Exhibit 10.8
ADOPTION AGREEMENT
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For American Savings Bank
Employees' Savings & Profit Sharing Plan and Trust
Client No. A16
ADOPTION AGREEMENT
FOR
AMERICAN SAVINGS BANK
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN AND TRUST
Name of Employer: American Savings Bank
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Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
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Contact Person: Mr. ▇▇▇▇ ▇▇▇▇▇▇, Vice President
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Name of Plan: American Savings Bank Employees' Savings & Profit
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Sharing Plan and Trust
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THIS ADOPTION AGREEMENT, upon execution by the Employer and the Trustee, and
subsequent approval by a duly authorized representative of Pentegra Services,
Inc. (the "Sponsor"), together with the Sponsor's Employees' Savings & Profit
Sharing Plan and Trust Agreement (the "Agreement"), shall constitute the
American Savings Bank Employees' Savings & Profit Sharing Plan and Trust (the
"Plan"). The terms and provisions of the Agreement are hereby incorporated
herein by this reference; provided, however, that if there is any conflict
between the Adoption Agreement and the Agreement, this Adoption Agreement shall
control.
The elections hereinafter made by the Employer in this Adoption Agreement may be
changed by the Employer from time to time by written instrument executed by a
duly authorized representative thereof; but if any other provision hereof or any
provision of the Agreement is changed by the Employer other than to satisfy the
requirements of Section 415 or 416 of the Internal Revenue Code of 1986, as
amended (the "Code"), because of the required aggregation of multiple plans, or
if as a result of any change by the Employer the Plan fails to obtain or retain
its tax-qualified status under Section 401(a) of the Code, the Employer shall be
deemed to have amended the Plan evidenced hereby and by the Agreement into an
individually designed plan, in which event the Sponsor shall thereafter have no
further responsibility for the tax-qualified status of the Plan. However, the
Sponsor may amend any term, provision or definition of this Adoption Agreement
or the Agreement in such manner as the Sponsor may deem necessary or advisable
from time to time and the Employer and the Trustee, by execution hereof,
acknowledge and consent thereto. Notwithstanding the foregoing, no amendment of
this Adoption Agreement or of the Agreement shall increase the duties or
responsibilities of the Trustee without the written consent thereof.
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I. Effect of Execution of Adoption Agreement
The Employer, upon execution of this Adoption Agreement by a duly
authorized representative thereof, (choose 1 or 2):
1. ___ Establishes as a new plan the American Savings Bank Employees'
Savings & Profit Sharing Plan and Trust, effective
_____________________________, 19 ____ (the "Effective Date").
2. X Amends its existing defined contribution plan and trust (Thrift
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& Profit Sharing Plan for the Employees of American Savings Bank)
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dated December 1, 1985, in its entirety into the American Savings
Employees' Savings & Profit Sharing Plan and Trust,
effective September 1, 1999, except as otherwise provided herein
or in the Agreement (the "Effective Date").
II. Definitions
A. Employer
1. "Employer," for purposes of the Plan, shall mean:
American Savings Bank
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2. The Employer is (choose whichever may apply):
(a) X A member of a controlled group of corporations under
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Section 414(b) of the Code.
(b) ____ A member of a group of entities under common control
under Section 414(c) of the Code.
(c) ____ A member of an affiliated service group under Section
414(m) of the Code.
(d) ____ A corporation.
(e) ____ A sole proprietorship or partnership.
(f) ____ A Subchapter S corporation.
3. Employer's Taxable Year Ends on December 31.
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4. Employer's Federal Taxpayer Identification Number is 06 - 0523890.
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5. Employer's Plan Number is (enter 3-digit number) 001.
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B. "Entry Date" means the first day of the (choose 1 or 2):
1. X Calendar month coinciding with or next following the date the
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Employee satisfies the Eligibility requirements described in
Section III.
2. ___ Calendar quarter (January 1, April 1, July 1, October 1)
coinciding with or next following the date the Employee
satisfies the Eligibility requirements described in Section
III.
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C. "Member" means an Employee enrolled in the membership of the Plan.
D. "Normal Retirement Age" means (choose 1 or 2):
1. _____ Attainment of age _______ (select an age not less than 55
and not greater than 65).
2. X Later of: (i) attainment of age 65 or (ii) the fifth
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anniversary of the date the Member commenced participation
in the Plan.
E. "Normal Retirement Date" means the first day of the first calendar
month coincident with or next following the date upon which a Member
attains his or her Normal Retirement Age.
F. "Plan Year" means the twelve (12) consecutive month period ending on
December 31.
G. "Salary" for benefit purposes under the Plan means (choose 1, 2 or 3):
1. _____ Total taxable compensation as reported on Form W-2
(exclusive of any compensation deferred from a prior year).
2. _____ Basic Salary only.
3. X Basic Salary plus one or more of the following (if 3 is
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chosen, then choose (a), (b), (c) or (d), whichever shall
apply):
(a) X Commissions not in excess of $ N/A
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(b) ____ Commissions to the extent that Basic Salary plus
Commissions do not exceed $ ______________________
(c) Overtime
(d) X Overtime and bonuses
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Note: Member pre-tax contributions to a Section 401(k) plan are
always included in Plan Salary.
Member pre-tax contributions to a Section 125 cafeteria plan
are also to be included in Plan Salary, unless the Employer
elects to exclude such amounts by checking this line _____.
III. Eligibility Requirements
A. All Employees shall be eligible to participate in the Plan in
accordance with the provisions of Article II of the Plan, except the
following Employees shall be excluded (choose whichever shall apply):
1. _____ Employees who have not attained age 21.
2. X Employees who have not, during the 12 consecutive month
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period (1-11, 12 or 24) beginning with an Employee's Date
of Employment, Date of Reemployment or any anniversary
thereof, completed 1000 Hours of Service (determined by
multiplying the number of months above by 83 1/3).
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Note: Employers which permit Members to make pre-tax
elective deferrals to the Plan (see V.A.3.) may not
elect a 24 month eligibility period.
3. _____ Employees included in a unit of Employees covered by a
collective bargaining agreement, if retirement benefits
were the subject of good faith bargaining between the
Employer and Employee representatives.
4. _____ Employees who are nonresident aliens and who receive no
earned income from the Employer which constitutes income
from sources within the United States.
5. _____ Employees included in the following job classifications:
(a) _____ Hourly Employees
(b) _____ Salaried Employees
6. _____ Employees of the following employers which are aggregated
under Section 414(b), 414(c) or 414(m) of the Code:
___________________________________________________________
___________________________________________________________
Note: If no entries are made above, all Employees shall be eligible to
participate in the Plan on the later of: (i) the Effective Date or
(ii) the first day of the calendar month or calendar quarter (as
designated by the Employer in Section II.D.) coinciding with or
immediately following the Employee's Date of Employment or, as
applicable, Date of Reemployment.
B. Such Eligibility Computation Period established above shall be
applicable to (choose 1 or 2):
1. X Both present and future Employees.
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2. _____ Future Employees only.
C. Such Eligibility requirements established above shall be (choose 1 or
2):
1. X Applied to the designated Employee group on and after the
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Effective Date of the Plan.
2. _____ Waived for the _____ consecutive monthly period (may not
exceed 12) beginning on the Effective Date of the Plan.
IV. Hours of Employment and Prior Employment Credit
A. The number of Hours of Employment with which an Employee or Member is
credited shall be (choose 1 or 2):
1. X The actual number of Hours of Employment. (Hour of Service
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Method)
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2. _____ 190 Hours of Employment for every month of Employment.
(Equivalency Method)
Note: This election is relevant if you selected an eligibility
requirement under III.A.2. or a vesting schedule under
VIII.A. other than immediate vesting.
B. Prior Employment Credit:
_____ Employment with the following entity or entities shall be
included for eligibility and vesting purposes:
Note: If this Plan is a continuation of a Predecessor Plan, service
under the Predecessor Plan shall be counted as Employment under
this Plan.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
V. Contributions
Note: Annual Member pre-tax elective deferrals, Employer matching
contributions, Employer basic contributions, Employer supplemental
contributions, Employer profit sharing contributions and Employer
Qualified Non-Elective contributions, in the aggregate, may not
exceed 15% of all Members' Salary (excluding from Salary Member pre-
tax elective deferrals).
A. Employee Contributions (fill in 1 and/or 6 if applicable; choose 2 or
3; 4 or 5):
1. X The maximum amount of monthly contributions a Member may make
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to the Plan is 15 % (1-20) of the Member's monthly Salary.
2. X A Member may make pre-tax elective deferrals to the Plan,
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based on multiples of 1% of monthly Salary.
3. _____ A Member may not make pre-tax elective deferrals to the Plan.
4. _____ A Member may make after-tax contributions to the Plan, based
on multiples of 1% of monthly Salary.
5. X A Member may not make after-tax contributions to the Plan.
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6. X An Employee may allocate a rollover contribution to the Plan
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prior to satisfying the Eligibility requirements described
above.
B. A Member may change his or her contribution rate (choose 1, 2 or 3):
1. _____ 1 time per pay period.
2. _____ 1 time per calendar month.
3. X 1 time per calendar quarter.
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C. Employer Matching Contributions (fill in 1 if applicable; and choose 2,
3, 4 or 5):
1. The Employer matching contributions under 2, 3 or 4 below shall be
based on the Member's contributions not in excess of 6% (1-20 but
not in excess of the percentage specified in A.1. above) of the
Member's Salary.
2. X The Employer shall allocate to each contributing Member's
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Account an amount equal to 50% (based on 1% increments not to
exceed 200%) of the Member's contributions for that month.
3. ____ The Employer shall allocate to each contributing Member's
Account an amount determined in accordance with the following
schedule:
Years of Employment Matching %
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Less than 3 50%
At least 3, but less than 5 75%
5 or more 100%
4. ____ The Employer shall allocate to each contributing Member's
Account an amount determined in accordance with the following
schedule:
Years of Employment Matching %
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Less than 3 100%
At least 3, but less than 5 150%
5 or more 200%
5. ____ No Employer matching contributions will be made to the Plan.
D. Employer Basic Contributions (choose 1 or 2):
1. _____ The Employer shall allocate an amount equal to _______% (based
on 1% increments not to exceed 15%) of Member's Salary for the
month to (choose (a) or (b)):
(a) _____ The Accounts of all Members
(b) _____ The Accounts of all Members who were employed
with the Employer on the last day of such month.
2. X No Employer basic contributions will be made to the Plan.
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E. Employer Supplemental Contributions:
The Employer may make supplemental contributions for any Plan Year in
accordance with Section 3.7 of the Plan.
F. Employer Profit Sharing Contributions (Choose 1, 2, 3, 4, or 5):
1. X No Employer Profit Sharing Contributions will be made to the
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Plan.
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Non-Integrated Formula
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2. _____ Profit sharing contributions shall be allocated to each Member
in the same ratio as each Member's Salary during such
Contribution Determination Period bears to the total of such
Salary of all Members.
3. _____ Profit sharing contributions shall be allocated to each Member
in the same ratio as each Member's Salary for the portion of the
Contribution Determination Period during which the Member
satisfied the Employer's eligibility requirement(s) bears to the
total of such Salary of all Members.
Integrated Formula
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4. _____ Profit sharing contributions shall be allocated to each Member's
Account in a uniform percentage (specified by the Employer as
_____%) of each Member's Salary during the Contribution
Determination Period up to the Social Security Taxable Wage Base
as defined in Section _____ of the Plan ("Base Salary") for the
Plan Year that includes such Contribution Determination Period,
plus a uniform percentage(specified by the Employer as _______%)
of each Member's Salary for the Contribution Determination
Period in excess of the Social Security Taxable Wage Base
("Excess Salary") for the Plan Year that includes such
Contribution Determination Period, in accordance with Article
III of the Plan.
5. _____ Profit sharing contributions shall be allocated to each Member's
Account in a uniform percentage (specified by the Employer as
_____%) of each Member's Salary for the portion of the
Contribution Determination Period during which the Member
satisfied the Employer's eligibility requirement(s), if any, up
to the Base Salary for the Plan Year that includes such
Contribution Determination Period, plus a uniform percentage
(specified by the Employer as _______%) of each Member's Excess
Salary for the portion of the Contribution Determination Period
during which the Member satisfied the Employer's eligibility
requirement(s) in accordance with Article III of the Plan.
G. Allocation of Employer Profit Sharing Contributions: N/A
In accordance with Section V, G above, a Member shall be eligible to share
in Employer Profit Sharing Contributions, if any, as follows (choose 1 or
2):
1. _____ A Member shall be eligible for an allocation of Employer Profit
Sharing Contributions for a Contribution Determination Period in
all events.
2. _____ A Member shall be eligible for an allocation of Employer Profit
Sharing Contributions for a Contribution Determination Period
only if he or she (choose (a), (b) or (c) whichever shall
apply):
(a) _____ is employed on the last day of the Contribution
Determinati on Period or retired, died or became
totally and permanently disabled prior to the
last day of the Contribution Determination Period.
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(b) _____ completed 1,000 Hours of Employment if the
Contribution Determination Period is a period
of 12 months (250 Hours of Employment if the
Contribution Determination Period is a period
of 3 months) or retired, died or became totally
and permanently disabled prior to the last day
of the Contribution Determination Period.
(c) _____ is employed on the last day of the Contribution
Determination Period and, if such period is 12
months, completed 1,000 Hours of Employment
(250 Hours of Employment if the Contribution
Determinati on Period is a period of 3 months)
or retired, died or became totally and
permanently disabled prior to the last day of the
Contribution Determination Period.
H. "Contribution Determination Period" for purposes of determining and
allocating Employer profit sharing contributions means (choose 1,2, 3 or
4): N/A
1. _____ The Plan Year.
2. _____ The Employer's Fiscal Year (defined as the Plan's "limitation
year") being the twelve (12) consecutive month period commencing
_________ (month/day) and ending __________ (month/day).
3. _____ The three (3) consecutive monthly periods that comprise each of
the Plan Year quarters.
4. _____ The three (3) consecutive monthly periods that comprise each of
the Employer's Fiscal Year quarters. (Employer's Fiscal Year is
the twelve (12) consecutive month period commencing
___________________________________ (month/day) and ending
___________________________________ (month/day).)
I. Employer Qualified Nonelective Contributions:
The Employer may make qualified nonelective contributions for any Plan
Year in accordance with Section 3.9 of the Plan.
VI. Investment Funds
The Employer hereby appoints Barclays Global Investors, N.A. to serve as
Investment Manager under the Plan.
The Employer hereby selects the following Investment Funds to be made
available under the Plan (choose whichever shall apply) and consent to the
lending of securities by such funds to brokers and other borrowers. The
Employer agrees and acknowledges that the selection of Investment Funds made
in this Section VI is solely its responsibility, and no other person,
including the Sponsor or Investment Manager, has any discretionary authority
or control with respect to such selection process. The Employer hereby holds
Investment Manager harmless from, and indemnifies it against, any liability
Investment Manager may incur with respect to such Investment Funds so long
as Investment Manager is not negligent and has not breached its fiduciary
duties.
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1. X S&P 500 Stock Fund
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2. X Stable Value Fund
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3. X S&P MidCap Stock Fund
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4. X Money Market Fund
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5. X Government Bond Fund
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6. X International Stock Fund
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7. X Asset Allocation Funds (3)
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. Income Plus
. Growth & Income
. Growth
8. X American Savings Bank Stock Fund (the "Employer Stock Fund")
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(when available)
9. ___ American Savings Bank Certificate of Deposit Fund
VII. Employer Securities
A. If the Employer makes available an Employer Stock Fund pursuant to
Section VI of this Adoption Agreement, then voting and tender offer
rights with respect to Employer Stock shall be delegated and exercised
as follows (choose 1 or 2):
1. X Each Member shall be entitled to direct the Plan Administrator
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as to the voting and tender offer rights involving Employer
Stock held in such Member's Account, and the Plan Administrator
shall follow or cause the Trustee to follow such directions. If
a Member fails to provide the Plan Administrator with directions
as to voting or tender offer rights, the Plan Administrator
shall exercise those rights as it determines in its discretion
and shall direct the Trustee accordingly.
2. ___ The Plan Administrator shall direct the Trustee as to the voting
of all Employer Stock and as to all rights in the event of a
tender offer involving such Employer Stock.
VIII. Investment Direction
A. Members shall be entitled to designate what percentage of employee
contributions and employer contributions made on their behalf will be
invested in the various Investment Funds offered by the Employer as
specified in Section VI of this Adoption Agreement; provided, however,
that the following portions of a Member's Account must be invested in
the Employer Stock Fund or, if applicable, the Employer Certificate of
Deposit Fund (choose whichever shall apply):
1. _____ Employer Profit Sharing Contributions
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2. _____ Employer Matching Contributions
3. _____ Employer Basic Contributions
4. _____ Employer Supplemental Contributions
5. _____ Employer Qualified Nonelective Contributions
B. _____ Amounts invested in the Employer Stock Fund or, if applicable,
the Employer Certificate of Deposit Fund may not be transferred
to any other Investment Fund.
1. _____ Notwithstanding this election in B, a Member may transfer such
amounts upon (choose whichever may apply):
(a) _____ the attainment of age _____ (insert 45 or greater)
(b) _____ the completion of ____ (insert 10 or greater) years
of employment
(c) _____ the attainment of age plus years of employment
equal to _______ (insert 55 or greater)
C. A Member may change his or her investment direction (choose 1,2, or 3):
1. X 1 time per business day.
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2. ____ 1 time per calendar month.
3. ____ 1 time per calendar quarter.
D. If a Member fails to make an effective investment direction, the
Member's contributions and employer contributions made on the Member's
behalf shall be invested in Money Market Fund (insert one of the
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Investment Funds selected in Section VI of this Adoption Agreement).
IX. Vesting Schedules; Years of Employment for Vesting Purposes
A. (Choose 1, 2, 3, 4, 5, 6 or 7)
Schedule Years of Employment Vested %
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1. X Immediate Upon Enrollment 100%
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2. ___ 2-6 Year Graded Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
3. ___ 5-Year Cliff Less than 5 0%
5 or more 100%
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4. X 3-Year Cliff Less than 3 0%
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3 or more 100%
5. ___ 4-Year Graded Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
6. ___ 3-7 Year Graded Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
7. ___ Other Less than _____ 0%
_____ but less than _____ ___%
_____ but less than _____ ___%
_____ but less than _____ ___%
_____ but less than _____ ___%
_____ or more 100%
B. With respect to the schedules listed above, the Employer elects (choose 1,
2, 3 and 4; or 5):
1. Schedule A-4 solely with respect to Employer matching contributions.
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2. Schedule ____ solely with respect to Employer basic contributions.
3. Schedule A-1 solely with respect to Employer supplemental
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contributions.
4. Schedule ____ solely with respect to Employer profit sharing
contributions.
5. Schedule ____ with respect to all Employer contributions.
NOTE: Notwithstanding any election by the Employer to the contrary, each
Member shall acquire a 100% vested interest in his Account attributable to
all Employer contributions made to the Plan upon the earlier of (i)
attainment of Normal Retirement Age, (ii) approval for disability or (iii)
death. In addition, a Member shall at all times have a 100% vested
interest in the Employer Qualified Non-Elective Contributions, if any, and
in the pre-tax elective deferrals and nondeductible after-tax Member
Contributions.
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C. Years of Employment Excluded for Vesting Purposes
The following Years of Employment shall be disregarded for vesting
purposes (choose whichever shall apply):
1. ____ Years of Employment during any period in which neither the Plan
nor any predecessor plan was maintained by the Employer.
2. X Years of Employment of a Member prior to attaining age 18.
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X. Withdrawal Provisions
A. The following portions of a Member's Account will be eligible for in-
service withdrawals, subject to the provisions of Article VII of the Plan
(choose whichever shall apply):
1. ___ Employee after-tax contributions and the earnings thereon.
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) ___ Hardship.
(b) ___ Attainment of age 59 1/2.
2. X Employee pre-tax elective deferrals and the earnings thereon.
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Note: In-service withdrawals of all employee pre-tax elective
deferrals and earnings thereon as of December 31, 1988 are
permitted only in the event of hardship or attainment of
age 59 1/2.
3. X Employee rollover contributions and the earnings thereon.
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In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) ___ Hardship.
(b) ___ Attainment of age 59 1/2.
4. X Employer matching contributions and the earnings thereon.
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In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) X Hardship.
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(b) ___ Attainment of age 59 1/2.
5. ___ Employer basic contributions and the earnings thereon.
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) _____ Hardship.
(b) _____ Attainment of age 59 1/2.
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6. X Employer supplemental contributions and the earnings thereon.
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In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) X Hardship.
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(b) ____ Attainment of age 59 1/2.
7. ____ Employer profit sharing contributions and the earnings thereon.
In-service withdrawals permitted only in the event of (choose
whichever shall apply):
(a) ____ Hardship.
(b) ____ Attainment of age 59 1/2.
8. ____ Employer qualified nonelective contributions and earnings
thereon.
Note: In-service withdrawals of all employer qualified
nonelective contributions and earnings thereon are
permitted only in the event of attainment of age 59 1/2
9. ____ No in-service withdrawals shall be allowed.
B. Notwithstanding any elections made in Subsection A of this Section X
above, the following portions of a Member's Account shall be excluded from
eligibility for in-service withdrawals (choose whichever shall apply):
1. ____ Employer contributions, and the earnings thereon, credited to
the Employer Stock Fund or, if applicable, the Employer
Certificate of Deposit Fund.
2. ____ All contributions and/or deferrals, and the earnings thereon,
credited to the Employer Stock Fund or, if applicable, the
Employer Certificate of Deposit Fund.
3. ____ Other: ________________________________________________
XI. Distribution Option (choose whichever shall apply)
1. X Lump Sum and partial lump sum payments only.
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2. ____ Lump Sum and partial lump sum payments plus one or more of the
following (choose (a) and /or (b)):
(a) _____ Installment payments.
(b) _____ Annuity payments.
3. ____ Distributions in kind of Employer Stock.
XII. Loan Program (choose 1, 2 or 3)
1. ____ No loans will be permitted from the Plan.
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2. X Loans will be permitted from the Member's Account.
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(1 per Plan Year to maximum of 2 per participant outstanding)
3. ____ Loans will be permitted from the Member's Account, excluding
(choose whichever shall apply):
(a) _____ Employer Profit sharing contributions and the earnings
thereon.
(b) _____ Employer matching contributions and the earnings thereon.
(c) _____ Employer basic contributions and the earnings thereon.
(d) _____ Employer supplemental contributions and the earnings
thereon.
(e) _____ Employee after-tax contributions and the earnings
thereon.
(f) _____ Employee pre-tax elective deferrals and the earnings
thereon.
(g) _____ Employee rollover contributions and the earnings thereon.
(h) _____ Employer qualified nonelective contributions and the
earnings thereon.
(i) _____ Any amounts to the extent invested in the Employer stock
fund.
XIII. Additional Information
The following is hereby made a part of Section X- Withdrawal Provisions and
XII-Loan Program of the Adoption Agreement and is thus incorporated into and
made a part of the American Savings Bank Employees' Saving & Profit Sharing
Plan and Trust:
Section X. Withdrawal Provisions - Salary deferrals shall be suspended for 12
months following the receipt of a distribution as a result of hardship.
Section XII. Loan Program - A participant is permitted to take one loan per
Plan Year. However, a participant may only have two loans outstanding at any
time.
Signature of Employer's Authorized Representative __________________________
Signature of Trustee ________________________________________
XIV. Plan Administrator
The Named Plan Administrator under the Plan shall be the (choose 1, 2, 3 or
4):
Note: Pentegra Services, Inc. may not be appointed Plan Administrator.
1. X Employer
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2. _____ Employer's Board of Directors
3. _____ Plan's Administrative Committee
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4. _____ Other (if chosen, then provide the following information)
Name: _______________________________________________________
Address: _______________________________________________________
Tel No: _______________________________________________________
Contact: _______________________________________________________
Note: If no Named Plan Administrator is designated above, the Employer
shall be deemed the Named Plan Administrator.
XV. Trustee
The Employer hereby appoints The Bank of New York to serve as Trustee for all
Investment Funds under the Plan except the Employer Stock Fund.
The Employer hereby appoints the following person or entity to serve as
Trustee under the Plan for the Employer Stock Fund.*
Name: _______________________________________________________________________
Address:_____________________________________________________________________
Telephone No: _______________________________ Contact: _____________________
_____________________________________________________________
Signature of Trustee
(Required only if the Employer is serving as its own Trustee)
* Subject to approval by The Bank of New York, if The Bank of New York is
appointed as Trustee for the Employer Stock Fund.
The Employer hereby appoints The Bank of New York to serve as Custodian under
the Plan for the Employer Stock Fund in the event The Bank of New York does not
serve as Trustee for such Fund.
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EXECUTION OF ADOPTION AGREEMENT
By execution of this Adoption Agreement by a duly authorized representative of
the Employer, the Employer acknowledges that it has established or, as the case
may be, amended a tax-qualified retirement plan into the American Savings Bank
Employees' Savings & Profit Sharing Plan and Trust (the "Plan"). The Employer
hereby represents and agrees that it will assume full fiduciary responsibility
for the operation of the Plan and for complying with all duties and requirements
imposed under applicable law, including, but not limited to, the Employee
Retirement Income Security Act of 1974, as amended, and the Internal Revenue
Code of 1986, as amended. In addition, the Employer represents and agrees that
it will accept full responsibility of complying with any applicable requirements
of federal or state securities law as such laws may apply to the Plan and to any
investments thereunder. The Employer further acknowledges that any opinion
letter issued with respect to the Adoption Agreement and the Agreement by the
Internal Revenue Service ("IRS") to Pentegra Services, Inc., as sponsor of the
Employees' Savings & Profit Sharing Plan, does not constitute a ruling or a
determination with respect to the tax-qualified status of the Plan and that the
appropriate application must be submitted to the IRS in order to obtain such a
ruling or determination with respect to the Plan.
The failure to properly complete the Adoption Agreement may result in
disqualification of the Plan and Trust evidenced thereby.
The Sponsor will inform the Employer of any amendments to the Plan or Trust
Agreement or of the discontinuance or abandonment of the Plan or Trust.
Any inquiries regarding the adoption of the Plan should be directed to the
Sponsor as follows:
Pentegra Services, Inc.
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IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officer this __________ day of
______________________________, 19_____.
American Savings Bank
By: __________________________________
Name: __________________________________
Title: __________________________________
16
PENTEGRA SERVICES, INC.
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN
BASIC PLAN DOCUMENT
TABLE OF CONTENTS
ARTICLE I PURPOSE AND DEFINITIONS..................................... 1
ARTICLE II PARTICIPATION AND MEMBERSHIP................................ 9
ARTICLE III CONTRIBUTIONS............................................... 12
ARTICLE IV INVESTMENT OF CONTRIBUTIONS................................. 25
ARTICLE V MEMBERS' ACCOUNTS, UNITS AND VALUATION...................... 27
ARTICLE VI VESTING OF UNITS............................................ 28
ARTICLE VII WITHDRAWALS AND DISTRIBUTIONS............................... 32
ARTICLE VIII LOAN PROGRAM................................................ 41
ARTICLE IX ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES... 46
ARTICLE X MISCELLANEOUS PROVISIONS.................................... 55
ARTICLE XI AMENDMENT AND TERMINATION................................... 64
TRUSTS ESTABLISHED UNDER THE PLAN
ARTICLE I
PURPOSE AND DEFINITIONS
Section 1.1
This Plan and Trust, as evidenced hereby, and the applicable Adoption Agreement
and Trust Agreement(s), are designed and intended to qualify in form as a
qualified profit sharing plan and trust under the applicable provisions of the
Internal Revenue Code of 1986, as now in effect or hereafter amended, or any
other applicable provisions of law including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended.
Section 1.2
The following words and phrases as used in this Plan shall have the following
meanings:
(A) "Account" means the Plan account established and maintained in respect
of each Member pursuant to Article V, including the Member's after-tax
amounts, 401(k) amounts, Employer matching, basic, supplemental and
qualified nonelective contribution amounts, rollover amounts and profit
sharing amounts, as elected by the Employer.
(B) "Adoption Agreement" means the separate document by which the Employer
has adopted the Plan and specified certain of the terms and provisions
hereof. If any term, provision or definition contained in the Adoption
Agreement is inconsistent with any term, provision or definition
contained herein, the one set forth in the Adoption Agreement shall
govern. The Adoption Agreement shall be incorporated into and form an
integral part of the Plan.
(C) "Beneficiary" means the person or persons designated to receive any
amount payable under the Plan upon the death of a Member. Such
designation may be made or changed only by the Member on a form provided
by, and filed with, the Third Party Adminstrator prior to his death. If
the Member is not survived by a Spouse and if no Beneficiary is
designated, or if the designated Beneficiary predeceases the Member,
then any such amount payable shall be paid to such Member's estate upon
his death.
(D) "Board" means the Board of Directors of the Employer adopting the Plan.
1
(E) "Break in Service" means a Plan Year during which an individual has not
completed more than 500 Hours of Employment, as determined by the Plan
Administrator in accordance with the IRS Regulations. Solely for
purposes of determining whether a Break in Service has occurred, an
individual shall be credited with the Hours of Employment which such
individual would have completed but for a maternity or paternity
absence, as determined by the Plan Administrator in accordance with this
Paragraph, the Code and the applicable regulations issued by the DOL and
the IRS; provided, however, that the total Hours of Employment so
credited shall not exceed 501 and the individual timely provides the
Plan Administrator with such information as it may require. Hours of
Employment credited for a maternity or paternity absence shall be
credited entirely (i) in the Plan Year in which the absence began if
such Hours of Employment are necessary to prevent a Break in Service in
such year, or (ii) in the following Plan Year. For purposes of this
Paragraph, maternity or paternity absence shall mean an absence from
work by reason of the individual's pregnancy, the birth of the
individual's child or the placement of a child with the individual in
connection with the adoption of the child by such individual, or for
purposes of caring for a child for the period immediately following such
birth or placement.
(F) "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.
(G) "Commencement Date" means the date on which an Employer begins to
participate in the Plan.
(H) "Contribution Determination Period" means the Plan Year, fiscal year, or
calendar or fiscal quarter, as elected by an Employer, upon which
eligibility for and the maximum permissible amount of any Profit Sharing
contribution, as defined in Article III, is determined. Notwithstanding
the foregoing, for purposes of Article VI, Contribution Determination
Period means the Plan Year.
(I) "Disability" means a Member's disability as defined in Article VII,
Section 7.4.
(J) "DOL" means the United States Department of Labor.
(K) "Employee" means any person in the Employment of, and who receives
compensation from, the Employer, and any leased employee within the
meaning of Section 414(n)(2) of the Code. Notwithstanding the foregoing,
if such leased employees constitute less than twenty percent (20%) of
the Employer's nonhighly compensated work force
2
within the meaning of Section 414(n)(5)(C)(ii) of the Code, such leased
employees are not Employees if they are covered by a plan meeting the
requirements of Section 414(n)(5)(B) of the Code.
(L) "Employer" means the proprietorship, partnership or corporation named in
the Adoption Agreement and any corporation which, together therewith,
constitutes an affiliated service group, any corporation which, together
therewith, constitutes a controlled group of corporations as defined in
Section 1563 of the Code, and any other trade or business (whether
incorporated or not) which, together therewith, are under common control
as defined in Section 414(c) of the Code, which have adopted the Plan.
(M) "Employment" means service with an Employer or with any domestic
subsidiary affiliated or associated with an Employer which is a member
of the same controlled group of corporations (within the meaning of
Section 1563(a) of the Code). In accordance with DOL Regulations
(Sections 2530.200-2(b) and (c)), service includes (a) periods of
vacation, (b) periods of layoff, (c) periods of absence authorized by an
Employer for sickness, temporary disability or personal reasons and (d)
if and to the extent required by the Military Selective Service Act as
amended, or any other federal law, service in the Armed Forces of the
United States.
(N) "Enrollment Date" means the date on which an Employee becomes a Member
as provided under Article II.
(O) "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
(P) "Fiduciary" means any person who (i) exercises any discretionary
authority or control with respect to the management of the Plan or
control with respect to the management or disposition of the assets
thereof, (ii) renders any investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of the Plan, or has any discretionary authority or
responsibility to do so, or (iii) has any discretionary authority or
responsibility in the administration of the Plan, including any other
persons (other than trustees) designated by any Named Fiduciary to carry
out fiduciary responsibilities, except to the extent otherwise provided
by ERISA.
3
(Q) "Highly Compensated Employee" or "Highly Compensated Member" means an
Employee or Member who is employed during the determination year and who
during the look-back year: (i) received compensation from the Employer
in excess of $75,000 (as adjusted pursuant to Section 415(d) of the
Code); (ii) received compensation from the Employer in excess of $50,000
(as adjusted pursuant to Section 415(d) of the Code) and was a member of
the top-paid group for such year as defined in Section 414(q) of the
Code; or (iii) was an officer of the Employer and received compensation
during such year that is greater than 50 percent of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code. The term
Highly Compensated Employee also includes: (i) employees who are both
described in the preceding sentence if the term "determination year" is
substituted for the term "look-back year" and are among the 100
employees who received the most compensation from the Employer during
the determination year; and (ii) employees who are 5 percent owners at
any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding
the determination year.
If an Employee is, during a determination year or look-back year, a
family member of either a 5 percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most
highly compensated Employees ranked on the basis of compensation paid by
the Employer during such year, then the family member and the 5 percent
owner or top-ten Highly Compensated Employee shall be aggregated. In
such case, the family member and 5 percent owner or top-ten Highly
Compensated Employee shall be treated as a single Employee receiving
compensation and plan contributions or benefits equal to the sum of such
compensation and contributions or benefits of the family member and 5
percent owner or top-ten Highly Compensated Employee. For purposes of
this Paragraph, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such
lineal ascendants and descendants.
4
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid
group, the top 100 Employees, the number of Employees treated as
officers and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the IRS Regulations
thereunder.
(R) "Hour of Employment" means each hour during which an Employee performs
service (or is treated as performing service as required by law) for the
Employer and, except in the case of military service, for which he is
directly or indirectly paid, or entitled to payment, by the Employer
(including any back pay irrespective of mitigation of damages), all as
determined in accordance with applicable DOL Regulations.
(S) "Investment Manager" means any Fiduciary other than a Trustee or Named
Fiduciary who (i) has the power to manage, acquire or dispose of any
asset of the Plan; (ii) is (a) registered as an investment advisor under
the Investment Advisors Act of 1940; (b) is a bank, as defined in such
Act, or (c) is an insurance company qualified to perform the services
described in clause (i) hereof under the laws of more than one state of
the United States; and (iii) has acknowledged in writing that he is a
Fiduciary with respect to the Plan.
(T) "IRS" means the United States Internal Revenue Service.
(U) "Leave of Absence" means an absence authorized by an Employee's Employer
and approved by the Plan Administrator, on a uniform basis, in
accordance with Article X.
(V) "Member" means an Employee enrolled in the membership of the Plan under
Article II.
(W) "Month" means any calendar month.
(X) "Named Fiduciary" means the Fiduciary or Fiduciaries named herein or in
the Adoption Agreement who jointly or severally have the authority to
control and manage the operation and administration of the Plan.
(Y) "Normal Retirement Age" means the Member's sixty-fifth (65th) birthday
unless otherwise specified in the Adoption Agreement.
5
(Z) "Plan" means the Employees' Savings & Profit Sharing Plan as evidenced
by this document, the applicable Adoption Agreement and all subsequent
amendments thereto.
(AA) "Plan Administrator" means the Named Fiduciary or, as designated by
such Named Fiduciary and approved by the Board in accordance with
Article IX, any officer or Employee of the Employer.
(BB) "Plan Year" means a consecutive 12-month period ending December 31
unless otherwise specified in the Adoption Agreement.
(CC) "Regulations" means the applicable regulations issued under the Code,
ERISA or other applicable law, by the IRS, the DOL or any other
governmental authority and any proposed or temporary regulations or
rules promulgated by such authorities pending the issuance of such
regulations.
(DD) "Salary" means regular basic monthly salary or wages, exclusive of
special payments such as overtime, bonuses, fees, deferred compensation
(other than pre-tax elective deferrals pursuant to a Member's election
under Article III), severance payments, and contributions by the
Employer under this or any other plan (other than before-tax
contributions made on behalf of a Member under a Code Section 125
cafeteria plan, unless the Employer specifically elects to exclude such
contributions). Commissions shall be included at the Employer's option
within such limits, if any, as may be set by the Employer in the
Adoption Agreement and applied uniformly to all its commissioned
Employees. In addition, Salary may also include, at the Employer's
option, special payments such as (i) overtime or (ii) overtime plus
bonuses. As an alternative to the foregoing definition, at the
Employer's option, Salary may be defined to include total taxable
compensation reported on the Member's IRS Form W-2, plus deferrals, if
any, pursuant to Section 401(k) of the Code and pursuant to Section 125
of the Code (unless the Employer specifically elects to exclude such
Section 125 deferrals), but excluding compensation deferred from
previous years. In no event may a Member's Salary for any Plan Year
exceed for purposes of the Plan $150,000 (adjusted for cost of living
to the extent permitted by the Code and the IRS Regulations).
6
(EE) "Social Security Taxable Wage Base" means the contribution and benefit
base attributable to the OASDI portion of Social Security employment
taxes under Section 230 of the Social Security Act (42 U.S.C. 430) in
effect on the first day of each Plan Year.
(FF) "Spouse" or "Surviving Spouse" means the individual to whom a Member or
former Member was married on the date such Member withdraws his
Account, or if such Member has not withdrawn his Account, the
individual to whom the Member or former Member was married on the date
of his death.
(GG) "Third Party Administrator" or "TPA" means Pentegra Services, Inc., a
non-fiduciary provider of administrative services appointed and
directed by the Plan Administrator or the Named Fiduciary either
jointly or severally.
(HH) "Trust" means the Trust or Trusts established and maintained pursuant
to the terms and provisions of this document and any separately
maintained Trust Agreement or Agreements.
(II) "Trustee" generally means the person, persons or other entities
designated by the Employer or its Board as the Trustee or Trustees
hereof and specified as such in the Adoption Agreement and any
separately maintained Trust Agreement or Agreements.
(JJ) "Trust Agreement" means the separate document by which the Employer or
its Board has appointed a Trustee of the Plan, specified the terms and
conditions of such appointment and any fees associated therewith.
(KK) "Trust Fund" means the Trust Fund or Funds established by the Trust
Agreement or Agreements.
(LL) "Unit" means the unit of measure described in Article V of a Member's
proportionate interest in the available Investment Funds (as defined in
Article IV).
(MM) "Valuation Date" means any business day of any month for the Trustee,
except that in the event the underlying portfolio(s) of any Investment
Fund cannot be valued on such date, the Valuation Date for such
Investment Fund shall be the next subsequent date on which the
underlying portfolio(s) can be valued. Valuations shall be made as of
the close of business on such Valuation Date(s).
7
(NN) "Year of Employment" means a 12-month period of Employment.
(OO) "Year of Service" means any Plan Year during which an individual
completed at least 1,000 Hours of Employment, or satisfied any
alternative requirement, as determined by the Plan Administrator in
accordance with any applicable Regulations issued by the DOL and the
IRS.
Section 1.3
The masculine pronoun wherever used shall include the feminine pronoun.
8
ARTICLE II
PARTICIPATION AND MEMBERSHIP
Section 2.1 Eligibility Requirements
------------------------
The Employer may establish as a requirement for eligibility in the Plan (i) the
completion of any number of months not to exceed 12 consecutive months, or (ii)
the completion of one or two 12-consecutive-month periods, and/or (iii) if the
Employer so elects, it may adopt a minimum age requirement of age 21. Such
election shall be made and reflected on the Adoption Agreement. Notwithstanding
the foregoing, in the case of an Employer that adopts the 401(k) feature under
Section 3.9, the eligibility requirements under such feature shall not exceed
the period described in clause (i) above, and, at the election of the Employer,
attainment of age 21 as described in clause (iii) above.
Where an Employer designates a one or two 12-consecutive-month eligibility
waiting period, an Employee must complete at least 1,000 Hours of Employment
during each 12-consecutive-month period (measured from his date of Employment
and each anniversary thereafter). Where an Employer designates an eligibility
waiting period of less than 12 months, an Employee must, for purposes of
eligibility, complete a required number of hours (measured from his date of
Employment and each anniversary thereafter) which is arrived at by multiplying
the number of months of the eligibility waiting period requirement by 83 1/3.
Section 2.2 Exclusion of Certain Employees
------------------------------
To the extent provided in the Adoption Agreement, the following Employees may be
excluded from participation in the Plan:
(i) Employees not meeting the age and service requirements;
(ii) Employees who are included in a unit of Employees covered by a
collective bargaining agreement between the Employee representatives and
one or more Employers if there is evidence that retirement benefits were
the subject of good faith bargaining between such Employee
representatives and such Employer(s). For this purpose, the term
"Employee representative" does not include any organization where more
than one-half of the membership is comprised of owners, officers and
executives of the Employer;
(iii) Employees who are nonresident aliens and who receive no earned income
from the Employer which constitutes income from sources within the
United States; and
9
(iv) Employees described in Section 2.4 or included in any other ineligible
job classifications set forth in the Adoption Agreement.
Section 2.3 Waiver of Eligibility Requirements
----------------------------------
The Employer, at its election, may waive the eligibility requirement(s) for
participation specified above for (i) all Employees, or (ii) all those employed
on or up to 12 months after its Commencement Date under the Plan. Subject to
the requirements of the Code, the eligibility waiting period shall be deemed to
have been satisfied for an Employee who was previously a Member of the Plan.
All Employees whose Employment commences after the expiration date of the
Employer's waiver of the eligibility requirement(s), if any, shall be enrolled
in the Plan in accordance with the eligibility requirement(s) specified in the
Adoption Agreement.
Section 2.4 Exclusion of Non-salaried Employees
-----------------------------------
The Employer, at its election, may exclude non-salaried (hourly paid) Employees
from participation in the Plan, regardless of the number of Hours of Employment
such Employees complete in any Plan Year. Notwithstanding the foregoing, for
purposes of this Section and all purposes under the Plan, a non-salaried
Employee that is hired following the adoption date of the Plan by the Employer,
but prior to the adoption of this exclusion by the Employer, shall continue to
be deemed to be an Employee and will continue to receive benefits on the same
basis as a salaried Member, despite classification as a non-salaried Employee.
Section 2.5 Commencement of Participation
-----------------------------
Every eligible Employee (other than non-salaried or such other Employees who, at
the election of the Employer, are excluded from participation) shall commence
participation in the Plan on the later of:
(1) The Employer's Commencement Date, or
(2) The first day of the month or calendar quarter (as designated by the
Employer in the Adoption Agreement) coinciding with or next
following his satisfaction of the eligibility requirements as
specified in the Adoption Agreement.
10
The date that participation commences shall be hereinafter referred to as his
Enrollment Date. Notwithstanding the above, no Employee shall under any
circumstances become a Member unless and until his enrollment application is
filed with, and accepted by, the Plan Administrator. The Plan Administrator
shall notify each Employee of his eligibility for membership in the Plan and
shall furnish him with an enrollment application in order that he may elect to
make or receive contributions on his behalf under Article III at the earliest
possible date consonant with this Article.
If an Employee fails to complete the enrollment form furnished to him, the Plan
Administrator shall do so on his behalf. In the event the Plan Administrator
processes the enrollment form on behalf of the Employee, the Employee shall be
deemed to have elected not to make any contributions and/or elective deferrals
under the Plan, if applicable.
Section 2.6 Termination of Participation
----------------------------
Membership under all features and provisions of the Plan shall terminate upon
the earlier of (a) a Member's termination of Employment and payment to him of
his entire vested interest, or (b) his death.
11
ARTICLE III
CONTRIBUTIONS
Section 3.1 Contributions by Members
------------------------
If the Adoption Agreement so provides, each Member may elect to make non-
deductible, after-tax contributions under the Plan, based on increments of 1% of
his Salary, provided the amount thereof, when aggregated with the amount of any
pre-tax effective deferrals, does not exceed the limit established by the
Employer in the Adoption Agreement. All such after-tax contributions shall be
separately accounted for, nonforfeitable and distributed with and in addition to
any other benefit to which the Member is entitled hereunder. A Member may
change his contribution rate as designated in the Adoption Agreement, but
reduced or suspended contributions may not subsequently be made up.
Section 3.2 Elective Deferrals by Members
-----------------------------
If the Adoption Agreement so provides, each Member may elect to make pre-tax
elective deferrals (401(k) deferrals) under the Plan, based on increments of 1%
of his Salary, provided the amount thereof, when aggregated with the amount of
any after-tax contributions, does not exceed the limit established by the
Employer in the Adoption Agreement. All such 401(k) deferrals shall be
separately accounted for, nonforfeitable and distributed under the terms and
conditions described under Article VII with and in addition to any other benefit
to which the Member is entitled hereunder. A Member may change his 401(k)
deferral rate or suspend his 401(k) deferrals as designated in the Adoption
Agreement, but reduced or suspended deferrals may not subsequently be made up.
Notwithstanding any other provision of the Plan, no Member may make 401(k)
deferrals during any Plan Year in excess of $7,000 multiplied by the adjustment
factor as provided by the Secretary of the Treasury. The adjustment factor
shall mean the cost of living adjustment factor prescribed by the Secretary of
the Treasury under Section 402(g)(5) of the Code for years beginning after
December 31, 1987, as applied to such items and in such manner as the Secretary
shall provide. In the event that the aggregate amount of such 401(k) deferrals
for a Member exceeds the limitation in the previous sentence, the amount of such
excess, increased by any income and decreased by any losses attributable
thereto, shall be refunded to such Member no later than the April 15 of the Plan
Year following the Plan Year for which the 401(k) deferrals were made. If
Member also participates, in any Plan Year, in any other plans subject to the
limitations set forth in Section 402(g) of the Code and has made excess 401(k)
deferrals under this Plan when combined with the other plans subject to such
limits, to
12
the extent the Member, in writing submitted to the TPA no later than the March 1
of the Plan Year following the Plan Year for which the 401(k) deferrals were
made, designates any 401(k) deferrals under this Plan as excess deferrals, the
amount of such designated excess, increased by any income and decreased by any
losses attributable thereto, shall be refunded to the Member no later than the
April 15 of the Plan Year following the Plan Year for which the 401(k) deferrals
were made.
Section 3.3 Transfer of Funds and Rollover Contributions by Members
-------------------------------------------------------
Each Member may elect to make, directly or indirectly, a rollover contribution
to the Plan of amounts held on his behalf in (i) an employee benefit plan
qualified under Section 401(a) of the Code, or (ii) an individual retirement
account or annuity as described in Section 408(d)(3) of the Code. All such
amounts shall be certified in form and substance satisfactory to the Plan
Administrator by the Member as being all or part of an "eligible rollover
distribution" or a "rollover contribution" within the meaning of Section
402(c)(4) or Section 408(d)(3), respectively, of the Code. Such rollover
amounts, along with the earnings related thereto, will be accounted for
separately from any other amounts in the Member's Account. A Member shall have a
nonforfeitable vested interest in all such rollover amounts.
The Employer may, at its option, permit Employees who have not satisfied the
eligibility requirements designated in the Adoption Agreement to make a rollover
contribution to the Plan.
The Trustee of the Plan may also accept a direct transfer of funds, which meets
the requirements of Section 1.411(d)-4 of the IRS Regulations, from a plan which
the Trustee reasonably believes to be qualified under Section 401(a) of the Code
in which an Employee was, is, or will become, as the case may be, a participant.
If the funds so directly transferred are transferred from a retirement plan
subject to Code Section 401(a)(11), then such funds shall be accounted for
separately and any subsequent distribution of those funds, and earnings thereon,
shall be subject to the provisions of Section 7.3 which are applicable when an
Employer elects to provide an annuity option under the Plan.
Section 3.4 Employer Contributions - General
--------------------------------
The Employer may elect to make regular or discretionary contributions under the
Plan. Such Employer contributions may be in the form of (i) matching
contributions, (ii) basic contributions, and/or (iii) profit sharing
contributions as designated by the Employer in the Adoption Agreement and/or (i)
supplemental contributions and/or (ii) qualified nonelective contributions as
permitted under the Plan. Each such contribution type shall be separately
accounted for by the TPA.
13
Section 3.5 Employer Matching Contributions
-------------------------------
The Employer may elect to make regular matching contributions under the Plan.
Such matching contributions on behalf of any Member shall be conditioned upon
the Member making after-tax contributions under Section 3.1 and/or 401(k)
deferrals under Sections 3.2 and 3.9.
If so adopted, the Employer shall contribute under the Plan on behalf of each of
its Members an amount equal to a percentage (as specified by the Employer in the
Adoption Agreement) of the Member's after-tax contributions and/or 401(k)
deferrals not in excess of a maximum percentage as specified by the Employer in
the Adoption Agreement (in increments of 1%) of his Salary. The percentage
elected by the Employer shall be based on 1% increments not to exceed 200% or in
accordance with one of the schedules of matching contribution formulas listed
below, and must be uniformly applicable to all Members.
Years of Employment Matching %
------------------- ----------
Formula Step 1 Less than 3 50%
At least 3 but less than 5 75%
5 or more 100%
Formula Step 2 Less than 3 100%
At least 3 but less than 5 150%
5 or more 200%
Section 3.6 Employer Basic Contributions
----------------------------
The Employer may elect to make regular basic contributions under the Plan. Such
basic contributions on behalf of any Member shall not be conditioned upon the
Member making after-tax contributions and/or (401(k) deferrals under this
Article III. If so adopted, the Employer shall contribute monthly under the
Plan on behalf of each Member (as specified by the Employer in the Adoption
Agreement) an amount equal to a percentage not to exceed 15% (as specified by
the Employer in the Adoption Agreement) in increments of 1% of the Member's
Salary for such month. The percentage elected by the Employer shall be
uniformly applicable to all Members. The Employer may elect to restrict the
allocation of such basic contribution to those Members who were employed with
the Employer on the last day of the month for which the basic contribution is
made.
Section 3.7 Supplemental Contributions by Employer
--------------------------------------
14
An Employer may, at its option, make a supplemental contribution under Formula
(1) or (2) below:
Formula (1) A uniform percentage (as specified by the Employer) of each
Member's contributions which were received by the Plan during the
Plan Year with respect to which the supplemental contribution
relates. If the Employer elects to make such a supplemental
contribution, it shall be made on or before the last day of the
second month in the Plan Year following the Plan Year described
in the preceding sentence on behalf of all those Members who were
employed with the Employer on the last working day of the Plan
Year with respect to which the supplemental contribution relates.
Formula (2) A uniform dollar amount per Member or a uniform percentage of
each Member's Salary for the Plan Year (or, at the election of
the Employer, the Employer's fiscal year) to which the
supplemental contribution relates. If the Employer elects to make
such a supplemental contribution, it shall be made on or before
the last day of the second month in the Plan Year (or the fiscal
year) following the Plan Year (or the fiscal year) described in
the preceding sentence on behalf of all those Members who were
employed with the Employer on the last working day of the Plan
Year (or the fiscal year) to which the supplemental contribution
relates. The percentage contributed under this Formula (2) shall
be limited in accordance with the Employer's matching formula and
basic contribution rate, if any, under this Article such that the
sum of the Employer's Formula (2) supplemental contribution plus
all other Employer contributions under this Article shall not
exceed 15% of Salary for such year.
Section 3.8 The Profit Sharing Feature
--------------------------
An Employer may, at its option, adopt the Profit Sharing Feature as described
herein, subject to any other provisions of the Plan, where applicable. This
Feature may be adopted either in lieu of, or in addition to, any other Plan
Feature contained in this Article III. The Profit Sharing Feature is designed
to provide the Employer a means by which to provide discretionary contributions
on behalf of Employees eligible under the Plan.
If this Profit Sharing Feature is adopted, the Employer may contribute on behalf
of each of its eligible Members, on an annual (or at the election of the
Employer, quarterly) basis for any Plan Year or fiscal year of the Employer (as
the Employer shall elect), a discretionary amount not to exceed the maximum
amount allowable as a deduction to the Employer under the provisions of Section
404 of the Code, and further subject to the provisions of Article X.
15
Any such profit sharing contribution must be received by the Trustee on or
before the last business day of the second month following the close of the
Contribution Determination Period on behalf of all those Members who are
entitled to an allocation of such profit sharing contribution as set forth in
the Adoption Agreement. For purposes of making the allocations described in
this paragraph, a Member who is on a Type 1 non-military Leave of Absence (as
defined in Sections 1.2(U) and 10.8(B)(1)) or a Type 4 military Leave of Absence
(as defined in Sections 1.2(U) and 10.8(B)(4)) shall be treated as if he were a
Member who was an Employee in Employment on the last day of such Contribution
Determination Period.
Profit sharing contributions shall be allocated to each Member's Account for the
Contribution Determination Period at the election of the Employer, in accordance
with one of the following options:
Profit Sharing Formula 1 - In the same ratio as each Member's Salary during
such Contribution Determination Period bears to the
total of such Salary of all Members.
Profit Sharing Formula 2 - In the same ratio as each Member's Salary for the
portion of the Contribution Determination Period
during which the Member satisfied the Employer's
eligibility requirement(s) bears to the total of
such Salary of all Members.
The Employer may integrate the Profit Sharing Feature with Social Security in
accordance with the following provision. The annual (or quarterly, if
applicable) profit sharing contributions for any Contribution Determination
Period (which period shall include, for the purposes of the following maximum
integration levels provided hereunder where the Employer has elected quarterly
allocations of contributions, the four quarters of a Plan Year or fiscal year)
shall be allocated to each Member's Account at the election of the Employer, in
accordance with one of the following options:
16
Profit Sharing Formula 3 - In a uniform percentage (as specified by the
Employer in the Adoption Agreement) of each Member's
Salary during the Contribution Determination Period
up to the Social Security Taxable Wage Base for such
Contribution Determination Period (the "Base
Contribution Percentage"), plus a uniform percentage
(as specified by the Employer in the Adoption
Agreement) of each Member's Salary for the
Contribution Determination Period in excess of the
Social Security Taxable Wage Base for such
Contribution Determination Period (the "Excess
Contribution Percentage").
Profit Sharing Formula 4 - In a uniform percentage (as specified by the
Employer in the Adoption Agreement) of each Member's
Salary for the portion of the Contribution
Determination Period during which the Member
satisfied the Employer's eligibility requirement(s),
if any, up to the Base Contribution Percentage for
such Contribution Determination Period, plus a
uniform percentage (as specified by the Employer in
the Adoption Agreement) of each Member's Salary for
the portion of the Contribution Determination Period
during which the Member satisfied the Employer's
eligibility requirement(s), equal to the Excess
Contribution Percentage.
The Excess Contribution Percentage described in Profit Sharing Formulas 3 and 4
above may not exceed the lesser of (i) the Base Contribution Percentage, or (ii)
the greater of (1) 5.7% or (2) the percentage equal to the portion of the Code
Section 3111(a) tax imposed on employers under the Federal Insurance
Contributions Act (as in effect as of the beginning of the Plan Year) which is
attributable to old-age insurance. For purposes of this Subparagraph,
"compensation" as defined in Section 414(s) of the Code shall be substituted for
"Salary" in determining the Excess Contribution Percentage and the Base
Contribution Percentage.
Notwithstanding the foregoing, the Employer may not adopt the Social Security
integration options provided above if any other integrated defined contribution
or defined benefit plan is maintained by the Employer during any Contribution
Determination Period.
17
Section 3.9 The 401(k) Feature
------------------
The Employer may, at its option, adopt the 401(k) Feature described hereunder
and in Section 3.2 above for the exclusive purpose of permitting its Members to
make 401(k) deferrals to the Plan.
The Employer may make, apart from any matching contributions it may elect to
make, Employer qualified nonelective contributions as defined in Section
1.401(k)-1(g)(13) of the Regulations. The amount of such contributions shall
not exceed 15% of the Salary of all Members eligible to share in the allocation
when combined with all Employer contributions (including 401(k) elective
deferrals) to the Plan for such Plan Year. Allocation of such contributions
shall be made, at the election of the Employer, to the accounts of (i) all
Members, or (ii) only Members who are not Highly Compensated Employees.
Allocation of such contributions shall be made, at the election of the Employer,
in the ratio (i) which each eligible Member's Salary for the Plan Year bears to
the total Salary of all eligible Members for such Plan Year, or (ii) which each
eligible Member's Salary not in excess of a fixed dollar amount specified by the
Employer for the Plan Year bears to the total Salary of all eligible Members
taking into account Salary for each such Member not in excess of the specified
dollar amount. Notwithstanding any provision of the Plan to the contrary, such
contributions shall be subject to the same vesting requirements and distribution
restrictions as Members' 401(k) deferrals and shall not be conditioned on any
election or contribution of the Member under the 401(k) feature. Any such
contributions must be made on or before the last day of the second month after
the Plan Year to which the contribution relates. Further, for purposes of the
actual deferral percentage or actual contribution percentage tests described
below, the Employer may apply (in accordance with applicable Regulations) all or
any portion of the Employer qualified nonelective contributions for the Plan
Year toward the satisfaction of the actual deferral percentage test. Any
remaining Employer qualified nonelective contributions not utilized to satisfy
the actual deferral percentage test may be applied (in accordance with
applicable Regulations) to satisfy the actual contribution percentage test.
Notwithstanding any other provision of this 401(k) Feature, the actual deferral
percentages for the Plan Year for Highly Compensated Employees shall not exceed
the greater of the following actual deferral percentages: (a) the actual
deferral percentage for such Plan Year of those Employees who are not Highly
Compensated Employees multiplied by 1.25; or (b) the actual deferral percentage
for the Plan Year of those Employees who are not Highly Compensated Employees
multiplied by 2.0, provided that the actual deferral percentage for the Highly
Compensated Employees does not exceed the actual deferral percentage for such
other Employees by more than 2 percentage points. This determination shall be
made in accordance
18
with the procedure described in Section 3.10 below.
Section 3.10 Determining the Actual Deferral Percentages
-------------------------------------------
For purposes of this 401(k) Feature, the "actual deferral percentage" for a Plan
Year means, for each specified group of Employees, the average of the ratios
(calculated separately for each Employee in such group) of (a) the amount of
401(k) deferrals (including, as provided in Section 3.9, any Employer qualified
nonelective contributions) made to the Member's account for the Plan Year, to
(b) the amount of the Member's compensation (as defined in Section 414(s) of the
Code) for the Plan Year or, alternatively, where specifically elected by the
Employer, for only that part of the Plan Year during which the Member was
eligible to participate in the Plan. An Employee's actual deferral percentage
shall be zero if no 401(k) deferral (or, as provided in Section 3.9, Employer
qualified nonelective contribution) is made on his behalf for such Plan Year.
If the Plan and one or more other plans which include cash or deferred
arrangements are considered as one plan for purposes of Sections 401(a)(4) and
410(b) of the Code, the cash or deferred arrangements included in such plans
shall be treated as one arrangement for purposes of this 401(k) Feature.
For purposes of determining the actual deferral percentage of a Member who is a
Highly Compensated Employee subject to the family aggregation rules of Section
414(q)(6) of the Code because such Employee is either a five-percent owner or
one of the ten most Highly Compensated Employees as described in Section
414(q)(6) of the Code, the 401(k) deferrals, contributions and compensation (as
defined in Section 414(s) of the Code) of such Member shall include 401(k)
deferrals, contributions and compensation (as defined in Section 414(s) of the
Code) of "family members", within the meaning of Section 414(q)(6) of the Code,
and such "family members" shall not be considered as separate Employees in
determining actual deferral percentages.
The TPA shall determine as of the end of the Plan Year whether one of the actual
deferral percentage tests specified in Section 3.9 above is satisfied for such
Plan Year. This determination shall be made after first determining the
treatment of excess deferrals within the meaning of Section 402(g) of the Code
under Section 3.2 above. In the event that neither of such actual deferral
percentage tests is satisfied, the TPA shall, to the extent permissible under
the Code and the IRS Regulations, refund the excess contributions for the Plan
Year in the following order of priority: by (i) refunding such amounts deferred
by the Member which were not matched by his Employer (and any earnings and
losses allocable thereto), and (ii) refunding amounts deferred for such Plan
Year by the Member (and any earnings and losses allocable thereto), and, solely
to the extent permitted under the Code and applicable IRS
19
Regulations, distributing to the Member amounts contributed for such Plan Year
by the Employer with respect to the Member's 401(k) deferrals that are returned
pursuant to this Paragraph (and any earnings and losses allocable thereto).
The distribution of such excess contributions shall be made to Highly
Compensated Members to the extent practicable before the 15th day of the third
month immediately following the Plan Year for which such excess contributions
were made, but in no event later than the end of the Plan Year following such
Plan Year or, in the case of the termination of the Plan in accordance with
Article XI, no later than the end of the twelve-month period immediately
following the date of such termination.
For purposes of this 401(k) Feature, "excess contributions" means, with respect
to any Plan Year, the excess of the aggregate amount of 401(k) deferrals (and
any earnings and losses allocable thereto) made to the accounts of Highly
Compensated Members for such Plan Year, over the maximum amount of such
deferrals that could be made by such Members without violating the requirements
described above, determined by reducing 401(k) deferrals made by or on behalf of
Highly Compensated Members in order of the actual deferral percentages beginning
with the highest of such percentages.
Section 3.11 Determining the Actual Contribution Percentages
-----------------------------------------------
Notwithstanding any other provision of this Section 3.11, the actual
contribution percentage for the Plan Year for Highly Compensated Employees shall
not exceed the greater of the following actual contribution percentages: (a)
the actual contribution percentage for such Plan Year of those Employees who are
not Highly Compensated Employees multiplied by 1.25, or (b) the actual
contribution percentage for the Plan Year of those Employees who are not Highly
Compensated Employees multiplied by 2.0, provided that the actual contribution
percentage for the Highly Compensated Employees does not exceed the actual
contribution percentage for such other Employees by more than 2 percentage
points. For purposes of this Article III, the "actual contribution percentage"
for a Plan Year means, for each specified group of Employees, the average of the
ratios (calculated separately for each Employee in such group) of (A) the sum of
(i) Member after-tax contributions credited to his Account for the Plan Year,
(ii) Employer matching contributions and/or supplemental contributions under
Formula 1 credited to his Account as described in this Article for the Plan
Year, and (iii) in accordance with and to the extent permitted by the IRS
Regulations, 401(k) deferrals (and, as provided in Section 3.9, any Employer
qualified nonelective contributions) credited to his Account, to (B) the amount
of the Member's compensation (as defined in Section 414(s) of the Code) for the
Plan Year or, alternatively, where specifically elected by the Employer, for
only that part of the Plan
20
Year during which the Member was eligible to participate in the Plan. An
Employee's actual contribution percentage shall be zero if no such contributions
are made on his behalf for such Plan Year.
The actual contribution percentage taken into account for any Highly Compensated
Employee who is eligible to make Member contributions or receive Employer
matching contributions under two or more plans described in Section 401(a) of
the Code or arrangements described in Section 401(k) of the Code that are
maintained by the Employer shall be determined as if all such contributions were
made under a single plan. For purposes of determining the actual contribution
percentage of a Member who is a Highly Compensated Employee subject to the
family aggregation rules of Section 414(q)(6) of the Code because such Member is
either a five-percent owner or one of the ten most Highly Compensated Employees
as described in Section 414(q)(6) of the Code, the Employer matching
contributions and Member contributions and compensation (as defined in Section
414(s) of the Code) of such Member shall include the Employer matching and
Member contributions and compensation (as defined in Section 414(s) of the Code)
of "family members," within the meaning of Section 414(q)(6) of the Code, and
such "family members" shall not be considered as separate Employees in
determining actual contribution percentages.
The TPA shall determine as of the end of the Plan Year whether one of the actual
contribution percentage tests specified above is satisfied for such Plan Year.
This determination shall be made after first determining the treatment of excess
deferrals within the meaning of Section 402(g) of the Code under Section 3.2
above and then determining the treatment of excess contributions under Section
3.10 above. In the event that neither of the actual contribution percentage
tests is satisfied, the TPA shall refund the excess aggregate contributions in
the manner described below.
For purposes of this Article III, "excess aggregate contributions" means, with
respect to any Plan Year and with respect to any Member, the excess of the
aggregate amount of contributions (and any earnings and losses allocable
thereto) made as (i) Member after-tax contributions credited to his Account for
the Plan Year, (ii) Employer matching contributions and/or supplemental
contributions under Formula 1 credited to his Account as described in this
Article for the Plan Year, and (iii) in accordance with and to the extent
permitted by the IRS Regulations, 401(k) deferrals (and, as provided in Section
3.9, any Employer qualified nonelective contributions) credited to his Account
(if the Plan Administrator elects to take into account such deferrals and
contributions when calculating the actual contribution percentage) of Highly
Compensated Members for such Plan Year, over the maximum amount of such
contributions that could be made as Employer contributions, Member contributions
and 401(k)
21
deferrals of such Members without violating the requirements of any Subparagraph
of this Section 3.11.
If the TPA is required to refund excess aggregate contributions for any Highly
Compensated Member for a Plan Year in order to satisfy the requirements of any
Subparagraph above, then the refund of such excess aggregate contributions shall
be made with respect to such Highly Compensated Members to the extent
practicable before the 15th day of the third month immediately following the
Plan Year for which such excess aggregate contributions were made, but in no
event later than the end of the Plan Year following such Plan Year or, in the
case of the termination of the Plan in accordance with Article XI, no later than
the end of the twelve-month period immediately following the date of such
termination.
For each such Member, the amounts so refunded shall be made in the following
order of priority: (i) to the extent that the amounts contributed by the Member
on an after-tax basis for such Plan Year exceed the highest rate of such
contributions with respect to which amounts were contributed by the Employer, by
refunding such amounts contributed by the Member which were not matched by his
Employer (and any earnings and losses allocable thereto) and (ii) by refunding
amounts contributed for such Plan Year by the Member which were matched by his
Employer (and any earnings and losses allocable thereto) and, solely to the
extent permitted under the Code and applicable IRS Regulations, distributing to
the Member amounts contributed for such Plan Year by the Employer with respect
to the amounts so returned (and any earnings and losses allocable thereto). All
such distributions shall be made to, or shall be with respect to, Highly
Compensated Members on the basis of the respective portions of such amounts
attributable to each such Highly Compensated Member.
Section 3.12 The Aggregate Limit Test
------------------------
Notwithstanding any other provision of the Plan, the sum of the actual deferral
percentage and the actual contribution percentage determined in accordance with
the procedures described above of those Employees who are Highly Compensated
Employees may not exceed the aggregate limit as determined below.
22
For purposes of this Article III, the "aggregate limit" for a Plan Year is the
greater of:
(1) The sum of:
(a) 1.25 times the greater of the relevant actual deferral percentage
or the relevant actual contribution percentage, and
(b) Two percentage points plus the lesser of the relevant actual
deferral percentage or the relevant actual contribution
percentage. In no event, however, shall this amount exceed twice
the lesser of the relevant actual deferral percentage or the
relevant actual contribution percentage; or
(2) The sum of:
(a) 1.25 times the lesser of the relevant actual deferral percentage
or the relevant actual contribution percentage, and
(b) Two percentage points plus the greater of the relevant actual
deferral percentage or the relevant actual contribution
percentage. In no event, however, shall this amount exceed twice
the greater of the relevant actual deferral percentage or the
relevant actual contribution percentage; provided, however, that
if a less restrictive limitation is prescribed by the IRS, such
limitation shall be used in lieu of the foregoing. The relevant
actual deferral percentage and relevant actual contribution
percentage are defined in accordance with the Code and the IRS
Regulations.
The TPA shall determine as of the end of the Plan Year whether the aggregate
limit has been exceeded. This determination shall be made after first
determining the treatment of excess deferrals within the meaning of Section
402(g) of the Code under Section 3.2 above, then determining the treatment of
excess contributions under Section 3.10 above, and then determining the
treatment of excess aggregate contributions under this Article III. In the
event that the aggregate limit is exceeded, the actual contribution percentage
of those Employees who are Highly Compensated Employees shall be reduced in the
same manner as described in Section 3.11 of this Article until the aggregate
limit is no longer exceeded, unless the TPA designates, in lieu of the reduction
of the actual contribution percentage a reduction in the actual deferral
percentage of those Employees who are Highly Compensated Employees, which
reduction shall occur in the same manner as described in Section 3.10 of this
Article until the aggregate limit is no longer exceeded. Notwithstanding the
provisions of Sections 3.2 and 3.10 above, the amount of excess contributions to
be distributed, with respect to a Member for a Plan Year, shall be reduced by
any excess deferrals distributed to such Member for such
23
Plan Year.
Section 3.13 Remittance of Contributions
---------------------------
The contributions of both the Employer and the Plan Members shall be recorded by
the Employer and remitted to the TPA for transmittal to the Trustee or custodian
or directly to the Trustee or custodian so that the Trustee or custodian shall
be in receipt thereof by the 15th day of the month next following the month in
respect of which such contributions are payable. Such amounts shall be used to
provide additional Units pursuant to Article V.
24
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
Section 4.1 Investment by Trustee or Custodian
----------------------------------
All contributions to the Plan shall, upon receipt by the TPA, be delivered to
the Trustee or custodian to be held in the Trust Fund and invested and
distributed by the Trustee or custodian in accordance with the provisions of the
Plan and Trust Agreement. The Trust Fund shall consist of one or more of the
Investment Funds designated by the Employer in the Adoption Agreement.
With the exception of the Employer Stock Fund or, if applicable, the Employer
Certificate of Deposit Fund, the Trustee may in its discretion invest any
amounts held by it in any Investment Fund in any commingled or group trust fund
described in Section 401(a) of the Code and exempt under Section 501(a) of the
Code or in any common trust fund exempt under Section 584 of the Code, provided
that such trust fund satisfies any requirements of the Plan applicable to such
Investment Funds. To the extent that the Investment Funds are at any time
invested in any commingled, group or common trust fund, the declaration of trust
or other instrument pertaining to such fund and any amendments thereto are
hereby adopted as part of the Plan.
The Employer will designate in the Adoption Agreement which of the Investment
Funds described therein will be made available to Members and the terms and
conditions under which such Funds will operate with respect to employee
direction of allocations to and among such designated Funds and the types of
contributions and/or deferrals eligible for investment therein.
Section 4.2 Member Directed Investments
---------------------------
To the extent permitted by the Employer as set forth in the Adoption Agreement,
each Member shall direct in writing that his contributions and deferrals, if
any, and the contributions made by the Employer on his behalf shall be invested
(a) entirely in any one of the Investment Funds made available by the Employer,
or (b) among the available Investment Funds in any combination of multiples of
1%. If a Member has made any Rollover contributions in accordance with Article
III, Section 3.3, such Member may elect to apply separate investment directions
to such rollover amounts. Any such investment direction shall be followed by
the TPA until changed. Subject to the provisions of the following paragraphs of
this Section, as
25
designated in the Adoption Agreement, a Member may change his investment
direction as to future contributions and also as to the value of his accumulated
Units in each of the available Investment Funds by filing written notice with
the TPA. Such directed change(s) will become effective upon the Valuation Date
coinciding with or next following the date which his notice was received by the
TPA or as soon as administratively practicable thereafter. If the Adoption
Agreement provides for Member directed investments, and if a Member does not
make a written designation of an Investment Fund or Funds, the Employer or its
designee shall direct the Trustee to invest all amounts held or received on
account of the such Member in the Investment Fund which in the opinion of the
Employer best protects principal.
Except as otherwise provided below, a Member may not direct a transfer from the
Stable Value Fund to the Government Money Market Fund. A Member may direct a
transfer from the 500 Stock Index Fund, the Midcap 400 Stock Index Fund, and/or
the Employer Stock Fund to the Government Money Market Fund provided that
amounts previously transferred from the Stable Value Fund to the 500 Stock Index
Fund, the Midcap 400 Stock Index Fund or the Employer Stock Fund remain in such
Funds for a period of three months prior to being transferred to the Government
Money Market Fund.
Section 4.3 Employer Securities
-------------------
If the Employer so elects in the Adoption Agreement, the Employer and/or Members
may direct that contributions will be invested in Qualifying Employer Securities
(within the meaning of Section 407(d)(5) of ERISA) through the Employer Stock
Fund.
26
ARTICLE V
MEMBERS' ACCOUNTS, UNITS AND VALUATION
The TPA shall establish and maintain an Account for each Member showing his
interests in the available Investment Funds, as designated by the Employer in
the Adoption Agreement. The interest in each Investment Fund shall be
represented by Units.
As of each Valuation Date, the value of a Unit in each Investment Fund shall be
determined by dividing (a) the sum of the net assets at market value determined
by the Trustee by (b) the total number of outstanding Units.
The number of additional Units to be credited to a Member's interest in each
available Investment Fund, as of any Valuation Date, shall be determined by
dividing (a) that portion of the aggregate contributions and/or deferrals by and
on behalf of the Member which was directed to be invested in such Investment
Fund and received by the Trustee by (b) the Unit value of such Investment Fund.
The value of a Member's Account may be determined as of any Valuation Date by
multiplying the number of Units to his credit in each available Investment Fund
by that Investment Fund's Unit Value on such date and aggregating the results.
27
ARTICLE VI
VESTING OF UNITS
Section 6.1 Vesting of Member Contributions and/or Deferrals
------------------------------------------------
All Units credited to a Member's Account based on after-tax contributions and/or
401(k) deferrals made by the Member and any earnings related thereto (including
any rollover contributions allocated to a Member's Account under the Plan and
any earnings thereon) and, as provided in Section 3.9, Employer qualified
nonelective contributions made on behalf of such Member shall be immediately and
fully vested in him at all times.
Section 6.2 Vesting of Employer Contributions
---------------------------------
The Employer may, at its option, elect one of the available vesting schedules
described herein for each of the employer contribution types applicable to the
Plan as designated in the Adoption Agreement.
Schedule 1: All applicable Units shall immediately and fully vest. If the
eligibility requirement(s) selected by the Employer under Article
II require(s) that an Employee complete a period of Employment
which is longer than 12 consecutive months, this vesting Schedule 1
shall be automatically applicable.
Schedule 2: All applicable Units shall become nonforfeitable and fully vested
in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
Schedule 3: All applicable Units shall become nonforfeitable and fully vested
in accordance with the schedule set forth below:
28
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 5 0%
5 or more 100%
Schedule 4: All applicable Units shall become nonforfeitable and fully vested
in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 3 0%
3 or more 100%
Schedule 5: All applicable Units shall become nonforfeitable and fully vested
in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
Schedule 6: All applicable Units shall become nonforfeitable and fully vested
in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
------------------- ----------
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
Schedule 7: All applicable Units shall become nonforfeitable and fully vested
in accordance with the schedule set forth in the Adoption Agreement
created by the Employer in accordance with applicable law.
Notwithstanding the vesting schedules above, a Member's interest in his Account
shall become
29
100% vested in the event that (i) the Member dies while in active Employment and
the TPA has received notification of death, (ii) the Member has been approved
for Disability, pursuant to the provisions of Article VII, and the TPA has
received notification of Disability, or (iii) the Member has attained Normal
Retirement Age.
Except as otherwise provided hereunder, in the event that the Employer adopts
the Plan as a successor plan to another defined contribution plan qualified
under Sections 401(a) and 501(a) of the Code, or in the event that the Employer
changes or amends a vesting schedule adopted under this Article, any Member who
was covered under such predecessor plan or, in the case of a change or amendment
to the vesting schedule, any Member who has completed at least 3 Years of
Employment with the Employer may elect to have the nonforfeitable percentage of
the portion of his Account which is subject to such vesting schedule computed
under such predecessor plan's vesting provisions, or computed without regard to
such change or amendment (a "Vesting Election"). Any Vesting Election made
under this Subparagraph shall be made by notifying the TPA in writing within the
election period hereinafter described. The election period shall begin on the
date such amendment is adopted or the date such change is effective, or the date
the Plan which serves as a successor plan is adopted or effective, as the case
may be, and shall end no earlier than the latest of the following dates: (i)
the date which is 60 days after the day such amendment is adopted; (ii) the date
which is 60 days after the day such amendment or change becomes effective; (iii)
the date which is 60 days after the day the Member is given written notice of
such amendment or change by the TPA; (iv) the date which is 60 days after the
day the Plan is adopted by the Employer or becomes effective; or (v) the date
which is 60 days after the day the Member is given written notice that the Plan
has been designated as a successor plan. Any election made pursuant to this
Subparagraph shall be irrevocable.
To the extent permitted under the Code and Regulations, the Employer may, at its
option, elect to treat all Members who are eligible to make a Vesting Election
as having made such Vesting Election. Furthermore, subject to the requirements
of the applicable Regulations, the Employer may elect to treat all Members, who
were employed by the Employer on or before the effective date of the change or
amendment, as subject to the prior vesting schedule, provided such prior
schedule is more favorable.
Section 6.3 Forfeitures
-----------
If a Member who was partially vested in his Account on the date of his
termination of
30
Employment returns to Employment, his Years of Employment prior to the Break(s)
in Service shall be included in determining future vesting and, if he returns
before incurring 5 consecutive one year Breaks in Service, any Units forfeited
from his Account shall be restored to his Account, including all interest
accrued during the intervening period; provided, however, that if such a Member
has received a distribution pursuant to Article VII, his Account Units shall not
be restored unless he repays the full amount distributed to him to the Plan
before the earlier of (i) 5 years after the first date on which the Member is
subsequently reemployed by the Employer, or (ii) the close of the first period
of 5 consecutive one-year Breaks in Service commencing after the withdrawal.
The Units restored to the Member's Account will be valued on the Valuation Date
coinciding with or next following the later of (i) the date the Employee is
rehired, or (ii) the date a new enrollment application is received by the TPA.
If a Member terminates Employment without any vested interest in his Account, he
shall (i) immediately be deemed to have received a total distribution of his
Account and (ii) thereupon forfeit his entire Account; provided that if such
Member returns to Employment before the number of consecutive one-year Breaks in
Service equals or exceeds the greater of (i) 5, or (ii) the aggregate number of
the Member's Years of Service prior to such Break in Service, his Account shall
be restored in the same manner as if such Member had been partially vested at
the time of his termination of Employment, and his Years of Employment prior to
incurring the first Break in Service shall be included in any subsequent
determination of his vesting service.
Forfeited amounts, as defined in the preceding paragraph, shall be made
available to the Employer, through transfer from the Member's Account to the
Employer Credit Account, upon: (1) if the Member had a vested interest in his
Account at his termination of Employment, the earlier of (i) the date as of
which the Member receives a distribution of his entire vested interest in his
Account or (ii) the date upon which the Member incurs 5 consecutive one-year
Breaks in Service, or (2) the date of the Member's termination of Employment, if
the Member then has no vested interest in his Account. Once so transferred,
such amounts shall be used at the option of the Employer to (i) reduce
administrative expenses for that Contribution Determination Period, (ii) offset
any contributions to be made by the Employer for that Contribution Determination
Period or (iii) be allocated to all eligible Members deemed to be employed as of
the last day of the Contribution Determination Period. The Employer Credit
Account, referenced in this Subparagraph, shall be maintained to receive, in
addition to the forfeitures described above, (i) contributions in excess of the
limitations contained in Section 415 of the Code and (ii) Employer contributions
made in advance of the date allocable to Members, if any.
31
ARTICLE VII
WITHDRAWALS AND DISTRIBUTIONS
Section 7.1 General Provisions
------------------
The Employer will define in the Adoption Agreement the terms and conditions
under which withdrawals and distributions will be permitted under the Plan. All
payments in respect of a Member's Account shall be made in cash from the Trust
Fund and in accordance with the provisions of this Article or Article XI. The
amount of payment will be determined in accordance with the Unit values on the
Valuation Date coinciding with or next following the date proper notice is filed
with the TPA, unless following such Valuation Date a decrease in the Unit values
of the Member's investment in any of the available Investment Funds occurs prior
to the date such Units of the Member are redeemed in which case that part of the
payment which must be provided through the sale of existing Units shall equal
the value of such Units determined on the date of redemption which date shall
occur as soon as administratively practicable on or following the Valuation Date
such proper notice is filed with the TPA. The redemption date Unit value with
respect to a Member's investment in any of the available Investment Funds shall
equal the value of a Unit in such Investment Fund, as determined in accordance
with the valuation method applicable to Unit investments in such Investment Fund
on the date the Member's investment is redeemed.
Except where otherwise specified, payments provided under this Article will be
made in a lump sum as soon as practicable after such Valuation Date or date of
redemption, as may be applicable, subject to any applicable restriction on
redemption imposed on amounts invested in any of the available Investment Funds.
Any partial withdrawal shall be deemed to come:
. First from the Member's after-tax contributions made prior to January 1,
1987.
. Next from the Member's after-tax contributions made after December 31, 1986
plus earnings on all of the Member's after-tax contributions.
. Next from the Member's rollover contributions plus earnings thereon.
. Next from the Employer matching contributions plus earnings thereon.
. Next from the Employer supplemental contributions plus earnings thereon.
. Next from the Employer basic contributions plus earnings thereon.
32
. Next from the Member's 401(k) deferrals plus earnings thereon.
. Next from the Employer qualified nonelective contributions plus earnings
thereon.
. Next from the Employer profit sharing contributions plus earnings thereon.
Section 7.2 Withdrawals While Employed
--------------------------
The Employer may, at its option, permit Members to make withdrawals from one or
more of the portions of their Accounts while employed by the Employer, as
designated in the Adoption Agreement, under the terms and provisions described
herein.
Voluntary Withdrawals - To the extent permitted by the Employer as specified in
the Adoption Agreement, a Member may voluntarily withdraw some or all of his
Account (other than his 401(k) deferrals and Employer qualified nonelective
contributions treated as 401(k) deferrals except as hereinafter permitted) while
in Employment by filing a notice of withdrawal with the TPA; provided, however,
that in the event his Employer has elected to provide annuity options under
Section 7.3, no withdrawals may be made from a married Member's Account without
the written consent of such Member's Spouse (which consent shall be subject to
the procedures set forth in Section 7.3). Only one in-service withdrawal may be
made in any Plan Year from each of the rollover amount of the Member's Account
and the remainder of the Member's Account. This restriction shall not, however,
apply to a withdrawal under this Section in conjunction with a hardship
withdrawal.
Notwithstanding the foregoing paragraph, a Member may not withdraw any matching,
basic, supplemental, profit sharing or qualified nonelective contributions made
by the Employer under Article III unless (i) the Member has completed 60 months
of participation in the Plan; (ii) the withdrawal occurs at least 24 months
after such contributions were made by the Employer; (iii) the Employer
terminates the Plan without establishing a qualified successor plan; or (iv) the
Member dies, is disabled, retires, attains age 59 1/2 or terminates Employment.
For purposes of the preceding requirements, if the Member's Account includes
amounts which have been transferred from a defined contribution plan established
prior to the adoption of the Plan by the Employer, the period of time during
which amounts were held on behalf of such Member and the periods of
participation of such Member under such defined contribution plan shall be taken
into account.
33
Hardship Withdrawals - If designated by the Employer in the Adoption Agreement,
a Member may make a withdrawal of his 401(k) deferrals, Employer qualified
nonelective contributions which are treated as elective deferrals, and any
earnings credited thereto prior to January 1, 1989, prior to attaining age 592,
provided that the withdrawal is solely on account of an immediate and heavy
financial need and is necessary to satisfy such financial need. For the
purposes of this Article, the term "immediate and heavy financial need" shall be
limited to the need of funds for (i) the payment of medical expenses (described
in Section 213(d) of the Code) incurred by the Member, the Member's Spouse, or
any of the Member's dependents (as defined in Section 152 of the Code), (ii) the
payment of tuition and room and board for the next 12 months of post-secondary
education of the Member, the Member's Spouse, the Member's children, or any of
the Member's dependents (as defined in Section 152 of the Code), (iii) the
purchase (excluding mortgage payments) of a principal residence for the Member,
or (iv) the prevention of eviction of the Member from his principal residence or
the prevention of foreclosure on the mortgage of the Member's principal
residence. For purposes of this Article, a distribution generally may be
treated as "necessary to satisfy a financial need" if the Plan Administrator
reasonably relies upon the Member's written representation that the need cannot
be relieved (i) through reimbursement or compensation by insurance or otherwise,
(ii) by reasonable liquidation of the Member's available assets, to the extent
such liquidation would not itself cause an immediate and heavy financial need,
(iii) by cessation of Member contributions and/or deferrals pursuant to Article
III of the Plan, to the extent such contributions and/or deferrals are permitted
by the Employer, or (iv) by other distributions or nontaxable (at the time of
the loan) loans from plans maintained by the Employer or by any other employer,
or by borrowing from commercial sources on reasonable commercial terms. The
amount of any withdrawal pursuant to this Article shall not exceed the amount
required to meet the demonstrated financial hardship, including any amounts
necessary to pay any federal income taxes and penalties reasonably anticipated
to result from the distribution as certified to the Plan Administrator by the
Member.
Notwithstanding the foregoing, no amounts may be withdrawn on account of
hardship pursuant to this Article prior to a Member's withdrawal of his other
available Plan assets without regard to any other withdrawal restrictions
adopted by the Employer.
Section 7.3 Distributions Upon Termination of Employment
--------------------------------------------
In accordance with the provisions for distributions designated by the Employer
in the Adoption Agreement, a Member who terminates Employment with the Employer
may request a distribution of his Account at any time thereafter up to
attainment of age 70 1/2. Except as otherwise provided, only one distribution
under this Section 7.3 may be made in any Plan Year
34
and any amounts paid under this Article may not be returned to the Plan.
Any distribution made under this Section 7.3 requires that a Request for
Distribution be filed with the TPA. If a Member does not file such a Request,
the value of his Account will be paid to him as soon as practicable after his
attainment of age 70 1/2, but in no event shall payment commence later than
April 1 of the calendar year following the calendar year in which the Member
attains age 70 1/2 unless otherwise provided by law.
Lump Sum Payments - A Member may request a distribution of all or a part of his
Account no more frequently than once per calendar year by filing the proper
Request for Distribution with the TPA. In the event the Employer has elected to
provide an annuity option under the Plan, no distributions may be made from a
married Member's Account without the written consent of such married Member's
spouse (which consent shall be subject to the procedures set forth below).
Installment Payments - To the extent designated by the Employer in the Adoption
Agreement and in lieu of any lump sum payment of his total Account, a Member who
has terminated his Employment may elect in his Request for Distribution to be
paid in up to 20 annual installments, provided that a Member shall not be
permitted to elect an installment period in excess of his remaining life
expectancy and if a Member attempts such an election, the TPA shall deem him to
have elected the installment period with the next lowest multiple within the
Member's remaining life expectancy. The amount of each installment will be
equal to the value of the total Units in the Member's Account, multiplied by a
fraction, the numerator of which is one and the denominator of which is the
number of remaining annual installments including the one then being paid, so
that at the end of the installment period so elected, the total Account will be
liquidated. The value of the Units will be determined in accordance with the
Unit values on the Valuation Date on or next following the TPA's receipt of his
Request for Distribution and on each anniversary thereafter subject to
applicable Regulations under Code Section 401(a)(9). Payment will be made as
soon as practicable after each such Valuation Date, but in no event shall
payment commence later than April 1 of the calendar year following the calendar
year in which the Member attains age 70 1/2 subject to the procedure for making
such distributions described below. The election of installments hereunder may
not be subsequently changed by the Member, except that upon written notice to
the TPA, the Member may withdraw the balance of the Units in his Account in a
lump sum at any time, notwithstanding the fact that the Member previously
received a distribution in the same calendar year.
Annuity Payments - The Employer may, at its option, elect to provide an annuity
option under the Plan. To the extent so designated by the Employer in the
Adoption Agreement and in lieu of any lump sum payment of his total Account, a
Member who has terminated his Employment
35
may elect in his Request for Distribution to have the value of his total Account
be paid as an annuity secured for the Member by the Plan Administrator through a
Group Annuity Contract adopted by the Plan. In the event the Employer elects to
provide the annuity option, the following provisions shall apply:
Unmarried Members - Any unmarried Member who has terminated his Employment may
elect, in lieu of any other available payment option, to receive a benefit
payable by purchase of a single premium contract providing for (i) a single life
annuity for the life of the Member or (ii) an annuity for the life of the Member
and, if the Member dies leaving a designated Beneficiary, a 50% survivor annuity
for the life of such designated Beneficiary.
Married Members - Except as otherwise provided below, (i) any married Member who
has terminated his Employment shall receive a benefit payable by purchase of a
single premium contract providing for a Qualified Joint and Survivor Annuity, as
defined below, and (ii) the Surviving Spouse of any married Member who dies
prior to the date payment of his benefit commences shall be entitled to a
Preretirement Survivor Annuity, as defined below. Notwithstanding the
foregoing, any such married Member may elect to receive his benefit in any other
available form, and may waive the Preretirement Survivor Annuity, in accordance
with the spousal consent requirements described herein.
For purposes of this Section 7.3, the term "Qualified Joint and Survivor
Annuity" means a benefit providing an annuity for the life of the Member, ending
with the payment due on the last day of the month coinciding with or preceding
the date of his death, and, if the Member dies leaving a Surviving Spouse, a
survivor annuity for the life of such Surviving Spouse equal to one-half of the
annuity payable for the life of the Member under his Qualified Joint and
Survivor Annuity, commencing on the last day of the month following the date of
the Member's death and ending with the payment due on the first day of the month
coinciding with or preceding the date of such Surviving Spouse's death.
For purposes of this Section 7.3, the term "Preretirement Survivor Annuity"
means a benefit providing for payment of 50% of the Member's Account balance as
of the Valuation Date coinciding with or preceding the date of his death.
Payment of a Preretirement Survivor Annuity shall commence in the month
following the month in which the Member dies or as soon as practicable
thereafter; provided, however, that to the extent required by law, if the value
of the amount used to purchase a Preretirement Survivor Annuity exceeds $3,500,
then payment of the Preretirement Survivor Annuity shall not commence prior to
the date the Member reached (or would have reached, had he lived) Normal
Retirement Age without the written consent of the Member's Surviving Spouse.
Absence of any required consent will
36
result in a deferral of payment of the Preretirement Survivor Annuity to the
month following the month in which occurs the earlier of (i) the date the
required consent is received by the TPA or (ii) the date the Member would have
reached Normal Retirement Age had he lived.
The TPA shall furnish or cause to be furnished, to each married Member with an
Account subject to this Section 7.3, explanations of the Qualified Joint and
Survivor Annuity and Preretirement Survivor Annuity. A Member may, with the
written consent of his Spouse (unless the TPA makes a written determination in
accordance with the Code and the Regulations that no such consent is required),
elect in writing (i) to receive his benefit in a single lump sum payment within
the 90-day period ending on the date payment of his benefit commences; and (ii)
to waive the Preretirement Survivor Annuity within the period beginning on the
first day of the Plan Year in which the Member attains age 35 and ending on the
date of his death. Any election made pursuant to this Subparagraph may be
revoked by a Member, without spousal consent, at any time within which such
election could have been made. Such an election or revocation must be made in
accordance with procedures developed by the TPA and shall be notarized.
Notwithstanding the preceding provisions of this Section 7.3, any benefit of
$3,500, subject to the limits of Article X, or less, shall be paid in cash in a
lump sum in full settlement of the Plan's liability therefor; provided, however,
that in the case of a married Member, no such lump sum payment shall be made
after benefits have commenced without the consent of the Member and his Spouse
or, if the Member has died, the Member's Surviving Spouse. Furthermore, if the
value of the benefit payable to a Member or his Surviving Spouse is greater than
$3,500 and the Member has or had not reached his Normal Retirement Age, then to
the extent required by law, unless the Member (and, if the Member is married and
his benefit is to be paid in a form other than a Qualified Joint and Survivor
Annuity, his Spouse, or, if the Member was married, his Surviving Spouse)
consents in writing to an immediate distribution of such benefit, his benefit
shall continue to be held in the Trust until a date following the earlier of (i)
the date of the TPA's receipt of all required consents or (ii) the date the
Member reaches his earliest possible Normal Retirement Age under the Plan (or
would have reached such date had he lived), and thereafter shall be paid in
accordance with this Section 7.3.
37
Solely to the extent required under applicable law and regulations, and
notwithstanding any provisions of the Plan to the contrary that would otherwise
limit a Distributee's election under this Subparagraph, a Distributee may elect,
at the time and in the manner prescribed by the TPA, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover. For purposes of this
Subparagraph, the following terms shall have the following meanings:
Eligible Rollover Distribution - Any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of ten years or more; any distribution
to the extent such distribution is required under Section 401(a)(9) of the
Code; and the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
Eligible Retirement Plan - An individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code, that
accepts the Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to a Surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or an individual
retirement annuity.
Distributee - A Distributee may be (i) an Employee, (ii) a former Employee,
(iii) an Employee's Surviving Spouse, (iv) a former Employee's Surviving
Spouse, (v) an Employee's Spouse or former Spouse who is an alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of
the Code, or (vi) a former Employee's Spouse or former Spouse who is an
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, with respect to the interest of the Spouse or
former Spouse.
Direct Rollover - A payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
Section 7.4 Distributions Due to Disability
-------------------------------
A Member who is separated from Employment by reason of a disability which is
expected to last in excess of 12 consecutive months and who is either (i)
eligible for, or is receiving, disability insurance benefits under the Federal
Social Security Act or (ii) approved for disability
38
under the provisions of any other benefit program or policy maintained by the
Employer, which policy or program is applied on a uniform and nondiscriminatory
basis to all Employees of the Employer, shall be deemed to be disabled for all
purposes under the Plan.
The Plan Administrator shall determine whether a Member is disabled in
accordance with the terms of the immediately preceding paragraph; provided,
however, approval of Disability is conditioned upon notice to the Plan
Administrator of such Member's Disability within 13 months of the Member's
separation from Employment. The notice of Disability shall include a
certification that the Member meets one or more of the criteria listed above.
Upon determination of Disability, a Member may withdraw his total Account
balance under the Plan and have such amounts paid to him in accordance with the
applicable provisions of this Article VII, as designated by the Employer. If a
disabled Member becomes reemployed subsequent to withdrawal of some or all of
his Account balance, such Member may not repay to the Plan any such withdrawn
amounts.
Section 7.5 Distributions Due to Death
--------------------------
Subject to the provisions of Section 7.3 above, if a married Member dies, his
Spouse, as Beneficiary, will receive a death benefit equal to the value of the
Member's Account determined on the Valuation Date on or next following the TPA's
receipt of notice that such Member died; provided, however, that if such
Member's Spouse had consented in writing to the designation of a different
Beneficiary, the Member's Account will be paid to such designated Beneficiary.
Such nonspousal designation may be revoked by the Member without spousal consent
at any time prior to the Member's death. If a Member is not married at the time
of his death, his Account will be paid to his designated Beneficiary.
A Member may elect that upon his death, his Beneficiary, pursuant to this
Section 7.5, may receive, in lieu of any lump sum payment, payment in 5 annual
installments (10 if the Spouse is the Beneficiary, provided that the Spouse's
remaining life expectancy is at least 10 years) whereby the value of 1/5th of
such Member's Units (or 1/10th in the case of a spousal Beneficiary, provided
that the Spouse's remaining life expectancy is at least 10 years) in each
available Investment Fund will be determined in accordance with the Unit values
on the Valuation Date on or next following the TPA's receipt of notice of the
Member's death and on each anniversary of such Valuation Date. Payment will be
made as soon as practicable after each Valuation Date until the Member's Account
is exhausted. Such election may be filed at any time with the Plan
Administrator prior to the Member's death and may not be changed or revoked
after such Member's death. If such an election is not in effect at the time of
the Member's death, his Beneficiary (including any spousal Beneficiary) may
elect to receive
39
distributions in accordance with this Article, except that any balance remaining
in the deceased Member's Account must be distributed on or before the December
31 of the calendar year which contains the 5th anniversary (the 10th anniversary
in the case of a spousal Beneficiary, provided that the Spouse's remaining life
expectancy is at least 10 years) of the Member's death. Notwithstanding the
foregoing, payment of a Member's Account shall commence not later than the
December 31 of the calendar year immediately following the calendar year in
which the Member died or, in the event such Beneficiary is the Member's
Surviving Spouse, on or before the December 31 of the calendar year in which
such Member would have attained age 70 1/2, if later (or, in either case, on any
later date prescribed by the IRS Regulations). If, upon the Spouse's or
Beneficiary's death, there is still a balance in the Account, the value of the
remaining Units will be paid in a lump sum to such Spouse's or Beneficiary's
estate.
Section 7.6 Minimum Required Distributions
------------------------------
In no event may payment of a Member's Account begin later than April 1 of the
year following the calendar year in which a Member attains age 70 1/2; provided,
however, if a Member attained age 70 1/2 prior to January 1, 1988, except as
otherwise provided below, any benefit payable to such Member shall commence no
later than the April 1 of the calendar year following the later of (i) the
calendar year in which the Member attains age 70 1/2 or (ii) the calendar year
in which the Member retires. Such benefit shall be paid, in accordance with the
Regulations, over a period not extending beyond the life expectancy of such
Member. Life expectancy for purposes of this Section shall not be recalculated
annualy in accordance with the Regulations.
If a Member who is a 5% owner attained age 70 1/2 before January 1, 1988, any
benefit payable to such Member shall commence no later than the April 1 of the
calendar year following the later of (i) the calendar year in which the Member
attains age 70 1/2 or (ii) the earlier of (a) the calendar year within which the
Member becomes a 5% owner or (b) the calendar year in which the Member retires.
For purposes of the preceding sentence, 5% owner shall mean a 5% owner of such
Member's Employer as defined in Section 416(i) of the Code at any time during
the Plan Year in which such owner attains age 66 1/2 or any subsequent Plan
Year. Distributions must continue to such Member even if such Member ceases to
own more than 5% of the Employer in a subsequent year.
ARTICLE VIII
LOAN PROGRAM
Section 8.1 General Provisions
------------------
40
An Employer may, at its option, make available the loan program described herein
for any Member (and, if applicable under Section 8.8 of this Article, any
Beneficiary), subject to applicable law. The Employer shall so designate its
adoption of the loan program and the terms and provisions of its operation in
the Adoption Agreement. In the event that the Employer has elected to provide
an annuity option under Article VII or amounts are transferred to the Plan from
a retirement plan subject to Section 401(a)(11) of the Code, no loans may be
made from a married Member's Account without the written consent of such
Member's Spouse (in accordance with the spousal consent rules set forth under
Section 7.3). In the event the Employer elects to permit loans to be made from
rollover contributions and earnings thereon, as designated in the Adoption
Agreement, loans shall be available from the Accounts of any Employees of the
Employer who have not yet become Members. Only one loan may be made to a Member
in the Plan Year.
Section 8.2 Loan Application
----------------
Subject to the restrictions described in the paragraph immediately following, a
Member in Employment may borrow from his Account in each of the available
Investment Funds by filing a loan application with the TPA. Such application
(hereinafter referred to as a "completed application") shall (i) specify the
terms pursuant to which the loan is requested to be made and (ii) provide such
information and documentation as the TPA shall require, including a note, duly
executed by the Member, granting a security interest of an amount not greater
than 50% of his vested Account, to secure the loan. With respect to such
Member, the completed application shall authorize the repayment of the loan
through payroll deductions. Such loan will become effective upon the Valuation
Date coinciding with or next following the date on which his completed
application and other required documents were submitted, subject to the same
conditions with respect to the amount to be transferred under this Section which
are specified in the Plan procedures for determining the amount of payments made
under Article VII of the Plan.
The Employer shall establish standards in accordance with the Code and ERISA
which shall be uniformly applicable to all Members eligible to borrow from their
interests in the Trust Fund similarly situated and shall govern the TPA's
approval or disapproval of completed applications. The terms for each loan
shall be set solely in accordance with such standards.
The TPA shall, in accordance with the established standards, review and approve
or disapprove a completed application as soon as practicable after its receipt
thereof, and shall promptly notify the applying Member of such approval or
disapproval. Notwithstanding the foregoing, the TPA may defer its review of a
completed application, or defer payment of the proceeds of
41
an approved loan, if the proceeds of the loan would otherwise be paid during the
period commencing on December 1 and ending on the following January 31.
Subject to the preceding paragraph and Section 8.6, upon approval of a completed
application, the TPA shall cause payment of the loan to be made from the
available Investment Fund(s) in the same proportion that the designated portion
of the Member's Account is invested at the time of the loan, and the relevant
portion of the Member's interest in such Investment Fund(s) shall be cancelled
and shall be transferred in cash to the Member. The TPA shall maintain
sufficient records regarding such amounts to permit an accurate crediting of
repayments of the loan.
Section 8.3 Permitted Loan Amount
---------------------
The amount of each loan may not be less than $1,000 nor more than the maximum
amount as described below. The maximum amount available for loan under the Plan
(when added to the outstanding balance of all other loans from the Plan to the
borrowing Member) shall not exceed the lesser of: (a) $50,000 reduced by the
excess (if any) of (i) the highest outstanding loan balance attributable to the
Account of the Member requesting the loan from the Plan during the one-year
period ending on the day preceding the date of the loan, over (ii) the
outstanding balance of all other loans from the Plan to the Member on the date
of the loan, or (b) 50% of the value of the Member's vested portion of his
Account available for borrowing as of the Valuation Date on or next following
the date on which the TPA receives the completed application for the loan and
all other required documents. The maximum amount available for a loan for
purposes of item (b) of the preceding sentence shall be determined by valuing
the Member's interest in that portion of his Account from which the loan will be
deducted as of the applicable Valuation Date. In determining the maximum amount
that a Member may borrow, all vested assets of his Account, regardless of
whether any particular portion of his Account is actually available for the
loan, will be taken into consideration, provided that, where the Employer has
not elected to make a Member's entire Account available for loans, in no event
shall the amount of the loan exceed the value of such portion of the Member's
Account from which loans are permissible.
Section 8.4 Source of Funds for Loan
------------------------
The amount of the loan will be deducted from the Member's Account in the
available Investment Funds in accordance with Section 8.2 of this Article and
the Plan procedures for determining the amount of payments made under Article
VII. Loans shall be deemed to come (to the extent the Employer permits Members
to take loans from one or more of the portions of their Accounts, as designated
in the Adoption Agreement):
42
. First from the Employer profit sharing contributions plus earnings thereon.
. Next from the Employer qualified nonelective contributions plus earnings
thereon.
. Next from the Member's 401(k) deferrals plus earnings thereon.
. Next from the Employer basic contributions plus earnings thereon.
. Next from the Employer supplemental contributions plus earnings thereon.
. Next from the Employer matching contributions plus earnings thereon.
. Next from the Member's rollover contributions plus earnings thereon.
. Next from the Member's after-tax contributions made after December 31,1986
plus earnings on all of the Member's after-tax contributions.
. Next from the Member's after-tax contributions made prior to January 1,1987.
Section 8.5 Conditions of Loan
------------------
Each loan to a Member under the Plan shall be repaid in level monthly amounts
through regular payroll deductions after the effective date of the loan, and
continuing thereafter with each payroll. Except as otherwise required by the
Code and the IRS Regulations, each loan shall have a repayment period of not
less than 12 months and not in excess of 60 months, unless the purpose of the
loan is for the purchase of a primary residence, in which case the loan may be
for not more than 180 months.
The rate of interest for the term of the loan will be established as of the loan
date, and will be the ▇▇▇▇▇▇'▇ Prime Rate (base rate) plus 1% as published on
the last Saturday of the preceding month, or such other rate as may be required
by applicable law and determined by reference to the prevailing interest rate
charged by commercial lenders under similar circumstances. The applicable rate
would then be in effect through the last business day of the month.
Repayment of all loans under the Plan shall be secured by 50% of the Member's
vested interest in his Account, determined as of the origination of such loan.
Section 8.6 Crediting of Repayment
----------------------
Upon lending any amount to a Member, the TPA shall establish and maintain a loan
receivable
43
account with respect to, and for the term of, the loan. The allocations
described in this Section shall be made from the loan receivable account. Upon
receipt of each monthly installment payment and the crediting thereof to the
Member's loan receivable account, there shall be allocated to the Member's
Account in the available Investment Funds, in accordance with his most recent
investment instructions, the principal portion of the installment payment plus
that portion of the interest equal to the rate determined in Section 8.5 of this
Article, less 2%. The unpaid balance owed by a Member on a loan under the Plan
shall not reduce the amount credited to his Account. However, from the time of
payment of the proceeds of the loan to the Member, such Account shall be deemed
invested, to the extent of such unpaid balance, in such loan until the complete
repayment thereof or distribution from such Account. Any loan repayment shall
first be deemed allocable to the portions of the Member's Account on the basis
of a reverse ordering of the manner in which the loan was originally distributed
to the Member.
Section 8.7 Cessation of Payments on Loan
-----------------------------
If a Member, while employed, fails to make a monthly installment payment when
due, as specified in the completed application, subject to applicable law, he
will be deemed to have received a distribution of the outstanding balance of the
loan. If such default occurs after the first 12 monthly payments of the loan
have been satisfied, the Member may pay the outstanding balance, including
accrued interest from the due date, by the last day of the calendar quarter
following the calendar quarter which contains the due date of the last monthly
installment payment, in which case no such distribution will be deemed to have
occurred. Subject to applicable law, notwithstanding the foregoing, a Member
that borrows any of his 401(k) deferrals and any of the earnings attributable
thereto may not cease to make monthly installment payments while employed and
receiving a Salary from the Employer.
Except as provided below, upon a Member's termination of Employment, death or
Disability, or the Employer's termination of the Plan, no further monthly
installment payments may be made. Unless the outstanding balance, including
accrued interest from the due date, is paid by the last day of the calendar
quarter following the calendar quarter which contains the date of such
occurrence, the Member will be deemed to have received a distribution of the
outstanding balance of the loan including accrued interest from the due date.
Section 8.8 Loans to Former Members
-----------------------
Notwithstanding any other provisions of this Article VIII, a member who
terminates Employment for any reason shall be permitted to continue making
scheduled repayments with respect to any loan balance outstanding at the time he
becomes a terminated Member. In addition, a terminated Member may elect to
initiate a new loan from his Account, subject to the conditions
44
otherwise described in this Article VIII. If any terminated Member who continues
to make repayments or who borrows from his Account pursuant to this Section 8.8
fails to make a scheduled monthly installment payment by the last day of the
calendar quarter following the calendar quarter which contains the scheduled
payment date, he will be deemed to have received a distribution of the
outstanding balance of the loan.
45
ARTICLE IX
ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES
Section 9.1 Fiduciaries
-----------
The following persons are Fiduciaries under the Plan.
a) The Trustee,
b) The Employer,
c) The Plan Administrator or committee, appointed by the Employer pursuant to
this Article IX of the Plan and designated as the "Named Fiduciary" of the
Plan and the Plan Administrator, and
d) Any Investment Manager appointed by the Employer as provided in Section
9.4.
Each of said Fiduciaries shall be bonded to the extent required by ERISA.
The TPA is not intended to have the authority or responsibilities which would
cause it to be considered a Fiduciary with respect to the Plan unless the TPA
otherwise agrees to accept such authority or responsibilities in a service
agreement or otherwise in writing.
Section 9.2 Allocation of Responsibilities Among the Fiduciaries
----------------------------------------------------
a) The Trustee
-----------
The Employer shall enter into one or more Trust Agreements with a Trustee
or Trustees selected by the Employer. The Trust established under any such
agreement shall be a part of the Plan and shall provide that all funds
received by the Trustee as contributions under the Plan and the income
therefrom (other than such part as is necessary to pay the expenses and
charges referred to in Paragraph (b) of this Section) shall be held in the
Trust Fund for the exclusive benefit of the Members or their Beneficiaries,
and managed, invested and reinvested and distributed by the Trustee in
accordance with the Plan. Sums received for investment may be invested (i)
wholly or partly through the medium of any common, collective or commingled
trust fund maintained by a bank or other financial institution and which is
qualified under Sections 401(a) and 501(a) of the Code and constitutes a
part of the Plan; (ii) wholly or partly through the medium of a group
annuity or other type of contract issued by an insurance company and
constituting a part of the Plan, and utilizing, under any such contract,
general, commingled or individual investment accounts; or (iii)
46
wholly or partly in securities issued by an investment company registered
under the Investment Company Act of 1940. Subject to the provisions of
Article XI, the Employer may from time to time and without the consent of
any Member or Beneficiary (a) amend the Trust Agreement or any such
insurance contract in such manner as the Employer may deem necessary or
desirable to carry out the Plan, (b) remove the Trustee and designate a
successor Trustee upon such removal or upon the resignation of the Trustee,
and (c) provide for an alternate funding agency under the Plan. The Trustee
shall make payments under the Plan only to the extent, in the amounts, in
the manner, at the time, and to the persons as shall from time to time be
set forth and designated in written authorizations from the Plan
Administrator or TPA.
The Trustee shall from time to time charge against and pay out of the Trust
Fund taxes of any and all kinds whatsoever which are levied or assessed
upon or become payable in respect of such Fund, the income or any property
forming a part thereof, or any security transaction pertaining thereto. To
the extent not paid by the Employer, the Trustee shall also charge against
and pay out of the Trust Fund other expenses incurred by the Trustee in the
performance of its duties under the Trust, the expenses incurred by the TPA
in the performance of its duties under the Plan (including reasonable
compensation for agents and cost of services rendered in respect of the
Plan), such compensation of the Trustee as may be agreed upon from time to
time between the Employer and the Trustee, and all other proper charges and
disbursements of the Trustee or the Employer.
b) The Employer
------------
The Employer shall be responsible for all functions assigned or reserved to
it under the Plan and any related Trust Agreement. Any authority so
assigned or reserved to the Employer, other than responsibilities assigned
to the Plan Administrator, shall be exercised by resolution of the
Employer's Board of Directors and shall become effective with respect to
the Trustee upon written notice to the Trustee signed by the duly
authorized officer of the Board advising the Trustee of such exercise. By
way of illustration and not by limitation, the Employer shall have
authority and responsibility:
(1) to amend the Plan;
(2) to merge and consolidate the Plan with all or part of the assets or
liabilities of any other plan;
(3) to appoint, remove and replace the Trustee and the Plan Administrator
and to monitor their performances;
47
(4) to appoint, remove and replace one or more Investment Managers, or to
refrain from such appointments, and to monitor their performances;
(5) to communicate such information to the Plan Administrator, TPA,
Trustee and Investment Managers as they may need for the proper
performance of their duties; and
(6) to perform such additional duties as are imposed by law.
Whenever, under the terms of this Plan, the Employer is permitted or
required to do or perform any act, it shall be done and performed by an
officer thereunto duly authorized by its Board of Directors.
c) The Plan Administrator
----------------------
The Plan Administrator shall have responsibility and discretionary
authority to control the operation and administration of the Plan in
accordance with the provisions of Article IX of the Plan, including,
without limiting, the generality of the foregoing:
(1) the determination of eligibility for benefits and the amount and
certification thereof to the Trustee;
(2) the hiring of persons to provide necessary services to the Plan;
(3) the issuance of directions to the Trustee to pay any fees, taxes,
charges or other costs incidental to the operation and management of
the Plan;
(4) the preparation and filing of all reports required to be filed with
respect to the Plan with any governmental agency; and
(5) the compliance with all disclosure requirements imposed by state or
federal law.
d) The Investment Manager
----------------------
Any Investment Manager appointed pursuant to Section 9.4 shall have sole
responsibility for the investment of the portion of the assets of the Trust
Fund to be managed and controlled by such Investment Manager. An Investment
Manager may place orders for the purchase and sale of securities directly
with brokers and dealers.
Section 9.3 No Joint Fiduciary Responsibilities
-----------------------------------
48
This Article IX is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to him, and
none of such responsibilities or any other responsibilities shall be shared by
two or more of such Fiduciaries unless such sharing is provided by a specific
provision of the Plan or any related Trust Agreement. Whenever one Fiduciary is
required to follow the directions of another Fiduciary, the two Fiduciaries
shall not be deemed to have been assigned a shared responsibility, but the
responsibility of the Fiduciary giving the directions shall be deemed his sole
responsibility, and the responsibility of the Fiduciary receiving those
directions shall be to follow them insofar as such instructions are on their
face proper under applicable law. To the extent that fiduciary responsibilities
are allocated to an Investment Manager, such responsibilities are so allocated
solely to such Investment Manager alone, to be exercised by such Investment
Manager alone and not in conjunction with any other Fiduciary, and the Trustee
shall be under no obligation to manage any asset of the Trust Fund which is
subject to the management of such Investment Manager.
Section 9.4 Investment Manager
------------------
The Employer may appoint a qualified Investment Manager or Managers to manage
any portion or all of the assets of the Trust Fund. For the purpose of this
Plan and the related Trust, a "qualified Investment Manager" means an
individual, firm or corporation who has been so appointed by the Employer to
serve as Investment Manager hereunder, and who is and has acknowledged in
writing that he is (a) a Fiduciary with respect to the Plan, (b) bonded as
required by ERISA, and (c) either (i) registered as an investment advisor under
the Investment Advisors Act of 1940, (ii) a bank as defined in said Act, or
(iii) an insurance company qualified to perform investment management services
under the laws of more than one state of the United States.
Any such appointment shall be by a vote of the Board of Directors of the
Employer naming the Investment Manager so appointed and designating the portion
of the assets of the Trust Fund to be managed and controlled by such Investment
Manager. Said vote shall be evidenced by a certificate in writing signed by the
duly authorized officer of the Board and shall become effective on the date
specified in such certificate but not before delivery to the Trustee of a copy
of such certificate, together with a written acknowledgment by such Investment
Manager of the facts specified in the second sentence of this Section.
Section 9.5 Advisor to Fiduciary
--------------------
A Fiduciary may employ one or more persons to render advice concerning any
responsibility such Fiduciary has under the Plan and related Trust Agreement.
49
Section 9.6 Service in Multiple Capacities
------------------------------
Any person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan, specifically including service both as Plan
Administrator and as a Trustee of the Trust; provided, however, that no person
may serve in a fiduciary capacity who is precluded from so serving pursuant to
Section 411 of ERISA.
Section 9.7 Appointment of Plan Administrator
---------------------------------
The Employer shall designate the Plan Administrator in the Adoption Agreement.
The Plan Administrator may be an individual, a committee of two or more
individuals, whether or not, in either such case, the individual or any of such
individuals are Employees of the Employer, a consulting firm or other
independent agent, the Trustee (with its consent), the Board of the Employer, or
the Employer itself. Except as the Employer shall otherwise expressly
determine, the Plan Administrator shall be charged with the full power and
responsibility for administering the Plan in all its details. If no Plan
Administrator has been appointed by the Employer, or if the person designated as
Plan Administrator is not serving as such for any reason, the Employer shall be
deemed to be the Plan Administrator. The Plan Administrator may be removed by
the Employer or may resign by giving written notice to the Employer, and, in the
event of the removal, resignation, death or other termination of service of the
Plan Administrator, the Employer shall, as soon as is practicable, appoint a
successor Plan Administrator, such successor thereafter to have all of the
rights, privileges, duties and obligations of the predecessor Plan
Administrator.
Section 9.8 Powers of the Plan Administrator
--------------------------------
The Plan Administrator is hereby vested with all powers and authority necessary
in order to carry out its duties and responsibilities in connection with the
administration of the Plan as herein provided, and is authorized to make such
rules and regulations as it may deem necessary to carry out the provisions of
the Plan and the Trust Agreement. The Plan Administrator may from time to time
appoint agents to perform such functions involved in the administration of the
Plan as it may deem advisable. The Plan Administrator shall have the
discretionary authority to determine any questions arising in the
administration, interpretation
50
and application of the Plan, including any questions submitted by the Trustee on
a matter necessary for it to properly discharge its duties; and the decision of
the Plan Administrator shall be conclusive and binding on all persons.
Section 9.9 Duties of the Plan Administrator
--------------------------------
The Plan Administrator shall keep on file a copy of the Plan and the Trust
Agreement(s), including any subsequent amendments, and all annual reports of the
Trustee(s), and such annual reports or registration statements as may be
required by the laws of the United States, or other jurisdiction, for
examination by Members in the Plan during reasonable business hours. Upon
request by any Member, the Plan Administrator shall furnish him with a statement
of his interest in the Plan as determined by the Plan Administrator as of the
close of the preceding Plan Year.
Section 9.10 Action by the Plan Administrator
--------------------------------
In the event that there shall at any time be two or more persons who constitute
the Plan Administrator, such persons shall act by concurrence of a majority
thereof.
Section 9.11 Discretionary Action
--------------------
Wherever, under the provisions of this Plan, the Plan Administrator is given any
discretionary power or powers, such power or powers shall not be exercised in
such manner as to cause any discrimination prohibited by the Code in favor of or
against any Member, Employee or class of Employees. Any discretionary action
taken by the Plan Administrator hereunder shall be consistent with any prior
discretionary action taken by it under similar circumstances and to this end the
Plan Administrator shall keep a record of all discretionary action taken by it
under any provision hereof.
Section 9.12 Compensation and Expenses of Plan Administrator
-----------------------------------------------
Employees of the Employer shall serve without compensation for services as Plan
Administrator, but all expenses of the Plan Administrator shall be paid by the
Employer. Such expenses shall include any expenses incidental to the
functioning of the Plan, including, but not limited to, attorney's fees,
accounting and clerical charges, and other costs of administering the Plan.
Non-Employee Plan Administrators shall receive such compensation as the Employer
shall determine.
51
Section 9.13 Reliance on Others
------------------
The Plan Administrator and the Employer shall be entitled to rely upon all
valuations, certificates and reports furnished by the Trustee(s), upon all
certificates and reports made by an accountant or actuary selected by the Plan
Administrator and approved by the Employer and upon all opinions given by any
legal counsel selected by the Plan Administrator and approved by the Employer,
and the Plan Administrator and the Employer shall be fully protected in respect
of any action taken or suffered by them in good faith in reliance upon such
Trustee(s), accountant, actuary or counsel and all action so taken or suffered
shall be conclusive upon each of them and upon all Members, retired Members, and
Former Members and their Beneficiaries, and all other persons.
Section 9.14 Self Interest
-------------
No person who is the Plan Administrator shall have any right to decide upon any
matter relating solely to himself or to any of his rights or benefits under the
Plan. Any such decision shall be made by another Plan Administrator or the
Employer.
Section 9.15 Personal Liability - Indemnification
------------------------------------
The Plan Administrator shall not be personally liable by virtue of any
instrument executed by him or on his behalf. Neither the Plan Administrator,
the Employer, nor any of its officers or directors shall be personally liable
for any action or inaction with respect to any duty or responsibility imposed
upon such person by the terms of the Plan unless such action or inaction is
judicially determined to be a breach of that person's fiduciary responsibility
with respect to the Plan under any applicable law. The limitation contained in
the preceding sentence shall not, however, prevent or preclude a compromise
settlement of any controversy involving the Plan, the Plan Administrator, the
Employer, or any of its officers and directors. The Employer may advance money
in connection with questions of liability prior to any final determination of a
question of liability. Any settlement made under this Article IX shall not be
determinative of any breach of fiduciary duty hereunder.
The Employer will indemnify every person who is or was a Plan Administrator,
officer or member of the Board or a person who provides services without
compensation to the Plan for any liability (including reasonable costs of
defense and settlement) arising by reason of any act or omission affecting the
Plan or affecting the Member or Beneficiaries thereof, including, without
limitation, any damages, civil penalty or excise tax imposed pursuant to ERISA;
provided (1) that the act or omission shall have occurred in the course of the
person's service as Plan Administrator, officer of the Employer or member of the
Board or was within the scope
52
of the Employment of any Employee of the Employer or in connection with a
service provided without compensation to the Plan, (2) that the act or omission
be in good faith as determined by the Employer, whose determination, made in
good faith and not arbitrarily or capriciously, shall be conclusive, and (3)
that the Employer's obligation hereunder shall be offset to the extent of any
otherwise applicable insurance coverage, under a policy maintained by the
Employer, or any other person, or other source of indemnification.
Section 9.16 Insurance
---------
The Plan Administrator shall have the right to purchase such insurance as it
deems necessary to protect the Plan and the Trustee from loss due to any breach
of fiduciary responsibility by any person. Any premiums due on such insurance
may be paid from Plan assets provided that, if such premiums are so paid, such
policy of insurance must permit recourse by the insurer against the person who
breaches his fiduciary responsibility. Nothing in this Article IX shall prevent
the Plan Administrator or the Employer, at its, or his, own expense, from
providing insurance to any person to cover potential liability of that person as
a result of a breach of fiduciary responsibility, nor shall any provisions of
the Plan preclude the Employer from purchasing from any insurance company the
right of recourse under any policy by such insurance company.
Section 9.17 Claims Procedures
-----------------
Claims for benefits under the Plan shall be filed with the Plan Administrator on
forms supplied by the Employer. Written notice of the disposition of a claim
shall be furnished to the claimant within 90 days after the application thereof
is filed unless special circumstances require an extension of time for
processing the claim. If such an extension of time is required, written notice
of the extension shall be furnished to the claimant prior to the termination of
said 90-day period, and such notice shall indicate the special circumstances
which make the postponement appropriate.
Section 9.18 Claims Review Procedures
------------------------
In the event a claim is denied, the reasons for the denial shall be specifically
set forth in the notice described in this Section 9.18 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 request
further consideration and review of the claim will be provided. In addition,
the claimant shall be furnished with an explanation of the Plan's claims review
procedures. Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Plan Administrator pursuant to
Section 9.17 shall be entitled to
53
request the Plan Administrator to give further consideration to his claim by
filing with the Plan Administrator (on a form which may be obtained from the
Plan Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Plan Administrator no later than 60 days after
receipt of the written notification provided for in Section 9.17. The Plan
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days' written notice to the Plan Administrator),
the claimant or his representative shall have an opportunity to review all
documents in the possession of the Plan Administrator which are pertinent to the
claim at issue and its disallowance. A final disposition of the claim shall be
made by the Plan Administrator within 60 days of receipt of the appeal unless
there has been an extension of 60 days and shall be communicated in writing to
the claimant. Such communication shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons for the
disposition and specific references to the pertinent Plan provisions on which
the disposition is based. For all purposes under the Plan, such decision on
claims (where no review is requested) and decision on review (where review is
requested) shall be final, binding and conclusive on all interested persons as
to participation and benefits eligibility, the amount of benefits and as to any
other matter of fact or interpretation relating to the Plan.
54
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 General Limitations
-------------------
(A) In order that the Plan be maintained as a qualified plan and trust under the
Code, contributions in respect of a Member shall be subject to the
limitations set forth in this Section, notwithstanding any other provision
of the Plan. The contributions in respect of a Member to which this Section
is applicable are his own contributions and/or deferrals and the Employer's
contributions.
For purposes of this Section 10.1, a Member's contributions shall be
determined without regard to any rollover contributions as provided in
Section 402(a)(5) of the Code.
(B) Annual additions to a Member's Account in respect of any Plan Year may not
exceed the limitations set forth in Section 415 of the Code, which are
incorporated herein by reference. For these purposes, "annual additions"
shall have the meaning set forth in Section 415(c)(2) of the Code, as
modified elsewhere in the Code and the Regulations, and the limitation year
shall mean the Plan Year unless any other twelve-consecutive-month period is
designated pursuant to a resolution adopted by the Employer and designated
in the Adoption Agreement. If a Member in the Plan also participates in any
defined benefit plan (as defined in Sections 414(j) and 415(k) of the Code)
maintained by the Employer or any of its Affiliates, in the event that in
any Plan Year the sum of the Member's "defined benefit fraction" (as defined
in Section 415(e)(2) of the Code) and the Member's "defined contribution
fraction" (as defined in Section 415(e)(3) of the Code) exceeds 1.0, the
benefit under such defined benefit plan or plans shall be reduced in
accordance with the provisions of that plan or those plans, so that the sum
of such fractions in respect of the Member will not exceed 1.0. If this
reduction does not ensure that the limitation set forth in this Paragraph
(B) is not exceeded, then the annual addition to any defined contribution
plan, other than the Plan, shall be reduced in accordance with the
provisions of that plan but only to the extent necessary to ensure that such
limitation is not exceeded.
(C) In the event that, due to forfeitures, reasonable error in estimating a
Member's compensation, or other limited facts and circumstances, total
contributions and/or deferrals to a Member's Account are found to exceed the
limitations of this Section, the TPA, at the direction of the Plan
Administrator, shall cause contributions made under Article III in excess of
such limitations to be refunded to the affected Member, with
55
earnings thereon, and shall take appropriate steps to reduce, if necessary,
the Employer contributions made with respect to those returned
contributions. Such refunds shall not be deemed to be withdrawals, loans, or
distributions from the Plan. If a Member's annual contributions exceed the
limitations contained in Paragraph (B) of this Section after the Member's
Article III contributions, with earnings thereon, if any, have been refunded
to such Member, any Employer supplemental and/or profit sharing contribution
to be allocated to such Member in respect of any Contribution Determination
Period (including allocations as provided in this Paragraph) shall instead
be allocated to or for the benefit of all other Members who are Employees in
Employment as of the last day of the Contribution Determination Period as
determined under the Adoption Agreement and allocated in the same proportion
that each such Member's Salary for such Contribution Determination Period
bears to the total Salary for such Contribution Determination Period of all
such Members or, the TPA may, at the election of the Employer, utilize such
excess to reduce the contributions which would otherwise be made for the
succeeding Contribution Determination Period by the Employer. If, with
respect to any Contribution Determination Period, there is an excess profit
sharing contribution, and such excess cannot be fully allocated in
accordance with the preceding sentence because of the limitations prescribed
in Paragraph (B) of this Section, the amount of such excess which cannot be
so allocated shall be allocated to the Employer Credit Account and made
available to the Employer pursuant to the terms of Article VI. The TPA, at
the direction of the Plan Administrator, in accordance with Paragraph (D) of
this Section, shall take whatever additional action may be necessary to
assure that contributions to Members' Accounts meet the requirements of this
Section.
(D) In addition to the steps set forth in Paragraph (C) of this Section, the
Employer may from time to time adjust or modify the maximum limitations
applicable to contributions made in respect of a Member under this Section
10.1 as may be required or permitted by the Code or ERISA prior to or
following the date that allocation of any such contributions commences and
shall take appropriate action to reallocate the annual contributions which
would otherwise have been made but for the application of this Section.
(E) Membership in the Plan shall not give any Employee the right to be retained
in the Employment of the Employer and shall not affect the right of the
Employer to discharge any Employee.
56
(F) Each Member, Spouse and Beneficiary assumes all risk in connection with any
decrease in the market value of the assets of the Trust Fund. Neither the
Employer nor the Trustee guarantees that upon withdrawal, the value of a
Member's Account will be equal to or greater than the amount of the Member's
own deferrals or contributions, or those credited on his behalf in which the
Member has a vested interest, under the Plan.
(G) The establishment, maintenance or crediting of a Member's Account pursuant
to the Plan shall not vest in such Member any right, title or interest in
the Trust Fund except at the times and upon the terms and conditions and to
the extent expressly set forth in the Plan and the Trust Agreement.
(H) The Trust Fund shall be the sole source of payments under the Plan and the
Employer, Plan Administrator and TPA assume no liability or responsibility
for such payments, and each Member, Spouse or Beneficiary who shall claim
the right to any payment under the Plan shall be entitled to look only to
the Trust Fund for such payment.
Section 10.2 Top Heavy Provisions
--------------------
The Plan will be considered a Top Heavy Plan for any Plan Year if it is
determined to be a Top Heavy Plan as of the last day of the preceding Plan Year.
The provisions of this Section 10.2 shall apply and supersede all other
provisions in the Plan during each Plan Year with respect to which the Plan is
determined to be a Top Heavy Plan.
(A) For purposes of this Section 10.2, the following terms shall have the
meanings set forth below:
(1) "Affiliate" shall mean any entity affiliated with the Employer within
the meaning of Section 414(b), 414(c) or 414(m) of the Code, or
pursuant to the IRS Regulations under Section 414(o) of the Code,
except that for purposes of applying the provisions hereof with respect
to the limitation on contributions, Section 415(h) of the Code shall
apply.
(2) "Aggregation Group" shall mean the group composed of each qualified
retirement plan of the Employer or an Affiliate in which a Key Employee
is a member and each other qualified retirement plan of the Employer or
an Affiliate which enables a plan of the Employer or an Affiliate in
which a Key Employee is a member to satisfy Sections 401(a)(4) or 410
of the Code. In addition, the TPA, at the direction of the Plan
Administrator, may choose to treat any other qualified retirement plan
as a member of the Aggregation Group if such Aggregation Group will
continue to
57
satisfy Sections 401(a)(4) and 410 of the Code with such plan being
taken into account.
(3) "Key Employee" shall mean a "Key Employee" as defined in Sections
416(i)(1) and (5) of the Code and the IRS Regulations thereunder. For
purposes of Section 416 of the Code and for purposes of determining who
is a Key Employee, an Employer which is not a corporation may have
"officers" only for Plan Years beginning after December 31, 1985. For
purposes of determining who is a Key Employee pursuant to this
Subparagraph (3), compensation shall have the meaning prescribed in
Section 414(s) of the Code, or to the extent required by the Code or
the IRS Regulations, Section 1.415-2(d) of the IRS Regulations.
(4) "Non-Key Employee" shall mean a "Non-Key Employee" as defined in
Section 416(i)(2) of the Code and the IRS Regulations thereunder.
(5) "Top Heavy Plan" shall mean a "Top Heavy Plan" as defined in Section
416(g) of the Code and the IRS Regulations thereunder.
(B) Subject to the provisions of Paragraph (D) below, for each Plan Year that
the Plan is a Top Heavy Plan, the Employer's contribution (including
contributions attributable to salary reduction or similar arrangements)
allocable to each Employee (other than a Key Employee) who has satisfied the
eligibility requirement(s) of Article II, Section 2, and who is in service
at the end of the Plan Year, shall not be less than the lesser of (i) 3% of
such eligible Employee's compensation (as defined in Section 414(s) of the
Code or to the extent required by the Code or the IRS Regulations, Section
1.415-2(d) of the Regulations), or (ii) the percentage at which Employer
contributions for such Plan Year are made and allocated on behalf of the Key
Employee for whom such percentage is the highest. For the purpose of
determining the appropriate percentage under clause (ii), all defined
contribution plans required to be included in an Aggregation Group shall be
treated as one plan. Clause (ii) shall not apply if the Plan is required to
be included in an Aggregation Group which enables a defined benefit plan
also required to be included in said Aggregation Group to satisfy Sections
401(a)(4) or 410 of the Code.
(C) If the Plan is a Top Heavy Plan for any Plan Year, and the Employer has
elected vesting Schedule 3 or 6 under Article VI, the vested interest of
each Member, who is credited with at least one Hour of Employment on or
after the Plan becomes a Top Heavy Plan,
58
in the Units allocated to his Account shall not be less than the percentage
determined in accordance with the following schedule:
Completed Years of Vested
Employment Percentage
-------------------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
(D) (1) For each Plan Year that the Plan is a Top Heavy Plan, 1.0 shall be
substituted for 1.25 as the multiplicand of the dollar limitation in
determining the denominator of the defined benefit plan fraction and of
the defined contribution plan fraction for purposes of Section 415(e)
of the Code.
(2) If, after substituting "90%" for "60%" wherever the latter appears in
Section 416(g) of the Code, the Plan is not determined to be a Top
Heavy Plan, the provisions of Subparagraph (1) of this Paragraph (D)
shall not be applicable if the minimum Employer contribution allocable
to any Member who is a Non-Key Employee as specified in Paragraph (B)
of this Section is determined by substituting "4%" for 3%.
(E) The TPA shall, to the maximum extent permitted by the Code and in accordance
with the IRS Regulations, apply the provisions of this Section 10.2 by
taking into account the benefits payable and the contributions made under
any other qualified plan maintained by the Employer, to prevent
inappropriate omissions or required duplication of minimum contributions.
Section 10.3 Information and Communications
------------------------------
Each Employer, Member, Spouse and Beneficiary shall be required to furnish the
TPA with such information and data as may be considered necessary by the TPA.
All notices, instructions and other communications with respect to the Plan
shall be in such form as is prescribed from time to time by the TPA, shall be
mailed by first class mail or delivered personally, and shall be deemed to have
been duly given and delivered only upon actual receipt thereof by the TPA. All
information and data submitted by an Employer or a Member, including a Member's
birth date, marital status, salary and circumstances of his Employment and
termination thereof, may be accepted and relied upon by the TPA. All
communications from the Employer or the Trustee
59
to a Member, Spouse or Beneficiary shall be deemed to have been duly given if
mailed by first class mail to the address of such person as last shown on the
records of the Plan.
Section 10.4 Small Account Balances
----------------------
Notwithstanding the foregoing provisions of the Plan, if the value of all
portions of a Member's Account under the Plan, when aggregated, is equal to or
exceeds $3,500, then the Account will not be distributed without the consent of
the Member prior to age 65 (at the earliest), but if the aggregate value of all
portions of his Account is less than $3,500, then his Account will be
distributed as soon as practicable following the termination of Employment by
the Member.
Section 10.5 Amounts Payable to Incompetents, Minors or Estates
--------------------------------------------------
If the Plan Administrator shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due him or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may be paid to his Spouse, relative or any other person deemed
by the Plan Administrator to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Trust Fund therefor.
Section 10.6 Non-alienation of Amounts Payable
---------------------------------
Except insofar as may otherwise be required by applicable law, or Article VIII,
or pursuant to the terms of a Qualified Domestic Relations Order, no amount
payable under the Plan shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge
or encumbrance of any kind, and any attempt to so alienate shall be void; nor
shall the Trust Fund in any manner be liable for or subject to the debts or
liabilities of any person entitled to any such amount payable; and further, if
for any reason any amount payable under the Plan would not devolve upon such
person entitled thereto, then the Employer, in its discretion, may terminate his
interest and hold or apply such amount for the benefit of such person or his
dependents as it may deem proper. For the purposes of the Plan, a "Qualified
Domestic Relations Order" means any judgment, decree or order (including
approval of a property settlement agreement) which has been determined by the
Plan Administrator, in accordance with procedures established under the Plan, to
constitute a Qualified Domestic Relations Order within the meaning of Section
414(p)(1) of the Code. No amounts may be withdrawn under Article VII, and no
loans granted under Article VIII, if the TPA has received a document which may
be determined following its receipt to be a Qualified Domestic Relations Order
prior to completion of review of such order by the Plan Administrator within the
time
60
period prescribed for such review by the IRS Regulations.
Section 10.7 Unclaimed Amounts Payable
-------------------------
If the TPA cannot ascertain the whereabouts of any person to whom an amount is
payable under the Plan, and if, after 5 years from the date such payment is due,
a notice of such payment due is mailed to the address of such person, as last
shown on the records of the Plan, and within 3 months after such mailing such
person has not filed with the TPA or Plan Administrator written claim therefor,
the Plan Administrator may direct in accordance with ERISA that the payment
(including the amount allocable to the Member's contributions) be cancelled, and
used in abatement of the Plan's administrative expenses, provided that
appropriate provision is made for recrediting the payment if such person
subsequently makes a claim therefor.
Section 10.8 Leaves of Absence
-----------------
(A) If the Employer's personnel policies allow leaves of absence for all
similarly situated Employees on a uniformly available basis under the
circumstances described in Paragraphs (B)(1)-(4) below, then contribution
allocations and vesting service will continue to the extent provided in
Paragraphs (B)(1)-(4).
(B) For purposes of the Plan, there are only four types of approved Leaves of
Absence:
(1) Non-military leave granted to a Member for a period not in excess of
one year during which service is recognized for vesting purposes and
the Member is entitled to share in any supplemental contributions under
Article III or forfeitures under Article VI, if any, on a pro-rata
basis, determined by the Salary earned during the Plan Year or
Contribution Determination Period; or
(2) Non-military leave or layoff granted to a Member for a period not in
excess of one year during which service is recognized for vesting
purposes, but the Member is not entitled to share in any contributions
or forfeitures as defined under (1) above, if any, during the period of
the leave; or
61
(3) To the extent not otherwise required by applicable law, military or
other governmental service leave granted to a Member from which he
returns directly to the service of the Employer. Under this leave, a
Member may not share in any contributions or forfeitures as defined
under (1) above, if any, during the period of the leave, but vesting
service will continue to accrue; or
(4) To the extent not otherwise required by applicable law, a military
leave granted at the option of the Employer to a Member who is subject
to military service pursuant to an involuntary call-up in the Reserves
of the U.S. Armed Services from which he returns to the service of the
Employer within 90 days of his discharge from such military service.
Under this leave, a Member is entitled to share in any contributions or
forfeitures as defined under (1) above, if any, and vesting service
will continue to accrue. Notwithstanding any provision of the Plan to
the contrary, if a Member has one or more loans outstanding at the time
of this leave, repayments on such loan(s) may be suspended, if the
Member so elects, until such time as the Member returns to the service
of the Employer or the end of the leave, if earlier.
Section 10.9 Return of Contributions to Employer
-----------------------------------
(A) In the case of a contribution that is made by an Employer by reason of a
mistake of fact, the Employer may request the return to it of such
contribution within one year after the payment of the contribution, provided
such refund is made within one year after the payment of the contribution.
(B) In the case of a contribution made by an Employer or a contribution
otherwise deemed to be an Employer contribution under the Code, such
contribution shall be conditioned upon the deductibility of the contribution
by the Employer under Section 404 of the Code. To the extent the deduction
for such contribution is disallowed, in accordance with IRS Regulations, the
Employer may request the return to it of such contribution within one year
after the disallowance of the deduction.
(C) In the event that the IRS determines that the Plan is not initially
qualified under the Code, any contribution made incident to that initial
qualification by the Employer must be returned to the Employer within one
year after the date the initial qualification is denied, but only if the
application for the qualification is made by the time prescribed by law for
filing the Employer's return for the taxable year in which the Plan is
adopted, or such later date as the Secretary of the Treasury may prescribe.
62
The contributions returned under (A), (B) or (C) above may not include any gains
on such excess contributions, but must be reduced by any losses.
Section 10.10 Controlling Law
---------------
The Plan and all rights thereunder shall be governed by and construed in
accordance with ERISA and the laws of the State of New York.
63
ARTICLE XI
AMENDMENT & TERMINATION
Section 11.1 General
-------
While the Plan is intended to be permanent, the Plan may be amended or
terminated completely by the Employer at any time at the discretion of its Board
of Directors. Except where necessary to qualify the Plan or to maintain
qualification of the Plan, no amendment shall reduce any interest of a Member
existing prior to such amendment. Subject to the terms of the Adoption
Agreement, written notice of such amendment or termination as resolved by the
Board shall be given to the Trustee, the Plan Administrator and the TPA. Such
notice shall set forth the effective date of the amendment or termination or
cessation of contributions.
Section 11.2 Termination of Plan and Trust
-----------------------------
This Plan and any related Trust Agreement shall in any event terminate whenever
all property held by the Trustee shall have been distributed in accordance with
the terms hereof.
Section 11.3 Liquidation of Trust Assets in the Event of Termination
-------------------------------------------------------
In the event that the Employer's Board of Directors shall decide to terminate
the Plan, or, in the event of complete cessation of Employer contributions, the
rights of Members to the amounts standing to their credit in their Accounts
shall be deemed fully vested and the Plan Administrator shall direct the Trustee
to either continue the Trust in full force and effect and continue so much of
the Plan in full force and effect as is necessary to carry out the orderly
distribution of benefits to Members and their Beneficiaries upon retirement,
Disability, death or termination of Employment; or (a) reduce to cash such part
or all of the Plan assets as the Plan Administrator may deem appropriate; (b)
pay the liabilities, if any, of the Plan; (c) value the remaining assets of the
Plan as of the date of notification of termination and proportionately adjust
Members' Account balances; (d) distribute such assets in cash to the credit of
their respective Accounts as of the notification of the termination date; and
(e) distribute all balances which have been segregated into a separate fund to
the persons entitled thereto; provided that no person in the event of
termination shall be required to accept distribution in any form other than
cash.
64
Section 11.4 Partial Termination
-------------------
The Employer may terminate the Plan in part without causing a complete
termination of the Plan. In the event a partial termination occurs, the Plan
Administrator shall determine the portion of the Plan assets attributable to the
Members affected by such partial termination and the provisions of Section 11.3
shall apply with respect to such portion as if it were a separate fund.
Section 11.5 Power to Amend
--------------
(A) Subject to Section 11.6, the Employer, through its Board of Directors, shall
have the power to amend the Plan in any manner which it deems desirable,
including, but not by way of limitation, the right to change or modify the
method of allocation of such contributions, to change any provision relating
to the distribution of payment, or both, of any of the assets of the Trust
Fund. Further, the Employer may (i) change the choice of options in the
Adoption Agreement; (ii) add overriding language in the Adoption Agreement
when such language is necessary to satisfy Section 415 or Section 416 of the
Code because of the required aggregation of multiple plans; and (iii) add
certain model amendments published by the IRS which specifically provide
that their adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under Section 412(d) of the
Code, will be considered to have an individually designed plan.
Any amendment shall become effective upon the vote of the Board of Directors
of the Employer, unless such vote of the Board of Directors of the Employer
specifies the effective date of the amendment.
Such effective date of the amendment may be made retroactive to the vote of
the Board of Directors, to the extent permitted by law.
(B) The Employer expressly recognizes the authority of the Sponsor, Pentegra
Services, Inc., to amend the Plan from time to time, except with respect to
elections of the Employer in the Adoption Agreement, and the Employer shall
be deemed to have consented to any such amendment. The Employer shall
receive a written instrument indicating the amendment of the Plan and such
amendment shall become effective as of the date of such instrument. No such
amendment shall in any way impair, reduce or affect any Member's vested and
nonforfeitable rights in the Plan and Trust.
Section 11.6 Solely for Benefit of Members, Terminated Members and their
-----------------------------------------------------------
Beneficiaries
-------------
65
No changes may be made in the Plan which shall vest in the Employer, directly or
indirectly, any interest, ownership or control in any of the present or
subsequent assets of the Trust Fund.
No part of the funds of the Trust other than such part as may be required to pay
taxes, administration expenses and fees, shall be reduced by any amendment or be
otherwise used for or diverted to purposes other than the exclusive benefit of
Members, retired Members, Former Members, and their Beneficiaries, except as
otherwise provided in Section 10.9 and under applicable law.
No amendment shall become effective which reduces the nonforfeitable percentage
of benefit that would be payable to any Member if his Employment were to
terminate and no amendment which modifies the method of determining that
percentage shall be made effective with respect to any Member with at least
three Years of Service unless such member is permitted to elect, within a
reasonable period after the adoption of such amendment, to have that percentage
determined without regard to such amendment.
Section 11.7 Successor to Business of the Employer
-------------------------------------
Unless this Plan and the related Trust Agreement be sooner terminated, a
successor to the business of the Employer by whatever form or manner resulting
may continue the Plan and the related Trust Agreement by executing appropriate
supplementary agreements and such successor shall thereupon succeed to all the
rights, powers and duties of the Employer hereunder. The Employment of any
Employee who has continued in the employ of such successor shall not be deemed
to have terminated or severed for any purpose hereunder if such supplemental
agreement so provides.
Section 11.8 Merger, Consolidation and Transfer
----------------------------------
The Plan shall not be merged or consolidated, in whole or in part, with any
other plan, nor shall any assets or liabilities of the Plan be transferred to
any other plan unless the benefit that would be payable to any affected Member
under such plan if it terminated immediately after the merger, consolidation or
transfer, is equal to or greater than the benefit that would be payable to the
affected Member under this Plan if it terminated immediately before the merger,
consolidation or transfer.
66
Section 11.9 Revocability
------------
This Plan is based upon the condition precedent that it shall be approved by the
Internal Revenue Service as qualified under Section 401(a) of the Code and
exempt from taxation under Section 501(a) of the Code. Accordingly,
notwithstanding anything herein to the contrary, if a final ruling shall be
received in writing from the IRS that the Plan does not initially qualify under
the terms of Sections 401(a) and 501(a) of the Code, there shall be no vesting
in any Member of assets contributed by the Employer and held by the Trustee
under the Plan. Upon receipt of notification from the IRS that the Plan fails
to qualify as aforesaid, the Employer reserves the right, at its option, to
either amend the Plan in such manner as may be necessary or advisable so that
the Plan may so qualify, or to withdraw and terminate the Plan.
Upon the event of withdrawal and termination, the Employer shall notify the
Trustee and provide the Trustee with a copy of such ruling and the Trustee shall
transfer and pay over to the Employer all of the net assets contributed by the
Employer pursuant to the Plan which remain after deducting the proper expense of
termination and the Trust Agreement shall thereupon terminate. For purposes of
this Article XI, "final ruling" shall mean either (1) the initial letter ruling
from the District Director in response to the Employer's original application
for such a ruling, or (2) if such letter ruling is unfavorable and a written
appeal is taken or protest filed within 60 days of the date of such letter
ruling, it shall mean the ruling received in response to such appeal or protest.
If the Plan is terminated, the Plan Administrator shall promptly notify the IRS
and such other appropriate governmental authority as applicable law may require.
Neither the Employer nor its Employees shall make any further contributions
under the Plan after the termination date, except that the Employer shall remit
to the TPA a reasonable administrative fee to be determined by the TPA for each
Member with a balance in his Account to defray the cost of implementing its
termination. Where the Employer has terminated the Plan pursuant to this
Article, the Employer may elect to transfer assets from the Plan to a successor
plan qualified under Section 401(a) of the Code in which event the Employer
shall remit to the TPA an additional administrative fee to be determined by the
TPA to defray the cost of such transfer transaction.
67
TRUSTS ESTABLISHED UNDER THE PLAN
Assets of the Plan are held in trust under separate Trust Agreements with the
Trustee or Trustees. Any Eligible Employee or Member may obtain a copy of these
Trust Agreements from the Plan Administrator.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the Plan by
the Employer, the Employer has caused these presents to be executed on its
behalf and its corporate seal to be hereunder affixed as of the _________ day of
_______________________, 19____.
ATTEST:
_________________________ By _____________________________
Clerk
68
[LOGO OF PENTEGRA APPEARS HERE]
69
P E N T E G R A I N V E S T M E N T P E R F O R M A N C E S U M M A R Y
-----------------------------------------------------------------------------
F U N D R E T U R N S T H R O U G H J U N E 3 0, 1 9 9 9/1/
5 Calendar 10 Calendar
ASSET ALLOCATION FUNDS/2/,/5/ Unit Monthly Year-to- Last 12 Years Years
Value Return Date Months Annualized Annualized
INCOME PLUS 11.7217 1.4% 3.5% 7.4% 8.4% See Note 5
GROWTH & INCOME 12.7882 3.2% 6.8% 12.1% 12.5% See Note 5
GROWTH 14.2227 5.3% 10.3% 18.2% 18.3% See Note 5
----------------------------------------------------------------------------------------------------------------------------
STOCK FUNDS
INTERNATIONAL STOCK FUND/2/ 11.4107 3.9% 3.8% 7.2% 10.4% 9.1%
Benchmark: MSCI EAFE Index
(Limited to 25% Japan) - 3.9% 4.0% 7.6% 10.8% 9.5%
S&P MIDCAP STOCK FUND/3/ 26.4785 5.3% 6.7% 16.8% 18.2% 18.7%
Benchmark: S&P MidCap 400 Index - 5.4% 6.9% 17.2% 18.8% 19.3%
S&P 500 STOCK FUND/3/ 40.1807 5.5% 12.1% 22.1% 23.4% 18.6%
Benchmark: S&P 500 Index - 5.6% 12.4% 22.8% 24.1% 19.2%
----------------------------------------------------------------------------------------------------------------------------
BOND/FIXED INCOME FUNDS
GOVERNMENT BOND FUND/3/ 7.4132 -1.3% -7.9% -1.5% 9.1% 11.2%
Benchmark: ▇▇▇▇▇▇ Brothers
20+ Year Treasury Bond Index - -1.2% -7.4% -0.9% 9.7% 11.8%
STABLE VALUE FUND/4/ 8.4322 0.5% 2.7% 5.7% 6.5% 7.5%
MONEY MARKET FUND/3/ 6.2693 0.4% 2.3% 5.0% 5.4% 5.9%
----------------------------------------------------------------------------------------------------------------------------
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (▇▇▇) is the Investment Manager for all Funds. Unit
values are determined as of the last business day of each month. Returns are
shown net of fees. Dividends and interest are automatically reinvested. See
following notes.
2 The Asset Allocation Funds and the International Stock Fund inception date
was July 2, 1997. Returns prior to inception are simulated using the returns
of market indices for, or actual funds of, the Fund's investment components,
and are net of fees.
3 BGI became the manager of the S&P MidCap, S&P 500, Government Bond and Money
Market Funds as of June 17, 1997. Results prior to June 17, 1997 are
hypothetical and are based on investment in the current underlying funds
managed by BGI, and are net of fees. Accordingly, actual past performance of
Pentegra's Funds will be different.
4 The Stable Value Fund is a separately managed account; historical return data
represents actual performance of this Fund.
5 The Asset Allocation Funds are designed investment vehicles utilizing various
asset classes represented by index funds managed by BGI. They are
specifically for Pentegra and its clients. Hypothetical results only exist
from January 1992 to July 2, 1997 (the inception date of the Funds).
Past performance is no guarantee of future performance.
PENTEGRA INCOME PLUS ASSET ALLOCATION FUND
Annual Return
The Pentegra Income Plus Asset
Allocation Fund diversifies among a [BAR CHART APPEARS HERE]
broad range of stable value securities
to reduce short-term risk, and among a
broad range of large U.S. and
international companies to capture
growth potential. The Fund is
structured to take advantage of market
opportunities with a small flexible
component. Its objective is to
preserve the value of your investment
over short periods of time and to offer
some potential for growth over time.
Current annual fees of 0.85% are 5-Year Annualized Rate of Return: 8.4%.
deducted before unit values are Fund inception July 2, 1997. Returns prior to inception are simulated
calculated and the rate of return is using the returns of market indices for, or actual funds of, the Fund's
published. investment components, and are net of fees.
PENTEGRA GROWTH & INCOME ASSET ALLOCATION FUND
The Pentegra Growth & Income Asset Annual Return
Allocation Fund diversifies among U.S.
and international stocks, U.S. bonds, [BAR CHART APPEARS HERE]
and stable value investments to pursue
long-term appreciation and short-term
stability and takes advantage of market
opportunities with a small flexible
component. Its objective is to provide
a balance between the pursuit of growth
and protection from risk over time.
Current annual fees of 0.85% are 5-Year Annualized Rate of Return: 12.5%
deducted before unit values are Fund inception July 2, 1997. Returns prior to inception are simulated
calculated and the rate of return is using the returns of market indices for, or actual funds of, the Fund's
published. investment components, and are net of fees.
PENTEGRA GROWTH ASSET ALLOCATION FUND
The Pentegra Growth Asset Allocation Fund Annual Return
diversifies among a broad range of
domestic and international stocks and [BAR CHART APPEARS HERE]
takes advantage of market opportunities
with a large flexible component. Its
objective is to pursue high growth of
your investment over time. Current 5-Year Annualized Rate of Return: 18.3%
annual fees of 0.85% are deducted before Fund inception July 2, 1997. Returns prior to inception are simulated
unit values are calculated and the rate using the returns of market indices for, or actual funds of, the Fund's
of return is published. investment components, and are net of fees.
PENTEGRA INTERNATIONAL STOCK FUND
The Pentegra International Stock Fund Annual Return
invests in over 1,000 foreign stocks in
20 countries, based in Europe, [BAR CHART APPEARS HERE]
Australia, and the Far East. Its goal
is to approximate the performance of
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital
International (MSCI) EAFE (Europe,
Australia, Far East) Index by investing
in most of the same stocks as the
Index. Unlike the Index, however, the
Fund limits its investment in Japanese
stocks to no more than 25% of the
Fund's overall portfolio. Its objective
is to offer the potential return of
investing in the stocks of established
non-U.S. companies, as well as the
potential risk-reduction of broad
diversification over time. Current 5-Year Annualized Rate of Return: 10.4% - 10-Year Annualized Rate of Return: 9.1%
annual fees of 0.65% are deducted Fund inception July 2, 1997. Returns prior to inception are simulated
before unit values are calculated and using the returns of market indices for, or actual funds of, the Fund's
the rate of return is published. investment components, and are net of fees.
PENTEGRA S&P MIDCAP STOCK FUND
The Pentegra S&P MidCap Stock Fund Annual Return
invests in the stocks of mid-sized U.S.
companies, which are expected to grow [BAR CHART APPEARS HERE]
faster than larger, more established
companies. Its goal is to match the
performance of the S&P MidCap 400 Index
by investing in most of the same stocks
as the Index. The MidCap Index
includes 400 stocks which represent the
middle tier of the U.S. stock market.
Its objective is to earn higher returns
which reflect the growth potential of
mid-sized companies over time. Current 5-Year Annualized Rate of Return: 18.2% - 10-Year Annualized Rate of Return: 18.7%
annual fees of 0.54% are deducted Barclays Global Investors (BGI) began management of this Fund June 17, 1997.
before unit values are calculated and Returns prior to June 17, 1997, are hypothetical and are based on investment
the rate of return is published. in the current underlying funds managed by BGI, and are net of fees.
PENTEGRA S&P 500 STOCK FUND
The Pentegra S&P 500 Stock Fund invests Annual Return
in the stocks of a broad array of
established U.S. companies. Its goal [BAR CHART APPEARS HERE]
is to match the performance of the S&P
500 Index, a widely recognized
benchmark of U.S. stocks,
representative of almost 72% of the
value of all publicly traded common
stocks in this country. The S&P 500
Index represents the largest tier of
the U.S. stock market. Its objective
is to earn higher returns by investing
in the largest companies in the U.S.
economy over time. Current annual 5-Year Annualized Rate of Return: 23.4% - 10-Year Annualized Rate of Return: 18.6%
fees of 0.524% are deducted before Barclays Global Investors (BGI) began management of this Fund June 17, 1997.
unit values are calculated and the Returns prior to June 17, 1997, are hypothetical and are based on investment in
rate of return is published. the current underlying funds managed by BGI, and are net of fees.
PENTEGRA GOVERNMENT BOND FUND
The Pentegra Government Bond Fund Annual Return
invests in U.S. Treasury bonds with a
maturity of 20 years or more. The [BAR CHART APPEARS HERE]
Fund=s goal is to match the performance
of the ▇▇▇▇▇▇ Brothers 20+ Year
Treasury Bond Index. Its objective is
to earn a higher level of income along
with the potential for capital
appreciation over time. Current annual 5 Year Annualized Rate of Return: 9.1% - 10 Year Annualized Rate of Return: 11.2%
fees of 0.60% are deducted before unit Barclays Global Investors (BGI) began management of this Fund June 17, 1997.
values are calculated and the rate of Returns prior to June 17, 1997, are hypothetical and are based on
return is published. investment in the current underlying funds managed by BGI, and are net of fees.
PENTEGRA STABLE VALUE FUND
The Pentegra Stable Value Fund invests Annual Return
primarily in Guaranteed Investment
Contracts (GICs) and Synthetic [BAR CHART APPEARS HERE]
Guaranteed Investment Contracts
(SGICs). These contracts pay a steady
rate of interest over a certain period
of time (usually between three and five
years). Its objective is to achieve a
stable return over short to
intermediate periods of time while
preserving the value of your investment
over time. Current annual fees of
0.551% are deducted before unit values
are calculated and the rate of return 5-Year Annualized Rate of Return: 6.5% - 10-Year Annualized Rate of Return:
is published. 7.5% Expected Return Range for second half of 1999: 5.2% to 5.7%
PENTEGRA MONEY MARKET FUND
The Pentegra Money Market Fund invests Annual Return
in a broad range of high-quality,
short-term instruments issued by banks, [BAR CHART APPEARS HERE]
corporations and the U.S. Government
and its agencies. These instruments
include certificates of deposit and
U.S. Treasury bills. Its objective is
to achieve competitive, short-term
rates of return while preserving the
value of your principal over time. Current annualized rate of return for June 1999: 4.7% 5-Year Annualized Rate of
Current annual fees of 0.38% are Return: 5.4% - 10-Year Annualized Barclays Global Investors (BGI) began
deducted before unit values are management of this Fund June 17, 1997. Returns prior to June 17, 1997, are
calculated and the rate of return is hypothetical and are based on investment in the current underlying funds managed
published. by BGI, and are net of fees.