................................
11.7 DISCONTINUANCE OF PARTICIPATION ...................................
11.8 ADMINISTRATOR'S AUTHORITY .........................................
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE .................
ARTICLE XII
CASH OR DEFERRED PROVISIONS
12.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION ...................
12.2 PARTICIPANT'S SALARY REDUCTION ELECTION ...........................
12.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS ..............
12.4 ACTUAL DEFERRAL PERCENTAGE TESTS ..................................
12.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS ....................
12.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS ..............................
12.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS ................
12.8 SAFE HARBOR PROVISIONS ............................................
12.9 ADVANCE DISTRIBUTION FOR HARDSHIP .................................
ARTICLE XIII
SIMPLE 401(K) PROVISIONS
13.1 DEFINITIONS .......................................................
13.2 CONTRIBUTIONS .....................................................
13.3 ELECTION AND NOTICE REQUIREMENTS ..................................
13.4 VESTING REQUIREMENTS ..............................................
13.5 TOP HEAVY RULES ...................................................
13.6 NONDISCRIMINATION TESTS ...........................................
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context:
1.1 "ACP" means the "Actual Contribution Percentage" determined
pursuant to Section 12.6(e).
1.2 "ACT" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.3 "ADP" means the "Actual Deferral Percentage" determined pursuant to
Section 12.4(e).
1.4 "ADMINISTRATOR" means the Employer unless another person or entity
has been designated by the Employer pursuant to Section 2.2 to administer the
Plan on behalf of the Employer.
1.5 "ADOPTION AGREEMENT" means the separate agreement which is executed
by the Employer and sets forth the elective provisions of this Plan and Trust as
specified by the Employer.
1.6 "AFFILIATED EMPLOYER" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.7 "ANNIVERSARY DATE" means the last day of the Plan Year.
1.8 "ANNUITY STARTING DATE" means, with respect to any Participant, the
first day of the first period for which an amount is paid as an annuity, or, in
the case of a benefit not payable in the form of an annuity, the first day on
which all events have occurred which entitle the Participant to such benefit.
1.9 "BENEFICIARY" means the person (or entity) to whom all or a portion
of a deceased Participant's interest in the Plan is payable, subject to the
restrictions of Sections 6.2 and 6.6.
1.10 "CODE" means the Internal Revenue Code of 1986, as amended.
1.11 "COMPENSATION" with respect to any Participant means one of the
following as elected in the Adoption Agreement:
(a) Information required to be reported under Code Sections
6041, 6051 and 6052 (Wages, tips and other compensation as reported on
Form W-2). Compensation means wages, within the meaning of Code Section
3401(a), and all other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a written statement
under Code Sections
1
6041(d), 6051(a)(3) and 6052. Compensation must be determined without
regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
(b) Code Section 3401(a) Wages. Compensation means wages
within the meaning of Code Section 3401(a) for the purposes of income
tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature
or location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
(c) 415 Safe-Harbor Compensation. Compensation means wages,
salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with
the Employer maintaining the Plan to the extent that the amounts are
includible in gross income (including, but not limited to, commissions
paid salespersons, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements, or other expense
allowances under a nonaccountable plan (as described in Regulation
1.62-2(c)), and excluding the following:
(1) 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
contributions under a simplified employee pension plan to the
extent such contributions are excludable from the Employee's
gross income, or any distributions from a plan of deferred
compensation;
(2) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
and
(4) Other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
contract described in Code Section 403(b) (whether or not the
contributions are actually excludable from the gross income of
the Employee).
However, Compensation for any Self-Employed Individual shall
be equal to Earned Income. Compensation shall include only that Compensation
which is actually paid to the Participant during the determination period.
Except as otherwise provided in this Plan, the determination period shall be the
period elected by the Employer in the Adoption Agreement. If the Employer makes
no election, the determination period shall be the Plan Year. Furthermore,
unless otherwise elected in the Adoption Agreement, Compensation for a
determination period shall only be recognized for an Employee's period of
participation in the component of the Plan for which Compensation is being used.
2
Notwithstanding the above, if elected in the Adoption Agreement,
Compensation shall include all of the following types of elective contributions
and all of the following types of deferred compensation:
(a) Elective contributions that are made by the Employer on
behalf of a Participant that are not includible in gross income under
Code Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b);
(b) Compensation deferred under an eligible deferred
compensation plan within the meaning of Code Section 457(b); and
(c) Employee contributions (under governmental plans)
described in Code Section 414(h)(2) that are picked up by the employing
unit and thus are treated as Employer contributions.
Compensation in excess of $150,000 (or such other amount
provided in the Code) shall be disregarded for all purposes other than for
purposes of salary deferral elections. Such amount shall be adjusted by the
Commissioner for increases in the cost-of-living in accordance with Code Section
401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year
applies to any determination period beginning in such calendar year. If a
determination period consists of fewer than twelve (12) months, the $150,000
annual Compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is twelve (12).
Notwithstanding the foregoing, except as otherwise elected in
a non-standardized Adoption Agreement, the family member aggregation rules of
Code Sections 401(a)(17) and 414(q)(6) as in effect prior to the enactment of
the Small Business Job Protection Act of 1996 shall not apply to this Plan
effective with respect to Plan Years beginning after December 31, 1996.
If, in the Adoption Agreement, the Employer elects to exclude
a class of Employees from the Plan, then Compensation for any Employee who
becomes eligible or ceases to be eligible to participate during a determination
period shall only include Compensation while the Employee is an Eligible
Employee.
If, in connection with the adoption of any amendment, the
definition of Compensation has been modified, then, except as otherwise provided
herein, for Plan Years prior to the Plan Year which includes the adoption date
of such amendment, Compensation means compensation determined pursuant to the
terms of the Plan then in effect.
1.12 "CONTRACT" OR "POLICY" means any life insurance policy, retirement
income policy, or annuity contract (group or individual) issued by the Insurer.
In the event of any conflict between the terms of this Plan and the terms of any
contract purchased hereunder, the Plan provisions shall control.
1.13 "DESIGNATED INVESTMENT ALTERNATIVE" means a specific investment
identified by name by the Employer (or such other Fiduciary who has been given
the authority to select investment options) as an available investment under the
Plan to which Plan assets may be invested by the Trustee pursuant to the
investment direction of a Participant.
3
1.14 "DIRECTED INVESTMENT OPTION" means a Designated Investment
Alternative and any other investment permitted by the Plan and the Participant
Direction Procedures to which Plan assets may be invested pursuant to the
investment direction of a Participant.
1.15 "EARLY RETIREMENT DATE" means the date specified in the Adoption
Agreement on which a Participant or Former Participant has satisfied the
requirements specified in the Adoption Agreement (Early Retirement Age). If
elected in the Adoption Agreement, a Participant shall become fully Vested upon
satisfying such requirements if the Participant is still employed at the Early
Retirement Age.
A Former Participant who separates from service after satisfying
any service requirement but before satisfying the age requirement for Early
Retirement Age and who thereafter reaches the age requirement contained herein
shall be entitled to receive benefits under this Plan (other than any
accelerated vesting and allocations of Employer Contributions) as though the
requirements for Early Retirement Age had been satisfied.
1.16 "EARNED INCOME" means the net earnings from self-employment in the
trade or business with respect to which the Plan is established, for which the
personal services of the individual are a material income-producing factor. Net
earnings will be determined without regard to items not included in gross income
and the deductions allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified Plan to the extent deductible under
Code Section 404. In addition, net earnings shall be determined with regard to
the deduction allowed to the taxpayer by Code Section 164(f).
1.16A "ELAPSED TIME METHOD" means the service crediting method under
which an Employee will receive credit for the aggregate of all time period(s)
commencing with the Employee's first day of employment or reemployment and
ending on the date a Break in Service begins. The first day of employment or
reemployment is the first day the employee performs an Hour of Service. An
Employee will also receive credit for any period of severance of less than 12
consecutive months. Fractional periods of a year will be expressed in terms of
days.
1.17 "ELECTIVE DEFERRALS" means the Employer's contributions to the
Plan that are made pursuant to a Participant's deferral election pursuant to
Section 12.2, excluding any such amounts distributed as "excess annual
additions" pursuant to Section 4.5. Elective Deferrals shall be subject to the
requirements of Sections 12.2(b) and 12.2(c) and shall, except as otherwise
provided herein, be required to satisfy the nondiscrimination requirements of
Regulation 1.401(k)-1(b)(2), the provisions of which are specifically
incorporated herein by reference.
1.18 "ELIGIBLE EMPLOYEE" means any Eligible Employee as elected in the
Adoption Agreement. However, with respect to a non-standardized Adoption
Agreement, Employees classified by the Employer as independent contractors who
are subsequently determined by the IRS to be Employees shall not be Eligible
Employees. Furthermore, with respect to a standardized Adoption Agreement, the
Employees of an entity which is an Affiliated Employer may only be treated as
"Eligible Employees" after the earlier of the date the entity adopts the Plan as
a Participating Employer or the first day after the expiration of the transition
period for certain dispositions or acquisitions set forth in Code Section
410(b)(6)(C). With respect to a non-standardized Adoption Agreement, the
Employees of an Affiliated Employer may not be treated as "Eligible Employees"
until the date the entity adopts the Plan as a Participating Employer.
4
If, in the Adoption Agreement, the Employer elects to exclude
union employees, then Employees whose employment is governed by a collective
bargaining agreement between the Employer and "employee representatives" under
which retirement benefits were the subject of good faith bargaining shall not be
eligible to participate in this Plan. For this purpose, the term "employee
representatives" does not include any organization more than half of whose
members are employees who are owners, officers, or executives of the Employer.
If, in the Adoption Agreement, the Employer elects to exclude
non-resident aliens, then Employees who are non-resident aliens (within the
meaning of Code Section 7701(b)(1)(B)) who received no earned income (within the
meaning of Code Section 911(d)(2)) from the Employer which constitutes income
from sources within the United States (within the meaning of Code Section
861(a)(3)) shall not be eligible to participate in this Plan.
1.19 "EMPLOYEE" means any person who is employed by the Employer, and
excludes any person who is employed as an independent contractor. The term
"Employee" shall also include any person who is an employee of an Affiliated
Employer and any Leased Employees to the extent required by Code Section 414(n)
or (o).
1.20 "EMPLOYER" means the entity specified in the Adoption Agreement,
any successor which shall maintain this Plan and any predecessor which has
maintained this Plan. In addition, unless the context means otherwise, the term
"Employer" shall include any Participating Employer (as defined in Section 11.1)
which shall adopt this Plan.
1.21 "EXCESS AGGREGATE CONTRIBUTIONS" means, with respect to any Plan
Year, the excess of:
(a) The aggregate "Contribution Percentage Amounts" (as defined in
Section 12.6) actually made on behalf of Highly Compensated
Participants for such Plan Year and taken into account in computing the
numerator of the ACP, over
(b) The maximum "Contribution Percentage Amounts" permitted by the ACP
test in Section 12.6 (determined by reducing contributions made on
behalf of Highly Compensated Participants in order of their
"Contribution Percentages," beginning with the highest of such
percentages).
Such determination shall be made after first taking into account corrections of
any Excess Deferrals pursuant to Section 12.2 and then taking into account
adjustments of any Excess Contributions pursuant to Section 12.5.
1.22 "EXCESS COMPENSATION" means, with respect to a Plan that is
integrated with Social Security (permitted disparity), a Participant's
Compensation which is in excess of the amount elected in the Adoption Agreement.
However, if Compensation is based on less than a twelve (12) month
period, Excess Compensation shall be reduced by a fraction, the numerator of
which is the number of full months in the short period and the denominator of
which is twelve (12).
1.23 "EXCESS CONTRIBUTIONS" means, with respect to any Plan Year, the
excess of:
5
(a) The aggregate amount of Employer contributions actually made on
behalf of Highly Compensated Participants for such Plan Year and taken
into account in computing the numerator of the ADP, over
(b) The maximum amount of such contributions permitted by the ADP test
in Section 12.4 (determined by reducing contributions made on behalf of
Highly Compensated Participants in order of the actual deferral ratios,
beginning with the highest of such ratios).
In determining the amount of Excess Contributions to be distributed and/or
recharacterized with respect to an affected Highly Compensated Participant as
determined herein, such amount shall be reduced by any Excess Deferrals
previously distributed to such affected Highly Compensated Participant for the
Participant's taxable year ending with or within such Plan Year.
1.24 "EXCESS DEFERRALS" means, with respect to any taxable year of a
Participant, those elective deferrals (within the meaning of Code Section
402(g)) that are includible in the Participant's gross income under Code Section
402(g) to the extent such Participant's elective deferrals for the taxable year
exceed the dollar limitation under such Code Section. Excess Deferrals shall be
treated as an "Annual Addition" pursuant to Section 4.4 when contributed to the
Plan unless distributed to the affected Participant not later than the first
April 15th following the close of the Participant's taxable year in which the
Excess Deferral was made. Additionally, for purposes of Sections 4.3(f) and 9.2,
Excess Deferrals shall continue to be treated as Employer contributions even if
distributed pursuant to Section 12.2(e). However, Excess Deferrals of Non-Highly
Compensated Participants are not taken into account for purposes of Section
12.4.
1.25 "FIDUCIARY" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.26 "FISCAL YEAR" means the Employer's accounting year as specified in
the Adoption Agreement.
1.27 "FORFEITURE" means, with respect to a Former Participant who has
severed employment, that portion of the Participant's Account that is not
Vested. Unless otherwise elected in the Adoption Agreement, Forfeitures occur
pursuant to (a) below.
(a) A Forfeiture will occur on the earlier of:
(1) The last day of the Plan Year in which a Former
Participant who has severed employment with the Employer
incurs five (5) consecutive 1-Year Breaks in Service (or, if
fewer, the number of consecutive 1-Year Breaks in Service
specified in the Adoption Agreement), or
(2) The distribution of the entire Vested portion of the
Participant's Account of a Former Participant who has severed
employment with the Employer. For purposes of this
6
provision, if the Former Participant has a Vested benefit of
zero, then such Former Participant shall be deemed to have
received a distribution of such Vested benefit as of the year
in which the severance of employment occurs.
(b) If elected in the Adoption Agreement, a Forfeiture will occur as of
the last day of the last day of the Plan Year in which the Former
Participant incurs the number of consecutive 1-Year Breaks in Service
elected in the Adoption Agreement.
Regardless of the preceding provisions, if a Former Participant is eligible to
share in the allocation of Employer contributions or Forfeitures in the year in
which the Forfeiture would otherwise occur, then the Forfeiture will not occur
until the end of the first Plan Year for which the Former Participant is not
eligible to share in the allocation of Employer contributions or Forfeitures.
Furthermore, the term "Forfeiture" shall also include amounts deemed to be
Forfeitures pursuant to any other provision of this Plan.
1.28 "FORMER PARTICIPANT" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.29 "414(s) COMPENSATION" means a definition of compensation that
satisfies the nondiscrimination requirements of Code Section 414(s) and the
Regulations thereunder as elected in the adoption agreement. An Employer may
limit the period taken into account to that part of the Plan Year or Calendar
Year in which an Employee was a Participant in the component of the Plan being
tested. The period used to determine 414(s) Compensation must be applied
uniformly to all Participants for the Plan Year.
1.30 "415 COMPENSATION" means, with respect to any Participant, such
Participant's (a) Wages, tips and other compensation on Form W-2, (b) Section
3401(a) wages or (c) 415 safe-harbor compensation as elected in the Adoption
Agreement for purposes of Compensation. 415 Compensation shall be based on the
full Limitation Year regardless of when participation in the Plan commences.
Furthermore, regardless of any election made in the Adoption Agreement, with
respect to Limitation Years beginning after December 31, 1997, 415 Compensation
shall include any elective deferral (as defined in Code Section 402(g)(3)) and
any amount which is contributed or deferred by the Employer at the election of
the Participant and which is not includible in the gross income of the
Participant by reason of Code Section 125 or 457. For Limitation Years beginning
prior to January 1, 1998, 415 Compensation shall exclude such amounts.
Except as otherwise provided herein, if, in connection with
the adoption of any amendment, the definition of 415 Compensation has been
modified, then for Plan Years prior to the Plan Year which includes the adoption
date of such amendment, 415 Compensation means compensation determined pursuant
to the terms of the Plan then in effect.
1.31 "HIGHLY COMPENSATED EMPLOYEE" means, effective for Plan Years
beginning after December 31, 1996, an Employee described in Code Section 414(q)
and the Regulations thereunder, and generally means any Employee who:
(a) was a "five percent (5%) owner" as defined in Section 1.37(c) at
any time during the "determination year" or the "look-back year"; or
7
(b) for the "look-back year" had 415 Compensation from the Employer in
excess of $80,000 and, if elected in the Adoption Agreement, was in the
Top-Paid Group for the "look-back year." The $80,000 amount is adjusted
at the same time and in the same manner as under Code Section 415(d),
except that the base period is the calendar quarter ending September
30, 1996.
The "determination year" means the Plan Year for which testing
is being performed and the "look-back year" means the immediately preceding
twelve (12) month period. However, if the calendar year data election is made in
the Adoption Agreement, for purposes of (b) above, the "look-back year" shall be
the calendar year beginning within the twelve (12) month period immediately
preceding the "determination year." Notwithstanding the preceding sentence, if
the calendar year data election is effective with respect to a Plan Year
beginning in 1997, then for such Plan Year the "look-back year" shall be the
calendar year ending with or within the Plan Year for which testing is being
performed, and the "determination year" shall be the period of time, if any,
which extends beyond the "look-back year" and ends on the last day of the Plan
Year for which testing is being performed.
A highly compensated former employee is based on the rules
applicable to determining highly compensated employee status as in effect for
that "determination year," in accordance with Regulation 1.414(q)-1T, A-4 and
IRS Notice 97-45 (or any superseding guidance).
In determining whether an employee is a Highly Compensated
Employee for a Plan Year beginning in 1997, the amendments to Code Section
414(q) stated above are treated as having been in effect for years beginning in
1996.
For purposes of this Section, for Plan Years beginning prior
to January 1, 1998, the determination of 415 Compensation shall be made by
including amounts that would otherwise be excluded from a Participant's gross
income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B) and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b).
In determining who is a Highly Compensated Employee, Employees
who are non-resident aliens and who received no earned income (within the
meaning of Code Section 911(d)) from the Employer constituting United States
source income within the meaning of Code Section 861(a)(3) shall not be treated
as Employees. Additionally, all Affiliated Employers shall be taken into account
as a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans.
1.32 "HIGHLY COMPENSATED PARTICIPANT" means any Highly Compensated
Employee who is eligible to participate in the component of the Plan being
tested.
1.33 "HOUR OF SERVICE" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period (these
hours will be credited to the Employee for the computation period in which the
duties are performed); (2) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer (irrespective
of whether the employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays,
8
sickness, jury duty, disability, lay-off, military duty or leave of absence)
during the applicable computation period (these hours will be calculated and
credited pursuant to Department of Labor regulation 2530.200b-2 which is
incorporated herein by reference); (3) each hour for which back pay is awarded
or agreed to by the Employer without regard to mitigation of damages (these
hours will be credited to the Employee for the computation period or periods to
which the award or agreement pertains rather than the computation period in
which the award, agreement or payment is made). The same Hours of Service shall
not be credited both under (1) or (2), as the case may be, and under (3).
Notwithstanding (2) above, (i) no more than 501 Hours of
Service are required to be credited to an Employee on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs in a single computation period); (ii) an hour for which an
Employee is directly or indirectly paid, or entitled to payment, on account of a
period during which no duties are performed is not required to be credited to
the Employee if such payment is made or due under a plan maintained solely for
the purpose of complying with applicable workers' compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee. Furthermore, for
purposes of (2) above, a payment shall be deemed to be made by or due from the
Employer regardless of whether such payment is made by or due from the Employer
directly, or indirectly through, among others, a trust fund, or insurer, to
which the Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are for
the benefit of particular Employees or are on behalf of a group of Employees in
the aggregate.
Hours of Service will be credited for employment with all
Affiliated Employers and for any individual considered to be a Leased Employee
pursuant to Code Section 414(n) or 414(o) and the Regulations thereunder.
Furthermore, the provisions of Department of Labor regulations 2530.200b-2(b)
and (c) are incorporated herein by reference.
Hours of Service will be determined on the basis of the method
elected in the Adoption Agreement.
1.34 "INSURER" means any legal reserve insurance company which shall
issue one or more Contracts or Policies under the Plan.
1.35 "INVESTMENT MANAGER" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.36 "JOINT AND SURVIVOR ANNUITY" means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than fifty percent (50%), nor more than one-hundred percent
(100%) of the amount of the annuity payable during the joint lives of the
Participant and the Participant's spouse which can be purchased with the
Participant's Vested interest in the Plan reduced by any outstanding loan
balances pursuant to Section 7.6.
1.37 "KEY EMPLOYEE" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of such Employee's or former Employee's Beneficiaries) is
considered a Key Employee if, the individual at any
9
time during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) having annual 415
Compensation greater than fifty percent (50%) of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year;
(b) one of the ten Employees having annual 415 Compensation from the
Employer for a Plan Year greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year in which such
Plan Year ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent (1/2%) interest
and the largest interests in the Employer;
(c) a "five percent (5%) owner" of the Employer. "Five percent (5%)
owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the value
of the outstanding stock of the Employer or stock possessing more than
five percent (5%) of the total combined voting power of all stock of
the Employer or, in the case of an unincorporated business, any person
who owns more than five percent (5%) of the capital or profits interest
in the Employer; and
(d) a "one percent (1%) owner" of the Employer having an annual 415
Compensation from the Employer of more than $150,000. "One percent (1%)
owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than one percent (1%) of the value of
the outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer.
In determining percentage ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated as
separate employers. In determining whether an individual has 415 Compensation of
more than $150,000, 415 Compensation from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken into
account. Furthermore, for purposes of this Section, for Plan Years beginning
prior to January 1, 1998, the determination of 415 Compensation shall be made by
including amounts that would otherwise be excluded from a Participant's gross
income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B) and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b).
1.38 "LATE RETIREMENT DATE" means the date of, or the first day of the
month or the Anniversary Date coinciding with or next following, whichever
corresponds to the election in the Adoption Agreement for the Normal Retirement
Date, a Participant's actual retirement after having reached the Normal
Retirement Date.
1.39 "LEASED EMPLOYEE" means, effective with respect to Plan Years
beginning on or after January 1, 1997, any person (other than an Employee of the
recipient Employer) who, pursuant to an agreement between the recipient Employer
and any other person or entity ("leasing organization"), has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time basis for a
period of at least one year, and such
10
services are performed under primary direction or control by the recipient
Employer. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
Employer shall be treated as provided by the recipient Employer. Furthermore,
Compensation for a Leased Employee shall only include Compensation from the
leasing organization that is attributable to services performed for the
recipient Employer.
A Leased Employee shall not be considered an employee of the
recipient Employer if: (a) such employee is covered by a money purchase pension
plan providing: (1) a nonintegrated employer contribution rate of at least 10
percent of compensation, as defined in Code Section 415(c)(3), but for Plan
Years beginning prior to January 1, 1998, including amounts contributed pursuant
to a salary reduction agreement which are excludable from the employee's gross
income under Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b), (2)
immediate participation, and (3) full and immediate vesting; and (b) leased
employees do not constitute more than 20 percent of the recipient Employer's
nonhighly compensated workforce.
1.40 "LIMITATION YEAR" means the determination period used to determine
Compensation. However, the Employer may elect a different Limitation Year in the
Adoption Agreement or by adopting a written resolution to such effect. All
qualified plans maintained by the Employer must use the same Limitation Year.
Furthermore, unless there is change to a new Limitation Year, the Limitation
Year will be a twelve (12) consecutive month period. In the case of an initial
Limitation Year, the Limitation Year will be the twelve (12) consecutive month
period ending on the last day of the period specified in the Adoption Agreement
(or written resolution). If the Limitation Year is amended to a different twelve
(12) consecutive month period, the new "Limitation Year" must begin on a date
within the "Limitation Year" in which the amendment is made.
1.41 "NET PROFIT" means, with respect to any Fiscal Year, the
Employer's net income or profit for such Fiscal Year determined upon the basis
of the Employer's books of account in accordance with generally accepted
accounting principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.42 "NON-ELECTIVE CONTRIBUTION" means the Employer's contributions to
the Plan other than Elective Deferrals, any Qualified Non-Elective Contributions
and any Qualified Matching Contributions. Employer matching contributions which
are not Qualified Matching Contributions shall be considered a Non-Elective
Contribution for purposes of the Plan.
1.43 "NON-HIGHLY COMPENSATED PARTICIPANT" means any Participant who is
not a Highly Compensated Employee. However, if pursuant to Sections 12.4 or 12.6
the prior year testing method is used to calculate the ADP or the ACP, a
Non-Highly Compensated Participant shall be determined using the definition of
Highly Compensated Employee in effect for the preceding Plan Year.
1.44 "NON-KEY EMPLOYEE" means any Employee or former Employee (and such
Employee's or former Employee's Beneficiaries) who is not, and has never been, a
Key Employee.
1.45 "NORMAL RETIREMENT AGE" means the age elected in the Adoption
Agreement at which time a Participant's Account shall be nonforfeitable (if the
Participant is employed by the Employer on or after that date).
1.46 "NORMAL RETIREMENT DATE" means the date elected in the Adoption
Agreement.
11
1.47 "1-YEAR BREAK IN SERVICE" means, if the Hour of Service Method is
elected in the Adoption Agreement, the applicable computation period during
which an Employee has not completed more than 500 Hours of Service. Further,
solely for the purpose of determining whether a Participant has incurred a
1-Year Break in Service, Hours of Service shall be recognized for "authorized
leaves of absence" and "maternity and paternity leaves of absence."
"Authorized leave of absence" means an unpaid, temporary
cessation from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means an absence
from work for any period by reason of the Employee's pregnancy, birth of the
Employee's child, placement of a child with the Employee in connection with the
adoption of such child, or any absence for the purpose of caring for such child
for a period immediately following such birth or placement. For this purpose,
Hours of Service shall be credited for the computation period in which the
absence from work begins, only if credit therefore is necessary to prevent the
Employee from incurring a 1-Year Break in Service, or, in any other case, in the
immediately following computation period. The Hours of Service credited for a
"maternity or paternity leave of absence" shall be those which would normally
have been credited but for such absence, or, in any case in which the
Administrator is unable to determine such hours normally credited, eight (8)
Hours of Service per day. The total Hours of Service required to be credited for
a "maternity or paternity leave of absence" shall not exceed the number of Hours
of Service needed to prevent the Employee from incurring a 1-Year Break in
Service.
If the Elapsed Time Method is elected in the Adoption
Agreement, a "1-Year Break in Service" means a twelve (12) consecutive month
period beginning on the severance from service date or any anniversary thereof
and ending on the next succeeding anniversary of such date; provided, however,
that the Employee during such twelve (12) consecutive month period does not
perform an Hour of Service for the Employer.
1.48 "OWNER-EMPLOYEE" means a sole proprietor who owns the entire
interest in the Employer or a partner (or member in the case of a limited
liability company treated as a partnership or sole proprietorship for federal
income tax purposes) who owns more than ten percent (10%) of either the capital
interest or the profits interest in the Employer and who receives income for
personal services from the Employer.
1.49 "PARTICIPANT" means any Eligible Employee who has satisfied the
requirements of Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
1.50 "PARTICIPANT DIRECTED ACCOUNT" means that portion of a
Participant's interest in the Plan with respect to which the Participant has
directed the investment in accordance with the Participant Direction Procedures.
1.51 "PARTICIPANT DIRECTION PROCEDURES" means such instructions,
guidelines or policies, the terms of which are incorporated herein, as shall be
established pursuant to Section 4.10 and observed by the Administrator and
applied and provided to Participants who have Participant Directed Accounts.
12
1.52 "PARTICIPANT'S ACCOUNT" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's total interest under the Plan resulting from (a) the Employer's
contributions in the case of a Profit Sharing Plan or Money Purchase Plan, and
(b) the Employer's Non-Elective Contributions in the case of a 401(k) Profit
Sharing Plan. Separate accountings shall be maintained with respect to that
portion of a Participant's Account attributable to Employer matching,
contributions and to Employer discretionary contributions made pursuant to
Section 12.1(a)(3).
1.53 "PARTICIPANT'S COMBINED ACCOUNT" means the total aggregate amount
of a Participant's interest under the Plan resulting from Employer contributions
(including Elective Deferrals).
1.54 "PARTICIPANT'S ELECTIVE DEFERRAL ACCOUNT" means the account
established and maintained by the Administrator for each Participant with
respect to such Participant's total interest in the Plan resulting from Elective
Deferrals. Amounts in the Participant's Elective Deferral Account are
nonforfeitable when made and are subject to the distribution restrictions of
Section 12.2(c).
1.55 "PARTICIPANT'S ROLLOVER ACCOUNT" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's interest in the Plan resulting from amounts transferred from
another qualified plan or "conduit" Individual Retirement Account in accordance
with Section 4.6.
1.56 "PARTICIPANT'S TRANSFER ACCOUNT" means the account established and
maintained by the Administrator for each Participant with respect to the total
interest in the Plan resulting from amounts transferred to this Plan from a
direct plan-to-plan transfer in accordance with Section 4.7
1.57 "PERIOD OF SERVICE" means the aggregate of all periods commencing
with an Employee's first day of employment or reemployment with the Employer or
an Affiliated Employer and ending on the first day of a Period of Severance. The
first day of employment or reemployment is the first day the Employee performs
an Hour of Service. An Employee will also receive partial credit for any Period
of Severance of less than twelve (12) consecutive months. Fractional periods of
a year will be expressed in terms of days.
Periods of Service with any Affiliated Employer shall be
recognized. Furthermore, Periods of Service with any predecessor employer which
maintained this Plan shall be recognized. Periods of Service with any other
predecessor employer shall be recognized as elected in the Adoption Agreement.
In determining Periods of Service for purposes of vesting
under the Plan, Periods of Service will be excluded as elected in the Adoption
Agreement and as specified in Section 3.7.
In the event the method of crediting service is amended from
the Hour of Service Method to the Elapsed Time Method, an Employee will receive
credit for a period of service consisting of:
(a) A number of years equal to the number of Years of Service credited
to the Employee before the computation period during which the
amendment occurs; and
(b) The greater of (1) the period of service that would be credited to
the Employee under the Elapsed Time Method for service during the
entire computation period in which the transfer
13
occurs or (2) the service taken into account under the Hour of Service
Method as of the date of the amendment.
In addition, the Employee will receive credit for service subsequent to the
amendment commencing on the day after the last day of the computation period in
which the transfer occurs.
1.58 "PERIOD OF SEVERANCE" means a continuous period of time during
which an Employee is not employed by the Employer. Such period begins on the
date the Employee retires, quits or is discharged, or if earlier, the twelve
(12) month anniversary of the date on which the Employee was otherwise first
absent from service.
In the case of an individual who is absent from work for
maternity or paternity reasons, the twelve (12) consecutive month period
beginning on the first anniversary of the first day of such absence shall not
constitute a one year Period of Severance. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an absence (a) by
reason of the pregnancy of the individual, (b) by reason of the birth of a child
of the individual, (c) by reason of the placement of a child with the individual
in connection with the adoption of such child by such individual, or (d) for
purposes of caring for such child for a period beginning immediately following
such birth or placement.
1.59 "PLAN" means this instrument (hereinafter referred to as MFS
Retirement Services, Inc. Prototype Defined Contribution Plan and Trust, Basic
Plan Document #02 and the Adoption Agreement as adopted by the Employer,
including all amendments thereto and any addendum which is specifically
permitted pursuant to the terms of the Plan.
1.60 "PLAN YEAR" means the Plan's accounting year as specified in the
Adoption Agreement.
1.61 "PRE-RETIREMENT SURVIVOR ANNUITY" means an immediate annuity for
the life of a Participant's spouse, the payments under which must be equal to
the benefit which can be provided with the percentage, as specified in the
Adoption Agreement, of the Participant's Vested interest in the Plan as of the
date of death. If no election is made in the Adoption Agreement, the percentage
shall be equal to fifty percent (50%). Furthermore, if less than one hundred
percent (100%) of the Participant's Vested interest in the Plan is used to
provide the Pre-Retirement Survivor Annuity, a proportionate share of each of
the Participant's accounts shall be used to provide the Pre-Retirement Survivor
Annuity.
1.62 "QUALIFIED MATCHING CONTRIBUTION" means any Employer matching
contributions that are made pursuant to Sections 12.1(a)(2) if elected in the
Adoption Agreement, 12.5 and 12.7.
1.63 "QUALIFIED MATCHING CONTRIBUTION ACCOUNT" means the account
established hereunder to which Qualified Matching Contributions are allocated.
Amounts in the Qualified Matching Contribution Account are nonforfeitable when
made and are subject to the distribution restrictions of Section 12.2(c).
1.64 "QUALIFIED NON-ELECTIVE CONTRIBUTION" means the Employer's
contributions to the Plan that are made pursuant to Sections 12.1(a)(4) if
elected in the Adoption Agreement, 12.5 and 12.7.
1.65 "QUALIFIED NON-ELECTIVE CONTRIBUTION ACCOUNT" means the account
established hereunder to which Qualified Non-Elective Contributions are
allocated. Amounts in the Qualified
14
Non-Elective Contribution Account are nonforfeitable when made and are subject
to the distribution restrictions of Section 12.2(c).
1.66 "QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTION ACCOUNT" means the
account established hereunder to which a Participant's tax deductible qualified
voluntary employee contributions made pursuant to Section 4.9 are allocated.
1.67 "REGULATION" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or a delegate of the Secretary of the Treasury,
and as amended from time to time.
1.68 "RETIRED PARTICIPANT" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.69 "RETIREMENT DATE" means the date as of which a Participant retires
for reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early Retirement Date or Late
Retirement Date (see Section 6.1).
1.70 "SELF-EMPLOYED INDIVIDUAL" means an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, and, also, an individual who would have had Earned Income but for
the fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.71 "SHAREHOLDER-EMPLOYEE" means a Participant who owns more than five
percent (5%) of the Employer's outstanding capital stock during any year in
which the Employer elected to be taxed as a Small Business Corporation (S
Corporation) under the applicable Code sections relating to Small Business
Corporations.
1.72 "SHORT PLAN YEAR" means, if specified in the Adoption Agreement, a
Plan Year of less than a twelve (12) month period. If there is a Short Plan
Year, the following rules shall apply in the administration of this Plan. In
determining whether an Employee has completed a Year of Service (or Period of
Service if the Elapsed Time Method is used) for benefit accrual purposes in the
Short Plan Year, the number of the Hours of Service (or months of service if the
Elapsed Time Method is used) required shall be proportionately reduced based on
the number of days (or months) in the Short Plan Year. The determination of
whether an Employee has completed a Year of Service (or Period of Service) for
vesting and eligibility purposes shall be made in accordance with Department of
Labor regulation 2530.203-2(c). In addition, if this Plan is integrated with
Social Security, then the integration level shall be proportionately reduced
based on the number of months in the Short Plan Year.
1.73 "SUPER TOP HEAVY PLAN" means a plan which would be a Top Heavy
Plan if sixty percent (60%) is replaced with ninety percent (90%) in Section
9.2(a). However, effective as of the first Plan Year beginning after December
31, 1999, no Plan shall be considered a Super Top Heavy Plan.
1.74 "TAXABLE WAGE BASE" means, with respect to any Plan Year, the
contribution and benefit base under Section 230 of the Social Security Act at
the beginning of such Plan Year.
1.75 "TERMINATED PARTICIPANT" means a person who has been a
Participant, but whose employment has been terminated other than by death, Total
and Permanent Disability or retirement.
15
1.76 "TOP HEAVY PLAN" means a plan described in Section 9.2(a).
1.77 "TOP HEAVY PLAN YEAR" means a Plan Year commencing after December
31, 1983, during which the Plan is a Top Heavy Plan.
1.78 "TOP-PAID GROUP" shall be determined pursuant to Code Section
414(q) and the Regulations thereunder and generally means the top twenty percent
(20%) of Employees who performed services for the Employer during the applicable
year, ranked according to the amount of 415 Compensation received from the
Employer during such year. All Affiliated Employers shall be taken into account
as a single employer, and Leased Employees shall be treated as Employees if
required pursuant to Code Section 414(n) or (o). Employees who are non-resident
aliens who received no earned income (within the meaning of Code Section
911(d)(2)) from the Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as Employees.
Furthermore, for the purpose of determining the number of active Employees in
any year, the following additional Employees may also be excluded, however, such
Employees shall still be considered for the purpose of identifying the
particular Employees in the Top-Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17-1/2 hours per week;
(c) Employees who normally work less than six (6) months during a year;
and
(d) Employees who have not yet attained age twenty-one (21).
In addition, if ninety percent (90%) or more of the Employees
of the Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded from
both the total number of active Employees as well as from the identification of
particular Employees in the Top-Paid Group.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable. Furthermore, in applying such
exclusions, the Employer may substitute any lesser service, hours or age.
1.79 "TOTAL AND PERMANENT DISABILITY" Unless elected otherwise in the
adoption agreement, means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months. The
disability of a Participant shall be determined by a licensed physician chosen
by the Administrator. However, if the condition constitutes total disability
under the federal Social Security Acts, the Administrator may rely upon such
determination that the Participant is Totally and Permanently Disabled for the
purposes of this Plan. The determination shall be applied uniformly to all
Participants.
1.80 "TRUSTEE" means the person or entity named in the Adoption
Agreement, or any successors thereto.
16
1.81 "TRUST FUND" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.82 "VALUATION DATE" means the date or dates specified in the Adoption
Agreement. Regardless of any election to the contrary, the Valuation Date shall
include the Anniversary Date and may include any other date or dates deemed
necessary or appropriate by the Administrator for the valuation of Participants'
Accounts during the Plan Year, which may include any day that the Trustee, any
transfer agent appointed by the Trustee or the Employer, or any stock exchange
used by such agent, are open for business.
1.83 "VESTED" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.84 "VOLUNTARY CONTRIBUTION ACCOUNT" means the account established and
maintained by the Administrator for each Participant with respect to such
Participant's total interest in the Plan resulting from the Participant's
after-tax voluntary Employee contributions made pursuant to Section 4.7.
Amounts recharacterized as after-tax voluntary Employee
contributions pursuant to Section 12.5 shall remain subject to the limitations
of Section 12.2. Therefore, a separate accounting shall be maintained with
respect to that portion of the Voluntary Contribution Account attributable to
after-tax voluntary Employee contributions made pursuant to Section 4.8.
1.85 "YEAR OF SERVICE" means the computation period of twelve (12)
consecutive months, herein set forth, and during which an Employee has completed
at least the number of Hours of Service specified in the Adoption Agreement.
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service (employment commencement date). The initial
computation period beginning after a 1-Year Break in Service shall be measured
from the date on which an Employee again performs an Hour of Service. The
succeeding computation periods shall begin on the anniversary of the Employee's
employment commencement date. However, if elected in the Adoption Agreement, the
computation period after the initial computation period shall shift to the
current Plan Year which includes the anniversary of the date on which the
Employee first performed an Hour of Service, and subsequent computation periods
shall be the Plan Year. If there is a shift to the Plan Year, an Employee who is
credited with the number of Hours of Service to be credited with a Year of
Service in both the initial eligibility computation period and the first Plan
Year which commences prior to the first anniversary of the Employee's initial
eligibility computation period will be credited with two (2) Years of Service
for purposes of eligibility to participate.
If two (2) Years of Service are required as a condition of
eligibility, a Participant will only have completed two (2) Years of Service for
eligibility purposes upon completing two (2) consecutive Years of Service
without an intervening 1-Year Break-in-Service.
For vesting purposes, and all other purposes not specifically
addressed in this Section, the computation period shall be the period elected in
the Adoption Agreement. If no election is made in the Adoption Agreement, the
computation period shall be the Plan Year.
17
In determining Years of Service for purposes of vesting under
the Plan, Years of Service will be excluded as elected in the Adoption Agreement
and as specified in Section 3.7.
Years of Service and 1-Year Breaks in Service will be measured
on the same computation period.
Years of Service with any Affiliated Employer shall be
recognized. Furthermore, Years of Service with any predecessor employer which
maintained this Plan shall be recognized. Years of Service with any other
predecessor employer shall be recognized as elected in the Adoption Agreement.
In the event the method of crediting service is amended from
the Elapsed Time Method to the Hour of Service Method, an Employee will receive
credit:
(a) The number of Years of Service equal to the number of 1-year
Periods of Service credited to the Employee as of the date of the
amendment; and
(b) In the computation period which includes the date of the amendment,
a number of Hours of Service (using the Hours of Service equivalency
method elected in the Adoption Agreement) to any fractional part of a
year credited to the Employee under this Section as of the date of the
amendment.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered to
appoint and remove the Trustee and the Administrator from time to time
as it deems necessary for the proper administration of the Plan to
ensure that the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the terms of
the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settlor) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer shall establish a "funding policy and
method," i.e., it shall determine whether the Plan has a short run need
for liquidity (e.g., to pay benefits) or whether liquidity is a long
run goal and investment growth (and stability of same) is a more
current need, or shall appoint a qualified person to do so. If the
Trustee has discretionary authority, the Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate
such Plan needs with its investment policy. The communication of such a
"funding policy and method" shall not, however, constitute a directive
to the Trustee as to the investment of the Trust Funds. Such "funding
policy and method" shall be consistent with the objectives of this Plan
and with the requirements of Title I of the Act.
18
(c) The Employer may appoint, at its option, an Investment
Manager, investment adviser, or other agent to provide direction to the
Trustee with respect to any or all of the Plan assets. Such appointment
shall be given by the Employer in writing in a form acceptable to the
Trustee and shall specifically identify the Plan assets with respect to
which the Investment Manager or other agent shall have the authority to
direct the investment.
(d) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct and
evaluation, or through other appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer may appoint one or more Administrators. If the
Employer does not appoint an Administrator, the Employer will be the
Administrator. Any person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any person so
appointed shall signify acceptance by filing written acceptance with the
Employer. An Administrator may resign by delivering a written resignation to the
Employer or be removed by the Employer by delivery of written notice of removal,
to take effect at a date specified therein, or upon delivery to the
Administrator if no date is specified. Upon the resignation or removal of an
Administrator, the Employer may designate in writing a successor to this
position.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
19
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Administrator
shall administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Any such determination by the Administrator shall be conclusive and
binding upon all persons. The Administrator may establish procedures, correct
any defect, supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or advisable to carry out
the purpose of the Plan; provided, however, that any procedure, discretionary
act, interpretation or construction shall be done in a nondiscriminatory manner
based upon uniform principles consistently applied and shall be consistent with
the intent that the Plan continue to be deemed a qualified plan under the terms
of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish its duties under this Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan as set forth under the terms of the Plan,
including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of an Employee to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect
to the amount and the kind of benefits to which any Participant shall
be entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
discretionary or otherwise directed disbursements from the Trust Fund;
(d) to maintain all necessary records for the administration
of the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan that are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any Insurer, and to designate the Insurer from which
such Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(h) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion (if the Trustee has such
discretion), in a manner designed to accomplish specific objectives;
(i) to prepare and implement a procedure for notifying
Participants and Beneficiaries of their rights to elect Joint and
Survivor Annuities and Pre-Retirement Survivor Annuities if required by
the Plan, Code and Regulations thereunder;
20
(j) to assist Participants regarding their rights, benefits,
or elections available under the Plan;
(k) to act as the named Fiduciary responsible for
communicating with Participants as needed to maintain Plan compliance
with Act Section 404(c) (if the Employer intends to comply with Act
Section 404(c)) including, but not limited to, the receipt and
transmission of Participants' directions as to the investment of their
accounts under the Plan and the formation of policies, rules, and
procedures pursuant to which Participants may give investment
instructions with respect to the investment of their accounts; and
(l) to determine the validity of, and take appropriate action
with respect to, any qualified domestic relations order received by it.
(m) to carry out the duties, rights, powers and authority
ascribed to it under the provisions of Article VII of the Plan,
including, without limitation, the duties, rights, powers and authority
of the Administrator when the Trustee is a Directed Trustee.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and, if applicable, to Plan Participants.
2.7 INFORMATION FROM EMPLOYER
The Employer shall supply full and timely information to the
Administrator on all pertinent facts as the Administrator may require in order
to perform its functions hereunder and the Administrator shall advise the
Trustee of such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such information as is
supplied by the Employer and shall have no duty or responsibility to verify such
information.
21
2.8 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Administrator, or any person or persons
retained or appointed by any Named Fiduciary incident to the exercise of their
duties under the Plan, including, but not limited to, fees of accountants,
counsel, Investment Managers, agents (including nonfiduciary agents) appointed
for the purpose of assisting the Administrator or Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts (if
permitted) and other specialists and their agents, the costs of any bonds
required pursuant to Act Section 412, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund. Any
administration expense paid to the Trust Fund as a reimbursement shall not be
considered an Employer Contribution.
2.9 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.3, if there is more than one
Administrator, then they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.10 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing
with the Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant within ninety (90) days after the application is
filed, or such period as is required by applicable law or Department of Labor
regulation. In the event the claim is denied, the reasons for the denial shall
be specifically set forth in the notice in language calculated to be understood
by the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will be
provided. In addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
22
2.11 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to Section
2.10 shall be entitled to request the Administrator to give further
consideration to the claim by filing with the Administrator a written request
for a hearing. Such request, together with a written statement of the reasons
why the claimant believes such claim should be allowed, shall be filed with the
Administrator no later than sixty (60) days after receipt of the written
notification provided for in Section 2.10. The Administrator shall then conduct
a hearing within the next sixty (60) days, at which the claimant may be
represented by an attorney or any other representative of such claimant's
choosing and expense and at which the claimant shall have an opportunity to
submit written and oral evidence and arguments in support of the claim. At the
hearing (or prior thereto upon five (5) business days written notice to the
Administrator) the claimant or the claimant's representative shall have an
opportunity to review all documents in the possession of the Administrator which
are pertinent to the claim at issue and its disallowance. Either the claimant or
the Administrator may cause a court reporter to attend the hearing and record
the proceedings. In such event, a complete written transcript of the proceedings
shall be furnished to both parties by the court reporter. The full expense of
any such court reporter and such transcripts shall be borne by the party causing
the court reporter to attend the hearing. A final decision as to the allowance
of the claim shall be made by the Administrator within sixty (60) days of
receipt of the appeal (unless there has been an extension of sixty (60) days due
to special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the sixty (60) day
period). Such communication shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons for the decision
and specific references to the pertinent Plan provisions on which the decision
is based. Notwithstanding the preceding, to the extent any of the time periods
specified in this Section are amended by law or Department of Labor regulation,
then the time frames specified herein shall automatically be changed in
accordance with such law or regulation.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate
hereunder on the date such Employee has satisfied the conditions of eligibility
elected in the Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has satisfied the conditions of
eligibility pursuant to Section 3.1 shall become a Participant effective as of
the date elected in the Adoption Agreement. If said Employee is not employed on
such date, but is reemployed before a 1-Year Break in Service has occurred, then
such Employee shall become a Participant on the date of reemployment or, if
later, the date that the Employee would have otherwise entered the Plan had the
Employee not terminated employment.
Unless specifically provided otherwise in the Adoption
Agreement, an Eligible Employee who satisfies the Plan's eligibility requirement
conditions by reason of recognition of service with a predecessor employer will
become a Participant as of the day the Plan credits service with a predecessor
23
employer or, if later, the date the Employee would have otherwise entered the
Plan had the service with the predecessor employer been service with the
Employer.
If an Employee, who has satisfied the Plan's eligibility
requirements and would otherwise have become a Participant, shall go from a
classification of a noneligible Employee to an Eligible Employee, such Employee
shall become a Participant on the date such Employee becomes an Eligible
Employee or, if later, the date that the Employee would have otherwise entered
the Plan had the Employee always been an Eligible Employee.
If an Employee, who has satisfied the Plan's eligibility
requirements and would otherwise become a Participant, shall go from a
classification of an Eligible Employee to a noneligible class of Employees, such
Employee shall become a Participant in the Plan on the date such Employee again
becomes an Eligible Employee, or, if later, the date that the Employee would
have otherwise entered the Plan had the Employee always been an Eligible
Employee. However, if such Employee incurs a 1-Year Break in Service,
eligibility will be determined under the Break in Service rules set forth in
Section 3.7.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. Such determination
shall be subject to review pursuant to Section 2.11.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in the Plan for each Year of Service (or Period of Service, if
the Elapsed Time Method is used) completed while an ineligible Employee, until
such time as the Participant's Account is forfeited or distributed pursuant to
the terms of the Plan. Additionally, the Former Participant's interest in the
Plan shall continue to share in the earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should have been
included as a Participant in the Plan is erroneously omitted and discovery of
such omission is not made until after a contribution by the Employer for the
year has been made and allocated, then the Employer shall make a subsequent
contribution, if necessary after the application of Section 4.3(e), so that the
omitted Employee receives the total amount which the Employee would have
received (including both Employer contributions and earnings thereon) had the
Employee not been omitted. Such contribution shall be made regardless of whether
it is deductible in whole or in part in any taxable year under applicable
provisions of the Code.
24
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such inclusion
is not made until after a contribution for the year has been made and allocated,
the Employer shall be entitled to recover the contribution made with respect to
the ineligible person provided the error is discovered within twelve (12) months
of the date on which it was made. Otherwise, the amount contributed with respect
to the ineligible person shall constitute a Forfeiture for the Plan Year in
which the discovery is made. Notwithstanding the forgoing, any Elective
Deferrals made by an ineligible person shall be distributed to the person (along
with any earnings attributable to such Elective Deferrals).
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE
(a) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed by the
Employer before a 1-Year Break in Service occurs, the Former Participant
shall become a Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed after a
l-Year Break in Service has occurred, Years of Service (or Periods of
Service if the Elapsed Time Method is being used) shall include Years of
Service (or Periods of Service if the Elapsed Time Method is being used)
prior to the l-Year Break in Service subject to the following rules:
(1) In the case of a Former Participant who under the Plan does
not have a nonforfeitable right to any interest in the Plan
resulting from Employer contributions, Years of Service (or
Periods of Service) before a period of l-Year Breaks in Service
will not be taken into account if the number of consecutive l-Year
Breaks in Service equals or exceeds the greater of (A) five (5) or
(B) the aggregate number of pre-break Years of Service (or Periods
of Service). Such aggregate number of Years of Service (or Periods
of Service) will not include any Years of Service (or Periods of
Service) disregarded under the preceding sentence by reason of
prior l-Year Breaks in Service;
(2) A Former Participant who has not had Years of Service (or
Periods of Service) before a l-Year Break in Service disregarded
pursuant to (1) above, shall participate in the Plan as of the
date of reemployment;
(c) After a Former Participant who has severed employment with
the Employer incurs five (5) consecutive l-Year Breaks in Service, the
Vested portion of such Former Participant's Account attributable to
pre-break service shall not be increased as a result of post-break
service. In such case, separate accounts will be maintained as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing the Participant's Employer-derived
account balance in the Plan attributable to post-break service.
25
(d) If any Participant becomes a Former Participant due to
separation from service with the Employer and is reemployed by the
Employer before five (5) consecutive l-Year Breaks in Service, and such
Former Participant had received a distribution of the entire Vested
interest prior to reemployment, then the forfeited account shall be
reinstated only if the Former Participant repays the full amount which
had been distributed. Such repayment must be made before the earlier of
five (5) years after the first date on which the Participant is
subsequently reemployed by the Employer or the close of the first period
of five (5) consecutive l-Year Breaks in Service commencing after the
distribution. If a distribution occurs for any reason other than a
severance of employment, the time for repayment may not end earlier than
five (5) years after the date of distribution. In the event the Former
Participant does repay the full amount distributed, the undistributed
forfeited portion of the Participant's Account must be restored in full,
unadjusted by any gains or losses occurring subsequent to the Valuation
Date preceding the distribution. The source for such reinstatement may be
Forfeitures occurring during the Plan Year. If such source is
insufficient, then the Employer will contribute an amount which is
sufficient to restore the Participant's Account, provided, however, that
if a discretionary contribution is made for such year, such contribution
will first be applied to restore any such accounts and the remainder
shall be allocated in accordance with the terms of the Plan. If a
non-Vested Former Participant was deemed to have received a distribution
and such Former Participant is reemployed by the Employer before five (5)
consecutive l-Year Breaks in Service, then such Participant will be
deemed to have repaid the deemed distribution as of the date of
reemployment.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, within a reasonable period of time
before the beginning of a Plan Year. For standardized Plans, a Participant or an
Eligible Employee may not elect not to participate. Furthermore, the foregoing
election not to participate shall not be available with respect to partners in a
partnership unless such election is a one-time irrevocable election made
pursuant to Regulation 1.401(k)-l(a)(3)(iv) or (6)(ii)(C).
3.9 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
Effective with respect to Plan Years beginning after December 31, 1996,
if this Plan provides contributions or benefits for one or more Owner-Employees,
the contributions on behalf of any Owner-Employee shall be made only with
respect to the Earned Income for such Owner-Employee which is derived from the
trade or business with respect to which such Plan is established.
26
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan:
(1) The Employer will make contributions on the following basis.
On behalf of each Participant eligible to share in allocations,
for each year of such Participant's participation in this Plan,
the Employer will contribute the amount elected in the Adoption
Agreement. The Employer must obtain a waiver from the Internal
Revenue Service for any Plan Year in which it is unable to make
the full required contribution to the Plan. In the event a waiver
is obtained, this Plan shall be deemed to be an individually
designed plan.
(2) Notwithstanding the foregoing, with respect to an Employer
which is not a tax-exempt entity, the Employer's contribution for
any Fiscal Year will generally not exceed the maximum amount
allowable as a deduction to the Employer under the provisions of
Code Section 404. However, to the extent necessary to provide the
top heavy minimum allocations, the Employer shall make a
contribution even if it exceeds the amount that is deductible
under Code Section 404.
(b) For a Profit Sharing Plan:
(1) For each Plan Year, the Employer will contribute to the Plan
such amount as elected by the Employer in the Adoption Agreement.
(2) Additionally, the Employer will contribute to the Plan the
amount necessary, if any, to provide the top heavy minimum
allocations, even if it exceeds current or accumulated Net Profit
or the amount that is deductible under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Unless otherwise provided by contract, the Employer may make its
contribution to the Plan for a particular Plan Year at such time as the
Employer, in its sole discretion, determines. If the Employer makes a
contribution for a particular Plan Year after the close of that Plan Year, the
Employer will designate to the Trustee the Plan Year for which the Employer is
making its contribution.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit as
of each Anniversary Date, or other Valuation Date, all amounts allocated
to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation of
the Employer's contribution, if any, for each Plan Year. Within a
reasonable period of time after the date of receipt by the Administrator
of such information, the Administrator shall allocate any contributions
as follows:
27
(1) For a Money Purchase Plan (other than a Money Purchase Plan
which is integrated by allocation):
(i) The Employer's contribution shall be allocated to each
Participant's Account in the manner set forth in Section
4.1 herein and as specified in the Adoption Agreement.
(ii) However, regardless of the preceding, a Participant
shall only be eligible to share in the allocations of the
Employer's contribution for the year if the conditions set
forth in the Adoption Agreement are satisfied, unless a
contribution is required pursuant to Section 4.3(f).
Furthermore, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of
the Plan Year and has completed a Year of Service (or
Period of Service if the Elapsed Time Method is elected).
(2) For an integrated Profit Sharing Plan or a Money Purchase Plan
which is integrated by allocation:
(i) The Employer's contribution shall be allocated to each
Participant's Account, except as provided in Section
4.3(f), in a dollar amount equal to 5.7% of the sum of each
Participant's Compensation plus Excess Compensation. If the
Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of
the contribution in the same proportion that each such
Participant's Compensation plus Excess Compensation for the
Plan Year bears to the total Compensation plus the total
Excess Compensation of all Participants for that year.
However, in the case of any Participant who has exceeded
the cumulative permitted disparity limit, the allocation
set forth in this paragraph shall be based on such
Participant's Compensation rather than Compensation plus
Excess Compensation.
Regardless of the preceding, 4.3% shall be substituted for
5.7% above if Excess Compensation is based on more than 20%
and less than or equal to 80% of the Taxable Wage Base. If
Excess Compensation is based on less than 100% and more
than 80% of the Taxable Wage Base, then 5.4% shall be
substituted for 5.7% above.
(ii) The balance of the Employer's contribution over the
amount allocated above, if any, shall be allocated to each
Participant's Account in the same proportion that each
such Participant's Compensation for the Year bears to the
total Compensation of all Participants for such year.
(iii) However, regardless of the preceding, a Participant
shall only be eligible to share in the allocations of the
Employer's Contribution for the year if the conditions set
forth in the Adoption Agreement are satisfied, unless a
contribution is required pursuant to Section 4.3(f).
Furthermore, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of
the Plan
28
Year and has completed a Year of Service (or Period of
Service if the Elapsed Time Method is elected).
(3) For a non-integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account in accordance with the allocation
method elected in the Adoption Agreement.
(ii) However, regardless of the preceding, a Participant
shall only be eligible to share in the allocations of the
Employer's contribution for the year if the conditions set
forth in the Adoption Agreement are satisfied, unless a
contribution is required pursuant to Section 4.3(f).
Furthermore, regardless of any election in the Adoption
Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for
the Plan Year if the Participant is employed at the end of
the Plan Year and has completed a Year of Service (or
Period of Service if the Elapsed Time Method is elected).
(4) Overall Permitted Disparity Limits:
Annual Overall Permitted Disparity Limit: Notwithstanding
the preceding paragraphs, if in any Plan Year this Plan
"benefits" any Participant who "benefits" under another
qualified plan or simplified employee pension, as defined
in Code Section 408(k), maintained by the Employer that
either provides for or imputes permitted disparity
(integrates), then such plans will be considered to be one
plan and will be considered to comply with the permitted
disparity rules if the extent of the permitted disparity of
all such plans does not exceed 100%. For purposes of the
preceding sentence, the extent of the permitted disparity
of a plan is the ratio, expressed as a percentage, which
the actual benefits, benefit rate, offset rate, or employer
contribution rate, whatever is applicable under the Plan,
bears to the limitation under Code Section 401(l)
applicable to such Plan. Notwithstanding the foregoing, if
the Employer maintains two or more standardized paired
plans, only one plan may provide for permitted disparity.
Cumulative Permitted Disparity Limit: With respect to a
Participant who "benefits" or "has benefited" under a
defined benefit or target benefit plan of the Employer,
effective for Plan Years beginning on or after January 1,
1994, the cumulative permitted disparity limit for the
Participant is thirty five (35) total cumulative permitted
disparity years. Total cumulative permitted disparity years
means the number of years credited to the Participant for
allocation or accrual purposes under the Plan, any other
qualified plan or simplified employee pension plan (whether
or not terminated) ever maintained by the Employer, while
such plan either provides for or imputes permitted
disparity. For purposes of determining the Participant's
cumulative permitted disparity limit, all years ending in
the same calendar year are treated as the same year. If the
Participant has not "benefited" under a defined benefit or
target benefit plan which neither provides for nor imputes
permitted disparity for any year beginning on or after
January 1, 1994, then such Participant has no cumulative
disparity limit.
29
For purposes of this Section, "benefiting" means benefiting
under the Plan for any Plan Year during which a Participant
received or is deemed to receive an allocation in accordance
with Regulation 1.410(b)-3(a).
(c) Except as otherwise elected in the Adoption Agreement or as
provided in Section 4.10 with respect to Participant Directed Accounts,
as of each Valuation Date, before allocation of any Employer
contributions and Forfeitures, any earnings or losses (net appreciation
or net depreciation) of the Trust Fund (exclusive of assets segregated
for distribution) shall be allocated in the same proportion that each
Participant's and Former Participant's nonsegregated accounts bear to the
total of all Participants' and Former Participants' nonsegregated
accounts as of such date. If any nonsegregated account of a Participant
has been distributed prior to the Valuation Date subsequent to a
Participant's termination of employment, no earnings or losses shall be
credited to such account.
(d) Participants' Accounts shall be debited for any insurance or
annuity premiums paid, if any, and credited with any dividends or
interest received on Contracts.
(e) On or before each Anniversary Date any amounts which became
Forfeitures may be made available to reinstate previously forfeited
account balances of Former Participants, if any, in accordance with
Section 3.7(d), used to satisfy any contribution that may be required
pursuant to Section 3.5 and/or 6.9, or used to pay any administrative
expenses of the Plan. The remaining Forfeitures, if any, shall be treated
in accordance with the Adoption Agreement. If no election is made in the
Adoption Agreement, any remaining Forfeitures will be used to reduce any
future Employer contributions under the Plan. Regardless of the preceding
sentences, in the event the allocation of Forfeitures provided herein
shall cause the "annual additions" (as defined in Section 4.4) to any
Participant's Account to exceed the amount allowable by the Code, an
adjustment shall be made in accordance with Section 4.5. Except, however,
a Participant shall only be eligible to share in the allocations of
Forfeitures for the year if the conditions set forth in the Adoption
Agreement are satisfied, unless a contribution is required pursuant to
Section 4.3(f).
(f) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall be equal to
at least three percent (3%) of such Non-Key Employee's 415 Compensation
(reduced by contributions and forfeitures, if any, allocated to each
Non-Key Employee in any defined contribution plan included with this Plan
in a "required aggregation group" (as defined in Section 9.2(f)).
However, if (i) the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each Key Employee for
such Top Heavy Plan Year is less than three percent (3%) of each Key
Employee's 415 Compensation and (ii) this Plan is not required to be
included in a "required aggregation group" (as defined in Section 9.2(f))
to enable a defined benefit plan to meet the requirements of Code Section
401(a)(4) or 410, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each Non-Key Employee
shall be equal to the largest percentage allocated to the Participant's
Combined Account of any Key Employee.
30
However, for each Non-Key Employee who is a Participant in a paired
Profit Sharing Plan or 401(k) Profit Sharing Plan and a paired Money Purchase
Plan, the minimum three percent (3%) allocation specified above shall be
provided in the Money Purchase Plan.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows and shall still be
required to satisfy the other provisions of this subsection:
(1) An amount equal to three percent (3%) multiplied by each
Participant's Compensation for the Plan Year shall be allocated to
each Participant's Account. If the Employer does not contribute such
amount for all Participants, the amount shall be allocated to each
Participant's Account in the same proportion that such Participant's
total Compensation for the Plan Year bears to the total Compensation
of all Participants for such year.
(2) The balance of the Employer's contribution over the amount
allocated under subparagraph (1) hereof shall be allocated to each
Participant's Account in a dollar amount equal to three percent (3%)
multiplied by a Participant's Excess Compensation. If the Employer
does not contribute such amount for all Participants, each
Participant will be allocated a share of the contribution in the same
proportion that such Participant's Excess Compensation bears to the
total Excess Compensation of all Participants for that year. For
purposes of this paragraph, in the case of any Participant who has
exceeded the cumulative permitted disparity limit described in
Section 4.3(b)(4), such Participant's total Compensation will be
taken into account.
(3) The balance of the Employer's contribution over the amount
allocated under subparagraph (2) hereof shall be allocated to each
Participant's Account in a dollar amount equal to 2.7% multiplied by
the sum of each Participant's total Compensation plus Excess
Compensation. If the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of the
contribution in the same proportion that such Participant's total
Compensation plus Excess Compensation for the Plan Year bears to the
total Compensation plus Excess Compensation of all Participants for
that year. For purposes of this paragraph in the case of any
Participant who has exceeded the cumulative permitted disparity limit
described in Section 4.3(b)(4), such Participant's total Compensation
rather than Compensation plus Excess Compensation will be taken into
account.
Regardless of the preceding, 1.3% shall be substituted for 2.7% above
if Excess Compensation is based on more than 20% and less than or
equal to 80% of the Taxable Wage Base. If Excess Compensation is
based on less than 100% and more than 80% of the Taxable Wage Base,
then 2.4% shall be substituted for 2.7% above.
(4) The balance of the Employer's contributions over the amount
allocated above, if any, shall be allocated to each Participant's
Account in the same proportion that such Participant's total
Compensation for the Plan Year bears to the total Compensation of all
Participants for such year.
31
For each Non-Key Employee who is a Participant in this Plan and
another non-paired defined contribution plan maintained by the Employer,
the minimum three percent (3%) allocation specified above shall be
provided as specified in the Adoption Agreement.
(g) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the 415 Compensation for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set forth in
this Section shall be allocated to the Participant's Combined Account of
all Non-Key Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Non-Key Employees
who have (1) failed to complete a Year of Service; or (2) declined to
make mandatory contributions (if required) or, in the case of a cash or
deferred arrangement, Elective Deferrals to the Plan.
(i) Notwithstanding anything herein to the contrary, in any Plan Year
in which the Employer maintains both this Plan and a defined benefit
pension plan included in a "required aggregation group" (as defined in
Section 9.2(f)) which is top heavy, the Employer will not be required
(unless otherwise elected in the Adoption Agreement) to provide a
Non-Key Employee with both the full separate minimum defined benefit plan
benefit and the full separate defined contribution plan allocations. In
such case, the top heavy minimum benefits will be provided as elected in
the Adoption Agreement and, if applicable, as follows:
(1) If the 5% defined contribution minimum is elected in the Adoption
Agreement:
(i) The requirements of Section 9.1 will apply except that
each Non-Key Employee who is a Participant in the Profit Sharing
Plan or Money Purchase Plan and who is also a Participant in the
Defined Benefit Plan will receive a minimum allocation of five
percent (5%) of such Participant's 415 Compensation from the
applicable Defined Contribution Plan(s).
(ii) For each Non-Key Employee who is a Participant only in
the Defined Benefit Plan the Employer will provide a minimum
non-integrated benefit equal to two percent (2%) of such
Participant's highest five (5) consecutive year average 415
Compensation for each Year of Service while a participant in the
plan, in which the Plan is top heavy, not to exceed ten (10).
(iii) For each Non-Key Employee who is a Participant only
in this Defined Contribution Plan, the Employer will provide a
minimum allocation equal to three percent (3%) of such
Participant's 415 Compensation.
(2) If the 7 1/2% defined contribution minimum is elected in the
Adoption Agreement, the provisions of (1) above shall apply except as
provided below:
(i) The minimum allocation specified in Section
4.3(i)(1)(i) will be seven and one-half percent (7 1/2%) for years
beginning prior to January 1, 2000, in which the Plan is Top
Heavy, but not Super Top Heavy.
32
(ii) The minimum benefit specified in Section 4.3(i)(1)(ii)
will be three percent (3%) for years beginning prior to January 1,
2000, in which the Plan is Top Heavy, but not Super Top Heavy.
(iii) The minimum allocation specified in Section
4.3(i)(1)(iii) will be four percent (4%) for years beginning prior
to January 1, 2000, in which the Plan is Top Heavy, but not Super
Top Heavy.
(3) If the 2% defined benefit minimum is elected in the Adoption
Agreement, for each Non-Key Employee who is a Participant only in the
Defined Benefit Plan the Employer will provide a minimum
non-integrated benefit equal to two percent (2%) of such
Participant's highest five (5) consecutive year average of 415
Compensation for each Year of Service while a participant in the
plan, in which the Plan is top heavy, not to exceed ten (10).
(4) If the 3% defined benefit minimum is elected in the Adoption
Agreement, for each Non-Key Employee who is a Participant only in the
Defined Benefit Plan, the Employer will provide a minimum
non-integrated benefit equal to three percent (3%) of such
Participant's highest five (5) consecutive year average of 415
Compensation for each Year of Service while a participant in the
plan, in which the Plan is top heavy, not to exceed ten (10).
Regardless of the preceding, for years in which the Plan is Super Top
Heavy and for years beginning after December 31, 1999, two percent
(2%) shall be substituted for three percent (3%).
(j) For the purposes of this Section, 415 Compensation will be
limited to the same dollar limitations set forth in Section 1.11 adjusted
in such manner as permitted under Code Section 415(d).
(k) Notwithstanding anything in this Section to the contrary, all
information necessary to properly reflect a given transaction may not be
available until after the date specified herein for processing such
transaction, in which case the transaction will be reflected when such
information is received and processed. Subject to express limits that may
be imposed under the Code, the processing of any contribution,
distribution or other transaction may be delayed for any legitimate
business reason (including, but not limited to, failure of systems or
computer programs, failure of the means of the transmission of data,
force majeure, the failure of a service provider to timely receive values
or prices, and correction for errors or omissions or the errors or
omissions of any service provider). The processing date of a transaction
will be binding for all purposes of the Plan.
(l) Notwithstanding anything to the contrary, if this is a
non-standardized Plan that would otherwise fail to meet the requirements
of Code Section 410(b)(1) or 410(b)(2)(A)(i) and the Regulations
thereunder (including Regulation 1.401(a)(4)-2(b)(4)(vi)(D)(3) which
treats Participants only receiving top heavy minimums as not benefiting)
because Employer contributions would not be allocated to a sufficient
number or percentage of Participants for a Plan Year, then the following
rules may be applied:
33
(1) The group of Participants eligible to share in the Employer's
contributions or Forfeitures for the Plan Year will be expanded to
include the minimum number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable test specified
above. The specific Participants who shall become eligible under the
terms of this paragraph shall be those who have not separated from
service prior to the last day of the Plan Year and, when compared to
similarly situated Participants, have completed the greatest number
of Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the applicable test
is still not satisfied, then the group of Participants eligible to
share in the Employer's contributions or Forfeitures for the Plan
Year shall be further expanded to include the minimum number of
Participants who have separated from service prior to the last day of
the Plan Year as are necessary to satisfy the applicable test. The
specific Participants who shall become eligible to share shall be
those Participants, when compared to similarly situated Participants,
who have completed the greatest number of Hours of Service in the
Plan Year before separation from service.
Nothing in this subsection shall permit the reduction of a
Participant's accrued benefit. Therefore any amounts that have previously
been allocated to Participants may not be reallocated to satisfy these
requirements. In such event, the Employer shall make an additional
contribution equal to the amount such affected Participants would have
received had they been included in the allocations, even if it exceeds
the amount that would be deductible under Code Section 404. Any
adjustment to the allocations pursuant to this paragraph shall be
considered a retroactive amendment adopted by the last day of the Plan
Year.
4.4 MAXIMUM ANNUAL ADDITIONS
(a)(1) If a Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer, or a
welfare benefit fund (as defined in Code Section 419(e)) maintained by
the Employer, or an individual medical account (as defined in Code
Section 415(l)(2)) maintained by the Employer, or a simplified employee
pension (as defined in Code Section 408(k)) maintained by the Employer
which provides "Annual Additions," the amount of "Annual Additions" which
may be credited to the Participant's accounts for any Limitation Year
shall not exceed the lesser of the "Maximum Permissible Amount" or any
other limitation contained in this Plan. If the Employer contribution
that would otherwise be contributed or allocated to the Participant's
accounts would cause the "Annual Additions" for the Limitation Year to
exceed the "Maximum Permissible Amount," the amount contributed or
allocated will be reduced so that the "Annual Additions" for the
Limitation Year will equal the "Maximum Permissible Amount," and any
amount in excess of the "Maximum Permissible Amount" which would have
been allocated to such Participant may be allocated to other
Participant's accounts in a manner consistent with that specified in the
Adoption Agreement.
(2) Prior to determining the Participant's actual 415 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 415 Compensation for the Limitation
Year, uniformly determined for all Participants similarly situated.
34
(3) As soon as is administratively feasible after the end of the
Limitation Year the "Maximum Permissible Amount" for such Limitation
Year shall be determined on the basis of the Participant's actual 415
Compensation for such Limitation Year.
(b)(1) This subsection applies if, in addition to this Plan, a
Participant is covered under another qualified master or prototype
defined contribution plan maintained by the Employer, a welfare benefit
fund (as defined in Code Section 419(e)) maintained by the Employer, an
individual medical account (as defined in Code Section 415(l)(2))
maintained by the Employer, or a simplified employee pension (as defined
in Code Section 408(k)) maintained by the Employer, which provides
"Annual Additions," during any Limitation Year. The "Annual Additions"
which may be credited to a Participant's accounts under this Plan for any
such Limitation Year shall not exceed the "Maximum Permissible Amount"
reduced by the "Annual Additions" credited to a Participant's accounts
under the other plans and welfare benefit funds, individual medical
accounts, and simplified employee pensions for the same Limitation Year.
If the "Annual Additions" with respect to the Participant under other
defined contribution plans and welfare benefit funds maintained by the
Employer are less than the "Maximum Permissible Amount" and the Employer
contribution that would otherwise be contributed or allocated to the
Participant's accounts under this Plan would cause the "Annual Additions"
for the Limitation Year to exceed this limitation, the amount contributed
or allocated will be reduced so that the "Annual Additions" under all
such plans and welfare benefit funds for the Limitation Year will equal
the "Maximum Permissible Amount," and any amount in excess of the
"Maximum Permissible Amount" which would have been allocated to such
Participant may be allocated to other Participants. If the "Annual
Additions" with respect to the Participant under such other defined
contribution plans, welfare benefit funds, individual medical accounts
and simplified employee pensions in the aggregate are equal to or greater
than the "Maximum Permissible Amount," no amount will be contributed or
allocated to the Participant's account under this Plan for the Limitation
Year.
(2) Prior to determining the Participant's actual 415 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 415 Compensation for the Limitation
Year, uniformly determined for all Participants similarly situated.
(3) 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 415
Compensation for the Limitation Year.
(4) If, pursuant to Section 4.4(b)(2) or Section 4.5, a Participant's
"Annual Additions" under this Plan and such other plans would result
in an "Excess Amount" for a Limitation Year, the "Excess Amount"
will be deemed to consist of the "Annual Additions" last allocated,
except that "Annual Additions" attributable to a simplified employee
pension will be deemed to have been allocated first, followed by
"Annual Additions" to a welfare benefit fund or individual medical
account, and then by "Annual Additions" to a plan subject to Code
Section 412, regardless of the actual allocation date.
(5) 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:
35
(i) the total "Excess Amount" allocated as of such date, times
(ii) the ratio of (1) the "Annual Additions" allocated to the
Participant for the Limitation Year as of such date under
this Plan to (2) 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.
(6) Any "Excess Amount" attributed to this Plan will be disposed of
in the manner described in Section 4.5.
(c) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a "Master or
Prototype Plan," "Annual Additions" which may be credited to the
Participant's Combined Account under this Plan for any Limitation Year
will be limited in accordance with Section 4.4(b), unless the Employer
provides other limitations in the Adoption Agreement.
(d) For any Limitation Year beginning prior to the date the Code
Section 415(e) limits are repealed with respect to this Plan (as
specified in the Adoption Agreement for the GUST transitional rules), if
the Employer maintains, or at any time maintained, a qualified defined
benefit plan covering any Participant in this Plan, then the sum of the
Participant's "Defined Benefit Plan Fraction" and "Defined Contribution
Plan Fraction" may not exceed 1.0. In such event, the rate of accrual in
the defined benefit plan will be reduced to the extent necessary so that
the sum of the "Defined Contribution Fraction" and "Defined Benefit
Fraction" will equal 1.0. However, the Employer may specify an
alternative method under which the plans involved will satisfy the
limitations of Code Section 415(e), including increased top heavy minimum
benefits so that the combined limitation is 1.25 rather than 1.0.
(e) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an "Annual
Addition." In addition, the following are not Employee contributions for
the purposes of Section 4.4(f)(l)(b): (1) rollover contributions (as
defined in Code Sections 402(c), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments
of distributions received by an Employee pursuant to Code Section
411(a)(7)(B) (cash-outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D) (mandatory contributions);
and (5) Employee contributions to a simplified employee pension
excludable from gross income under Code Section 408(k)(6).
(f) For purposes of this Section, the following terms shall be
defined as follows:
(1) "Annual Additions" means the sum credited to a Participant's
accounts for any Limitation Year of (a) Employer contributions, (b)
Employee contributions (except as provided below), (c) forfeitures,
(d) amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer, (e) amounts
derived from contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of
a key employee (as defined in Code Section 419A(d)(3)) under a
welfare
36
benefit fund (as defined in Code Section 419(e)) maintained by the
Employer and (f) allocations under a simplified employee pension.
Except, however, the Compensation percentage limitation referred to
in paragraph (f)(9)(ii) shall not apply to: (1) any contribution for
medical benefits (within the meaning of Code Section 419A(f)(2))
after separation from service which is otherwise treated as an
"Annual Addition," or (2) any amount otherwise treated as an "Annual
Addition" under Code Section 415(1)(l). Notwithstanding the
foregoing, for Limitation Years beginning prior to January 1, 1987,
only that portion of Employee contributions equal to the lesser of
Employee contributions in excess of six percent (6%) of 415
Compensation or one-half of Employee contributions shall be
considered an "Annual Addition."
For this purpose, any Excess Amount applied under Section 4.5 in
the Limitation Year to reduce Employer contributions shall be
considered "Annual Additions" for such Limitation Year.
(2) "Defined Benefit Fraction" means 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 one hundred twenty-five percent (125%) of the dollar
limitation determined for the Limitation Year under Code Sections
415(d)(1)(A) as adjusted by Code Section 415(d) or one hundred forty
percent (140%) of the "Highest Average Compensation" including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first Limitation Year beginning after
December 31,1986, in one or more defined benefit plans maintained by
the Employer which were in existence on May 6, 1986, the denominator
of this fraction will not be less than one hundred twenty-five
percent (125%) of the sum of the annual benefits under such plans
which the Participant had accrued as of the end of the close of the
last Limitation Year beginning before January 1, 1987, disregarding
any changes in the terms and conditions of the plan after May 5,
1986. The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the requirements of
Code Section 415 for all Limitation Years beginning before January
1,1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, one
hundred percent (100%) shall be substituted for one hundred
twenty-five percent (125%) unless the extra minimum allocation or
benefit is being made pursuant to the Employer's election in the
Adoption Agreement. However, for any Plan Year in which this Plan is
a Super Top Heavy Plan, one hundred percent (100%) shall always be
substituted for one hundred twenty-five percent (125%).
(3) Defined Contribution Dollar Limitation means $30,000 as adjusted
under Code Section 415(d).
(4) Defined Contribution Fraction means a fraction, the numerator of
which is the sum of the "Annual Additions" to the Participant's
accounts under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all prior
Limitation Years, (including the "Annual Additions" attributable to
37
the Participant's nondeductible voluntary employee contributions to
any defined benefit plans, whether or not terminated, maintained by
the Employer and the "Annual Additions" attributable to all welfare
benefit funds (as defined in Code Section 419(e)), individual medical
accounts (as defined in Code Section 415(l)(2)), and simplified
employee pensions (as defined in Code Section 408(k)) 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 in which the Employee had 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 one hundred twenty-five percent (125%) of the dollar
limitation determined under Code Section 415(c)(l)(A) as adjusted by
Code Section 415(d) or thirty-five percent (35%) of the Participant's
415 Compensation for such year.
If the Employee was a Participant as of the end of the first day
of the first Limitation Year beginning after December 31, 1986, in
one or more defined contribution plans maintained by the Employer
which were in existence on May 5, 1986, 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 fractions 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, 1987, and disregarding
any changes in the terms and conditions of the plan made after May 5,
1986, but using the Code Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
For Limitation Years beginning prior to January 1, 1987, the "Annual
Additions" shall not be recomputed to treat all Employee
contributions as "Annual Additions."
Notwithstanding the foregoing, for any Top Heavy Plan Year, one
hundred percent (100%) shall be substituted for one hundred
twenty-five percent (125%) unless the extra minimum allocation or
benefit is being made pursuant to the Employer's election in the
Adoption Agreement. However, for any Plan Year in which this Plan is
a Super Top Heavy Plan, one hundred percent (100%) shall always be
substituted for one hundred twenty-five percent (125%).
(5) "Employer" means the Employer that adopts this Plan and all
Affiliated Employers, except that for purposes of this Section, the
determination of whether an entity is an Affiliated Employer shall be
made by applying Code Section 415(h).
(6) "Excess Amount" means the excess of the Participant's "Annual
Additions" for the Limitation Year over the "Maximum Permissible
Amount."
(7) "Highest Average Compensation" means the average Compensation for
the three (3) consecutive Years of Service with the Employer while a
Participant in the Plan that produces the highest average. A Year of
Service with the Employer is the twelve (12) consecutive month period
ending on the last day of the Limitation Year.
38
(8) "Master or Prototype Plan" means a plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
(9) "Maximum Permissible Amount" means the maximum Annual Addition
that may be contributed or allocated to a Participant's accounts
under the Plan for any Limitation Year, which shall not exceed the
lesser of:
(i) the "Defined Contribution Dollar Limitation," or
(ii) twenty-five percent (25%) of the Participant's 415
Compensation for the Limitation Year.
The Compensation Limitation referred to in (ii) shall not
apply to any contribution for medical benefits (within the meaning of Code
Sections 401(h) or 419A(f)(2)) which is otherwise treated as an "Annual
Addition."
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different twelve (12)
consecutive month period, the "Maximum Permissible Amount" will not
exceed the "Defined Contribution Dollar Limitation" multiplied by a
fraction, the numerator of which is the number of months in the short
Limitation Year and the denominator of which is twelve (12).
(10) "Projected Annual Benefit" means 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:
(i) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(ii) the Participant's 415 Compensation for the current
Limitation Year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future
Limitation Years.
For purposes of this subsection, "straight life annuity" means an
annuity that is payable in equal installments for the life of the
Participant that terminates upon the Participant's death.
(g) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed
in this Section shall at all times comply with the provisions of Code
Section 415 and the Regulations thereunder, the terms of which are
specifically incorporated herein by reference.
39
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
Allocation of Annual Additions to a Participant's Combined Account
for a Limitation Year generally will cease once the limits of Section 4.4
have been reached for such Limitation Year. However, if as a result of the
allocation of Forfeitures, a reasonable error in estimating a Participant's
annual 415 Compensation, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3)) that may
be made with respect to any Participant under the limits of Section 4.4, or
other facts and circumstances to which Regulation 1.415-6(b)(6) shall be
applicable, the "Annual Additions" under this Plan would cause the maximum
provided in Section 4.4 to be exceeded, the "Excess Amount" will be
disposed of in one of the following manners, as uniformly determined by the
Plan Administrator for all Participants similarly situated:
(a) Any after-tax voluntary Employee contributions (plus
attributable gains), to the extent they would reduce the Excess Amount,
will be distributed to the Participant;
(b) If, after the application of subparagraph (a), an "Excess
Amount" still exists, any unmatched Elective Deferrals (and for
Limitation Years beginning after December 31, 1995, any gains
attributable to such Elective Deferrals), to the extent they would reduce
the Excess Amount, will be distributed to the Participant;
(c) To the extent necessary, matched Elective Deferrals and
Employer matching contributions will be proportionately reduced from the
Participant's Account. The Elective Deferrals (and for Limitation Years
beginning after December 31, 1995, any gains attributable to such
Elective Deferrals) will be distributed to the Participant and the
Employer matching contributions will be used to reduce the Employer's
contributions in the next Limitation Year;
(d) If, after the application of subparagraphs (a), (b) and (c),
an "Excess Amount" still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the "Excess Amount" in the
Participant's Account will be used to reduce Employer contributions
(including any allocation of Forfeitures) for such Participant in the
next Limitation Year, and each succeeding Limitation Year if necessary;
(e) If, after the application of subparagraphs (a), (b) and (c),
an "Excess Amount" still exists, and the Participant is not covered by
the Plan at the end of a 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; and
(f) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, no investment gains and losses
shall be allocated to such suspense account. If a suspense account is in
existence at any time during a particular Limitation Year, all amounts in
the suspense account must be allocated to Participants' Accounts before
any Employer contributions or any Employee contributions may be made to
the Plan for that Limitation Year. Except as provided in (a), (b) and (c)
above, "Excess Amounts" may not be distributed to Participants or Former
Participants.
40
4.6 ROLLOVERS
(a) If elected in the Adoption Agreement and with the consent of
the Administrator, the Plan may accept a "rollover," provided the
"rollover" will not jeopardize the tax-exempt status of the Plan or
create adverse tax consequences for the Employer. The amounts rolled over
shall be set up in a separate account herein referred to as a
"Participant's Rollover Account." Such account shall be fully Vested at
all times and shall not be subject to forfeiture for any reason. For
purposes of this Section, the term Participant shall include any Eligible
Employee who is not yet a Participant if, pursuant to the Adoption
Agreement, a rollover is permitted by such Eligible Employee.
(b) Amounts in a Participant's Rollover Account shall be held by
the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as elected in the Adoption Agreement and subsection (c) below. The
Trustee shall have no duty or responsibility to inquire as to the
propriety of the amount, value or type of assets transferred, nor to
conduct any due diligence with respect to such assets; provided, however,
that such assets are otherwise eligible to be held by the Trustee under
the terms of this Plan.
(c) At Normal Retirement Date, or such other date when the
Participant or Eligible Employee or such Participant's or Eligible
Employee's Beneficiary shall be entitled to receive benefits, the
Participant's Rollover Account shall be used to provide additional
benefits to the Participant or the Participant's Beneficiary. Any
distribution of amounts held in a Participant's Rollover Account shall be
made in a manner which is consistent with and satisfies the provisions of
Sections 6.5 and 6.6, including, but not limited to, all notice and
consent requirements of Code Sections 411(a)(11) and 417 and the
Regulations thereunder. Furthermore, such amounts shall be considered to
be part of a Participant's benefit in determining whether an involuntary
cash-out of benefits may be made without Participant consent.
(d) The Administrator may direct that rollovers made after a
Valuation Date be segregated into a separate account for each Participant
until such time as the allocations pursuant to this Plan have been made,
at which time they may remain segregated, invested as part of the general
Trust Fund or, if elected in the Adoption Agreement, directed by the
Participant.
(e) For purposes of this Section, the term "qualified plan" shall
mean any tax qualified plan under Code Section 401(a), or any other plans
from which distributions are eligible to be rolled over into this Plan
pursuant to the Code. The term "rollover" means: (i) amounts transferred
to this Plan directly from another "qualified plan"; (ii) distributions
received by an Employee from other "qualified plans" which are eligible
for tax-free rollover to a "qualified plan" and which are transferred by
the Employee to this Plan within sixty (60) days following receipt
thereof; (iii) amounts transferred to this Plan from a conduit individual
retirement account provided that the conduit individual retirement
account has no assets other than assets which (A) were previously
distributed to the Employee by another "qualified plan" (B) were eligible
for tax-free rollover to a "qualified plan" and (C) were deposited in
such conduit individual retirement account within sixty (60) days of
receipt thereof; (iv) amounts
41
distributed to the Employee from a conduit individual retirement account
meeting the requirements of clause (iii) above, and transferred by the
Employee to this Plan within sixty (60) days of receipt thereof from such
conduit individual retirement account; and (v) any other amounts which
are eligible to be rolled over to this Plan pursuant to the Code.
(f) Prior to accepting any "rollovers" to which this Section
applies, the Administrator may require the Employee to establish (by
providing opinion of counsel or otherwise) that the amounts to be rolled
over to this Plan meet the requirements of this Section.
4.7 PLAN-TO-PLAN TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred (within the meaning of Code Section 414(l)) to this Plan from
other tax qualified plans under Code Section 401(a), provided the plan
from which such funds are transferred permits the transfer to be made and
the transfer will not jeopardize the tax-exempt status of the Plan or
Trust or create adverse tax consequences for the Employer. Prior to
accepting any transfers to which this Section applies, the Administrator
may require an opinion of counsel that the amounts to be transferred meet
the requirements of this Section. The amounts transferred shall be set up
in a separate account herein referred to as a "Participant's Transfer
Account." Furthermore, for Vesting purposes, the Participant's Transfer
Account shall be treated as a separate "Participant's Account."
(b) Amounts in a Participant's Transfer Account shall be held by
the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as elected in the Adoption Agreement and subsection (d) below,
provided the restrictions of subsection (c) below and Section 6.15 are
satisfied. The Trustee shall have no duty or responsibility to inquire as
to the propriety of the amount, value or type of assets transferred, nor
to conduct any due diligence with respect to such assets; provided,
however, that such assets are otherwise eligible to be held by the
Trustee under the terms of this Plan.
(c) Except as permitted by Regulations (including Regulation
1.41l(d)-4), amounts attributable to elective contributions (as defined
in Regulation 1.401(k)-l(g)(3)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer (other than a direct rollover) shall be subject to
the distribution limitations provided for in Regulation 1.401(k)-l(d).
(d) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary shall be entitled to receive
benefits, the Participant's Transfer Account shall be used to provide
additional benefits to the Participant or the Participant's Beneficiary.
Any distribution of amounts held in a Participant's Transfer Account
shall be made in a manner which is consistent with and satisfies the
provisions of Sections 6.5 and 6.6, including, but not limited to, all
notice and consent requirements of Code Sections 41l(a)(11) and 417 and
the Regulations thereunder. Furthermore, such amounts shall be considered
to be part of a Participant's benefit in determining whether an
involuntary cash-out of benefits may be made without Participant consent.
42
(e) The Administrator may direct that Employee transfers made
after a Valuation Date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan have
been made, at which time they may remain segregated, invested as part of
the general Trust Fund or, if elected in the Adoption Agreement, directed
by the Participant.
(f) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction
having the effect of such a transfer) shall only be permitted if it will
not result in the elimination or reduction of any "Section 411(d)(6)
protected benefit" as described in Section 8.1(e).
4.8 VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If elected in the Adoption Agreement, each Participant may, in
accordance with nondiscriminatory procedures established by the
Administrator, elect to make after-tax voluntary Employee contributions
to this Plan. Such contributions must generally be paid to the Trustee
within a reasonable period of time after being received by the Employer.
(b) The balance in each Participant's Voluntary Contribution
Account shall be fully Vested at all times and shall not be subject to
Forfeiture for any reason.
(c) A Participant may elect at any time to withdraw after-tax
voluntary Employee contributions from such Participant's Voluntary
Contribution Account and the actual earnings thereon in a manner which is
consistent with and satisfies the provisions of Section 6.5, including,
but not limited to, all notice and consent requirements of Code Sections
411(a)(11) and 417 and the Regulations thereunder. If the Administrator
maintains sub-accounts with respect to after-tax voluntary Employee
contributions (and earnings thereon) which were made on or before a
specified date, a Participant shall be permitted to designate which
sub-account shall be the source for the withdrawal. Forfeitures of
Employer contributions shall not occur solely as a result of an
Employee's withdrawal of after-tax voluntary Employee contributions.
In the event a Participant has received a hardship
distribution pursuant to Regulation 1.401(k)-l(d)(2)(iii)(B) from any
plan maintained by the Employer, then the Participant shall be barred
from making any after-tax voluntary Employee contributions for a period
of twelve (12) months after receipt of the hardship distribution.
(d) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary is entitled to receive
benefits, the Participant's Voluntary Contribution Account shall be used
to provide additional benefits to the Participant or the Participant's
Beneficiary.
43
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted
deductible voluntary Employee contributions, then each Participant who
made "Qualified Voluntary Employee Contributions" within the meaning of
Code Section 219(e)(2) as it existed prior to the enactment of the Tax
Reform Act of 1986, shall have such contributions held in a separate
Qualified Voluntary Employee Contribution Account which shall be fully
Vested at all times. Such contributions, however, shall not be permitted
for taxable years beginning after December 31,1986.
(b) A Participant may, upon written request delivered to the
Administrator, make withdrawals from such Participant's Qualified
Voluntary Employee Contribution Account. Any distribution shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 41l(a)(11) and 417 and the Regulations
thereunder.
(c) At Normal Retirement Date, or such other date when the
Participant or the Participant's Beneficiary is entitled to receive
benefits, the Qualified Voluntary Employee Contribution Account shall be
used to provide additional benefits to the Participant or the
Participant's Beneficiary.
4.10 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants may
direct the Trustee as to the investment of all or a portion of their
individual account balances as set forth in the Adoption Agreement and
within limits set by the Employer. Participants may direct the Trustee,
in writing (or in such other form which is acceptable to the Trustee), to
invest their accounts in specific assets, specific funds or other
investments permitted under the Plan and the Participant Direction
Procedures. That portion of the account of any Participant that is
subject to investment direction of such Participant will be considered a
Participant Directed Account.
(b) The Administrator will establish a Participant Direction
Procedure, to be applied in a uniform and nondiscriminatory manner,
setting forth the permissible investment options under this Section, how
often changes between investments may be made, and any other limitations
and provisions that the Administrator may impose on a Participant's right
to direct investments.
(c) The Administrator may, in its discretion, include or exclude
by amendment or other action from the Participant Direction Procedures
such instructions, guidelines or policies as it deems necessary or
appropriate to ensure proper administration of the Plan, and may
interpret the same accordingly.
(d) As of each Valuation Date, all Participant Directed Accounts
shall be charged or credited with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in the market value
using publicly listed fair market values when available or appropriate
as follows:
44
(1) to the extent the assets in a Participant Directed Account are
accounted for as pooled assets or investments, the allocation of
earnings, gains and losses of each Participant's Account shall be
based upon the total amount of funds so invested in a manner
proportionate to the Participant's share of such pooled
investment; and
(2) to the extent the assets in a Participant Directed Account are
accounted for as segregated assets, the allocation of earnings,
gains on and losses from such assets shall be made on a separate
and distinct basis.
(e) Investment directions will be processed as soon as
administratively practicable after proper investment directions are
received from the Participant. No guarantee is made by the Plan,
Employer, Administrator or Trustee that investment directions will be
processed on a daily basis, and no guarantee is made in any respect
regarding the processing time of an investment direction. Notwithstanding
any other provision of the Plan, the Employer, Administrator or Trustee
reserves the right to not value an investment option or any given
Valuation Date for any reason deemed appropriate by the Employer,
Administrator or Trustee. Furthermore, the processing of any investment
transaction may be delayed for any legitimate business reason (including,
but not limited to, failure of systems or computer programs, failure of
the means of the transmission of data, force majeure, the failure of a
service provider to timely receive values or prices, and correction for
errors or omissions or the errors or omissions of any service provider).
The processing date of a transaction will be binding for all purposes of
the Plan and considered the applicable Valuation Date for an investment
transaction.
(f) If the Employer has elected in the Adoption Agreement that it
intends to operate any portion of this Plan as an Act Section 404(c)
plan, the Participant Direction Procedures should provide an explanation
of the circumstances under which Participants and their Beneficiaries may
give investment instructions, including but not limited to, the
following:
(1) the conveyance of instructions by the Participants and their
Beneficiaries to invest Participant Directed Accounts in a
Directed Investment Option;
(2) the name, address and phone number of the Fiduciary (and, if
applicable, the person or persons designated by the Fiduciary to
act on its behalf) responsible for providing information to the
Participant or a Beneficiary upon request relating to the Directed
Investment Options;
(3) applicable restrictions on transfers to and from any
Designated Investment Alternative;
(4) any restrictions on the exercise of voting, tender and similar
rights related to a Directed Investment Option by the Participants
or their Beneficiaries;
(5) a description of any transaction fees and expenses which
affect the balances in Participant Directed Accounts in connection
with the purchase or sale of a Directed Investment Option; and
45
(6) general procedures for the dissemination of investment and
other information relating to the Designated Investment
Alternatives as deemed necessary or appropriate, including but not
limited to a description of the following:
(i) the investment vehicles available under the Plan,
including specific information regarding any Designated
Investment Alternative;
(ii) any designated Investment Managers; and
(iii) a description of the additional information that may
be obtained upon request from the Fiduciary designated to
provide such information.
(g) With respect to those assets in a Participant's Directed
Account, the Participant or Beneficiary shall direct the Trustee with
regard to any voting, tender and similar rights associated with the
ownership of such assets (hereinafter referred to as the "Stock Rights")
as follows based on the election made in the Adoption Agreement:
(1) each Participant or Beneficiary shall direct the Trustee to
vote or otherwise exercise such Stock Rights in accordance with
the provisions, conditions and terms of any such Stock Rights;
(2) such directions shall be provided to the Trustee by the
Participant or Beneficiary in accordance with the procedure as
established by the Administrator and the Trustee shall vote or
otherwise exercise such Stock Rights with respect to which it has
received directions to do so under this Section; and
(3) to the extent to which a Participant or Beneficiary does not
instruct the Trustee to vote or otherwise exercise such Stock
Rights, such Participants or Beneficiaries shall be deemed to have
directed the Trustee that such Stock Rights remain nonvoted and
unexercised.
(h) Any information regarding investments available under the
Plan, to the extent not required to be described in the Participant
Direction Procedures, may be provided to Participants in one or more
documents (or in any other form, including, but not limited to,
electronic media) which are separate from the Participant Direction
Procedures and are not thereby incorporated by reference into this Plan.
4.11 INTEGRATION IN MORE THAN ONE PLAN
If the Employer maintains qualified retirement plans that provide
for permitted disparity (integration), the provisions of Section 4.3(b)(4) will
apply. Furthermore, If the Employer maintains two or more standardized paired
plans, only one plan may provide for permitted disparity.
46
4.12 QUALIFIED MILITARY SERVICE
Notwithstanding any provisions of this Plan to the contrary,
effective as of the later of December 12, 1994, or the Effective Date of the
Plan, contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Code Section 414(u).
Furthermore, loan repayments may be suspended under this Plan as permitted under
Code Section 414(u)(4).
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation
Date, to determine the net worth of the assets comprising the Trust Fund as it
exists on the Valuation Date. In determining such net worth, the Trustee shall
value the assets comprising the Trust Fund at their fair market value (or their
contractual value in the case of a Contract or Policy) as of the Valuation Date
and shall deduct all expenses for which the Trustee has not yet been paid by the
Employer or the Trust Fund. The Trustee may update the value of any shares held
in a Participant Directed Account by reference to the number of shares held on
behalf of the Participant, priced at the market value as of the Valuation Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust
Fund which are listed on a registered stock exchange, the Administrator shall
direct the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the Valuation Date. If such
securities were not traded on the Valuation Date, or if the exchange on which
they are traded was not open for business on the Valuation Date, then the
securities shall be valued at the prices at which they were last traded prior to
the Valuation Date. Any unlisted security held in the Trust Fund shall be valued
at its bid price next preceding the close of business on the Valuation Date,
which bid price shall be obtained from a registered broker or an investment
banker. In determining the fair market value of assets other than securities for
which trading or bid prices can be obtained, the Trustee may appraise such
assets itself, or in its discretion, employ one or more appraisers for that
purpose and rely on the values established by such appraiser or appraisers.
47
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate employment with the Employer and
retire for purposes hereof on the Participant's Normal Retirement Date or Early
Retirement Date. However, a Participant may postpone the termination of
employment with the Employer to a later date, in which event the participation
of such Participant in the Plan, including the right to receive allocations
pursuant to Section 4.3, shall continue until such Participant's Retirement
Date. Upon a Participant's Retirement Date, or, if elected in the Adoption
Agreement, the attainment of Normal Retirement Date without termination of
employment with the Employer, or as soon thereafter as is practicable, the
Administrator shall direct the distribution, at the election of the Participant,
of all amounts credited to such Participant's Combined Account in accordance
with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before the Participant's
Retirement Date or other termination of employment, all amounts credited to
such Participant's Combined Account shall, if elected in the Adoption
Agreement, become fully Vested. The Administrator shall direct, in
accordance with the provisions of Sections 6.6 and 6.7, the distribution of
the deceased Participant's Vested accounts to the Participant's
Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall
direct, in accordance with the provisions of Sections 6.6 and 6.7, the
distribution of any remaining Vested amounts credited to the accounts of
such deceased Former Participant to such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of the
account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(d) Unless otherwise elected in the manner prescribed in Section 6.6,
the Beneficiary of the Pre-Retirement Survivor Annuity shall be the
Participant's surviving spouse. Except, however, the Participant may
designate a Beneficiary other than the spouse for the Pre-Retirement
Survivor Annuity if:
(1) the Participant and the Participant's spouse have validly waived
the Pre-Retirement Survivor Annuity in the manner prescribed in
Section 6.6, and the spouse has waived the right to be the
Participant's Beneficiary,
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a court
order to such effect (and there is no "qualified domestic relations
order" as defined in Code Section 414(p) which provides otherwise),
(3) the Participant has no spouse, or
48
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be
made on a form satisfactory to the Administrator. A Participant may at
any time revoke a designation of a Beneficiary or change a Beneficiary
by filing written (or in such other form as permitted by the IRS)
notice of such revocation or change with the Administrator. However,
the Participant's spouse must again consent in writing (or in such
other form as permitted by the IRS) to any change in Beneficiary unless
the original consent acknowledged that the spouse had the right to
limit consent only to a specific Beneficiary and that the spouse
voluntarily elected to relinquish such right.
(e) A Participant may, at any time, designate a Beneficiary
for death benefits, if any, payable under the Plan that are in excess
of the Pre-Retirement Survivor Annuity without the waiver or consent of
the Participant's spouse. In the event no valid designation of
Beneficiary exists, or if the Beneficiary is not alive at the time of
the Participant's death, the death benefit will be paid in the
following order of priority, unless the Employer specifies a different
order of priority in an addendum to the Adoption Agreement, to:
(1) The Participant's surviving spouse;
(2) The Participant's children, including adopted children,
per stirpes
(3) The Participant's surviving parents, in equal shares; or
(4) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior
to distribution of the death benefit, the death will be paid to the
Beneficiary's estate.
(f) If the Plan provides an insured death benefit and a
Participant dies before any insurance coverage to which the Participant
is entitled under the Plan is effected, the death benefit from such
insurance coverage shall be limited to the standard rated premium which
was or should have been used for such purpose.
(g) In the event of any conflict between the terms of this
Plan and the terms of any Contract issued hereunder, the Plan
provisions shall control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability
prior to the Participant's Retirement Date or other termination of employment,
all amounts credited to such Participant's Combined Account shall, if elected in
the Adoption Agreement, become fully Vested. In the event of a Participant's
Total and Permanent Disability, the Administrator, in accordance with the
provisions of Sections 6.5 and 6.7, shall direct the distribution to such
Participant of all Vested amounts credited to such Participant's Combined
Account.
49
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is
terminated for any reason other than death, Total and Permanent
Disability, or retirement, then such Participant shall be entitled to
such benefits as are provided hereinafter pursuant to this Section.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of
the Employer (upon the Participant's death, Total and Permanent
Disability, Early or Normal Retirement). However, at the election of
the Participant, the Administrator shall direct that the entire Vested
portion of the Terminated Participant's Combined Account be payable to
such Terminated Participant provided the conditions, if any, set forth
in the Adoption Agreement have been satisfied. Any distribution under
this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including but not limited to,
all notice and consent requirements of Code Sections 411(a)(11) and 417
and the Regulations thereunder.
Regardless of whether distributions in kind are permitted,
in the event that the amount of the Vested portion of the Terminated
Participant's Combined Account equals or exceeds the fair market value
of any insurance Contracts, the Trustee, when so directed by the
Administrator and agreed to by the Terminated Participant, shall
assign, transfer, and set over to such Terminated Participant all
Contracts on such Terminated Participant's life in such form or with
such endorsements, so that the settlement options and forms of payment
are consistent with the provisions of Section 6.5. In the event that
the Terminated Participant's Vested portion does not at least equal the
fair market value of the Contracts, if any, the Terminated Participant
may pay over to the Trustee the sum needed to make the distribution
equal to the value of the Contracts being assigned or transferred, or
the Trustee, pursuant to the Participant's election, may borrow the
cash value of the Contracts from the Insurer so that the value of the
Contracts is equal to the Vested portion of the Terminated
Participant's Combined Account and then assign the Contracts to the
Terminated Participant.
Notwithstanding the above, unless otherwise elected in the
Adoption Agreement, if the value of a Terminated Participant's Vested
benefit derived from Employer and Employee contributions does not
exceed $5,000 (or, $3,500 for distributions made prior to the later of
the first day of the first Plan Year beginning on or after August
5, 1997, or the date specified in the Adoption Agreement) the
Administrator shall direct that the entire Vested benefit be paid to
such Participant in a single lump-sum without regard to the consent of
the Participant or the Participant's spouse. A Participant's Vested
benefit shall not include Qualified Voluntary Employee Contributions
within the meaning of Code Section 72(o)(5)(B) for Plan Years beginning
prior to January 1, 1989. Furthermore, the determination of whether the
$5,000 (or, if applicable, $3,500) threshold has been exceeded is
generally based on the value of the Vested benefit as of the Valuation
Date preceding the date of the distribution. However, if the "lookback
rule" applies, the applicable threshold is deemed to be exceeded if the
Vested benefit exceeded the applicable threshold at the time of any
prior distribution. The "lookback rule" generally applies to all
distributions made prior to March 22, 1999. With respect to
distributions made on or after March 22, 1999, the "lookback rule"
applies if either (1) the provisions of Section 6.12 do not apply or
(2) a Participant has begun to receive distributions pursuant to an
optional form of benefit under which at least one scheduled periodic
distribution
50
has not yet been made, and if the value of the Participant's benefit,
determined at the time of the first distribution under that optional
form of benefit exceeded the applicable threshold. However, the Plan
does not fail to satisfy the requirements of this paragraph if, prior
to the adoption of this Prototype Plan, the "lookback rule" was applied
to all distributions. Notwithstanding the preceding, the "lookback
rule" will not apply to any distributions made after the effective date
of any Regulations that repeal the "lookback rule" for distributions
that are not already exempt from such rules.
(b) The Vested portion of any Participant's Account shall be a
percentage of such Participant's Account determined on the basis of the
Participant's number of Years of Service (or Periods of Service if the
Elapsed Time Method is elected) according to the vesting schedule
specified in the Adoption Agreement. However, a Participant's entire
interest in the Plan shall be non-forfeitable upon the Participant's
Normal Retirement Age (if the Participant is employed by the Employer
on or after such date).
(c) For any Top Heavy Plan Year, the minimum top heavy vesting
schedule elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. The minimum top heavy vesting schedule
applies to all benefits within the meaning of Code Section 411(a)(7)
except those attributable to Employee contributions, including benefits
accrued before the effective date of Code Section 416 and benefits
accrued before the Plan became top heavy. Further, no decrease in a
Participant's Vested percentage shall occur in the event the Plan's
status as top heavy changes for any Plan Year. However, this Section
does not apply to the account balances of any Employee who does not
have an Hour of Service after the Plan has initially become top heavy
and the Vested percentage of such Employee's Participant's Account
shall be determined without regard to this Section 6.4(c).
If in any subsequent Plan Year the Plan ceases to be
a Top Heavy Plan, then unless a specific Plan amendment is made to
provide otherwise, the Administrator will continue to use the vesting
schedule in effect while the Plan was a Top Heavy Plan.
(d) Notwithstanding the vesting schedule above, upon the
complete discontinuance of the Employer's contributions to the Plan (if
this is a profit sharing plan) or upon any full or partial termination
of the Plan, all amounts then credited to the account of any affected
Participant shall become 100% Vested and shall not thereafter be
subject to Forfeiture.
(e) If this is an amended or restated Plan, then
notwithstanding the vesting schedule specified in the Adoption
Agreement, the Vested percentage of a Participant's Account shall not
be less than the Vested percentage attained as of the later of the
effective date or adoption date of this amendment and restatement. The
computation of a Participant's nonforfeitable percentage of such
Participant's interest in the Plan shall not be reduced as the result
of any direct or indirect amendment to this Article, or due to changes
in the Plan's status as a Top Heavy Plan.
(f) If the Plan's vesting schedule is amended, or if the Plan
is amended in any way that directly or indirectly affects the
computation of the Participant's nonforfeitable percentage or if the
Plan is deemed amended by an automatic change to a top heavy vesting
schedule, then each Participant with at least three (3) Years of
Service (or Periods of Service if the Elapsed Time Method is elected)
as of the expiration date of the election period may elect to have such
51
Participant's nonforfeitable percentage computed under the Plan without
regard to such amendment or change. If a Participant fails to make such
election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence on the
adoption date of the amendment and shall end sixty (60) days after the
latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(g) In determining Years of Service or Periods of Service for
purposes of vesting under the Plan, Years of Service or Periods of
Service shall be excluded as elected in the Adoption Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a)(1) Unless otherwise elected as provided below, a
Participant who is married on the Annuity Starting Date and who does
not die before the Annuity Starting Date shall receive the value of all
Plan benefits in the form of a Joint and Survivor Annuity. The Joint
and Survivor Annuity is an annuity that commences immediately and shall
be equal in value to a single life annuity. Such joint and survivor
benefits following the Participant's death shall continue to the spouse
during the spouse's lifetime at a rate equal to fifty percent (50%) of
the rate at which such benefits were payable to the Participant. This
Joint and Survivor Annuity shall be considered the designated qualified
Joint and Survivor Annuity and the automatic form of payment for the
purposes of this Plan. However, the Participant may, without spousal
consent, elect to receive a smaller annuity benefit with continuation
of payments to the spouse at a rate of seventy-five percent (75%) or
one hundred percent (100%) of the rate payable to a Participant during
the Participant's lifetime, which alternative Joint and Survivor
Annuities shall be equal in value to the automatic Joint and 50%
Survivor Annuity. An unmarried Participant shall receive the value of
such Participant's benefit in the form of a life annuity. Such
unmarried Participant, however, may elect to waive the life annuity.
The election must comply with the provisions of this Section as if it
were an election to waive the Joint and Survivor Annuity by a married
Participant, but without fulfilling the spousal consent requirement.
The Participant may elect to have any annuity provided for in this
Section distributed upon the attainment of the "earliest retirement
age" under the Plan. The "earliest retirement age" is the earliest date
on which, under the Plan, the Participant could elect to receive
retirement benefits.
(2) Any election to waive the Joint and Survivor Annuity must
be made by the Participant in writing (or in such other form
as permitted by the IRS) during the election period and be
consented to in writing (or in such other form as permitted by
the IRS) by the Participant's spouse. If the spouse is legally
incompetent to give consent, the spouse's legal guardian, even
if such guardian is the Participant, may give consent. Such
election shall designate a Beneficiary (or a form of benefits)
that may not be changed without spousal consent (unless the
consent of the spouse expressly permits designations by the
Participant without the requirement of further consent by the
spouse). Such spouse's
52
consent shall be irrevocable and must acknowledge the effect
of such election and be witnessed by a Plan representative or
a notary public. Such consent shall not be required if it is
established to the satisfaction of the Administrator that the
required consent cannot be obtained because there is no
spouse, the spouse cannot be located, or other circumstances
that may be prescribed by Regulations. The election made by
the Participant and consented to by such Participant's spouse
may be revoked by the Participant in writing (or in such other
form as permitted by the IRS) without the consent of the
spouse at any time during the election period. A revocation of
a prior election shall cause the Participant's benefits to be
distributed as a Joint and Survivor Annuity. The number of
revocations shall not be limited. Any new election must comply
with the requirements of this paragraph. A former spouse's
waiver shall not be binding on a new spouse.
(3) The election period to waive the Joint and Survivor
Annuity shall be the ninety (90) day period ending on the
Annuity Starting Date.
(4) For purposes of this Section, spouse or surviving spouse
means the spouse or surviving spouse of the Participant,
provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as
the spouse or surviving spouse to the extent provided under a
qualified domestic relations order as described in Code
Section 414(p).
(5) With regard to the election, except as otherwise provided
herein, the Administrator shall provide to the Participant no
less than thirty (30) days and no more than ninety (90) days
before the Annuity Starting Date a written (or such other form
as permitted by the IRS) explanation of:
(i) the teens and conditions of the Joint and
Survivor Annuity,
(ii) the Participant's right to make and the effect
of an election to waive the Joint and Survivor
Annuity,
(iii) the right of the Participant's spouse to
consent to any election to waive the Joint and
Survivor Annuity, and
(iv) the right of the Participant to revoke such
election, and the effect of such revocation.
(6) Notwithstanding the above, with respect to distributions
made on or after December 31, 1996, if the Participant elects
(with spousal consent if applicable) to waive the requirement
that the explanation be provided at least thirty (30) days
before the Annuity Starting Date, the election period shall be
extended to the thirtieth (30th) day after the date on which
such explanation is provided to the Participant, unless the
thirty (30) day period is waived pursuant to the following
provisions.
Any distribution provided for in this Section made on
or after December 31, 1996, may commence less than thirty (30)
days after the notice required by Code Section 417(a)(3) is
given provided the following requirements are satisfied:
53
(i) the Administrator clearly informs the Participant
that the Participant has a right to a period of
thirty (30) days after receiving the notice to
consider whether to waive the Joint and Survivor
Annuity and to elect (with spousal consent) a form of
distribution other than a Joint and Survivor Annuity;
(ii) the Participant is permitted to revoke any
affirmative distribution election at least until the
Annuity Starting Date or, if later, at any time prior
to the expiration of the seven (7) day period that
begins the day after the explanation of the Joint and
Survivor Annuity is provided to the Participant;
(iii) the Annuity Starting Date is after the time
that the explanation of the Joint and Survivor
Annuity is provided to the Participant. However, the
Annuity Starting Date may be before the date that any
affirmative distribution election is made by the
Participant and before the date that the distribution
is permitted to commence under (iv) below; and
(iv) distribution in accordance with the affirmative
election does not commence before the expiration of
the seven (7) day period that begins the day after
the explanation of the Joint and Survivor Annuity is
provided to the Participant.
(b) In the event a married Participant duly elects
pursuant to paragraph (a)(2) above not to receive the benefit
in the form of a Joint and Survivor Annuity, or if such
Participant is not married, in the form of a life annuity, the
Administrator, pursuant to the election of the Participant,
shall direct the distribution to a Participant or Beneficiary
any amount to which the Participant or Beneficiary is entitled
under the Plan in one or more of the following methods which
are permitted pursuant to the Adoption Agreement:
(1) One lump-sum payment in cash or in property;
(2) Partial withdrawals;
(3) Payments over a period certain in monthly,
quarterly, semiannual, or annual cash installments.
In order to provide such installment payments, the
Administrator may (A) segregate the aggregate amount
thereof in a separate, federally insured savings
account, certificate of deposit in a bank or savings
and loan association, money market certificate or
other liquid short-term security or (B) purchase a
nontransferable annuity contract for a term certain
(with no life contingencies) providing for such
payment. The period over which such payment is to be
made shall not extend beyond the Participant's life
expectancy (or the life expectancy of the Participant
and the Participant's designated Beneficiary);
(4) Purchase of or providing an annuity. However,
such annuity may not be in any form that will provide
for payments over a period extending beyond either
the life of the Participant (or the lives of the
Participant and the Participant's designated
Beneficiary) or the life expectancy of the
Participant (or the life expectancy of the
Participant and the Participant's designated
Beneficiary).
54
(c) The present value of a Participant's Joint and
Survivor Annuity derived from Employer and Employee
contributions may not be paid without the Participant's
written (or in such other form as permitted by the IRS)
consent if the value exceeds, or has ever exceeded at the time
of any prior distribution, $5,000 (or $3,500, for
distributions made prior to the later of the first day of the
first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement). Further, the spouse of a
Participant must consent in writing (or in such other form as
permitted by the IRS) to any immediate distribution. If the
value of the Participant's benefit derived from Employer and
Employee contributions does not exceed, and has never exceeded
at the time of any prior distribution, $5,000 (or, if
applicable, $3,500) the Administrator will distribute such
benefit in a lump-sum without such Participant's consent. No
distribution may be made under the preceding sentence after
the Annuity Starting Date unless the Participant and the
Participant's spouse consent in writing (or in such other form
as permitted by the IRS) to such distribution. Any consent
required under this paragraph must be obtained not more than
ninety (90) days before commencement of the distribution and
shall be made in a manner consistent with Section 6.5(a)(2).
Notwithstanding the preceding, the "lookback rule" (which
provides that if the present value at the time of a
distribution exceeds the applicable dollar threshold, then the
present value at any subsequent time is deemed to exceed the
threshold) will not apply to any distributions made after the
effective date of any Regulations that repeal such rule.
(d) Any distribution to a Participant who has a
benefit which exceeds, or, to the extent required by
Regulations, has ever exceeded at the time of any prior
distribution, $5,000 (or $3,500, for distributions made prior
to the later of the first day of the first Plan Year beginning
after August 5, 1997, or the date specified in the Adoption
Agreement) shall require such Participant's consent if such
distribution commences prior to the time the benefit is
"immediately distributable." A benefit is "immediately
distributable" if any part of the benefit could be distributed
to the Participant (or surviving spouse) before the
Participant attains (or would have attained if not deceased)
the later of the Participant's Normal Retirement Age or age
62. With regard to this required consent:
(1) No consent shall be valid unless the Participant
has received a general description of the material
features and an explanation of the relative values of
the optional forms of benefit available under the
Plan that would satisfy the notice requirements of
Code Section 417;
(2) The Participant must be informed of the right to
defer receipt of the distribution. If a Participant
fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.
However, any election to defer the receipt of
benefits shall not apply with respect to
distributions that are required under Section 6.5(e);
(3) Notice of the rights specified under this
paragraph shall be provided no less than thirty (30)
days and no more than ninety (90) days before the
Annuity Starting Date;
(4) Written (or such other form as permitted by the
IRS) consent of the Participant to the distribution
must not be made before the Participant receives the
notice and must not be made more than ninety (90)
days before the Annuity Starting Date; and
55
(5) No consent shall be valid if a significant
detriment is imposed under the Plan on any
Participant who does not consent to the distribution.
(e) Notwithstanding any provision in the Plan to the
contrary, for Plan Years beginning after December 31, 1996,
the distribution of a Participant's benefits, whether under
the Plan or through the purchase of an annuity Contract, shall
be made in accordance with the following requirements and
shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation 1.401(a)(9)-2),
the provisions of which are incorporated herein by reference:
(1) A Participant's benefits will be distributed or
must begin to be distributed not later than the
Participant's "required beginning date."
Alternatively, distributions to a Participant must
begin no later than the Participant's "required
beginning date" and must be made over the life of the
Participant (or the lives of the Participant and the
Participant's designated Beneficiary) or the life
expectancy of the Participant (or the life
expectancies of the Participant and the Participant's
designated Beneficiary) in accordance with
Regulations. However, if the distribution is to be in
the form of a joint and survivor annuity or single
life annuity, then distributions must begin no later
than the "required beginning date" and must be made
over the life of the Participant (or the lives of the
Participant and the Participant's designated
Beneficiary) in accordance with Regulations.
(2) The "required beginning date" for a Participant
who is a "five percent (5%) owner" with respect to
the Plan Year ending in the calendar year in which
such Participant attains age 70 1/2 means, unless the
Employer has elected to continue the pre-SBJPA (Small
Business Job Protection Act of 1996) rules in the
Adoption Agreement, April 1st of the calendar year
following the calendar year in which the Participant
attains age 70 1/2. Once distributions have begun to
a "five percent (5%) owner" under this subsection,
they must continue to be distributed, even if the
Participant ceases to be a "five percent (5%) owner"
in a subsequent year.
(3) The "required beginning date" for a Participant
other than a "five percent (5%) owner" means, unless
the Employer has elected to continue the pre-SBJPA
rules in the Adoption Agreement, April 1st of the
calendar year following the later of the calendar
year in which the Participant attains age 70 1/2 or
the calendar year in which the Participant retires.
(4) If the election is made to continue the pre-SBJPA
rules, then except as provided below, the "required
beginning date" is April 1st of the calendar year
following the calendar year in which a Participant
attains age 70 1/2.
(i) However, the "required beginning date"
for a Participant who had attained age 70
1/2 before January 1, 1988, and was not a
five percent (5%) owner (within the
meaning of Code Section 416) at any time
during the Plan Year ending with or within
the calendar year in which the Participant
attained age 66 1/2 or any subsequent Plan
Year, is April 1st of the calendar year
following the calendar in which the
Participant retires.
56
(ii) Notwithstanding (i) above, the
"required beginning date" for a Participant
who was a five percent (5%) owner (within
the meaning of Code Section 416) at any time
during the five (5) Plan Year period ending
in the calendar year in which the
Participant attained age 70 1/2 is April 1st
of the calendar year in which the
Participant attained age 70 1/2. In the case
of a Participant who became a five percent
(5%) owner during any Plan Year after the
calendar year in which the Participant
attained age 70 1/2, the "required beginning
date" is April 1st of the calendar year
following the calendar year in which such
subsequent Plan Year ends.
(5) If this is an amendment or restatement of a plan
that contained the pre-SBJPA rules and an election is
made to use the post-SBJPA rules, then the transition
rules elected in the Adoption Agreement will apply.
(6) Except as otherwise provided herein, "five
percent (5%) owner" means, for purposes of this
Section, a Participant who is a five percent (5%)
owner as defined in Code Section 416 at any time
during the Plan Year ending with or within the
calendar year in which such owner attains age 70 1/2.
(7) Distributions to a Participant and such
Participant's Beneficiaries will only be made in
accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the
Regulations thereunder.
(f) For purposes of this Section, the life expectancy
of a Participant and/or a Participant's spouse (other than in
the case of a life annuity) shall or shall not be redetermined
annually as elected in the Adoption Agreement and in
accordance with Regulations. If the Participant or the
Participant's spouse may elect, pursuant to the Adoption
Agreement, to have life expectancies recalculated, then the
election, once made shall be irrevocable. If no election is
made by the time distributions must commence, then the life
expectancy of the Participant and the Participant's spouse
shall not be subject to recalculation. Life expectancy and
joint and last survivor life expectancy shall be computed
using the return multiples in Tables V and VI of Regulation
Section 1.72-9.
(g) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of
any annuity Contract purchased and distributed to a
Participant or spouse shall comply with all of the
requirements of this Plan.
(h) Subject to the spouse's right of consent afforded
under the Plan, the restrictions imposed by this Section
shall not apply if a Participant has, prior to January 1,
1984, made a written designation to have retirement benefits
paid in an alternative method acceptable under Code Section
401(a) as in effect prior to the enactment of the Tax Equity
and Fiscal Responsibility Act of 1982 (TEFRA).
57
(i) If a distribution is made to a Participant who
has not severed employment and who is not fully Vested in the
Participant's Account and the Participant may increase the
Vested percentage in such account, then, at any relevant time
the Participant's Vested portion of
the account will be equal to an amount ("X") determined by the formula:
X equals P (AB plus D) - D
For purposes of applying the formula: P is the Vested percentage at the
relevant time, AB is the account balance at the relevant time, and D is
the amount of distribution.
However, the Employer may attach an addendum to the Adoption Agreement
to provide that a separate account shall be established for the
Participant's interest in the Plan as of the time of the distribution,
and at any relevant time the Participant's Vested portion of the
separate account will be equal to an amount determined as follows:
P(AB plus (R x D)) - (R x D) where R is the ratio of the account
balance at the relevant time. Any amendment to change the formula in
accordance with the preceding sentence shall not be considered an
amendment which causes this Plan to become an individually designed
Plan.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested
Participant who dies before the Annuity Starting Date and who has a
surviving spouse shall have the Pre-Retirement Survivor Annuity paid to
the surviving spouse. The Participant's spouse may direct that payment
of the Pre-Retirement Survivor Annuity commence within a reasonable
period after the Participant's death. If the spouse does not so direct,
payment of such benefit will commence at the time the Participant would
have attained the later of Normal Retirement Age or age 62. However,
the spouse may elect a later commencement date. Any distribution to
the Participant's spouse shall be subject to the rules specified in
Section 6.6(h).
(b) Any election to waive the Pre-Retirement Survivor Annuity
before the Participant's death must be made by the Participant in
writing (or in such other form as permitted by the IRS) during the
election period and shall require the spouse's irrevocable consent in
the same manner provided for in Section 6.5(a)(2). Further, the
spouse's consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor
Annuity shall begin on the first day of the Plan Year in which the
Participant attains age 35 and end on the date of the Participant's
death. An earlier waiver (with spousal consent) may be made provided a
written (or such other form as permitted by the IRS) explanation of the
Pre-Retirement Survivor Annuity is given to the Participant and such
waiver becomes invalid at the beginning of the Plan Year in which the
Participant turns age 35. In the event a Participant separates from
service prior to the beginning of the election period, the election
period shall begin on the date of such separation from service.
58
(d) With regard to the election, the Administrator shall
provide each Participant within the applicable election period, with
respect to such Participant (and consistent with Regulations), a
written (or such other form as permitted by the IRS) explanation of the
Pre-Retirement Survivor Annuity containing comparable information to
that required pursuant to Section 6.5(a)(5). For the purposes of this
paragraph, the term "applicable period" means, with respect to a
Participant, whichever of the following periods ends last:
(1) The period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
(2) A reasonable period after the individual becomes a
Participant. For this purpose, in the case of an individual
who becomes a Participant after age 32, the explanation must
be provided by the end of the three-year period beginning with
the first day of the first Plan Year for which the individual
is a Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity
with respect to the Participant; or
(4) A reasonable period ending after Code Section 401(a)(11)
applies to the Participant.
For purposes of applying this subsection, a reasonable period ending
after the enumerated events described in (2), (3) and (4) is the end of
the two (2) year period beginning one (1) year prior to the date the
applicable event occurs, and ending one (1) year after that date. In
the case of a Participant who separates from service before the Plan
Year in which age 35 is attained, notice shall be provided within the
two (2) year period beginning one (1) year prior to separation and
ending one (1) year after separation. If such a Participant thereafter
returns to employment with the Employer, the applicable period for such
Participant shall be redetermined.
(e) The Pre-Retirement Survivor Annuity provided for in this
Section shall apply only to Participants who are credited with an Hour
of Service on or after August 23, 1984. Former Participants who are not
credited with an Hour of Service on or after August 23, 1984, shall be
provided with rights to the Pre-Retirement Survivor Annuity in
accordance with Section 303(e)(2) of the Retirement Equity Act of 1984.
(f) If the value of the Pre-Retirement Survivor Annuity
derived from Employer and Employee contributions does not exceed, and
has never exceeded at the time of any prior distribution, $5,000 (or,
$3,500 for distributions made prior to the later of the first day of
the first Plan Year beginning after August 5, 1997, or the date
specified in the Adoption Agreement) the Administrator shall direct the
distribution of such amount to the Participant's spouse as soon as
practicable. No distribution may be made under the preceding sentence
after the Annuity Starting Date unless the spouse consents in writing
(or in such other form as permitted by the IRS). If the value exceeds,
or has ever exceeded at the time of any prior distribution, $5,000 (or,
if applicable, $3,500), an immediate distribution of the entire amount
may be made to the surviving spouse, provided such surviving spouse
consents in writing (or in such other form as permitted by the IRS) to
such distribution. Any consent required under this
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paragraph must be obtained not more than ninety (90) days before
commencement of the distribution and shall be made in a manner
consistent with Section 6.5(a)(2). Notwithstanding the preceding, the
"lookback rule" (which provides that if the present value at the time
of a distribution exceeds the applicable dollar threshold, then the
present value at any subsequent time is deemed to exceed the threshold)
will not apply to any distributions made after the effective date of
any Regulations that repeal such rule.
(g) Death benefits may be paid to a Participant's Beneficiary
in one of the following optional forms of benefits subject to the rules
specified in Section 6.6(h) and the elections made in the Adoption
Agreement. Such optional forms of distributions may be elected by the
Participant in the event there is an election to waive the
Pre-Retirement Survivor Annuity, and for any death benefits in excess
of the Pre-Retirement Survivor Annuity. However, if no optional form of
distribution was elected by the Participant prior to death, then the
Participant's Beneficiary may elect the form of distribution.
(1) One lump-sum payment in cash or in property.
(2) Partial withdrawals.
(3) Payment in monthly, quarterly, semi-annual, or annual cash
installments over a period to be determined by the Participant
or the Participant's Beneficiary. In order to provide such
installment payments, the Administrator may (A) segregate the
aggregate amount thereof in a separate, federally insured
savings account, certificate of deposit in a bank or savings
and loan association, money market certificate or other liquid
short-term security or (B) purchase a nontransferable annuity
contract for a term certain (with no life contingencies)
providing for such payment. After periodic installments
commence, the Beneficiary shall have the right to reduce the
period over which such periodic installments shall be made,
and the cash amount of such periodic installments shall be
adjusted accordingly.
(4) In the form of an annuity over the life expectancy of the
Beneficiary.
(5) If death benefits in excess of the Pre-Retirement Survivor
Annuity are to be paid to the surviving spouse, such benefits
may be paid pursuant to (1), (2) or (3) above, or used to
purchase an annuity so as to increase the payments made
pursuant to the Pre-Retirement Survivor Annuity.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder.
(1) If it is determined, pursuant to Regulations, that the
distribution of a Participant's interest has begun and the
Participant dies before the entire interest has been
distributed, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
distribution elected pursuant to Section 6.5 as of the date of
death.
(2) If a Participant dies before receiving any distributions
of the interest in the Plan or before distributions are deemed
to have begun pursuant to Regulations, then the death
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benefit shall be distributed to the Participant's
Beneficiaries in accordance with the following rules subject
to the elections made in the Adoption Agreement and
Subsections 6.6(h)(3) and 6.6(i) below:
(i) The entire death benefit shall be distributed to
the Participant's Beneficiaries by December 31st of
the calendar year in which the fifth anniversary of
the Participant's death occurs;
(ii) The 5-year distribution requirement of (i) above
shall not apply to any portion of the deceased
Participant's interest which is payable to or for the
benefit of a designated Beneficiary. In such event,
such portion shall be distributed over the life of
such designated Beneficiary (or over a period not
extending beyond the life expectancy of such
designated Beneficiary) provided such distribution
begins not later than December 31st of the calendar
year immediately following the calendar year in which
the Participant died (or such later date as may be
prescribed by Regulations);
(iii) However, in the event the Participant's spouse
(determined as of the date of the Participant's
death) is the designated Beneficiary, the provisions
of (ii) above shall apply except that the requirement
that distributions commence within one year of the
Participant's death shall not apply. In lieu thereof,
distributions must commence on or before the later
of: (1) December 31st of the calendar year
immediately following the calendar year in which the
Participant died; or (2) December 31st of the
calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies
before distributions to such spouse begin, then the
5-year distribution requirement of this Section shall
apply as if the spouse was the Participant.
(3) Notwithstanding subparagraph (2) above, or any elections
made in the Adoption Agreement, if a Participant's death
benefits are to be paid in the form of a Pre-Retirement
Survivor Annuity, then distributions to the Participant's
surviving spouse must commence on or before the later of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December
31st of the calendar year in which the Participant would have
attained age 70 1/2.
(i)For purposes of Section 6.6(h)(2), the election by a
designated Beneficiary to be excepted from the 5-year distribution
requirement (if permitted in the Adoption Agreement) must be made no
later than December 31st of the calendar year following the calendar
year of the Participant's death. Except, however, with respect to a
designated Beneficiary who is the Participant's surviving spouse, the
election must be made by the earlier of: (1) December 31st of the
calendar year immediately following the calendar year in which the
Participant died or, if later, December 31st of the calendar year in
which the Participant would have attained age 70 1/2; or (2) December
31st of the calendar year which contains the fifth anniversary of the
date of the Participant's death. An election by a designated
Beneficiary must be in writing (or in such other form as permitted by
the IRS) and shall be irrevocable as of the last day of the election
period stated herein. In the absence of an election by the Participant
or a designated Beneficiary, the 5-year distribution requirement shall
apply.
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(j) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a
life annuity) shall or shall not be redetermined annually as elected in
the Adoption Agreement and in accordance with Regulations. If the
Participant may elect, pursuant to the Adoption Agreement, to have life
expectancies recalculated, then the election, once made shall be
irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the
Participant's spouse shall not be subject to recalculation. Life
expectancy and joint and last survivor life expectancy shall be
computed using the return multiples in Tables V and VI of Regulation
Section 1.72-9.
(k) For purposes of this Section, any amount paid to a child
of the Participant will be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the surviving spouse
when the child reaches the age of majority.
(l) In the event that less than 100% of a Participant's
interest in the Plan is distributed to such Participant's spouse, the
portion of the distribution attributable to the Participant's Voluntary
Contribution Account shall be in the same proportion that the
Participant's Voluntary Contribution Account bears to the Participant's
total interest in the Plan.
(m) Subject to the spouse's right of consent afforded under
the Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
to have death benefits paid in an alternative method acceptable under
Code Section 401(a) as in effect prior to the enactment of the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA).
6.7 TIME OF DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a distribution is
to be made, or a series of payments are to commence, the distribution or series
of payments may be made or begun on such date or as soon thereafter as is
practicable. However, unless a Former Participant elects in writing to defer the
receipt of benefits (such election may not result in a death benefit that is
more than incidental), the payment of benefits shall begin not later than the
sixtieth (60th) day after the close of the Plan Year in which the latest of the
following events occurs: (a) the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified herein; (b) the tenth
(10th) anniversary of the year in which the Participant commenced participation
in the Plan; or (c) the date the Participant terminates service with the
Employer.
Notwithstanding the foregoing, the failure of a Participant and, if
applicable, the Participant's spouse, to consent to a distribution that is
"immediately distributable" (within the meaning of Section 6.5(d)), shall be
deemed to be an election to defer the commencement of payment of any benefit
sufficient to satisfy this Section.
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6.8 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY
In the event a distribution is to be made to a minor or incompetent
Beneficiary, then the Administrator may direct that such distribution be paid to
the legal guardian, or if none in the case of a minor Beneficiary, to a parent
of such Beneficiary or a responsible adult with whom the Beneficiary maintains
residence, or to the custodian for such Beneficiary under the Uniform Gift to
Minors Act or Gift to Minors Act, if such is permitted by the laws of the state
in which said Beneficiary resides. Such a payment to the legal guardian,
custodian or parent of a minor or incompetent Beneficiary shall fully discharge
the Trustee, Employer, and Plan from further liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or Beneficiary hereunder shall, at the later of the Participant's
attainment of age 62 or Normal Retirement Age, remain unpaid solely by reason of
the inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent effort,
to ascertain the whereabouts of such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the Plan.
Notwithstanding the foregoing, if the value of a Participant's Vested benefit
derived from Employer and Employee contributions does not exceed $5,000, then
the amount distributable shall be treated as a Forfeiture at the time it is
determined that the whereabouts of the Participant or the Participant's
Beneficiary can not be ascertained. In the event a Participant or Beneficiary
is located subsequent to the Forfeiture, such benefit shall be restored, first
from Forfeitures, if any, and then from an additional Employer contribution, if
necessary. However, regardless of the preceding, a benefit that is lost by
reason of escheat under applicable state law is not treated as a Forfeiture for
purposes of this Section nor as an impermissible forfeiture under the Code.
6.10 IN-SERVICE DISTRIBUTION
If elected in the Adoption Agreement, at such time as the conditions
set forth in the Adoption Agreement have been satisfied, then the Administrator,
at the election of a Participant who has not severed employment with the
Employer, shall direct the distribution of up to the entire Vested amount then
credited to the accounts as elected in the Adoption Agreement maintained on
behalf of such Participant. In the event that the Administrator makes such a
distribution, the Participant shall continue to be eligible to participate in
the Plan on the same basis as any other Employee. Any distribution made pursuant
to this Section shall be made in a manner consistent with Section 6.5,
including, but not limited to, all notice and consent requirements of Code
Sections 411(a)(11) and 417 and the Regulations thereunder.
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6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans and 401(k) Plans (except to the
extent Section 12.9 applies), if elected in the Adoption Agreement,
the Administrator, at the election of the Participant, shall direct
the distribution to any Participant in any one Plan Year up to the
lesser of 100% of the Vested interest of the Participant's Combined
Account valued as of the last Valuation Date or the amount necessary
to satisfy the immediate and heavy financial need of the Participant.
Any distribution made pursuant to this Section shall be deemed to be
made as of the first day of the Plan Year or, if later, the Valuation
Date immediately preceding the date of distribution, and the account
from which the distribution is made shall be reduced accordingly.
Withdrawal under this Section shall be authorized only if the
distribution is for an immediate and heavy financial need. The
Administrator will determine whether there is an immediate and heavy
financial need based on the facts and circumstances. An immediate and
heavy financial need includes, but is not limited to, a distribution
for one of the following:
(1) Medical expenses described in Code Section 213(d) incurred
by the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as
described in Code Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
(4) Payment of tuition, related educational fees, and room and
board expenses, for the next twelve (12) months of
post-secondary education for the Participant, the
Participant's spouse, children, or dependents (as defined in
Code Section 152); or
(5) Payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or
foreclosure on the mortgage on that residence.
(b) If elected in the Adoption Agreement, no distribution
shall be made pursuant to this Section from the Participant's Account
until such Account has become fully Vested.
(c) Any distribution made pursuant to this Section shall be
made in a manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
6.12 SPECIAL RULE FOR CERTAIN PROFIT SHARING PLANS
(a) The provisions of this Section apply, if elected in the
Adoption Agreement, to a Participant in a Profit Sharing Plan or 401(k)
Profit Sharing Plan. However, regardless of the preceding and any election
in the Adoption Agreement, this Section shall not apply to any Participant
if it is determined that this Plan is a direct or indirect transferee of
assets (other than through a direct rollover) of a defined benefit plan or
money purchase plan (including a target benefit plan). Furthermore, if
any election is made to use the provisions of this Section and this
64
Plan is a direct or indirect transferee of assets (other than through a
direct rollover) from a stock bonus or profit sharing plan which would
otherwise provide for a life annuity form of payment to the
Participant, then the provisions of subsection (c) below will apply.
(b) If an election is made to not offer a life annuity form of
distribution, a Participant shall be prohibited from electing
benefits in the form of a life annuity and the Joint and
Survivor Annuity provisions of Section 6.5 shall not apply.
(c) If an election is made to offer annuities as a form of
distribution but not as the normal form of distribution, then
the Joint and Survivor Annuity provisions of Section 6.5 shall
not apply if a Participant does not elect an annuity form of
distribution. Furthermore, subsection (e) shall not apply if a
Participant elects an annuity form of distribution.
(d) Upon the death of a Participant, the Participant's entire
Vested account balances will be paid to the Participant's
surviving spouse, or, if there is no surviving spouse or the
surviving spouse has consented to waive the benefit, in
accordance with Section 6.6, to the Participant's designated
Beneficiary.
(e) Except to the extent otherwise provided in this Section,
the provisions of Sections 6.2, 6.5 and 6.6 regarding spousal
consent shall be inoperative with respect to this Plan.
(f) If a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distribution may commence less than
thirty (30) days after the notice required under Regulation
1.411(a)-11(c) is given, provided that:
(1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least
thirty (30) days after the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order."
Furthermore, a distribution to an "alternate payee" shall be permitted
if such distribution is authorized by a "qualified domestic relations
order," even if the affected Participant has not reached the
"earliest retirement age" under the Plan. For the purposes of this
Section, "alternate payee," "qualified domestic relations order" and
"earliest retirement age" shall have the meanings set forth under Code
Section 414(p).
65
6.14 DIRECT ROLLOVERS
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a "distributee's" election under this
Section, a "distributee" may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an "eligible
rollover distribution" paid directly to an "eligible retirement plan"
specified by the "distributee" in a "direct rollover".
(b) For purposes of this Section, the following definitions
shall apply:
(1) An "eligible rollover distribution" means any distribution
described in Code Section 402(c)(4) and generally includes any
distribution of all or any portion of the balance to the
credit of the distributee, except that an "eligible rollover
distribution" does not include: any distribution that is one
of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the "distributee" or the joint lives (or joint
life expectancies) of the "distributee" and the
"distributee's" designated beneficiary, or for a specified
period of ten (10) years or more; any distribution to the
extent such distribution is required under Code Section
401(a)(9); the portion of any other distribution(s) that is
not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to
employer securities); for distributions made after December
31, 1999, any hardship distribution described in Code Section
401(k)(2)(B)(i)(IV); and any other distribution reasonably
expected to total less than $200 during a year.
(2) An "eligible retirement plan" is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified
plan described in Code Section 401(a), that accepts the
"distributee's" "eligible rollover distribution." However, in
the case of an "eligible rollover distribution" to the
surviving spouse, an "eligible retirement plan" is an
individual retirement account or individual retirement
annuity.
(3) A "distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section 414(p),
are distributees with regard to the interest of the spouse or
former spouse.
(4) A "direct rollover" is a payment by the Plan to the
"eligible retirement plan" specified by the "distributee."
6.15 TRANSFER OF ASSETS FROM A MONEY PURCHASE PLAN
(a) This Section shall be effective as of the following date:
(1) for Plans not entitled to extended reliance as described
in Revenue Ruling 94-76, the first day of the first Plan Year
beginning on or after December 12,1994, or if later, 90 days
after December 12,1994; or
66
(2) for Plans entitled to extended reliance as described in
Revenue Ruling 94-76, as of the first day of the first Plan
Year following the Plan Year in which the extended reliance
period applicable to the Plan ends. However, in the event of a
transfer of assets to the Plan from a money purchase plan that
occurs after the date of the most recent determination letter,
the effective date of the amendment shall be the date
immediately preceding the date of such transfer of assets.
(b) Notwithstanding any provision of this Plan to the
contrary, to the extent that any optional form of benefit under this
Plan permits a distribution prior to the Employee's retirement, death,
disability, or severance from employment, and prior to Plan
termination, the optional form of benefit is not available with respect
to benefits attributable to assets (including the post-transfer
earnings thereon) and liabilities that are transferred, within the
meaning of Code Section 414(l), to this Plan from a money purchase
pension plan qualified under Code Section 401(a) (other than any
portion of those assets and liabilities attributable to after-tax
voluntary Employee contributions or to a direct or indirect rollover
contribution).
ARTICLE VII
TRUSTEE AND CUSTODIAN
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The provisions of this Article, other than Section 7.6
shall not apply to this Plan if a separate trust agreement is being
used as specified in the Adoption Agreement.
(b) The Trustee is accountable to the Employer for the funds
contributed to the Trust Fund by the Employer, but the Trustee does not
have any duty to see that the contributions received comply with the
provisions of the Plan. The Trustee is not obligated to collect any
contributions from the Employer, nor is it under a duty to see that
funds deposited with it are deposited in accordance with the provisions
of the Plan.
(c) The Trustee will credit and distribute the Trust Fund as
directed by the Administrator. The Trustee shall not be responsible in
any way to determine whether any payee or distributee is entitled to
any payment or whether the distribution is proper or within the terms
of the Plan, or as to the manner of making any payment or distribution.
The Trustee is accountable only to the Administrator for any payment or
distribution made by it in good faith on the order or direction of the
Administrator.
(d) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures if the
Plan permits Participant directed investments), the Employer, or an
Investment Manager or other agent appointed by the Employer with
respect to the investment of any or all Plan assets, the Trustee shall
have no liability with respect to the investment of such assets, but
shall be responsible only to execute such investment instructions as so
directed.
(1) The Trustee shall be entitled to rely fully on the written
(or other form acceptable to the Administrator and the Trustee,
including but not limited to voice recorded) instructions of a
Participant (pursuant to the Participant Direction Procedures), the
Employer,
67
or any Fiduciary or nonfiduciary agent of the Employer, in the
discharge of such duties, and shall not be liable for any loss or other
liability, resulting from such direction (or lack of direction) of the
investment of any part of the Plan assets.
(2) The Trustee may delegate the duty to execute such
instructions to any nonfiduciary agent, which may be an affiliate of
the Trustee or any Plan representative.
(3) 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.
The Trustee shall not be responsible 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.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's Directed
Account, unless paid by the Employer.
(e) The Trustee will maintain records of receipts and
disbursements and furnish to the Employer and/or Administrator for each
Plan Year a written annual report pursuant to Section 7.9.
(f) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under which
the duties of such bank or trust company shall be of a custodial,
clerical and record-keeping nature.
7.2 POWERS AND DUTIES OF DISCRETIONARY TRUSTEE
(a) This Section applies to and describes the authority of the
Trustee, if the Employer, in the Adoption Agreement, designates the
Trustee to administer the trust as a discretionary Trustee. If so
designated, then the Trustee has the discretion and authority to
invest, manage, and control the Plan assets except, however, with
respect to those assets which are subject to the investment direction
of a Participant (if Participant directed investments are permitted),
or an Investment Manager, the Administrator, or other agent of the
Employer if the Employer should appoint such manager, the Administrator
or agent as to all or a portion of the assets of the Plan. The
exercise of any investment discretion hereunder shall be consistent
with the "funding policy and method" determined by the Employer. This
Section also applies to, and describes the authority of, the
Administrator (or another party to whom the Administrator has properly
delegated its authority) to instruct and direct a Directed Trustee if
the Employer, in the Adoption Agreement, designates a Directed Trustee.
In that event, the term "Trustee" refers to the Administrator (or
delegate) in its capacity to instruct or direct the Directed Trustee.
(b) The Trustee shall, except as otherwise provided in this
Plan, invest and reinvest the Trust Fund to keep the Trust Fund
invested without distinction between principal and income and in such
securities or property, real or personal, wherever situated, as the
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Trustee shall deem advisable, including, but not limited to, stocks,
common or preferred, open-end or closed-end mutual funds, bonds and
other evidences of indebtedness or ownership, and real estate or any
interest therein. The Trustee shall at all times in making investments
of the Trust Fund consider, among other factors, the short and long-
term financial needs of the Plan on the basis of information furnished
by the Employer. In making such investments, the Trustee shall not be
restricted to securities or other property of the character expressly
authorized by the applicable law for trust investments; however, the
Trustee shall give due regard to any limitations imposed by the Code or
the Act so that at all times this Plan may qualify as a qualified Plan
and Trust.
(c) The Trustee, in addition to all powers and authorities
under common law, statutory authority, including the Act, and other
provisions of this Plan, shall have the following powers and
authorities to be exercised in the Trustee's sole discretion:
(1) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
(2) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property held
by the Trustee, by private contract or at public auction. No person
dealing with the Trustee shall be bound to see to the application of
the purchase money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or without
advertisement;
(3) To vote upon any stocks, bonds, or other securities; to
give general or special proxies or powers of attorney with or without
power of substitution; to exercise any conversion privileges,
subscription rights or other options, and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes affecting
corporate securities, and to delegate discretionary powers, and to pay
any assessments or charges in connection therewith; and generally to
exercise any of the powers of an owner with respect to stocks, bonds,
securities, or other property. However, the Trustee shall not vote
proxies relating to securities for which it has not been assigned full
investment management responsibilities. In those cases where another
party has such investment authority or discretion, the Trustee will
deliver all proxies to said party who will then have full
responsibility for voting those proxies;
(4) To cause any securities or other property to be registered
in the Trustee's own name, in the name of one or more of the Trustee's
nominees, in a clearing corporation, in a depository, or in book entry
form or in bearer form, but the books and records of the Trustee shall
at all times show that all such investments are part of the Trust Fund;
(5) To invest in a common, collective, or pooled trust fund
(the provisions of which are incorporated herein by reference)
maintained by any corporate Trustee hereunder pursuant to Revenue
Ruling 81-100, all or such part of the Trust Fund as the Trustee may
deem advisable, and such part or all of the Trust Fund so transferred
shall be subject to all the terms and provisions of the common,
collective, or pooled trust fund which contemplate the
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commingling for investment purposes of such trust assets with trust
assets of other trusts. The Trustee may withdraw from such common,
collective, or pooled trust fund all or such part of the Trust Fund as
the Trustee may deem advisable.
(6) To borrow or raise money for the purposes of the Plan in
such amount, and upon such terms and conditions, as the Trustee shall
deem advisable; and for any sum so borrowed, to issue a promissory note
as Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(7) To accept and retain for such time as it may deem
advisable any securities or other property received or acquired by it
as Trustee hereunder, whether or not such securities or other property
would normally be purchased as investments hereunder;
(8) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(9) To settle, compromise, or submit to arbitration any
claims, debts, or damages due or owing to or from the Plan, to commence
or defend suits or legal or administrative proceedings, and to
represent the Plan in all suits and legal and administrative
proceedings;
(10) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agents or counsel may or
may not be agent or counsel for the Employer;
(11) To apply for and procure from the Insurer as an
investment of the Trust Fund such annuity, or other Contracts (on the
life of any Participant, or in the case of a Profit Sharing Plan, on
the joint life of a Participant and any person in whom the Participant
has an insurable interest) as the Administrator shall deem proper; to
exercise, at any time or from time to time, whatever rights and
privileges may be granted under such annuity, or other Contracts; to
collect, receive, and settle for the proceeds of all such annuity, or
other Contracts as and when entitled to do so under the provisions
thereof;
(12) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or cash
balances without liability for interest thereon, including specific
authority to invest in any type of deposit of the Trustee (or of a
financial institution related to a Trustee);
(13) To invest in Treasury Bills and other forms of United
States government obligations;
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(14) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national securities
exchange, are guaranteed by a member firm of the New York Stock
Exchange;
(15) To deposit monies in federally insured savings accounts
or certificates of deposit in banks or savings and loan associations;
(16) To pool all or any of the Trust Fund, from time to time,
with assets belonging to any other qualified employee pension benefit
trust created by the Employer or any Affiliated Employer, and to
commingle such assets and make joint or common investments and carry
joint accounts on behalf of this Plan and such other trust or trusts,
allocating undivided shares or interests in such investments or
accounts or any pooled assets of the two or more trusts in accordance
with their respective interests; and
(17) Notwithstanding anything hereinabove to the contrary, the
Trustee shall not, at any time after December 31, 1981, invest any
portion of a Participant's Directed Account in "collectibles" within
the meaning of Code Section 408(m).
(18) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee
may deem necessary to carry out the purposes of the Plan.
7.3 DIRECTED TRUSTEE
(a) Notwithstanding any of the provisions of this Plan to the
contrary, and to the extent permitted by applicable law, this Section
7.3 shall apply in the event MFS Heritage Trust (or any successor
appointed by the sponsoring organization of this Plan) or any other
eligible entity is designated to serve as a Directed Trustee of this
Plan. A Directed Trustee shall serve in accordance with this Section.
(b) The Administrator shall direct the Directed Trustee in the
performance of the duties and obligations of the Trustee set forth in
the Plan, or as may exist under common law or statutory authority
(including the Act), unless the Administrator has properly delegated
its authority hereunder to another party other than the Directed
Trustee in accordance with the terms of the Plan.
(c) Powers, rights and authority of a Trustee under the terms
of the Plan or under common law or statutory authority (including the
Act) shall vest in, and shall be exercised solely by, the Administrator
by directing the Directed Trustee unless the Plan Administrator has
properly delegated its authority hereunder to another party other than
the Directed Trustee in accordance with the terms of the Plan.
(d) The duties and obligations of a Directed Trustee shall be
limited to holding title to Plan assets and performing such clerical,
administrative, ministerial or recordkeeping duties as may be
associated therewith or pursuant to instructions or directions from the
Plan Administrator in the exercise of the Administrator's fiduciary
authority hereunder (including Trustee direction authority pursuant to
Section 7.3(b) or Section 7.3(c).
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(e) The parties intend that this Section shall constitute an
allocation of fiduciary duties for purposes of Section 403(a) of the
Act and that the Directed Trustee shall have no residual fiduciary
obligations whatsoever with respect to Plan assets or Plan operations,
no responsibility or obligation whatsoever to ascertain or to inquire
with respect to the propriety of any action, of any Plan fiduciary, and
in all respects shall have no obligation other than the custodial
function of holding title to Plan Assets and such administrative,
clerical or ministerial duties as may be associated therewith or with
the exercise of authority (including Trustee authority to direct or
instruct the Trustee hereunder) by the Administrator.
(f) A Directed Trustee shall be under no duty whatsoever to
question or otherwise ascertain the propriety or authority of any
fiduciary action hereunder including, without limitation, any
instructions or directions received from the Administrator or
Participant.
(g) The performance by the Directed Trustee of any act or
exercise of any right or power of a Trustee as enumerated under the
terms of the Plan or as may exist under common law or statutory
authority, including the Act, shall be taken only as directed by the
Administrator in its fulfillment of its duties and obligations or the
exercise of its powers and rights hereunder or as directed by the
Participants as to matters that may be directed by Participants.
(h) A reference to a Trustee in Sections 7.1, 7.3, 7.8, 7.9,
7.11 and 7.13 shall include a Directed Trustee. A reference to a
Trustee in Sections 7.2, 7.5, 7.6, and 7.14 shall not apply to a
Directed Trustee provided, however, that a Directed Trustee may, upon
the instruction of the Administrator or other fiduciary designated by
the Administrator exercising authority under such provisions, or, as to
matters subject to Participant direction, upon instruction of a
Participant, perform any clerical, administrative or ministerial tasks
required to permit the fiduciary to perform under such Sections or the
Participant to exercise his or her authority under the Plan.
(i) The receipt by the Directed Trustee of (a) Instructions or
direction from the Plan Administrator to the Directed Trustee
concerning the voting of securities (including Employer securities)
pursuant to Section 7.14(b)(ii) or tendering or exchanging of
securities (including Employer securities) pursuant to Section 7.13(c)
as to which the Administrator is directing the Trustee pursuant to the
Administrator's authority under Section 7.14 ("Administrator
Instructions") and/or (b) Instructions from Participants to the
Directed Trustee as to the voting of shares or other action concerning
shares credited to their accounts ("Participant Instructions"), shall
be deemed to be a certification by the Plan Administrator, to the
effect that:
(1) the Employer (or Administrator) has complied with the
Employer's or Administrator's obligation under Section 7.1
4(b)(ii) or 7.14(c) as the case may be;
(2) in connection with Participant Instructions:
(i) the Employer or Administrator has established
procedures for the collection and timely transmission of
Participants' voting, tender, exchange or other directions to
the Directed Trustee;
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(ii) the Employer or Administrator has furnished to
Participants all information required by law to be provided to
Participants and has furnished such information in a timely
basis as required by law; and
(iii) the Employer or Administrator has informed
Participants of the manner in which unallocated shares if any
will be voted or tendered and how the Administrator will
instruct the Directed Trustee to treat non-responses from
Participants.
(3) The execution by the Directed Trustee of any such
Administrator Instructions or Participants Instructions is in
compliance with all applicable laws and regulations including the Act
and regulations thereunder.
7.4 POWERS AND DUTIES OF CUSTODIAN
If there is a discretionary Trustee, the Employer may appoint a
custodian. A custodian has the same powers, rights and duties as a Directed
Trustee. Any reference in the Plan to a Directed Trustee also is a reference to
a custodian unless the context of the Plan indicates otherwise. A limitation of
the Trustee's or Directed Trustee's liability by Plan provision also acts as a
limitation of the custodian's liability. Any action taken by the custodian at
the discretionary Trustee's direction satisfies any provision in the Plan
referring to the Trustee's taking that action.
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7.5 LIFE INSURANCE
(a) The Trustee, at the direction of the Administrator and
pursuant to instructions from the individual designated in the Adoption
Agreement for such purpose and subject to the conditions set forth in
the Adoption Agreement, shall ratably apply for, own, and pay all
premiums on Contracts on the lives of the Participants or, in the case
of Profit Sharing Plan (including a 401(k) plan), on the joint lives of
a Participant and any person in whom the Participant has an insurable
interest. Any initial or additional Contract purchased on behalf of a
Participant shall have a face amount of not less than $1,000, the
amount set forth in the Adoption Agreement, or the limitation of the
Insurer, whichever is greater. If a life insurance Contract is to be
purchased for a Participant, the aggregate premium for ordinary life
insurance for each Participant must be less than 50% of the aggregate
contributions and Forfeitures allocated to a Participant's Combined
Account. For purposes of this limitation, ordinary life insurance
Contracts are Contracts with both non-decreasing death benefits and
non-increasing premiums. If term insurance or universal life insurance
is purchased with such contributions, the aggregate premium must be 25%
or less of the aggregate contributions and Forfeitures allocated to a
Participant's Combined Account. If both term insurance and ordinary
life insurance are purchased with such contributions, the amount
expended for term insurance plus one-half of the premium for ordinary
life insurance may not in the aggregate exceed 25% of the aggregate
Employer contributions and Forfeitures allocated to a Participant's
Combined Account. Notwithstanding the preceding, the limitations
imposed herein with respect to the purchase of life insurance shall not
apply, in the case of a Profit Sharing Plan, to the portion of a
Participant's Account that has accumulated for at least two (2) Plan
Years or to the entire Participant's Account if a Participant has been
a Participant in the Plan for at least five (5) years.
(b) The Trustee must distribute the Contracts to the
Participant or convert the entire value of the Contracts at or before
retirement into cash or provide for a periodic income so that no
portion of such value may be used to continue life insurance protection
beyond retirement. Furthermore, if a policy is purchased on the joint
lives of the Participant and another person and such other person
predeceases the Participant, then the Trustee may not maintain the
Contract under this Plan.
(c) Notwithstanding anything hereinabove to the contrary,
amounts credited to a Participant's Qualified Voluntary Employee
Contribution Account pursuant to Section 4.8, shall not be applied to
the purchase of life insurance Contracts.
(d) The Trustee will be the owner of any life insurance
Contract purchased under the terms of this Plan. The Contract must
provide that the proceeds will be payable to the Trustee; however, the
Trustee shall be required to pay over all proceeds of the Contract to
the Participant's designated Beneficiary in accordance with the
distribution provisions of Article VI. A Participant's spouse will be
the designated Beneficiary pursuant to Section 6.2, unless a qualified
election has been made in accordance with Sections 6.5 and 6.6 of the
Plan, if applicable. Under no circumstances shall the Trust retain any
part of the proceeds. However, the Trustee shall not pay the proceeds
in a method that would violate the requirements of the
74
Retirement Equity Act, as stated in Article VI of the Plan, or Code
Section 401(a)(9) and the Regulations thereunder. In the event of any
conflict between the terms of this Plan and the terms of any insurance
Contract purchased hereunder, the Plan provisions shall control.
7.6 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee (or
the Administrator if the Trustee is a nondiscretionary Trustee or if
loans are treated as Participant directed investments pursuant to the
Adoption Agreement) may, in the Trustee's (or, if applicable, the
Administrator's) sole discretion, make loans to Participants or
Beneficiaries under the following circumstances: (1) loans shall be
made available to all Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made
available to other Participants; (3) loans shall bear a reasonable rate
of interest; (4) loans shall be adequately secured; and (5) loans shall
provide for periodic repayment over a reasonable period of time.
(b) Loans shall not be made to any Shareholder-Employee or
Owner-Employee unless an exemption for such loan is obtained pursuant
to Act Section 408 or such loan would otherwise not be a prohibited
transaction pursuant to Code Section 4975 and Act Section 408.
(c) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) may, in accordance with a uniform and nondiscriminatory
policy established by the Administrator, be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant
during the one year period ending on the day before the date
on which such loan is made, over the outstanding balance of
loans from the Plan to the Participant on the date on which
such loan was made, or
(2) one-half (1/2) of the present value of the non-forfeitable
accrued benefit of the Participant under this Plan and all
other plans of the Employer.
(d) No Participant loan shall take into account the present
value of such Participant's Qualified Voluntary Employee Contribution
Account.
(e) Loans shall be required to provide for level amortization
with payments to be made not less frequently than quarterly, over a
period not to exceed five (5) years. However, loans used to acquire any
dwelling unit which, within a reasonable time, is to be used
(determined at the time the loan is made) as the "principal residence"
of the Participant shall provide for periodic repayment over a
reasonable period of time that may exceed five (5) years. For this
purpose, "principal residence" has the same meaning as "principal
residence" under Code Section 1034. Notwithstanding the foregoing, loan
repayments may be suspended under this Plan as permitted under Code
Section 414(u)(4) for qualified military service.
(f) An assignment or pledge of any portion of a Participant's
interest in the Plan and a loan, pledge, or assignment with respect to
any insurance Contract purchased under the Plan, shall be treated as a
loan under this Section.
75
(g) If the Vested interest of a Participant is used to secure
any loan made pursuant to this Section, then the written (or such other
form as permitted by the IRS) consent of the Participant's spouse shall
be required in a manner consistent with Section 6.5(a), provided the
spousal consent requirements of such Section apply to the Plan. Such
consent must be obtained within the 90-day period prior to the date the
loan is made. Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant shall be
taken into account in determining the amount of the death benefit or
Pre-Retirement Survivor Annuity. However, unless the loan program
established pursuant to this Section provides otherwise, no spousal
consent shall be required under this paragraph if the total Vested
interest subject to the security is not in excess of $5,000 (or, $3,500
effective for loans made prior to the later of the first day of the
first Plan Year beginning after August 5, 1997, or the date specified
in the Adoption Agreement).
(h) A Participant loan program shall be established which must
include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans
offered, including what constitutes a hardship or financial
need if selected in the Adoption Agreement;
(5) the procedure under the program for determining a
reasonable rate of interest;
(6) the types of collateral which may secure a Participant
loan; and
(7) the events constituting default and the steps that will be
taken to preserve Plan assets.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby incorporated
by reference and made a part of this Plan. Furthermore, such
Participant loan program may be modified or amended in writing from
time to time without the necessity of amending this Section of the
Plan.
(i) Notwithstanding anything in this Plan to the contrary, if
a Participant or Beneficiary defaults on a loan made pursuant to this
Section, then the loan default will be a distributable event to the
extent permitted by the Code and Regulations.
(j) Notwithstanding anything in this Section to the contrary,
if this is an amendment and restatement of an existing plan, any loans
made prior to the date this amendment and restatement is adopted shall
be subject to the terms of the plan in effect at the time such loan was
made.
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(k) For purposes of this Section, the term "Participant" shall
mean any Employee as defined in Article I.
7.7 MAJORITY ACTIONS
Except where there has been an allocation and delegation of powers, if
there shall be more than one Trustee, they shall act by a majority of their
number, but may authorize one or more of them to sign papers on their behalf.
7.8 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in
the Trustee's fee schedule (if the Trustee has such a schedule) or as agreed
upon in writing by the Employer and the Trustee. However, an individual
serving as Trustee who already receives full-time compensation from the Employer
shall not receive compensation from this Plan. In addition, the Trustee shall
be reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from the
Trust Fund unless paid or advanced by the Employer. All taxes of any kind
whatsoever that may be levied or assessed under existing or future laws upon, or
in respect of, the Trust Fund or the income thereof, shall be paid from the
Trust Fund.
7.9 ANNUAL REPORT OF THE TRUSTEE
(a) Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer's contribution for each Plan Year,
the Trustee, or its agent, shall furnish to the Employer and Administrator a
written statement of account with respect to the Plan Year for which such
contribution was made setting forth:
(1) the net income, or loss, of the Trust Fund;
(2) the gains, or losses, realized by the Trust Fund upon
sales or other disposition of the assets;
(3) the increase, or decrease, in the value of the Trust
Fund;
(4) all payments and distributions made from the Trust
Fund; and
(5) such further information as the Trustee and/or
Administrator deems appropriate.
(b) The Employer, promptly upon its receipt of each such statement of
account, shall acknowledge receipt thereof in writing and advise the Trustee
and/or Administrator of its approval or disapproval thereof. Failure by the
Employer to disapprove any such statement of account within thirty (30) days
after its receipt thereof shall be deemed an approval thereof. The approval by
the Employer of any statement of account shall be binding on the Employer and
the Trustee as to all matters contained in the statement to the same extent as
if the account of the Trustee had been settled by judgment or decree in an
action for a judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all persons having or
claiming an interest in the Plan were parties. However, nothing contained in
this Section shall deprive the Trustee of its right to have its accounts
judicially settled if the Trustee so desires.
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7.10 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the Administrator
shall direct the Trustee to engage on behalf of all Participants an
independent qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of the Plan
in accordance with generally accepted auditing standards, within a
reasonable period after the close of the Plan Year, furnish to the
Administrator and the Trustee a report of the audit setting forth the
accountant's opinion as to whether any statements, schedules or lists,
that are required by Act Section 103 or the Secretary of Labor to be
filed with the Plan's annual report, are presented fairly in conformity
with generally accepted accounting principles applied consistently.
(b) All auditing and accounting fees shall be an expense of
and may, at the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated, supervised, and
subject to periodic examination by a state or federal agency, then it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or such other date as
may be prescribed under regulations of the Secretary of Labor.
7.11 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) Unless otherwise agreed to by both the Trustee and the
Employer, a Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of resignation.
(b) Unless otherwise agreed to by both the Trustee and the
Employer, the Employer may remove a Trustee at any time by delivering
to the Trustee, at least thirty (30) days before its effective date, a
written notice of such Trustee's removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the powers and responsibilities of the predecessor as if such
successor had been originally named as a Trustee herein. Until such a
successor is appointed, any remaining Trustee or Trustees shall have
full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the powers and responsibilities of the predecessor as if such
successor had been originally named as Trustee herein immediately upon
the death, resignation, incapacity, or removal of the predecessor.
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(e) Whenever any Trustee hereunder ceases to serve as such,
the Trustee shall furnish to the Employer and Administrator a written
statement of account with respect to the portion of the Plan Year
during which the individual or entity served as Trustee. This statement
shall be either (i) included as part of the annual statement of account
for the Plan Year required under Section 7.9 or (ii) set forth in a
special statement. Any such special statement of account should be
rendered to the Employer no later than the due date of the annual
statement of account for the Plan Year. The procedures set forth in
Section 7.9 for the approval by the Employer of annual statements of
account shall apply to any special statement of account rendered
hereunder and approval by the Employer of any such special statement in
the manner provided in Section 7.9 shall have the same effect upon the
statement as the Employer's approval of an annual statement of account.
No successor to the Trustee shall have any duty or responsibility to
investigate the acts or transactions of any predecessor who has
rendered all statements of account required by Section 7.9 and this
subparagraph.
7.12 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee
at the direction of the Administrator shall transfer the Vested interest, if
any, of a Participant to another trust forming part of a pension, profit
sharing, or stock bonus plan maintained by such Participant's new employer and
represented by said employer in writing as meeting the requirements of Code
Section 401(a), provided that the trust to which such transfers are made permits
the transfer to be made.
7.13 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and hold harmless the Trustee against
any and all claims, losses, damages, expenses and liabilities the Trustee may
incur in the exercise and performance of the Trustee's powers and duties
hereunder, unless the same are determined to be due to gross negligence or
willful misconduct.
7.14 EMPLOYER SECURITIES AND REAL PROPERTY
(a) The Trustee shall be empowered to acquire and hold
"qualifying Employer securities" and "qualifying Employer real property," as
those terms are defined in the Act. However, no more than 100%, in the case of a
Profit Sharing Plan or 401(k) Plan or ten percent (10%), in the case of a Money
Purchase Plan of the fair market value of all the assets in the Trust Fund may
be invested in "qualifying Employer securities" and "qualifying Employer real
property."
Notwithstanding the above, for Plan Years beginning after December 31,
1998, if the Plan does not permit Participants to direct the investment of the
portion of their Elective Account attributable to Elective Deferrals, then the
Trustee shall not be permitted to acquire or hold qualifying Employer securities
and qualifying Employer real property if the fair market value of such
securities and property should amount to more than ten percent (10%) of the
portion of a Participant's Elective Account attributable to Elective Deferrals.
(b) The following provisions shall apply in the event and to
the extent that the Plan permits each Participant to direct the investment of
his or her Participant Accounts:
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(i) Voting of Stock. Each Participant shall have the
right to instruct the Trustee as to the manner in
which to vote that number of shares of Employer stock
credited to his or her Participant Account. The
number of shares deemed credited to a Participant's
Account shall be determined as of the date of record
determined by the Employer for which an allocation
has been completed under Section 4.3 and Employer
stock has actually been credited to a Participant's
Account. To facilitate the Participants' voting
rights, the Employer shall deliver to each
Participant, on a timely basis, a copy of all
proxies, notices and other information which it
distributes to shareholders generally and such other
information as may be required by law or as may be
necessary to permit a Participant to exercise the
Participant's authority to direct action with respect
to all shares in such Participant's Account and as
may be necessary to permit the Administrator to
direct action with respect to unallocated shares.
The directions of Participants shall be communicated
in writing or electronically and shall be held in
confidence by the Trustee or the Intermediary as
defined in paragraph (iii) below and not divulged to
the Employer or any officer or employee thereof. Upon
receipt of the directions, the Trustee shall vote as
directed by the Participants. The Trustee shall not
vote those shares of Employer stock credited to
Participants' Accounts for which no voting directions
have been received. The party having the voting
authority under Section 7.2(c)(3) above shall
instruct the Trustee how to vote any shares of
Employer stock which have not been credited to
Participants' Accounts.
(ii) Tender Offer or Exchange Offer. In the event of a
tender offer or exchange offer, each Participant
shall have the right to direct the Trustee as to
whether the shares of Employer stock credited to his
or her Participant's Account shall be tendered or
exchanged in response to such offer. The number of
shares credited to Participants' accounts shall be
determined as of the date of record determined by the
Employer for which an allocation has been completed
under Section 4.3 and Employer stock has actually
been credited to Participants' Accounts. To
facilitate the right to instruct the Trustee as to a
tender or exchange offer, the Employer shall
distribute to each Participant the same information
as may be distributed to the stockholders of the
Employer in connection with such offer and such
additional information as may be required by law or
as may be necessary to permit a Participant to
exercise the Participant's authority to direct action
with respect to all shares in such Participant's
Account and as may be necessary to permit the
Administrator to direct action with respect to
unallocated shares.
The directions of Participants shall be communicated
in writing or electronically and shall be held in
confidence by the Trustee or the Intermediary, as
defined in paragraph (iii) below and not divulged to
the Employer, or any officer or employee thereof.
Upon receipt of the directions, the Trustee shall
take such action as directed by the Participants. The
Trustee shall not tender or exchange those shares of
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Employer stock credited to Participants' Accounts for
which no directions have been received. The
Administrator shall instruct the Trustee whether to
tender or exchange those shares of Employer stock
which have not been credited to Participants'
Accounts.
(iii) The Employer shall be responsible for determining
whether, under the circumstances prevailing at a
given time, its fiduciary duty to Participants and
Beneficiaries under the Plan and ERISA requires that
the Employer follow the advice of independent counsel
as to the voting of Employer stock. The Employer
will, in addition, establish procedures for the
collection and timely transmission of each
Participant's directions to the Trustee. Such
procedures shall include such measures as may be
necessary to insure the confidentiality of each
Participant's directions, which measures may include,
without limitation, appointment of an independent
third party (the "Intermediary") to receive
directions from each Participant, to compute the
aggregate results of Participant directions and to
communicate such results to the Trustee. For purposes
of this Section 7.14, the term "Participant" includes
any beneficiary with an Account in the Plan which is
invested in Employer stock.
(c) In addition, the following provisions shall apply in the
event that MFS Heritage Trust Company (or any successor appointed by
the sponsoring organization of this Plan) or other entity is designated
to serve as a Directed Trustee of this Plan:
(i) Employer Stock Limitation. The investment in
qualifying Employer securities shall be restricted to
publicly-traded common stock of the Employer or of an
affiliate of the Employer.
(ii) Employer Certification. The receipt by the Directed
Trustee of instructions or directions from the
Employer or Administrator pursuant to this Section
7.14 shall be deemed to be certifications by the
Employer or Administrator that the provisions of this
Section 7.14, ERISA and all applicable securities
laws and regulations have been complied with by the
Employer or Administrator.
(d) In addition to its duties as described in Section 2.4 of
the Prototype Plan Document, the Administrator will be responsible for
filing all reports required under the Act and federal or state
securities laws with respect to the Plan's ownership interest in
Employer stock. The Administrator will establish such procedures, as it
shall deem necessary for compliance with such reporting requirements
and to monitor and restrict transfers into and out of Employer stock
pursuant to the requirements of Section 16 of the Securities Act of
1934 and ERISA Section 404(c).
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ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend
this Plan subject to the limitations of this Section. However, any
amendment that affects the rights, duties or responsibilities of the
Trustee or Administrator may only be made with the Trustee's or
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee shall not
be required to execute any such amendment unless the amendment affects
the duties of the Trustee hereunder.
(b) The Employer may (1) change the choice of options in the
Adoption Agreement, (2) add any addendum to the Adoption Agreement that
is specifically permitted pursuant to the terms of the Plan; (3) add
overriding language to the Adoption Agreement when such language is
necessary to satisfy Code Sections 415 or 416 because of the required
aggregation of multiple plans, and (4) add certain model amendments
published by the Internal Revenue Service which specifically provide
that their adoption will not cause the Plan to be treated as an
individually designed plan. An Employer that amends the Plan for any
other reason, including a waiver of the minimum funding requirement
under Code Section 412(d), will no longer participate in this Prototype
Plan and this Plan will be considered to be an individually designed
plan. Notwithstanding the preceding, the attachment to the Adoption
Agreement of any addendum specifically authorized by the Plan or a list
of any "Section 411(d)(6) protected benefits" which must be preserved
shall not be considered an amendment to the Plan.
(c) The Employer expressly delegates authority to the
sponsoring organization of this Plan, the right to amend this Plan by
submitting a copy of the amendment to each Employer who has adopted
this Plan, after first having received a ruling or favorable
determination from the Internal Revenue Service that the Plan as
amended qualifies under Code Section 401(a) and the Act (unless a
ruling or determination is not required by the IRS). For purposes of
this Section, the mass submitter shall be recognized as the agent of
the sponsoring organization. If the sponsoring organization does not
adopt any amendment made by the mass submitter, it will no longer be
identical to, or a minor modifier of, the mass submitter plan.
(d) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than such part
as is required to pay taxes and administration expenses) to be used for
or diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any reduction
in the amount credited to the account of any Participant; or causes or
permits any portion of the Trust Fund to revert to or become property
of the Employer.
(e) Except as permitted by Regulations (including Regulation
1.411(d)-4) or other IRS guidance, no Plan amendment or transaction
having the effect of a Plan amendment (such as a merger, plan transfer
or similar transaction) shall be effective if it eliminates or reduces
any "Section 411(d)(6) protected benefit" or adds or modifies
conditions relating to "Section 411(d)(6) protected benefits" which
results in a further restriction on such benefits unless such "Section
411(d)(6) protected benefits" are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected
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benefits" are benefits described in Code Section 411(d)(6)(A), early
retirement benefits and retirement-type subsidies, and optional forms
of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination. Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall become
100% Vested and shall not thereafter be subject to forfeiture, and all
unallocated amounts, including Forfeitures, shall be allocated to the
accounts of all Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets to Participants in a manner that
is consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash (or in property if
permitted in the Adoption Agreement) or through the purchase of
irrevocable nontransferable deferred commitments from the Insurer.
Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411(d)(6) protected benefits"
as described in Section 8.1(e).
8.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
This Plan may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" as described in Section 8.1(e).
ARTICLE IX
TOP HEAVY PROVISIONS
9.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the
special vesting requirements of Code Section 416(b) pursuant to Section 6.4 of
the Plan and the special minimum allocation requirements of Code Section 416(c)
pursuant to Section 43(f) of the Plan.
9.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any plan year
beginning after December 31,1983, if any of the following conditions
exists:
(1) if the "top heavy ratio" for this Plan exceeds sixty
percent (60%) and this Plan is not part of any "required
aggregation group" or "permissive aggregation group";
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(2) if this Plan is a part of a "required aggregation group"
but not part of a "permissive aggregation group" and the "top
heavy ratio" for the group of plans exceeds sixty percent
(60%); or
(3) if this Plan is a part of a "required aggregation group"
and part of a "permissive aggregation group" and the "top
heavy ratio" for the "permissive aggregation group" exceeds
sixty percent (60%).
(b) "Top heavy ratio" means, with respect to a "determination date":
(1) If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan (as
defined in Code Section 408(k)) and the Employer has not
maintained any defined benefit plan which during the 5-year
period ending on the "determination date" has or has had
accrued benefits, the top heavy ratio for this plan alone or
for the "required aggregation group" or "permissive
aggregation group" as appropriate is a fraction, the numerator
of which is the sum of the account balances of all Key
Employees as of the "determination date" (including any part
of any account balance distributed in the 5-year period ending
on the "determination date"), and the denominator of which is
the sum of all account balances (including any part of any
account balance distributed in the 5-year period ending on the
"determination date"), both computed in accordance with Code
Section 416 and the Regulations thereunder. Both the numerator
and denominator of the top heavy ratio are increased to
reflect any contribution not actually made as of the
"determination date," but which is required to be taken into
account on that date under Code Section 416 and the
Regulations thereunder.
(2) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
"determination date" has or has had any accrued benefits, the
top heavy ratio for any "required aggregation group" or
"permissive aggregation group" as appropriate is a fraction,
the numerator of which is the sum of account balances under
the aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with (1) above, and the
present value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the
"determination date," and the denominator of which is the sum
of the account balances under the aggregated defined
contribution plan or plans for all participants, determined in
accordance with (1) above, and the "present value" of accrued
benefits under the defined benefit plan or plans for all
participants as of the "determination date," all determined in
accordance with Code Section 416 and the Regulations
thereunder. The accrued benefits under a defined benefit plan
in both the numerator and denominator of the top heavy ratio
are increased for any distribution of an accrued benefit made
in the five-year period ending on the determination date.
(3) For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent "valuation date" that falls
within or ends with the 12-month period ending on the
"determination date," except as provided in Code Section 416
and the Regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances and
accrued benefits of a
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participant (i) who is not a Key Employee but who was a Key
Employee in a prior year, or (ii) who has not been credited
with at least one Hour of Service with any Employer
maintaining the plan at any time during the 5-year period
ending on the "determination date" will be disregarded. The
calculation of the top heavy ratio, and the extent to which
distributions, rollovers, and transfers are taken into account
will be made in accordance with Code Section 416 and the
Regulations thereunder. Deductible Employee contributions will
not be taken into account for purposes of computing the top
heavy ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with
reference to the "determination dates" that fall within the
same calendar year.
The accrued benefit of a participant other than a Key Employee
shall be determined under (i) the method, if any, that
uniformly applies for accrual purposes under all defined
benefit plans maintained by the employer, or (ii) if there is
no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional
rule of Code Section 411(b)(1)(C).
(c) "Determination date" means, for any Plan Year subsequent
to the first Plan Year, the last day of the preceding Plan Year. For
the first Plan Year of the Plan, "determination date" means the last
day of that Plan Year.
(d) "Permissive aggregation group" means the "required
aggregation group" of plans plus any other plan or plans of the
Employer which, when considered as a group with the required
aggregation group, would continue to satisfy the requirements of Code
Sections 401(a)(4) and 410.
(e) "Present value" means the present value based only on the
interest and mortality rates specified in the Adoption Agreement.
(f) "Required aggregation group" means: (1) each qualified
plan of the Employer in which at least one Key Employee participates or
participated at any time during the determination period (regardless of
whether the plan has terminated), and (2) any other qualified plan of
the Employer which enables a plan described in (1) to meet the
requirements of Code Sections 401(a)(4) or 410.
(g) "Valuation date" means the date elected by the Employer in
the Adoption Agreement as of which account balances or accrued benefits
are valued for purposes of calculating the "top heavy ratio."
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ARTICLE X
MISCELLANEOUS
10.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer hereunder by
executing the Adoption Agreement in a form satisfactory to the Trustee,
and it shall provide such additional information as the Trustee may
require. The consent of the Trustee to act as such shall be signified
by its execution of the Adoption Agreement or a separate Trust
agreement (if elected in the Adoption Agreement).
(b) Except as otherwise provided in this Plan, the affiliation
of the Employer and the participation of its Participants shall be
separate and apart from that of any other employer and its participants
hereunder.
10.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon the Employee as a Participant of this Plan.
10.3 ALIENATION
(a) Subject to the exceptions provided below and as otherwise
permitted by the Code and the Act, no benefit which shall be payable to
any person (including a Participant or the Participant's Beneficiary)
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void; and no such benefit shall in any manner
be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and the same
shall not be recognized except to such extent as may be required by
law.
(b) Subsection (a) shall not apply to the extent a Participant
or Beneficiary is indebted to the Plan by reason of a loan made
pursuant to Section 7.6. At the time a distribution is to be made to or
for a Participant's or Beneficiary's benefit, such portion of the
amount to be distributed as shall equal such indebtedness shall be paid
to the Plan, to apply against or discharge such indebtedness. Prior to
making a payment, however, the Participant or Beneficiary must be given
notice by the Administrator that such indebtedness is to be so paid in
whole or part from the Participant's interest in the Plan. If the
Participant or Beneficiary does not agree that the indebtedness is a
valid claim against the Participant's interest in the Plan, the
Participant or Beneficiary shall be entitled to a review of the
validity of the claim in accordance with procedures provided in
Sections 2.10 and 2.11.
86
(c) Subsection (a) shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former
spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(d) Notwithstanding any provision of this Section to the
contrary, an offset to a Participant's accrued benefit against an
amount that the Participant is ordered or required to pay the Plan with
respect to a judgement, order, or decree issued, or a settlement
entered into, on or after August 5, 1997, shall be permitted in
accordance with Code Sections 401(a)(13)(C) and (D).
10.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the
Code, the Act and the laws of the state or commonwealth in which the Employer's
(or if there is a corporate Trustee, the Trustee's) principal office is located
(unless otherwise designated in the Adoption Agreement), other than its laws
respecting choice of law, to the extent not pre-empted by the Act.
10.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
10.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the Plan or of
the Trust, by termination of either, by power of revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or income
of any Trust Fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other than
the exclusive benefit of Participants, Former Participants, or their
Beneficiaries.
(b) In the event the Employer shall make a contribution under
a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer
may demand repayment of such contribution at any time within one (1)
year following the time of payment and the Trustee
87
shall return such amount to the Employer within the one (1) year
period. Earnings of the Plan attributable to the contributions may not
be returned to the Employer but any losses attributable thereto must
reduce the amount so returned.
(c) Except as specifically stated in the Plan, any
contribution by the Employer (if the Employer is not tax-exempt) to the
Plan is conditioned upon the deductibility of the contribution by the
Employer under the Code and, to the extent any such deduction is
disallowed, the Employer may, within one (1) year following a final
determination of the disallowance, whether by agreement with the
Internal Revenue Service or by final decision of a court of competent
jurisdiction, demand repayment of such disallowed contribution and the
Trustee shall return such contribution within one (1) year following
the disallowance. Earnings of the Plan attributable to the contribution
may not be returned to the Employer, but any losses attributable
thereto must reduce the amount so returned.
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
The Employer, Administrator and Trustee, and their successors, shall
not be responsible for the validity of any Contract issued hereunder or for the
failure on the part of the Insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
10.9 INSURER'S PROTECTIVE CLAUSE
Except as otherwise agreed upon in writing between the Employer and the
Insurer, an Insurer which issues any Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The Insurer shall be protected and held harmless in acting in
accordance with any written direction of the Administrator or Trustee, and shall
have no duty to see to the application of any funds paid to the Trustee, nor be
required to question any actions directed by the Administrator or Trustee.
Regardless of any provision of this Plan, the Insurer shall not be required to
take or permit any action or allow any benefit or privilege contrary to the
terms of any Contract which it issues hereunder, or the rules of the Insurer.
10.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, the Participant's legal representative,
Beneficiary, or to any guardian or committee appointed for such Participant or
Beneficiary in accordance with the provisions of this Plan, shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the Trustee and
the Employer.
10.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
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10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator, (3) the Trustee (if the Trustee has discretionary authority as
elected in the Adoption Agreement or as otherwise agreed upon by the Employer
and the Trustee), and (4) any Investment Manager appointed hereunder. The named
Fiduciaries shall have only those specific powers, duties, responsibilities, and
obligations as are specifically given them under the Plan including, but not
limited to, any agreement allocating or delegating their responsibilities, the
terms of which are incorporated herein by reference. In general, the Employer
shall have the sole responsibility for making the contributions provided for
under the Plan; and shall have the sole authority to appoint and remove the
Trustee and the Administrator; to formulate the Plan's "funding policy and
method"; and to amend the elective provisions of the Adoption Agreement or
terminate, in whole or in part, the Plan. The Administrator shall have the sole
responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. If the Trustee has discretionary authority,
it shall have the sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been assigned to an
Investment Manager or Administrator, who shall be solely responsible for the
management of the assets assigned to it, all as specifically provided in the
Plan. Each named Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the provisions of
the Plan, authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction, information
or action of another named Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such direction,
information or action. It is intended under the Plan that each named Fiduciary
shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity.
10.14 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.15 APPROVAL BY INTERNAL REVENUE SERVICE
Notwithstanding anything herein to the contrary, if, pursuant to a
timely application filed by or on behalf of the Plan, the Commissioner of
Internal Revenue Service or the Commissioner's delegate should determine that
the Plan does not initially qualify as a tax-exempt plan under Code Sections 401
and 501, and such determination is not contested, or if contested, is finally
upheld, then if the Plan is a new plan, it shall be void ab initio and all
amounts contributed to the Plan, by the Employer, less expenses paid, shall be
returned within one (1) year and the Plan shall terminate, and the Trustee shall
be discharged from all further obligations. If the disqualification relates to
an amended plan, then the Plan shall operate as if it had not been amended. If
the Employer's Plan fails to attain or retain qualification, such Plan will no
longer participate in this prototype plan and will be considered an individually
designed plan.
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10.16 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner.
10.17 PAYMENT OF BENEFITS
Except as otherwise provided in the Plan, benefits under this Plan
shall be paid, subject to Sections 6.10, 6.11 and 12.9, only upon death, Total
and Permanent Disability, normal or early retirement, termination of employment,
or termination of the Plan.
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the consent of
the Employer and Trustee, any Affiliated Employer may adopt the Employer's Plan
and all of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said intent
and will of such Participating Employer. Regardless of the preceding, an entity
that ceases to be an Affiliated Employer may continue to be a Participating
Employer through the end of the transition period for certain dispositions set
forth in Code Section 410(b)(6)(C). In the event a Participating Employer is not
an Affiliated Employer and the transition period in the preceding sentence, if
applicable, has expired, then this Plan will be considered an individually
designed plan.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to select
the same Adoption Agreement provisions as those selected by the
Employer other than the Plan Year, the Fiscal Year, and such other
items that must, by necessity, vary among employers.
(b) The Trustee may, but shall not be required to, commingle,
hold and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof.
(c) Any expenses of the Plan which are to be paid by the
Employer or borne by the Trust Fund shall be paid by each Participating
Employer in the same proportion that the total amount standing to the
credit of all Participants employed by such Employer bears to the total
standing to the credit of all Participants.
11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for purposes of this Plan, each Participating Employer shall
be deemed to have designated irrevocably the Employer as its agent. Unless the
context of the Plan clearly indicates the contrary, the word "Employer" shall be
deemed to include each Participating Employer as related to its adoption of the
Plan.
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11.4 EMPLOYEE TRANSFERS
In the event an Employee is transferred between Participating
Employers, accumulated service and eligibility shall be carried with the
Employee involved. No such transfer shall effect a termination of employment
hereunder, and the Participating Employer to which the Employee is transferred
shall thereupon become obligated hereunder with respect to such Employee in the
same manner as was the Participating Employer from whom the Employee was
transferred.
11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during each Plan
Year shall be allocated among all Participants of all Participating Employers in
accordance with the provisions of this Plan. However, if a Participating
Employer is not an Affiliated Employer (due to the transition rule for certain
dispositions set forth in Code Section 410(b)(6)(C)) then any contributions made
by such Participating Employer will only be allocated among the Participants
eligible to share of the Participating Employer. On the basis of the information
furnished by the Administrator, the Trustee may keep separate books and records
concerning the affairs of each Participating Employer hereunder and as to the
accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Participating Employer shall immediately notify the Trustee
thereof.
11.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be
a Participating Employer that is an Affiliated Employer hereunder shall only be
by the written action of each and every Participating Employer and with the
consent of the Trustee where such consent is necessary in accordance with the
terms of this Plan.
11.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a standardized Plan, any Participating Employer
that is an Affiliated Employer shall be permitted to discontinue or revoke its
participation in the Plan at any time. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets allocable to
the Participants of such Participating Employer to such new trustee or custodian
as shall have been designated by such Participating Employer, in the event that
it has established a separate qualified retirement plan for its employees
provided, however, that no such transfer shall be made if the result is the
elimination or reduction of any "Section 411(d)(6) protected benefits" as
described in Section 8.1(e). If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating Employer pursuant to
the provisions of Article VII hereof. In no such event shall any part of the
corpus or income of the Trust Fund as it relates to such Participating Employer
be used for or diverted to purposes other than for the exclusive benefit of the
employees of such Participating Employer.
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11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from
making a contribution which it would otherwise have made under the Plan by
reason of having no current or accumulated earnings or profits, or because such
earnings or profits are less than the contribution which it would otherwise have
made, then, pursuant to Code Section 404(a)(3)(B), so much of the contribution
which such Participating Employer was so prevented from making may be made, for
the benefit of the participating employees of such Participating Employer, by
other Participating Employers who are members of the same affiliated group
within the meaning of Code Section 1504 to the extent of their current or
accumulated earnings or profits, except that such contribution by each such
other Participating Employer shall be limited to the proportion of its total
current and accumulated earnings or profits remaining after adjustment for its
contribution to the Plan made without regard to this paragraph which the total
prevented contribution bears to the total current and accumulated earnings or
profits of all the Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a contribution is
made under this paragraph shall not be required to reimburse the contributing
Participating Employers.
ARTICLE XII
CASH OR DEFERRED PROVISIONS
Except as specifically provided elsewhere in this Plan, the provisions
of this Article shall apply with respect to any 401(k) Profit Sharing Plan
regardless of any provisions in the Plan to the contrary.
12.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer will (or may with respect
to any discretionary contributions) contribute to the Plan:
(1) The amount of the total salary reduction elections of all
Participants made pursuant to Section 12.2(a), which amount
shall be deemed Elective Deferrals, plus
(2) If elected in the Adoption Agreement, a matching
contribution and/or a qualified matching contribution equal to
the percentage, if any, specified in the Adoption Agreement of
the Elective Deferrals of each Participant eligible to share
in the allocations of the matching contribution and/or
qualified matching contributions, plus
(3) If elected in the Adoption Agreement, a fixed amount, a
Prevailing Wage Contribution or a discretionary amount
determined each year by the Employer, which amount if any,
shall be deemed an Employer's Non-Elective Contribution, plus
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(4) If elected in the Adoption Agreement, a discretionary
Qualified Non-Elective Contribution.
(b) Notwithstanding the foregoing, if the Employer is not a
tax-exempt entity, then the Employer's contributions for any Fiscal
Year may generally not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
However, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds
current or accumulated Net Profit or the amount which is deductible
under Code Section 404. All contributions by the Employer shall be made
in cash or in such property as is acceptable to the Trustee.
12.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a percentage or dollar
amount of Compensation which would have been received in the Plan Year,
but for the salary reduction election, subject to the limitations of
this Section and the Adoption Agreement. A salary reduction election
(or modification of an earlier election) may not be made with respect
to Compensation which is currently available on or before the date the
Participant executed such election, or if later, the later of the date
the Employer adopts this cash or deferred arrangement or the date such
arrangement first became effective. Any elections made pursuant to this
Section shall become effective as soon as is administratively feasible.
If the automatic election option is elected in the Adoption Agreement,
then in the event a Participant fails to make a deferral election and
does not affirmatively elect to receive cash, such Participant shall be
deemed to have made a deferral election equal to the percentage of
Compensation set forth in the Adoption Agreement. The automatic
election may, in accordance with procedures established by the
Administrator, be applied to all Participants or to Eligible Employees
who become Participants after a certain date. For purposes of this
Section, Compensation in excess of the annual dollar limitation of Code
Section 401(a)(17) ($150,000 as adjusted) shall not apply.
Additionally, if elected in the Adoption Agreement, each
Participant may elect to defer a different percentage or amount of any
cash bonus to be paid by the Employer during the Plan Year. A deferral
election may not be made with respect to cash bonuses which are
currently available on or before the date the Participant executes such
election.
The amount by which Compensation and/or cash bonuses are reduced
shall be that Participant's Elective Deferrals and shall be treated as
an Employer contribution and allocated to that Participant's Elective
Deferral Account.
Once made, a Participant's election to reduce Compensation shall
remain in effect until modified or terminated. Modifications may be
made as specified in the Adoption Agreement, and terminations may be
made at any time. Any modification or termination of an election will
become effective as soon as is administratively feasible.
The Employer may allow Participants upon proper notice and
approval to enter into a special salary reduction agreement to make
Elective Deferrals in an amount up to 100% of their compensation for
one or more payroll periods in the final month of the Plan Year.
However, catch-up contributions and annual bonus contributions may not
cause a Participant's
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elective Deferral contributions for the Plan Year to exceed his
Compensation times the Plan's maximum allowable deferral percentage or
the maximum dollar amount permitted under Section 402(g) of the Code.
The Employer has the right to refuse to allow a Participant to make
such contributions if they would adversely affect the Plan's ability to
pass the Actual Deferral Percentage Test and/or the Actual Contribution
Percentage Test.
(b) The balance in each Participant's Elective Deferral
Account, Qualified Matching Contribution Account and Qualified
Non-Elective Contribution Account shall be fully Vested at all times
and, except as otherwise provided herein, shall not be subject to
Forfeiture for any reason.
(c) Amounts held in a Participant's Elective Deferral Account,
Qualified Matching Contribution Account and Qualified Non-Elective
Account may only be distributable as provided in (4), (5) or (6) below
or as provided under the other provisions of this Plan, but in no event
prior to the earlier of the following events or any other events
permitted by the Code or Regulations:
(1) the Participant's separation from service, Total and
Permanent Disability, or death;
(2) the Participant's attainment of age 59 1/2;
(3) the proven financial hardship of the Participant, subject
to the limitations of Section 12.9;
(4) the termination of the Plan without the existence at the
time of Plan termination of another defined contribution plan
or the establishment of a successor defined contribution plan
by the Employer or an Affiliated Employer within the period
ending twelve months after distribution of all assets from the
Plan maintained by the Employer. For this purpose, a defined
contribution does not include an employee stock ownership plan
(as defined in Code Section 4975(e)(7) or 409), a simplified
employee pension plan (as defined in Code Section 408(k)), or
a simple individual retirement account plan (as defined in
Code Section 408(p));
(5) the date of the sale by the Employer to an entity that is
not an Affiliated Employer of substantially all of the assets
(within the meaning of Code Section 409(d)(2)) with respect to
a Participant who continues employment with the corporation
acquiring such assets; or
(6) the date of the sale by the Employer or an Affiliated
Employer of its interest in a subsidiary (within the meaning
of Code Section 409(d)(3)) to an entity that is not an
Affiliated Employer with respect to a Participant who
continues employment with such subsidiary.
Distributions that are made because of (4), (5), or (6) above
must be made in a lump-sum.
(d) A Participant's "elective deferrals" made under this Plan
and all other plans, contracts or arrangements of the Employer
maintaining this Plan during any calendar year shall
94
not exceed the dollar limitation imposed by Code Section 402(g), as in
effect at the beginning of such calendar year. This dollar limitation
shall be adjusted annually pursuant to the method provided in Code
Section 415(d) in accordance with Regulations. For this purpose,
"elective deferrals" means, with respect to a calendar year, the sum of
all Employer contributions made on behalf of such Participant pursuant
to an election to defer under any qualified cash or deferred
arrangement as described in Code Section 401(k), any qualified salary
reduction arrangement as described in Code Section 408(p)(2), any
salary reduction simplified employee pension (as defined in Code
Section 408(k)(6)), any eligible deferred compensation plan under Code
Section 457, any plans described under Code Section 501(c)(18), and any
Employer contributions made on the behalf of a Participant for the
purchase of an annuity contract under Code Section 403(b) pursuant to a
salary reduction agreement. "Elective deferrals" shall not include any
deferrals properly distributed as excess "Annual Additions" pursuant to
Section 4.5.
(e) If a Participant has Excess Deferrals for a taxable year,
the Participant may, not later than March 1st following the close of
such taxable year, notify the Administrator in writing of such excess
and request that the Participant's Elective Deferrals under this Plan
be reduced by an amount specified by the Participant. In such event,
the Administrator shall direct the distribution of such excess amount
(and any "Income" allocable to such excess amount) to the Participant
not later than the first April 15th following the close of the
Participant's taxable year. Any distribution of less than the entire
amount of Excess Deferrals and "Income" shall be treated as a pro rata
distribution of Excess Deferrals and "Income." The amount distributed
shall not exceed the Participant's Elective Deferrals under the Plan
for the taxable year. Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following
conditions:
(1) the Participant shall designate the distribution as Excess
Deferrals;
(2) the distribution must be made after the date on which the
Plan received the Excess Deferrals; and
(3) the Plan must designate the distribution as a distribution
of Excess Deferrals.
Regardless of the preceding, if a Participant has
Excess Deferrals solely from elective deferrals made under this Plan or
any other plan maintained by the Employer, a Participant will be deemed
to have notified the Administrator of such excess amount and the
Administrator shall direct the distribution of such Excess Deferrals in
a manner consistent with the provisions of this subsection.
Any distribution made pursuant to this subsection
shall be made first from unmatched Elective Deferrals and, thereafter,
from Elective Deferrals which are matched. Matching contributions which
relate to Excess Deferrals which are distributed pursuant to this
Section 12.2(e) shall be treated as a Forfeiture to the extent required
pursuant to Code Section 401(a)(4) and the Regulations thereunder.
For the purpose of this subsection, "Income" means
the amount of income or loss allocable to a Participant's Excess
Deferrals for the Plan Year, which amount shall be allocated in the
same manner as income or losses are allocated pursuant to Section
4.3(c). However,
95
"Income" for the period between the end of the taxable year of the
Participant and the date of the distribution (the "gap period") is not
required to be distributed.
(f) Notwithstanding the preceding, a Participant's Excess
Deferrals shall be reduced, but not below zero, by any distribution
and/or recharacterization of Excess Deferrals pursuant to Section
12.5(a) for the Plan Year beginning with or within the taxable year of
the Participant.
(g) In the event a Participant has received a hardship
distribution pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any
other plan maintained by the Employer or from the Participant's
Elective Deferral Account pursuant to Section 12.9, then such
Participant shall not be permitted to elect to have Elective Deferrals
contributed to the Plan for a period of twelve (12) months following
the receipt of the distribution. Furthermore, the dollar limitation
under Code Section 402(g) shall be reduced, with respect to the
Participant's taxable year following the taxable year in which the
hardship distribution was made, by the amount of such Participant's
Elective Deferrals, if any, made pursuant to this Plan (and any other
plan maintained by the Employer) for the taxable year of the hardship
distribution.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Deferral Account shall be used to
provide benefits to the Participant or the Participant's Beneficiary.
(i) If during a Plan Year, it is projected that the aggregate
amount of Elective Deferrals to be allocated to all Highly Compensated
Participants under this Plan would cause the Plan to fail the actual
deferral percentage tests set forth in Section 12.4, then the
Administrator may automatically reduce the deferral amount of affected
Highly Compensated Participants, beginning with the Highly Compensated
Participant who has the highest actual deferral ratio until it is
anticipated the Plan will pass the tests or until the actual deferral
ratio equals the actual deferral ratio of the Highly Compensated
Participant having the next highest actual deferral ratio. This process
may continue until it is anticipated that the Plan will satisfy one of
the tests set forth in Section 12.4.
(j) The Employer and the Administrator shall establish
procedures necessary to implement the salary reduction elections
provided for herein. Such procedures may contain limits on salary
deferral elections such as limiting elections to whole percentages of
Compensation or to equal dollar amounts per pay period that an election
is in effect.
12.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account
in the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other Valuation Date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of Employer contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate contributions as follows:
96
(1) With respect to Elective Deferrals made pursuant to Section
12.1(a)(1), to each Participant's Elective Deferral Account in an
amount equal to each such Participant's Elective Deferrals for the
year.
(2) With respect to the Employer's matching contribution made pursuant
to Section 12.1(a)(2), to each Participant's Account, or Participant's
Qualified Matching Contribution Account, as elected in the Adoption
Agreement, in accordance with Section 12.1(a)(2).
Except, however, in order to be entitled to receive any Employer
matching contribution, a Participant must satisfy the conditions for
sharing in the Employer matching contribution as set forth in the
Adoption Agreement. Furthermore, regardless of any election in the
Adoption Agreement to the contrary, for the Plan Year in which this
Plan terminates, a Participant shall only be eligible to share in the
allocation of the Employer's contributions for the Plan Year if the
Participant is employed at the end of the Plan Year and has completed a
Year of Service (or Period of Service if the Elapsed Time Method is
elected).
(3) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 12.1(a)(3), to each Participant's Account in
accordance with the provisions of Section 4.3(b)(2) or (3) whichever is
applicable.
(4) With respect to the Employer's Qualified Non-Elective Contribution
made pursuant to Section 12.1(a)(4), to each Participant's (excluding
Highly Compensated Employees, if elected in the Adoption Agreement)
Qualified Non-Elective Contribution Account in accordance with the
Adoption Agreement.
(c) Notwithstanding anything in the Plan to the contrary, in
determining whether a Non-Key Employee has received the required minimum
allocation pursuant to Section 4.3(f) such Non-Key Employee's Elective Deferrals
and matching contributions used to satisfy the "Actual Deferral Percentage"
tests of Section 12.4 or the "Actual Contribution Percentage" tests of Section
12.6 shall not be taken into account.
(d) Notwithstanding anything herein to the contrary, Participants who
terminated employment during the Plan Year shall share in the salary reduction
contributions made by the Employer for the year of termination without regard to
the Hours of Service credited.
(e) Notwithstanding anything herein to the contrary (other than
Sections 4.3(f) and 11.3(f)), Participants shall only share in the allocations
of the Employer's matching contribution made pursuant to Section 12.1(a)(2), the
Employer's Non-Elective Contributions made pursuant to Section 12.1(a)(3), the
Employer's Qualified Non-Elective Contribution made pursuant to Section
12.1(a)(4), and Forfeitures as provided in the Adoption Agreement. Furthermore,
regardless of any election in the Adoption Agreement to the contrary, for the
Plan Year in which this Plan terminates, a Participant shall only be eligible to
share in the allocation of the Employer's contributions for the Plan Year if the
Participant is employed at the end of the Plan Year and has completed a Year of
Service (or Period of Service if the Elapsed Time Method is elected).
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(f) Notwithstanding anything to the contrary, if this is a
non-standardized Plan that would otherwise fail to meet the requirements of Code
Section 410(b)(1) or 410(b)(2)(A)(i) and the Regulations thereunder (including
Regulation 1.401(a)(4)-2(b)(4)(vi)(D)(3) which treats Participants only
receiving top heavy minimums as not benefiting) because Employer contributions
would not be allocated to a sufficient number or percentage of Participants for
a Plan Year, then the following rules may be applied:
(1) The group of Participants eligible to share in the Employer's
contributions or Forfeitures for the Plan Year will be expanded to
include the minimum number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable test specified
above. The specific Participants who shall become eligible under the
terms of this paragraph shall be those who have not separated from
service prior to the last day of the Plan Year and, when compared to
similarly situated Participants, have completed the greatest number of
Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the applicable test is
still not satisfied, then the group of Participants eligible to share
in the Employer's contribution or Forfeitures for the Plan Year shall
be further expanded to include the minimum number of Participants who
have separated from service prior to the last day of the Plan Year as
are necessary to satisfy the applicable test. The specific Participants
who shall become eligible to share shall be those Participants, when
compared to similarly situated Participants, who have completed the
greatest number of Hours of Service in the Plan Year before separation
from service.
Nothing in this subsection shall permit the reduction of a
Participant's accrued benefit. Therefore any amounts that have previously been
allocated to Participants may not be reallocated to satisfy these requirements.
In such event, the Employer shall make an additional contribution equal to the
amount such affected Participants would have received had they been included in
the allocations, even if it exceeds the amount that would be deductible under
Code Section 404. Any adjustment to the allocations pursuant to this paragraph
shall be considered a retroactive amendment adopted by the last day of the Plan
Year.
12.4 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Except as otherwise provided herein, this subsection
applies if the Prior Year Testing method is elected in the Adoption
Agreement. The "Actual Deferral Percentage" (hereinafter "ADP") for a
Plan Year for Participants who are Highly Compensated Employees
(hereinafter "HCEs") for each Plan Year and the prior year's ADP for
Participants who were Non-Highly Compensated Employees (hereinafter
"NHCEs") for the prior Plan Year must satisfy one of the following
tests:
(1) The ADP for a Plan Year for Participants who are HCEs for
the Plan Year shall not exceed the prior year's ADP for
Participants who were NHCEs for the prior Plan Year multiplied
by 1.25; or
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(2) The ADP for a Plan Year for Participants who are HCEs for
the Plan Year shall not exceed the prior year's ADP for
Participants who were NHCEs for the prior Plan Year multiplied
by 2.0, provided that the ADP for Participants who are HCEs
does not exceed the prior year's ADP for Participants who were
NHCEs in the prior Plan Year by more than two (2) percentage
points.
Notwithstanding the above, for purposes of applying the
foregoing tests with respect to the first Plan Year in which
the Plan permits any Participant to make Elective Deferrals,
the ADP for the prior year's NHCEs shall be deemed to be three
percent (3%) unless the Employer has elected in the Adoption
Agreement to use the current Plan Year's ADP for these
Participants. However, the provisions of this paragraph may
not be used if the Plan is a successor plan or is otherwise
prohibited from using such provisions pursuant to IRS Notice
98-1 (or superseding guidance).
(b) Notwithstanding the foregoing, if the Current Year Testing
method is elected in the Adoption Agreement, the ADP tests in (a)(1)
and (a)(2), above shall be applied by comparing the current Plan Year's
ADP for Participants who are HCEs with the current Plan Year's ADP
(rather than the prior Plan Year's ADP) for Participants who are NHCEs
for the current Plan Year. Once made, this election can only be changed
if the Plan meets the requirements for changing to the Prior Year
Testing method set forth in IRS Notice 98-1 (or superseding guidance).
(c) This subsection applies to prevent the multiple use of the
test set forth in subsection (a)(2) above. Any HCE eligible to make
Elective Deferrals pursuant to Section 12.2 and to make after-tax
voluntary Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affiliated Employer, shall have either the actual deferral ratio
adjusted in the manner described in Section 12.5 or the actual
contribution ratio adjusted in the manner described in Section 12.7 so
that the "Aggregate Limit" is not exceeded pursuant to Regulation
1.401(m)-2, the provisions of which are incorporated herein by
reference. The amounts in excess of the "Aggregate Limit" shall be
treated as either an Excess Contribution or an Excess Aggregate
Contribution. The ADP and ACP of the HCEs are determined after any
corrections required to meet the ADP and ACP tests and are deemed to be
the maximum permitted under such tests for the Plan Year. Multiple use
does not occur if either the ADP or ACP of the HCEs does not exceed
1.25 multiplied by the ADP and ACP of the NHCEs.
"Aggregate Limit" means the sum of (i)125 percent of the greater of the
ADP of the NHCEs for the prior Plan Year or the ACP of such NHCEs under
the plan subject to Code Section 401(m) for the Plan Year beginning
with or within the prior Plan Year of the cash or deferred arrangement
and (ii) the lesser of 200% or two (2) plus the lesser of such ADP or
ACP. "Lesser" is substituted for "greater" in (i) above, and "greater"
is substituted for "lesser" after "two (2) plus the" in (ii) above if
it would result in a larger Aggregate Limit. If the Employer has
elected in the Adoption Agreement to use the Current Year Testing
method, then in calculating the "Aggregate Limit" for a particular Plan
Year, the NHCEs ADP and ACP for that Plan Year, instead of the prior
Plan Year, is used.
(d) A Participant is an HCE for a particular Plan Year if the
Participant meets the definition of an HCE in effect for that Plan
Year. Similarly, a Participant is an NHCE for a
99
particular Plan Year if the Participant does not meet the definition of
an HCE in effect for that Plan Year.
(e) For the purposes of this Section and Section 12.5, ADP
means, for a specific group of Participants for a Plan Year, the
average of the ratios (calculated separately for each Participant in
such group) of (1) the amount of Employer contributions actually paid
over to the Plan on behalf of such Participant for the Plan Year to (2)
the Participant's 414(s) Compensation for such Plan Year. Employer
contributions on behalf of any participant shall include: (1) any
Elective Deferrals made pursuant to the Participant's deferral election
(including Excess Deferrals of HCEs), but excluding (i) Excess
Deferrals of NHCEs that arise solely from Elective Deferrals made under
the plan or plans of this Employer and (ii) Elective Deferrals that are
taken into account in the Actual Contribution Percentage Test set forth
in Section 12.6 (provided the ADP test is satisfied both with and
without exclusion of these Elective Deferrals); and (2) at the election
of the Employer, Qualified Non-elective Contributions and Qualified
Matching Contributions to the extent such contributions are not used to
satisfy the ACP test.
The actual deferral ratio for each Participant and the ADP for
each group shall be calculated to the nearest one-hundredth of one
percent. Elective Deferrals allocated to each Non-Highly Compensated
Participant's Elective Deferral Account shall be reduced by Excess
Deferrals to the extent such excess amounts are made under this Plan or
any other plan maintained by the Employer. Elective Deferrals allocated
to each Highly Compensated Participant's Elective Deferral Account
shall not be reduced by Excess Deferrals to the extent such excess
amounts are made under this Plan or any other plan maintained by the
Employer.
(f) For purposes of this Section and Section 12.5, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make salary deferrals pursuant to
Section 12.2 for the Plan Year. Such Participants who fail to make
Elective Deferrals shall be treated for ADP purposes as Participants
on whose behalf no Elective Deferrals are made.
(g) In the event this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(k), or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the ADP of
Employees as if all such plans were a single plan. Any adjustments to
the NHCE ADP for the prior year will be made in accordance with IRS
Notice 98-1 and any superseding guidance, unless the Employer has
elected in the Adoption Agreement to use the Current Year Testing
method. Plans may be aggregated in order to satisfy Code Section 401(k)
only if they have the same Plan Year and use the same ADP testing
method.
(h) The ADP for any Participant who is an HCE for the Plan
Year and who is eligible to have Elective Deferrals (and Qualified
Non-elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test)
allocated to such Participant's accounts under two (2) or more
arrangements described in Code Section 401(k), that are maintained by
the Employer, shall be determined as if such Elective Deferrals (and,
if applicable, such Qualified Non-elective Contributions or Qualified
Matching Contributions, or both) were made under a single arrangement
for purposes of determining such
100
HCE's actual deferral ratio. However, if the cash or deferred
arrangements have different Plan Years, this paragraph shall be applied
by treating all cash or deferred arrangements ending with or within the
same calendar year as a single arrangement. Notwithstanding the
foregoing, certain plans shall be treated as separate if mandatorily
disaggregated under Regulations under Code Section 401.
(i) For purposes of determining the ADP and the amount of
Excess Contributions pursuant to Section 12.5, only Elective Deferrals,
Qualified Non-elective Contributions and Qualified Matching
Contributions contributed to the Plan prior to the end of the twelve
(12) month period immediately following the Plan Year to which the
contributions relate shall be considered.
(j) Notwithstanding anything in this Section to the contrary,
the provisions of this Section and Section 12.5 may be applied
separately (or will be applied separately to the extent required by
Regulations) to each "plan" within the meaning of Regulation
1.401(k)-1(g)(11). Furthermore, for Plan Years beginning after December
31, 1998, the provisions of Code Section 401(k)(3)(F) may be used to
exclude from consideration all Non-Highly Compensated Employees who
have not satisfied the minimum age and service requirements of Code
Section 410(a)(1)(A).
12.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
(a) In the event (or, with respect to subsection (c) when the
Prior Year Testing method is being used, if it is anticipated) that for
Plan Years beginning after December 31, 1996, the Plan does not satisfy
one of the tests set forth in Section 12.4, the Administrator shall
adjust Excess Contributions or the Employer shall make contributions
pursuant to the options set forth below or any combination thereof.
However, if the Prior Year testing method is being used and it is
anticipated that the Plan might not satisfy one of such tests, then the
Employer may make contributions pursuant to the options set forth in
subsection (c) below.
(b) On or before the fifteenth day of the third month
following the end of each Plan Year, but in no event later than the
close of the following Plan Year, the Highly Compensated Participant
having the largest amount of Elective Deferrals shall have a portion of
such Elective Deferrals (and "Income" allocable to such amounts)
distributed (and/or, at the Participant's election, recharacterized as
a after-tax voluntary Employee contribution pursuant to Section 4.8)
until the total amount of Excess Contributions has been distributed, or
until the amount of the Participant's Elective Deferrals equals the
Elective Deferrals of the Highly Compensated Participant having the
next largest amount of Elective Deferrals. This process shall continue
until the total amount of Excess Contributions has been distributed.
Any distribution and/or recharacterization of Excess Contributions
shall be made in the following order:
(1) With respect to the distribution of Excess
Contributions, such distribution:
(i) may be postponed but not later than the close of the Plan
Year following the Plan Year to which they are allocable;
(ii) shall be made first from unmatched Elective Deferrals
and, thereafter, from Elective Deferrals which are matched.
Matching contributions which relate to Excess
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Contributions shall be forfeited unless they are considered
distributed as an Excess Aggregate Contribution pursuant to
Section 12.7;
(iii) shall be adjusted for "Income"; and
(iv) shall be designated by the Employer as a distribution of
Excess Contributions (and "Income").
(2) with respect to the recharacterization of Excess Contributions
pursuant to (a) above, such recharacterized amounts:
(i) shall be deemed to have occurred on the date on which the
last of those Highly Compensated Participants with Excess
Contributions to be recharacterized is notified of the
recharacterization and the tax consequences of such
recharacterization;
(ii) shall not exceed the amount of Elective Deferrals on
behalf of any Highly Compensated Participant for any Plan
Year;
(iii) shall be treated as after-tax voluntary Employee
contributions for purposes of Code Section 401(a)(4) and
Regulation 1.401(k)-1(b). However, for purposes of Sections
4.3(f) and 9.2 (top heavy rules), recharacterized Excess
Contributions continue to be treated as Employer contributions
that are Elective Deferrals. Excess Contributions (and
"Income" attributable to such amounts) recharacterized as
after-tax voluntary Employee contributions shall continue to
be nonforfeitable and subject to the same distribution rules
provided for in Section 12.2(c); and
(iv) are not permitted if the amount recharacterized plus
after-tax voluntary Employee contributions actually made by
such Highly Compensated Participant, exceed the maximum
amount of after-tax voluntary Employee contributions
(determined prior to application of Section 12.6) that such
Highly Compensated Participant is permitted to make under the
Plan in the absence of recharacterization.
(3) Any distribution and/or recharacterization of less than the entire
amount of Excess Contributions shall be treated as a pro rata
distribution and/or recharacterization of Excess Contributions and
"Income."
(4) For the purpose of this Section, "Income" means the income or
losses allocable to Excess Contributions for the Plan Year, which
amount shall be allocated at the same time and in the same manner as
income or losses are allocated pursuant to Section 43(c). However,
"Income" for the period between the end of the Plan Year and the date
of the distribution (the "gap period") is not required to be
distributed.
(5) Excess Contributions shall be treated as Employer contributions for
purposes of Code Sections 404 and 415 even if distributed from the
Plan.
(c) Notwithstanding the above, within twelve (12) months after the end
of the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution or Qualified
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Matching Contribution in accordance with one of the following provisions which
contribution shall be allocated to the Qualified Non-Elective Contribution
Account or Qualified Matching Contribution Account of each Non-Highly
Compensated Participant eligible to share in the allocation in accordance with
such provision. The Employer shall provide the Administrator with written
notification of the amount of the contribution being made and to which provision
it relates.
(1) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated in the same
proportion that each Non-Highly Compensated Participant's 414(s)
Compensation for the year (or prior year if the Prior Year Testing
method is being used) bears to the total 414(s) Compensation of all
Non-Highly Compensated Participants for such year.
(2) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated in the same
proportion that each Non-Highly Compensated Participant's 414(s)
Compensation for the year (or prior year if the Prior Year Testing
method is being used) bears to the total 414(s) Compensation of all
Non-Highly Compensated Participants for such year. However, for
purposes of this contribution, Non-Highly Compensated Participants who
are not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being used) shall
not be eligible to share in the allocation and shall be disregarded.
(3) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated in equal amounts
(per capita).
(4) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated in equal amounts
(per capita). However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of the Plan
Year (or at the end of the prior Plan Year if the Prior Year Testing
method is being used) shall not be eligible to share in the allocation
and shall be disregarded.
(5) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated to the Qualified
Non-Elective Contribution Account of the Non-Highly Compensated
Participant having the lowest 414(s) Compensation, until one of the
tests set forth in Section 12.4 is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has
received the maximum "Annual Addition" pursuant to Section 4.4. This
process shall continue until one of the tests set forth in Section 12.4
is satisfied (or is anticipated to be satisfied).
103
A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated to the Qualified
Non-Elective Contribution Account of the Non-Highly Compensated
Participant having the lowest 414(s) Compensation, until one of the
tests set forth in Section 12.4 is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has
received the maximum "Annual Addition" pursuant to Section 4.4. This
process shall continue until one of the tests set forth in Section 12.4
is satisfied (or is anticipated to be satisfied). However, for purposes
of this contribution, Non-Highly Compensated Participants who are not
employed at the end of the Plan Year (or at the end of the prior Plan
Year if the Prior Year Testing method is being used) shall not be
eligible to share in the allocation and shall be disregarded.
(7) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated to the Qualified
Matching Contribution Account of each Non-Highly Compensated
Participant in the same proportion that each Non-Highly Compensated
Participant's Elective Deferrals for the year bears to the total
Elective Deferrals of all Non-Highly Compensated Participants.
(8) A Qualified Matching Contribution on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy (or to
prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated to the Qualified
Matching Contribution Account of each Non-Highly Compensated
Participant in the same proportion that each Non-Highly Compensated
Participant's Elective Deferrals for the year bears to the total
Elective Deferrals of all Non-Highly Compensated Participants. However,
for purposes of this contribution, Non-Highly Compensated Participants
who are not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being used) shall
not be eligible to share in the allocation and shall be disregarded.
(9) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated to the Qualified
Matching Contribution Account of the Non-Highly Compensated Participant
having the lowest Elective Deferrals until one of the tests set forth
in Section 12.4 is satisfied (or is anticipated to be satisfied), or
until such Non-Highly Compensated Participant has received the maximum
"Annual Addition" pursuant to Section 4.4. This process shall continue
until one of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied).
(10) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated to the Qualified
Matching Contribution Account of the Non-Highly Compensated Participant
having the lowest Elective Deferrals until one of the tests set forth
in Section 12.4 is satisfied (or is
104
anticipated to be satisfied), or until such Non-Highly
Compensated Participant has received the maximum "Annual
Addition" pursuant to Section 4.4. This process shall continue
until one of the tests set forth in Section 12.4 is satisfied
(or is anticipated to be satisfied). However, for purposes of
this contribution, Non-Highly Compensated Participants who are
not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being
used) shall not be eligible to share in the allocation and
shall be disregarded.
(d) If during a Plan Year, it is projected that the aggregate
amount of Elective Deferrals to be allocated to all Highly
Compensated Participants under this Plan would cause the Plan to fail
the tests set forth in Section 12.4, then the Administrator may
automatically reduce the deferral amount of affected Highly
Compensated Participants, beginning with the Highly Compensated
Participant who has the highest actual deferral ratio until it is
anticipated the Plan will pass the tests or until the actual deferral
ratio equals the actual deferral ratio of the Highly Compensated
Participant having the next highest actual deferral ratio. This
process may continue until it is anticipated that the Plan will
satisfy one of the tests set forth in Section 12.4. Alternatively,
the Employer may specify a maximum percentage of Compensation that
may be deferred by Highly Compensated Participants.
(e) Any Excess Contributions (and "Income") which are
distributed on or after 2 1/2 months after the end of the Plan Year
shall be subject to the ten percent (10%) Employer excise tax imposed
by Code Section 4979.
12.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) Except as otherwise provided herein, this subsection
applies if the Prior Year Testing method is elected in the Adoption
Agreement. The "Actual Contribution Percentage" (hereinafter "ACP")
for Participants who are Highly Compensated Employees (hereinafter
"HCEs") for each Plan Year and the prior year's ACP for Participants
who were Non-Highly Compensated Employees (hereinafter "NHCEs") for
the prior Plan Year must satisfy one of the following tests:
(1) The ACP for a Plan Year for Participants who are HCEs for
the Plan Year shall not exceed the prior year's ACP for
Participants who were NHCEs for the prior Plan Year multiplied
by 1.25; or
(2) The ACP for a Plan Year for Participants who are HCEs for
the Plan Year shall not exceed the prior year's ACP for
Participants who were NHCEs for the prior Plan Year multiplied
by 2.0, provided that the ACP for Participants who are HCEs
does not exceed the prior year's ACP for Participants who
were NHCEs in the prior Plan Year by more than two (2)
percentage points.
Notwithstanding the above, for purposes of applying the
foregoing tests with respect to the first Plan Year in which
the Plan permits any Participant to make Employee
contributions, provides for matching contributions, or both,
the ACP for the prior year's NHCEs shall be deemed to be three
percent (3%) unless the Employer has elected in the Adoption
Agreement to use the current Plan Year's ACP for these
Participants. However, the provisions of this paragraph may
not be used if the Plan is a successor plan or is
105
otherwise prohibited from using such provisions pursuant to
IRS Notice 98-1 (or superceding guidance).
(b) Notwithstanding the preceding, if the Current Year Testing
method is elected in the Adoption Agreement, the ACP tests in (a)(1)
and (a)(2), above shall be applied by comparing the current Plan Year's
ACP for Participants who are HCEs with the current Plan Year's ACP
(rather than the prior Plan Year's ACP) for Participants who are NHCEs
for the current Plan Year. Once made, this election can only be changed
if the Plan meets the requirements for changing to the Prior Year
Testing method set forth in IRS Notice 98-1 (or superseding guidance).
(c) This subsection applies to prevent the multiple use of the
test set forth in subsection (a)(2) above. Any HCE eligible to make
Elective Deferrals pursuant to Section 12.2 and to make nondeductible
voluntary Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affiliated Employer, shall have either the actual deferral ratio
adjusted in the manner described in Section 12.5 or the actual
contribution ratio reduced in the manner described in Section 12.7 so
that the "Aggregate Limit" is not exceeded pursuant to Regulation
1.401(m)-2, the provisions of which are incorporated herein by
reference. The amounts in excess of the "Aggregate Limit" shall be
treated as either an Excess Contribution or an Excess Aggregate
Contribution. The ADP and ACP of the HCEs are determined after any
corrections required to meet the ADP and ACP tests and are deemed to be
the maximum permitted under such test for the Plan Year. Multiple use
does not occur if either the ADP or ACP of the HCEs does not exceed
1.25 multiplied by the ADP and ACP of the NHCEs.
"Aggregate Limit" means the sum of (i) 125 percent of the greater of
the ADP of the NHCEs for the Plan Year or the ACP of such NHCEs under
the plan subject to Code Section 401(m) for the Plan Year beginning
with or within the prior Plan Year of the cash or deferred arrangement
and (ii) the lesser of 200% or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in (i) above, and "greater" is
substituted for "lesser" after "two plus the" in (ii) above if it would
result in a larger Aggregate Limit. If the Employer has elected in the
Adoption Agreement to use the Current Year Testing method, then in
calculating the "Aggregate Limit" for a particular Plan Year, the NHCEs
ADP and ACP for that Plan Year, instead of the prior Plan Year, is
used.
(d) A Participant is a Highly Compensated Employee for a
particular Plan Year if the Participant meets the definition of a
Highly Compensated Employee in effect for that Plan Year. Similarly, a
Participant is a Non-highly Compensated Employee for a particular Plan
Year if the Participant does not meet the definition of a Highly
Compensated Employee in effect for that Plan Year.
(e) For the purposes of this Section and Section 12.7, ACP for
a specific group of Participants for a Plan Year means the average of
the "Contribution Percentages" (calculated separately for each
Participant in such group). For this purpose, "Contribution Percentage"
means the ratio (expressed as a percentage) of the Participant's
"Contribution Percentage Amounts" to the Participant's 414(s)
Compensation. The actual contribution ratio for each Participant and
the ACP for each group, shall be calculated to the nearest
one-hundredth of one percent of the Participant's 414(s) Compensation.
106
(f) "Contribution Percentage Amounts" means the sum of (i)
nondeductible voluntary Employee contributions, (ii) Employer "Matching
Contributions" made pursuant to Section 12.1(b) (including Qualified
Matching Contributions to the extent such Qualified Matching
Contributions are not used to satisfy the tests set forth in Section
12.4), (iii) Excess Contributions recharacterized as nondeductible
voluntary Employee contributions pursuant to Section 12.5, and (iv)
Qualified Non-Elective Contributions (to the extent not used to satisfy
the tests set forth in Section 12.4). However, "Contribution Percentage
Amounts" shall not include "Matching Contributions" that are forfeited
either to correct Excess Aggregate Contributions or due to Code Section
401(a)(4) and the Regulations thereunder because the contributions to
which they relate are Excess Deferrals, Excess Contributions, or Excess
Aggregate Contributions. In addition, "Contribution Percentage Amounts"
may include Elective Deferrals provided the ADP test in Section 12.4 is
met before the Elective Deferrals are used in the ACP test and
continues to be met following the exclusion of those Elective Deferrals
that are used to meet the ACP test.
(g) For purposes of determining the ACP and the amount of
Excess Aggregate Contributions pursuant to Section 12.7, only Employer
"Matching Contributions" (excluding "Matching Contributions" forfeited
or distributed pursuant to Section 12.2(e), 12.5(b), or 12.7(b))
contributed to the Plan prior to the end of the succeeding Plan Year
shall be considered. In addition, the Administrator may elect to take
into account, with respect to Employees eligible to have Employer
"Matching Contributions" made pursuant to Section 12.1(b) or after-tax
voluntary Employee contributions made pursuant to Section 4.7 allocated
to their accounts, elective deferrals (as defined in Regulation
1.402(g)-1(b)) and qualified non-elective contributions (as defined in
Code Section 401(m)(4)(C)) contributed to any plan maintained by the
Employer. Such elective deferrals and qualified non-elective
contributions shall be treated as Employer matching contributions
subject to Regulation 1.401(m)-1(b)(2) which is incorporated herein by
reference. The Plan Year must be the same as the plan year of the plan
to which the elective deferrals and the qualified non-elective
contributions are made.
(h) In the event that this Plan satisfies the requirements of
Code Sections 401(a)(4), 401(m), or 410(b) only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the ACP of
Employees as if all such plans were a single plan. Plans may be
aggregated in order to satisfy Code section 401(m) only if they have
the same Plan Year.
Any adjustments to the NHCE ACP for the prior year will be
made in accordance with IRS Notice 98-1 and any superseding guidance,
unless the Employer has elected in the Adoption Agreement to use the
Current Year Testing method. Plans may be aggregated in order to
satisfy Code Section 401(k) only if they have the same Plan Year and
use the same ACP testing method.
(i) For the purposes of this Section, if an HCE is a
Participant under two (2) or more plans (other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)) which are
maintained by the Employer or an Affiliated Employer to which "Matching
Contributions," nondeductible voluntary Employee contributions, or
both, are made, all such contributions on behalf of such HCE shall be
aggregated for purposes of determining such
107
HCP's actual contribution ratio. However, if the plans have different
plan years, this paragraph shall be applied by treating all plans
ending with or within the same calendar year as a single plan.
(j) For purposes of this Section and Section 12.7, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to have "Matching Contributions" made
pursuant to Section 12.1(a)(2) (whether or not a deferral election was
made or suspended pursuant to Section 12.2(g)) allocated to such
Participant's account for the Plan Year or to make salary deferrals
pursuant to Section 12.2 (if the Employer uses salary deferrals to
satisfy the provisions of this Section) or after-tax voluntary Employee
contributions pursuant to Section 4.7 (whether or not nondeductible
voluntary Employee contributions are made) allocated to the
Participant's account for the Plan Year.
(k) For purposes of this Section, "Matching Contribution"
means an Employer contribution made to the Plan, or to a contract
described in Code Section 403(b), on behalf of a Participant on account
of a nondeductible voluntary Employee contribution made by such
Participant, or on account of a Participant's elective deferrals under
a plan maintained by the Employer.
(l) For purposes of determining the ACP and the amount of
Excess Aggregate Contributions pursuant to Section 12.7, only Elective
Deferrals, Qualified Non-elective Contributions and Qualified Matching
Contributions contributed to the Plan prior to the end of the twelve
(12) month period immediately following the Plan Year to which the
contributions relate shall be considered.
(m) Notwithstanding anything in this Section to the contrary,
the provisions of this Section and Section 12.7 may be applied
separately (or will be applied separately to the extent required by
Regulations) to each "plan" within the meaning of Regulation
1.401(k)-1(g)(11). Furthermore, for Plan Years beginning after December
31, 1998, the provisions of Code Section 401(k)(3)(F) may be used to
exclude from consideration all Non-Highly Compensated Employees who
have not satisfied the minimum age and service requirements of Code
Section 410(a)(1)(A).
12.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event (or, with respect to subsection (g) below
when the Prior Year Testing method is being used, if it is anticipated)
that for Plan Years beginning after December 31, 1996, the Plan does
not satisfy one of the tests set forth in Section 12.6 the
Administrator shall adjust Excess Aggregate Contributions or the
Employer shall make contributions pursuant to the options set forth
below or any combination thereof. However, if the Prior Year testing
method is being used and it is anticipated that the Plan might not
satisfy one of such tests, then the Employer may make contributions
pursuant to the options set forth in subsection (c) below.
(b) On or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than the
close of the following Plan Year the Highly Compensated Participant
having the largest "Contribution Percentage Amounts" shall have a
portion of such "Contribution Percentage Amounts" (and "Income"
allocable to such amounts) distributed or, if non-Vested, Forfeited
(including "Income" allocable to such Forfeitures) until the total
amount
108
of Excess Aggregate Contributions has been distributed, or until the
amount of the Participant's "Contribution Percentage Amounts" equals
the "Contribution Percentage Amounts" of the Highly Compensated
Participant having the next largest amount of "Contribution Percentage
Amounts." This process shall continue until the total amount of Excess
Aggregate Contributions has been distributed or forfeited. Any
distribution and/or Forfeiture of "Contribution Percentage Amounts"
shall be made in the following order:
(1) After-tax voluntary Employee contributions including
Excess Contributions recharacterized as after tax voluntary
Employee contributions pursuant to Section 12.5(b)(2).
Matching contributions which relate to Excess Aggregate
Contributions shall be forfeited;
(2) Employer matching contributions forfeited above.
(3) Remaining Employer matching contributions.
(c) Any distribution or Forfeiture of less than the entire
amount of Excess Aggregate Contributions (and "Income") shall be
treated as a pro rata distribution of Excess Aggregate Contributions
and "Income." Distribution of Excess Aggregate Contributions shall be
designated by the Employer as a distribution of Excess Aggregate
Contributions (and "Income"). Forfeitures of Excess Aggregate
Contributions shall be treated in accordance with Section 4.3. However,
no such Forfeiture may be allocated to a Highly Compensated Participant
whose contributions are reduced pursuant to this Section.
(d) For the purpose of this Section, "Income" means the income
or losses allocable to Excess Aggregate Contributions for the Plan
Year, which amount shall be allocated at the same time and in the same
manner as income or losses are allocated pursuant to Section 4.3(c).
However, "Income" for the period between the end of the Plan Year and
the date of the distribution (the "gap period") is not required to be
distributed.
(e) Excess Aggregate Contributions attributable to amounts
other than nondeductible voluntary Employee contributions, including
forfeited matching contributions, shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even if
distributed from the Plan.
(f) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
nondeductible voluntary Employee contributions due to
recharacterization for the plan year of any other qualified cash or
deferred arrangement (as defined in Code Section 401(k)) maintained by
the Employer that ends with or within the Plan Year or which are
treated as after-tax voluntary Employee contributions due to
recharacterization pursuant to Section 12.5.
(g) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution or Qualified Matching Contribution in
accordance with one of the following provisions which contribution
shall be allocated to the Qualified Non-Elective Contribution Account
or Qualified Matching
109
Contribution Account of each Non-Highly Compensated eligible to share
in the allocation in accordance with such provision. The Employer shall
provide the Administrator with written notification of the amount of
the contribution being made and for which provision it is being made
pursuant to.
(1) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 12.6. Such contribution shall be allocated in
the same proportion that each Non-Highly Compensated Participant's
414(s) Compensation for the year (or prior year if the Prior Year
Testing method is being used) bears to the total 414(s)
Compensation of all Non-Highly Compensated Participants for such
year.
(2) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 12.6. Such contribution shall be allocated in
the same proportion that each Non-Highly Compensated Participant's
414(s) Compensation for the year (or prior year if the Prior Year
Testing method is being used) bears to the total 414(s)
Compensation of all Non-Highly Compensated Participants for such
year. However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of the
Plan Year (or at the end of the prior Plan Year if the Prior Year
Testing method is being used) shall not be eligible to share in
the allocation and shall be disregarded.
(3) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 12.6. Such contribution shall be allocated in
equal amounts (per capita).
(4) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 12.6. Such contribution shall be allocated in
equal amounts (per capita). However, for purposes of this
contribution, Non-Highly Compensated Participants who are not
employed at the end of the Plan Year (or at the end of the prior
Plan Year if the Prior Year Testing method is being used) shall
not be eligible to share in the allocation and shall be
disregarded.
(5) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 12.6. Such contribution shall be allocated to
the Qualified Non-Elective Contribution Account of the Non-Highly
Compensated Participant having the lowest 414(s) Compensation,
until one of the tests set forth in Section 12.6 is satisfied (or
is anticipated to be satisfied), or until such Non-Highly
Compensated Participant has received the maximum "Annual Addition"
pursuant to Section 4.4. This process shall continue until one of
the tests set forth in Section 12.6 is satisfied (or is
anticipated to be satisfied).
110
(6) A Qualified Non-Elective Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.6. Such contribution shall be allocated to the Qualified
Non-Elective Contribution Account of the Non-Highly Compensated
Participant having the lowest 414(s) Compensation, until one of the
tests set forth in Section 12.6 is satisfied (or is anticipated to be
satisfied), or until such Non-Highly Compensated Participant has
received the maximum "Annual Addition" pursuant to Section 4.4. This
process shall continue until one of the tests set forth in Section 12.6
is satisfied (or is anticipated to be satisfied). However, for purposes
of this contribution, Non-Highly Compensated Employees who are not
employed at the end of the Plan Year (or at the end of the prior Plan
Year if the Prior Year Testing method is being used) shall not be
eligible to share in the allocation and shall be disregarded.
(7) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.6. Such contribution shall be allocated on behalf of each
Non-Highly Compensated Participant in the same proportion that each
Non-Highly Compensated Participant's Elective Deferrals for the year
bears to the total Elective Deferrals of all Non-Highly Compensated
Participants. The Employer shall designate, at the time the
contribution is made, whether the contribution made pursuant to this
provision shall be a Qualified Matching Contribution allocated to a
Participant's Qualified Matching Contribution Account or an Employer
Non-Elective Contribution allocated to a Participant's Non-Elective
Account.
(8) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.6. Such contribution shall be allocated on behalf of each
Non-Highly Compensated Participant in the same proportion that each
Non-Highly Compensated Participant's Elective Deferrals for the year
bears to the total Elective Deferrals of all Non-Highly Compensated
Participants. The Employer shall designate, at the time the
contribution is made, whether the contribution made pursuant to this
provision shall be a Qualified Matching Contribution allocated to a
Participant's Qualified Matching Contribution Account or an Employer
Non-Elective Contribution allocated to a Participant's Non-Elective
Account. However, for purposes of this contribution, Non-Highly
Compensated Participants who are not employed at the end of the Plan
Year (or at the end of the prior Plan Year if the Prior Year Testing
method is being used) shall not be eligible to share in the allocation
and shall be disregarded.
(9) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated on behalf of the
Non-Highly Compensated Participant having the lowest Elective Deferrals
until one of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition" pursuant to
Section 4.4. This process shall continue until one of the tests set
forth in Section 12.4 is satisfied (or is anticipated to be satisfied).
The Employer shall designate, at the time the contribution is made,
whether the contribution made pursuant to this provision shall be a
Qualified Matching Contribution allocated to a
111
Participant's Qualified Matching Contribution Account or an Employer
Non-Elective Contribution allocated to a Participant's Non-Elective
Account.
(10) A Qualified Matching Contribution may be made on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
(or to prevent an anticipated failure of) one of the tests set forth in
Section 12.4. Such contribution shall be allocated on behalf of the
Non-Highly Compensated Participant having the lowest Elective Deferrals
until one of the tests set forth in Section 12.4 is satisfied (or is
anticipated to be satisfied), or until such Non-Highly Compensated
Participant has received the maximum "Annual Addition" pursuant to
Section 4.4. This process shall continue until one of the tests set
forth in Section 12.4 is satisfied (or is anticipated to be satisfied).
The Employer shall designate, at the time the contribution is made,
whether the contribution made pursuant to this provision shall be a
Qualified Matching Contribution allocated to a Participant's Qualified
Matching Contribution Account or an Employer Non-Elective Contribution
allocated to a Participant's Non-Elective Account. However, for
purposes of this contribution, Non-Highly Compensated Participants who
are not employed at the end of the Plan Year (or at the end of the
prior Plan Year if the Prior Year Testing method is being used) shall
not be eligible to share in the allocation and shall be disregarded.
(h) Any Excess Aggregate Contributions (and "Income") which are
distributed on or after 2 1/2 months after the end of the Plan Year shall be
subject to the ten percent (10%) Employer excise tax imposed by Code Section
4979.
12.8 SAFE HARBOR PROVISIONS
(a) The provisions of this Section will apply if the Employer
has elected, in the Adoption Agreement, to use the "ADP Test Safe
Harbor" or "ACP Test Safe Harbor." If the Employer has elected to use
the "ADP Test Safe Harbor" for a Plan Year, then the provisions
relating to the ADP test described in Section 12.4 and in Code Section
401(k)(3) do not apply for such Plan Year. In addition, if the Employer
has also elected to use the "ACP Test Safe Harbor" for a Plan Year,
then the provisions relating to the ACP test described in Section 12.6
and in Code Section 401(m)(2) do not apply for such Plan Year.
Furthermore, to the extent any other provision of the Plan is
inconsistent with the provisions of this Section, the provisions of
this Section will govern.
(b) For purposes of this Section, the following definitions
apply:
(1) "ACP Test Safe Harbor" means the method described in
subsection (c) below for satisfying the ACP test of Code
Section 401(m)(2).
(2) "ACP Test Safe Harbor Matching Contributions" means
"Matching Contributions" described in subsection (d)(1).
(3) "ADP Test Safe Harbor" means the method described in
subsection (c) for satisfying the ADP test of Code Section
401(k)(3).
(4) "ADP Test Safe Harbor Contributions" means "Matching
Contributions" and nonelective contributions described in
subsection (c)(1) below.
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(5) "Compensation" means Compensation as defined in Section 1.11,
except, for purposes of this Section, no dollar limit, other than the
limit imposed by Code Section 401(a)(17), applies to the Compensation
of a Non-Highly Compensated Employee. However, solely for purposes of
determining the Compensation subject to a Participant's deferral
election, the Employer may use an alternative definition to the one
described in the preceding sentence, provided such alternative
definition is a reasonable definition within the meaning of Regulation
1.414(s)-1(d)(2) and permits each Participant to elect sufficient
Elective Deferrals to receive the maximum amount of "Matching
Contributions" (determined using the definition of Compensation
described in the preceding sentence) available to the Participant under
the Plan.
(6) "Eligible Participant" means a Participant who is eligible to make
Elective Deferrals under the Plan for any part of the Plan Year (or who
would be eligible to make Elective Deferrals but for a suspension due
to a hardship distribution described in Section 12.9 or to statutory
limitations, such as Code Sections 402(g) and 415) and who is not
excluded as an "Eligible Participant" under the 401(k) Safe Harbor
elections in the Adoption Agreement.
(7) "Matching Contributions" means contributions made by the Employer
on account of an "Eligible Participant's" Elective Deferrals.
(c) The provisions of this subsection apply for purposes of satisfying
the "ADP Test Safe Harbor."
(1) The "ADP Test Safe Harbor Contribution" is the contribution elected
by the Employer in the Adoption Agreement to be used to satisfy the
"ADP Test Safe Harbor." However, if no contribution is elected in the
Adoption Agreement, the Employer will contribute to the Plan for the
Plan Year a "Basic Matching Contribution" on behalf of each "Eligible
Employee." The "Basic Matching Contribution" is equal to (i)
one-hundred percent (100%) of the amount of an "Eligible Participant's"
Elective Deferrals that do not exceed three percent (3%) of the
Participant's "Compensation" for the Plan Year, plus (ii) fifty percent
(50%) of the amount of the Participant's Elective Deferrals that exceed
three percent (3%) of the Participant's "Compensation" but do not
exceed five percent (5%) of the Participant's "Compensation."
(2) Except as provided in subsection (e) below, for purposes of the
Plan, a Basic Matching Contribution or an Enhanced Matching
Contribution will be treated as a Qualified Matching Contribution and a
Nonelective Safe Harbor Contribution will be treated as a Qualified
Non-Elective Contribution. Accordingly, the "ADP Test Safe Harbor
Contribution" will be fully Vested and subject to the distribution
restrictions set forth in Section 12.2(c) (i.e., may generally not be
distributed earlier than separation from service, death, disability, an
event described in Section 401(k)(1), or, in case of a profit sharing
plan, the attainment of age 59 1/2.). In addition, such contributions
must satisfy the "ADP
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Test Safe Harbor" without regard to permitted disparity under Code
Section 401(1).
(3) Except as otherwise permitted by the IRS, at least thirty (30)
days, but not more than ninety (90) days, before the beginning of the
Plan Year, the Employer will provide each "Eligible Participant" a
comprehensive notice of the Participant's rights and obligations under
the Plan, written in a manner calculated to be understood by the
average Participant. If an Employee becomes eligible after the 90th day
before the beginning of the Plan Year and does not receive the notice
for that reason, the notice must be provided no more than ninety (90)
days before the Employee becomes eligible but not later than the date
the Employee becomes eligible.
(4) In addition to any other election periods provided under the Plan,
each "Eligible Participant" may make or modify a deferral election
during the thirty (30) day period immediately following receipt of the
notice described in subsection (3) above. Furthermore, if the "ADP Test
Safe Harbor" is a "Matching Contribution" each "Eligible Employee" must
be permitted to elect sufficient Elective Deferrals to receive the
maximum amount of "Matching Contributions" available to the Participant
under the Plan.
(d) The provisions of this subsection apply if the Employer has elected
to satisfy the "ACP Test Safe Harbor."
(1) In addition to the "ADP Test Safe Harbor Contributions," the
Employer will make any "Matching Contributions" in accordance with
elections made in the Adoption Agreement. Such additional "Matching
Contributions" will be considered "ACP Test Safe Harbor Matching
Contributions."
(2) Notwithstanding any election in the Adoption Agreement to the
contrary, an "Eligible Participant's" Elective Deferrals in excess of
six percent (6%) of "Compensation" may not be taken into account in
applying "ACP Test Safe Harbor Matching Contributions." In addition,
effective with respect to Plan Years beginning after December 31,1999,
any portion of an "ACP Test Safe Harbor Matching Contribution"
attributable to a discretionary "Matching Contribution" may not exceed
four percent (4%) of an "Eligible Participant's" "Compensation."
(e) The Plan is required to satisfy the ACP test of Code Section
401(m)(2), using the current year testing method, if the Plan permits after-tax
voluntary Employee contributions or if matching contributions that do not
satisfy the "ACP Test Safe Harbor" may be made to the Plan. In such event, only
"ADP Test Safe Harbor Contributions" or "ACP Test Safe Harbor Contributions"
that exceed the amount needed to satisfy the "ADP Test Harbor" or "ACP Test Safe
Harbor" (if the Employer has elected to use the "ACP Test Safe Harbor") may be
treated as Qualified Nonelective Contributions or Qualified Matching
Contributions in applying the ACP test. In addition, in applying the ACP test,
elective contributions may not treated as matching contributions under Code
Section 401(m)(3). Furthermore, in applying the ACP test, the Employer may elect
to disregard with respect to all "Eligible Participants" (1) all "Matching
Contributions" if the
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only "Matching Contributions" made to the Plan satisfy the
"ADP Test Safe Harbor Contribution" (the "Basic Matching
Contribution" or the "Enhanced Matching Contribution") and (2)
if the "ACP Test Safe Harbor" is satisfied, "Matching
Contributions" that do not exceed four (4%) of each
Participant's "Compensation."
12.9 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of a Participant, shall
direct the Trustee to distribute to the Participant in any one Plan
Year up to the lesser of (1) 100% of the accounts as elected in the
Adoption Agreement valued as of the last Valuation Date or (2) the
amount necessary to satisfy the immediate and heavy financial need of
the Participant. Any distribution made pursuant to this Section shall
be deemed to be made as of the first day of the Plan Year or, if later,
the Valuation Date immediately preceding the date of distribution, and
the account from which the distribution is made shall be reduced
accordingly. Withdrawal under this Section shall be authorized only if
the distribution is for one of the following or any other item
permitted under Regulation 1.401(k)-1(d)(2)(iv):
(1) Medical expenses described in Code Section 213(d) incurred
by the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care as
described in Code Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Payment of tuition and related educational fees, and room
and board expenses, for the next twelve (12) months of
post-secondary education for the Participant, the
Participant's spouse, children, or dependents (as defined in
Code Section 152); or
(4) Payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or
foreclosure on the mortgage on that residence.
(b) No distribution shall be made pursuant to this Section
unless the Administrator, based upon the Participant's representation
and such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant
(including any amounts necessary to pay any federal, state, or
local taxes or penalties reasonably anticipated to result from
the distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer (to the
extent the loan would not increase the hardship);
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and
nondeductible voluntary Employee contributions will be
suspended for at least twelve (12) months after receipt of the
hardship distribution; and
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(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals
for the Participant's taxable year immediately following the
taxable year of the hardship distribution in excess of the
applicable limit under Code Section 402(g) for such next
taxable year less the amount of such Participant's elective
deferrals for the taxable year of the hardship distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Deferral Account, Qualified Matching
Contribution Account and Qualified Non-Elective Account pursuant to
this Section shall be limited solely to the Participant's Elective
Deferrals and any income attributable thereto credited to the
Participant's Elective Deferral Account as of December 31,1988.
(d) Any distribution made pursuant to this Section shall be
made in a manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
ARTICLE XIII
SIMPLE 401(K) PROVISIONS
13.1 DEFINITIONS
(a) "Compensation" means, for purposes of this Article, the
sum of the wages, tips, and other compensation from the Employer
subject to federal income tax withholding (as described in Code Section
6051(a)(3)) and the Employee's salary reduction contributions made
under this or any other 401(k) plan, and, if applicable, elective
deferrals under a Code Section 408(p) SIMPLE plan, a SARSEP, or a Code
Section 403(b) annuity contract and compensation deferred under a Code
Section 457 plan, required to be reported by the Employer on Form W-2
(as described in Code Section 6051(a)(8)). For self-employed
individuals, "compensation" means net earnings from self-employment
determined under Code Section 1402(a) prior to subtracting any
contributions made under this Plan on behalf of the individual. The
provisions of the plan implementing the limit on Compensation under
Code Section 401(a)(17) apply to the "compensation" under this Article.
(b) "Eligible employee" means, for purposes of this Article,
any Participant who is entitled to make elective deferrals described in
Code Section 402(g) under the terms of the Plan.
(c) "Year" means the calendar year.
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13.2 CONTRIBUTIONS
(a) Salary Reduction Contributions
(1) Each "eligible employee" may make a salary reduction
election to have "compensation" reduced for the "year" in any
amount selected by the Employee subject to the limitation in
subsection (c) below. The Employer will make a salary
reduction contribution to the Plan, as an Elective Deferral,
in the amount by which the Employee's "compensation" has been
reduced.
(2) The total salary reduction contribution for the "year"
cannot exceed $6,000 for any Employee. To the extent permitted
by law, this amount will be adjusted to reflect any annual
cost-of-living increases announced by the IRS.
(b) Other Contributions
(1) Matching Contributions -- Unless (2) below is elected,
each "year" the Employer will contribute a matching
contribution to the Plan on behalf of each Employee who makes
a salary reduction election under Section 133(a). The amount
of the matching contribution will be equal to the Employee's
salary reduction contribution up to a limit of three percent
(3%) of the Employee's "compensation" for the full "year."
(2) Nonelective Contribution -- For any "year," instead of a
matching contribution, the Employer may elect to contribute a
nonelective contribution of two percent (2%) of "compensation"
for the "year" for each "eligible employee" who received at
least $5,000 of "compensation" from the Employer for the
"year."
(c) Limitation on Other Contributions
No Employer or Employee contributions may be made to this Plan
for the" year" other than salary reduction contributions
described in Section 13.3(a), matching or nonelective
contributions described in Section 13.3(b) and rollover
contributions described in Regulation Section 1.402(c)-2,
Q&A-1(a). Furthermore, the provisions of Section 4.4 which
implement the limitations of Code Section 415 apply to
contributions made pursuant to this Section.
13.3 ELECTION AND NOTICE REQUIREMENTS
(a) Election Period
(1) In addition to any other election periods provided under
the Plan, each "eligible employee" may make or modify a salary
reduction election during the 60-day period immediately
preceding each January 1st.
(2) For the "year" an Employee becomes eligible to make salary
reduction contributions under this Article, the 60-day
election period requirement of subsection (a)(1) is deemed
satisfied if the Employee may make or modify a salary
reduction election during a 60-day period that includes either
the date the Employee becomes eligible or the day before.
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(3) Each "eligible employee" may terminate a salary reduction
election at any time during the "year."
(b) Notice Requirements
(1) The Employer will notify each "eligible employee" prior to
the 60-day election period described in Section 13.4(a) that a
salary reduction election or a modification to a prior
election may be made during that period.
(2) The notification described in (1) above will indicate
whether the Employer will provide a matching contribution
described in Section 13.3(b)(1) or a two percent (2%)
nonelective contribution described in section 13.3(b)(2).
13.4 VESTING REQUIREMENTS
All benefits attributable to contributions made pursuant to this
Article are nonforfeitable at all times.
13.5 TOP HEAVY RULES
The Plan is not treated as a top heavy plan under Code Section 416 for
any year for which the provisions of this Article are effective and satisfied.
13.6 NONDISCRIMINATION TESTS
The Plan is treated as meeting the requirements of Code Sections
401(k)(3)(A)(ii) and 401(m)(2) for any "year" for which the provisions of this
Article are effective and satisfied. Accordingly, Sections 12.4, 12.5, 12.6 and
12.7 shall not apply to the Plan.
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