Exhibit 4.1
Plan #002
NON-STANDARDIZED ADOPTION AGREEMENT
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST
Sponsored by
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust, Basic Plan Document #04.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan, complete this
section based on the lead Employer. Additional Employers may
adopt this Plan by attaching executed signature pages to the
back of the Employer's Adoption Agreement.
(a) NAME AND ADDRESS:
THE PRINCETON REVIEW, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(b) TELEPHONE NUMBER:(▇▇▇)▇▇▇-▇▇▇▇
(c) TAX ID NUMBER: ▇▇-▇▇▇▇▇▇▇
(d) FORM OF BUSINESS:
[ ] (i) Sole Proprietor
[ ] (ii) Partnership
[X] (iii) Corporation
[ ] (iv) "S" Corporation (formerly known as Subchapter S)
[ ] (v) Other:
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(e) NAME OF PLAN: THE PRINCETON REVIEW, INC. 401(k) EMPLOYEE
SAVINGS PLAN
(f) THREE DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT: 001
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of
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(b) This is an amended Plan.
(i) The effective date of the original Plan was JANUARY
1, 1992 . The effective date of the amended Plan is
JANUARY 15, 2002 .
NOTE: The effective date of the amended Plan for the Tax
Reform Act of 1986 required changes is the first day
of the 1987 Plan Year. Sections 7(f) and 12 herein
shall be effective as of the first day of the 1989
Plan Year. Any prior amendments to the plan which
were intended to have effect after December 31, 1986
will continue to be in effect only until the
effective date of this amended and restated plan.
3. DEFINITIONS
(a) (i) "Compensation" For purposes of Elective Deferrals and
Top-Heavy contributions, Compensation includes
everything enumerated in paragraph 1.12 of the Basic
Plan Document #04. For purposes of all other Employer
contributions (except if the Employer selects an
Integrated Allocation Formula), Compensation will
exclude the following:
[ ] (1) overtime.
[ ] (2) bonuses.
[ ] (3) commissions.
[ ] (4)
[X] (ii) For purposes of Discretionary Contributions,
Compensation will only include amounts for the period
during which the employee was eligible to
participate.
NOTE: Any exclusion of compensation must satisfy the requirements of
IRS Regulations Section 1.401(a)(4) and Code Section 414(s)
and the regulations thereunder.
(b) "Entry Date"
[ ] (i) The first day of the month coinciding with
or following the date on which an Employee
meets the eligibility requirements.
[ ] (ii) The earlier of the first day of the Plan
Year or the first day of the seventh month
of the Plan Year coinciding with or
following the date on which an Employee
meets the eligibility requirements.
[X] (iii) The first day of the Plan Year, or the first
day of the fourth month, or the first day of
the seventh month or the first day of the
tenth month, of the Plan Year coinciding
with or following the date on which an
Employee meets the eligibility requirements.
(c) "Hours of Service" Shall be determined on the basis of the
method selected below. Only one method may be selected. The
method selected shall be applied to all Employees covered
under the Plan as follows:
[X] (i) On the basis of actual hours for which an
Employee is paid or entitled to payment.
[ ] (ii) On the basis of days worked. An Employee
shall be credited with ten (10) Hours of
Service if under paragraph 1.41 of the Basic
Plan Document #04 such Employee would be
credited with at least one (1) Hour of
Service during the day.
[ ] (iii) On the basis of weeks worked. An Employee
shall be credited with forty-five (45) Hours
of Service if under paragraph 1.41 of the
Basic Plan Document #04 such Employee would
be credited with at least one (1) Hour of
Service during the week.
(d) "Limitation Year" The Limitation Year shall be the Plan Year
unless another year is specified here:
(e) "Net Profit"
[X] (i) Not applicable (profits will not be required
for any contributions to the Plan).
[ ] (ii) As defined in paragraph 1.48 of the Basic
Plan Document #04.
(f) "Plan Year" The 12-consecutive month period commencing on
JANUARY 1 and ending on DECEMBER 31.
(g) "Qualified Early Retirement Age" For purposes of making
distributions under the provisions of a Qualified Domestic
Relations Order, the Plan's Qualified Early Retirement Age
with regard to the Participant against whom the order is
entered [X] shall [ ] shall not be the date the order is
determined to be qualified. If "shall" is elected, this will
only allow payout to the alternate payee(s).
(h) "Qualified Joint and Survivor Annuity" The safe-harbor
provisions of paragraph 8.7 of the Basic Plan Document #04 are
applicable. If the Plan is not safe-harbored under paragraph
8.7 of the Basic Plan Document, the survivor annuity shall be
50% of the annuity payable during the lives of the Participant
and Spouse.
(i) "Taxable Wage Base"
[ ] (i) Not Applicable - Plan is not integrated with
Social Security.
[X] (ii) The maximum earnings considered wages for
such Plan Year under Code Section 3121(a).
[ ] (iii) % (not more than 100%) of the amount
considered wages for such Plan Year under
Code Section 3121(a).
[ ] (iv) $ , provided that such amount is not in
excess of the amount determined under
paragraph 3(i)(ii) above.
NOTE: Using less than the maximum at (ii) may result in a
change in the allocation formula in Section 7.
(j) "Year of Service"
(i) For Eligibility Purposes: (Choose one)
[X] (1) The 12-consecutive month period
during which an Employee is
credited with 1000 (not more than
1,000) Hours of Service.
[ ] (2) Elapsed Time
If no answer is specified, the Hours of Service
method will be used.
(ii) For Allocation Accrual Purposes: The 12-consecutive
month period during which an Employee is credited
with 1000 (not more than 1,000) Hours of Service.
(iii) For Vesting Purposes: (Choose one)
[ ] (1) The 12-consecutive month period
during which an Employee is
credited with (not more than
1,000) Hours of Service.
[ ] (2) Elapsed Time
If no answer is specified, the Hours of Service
method will be used.
4. ELIGIBILITY REQUIREMENTS
(a) Service:
[ ] (i) The Plan shall have no service requirement.
[X] (ii) The Plan shall cover only Employees having
completed at least one Year of Service.
[ ] (iii) The Plan shall cover only Employees having
completed at least months (less than 12).
NOTE: If the eligibility period selected is less than one year, an
Employee will not be required to complete any specified number
of Hours of Service to receive credit for such period.
(b) Age:
[ ] (i) The Plan shall have no minimum age
requirement.
[X] (ii) The Plan shall cover only Employees having
attained age 21 (not more than age 21).
(c) Classification:
The Plan shall cover all Employees who have met the age and
service requirements with the following exceptions:
[X] (i) No exceptions.
[ ] (ii) The Plan shall exclude Employees included in
a unit of Employees covered by a collective
bargaining agreement between the Employer
and Employee Representatives, if retirement
benefits were the subject of good faith
bargaining and if two percent or less of the
Employees who are covered pursuant to that
agreement are professionals as defined in
Regulations Section 1.410(b)-9. For this
purpose, the term "Employee Representative"
does not include any organization more than
half of whose members are Employees who are
owners, officers, or executives of the
Employer.
[ ] (iii) The Plan shall exclude Employees who are
nonresident aliens [within the meaning of
Code Section 7701(b)(1)(B)] and who receive
no earned income [within the meaning of Code
Section 911(d)(2)] from the Employer which
constitutes income from sources within the
United States [within the meaning of Code
Section 861(a)(3)].
[ ] (iv) The Plan shall exclude from participation
any nondiscriminatory classification of
Employees determined as follows:
(d) Employees on Effective Date:
[X] (i) Not Applicable. All Employees will be
required to satisfy both the age and Service
requirements specified above.
[ ] (ii) Employees employed on the Plan's Effective
Date do not have to satisfy the Service
requirements specified above.
[ ] (iii) Employees employed on the Plan's Effective
Date do not have to satisfy the age
requirements specified above.
5. RETIREMENT AGES
(a) Normal Retirement Age:
If the Employer imposes a requirement that Employees retire
upon reaching a specified age, the Normal Retirement Age
selected below may not exceed the Employer imposed mandatory
retirement age.
[X] (i) Normal Retirement Age shall be 65 (not to
exceed age 65).
[ ] (ii) Normal Retirement Age shall be the later of
attaining age (not to exceed age 65) or
the (not to exceed the 5th) anniversary of
the first day of the first Plan Year in
which the Participant commenced
participation in the Plan.
(b) Early Retirement Age:
Early Retirement Age shall not be applicable unless the
Employer attached a form to this Adoption Agreement certifying
that Early Retirement Age is a benefit which has accrued under
the predecessor Plan which cannot be cut back under Code
Section 411(d)(6).
6. EMPLOYEE CONTRIBUTIONS
[X] (a) Participants shall be permitted to make Elective
Deferrals in any amount from 2% (not more than 2%)
up to 20% (not more than 20%) of their Compensation.
If (a) is applicable, Participants shall be permitted
to amend their Salary Savings Agreements to change
the contribution percentage in accordance with the
procedures established by the Plan Administrator.
[ ] (b) Participants shall be permitted to make after tax
Voluntary Contributions.
NOTE: The Average Deferral Percentage Test will apply to
contributions under (a) above. The Average Contribution
Percentage Test will apply to contributions under (b) and may
apply to (a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF
NOTE: The Employer shall make contributions to the Plan in
accordance with the formula or formulas selected below. The
Employer's contribution shall be subject to the limitations
contained in Articles III and X. For this purpose, a
contribution for a Plan Year shall be limited for the
Limitation Year which ends with or within such Plan Year.
Also, the integrated allocation formulas below are for Plan
Years beginning in 1989 and later. The Employer's allocation
for earlier years shall be as specified in its Plan prior to
amendment for the Tax Reform Act of 1986.
(a) Current or Accumulated Net Profits are required for:
[ ] (i) Matching Contributions.
[ ] (ii) Qualified Non-Elective
Contributions.
[ ] (iii) Discretionary Contributions.
If no answer is specified, Current or Accumulated Net
Profits will not be required.
NOTE: Elective Deferrals can always be contributed regardless of
profits.
(b) Salary Savings Agreement:
The Employer shall contribute and allocate to each
Participant's account an amount equal to the amount
withheld from the Compensation of such Participant
pursuant to his or her Salary Savings Agreement.
An Employee who has terminated his or her election
under the Salary Savings Agreement other than for
hardship reasons may not make another Elective
Deferral:
[ ] (i) until the first day of the next
Plan Year.
[ ] (ii) until the first day of the next
valuation period.
[X] (iii) for a period of 3 month(s) (not to
exceed 12 months).
If no option is specified, option (ii) will apply.
[X] (c) Matching Employer Contribution [See paragraphs
(g),(h) and (i)]:
[ ] (i) PERCENTAGE MATCH: The Employer
shall contribute and allocate to
each eligible Participant's account
an amount equal to % of the
amount contributed and allocated in
accordance with paragraph 7(b)
above. The Employer shall not match
Participant Elective Deferrals as
provided above in excess of $
or in excess of % of the
Participant's Compensation.
[X] (ii) DISCRETIONARY MATCH: The Employer
shall contribute and allocate to
each eligible Participant's account
a percentage of the Participant's
Elective Deferral contributed and
allocated in accordance with
paragraph 7(b) above. The Employer
shall not match Participant
Elective Deferrals in excess of
$ or in excess of %
of the Participant's Compensation.
[ ] (iii) TIERED MATCH: The Employer shall
contribute and allocate to each
Participant's account an amount
equal to % of the first
% of the Participant's
Compensation, and % of the
next % of the Participant's
Compensation.
NOTE: Percentages specified in (iii) above may not increase
as the percentage of Participant's contribution
increases.
[ ] (iv) FLAT DOLLAR MATCH: The Employer
shall contribute and allocate to
each Participant's account $ if
the Participant defers at least 1%
of Compensation.
(v) ELIGIBILITY FOR MATCH: Matching
contributions will be made to [X]
all Employees eligible to
participate [ ] only to non-Highly
Compensated Employees eligible to
participate.
[ ] (vi) QUALIFIED MATCH: Employer Matching
Contributions will be treated as
Qualified Matching Contributions to
the extent specified by the
Employer at the time the Matching
Employer Contributions are made.
(vii) MATCHING CONTRIBUTION COMPUTATION
PERIOD: The time period upon which
matching contributions will be
based shall be:
[ ] (A) weekly
[X] (B) bi-weekly
[ ] (C) semi-monthly
[ ] (D) monthly
[ ] (E) quarterly
[ ] (F) semi-annually
[ ] (G) annually
[X] (d) Qualified Non-Elective Employer Contribution - [See paragraphs
(g), (h) and (i)] These contributions are fully vested when
contributed.
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation as
a percentage of the Compensation of all eligible Employees.
This part of the Employer's contribution and the allocation
thereof shall be unrelated to any Employee contributions made
hereunder. The amount of Qualified non-Elective Contributions
taken into account for purposes of meeting the ADP or ACP test
requirements is the amount necessary to meet both the ADP and
ACP tests. Qualified non-Elective Contributions will be made
to only non-Highly Compensated Employees eligible to
participate.
[ ] (e) Additional Employer Contribution Other Than Qualified
Non-Elective Contributions - Non-Integrated [See paragraphs
(g), (h) and (i)]
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation as
a percentage of the Compensation of all eligible Employees.
This part of the Employer's contribution and the allocation
thereof shall be unrelated to any Employee contributions made
hereunder.
[X] (f) Additional Employer Contribution - Integrated
Allocation Formula [See paragraphs (g),(h) and (i)]
The Employer's contribution for the Plan Year plus any
forfeitures (only if they are reallocated to Participants
under Section 9 herein), shall be allocated to the accounts of
eligible Participants as set forth in the Basic Plan Document
#04 of paragraph 5.3.
NOTE: Only one plan maintained by the Employer may be integrated
with Social Security.
(g) Allocation of Excess Amounts (Annual Additions)
Excess deferrals which result in an Excess Amount shall be
returned to the Participant. In the event that the allocation
formula of other contributions results in an Excess Amount,
such excess shall be:
[X] (i) placed in a suspense account accruing no
gains or losses for the benefit of the
Participant.
NOTE: For every Limitation Year, or part thereof, that a
suspense account exists, the Employer will be
subjected to a ten-percent penalty on the monies held
in the suspense account.
[ ] (ii) reallocated as additional Employer
contributions to all other Participants to
the extent that they do not have any Excess
Amount.
If no answer is specified, the suspense
account method will be used.
(h) Minimum Employer Contribution Under Top-Heavy Plans:
For any Plan Year during which the Plan is Top-Heavy, the sum
of the contributions and forfeitures as allocated to eligible
Employees under paragraphs 7(d), 7(e), 7(f), and 9 of this
Adoption Agreement shall not be less than the amount required
under paragraph 14.2 of the Basic Plan Document #04. Top-Heavy
minimums will be allocated to:
[X] (i) all eligible Participants.
[ ] (ii) only eligible non-Key Employees who are
Participants.
(i) Return of Excess Contributions and/or Excess Aggregate
Contributions:
In the event that one or more Highly Compensated Employees is
subject to both the ADP and ACP tests and the sum of such
tests exceeds the Aggregate Limit, the limit will be satisfied
by reducing the ACP of the affected Highly Compensated
Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES
(a) The Employer will not allocate Employer related contributions
to Employees who terminate during a Plan Year, unless required
to satisfy the requirements of Code Section 401(a)(26) and
410(b). (These requirements are effective for 1989 and
subsequent Plan Years.)
(b) The Employer will allocate Employer related contributions to
any Participant who terminates during the Plan Year without
accruing the necessary Hours of Service if they terminate as a
result of:
[X] (i) Retirement.
[X] (ii) Disability.
[X] (iii) Death.
[ ] (iv) Other termination
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures of
amounts other than Excess Aggregate Contributions.
(a) Allocation Alternatives:
[X] (i) Not Applicable. All contributions are always
fully vested.
[ ] (ii) Forfeitures shall be allocated to
Participants in the same manner as the
Employer's contribution.
[ ] (iii) Forfeitures shall be applied to reduce the
Employer's contribution for such Plan Year.
[ ] (iv) Forfeitures shall be applied to offset
administrative expenses of the Plan. If
forfeitures exceed these expenses, (iii)
above shall apply.
(b) Date for Reallocation:
NOTE: If no distribution has been made to a former Participant,
sub-section (i) below will apply to such Participant even if
the Employer elects (ii) or (iii) below as its normal
administrative policy.
[ ] (i) Forfeitures shall be reallocated at the end
of the Plan Year during which the former
Participant incurs his or her fifth
consecutive one year Break In Service.
[ ] (ii) Forfeitures will be reallocated immediately
(as of the next Valuation Date).
[ ] (iii) Forfeitures will be reallocated as of the
end of the Plan Year in which the
Participant separates from service.
[ ] (iv) Forfeitures shall be reallocated at the end
of the Plan Year during which the former
Employee incurs his or her (1st, 2nd, 3rd,
or 4th) consecutive one year Break In
Service.
(c) Restoration of Forfeitures:
If amounts are forfeited prior to five consecutive 1-year
Breaks in Service, the Funds for restoration of account
balances will be obtained from the following resources in the
order indicated (fill in 1 and 2 in the following boxes to
indicate order):
[ ] (i) Current year's forfeitures.
[ ] (ii) Additional Employer contribution.
If no answer is specified, the order will be (i) and (ii).
(d) Forfeitures of Excess Aggregate Contributions shall be:
[ ] (i) Applied to reduce Employer contributions.
[ ] (ii) Allocated, after all other forfeitures under
the Plan, to the Matching Contribution
account of each non-Highly Compensated
Participant who made Elective Deferrals in
the ratio which each such Participant's
Compensation for the Plan Year bears to the
total Compensation of all Participants for
such Plan Year. Such forfeitures cannot be
allocated to the account of any Highly
Compensated Employee.
Forfeitures of Excess Aggregate Contributions will be so
applied at the end of the Plan Year in which they occur.
10. CASH OPTION
[ ] (a) The Employer may permit a Participant to elect to
defer to the Plan, an amount not to exceed %
of any Employer paid cash bonus made for such
Participant for any year. A Participant must file an
election to defer such contribution at least fifteen
(15) days prior to the end of the Plan Year. If the
Employee fails to make such an election, the entire
Employer paid cash bonus to which the Participant
would be entitled shall be paid as cash and not to
the Plan. Amounts deferred under this section shall
be treated for all purposes as Elective Deferrals.
Notwithstanding the above, the election to defer must
be made before the bonus is made available to the
Participant.
[X] (b) Not Applicable.
If no answer is specified, option (b) will apply.
11. LIMITATIONS ON ALLOCATIONS
[X] This is the only Plan the Employer maintains or ever
maintained, therefore, this section is not applicable.
[ ] The Employer does maintain or has maintained another Plan
(including a Welfare Benefit Fund or an individual medical
account (as defined in Code Section 415(l)(2)), under which
amounts are treated as Annual Additions) and has completed the
proper sections below.
Complete (a), (b) and (c) only if the Employer maintains or ever
maintained another qualified plan, including a Welfare Benefit Fund or
an individual medical account [as defined in Code Section 415(l)(2)] in
which any Participant in this Plan is (or was) a participant or could
possibly become a participant.
(a) If the Participant is covered under another qualified Defined
Contribution Plan maintained by the Employer, other than a
Master or Prototype Plan:
[ ] (i) the provisions of Article X of the Basic
Plan Document #04 will apply, as if the
other plan were a Master or Prototype Plan.
[ ] (ii) Attach provisions stating the method under
which the plans will limit total Annual
Additions to the Maximum Permissible Amount,
and will
properly reduce any Excess Amounts, in a
manner that precludes Employer discretion.
If no answer is specified, option (i) will apply.
(b) If a Participant is or ever has been a participant in a
Defined Benefit Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of
Code Section 415(e). Such language must preclude Employer
discretion. The Employer must also specify the interest and
mortality assumptions used in determining Present Value in the
Defined Benefit Plan.
(c) The minimum contribution or benefit required under Code
Section 416 relating to Top-Heavy Plans shall be satisfied by:
[ ] (i) this Plan.
[ ] (ii)
-------------------------------------------------
(Name of other qualified plan of the Employer).
[ ] (iii) Attach provisions stating the method under
which the minimum contribution and benefit
provisions of Code Section 416 will be
satisfied. If a Defined Benefit Plan is or
was maintained, an attachment must be
provided showing interest and mortality
assumptions used in the Top-Heavy Ratio.
If no answer is specified, option (i) will apply.
12. VESTING
Contributions under paragraph 7(b), 7(c)(vi) and 7(d) are always fully
vested. Employer contributions shall be subject to the vesting table
selected by the Employer below. A Participant shall receive credit for
a Year of Service as specified at 3(j)(iii) of this Adoption Agreement.
(a) Vesting Schedules:
NOTE: The vesting schedules below only apply to a Participant who
has at least one Hour of Service during or after the 1989 Plan
Year. If applicable, Participants who separated from Service
prior to the 1989 Plan Year will remain under the vesting
schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
(i) Full and immediate vesting.
Years of Service
1 2 3 4 5 6 7
-- -- -- -- -- -- --
(ii) % 100%
-----
(iii) % % 100%
----- -----
(iv) % 20% 40% 60% 80% 100%
-----
(v) % % 20% 40% 60% 80% 100%
----- -----
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) % % % % 100%
----- ----- ----- ----
(viii) % % % % % % 100%
----- ----- ----- ---- ----- -----
NOTE: The percentages selected for schedule (viii) may not be less
for any year than the percentages shown at schedule (v).
Contributions will vest as provided below:
Vesting
Option Selected Type Of Employer Contribution
--------------- -----------------------------
i 7(c) Employer Match on Salary Savings
--------
i 7(e) or (f) Employer Discretionary
--------
(b) Top-Heavy Vesting
For any Plan Year in which this Plan is Top-Heavy, the
following minimum vesting rules will apply:
(i) Schedules (v), (vi), and (viii) above will
automatically shift to schedule (iv).
(ii) Schedule (vii) above will automatically shift to
schedule (iii).
(c) Service disregarded for Vesting:
[ ] (i) No service will be disregarded.
[ ] (ii) Service prior to the Effective Date of this
Plan or a predecessor plan shall be
disregarded when computing a Participant's
vested and nonforfeitable interest.
[ ] (iii) Service prior to a Participant having
attained age 18 shall be disregarded when
computing a Participant's vested and
nonforfeitable interest.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for eligibility,
Hours of Service shall include Service with the following predecessor
organization(s):
(These hours will also be used for vesting purposes.)
THE PRINCETON REVIEW OF BOSTON, INC.;
THE PRINCETON REVIEW PENINSULAR, INC.;
T.S.T.S., INC.;
▇▇▇▇▇▇.▇▇▇, INC.
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, including Direct Rollovers, as
described at paragraph 1.69 of the Basic Plan Document #04,
[X] shall [ ] shall not be permitted to be made to the Plan.
If permitted, Employees [X] may [ ] may not make Rollover
Contributions prior to meeting the eligibility requirements
for participation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the
Basic Plan Document #04 [X] shall [ ] shall not be permitted
to be made to the Plan. If permitted, Employees [X] may [ ]
may not make Transfer Contributions prior to meeting the
eligibility requirements for participation in the Plan.
NOTE: Even if available, the Employer may refuse to accept such
contributions if its Plan meets the safe-harbor rules of
paragraph 8.7 of the Basic Plan Document #04.
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic
Plan Document #04, [X] are [ ] are not permitted. If permitted,
Hardship withdrawals [X] shall [ ] shall not be limited to Elective
Deferrals.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.8 of the Basic Plan
Document #04, [X] are [ ] are not permitted. If permitted, repayments
of principal and interest shall be repaid to the Participant's
segregated account.
17. INSURANCE POLICIES
The insurance provisions of paragraph 13.9 of the Basic Plan Document
#04 [ ] shall [X] shall not be applicable.
18. INVESTMENT DIRECTION
[ ] (a) Employer Investment Direction
The Employer investment direction provisions, as set
forth in Article XIII of the Basic Plan Document #04,
shall be applicable as to the following:
[ ] (i) All monies
[ ] (ii) Employer Discretionary and Matching Monies
[ ] (iii) Employer Discretionary Monies excluding
Matching Monies
[ ] (iv) Employer Matching Monies only.
[X] (b) Employee Investment Direction
Employee investment direction provisions, as
set forth in Article XIII of the Basic Plan
Document #04, shall be applicable to all
monies not directed by Employer.
If no answer is specified, Employee Investment Direction will apply.
NOTE: Each of the mutual funds in which the Plan may invest carries
its own fees and expenses, which may include management fees,
Rule 12b-1 fees and/or other fees and expenses, which are
described in detail in each Fund's prospectus. Employees who
invest in one or more of these mutual funds will, as
shareholders of those mutual funds, bear their pro-rata
portion of each fund's fees and expenses and may also pay a
sales charge or contingent deferred sales charge in connection
with their purchase of fund shares. Employer acknowledges that
Prudential Securities Incorporated (PSI) and Pruco Securities
Corporation (Prusec) may be deemed to benefit from advisory
and other fees paid to its affiliates in connection with the
management and operation of the mutual funds in which the
Employee may invest, from sales charges and contingent
deferred sales charges imposed as described in the prospectus
and from fees paid to The Prudential Insurance Company of
America in connection with the Guaranteed Interest Account.
19. EARLY PAYMENT OPTION
(a) A Participant who has attained age 59-1/2 and who has not
separated from Service [X] may [ ] may not obtain a
distribution of his or her vested Employer contributions.
(b) A Participant who has attained the Plan's Normal Retirement
Age and who has not separated from Service [X] may [ ] may not
receive a distribution of his or her vested account balance.
NOTE: If the Participant has had the right to withdraw his or her
account balance in the past, this right may not be taken away.
Notwithstanding the above, to the contrary,
required minimum distributions will be paid. For timing of
distributions, see item 20 below.
20. DISTRIBUTION OPTIONS
(a) Timing of Distributions:
In cases of termination benefits shall be paid:
[ ] (i) As soon as administratively feasible
following the close of the Plan Year during
which a distribution is requested or is
otherwise payable.
[X] (ii) As soon as administratively feasible,
following the date on which a distribution
is requested or is otherwise payable.
[ ] (iii) Only after the Participant has achieved the
Plan's Normal Retirement Age, or Early
Retirement Age, if applicable.
If no answer is specified, option (ii) will
apply.
(b) Optional Forms of Payment:
[X] (i) Lump Sum.
[ ] (ii) Installment Payments.
[ ] (iii) Other form(s)* as specified:
If no answer is specified, option (i) will apply.
*Annuities are only available in either a nonsafe-harbored
Plan which does not meet the provisions of paragraph 8.7 of
Basic Plan Document #04 or in a Plan which previously offered
annuities as an optional form of payment.
21. SPONSOR CONTACT
The Sponsor of this Prototype Plan is Prudential Mutual Fund
Management, Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Any
questions regarding this Prototype Plan document may be directed to
your Prudential Representative. You may also call Prudential Mutual
Fund Services at (▇▇▇)▇▇▇-▇▇▇▇.
22. SIGNATURES:
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
BEFORE YOU EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY
OR TAX ADVISOR, IF ANY.
The adopting Employer understands that there are fees for each account
under the Plan. THE BASIC PLAN DOCUMENT CONTAINS A PRE-DISPUTE
ARBITRATION CLAUSE FOUND IN ARTICLE XIII, SECTION 13.7 ARBITRATION.
IF EMPLOYER INVESTMENT DIRECTION APPLICABLE, NAME(S) OF
INDIVIDUAL(S) AUTHORIZED TO ISSUE INVESTMENT AND
ADMINISTRATIVE INSTRUCTIONS TO THE PLAN SPONSOR OR AFFILIATE:
(a) EMPLOYER:
This agreement and the corresponding provisions of the Plan
and Trust Basic Plan Document #04 were adopted by the Employer
the 26th day of November, 2001.
Signed for the Employer by: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
Signature: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: The adopting Employer may not rely on an
opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under
Code Section 401. In order to obtain reliance with respect to
Plan qualification, the Employer must apply to the appropriate
Key District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
22. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
BEFORE YOU EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY
OR TAX ADVISOR.
The adopting Employer understands that there are fees for each account
under the Plan. THE BASIC PLAN DOCUMENT CONTAINS A PRE-DISPUTE
ARBITRATION CLAUSE FOUND IN ARTICLE XIII, SECTION 13.7 ARBITRATION.
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
PRINCETON REVIEW MANAGEMENT, L.L.C.
EIN: ▇▇-▇▇▇▇▇▇▇
IF EMPLOYER INVESTMENT DIRECTION APPLICABLE, NAME(S) OF
INDIVIDUAL(S) AUTHORIZED TO ISSUE INVESTMENT AND
ADMINISTRATIVE INSTRUCTIONS TO THE PLAN SPONSOR OR AFFILIATE:
This Adoption Agreement and the corresponding provisions of
the Plan and Trust Basic Plan Document #04 were adopted by the
Employer the 26th day of November, 2001.
Signed for the Employer by: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
Signature: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: The adopting Employer may not rely on an
opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under
Code Section 401. In order to obtain reliance with respect to
Plan qualification, the Employer must apply to the appropriate
Key District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
22. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
BEFORE YOU EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY
OR TAX ADVISOR.
The adopting Employer understands that there are fees for each account
under the Plan. THE BASIC PLAN DOCUMENT CONTAINS A PRE-DISPUTE
ARBITRATION CLAUSE FOUND IN ARTICLE XIII, SECTION 13.7 ARBITRATION.
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
PRINCETON REVIEW PRODUCTS, L.L.C.
EIN: ▇▇-▇▇▇▇▇▇▇
IF EMPLOYER INVESTMENT DIRECTION APPLICABLE, NAME(S) OF
INDIVIDUAL(S) AUTHORIZED TO ISSUE INVESTMENT AND
ADMINISTRATIVE INSTRUCTIONS TO THE PLAN SPONSOR OR AFFILIATE:
This Adoption Agreement and the corresponding provisions of
the Plan and Trust Basic Plan Document #04 were adopted by the
Employer the 26th day of November, 2001.
Signed for the Employer by: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
Signature: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: The adopting Employer may not rely on an
opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under
Code Section 401. In order to obtain reliance with respect to
Plan qualification, the Employer must apply to the appropriate
Key District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
22. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
BEFORE YOU EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY
OR TAX ADVISOR.
The adopting Employer understands that there are fees for each account
under the Plan. THE BASIC PLAN DOCUMENT CONTAINS A PRE-DISPUTE
ARBITRATION CLAUSE FOUND IN ARTICLE XIII, SECTION 13.7 ARBITRATION.
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
PRINCETON REVIEW OPERATIONS, L.L.C. DELAWARE
EIN: ▇▇-▇▇▇▇▇▇▇
IF EMPLOYER INVESTMENT DIRECTION APPLICABLE, NAME(S) OF
INDIVIDUAL(S) AUTHORIZED TO ISSUE INVESTMENT AND
ADMINISTRATIVE INSTRUCTIONS TO THE PLAN SPONSOR OR AFFILIATE:
This Adoption Agreement and the corresponding provisions of
the Plan and Trust Basic Plan Document #04 were adopted by the
Employer the 26th day of November, 2001.
Signed for the Employer by: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
Signature: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: The adopting Employer may not rely on an
opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under
Code Section 401. In order to obtain reliance with respect to
Plan qualification, the Employer must apply to the appropriate
Key District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
22. SIGNATURES
DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
BEFORE YOU EXECUTE THIS ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY
OR TAX ADVISOR.
The adopting Employer understands that there are fees for each account
under the Plan. THE BASIC PLAN DOCUMENT CONTAINS A PRE-DISPUTE
ARBITRATION CLAUSE FOUND IN ARTICLE XIII, SECTION 13.7 ARBITRATION.
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
PRINCETON REVIEW PUBLISHING, L.L.C.
EIN: ▇▇-▇▇▇▇▇▇▇
IF EMPLOYER INVESTMENT DIRECTION APPLICABLE, NAME(S) OF
INDIVIDUAL(S) AUTHORIZED TO ISSUE INVESTMENT AND
ADMINISTRATIVE INSTRUCTIONS TO THE PLAN SPONSOR OR AFFILIATE:
This Adoption Agreement and the corresponding provisions of
the Plan and Trust Basic Plan Document #04 were adopted by the
Employer the 26th day of November, 2001.
Signed for the Employer by: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
Signature: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: The adopting Employer may not rely on an
opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under
Code Section 401. In order to obtain reliance with respect to
Plan qualification, the Employer must apply to the appropriate
Key District Office for a determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #04.
[X] (b) TRUSTEE:
Name of Trustee:
[ ]
NOTE: There is an annual trustee fee charged under the Plan
if Prudential Trust Company is appointed as Trustee.
[X] The Trustee(s) will be the following individuals:
PRUDENTIAL TRUST COMPANY
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
The assets of the Fund shall be invested in accordance with
paragraph 13.3 of the Basic Plan Document #04 as a Trust. As
such, the Employer's Plan as contained herein was accepted by
the Trustee the 15th day of December, 2001.
Signed for the Trustee by: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------- V.P., Prudential Trust
Signature Company
-------------------------
Signature Signature
-------------------------
Signature Signature
(c) Prudential Mutual Fund Management, Inc.
The Employer's Agreement and the corresponding provisions of
the Plan and Trust Basic Plan Document #04 were accepted by
Prudential Mutual Fund Management, Inc. the 12th day of
December, 2001.
Signed for by: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director, Pension Consulting
Signature: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
401(k) PLAN DOCUMENT
THE PRUARRAY PROTOTYPE PLAN AND
TRUST AND IRS OPINION LETTERS
[PRUARRAY LOGO]
PRUARRAY 401(k) PLAN
401(k) PLAN DOCUMENT
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES. USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.
CONTENTS
PARAGRAPH PAGE
ARTICLE I -- DEFINITIONS
1.1 ACTUAL DEFERRAL PERCENTAGE 1
1.2 ADOPTION AGREEMENT 1
1.3 AGGREGATE LIMIT THE SUM OF: 1
1.4 ANNUAL ADDITIONS 1
1.5 ANNUITY STARTING DATE 1
1.6 APPLICABLE CALENDAR YEAR 1
1.7 APPLICABLE LIFE EXPECTANCY 1
1.8 AVERAGE CONTRIBUTION PERCENTAGE (ACP) 2
1.9 AVERAGE DEFERRAL PERCENTAGE (ADP) 2
1.10 BREAK IN SERVICE 2
1.11 CODE 2
1.12 COMPENSATION 2
1.13 CONTRIBUTION PERCENTAGE 3
1.14 DEFINED BENEFIT PLAN 3
1.15 DEFINED BENEFIT (PLAN) FRACTION 3
1.16 DEFINED CONTRIBUTION DOLLAR LIMITATION 4
1.17 DEFINED CONTRIBUTION PLAN 4
1.18 DEFINED CONTRIBUTION (PLAN) FRACTION 4
1.19 DESIGNATED BENEFICIARY 4
1.20 DISABILITY 4
1.21 DISTRIBUTION CALENDAR YEAR 4
1.22 EARLY RETIREMENT AGE 4
1.23 EARNED INCOME 4
1.24 EFFECTIVE DATE 5
1.25 ELECTION PERIOD 5
1.26 ELECTIVE DEFERRAL 5
1.27 ELIGIBLE PARTICIPANT 5
1.28 EMPLOYEE 5
1.29 EMPLOYER 5
1.30 ENTRY DATE 5
1.31 EXCESS AGGREGATE CONTRIBUTIONS 5
1.32 EXCESS AMOUNT 6
1.33 EXCESS CONTRIBUTION 6
1.34 EXCESS ELECTIVE DEFERRALS 6
1.35 FAMILY MEMBER 6
1.36 FIRST DISTRIBUTION CALENDAR YEAR 6
1.37 FUND 6
1.38 HARDSHIP 6
1.39 HIGHEST AVERAGE COMPENSATION 6
1.40 HIGHLY COMPENSATED EMPLOYEE 6
1.41 HOUR OF SERVICE 6
1.42 KEY EMPLOYEE 8
1.43 LEASED EMPLOYEE 8
1.44 LIMITATION YEAR 8
1.45 MASTER OR PROTOTYPE PLAN 8
1.46 MATCHING CONTRIBUTION 8
1.47 MAXIMUM PERMISSIBLE AMOUNT 8
1.48 NET PROFIT 8
1.49 NORMAL RETIREMENT AGE 8
1.50 OWNER-EMPLOYEE 8
1.51 PAIRED PLANS 9
1.52 PARTICIPANT 9
1.53 PARTICIPANT'S BENEFIT 9
1.54 PERMISSIVE AGGREGATION GROUP 9
1.55 PLAN 9
1.56 PLAN ADMINISTRATOR 9
1.57 YEAR 9
1.58 PRESENT VALUE 9
1.59 PROJECTED ANNUAL BENEFIT 9
1.60 QUALIFIED DEFERRED COMPENSATION PLAN 9
1.61 QUALIFIED DOMESTIC RELATIONS ORDER 9
1.62 QUALIFIED EARLY RETIREMENT AGE 9
1.63 QUALIFIED JOINT AND SURVIVOR ANNUITY 10
1.64 QUALIFIED MATCHING CONTRIBUTION 10
1.65 QUALIFIED NON-ELECTIVE CONTRIBUTIONS 10
1.66 QUALIFIED VOLUNTARY CONTRIBUTION 10
1.67 REQUIRED AGGREGATION GROUP 10
1.68 REQUIRED BEGINNING DATE 10
1.69 ROLLOVER CONTRIBUTION 10
1.70 SALARY SAVINGS AGREEMENT 10
1.71 SELF-EMPLOYED INDIVIDUAL 10
1.72 SERVICE 10
1.73 SERVICE COMPANY 10
1.74 SHAREHOLDER EMPLOYEE 10
1.75 SIMPLIFIED EMPLOYEE PENSION PLAN 10
1.76 SPONSOR 11
1.77 SPOUSE (SURVIVING SPOUSE) 11
1.78 SUPER TOP-HEAVY PLAN 11
1.79 TAXABLE WAGE BASE 11
1.80 TOP-HEAVY DETERMINATION DATE 11
1.81 TOP-HEAVY PLAN 11
1.82 TOP-HEAVY RATIO 11
1.83 TOP-PAID GROUP 12
1.84 TRANSFER CONTRIBUTION 12
1.85 TRUSTEE 12
1.86 VALUATION DATE 12
1.87 VESTED ACCOUNT BALANCE 12
1.88 VOLUNTARY CONTRIBUTION 12
1.89 WELFARE BENEFIT FUND 12
1.90 YEAR OF SERVICE 13
ARTICLE II -- ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION 13
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT 13
2.3 COMPUTATION PERIOD 13
2.4 EMPLOYMENT RIGHTS 13
2.5 SERVICE WITH CONTROLLED GROUPS 13
2.6 OWNER-EMPLOYEES 13
2.7 LEASED EMPLOYEES 14
2.8 OMISSION OF ELIGIBLE EMPLOYEE 14
2.9 INCLUSION OF INELIGIBLE EMPLOYEE 14
ARTICLE III -- EMPLOYER CONTRIBUTIONS
3.1 AMOUNT 14
3.2 EXPENSES AND FEES 14
3.3 RESPONSIBILITY FOR CONTRIBUTIONS 14
3.4 RETURN OF CONTRIBUTIONS 15
3.5 FORM OF CONTRIBUTION 15
ARTICLE IV -- EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS 15
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS 15
4.3 ROLLOVER CONTRIBUTION 15
4.4 TRANSFER CONTRIBUTION 16
4.5 EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS 16
4.6 ELECTIVE DEFERRALS 16
4.7 DIRECT ROLLOVER OF BENEFITS 16
ARTICLE V -- PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS 17
5.2 ADJUSTMENTS TO PARTICIPANT ACCOUNTS 17
5.3 ALLOCATING EMPLOYER CONTRIBUTIONS 17
5.4 ALLOCATING INVESTMENT EARNINGS AND LOSSES 18
5.5 PARTICIPANT STATEMENTS 18
ARTICLE VI -- RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS 18
6.2 EARLY RETIREMENT BENEFITS 19
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT 19
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS 19
6.5 NORMAL FORM OF PAYMENT 20
6.6 COMMENCEMENT OF BENEFITS 20
6.7 CLAIMS PROCEDURES 21
6.8 IN-SERVICE WITHDRAWALS 21
6.9 HARDSHIP WITHDRAWAL 21
6.10 ORDER OF WITHDRAWALS 22
ARTICLE VII -- DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS 22
7.2 MINIMUM DISTRIBUTION REQUIREMENTS 22
7.3 LIMITS ON DISTRIBUTION PERIODS 23
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED
BEGINNING DATE 23
7.5 REQUIRED BEGINNING DATE 23
7.6 TRANSITIONAL RULE 24
7.7 DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT 25
7.8 NONEXISTENCE OF BENEFICIARY 25
7.9 DISTRIBUTION BEGINNING BEFORE DEATH 25
7.10 DISTRIBUTION BEGINNING AFTER DEATH 25
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS 25
7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS 26
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS 26
ARTICLE VIII -- JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS 27
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY 27
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY 27
8.4 QUALIFIED ELECTION 27
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR
ANNUITY 28
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT
SURVIVOR ANNUITY 28
8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN
PROFIT-SHARING PLANS 28
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES 29
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY
SURVIVOR ANNUITY 29
8.10 ANNUITY CONTRACTS 29
ARTICLE IX -- VESTING
9.1 EMPLOYEE CONTRIBUTIONS 29
9.2 EMPLOYER CONTRIBUTIONS 30
9.3 COMPUTATION PERIOD 30
9.4 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR
BREAKS IN SERVICE 30
9.5 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR
BREAKS IN SERVICE 30
9.6 CALCULATING VESTED INTEREST 30
9.7 FORFEITURES 30
9.8 AMENDMENT OF VESTING SCHEDULE 30
9.9 SERVICE WITH CONTROLLED GROUPS 31
ARTICLE X -- LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION
TESTING
10.1 PARTICIPATION IN THIS PLAN ONLY 31
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS 31
10.3 PARTICIPATION IN THIS PLAN AND ANOTHER QUALIFIED
MASTER AND PROTOTYPE DEFINED CONTRIBUTION PLAN,
WELFARE BENEFIT FUND, INDIVIDUAL MEDICAL ACCOUNT
OR SIMPLIFIED EMPLOYEE PENSION PLAN MAINTAINED
BY THE EMPLOYER 32
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS 32
10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED
CONTRIBUTION PLAN WHICH IS NOT A QUALIFIED MASTER
OR PROTOTYPE PLAN 32
10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN 33
10.7 AVERAGE DEFERRAL PERCENTAGE (ADP) TEST 33
10.8 SPECIAL RULES RELATING TO APPLICATION OF ADP TEST 33
10.9 AVERAGE CONTRIBUTION PERCENTAGE (ACP) TEST 34
10.10 SPECIAL RULES RELATING TO APPLICATION OF ACP TEST 34
ARTICLE XI -- ADMINISTRATION
11.1 PLAN ADMINISTRATOR 35
11.2 TRUSTEE 35
11.3 ADMINISTRATIVE FEES AND EXPENSES 35
11.4 DUTIES AND INDEMNIFICATION 36
11.5 SPECIAL PROVISIONS CONCERNING THE SERVICE COMPANY 36
ARTICLE XII -- TRUST FUND
12.1 THE FUND 37
12.2 CONTROL OF PLAN ASSETS 37
12.3 EXCLUSIVE BENEFIT RULES 37
12.4 ASSIGNMENT AND ALIENATION OF BENEFITS 37
12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS
ORDER (QDRO) 37
ARTICLE XIII -- INVESTMENTS
13.1 FIDUCIARY STANDARDS 38
13.2 NO INVESTMENT DISCRETION 38
13.3 INVESTMENT DIRECTIONS 38
13.4 PERMITTED INVESTMENTS 39
13.5 SHAREHOLDER RIGHTS 39
13.6 LIQUIDATION OF ASSETS 39
13.7 ARBITRATION 39
13.8 PARTICIPANT LOANS 40
13.9 INSURANCE POLICIES 41
ARTICLE XIV -- TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES 42
14.2 MINIMUM CONTRIBUTION 42
14.3 MINIMUM VESTING 43
14.4 LIMITATIONS ON ALLOCATIONS 43
ARTICLE XV -- AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR 43
15.2 AMENDMENT BY EMPLOYER 43
15.3 TERMINATION 43
15.4 QUALIFICATION OF EMPLOYER'S PLAN 43
15.5 MERGERS AND CONSOLIDATIONS 44
15.6 RESIGNATION AND REMOVAL 44
15.7 QUALIFICATION OF PROTOTYPE 44
ARTICLE XVI -- GOVERNING LAW
ARTICLE I-- DEFINITIONS
1.1 ACTUAL DEFERRAL PERCENTAGE
The ratio (expressed as a percentage and calculated separately for each
Participant) of:
(a) the amount of Employer contributions [as defined at (c) and (d)]
actually paid over to the Fund on behalf of such Participant for the
Plan Year to
(b) the Participant's Compensation for such Plan Year. (Unless
otherwise specified by the Employer in the Adoption Agreement,
Compensation will include all amounts earned from the Employer and
actually paid during the Plan Year).
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's deferral
election, including Excess Elective Deferrals, but excluding Elective
Deferrals that are either taken into account in the Contribution
Percentage test (provided the ADP test is satisfied both with and
without exclusion of these Elective Deferrals) or are returned as
excess Annual Additions; and
(d) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee who would be
a Participant but for the failure to make Elective Deferrals shall be treated as
a Participant on whose behalf no Elective Deferrals are made.
1.2 ADOPTION AGREEMENT
The document attached to this Plan by which an Employer elects to establish a
qualified retirement plan and trust under the terms of this Prototype Plan and
Trust.
1.3 AGGREGATE LIMIT THE SUM OF:
(a) 125 percent of the greater of the ADP of the Non-Highly Compensated
Employees for the Plan Year or the ACP of Non-Highly Compensated
Employees under the Plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of the cash or deferred
arrangement as described in Code Section 401(k) or Code Section
402(h)(1)(B), and
(b) the lesser of 200% or 2% plus the lesser of such ADP or ACP.
Alternatively, the aggregate limit can be determined by substituting "the lesser
of 200% or 2 percent plus" for "125% of" in (a) above, and substituting "125%
of" for "the lesser of 200% or 2% plus" in (b) above.
1.4 ANNUAL ADDITIONS
The sum of the following amounts credited to a Participant's account for the
Limitation Year:
(a) Employer Contributions;
(b) Employee Contributions (under Article IV);
(c) Forfeitures;
(d) Amounts allocated after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer (these amounts are
treated as Annual Additions to a Defined Contribution Plan, though they
arise under a Defined Benefit Plan); and
(e) Amounts derived from contributions paid or accrued after 1985, in
taxable years ending after 1985, which are either attributable to
post-retirement medical benefits allocated to the account of a Key
Employee, or to a Welfare Benefit Fund maintained by the Employer, are
also treated as Annual Additions to a Defined Contribution Plan. For
purposes of this paragraph, an Employee is a Key Employee if he or she
meets the requirements of paragraph 1.43 at any time during the Plan
Year or any preceding Plan Year. Welfare Benefit Fund is defined at
paragraph 1.89.
(f) Allocations under a Simplified Employee Pension Plan.
Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such Limitation Year, pursuant to the
provisions of Article X.
1.5 ANNUITY STARTING DATE
The first day of the first period for which an amount is paid as an annuity or
in any other form.
1.6 APPLICABLE CALENDAR YEAR
The First Distribution Calendar Year, and in the event of the recalculation of
life expectancy, such succeeding calendar year. If payments commence in
accordance with paragraph 7.4(e) before the Required Beginning Date, the
Applicable Calendar Year is the year such payments commence. If distribution is
in the form of an immediate annuity purchased after the Participant's death with
the Participant's remaining interest, the Applicable Calendar Year is the year
of purchase.
1.7 APPLICABLE LIFE EXPECTANCY
Used in determining the required minimum distribution. The life expectancy (or
joint and last survivor expectancy) calculated using the attained age of the
Participant (or
1
Designated Beneficiary) as of the Participant's (or Designated Beneficiary's)
birthday in the Applicable Calendar Year reduced by one for each calendar year
which has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the Applicable Life Expectancy shall be the
life expectancy as so recalculated. The life expectancy of a non-Spouse
Beneficiary may not be recalculated.
1.8 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
The average of the Contribution Percentages for each Highly Compensated Employee
and for each Non-Highly Compensated Employee.
1.9 AVERAGE DEFERRAL PERCENTAGE (ADP)
The average of the Actual Deferral Percentages for each Highly Compensated
Employee and for each Non-Highly Compensated Employee.
1.10 BREAK IN SERVICE
If the Hour counting method has been chosen by the Employer in the Adoption
Agreement, a Break in Service is a 12-consecutive month period during which an
Employee fails to complete more than 500 Hours of Service. If the Elapsed Time
method has been chosen by the Employer in the Adoption Agreement, a Break in
Service is a period of severance of at least 12 consecutive months.
1.11 CODE
The Internal Revenue Code of 1986, including any amendments.
1.12 COMPENSATION
Unless otherwise specified by the Employer in the Adoption Agreement,
Compensation shall include all amounts earned from the Employer and actually
paid during the Plan Year.
(a) Code Section 3401(a) Wages. Compensation is defined as wages within
the meaning of Code Section 3401(a) for the purposes of Federal income
tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature
or location of the employment or the services performed [such as the
exception for agricultural labor in Code Section 3401(a)(2)].
(b) Code Section 415 Compensation. For purposes of applying the
limitations of Article X and Top-Heavy minimums, the definition of
Compensation shall be Code Section 415 Compensation defined as follows:
a Participant's Earned Income, wages, salaries, and fees for
professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in
gross income [including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits and
reimbursements or other expense allowances under a nonaccountable plan
(as described in Regulation 1.62-2(c))], and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for
the taxable year in which contributed, or Employer
contributions under a Simplified Employee Pension Plan or any
distributions from a plan of deferred compensation,
(2) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by
the Employee either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture,
(3) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a
Salary Reduction Agreement) towards the purchase of an annuity
described in Code Section 403(b) (whether or not the amounts
are actually excludaible from the gross income of the
Employee).
For purposes of applying the limitations of Article X, Compensation for a
Limitation Year is the Compensation actually paid or made available during such
Limitation Year. Notwithstanding the preceding sentence, Compensation for a
Participant in a Defined Contribution Plan who is permanently and totally
disabled [as defined in Code Section 22(e)(3)] is the Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Compensation paid immediately before becoming
permanently and totally disabled. Such imputed Compensation for the disabled
Participant may be taken into account only if the participant is not a Highly
Compensated Employee [as defined in Code Section 414(q)] and contributions made
on behalf of such Participant are nonforfeitable when made.
If the Employer fails to pick the determination period in the Adoption
Agreement, the Plan Year shall be used. Unless otherwise specified by the
Employer in the Adoption Agreement, Compensation shall be determined as provided
in Code Section 3401(a) (as defined in this
2
paragraph 1.12(a)). In nonstandardized Adoption Agreement 002, the Employer may
choose to eliminate or exclude categories of Compensation which do not violate
the provisions of Code Sections 401(a)(4), 414(s) the regulations thereunder and
Revenue Procedure 89-65.
Beginning with 1989 Plan Years, the annual Compensation of each Participant
which may be taken into account for determining all benefits provided under the
Plan (including benefits under Article XIV) for any Plan Year shall not exceed
$200,000, as adjusted under Code Section 415(d). For Plan Years beginning on or
after January 1, 1994, the annual Compensation of each Participant taken into
account for determining all benefits provided under the Plan for any Plan Year
shall not exceed $150,000, as adjusted for increases in the cost-of-living in
accordance with Code Section 401(a)(17). The cost-of-living adjustment in effect
for a calendar year applies to any determination period beginning in such
calendar year.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) shall apply, except in applying
such rules, the term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the end of the Plan Year. If, as a result of the application of such
rules the adjusted annual Compensation limitation is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity), the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this section prior to the application of this
limitation.
If a Plan has a Plan Year that contains fewer than 12 Calendar Months, then the
annual compensation limit for that period is an amount equal to the annual
Compensation as adjusted for the calendar year in which the compensation period
begins, multiplied by a fraction the numerator of which is the number of full
months in the short determination period and the denominator of which is 12. If
compensation for any prior plan year is taken into account in determining an
employee's contributions or benefits for the current year, the compensation for
such prior year is subject to the applicable annual compensation limit in effect
for that prior year. For this purpose, for years beginning before January 1,
1990, the applicable annual compensation limit is $200,000.
Compensation shall not include deferred compensation other than contributions
through a salary reduction agreement to a cash or deferred plan under Code
Section 401(k), a Simplified Employee Pension Plan under Code Section
402(h)(1)(B), a cafeteria plan under Code Section 125 or a tax-deferred annuity
under Code Section 403(b). Unless elected otherwise by the Employer in the
Adoption Agreement, these deferred amounts will be considered as Compensation
for Plan purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV except for Code Sections 401(k) and 401(m)
testing. When applicable to a Self-Employed Individual, Compensation shall mean
Earned Income.
1.13 CONTRIBUTION PERCENTAGE
The ratio (expressed as a percentage and calculated separately for each
Participant) of:
(a) the Participant's Contribution Percentage Amounts [as defined at
(c)-(f)] for the Plan Year, to
(b) the Participant's Compensation for such Plan Year. Unless otherwise
specified by the Employer in the Adoption Agreement, Compensation will
include all amounts earned from the Employer and actually paid during
the Plan Year.
Contribution Percentage Amounts on behalf of any Participant shall include:
(c) the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the extent not
taken into account for purposes of the ADP test) made under the Plan on
behalf of the Participant for the Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which shall be
taken into account in the year in which such forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective
Contributions, and
(f) the Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is met before
the Elective Deferrals are used in the ACP test and continues to be met
following the exclusion of those Elective Deferrals that are used to
meet the ACP test.
Contribution Percentage Amounts shall not include Matching Contributions,
whether or not Qualified, that are forfeited either to correct Excess Aggregate
Contributions, or because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
1.14 DEFINED BENEFIT PLAN
A Plan under which a Participant's benefit is determined by a formula contained
in the Plan and no individual accounts are maintained for Participants.
1.15 DEFINED BENEFIT (PLAN) FRACTION
3
A fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the Defined Benefit Plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year under Code
Sections 415(b) and (d) or 140 percent of the Highest Average Compensation,
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of the first
day of the first Limitation Year beginning after 1986, in one or more Defined
Benefit Plans maintained by the Employer which were in existence on May 6, 1986,
the denominator of this fraction will not be less than 125 percent of the sum of
the annual benefits under such plans which the Participant had accrued as of the
close of the last Limitation Year beginning before 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986. The preceding
sentence applies only if the Defined Benefit Plans individually and in the
aggregate satisfied the requirements of Section 415 for all Limitation Years
beginning before 1987.
1.16 DEFINED CONTRIBUTION DOLLAR LIMITATION
Thirty thousand dollars ($30,000) or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Code Section 415(b)(1) as in effect for
the Limitation Year.
1.17 DEFINED CONTRIBUTION PLAN
A Plan under which individual accounts are maintained for each Participant to
which all contributions, forfeitures, investment income and gains or losses, and
expenses are credited or deducted. A Participant's benefit under such Plan is
based solely on the fair market value of his or her account balance.
1.18 DEFINED CONTRIBUTION (PLAN) FRACTION
A Fraction, the numerator of which is the sum of the Annual Additions to the
Participant's account under all the Defined Contribution Plans (whether or not
terminated) maintained by the Employer for the current and all prior Limitation
Years (including the Annual Additions attributable to the Participant's
nondeductible Employee contributions to all Defined Benefit Plans, whether or
not terminated, maintained by the Employer, and the Annual Additions
attributable to all Welfare Benefit Funds, as defined in paragraph 1.89 and
individual medical accounts, as defined in Code Section 415(l)(2), maintained by
the Employer), and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of service with the
Employer (regardless of whether a Defined Contribution Plan was maintained by
the Employer). The maximum aggregate amount in the Limitation Year is the lesser
of 125 percent of the dollar limitation determined under Code Sections 415(b)
and (d) in effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after 1986, in one or more Defined Contribution Plans
maintained by the Employer which were in existence on May 6, 1986, the numerator
of this fraction will be adjusted if the sum of this fraction and the Defined
Benefit Fraction would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this fraction will be
permanently subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end of the
last Limitation Year beginning before 1987, and disregarding any changes in the
terms and conditions of the Plan made after May 6, 1986, but using the Section
415 limitation applicable to the first Limitation Year beginning on or after
January 1, 1987. The Annual Addition for any Limitation Year beginning before
1987 shall not be re-computed to treat all Employee Contributions as Annual
Additions.
1.19 DESIGNATED BENEFICIARY
The individual who is designated as the beneficiary under the Plan in accordance
with Code Section 401(a)(9) and the regulations thereunder.
1.20 DISABILITY
An illness or injury of a potentially permanent nature, expected to last for a
continuous period of not less than 12 months, certified by a physician selected
by or satisfactory to the Employer, which prevents the Employee from engaging in
any occupation for wage or profit for which the Employee is reasonably fitted by
training, education or experience.
1.21 DISTRIBUTION CALENDAR YEAR
A calendar year for which a minimum distribution is required.
1.22 EARLY RETIREMENT AGE
The age set by the Employer in the Adoption Agreement (but not less than 55),
which is the earliest age at which a Participant may retire and receive his or
her benefits under the Plan.
1.23 EARNED INCOME
Net earnings from self-employment in the trade or business with respect to which
the Plan is established, determined without regard to items not included in
gross income and the deductions allocable to such items,
4
provided that personal services of the individual are a material
income-producing factor. Earned income shall be reduced by contributions made by
an Employer to a qualified plan to the extent deductible under Code Section 404.
For tax years beginning after 1989, net earnings shall be determined, taking
into account the deduction for one-half of self-employment taxes allowed to the
Employer under Code Section 164(f) to the extent deductible.
1.24 EFFECTIVE DATE
The date on which the Employer's retirement plan or amendment to such plan
becomes effective. Unless otherwise specified in the Adoption Agreement, the
effective date shall be the first day of the Plan Year during which the Adoption
Agreement is executed by the Employer. For amendments reflecting statutory and
regulatory changes post Tax Reform Act of 1986, the Effective Date will be the
date upon which such amendment is first administratively applied.
1.25 ELECTION PERIOD
The period which begins on the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of the Plan Year in
which age 35 is attained, the Election Period shall begin on the date of
separation, with respect to the account balance as of the date of separation.
1.26 ELECTIVE DEFERRAL
Employer contributions made to the Plan at the election of the Participant, in
lieu of cash Compensation. Elective Deferrals shall also include contributions
made pursuant to a Salary Savings Agreement or other deferral mechanism, such as
a cash option contribution. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on behalf of
such Participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in Code Section 401(k), any simplified
employee pension cash or deferred arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation plan under Code Section 457,
any plan as described under Code Section 501(c)(18), and any Employer
contributions made on the behalf of a Participant for the purchase of an annuity
contract under Code Section 403(b) pursuant to a Salary Savings Agreement.
Elective Deferrals shall not include any deferrals properly distributed as
Excess Annual Additions.
1.27 ELIGIBLE PARTICIPANT
Any Employee who is eligible to make a Voluntary Contribution, or an Elective
Deferral (if the Employer takes such contributions into account in the
calculation of the Contribution Percentage), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching Contribution. If a
Voluntary Contribution or Elective Deferral is required as a condition of
participation in the Plan, any Employee who would be a Participant in the Plan
if such Employee made such a contribution shall be treated as an Eligible
Participant even though no Voluntary Contributions or Elective Deferrals are
made.
1.28 EMPLOYEE
Any person employed by the Employer (including Self-Employed Individuals and
partners), all Employees of a member of an affiliated service group [as defined
in Code Section 414(m)], Employees of a controlled group of corporations [as
defined in Code Section 414(b)], all Employees of any incorporated or
unincorporated trade or business which is under common control [as defined in
Code Section 414(c)], leased Employees [as defined in Code Section 414(n)] and
any Employee required to be aggregated by Code Section 414(o). All such
Employees shall be treated as employed by a single Employer.
1.29 EMPLOYER
The Self-Employed Individual, partnership, corporation or other organization
which adopts this Plan, including any firm that succeeds the Employer and adopts
this Plan. For purposes of Article X, Limitations on Allocations, Employer shall
mean the Employer that adopts this Plan, and all members of a controlled group
of corporations [as defined in Code Section 414(b) as modified by Code Section
415(h)], all commonly controlled trades or businesses [as defined in Code
Section 414(c) as modified by Code Section 415(h)] or affiliated service groups
[as defined in Code Section 414(m)] of which the adopting Employer is a part,
and any other entity required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o).
1.30 ENTRY DATE
The date on which an Employee commences participation in the Plan as determined
by the Employer in the Adoption Agreement. Unless the Employer specifies
otherwise in the Adoption Agreement, entry into the Plan shall be on the first
day of the Plan Year or the first day of the seventh month of the Plan Year
coinciding with or following the date on which an Employee meets the eligibility
requirements.
1.31 EXCESS AGGREGATE CONTRIBUTIONS
The excess, with respect to any Plan Year, of:
(a) the aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over
5
(b) the maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages
beginning with the highest of such percentages).
Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.34 and then determining Excess Contributions
pursuant to paragraph 1.33.
1.32 EXCESS AMOUNT
The excess of the Participant's Annual Additions for the Limitation Year over
the Maximum Permissible Amount.
1.33 EXCESS CONTRIBUTION
With respect to any Plan Year, the excess of:
(a) the aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such
Plan Year, over
(b) the maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of the ADPs, beginning with the highest
of such percentages).
1.34 EXCESS ELECTIVE DEFERRALS
Those Elective Deferrals that are includible in a Participant's gross income
under Code Section 402(g) to the extent such Participant's Elective Deferrals
for a taxable year exceed the dollar limitation under such Code Section. Excess
Elective Deferrals shall be treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
1.35 FAMILY MEMBER
The Employee's Spouse, any lineal descendants and ascendants and the Spouse of
such lineal descendants and ascendants.
1.36 FIRST DISTRIBUTION CALENDAR YEAR
For distributions beginning before the Participant's death, the First
Distribution Calendar Year is the calendar year immediately preceding the
calendar year which contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the First Distribution
Calendar Year is the calendar year in which distributions are required to begin
pursuant to paragraph 7.10.
1.37 FUND
All contributions received by the Trustee under this Plan and Trust, investments
thereof and earnings and appreciation thereon.
1.38 HARDSHIP
An immediate and heavy financial need of the Employee where such Employee lacks
other available resources.
1.39 HIGHEST AVERAGE COMPENSATION
The average Compensation for the three consecutive Years of Service with the
Employer that produces the highest average. A Year of Service with the Employer
is the 12-consecutive month period defined in the Adoption Agreement.
1.40 HIGHLY COMPENSATED EMPLOYEE
Any Employee who performs service for the Employer during the determination year
and who, during the immediate prior year:
(a) received Compensation from the Employer in excess of $75,000 [as
adjusted pursuant to Code Section 415(d)]; or
(b) received Compensation from the Employer in excess of $50,000 [as
adjusted pursuant to Code Section 415(d)] and was a member of the
Top-Paid Group for such year; or
(c) 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 Code Section 415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly Compensated
during the preceding Plan Year shall not be treated as a Highly Compensated
Employee with respect to the current Plan Year, unless such Employee is a member
of the 100 Employees paid the greatest Compensation during the year for which
such determination is being made.
(d) Employees who are five percent (5%) Owners at any time during the
immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees.
1.41 HOUR OF SERVICE
(a) Hour Counting Method:
(1) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These
hours shall be credited to the Employee for the computation
period in which the duties are performed; and
(2) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to
6
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this
paragraph for any single continuous period (whether or not
such period occurs in a single computation period). Hours
under this paragraph shall be calculated and credited pursuant
to Section 2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
(3) Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Employer.
The same Hours of Service shall not be credited both under
paragraph (a) or paragraph (b), as the case may be, and under
this paragraph (c). These hours shall be credited to the
Employee for the computation period or periods to which the
award or agreement pertains rather than the computation period
in which the award, agreement or payment is made.
(4) Hours of Service shall be credited for employment with the
Employer and with other members of an affiliated service group
[as defined in Code Section 414(m)], a controlled group of
corporations [as defined in Code Section 414(b)], or a group
of trades or businesses under common control [as defined in
Code Section 414(c)] of which the adopting Employer is a
member, and any other entity required to be aggregated with
the Employer pursuant to Code Section 414(o) and the
regulations thereunder. Hours of Service shall also be
credited for any individual considered an Employee for
purposes of this Plan under Code Section 414(n) or Code
Section 414(o) and the regulations thereunder.
(5) Solely for purposes of determining whether a Break in
Service, as defined in paragraph 1.10, for participation and
vesting purposes has occurred in a computation period, an
individual who is absent from work for maternity or paternity
reasons shall receive credit for the Hours of Service which
would otherwise have been credited to such individual but for
such absence, or in any case in which such hours cannot be
determined, 8 Hours of Service per day of such absence. For
purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence by reason of the
pregnancy of the individual, by reason of a birth of a child
of the individual, by reason of the placement of a child with
the individual in connection with the adoption of such child
by such individual, or for purposes of caring for such child
for a period beginning immediately following such birth or
placement. The Hours of Service credited under this paragraph
shall be credited in the computation period in which the
absence begins if the crediting is necessary to prevent a
Break in Service in that period, or in all other cases, in the
following computation period. No more than 501 hours will be
credited under this paragraph.
(6) Unless specified otherwise in the Adoption Agreement, the
Hours of Service Method shall be used. Also, unless specified
otherwise in the Adoption Agreement, Hours of Service shall be
determined on the basis of actual hours for which an Employee
is paid or entitled to payment.
(b) Elapsed Time Method:
(1) For purposes of this section, Hour of Service shall mean
each hour for which an Employee is paid or entitled to payment
for the performance of duties for the Employer.
(2) Break In Service is a period of severance of at least 12
consecutive months.
(3) Period of severance is a continuous period of time during
which the Employee is not employed by the Employer. Such
period begins on the date the Employee retires, quits or is
discharged, or if earlier, the 12 month anniversary of the
date on which the Employee was otherwise first absent from
service.
(4) In the case of an individual who is absent from work for
maternity or paternity reasons, the 12-consecutive-month
period beginning on the first anniversary of the first date of
such absence shall not constitute a Break In Service. For
purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (i) by reason of the
pregnancy of the individual, (ii) by reason of the birth of a
child of the individual, (iii) by reason of the placement of a
child with the individual in connection with the adoption of
such child by such individual, or (iv) for purposes of caring
for such child for a period beginning immediately following
such birth or placement.
(5) Each Employee will share in Employer contributions for the
period beginning on the date the Employee commences
participation under the plan and ending on the date on which
such Employee ▇▇▇▇▇▇ employment with the Employer or is no
longer a member of an eligible class of Employees.
7
(6) If the Employer is a member of an affiliated service group
(under section 414(m)), a controlled group of corporations
(under section 414(b)), a group of trades or businesses under
common control (under section 414(c)) or any other entity
required to be aggregated with the Employer pursuant to
section 414(o), service will be credited for any employment
for any period of time for any other member of such group.
Service will also be credited for any individual required
under section 414(n) or section (414)(o) to be considered an
Employee of any Employer aggregated under section 414(b), (c),
or (m).
1.42 KEY EMPLOYEE
Any Employee or former Employee (and the beneficiaries of such employee) who at
any time during the determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar limitation under Code
Section 415(b)(1)(A) (the defined benefit maximum annual benefit), an owner (or
considered an owner under Code Section 318) of one of the ten largest interests
in the employer if such individual's compensation exceeds 100% of the dollar
limitation under Code Section 415(c)(1)(A), a 5% owner of the Employer, or a 1%
owner of the Employer who has an annual compensation of more than $150,000. For
purposes of determining who is a Key Employee, annual compensation shall mean
Compensation as defined for Article X, but including amounts deferred through a
salary reduction agreement to a cash or deferred plan under Code Section 401(k),
a Simplified Employee Pension Plan under Code Section 408(k), a cafeteria plan
under Code Section 125 or a tax-deferred annuity under Code Section 403(b). The
determination period is the Plan Year containing the Determination Date and the
four preceding Plan Years. The determination of who is a Key Employee will be
made in accordance with Code Section 416(i)(1) and the regulations thereunder.
1.43 LEASED EMPLOYEE
Any person (other than an Employee of the recipient) who, pursuant to an
agreement between the recipient and any other person ("leasing organization"),
has performed services for the recipient [or for the recipient and related
persons determined in accordance with Code Section 414(n)(6)] on a substantially
full-time basis for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of the recipient
Employer.
1.44 LIMITATION YEAR
The Plan Year as designated by the Employer in the Adoption Agreement for
purposes of determining the maximum Annual Addition to a Participant's account.
All qualified plans maintained by the Employer must use the same Limitation
Year. If the Limitation Year is amended to a different 12-consecutive-month
period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
1.45 MASTER OR PROTOTYPE PLAN
A plan, the form of which is the subject of a favorable opinion letter from the
Internal Revenue Service.
1.46 MATCHING CONTRIBUTION
An Employer contribution made to this or any other defined contribution plan on
behalf of a Participant on account of an Employee Voluntary Contribution made by
such Participant, or on account of a Participant's Elective Deferral, under a
Plan maintained by the Employer.
1.47 MAXIMUM PERMISSIBLE AMOUNT
The maximum Annual Addition that may be contributed or allocated to a
Participant's account under the plan for any Limitation Year shall not exceed
the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year.
The compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Section 415(l)(1) or 419(d)(2). If a short Limitation Year is created
because of an amendment changing the Limitation Year to a different
12-consecutive month period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by the following fraction:
Number of months in the short Limitation Year divided by 12.
1.48 NET PROFIT
The current and accumulated operating earnings of the Employer before Federal
and State income taxes, excluding nonrecurring or unusual items of income, and
before contributions to this and any other qualified plan of the Employer.
Unless otherwise specified in the Adoption Agreement, profits will not be
required for Profit-Sharing contributions to the Plan.
1.49 NORMAL RETIREMENT AGE
The age, set by the Employer in the Adoption Agreement, at which a Participant
may retire and receive his or her benefits under the Plan. Unless otherwise
specified in the Adoption Agreement, the Normal Retirement Age shall be 65.
1.50 OWNER-EMPLOYEE
A sole proprietor, or a partner owning more than 10% of either the capital or
profits interest of the partnership.
8
1.51 PAIRED PLANS
Two or more Plans maintained by the Sponsor designed so that a single or any
combination of Plans adopted by an Employer will meet the antidiscrimination
rules, the contribution and benefit limitations, and the Top-Heavy provisions of
the Code.
1.52 PARTICIPANT
Any Employee who has met the eligibility requirements and is participating in
the Plan.
1.53 PARTICIPANT'S BENEFIT
The account balance as of the last Valuation Date in the calendar year
immediately preceding the Distribution Calendar Year (valuation calendar year)
increased by the amount of any contributions or forfeitures allocated to the
account balance as of the dates in the valuation calendar year after the
Valuation Date and decreased by distributions made in the valuation calendar
year after the Valuation Date. A special exception exists for the second
distribution Calendar Year. For purposes of this paragraph, if any portion of
the minimum distribution for the First Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the
Required Beginning Date, the amount of the minimum distribution made in the
second distribution calendar year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.
1.54 PERMISSIVE AGGREGATION GROUP
Used for Top-Heavy testing purposes, it is the Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
1.55 PLAN
The Employer's retirement plan as embodied herein and in the Adoption Agreement.
1.56 PLAN ADMINISTRATOR
The Employer.
1.57 YEAR
The 12-consecutive month period designated by the Employer in the Adoption
Agreement. If no such period is designated, the Plan Year shall be the
Employer's taxable year.
1.58 PRESENT VALUE
Used for Top-Heavy test and determination purposes, when determining the Present
Value of accrued benefits, with respect to any Defined Benefit Plan maintained
by the Employer, interest and mortality rates shall be determined in accordance
with the provisions of the respective plan. If applicable, interest and
mortality assumptions will be specified in Section 11 of the Adoption Agreement.
1.59 PROJECTED ANNUAL BENEFIT
Used to test the maximum benefit which may be obtained from a combination of
retirement plans, it is the annual retirement benefit (adjusted to an actuarial
equivalent straight life annuity if such benefit is expressed in a form other
than a straight life annuity or Qualified Joint and Survivor Annuity) to which
the Participant would be entitled under the terms of a Defined Benefit Plan or
plans, assuming:
(a) the Participant will continue employment until Normal Retirement
Age under the plan (or current age, if later), and
(b) the Participant's Compensation for the current Limitation Year and
all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
1.60 QUALIFIED DEFERRED COMPENSATION PLAN
Any pension, profit-sharing, stock bonus, or other plan which meets the
requirements of Code Section 401 and includes a trust exempt from tax under Code
Section 501(a) or any annuity plan described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (▇▇▇) as
described in section 408(a) of the Code, an individual retirement annuity (▇▇▇)
as described in section 408(b) of the Code, an annuity plan as described in
section 403(a) of the Code, or a qualified trust as described in section 401(a)
of the Code, which accepts Eligible Rollover Distributions. However, in the case
of an Eligible Rollover Distribution to a surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or individual retirement
annuity.
1.61 QUALIFIED DOMESTIC RELATIONS ORDER
A QDRO is a signed Domestic Relations Order issued by a State Court which
creates, recognizes or assigns to an alternate payee(s) the right to receive all
or part of a Participant's Plan benefit and which meets the requirements of Code
Section 414(p). An alternate payee is a Spouse, former Spouse, child, or other
dependent who is treated as a beneficiary under the Plan as a result of the
QDRO.
1.62 QUALIFIED EARLY RETIREMENT AGE
For purposes of paragraph 8.9, Qualified Early Retirement Age is the latest of:
9
(a) the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits, or
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
1.63 QUALIFIED JOINT AND SURVIVOR ANNUITY
An immediate annuity for the life of the Participant with a survivor annuity for
the life of the Participant's Spouse which is at least one-half of but not more
than the amount of the annuity payable during the joint lives of the Participant
and the Participant's Spouse. The exact amount of the Survivor Annuity is to be
specified by the Employer in the Adoption Agreement. If not designated by the
Employer, the Survivor Annuity will be 1/2 of the amount paid to the Participant
during his or her lifetime. The Qualified Joint and Survivor Annuity will be the
amount of benefit which can be provided by the Participant's Vested Account
Balance.
1.64 QUALIFIED MATCHING CONTRIBUTION
Matching Contributions which when made are subject to the distribution and
nonforfeitability requirements under Code Section 401(k).
1.65 QUALIFIED NON-ELECTIVE CONTRIBUTIONS
Contributions (other than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participants' accounts that
the Participants may not elect to receive in cash until distributed from the
Plan; that are nonforfeitable when made; and that are distributable only in
accordance with the distribution provisions that are applicable to Elective
Deferrals and Qualified Matching Contributions.
1.66 QUALIFIED VOLUNTARY CONTRIBUTION
A tax-deductible voluntary Employee contribution. These contributions may no
longer be made to the Plan.
1.67 REQUIRED AGGREGATION GROUP
Used for Top-Heavy testing purposes, it consists of:
(a) each qualified plan of the Employer in which at least one Key
Employee participates or participated at any time during the
determination period (regardless of whether the plan has terminated),
and
(b) any other qualified plan of the Employer which enables a plan
described in (a) to meet the requirements of Code Sections 401(a)(4) or
410.
1.68 REQUIRED BEGINNING DATE
The date on which a Participant is required to take his or her first minimum
distribution under the Plan. The rules are set forth at paragraph 7.5.
1.69 ROLLOVER CONTRIBUTION
A contribution made by a Participant of an amount distributed to such
Participant from another Qualified Deferred Compensation Plan in accordance with
Code Sections 402(a)(5), (6), and (7). An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Participant except that an Eligible Rollover Distribution does not include:
(a) 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 Participant or the joint lives (or joint
life expectancies) of the Participant and the Participant's Designated
Beneficiary, or for a specified period of ten years or more;
(b) any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and
(c) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
A Direct Rollover is a payment by the plan to the Eligible Retirement Plan
specified by the Participant.
1.70 SALARY SAVINGS AGREEMENT
An agreement between the Employer and a participating Employee where the
Employee authorizes the Employer to withhold a specified percentage of his or
her Compensation for deposit to the Plan on behalf of such Employee.
1.71 SELF-EMPLOYED INDIVIDUAL
An individual who has Earned Income for the taxable year from the trade or
business for which the Plan is established including an individual who would
have had Earned Income but for the fact that the trade or business had no Net
Profit for the taxable year.
1.72 SERVICE
The period of current or prior employment with the Employer. If the Employer
maintains a plan of a predecessor employer, Service for such predecessor shall
be treated as Service for the Employer.
1.73 SERVICE COMPANY
Prudential Mutual Fund Services, Inc., or its successor serving from time to
time.
1.74 SHAREHOLDER EMPLOYEE
An Employee or Officer who owns [or is considered as owning within the meaning
of Code Section 318(a)(1)], on any day during the taxable year of an electing
small business corporation (S Corporation), more than 5% of such corporation's
outstanding stock.
1.75 SIMPLIFIED EMPLOYEE PENSION PLAN
10
An individual retirement account which meets the requirements of Code Section
408(k), and to which the Employer makes contributions pursuant to a written
formula. These plans are considered for contribution limitation and Top-Heavy
testing purposes.
1.76 SPONSOR
Shall be Prudential Mutual Fund Management, Inc.
1.77 SPOUSE (SURVIVING SPOUSE)
The Spouse or Surviving Spouse of the Participant, provided that a former Spouse
will be treated as the Spouse or Surviving Spouse and a current Spouse will not
be treated as the Spouse or Surviving Spouse to the extent provided under a
Qualified Domestic Relations Order as described in Code Section 414(p).
1.78 SUPER TOP-HEAVY PLAN
A Plan described at paragraph 1.81 under which the Top-Heavy Ratio [as defined
at paragraph 1.82] exceeds 90%.
1.79 TAXABLE WAGE BASE
For plans with an allocation formula which takes into account the Employer's
contribution under the Federal Insurance Contributions Act (FICA), the
contribution and benefit base in effect under Section 230, of the Social
Security Act, at the beginning of the Plan Year, or the amount elected by the
Employer in the Adoption Agreement.
1.80 TOP-HEAVY DETERMINATION DATE
For any Plan Year subsequent to the first Plan Year, the last day of the
preceding Plan Year. For the first Plan Year of the Plan, the last day of that
year.
1.81 TOP-HEAVY PLAN
For any Plan Year beginning after 1983, the Employer's Plan is top-heavy if any
of the following conditions exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this
Plan is not part of any required Aggregation Group or Permissive
Aggregation Group of Plans.
(b) If the Employer's plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%.
(c) If the Employer's plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds 60%.
1.82 TOP-HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has
not maintained any Defined Benefit Plan which during the 5-year period
ending on the Determination Date(s) has or has had accrued benefits,
the Top-Heavy Ratio for this Plan alone, or for the Required or
Permissive Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account balances
of all Key Employees as of the Determination Date(s)
[including any part of any account balance distributed in the
5-year period ending on the Determination Date(s)], and
(2) the denominator of which is the sum of all account
balances [including any part of any account balance
distributed in the 5-year period ending on the Determination
Date(s)], both computed in accordance with Code Section 416
and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under Code Section 416
and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more Defined Benefit Plans which
during the 5-year period ending on the Determination Date(s) has or has
had any accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of account balances under the aggregated
Defined Contribution Plan or Plans for all Key Employees, determined in
accordance with (a) above, and the Present Value of accrued benefits
under the aggregated Defined Benefit Plan or Plans for all Key
Employees as of the Determination Date(s), and the denominator of which
is the sum of the account balances under the aggregated Defined
Contribution Plan or Plans for all Participants, determined in
accordance with (a) above, and the Present Value of accrued benefits
under the Defined Benefit Plan or Plans for all Participants as of the
Determination Date(s), all determined in accordance with Code Section
416 and the regulations thereunder. The accrued benefits under a
Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distribution of an accrued
benefit made in the 5-year period ending on the Determination Date.
(c) For purposes of (a) and (b) above, the value of account balances
and the Present Value of accrued
11
benefits will be determined as of the most recent Valuation Date that
falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a Defined
Benefit Plan. The account balances and accrued benefits of a
participant (1) who is not a Key Employee but who was a Key Employee in
a prior year, or (2) who has not been credited with at least one hour
of service with any Employer maintaining the Plan at any time during
the 5-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account
will be made in accordance with Code Section 416 and the regulations
thereunder. Qualified Voluntary Employee Contributions will not be
taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits
will be calculated with reference to the Determination Dates that fall
within the same calendar year. The accrued benefit of a Participant
other than a Key Employee shall be determined under (1) the method, if
any, that uniformly applies for accrual purposes under all Defined
Benefit Plans maintained by the Employer, or (2) if there is no such
method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
1.83 TOP-PAID GROUP
The group consisting of the top 20% of Employees when ranked on the basis of
Compensation paid during such year. For purposes of determining the number of
Employees in the group (but not who is in it), the following Employees shall be
excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17-1/2 hours per week.
(c) Employees who normally do not work more than 6 months during any
year.
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered by an
agreement between employee representatives and the Employer, where
retirement benefits were the subject of good faith bargaining and
provided that 90% or more of the Employer's Employees are covered by
the agreement.
(f) Employees who are nonresident aliens and who receive no earned
income which constitutes income from sources within the United States.
1.84 TRANSFER CONTRIBUTION
A non-taxable transfer of a Participant's benefit directly from a Qualified
Deferred Compensation Plan to this Plan.
1.85 TRUSTEE
The individual(s) or institution appointed by the Employer in the Adoption
Agreement.
1.86 VALUATION DATE
The last business day of each Plan Year or such other date consistent with the
operational cycle of the Service Company, as agreed to by the Employer and the
Service Company on which Participant accounts are revalued in accordance with
Article V hereof. For Top-Heavy purposes, the date selected by the Employer as
of which the Top-Heavy Ratio is calculated.
The value of mutual funds and other marketable investments shall be determined
using the most recent price quoted on a national securities exchange or over the
counter market. The value of investments for which there is no market shall be
determined in the sole judgement of the Employer or issuer and neither the
Trustee nor Service Company shall have responsibility with respect to the
valuation of such assets.
1.87 VESTED ACCOUNT BALANCE
The aggregate value of the Participant's Vested Account Balances derived from
Employer and Employee contributions (including Rollovers), whether vested before
or upon death, including the proceeds of insurance contracts, if any, on the
Participant's life. The provisions of Article VIII shall apply to a Participant
who is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
1.88 VOLUNTARY CONTRIBUTION
An Employee contribution made to the Plan by or on behalf of a Participant that
is included in the Participant's gross income in the year in which made and that
is maintained under a separate account to which earnings and losses are
allocated.
1.89 WELFARE BENEFIT FUND
Any fund that is part of a plan of the Employer, or has the effect of a plan,
through which the Employer provides welfare benefits to Employees or their
beneficiaries. For these purposes, Welfare Benefits means any benefit other than
those with respect to which Code Section 83(h) (relating to transfers of
property in connection with the performance of services), Code Section 404
(relating to deductions for contributions to an Employee's trust or annuity and
Compensation under a deferred payment plan), Code Section 404A (relating to
12
certain foreign deferred compensation plans) apply. A "Fund" is any social club,
voluntary employee benefit association, supplemental unemployment benefit trust
or qualified group legal service organization described in Code Section
501(c)(7), (9), (17) or (20); any trust, corporation, or other organization not
exempt from income tax, or to the extent provided in regulations, any account
held for an Employer by any person.
1.90 YEAR OF SERVICE
If the Hour counting method has been chosen by the Employer in the Adoption
Agreement, a Year Of Service is a 12-consecutive month period during which an
Employee is credited with not less than 1,000 (or such lesser number as
specified by the Employer in the Adoption Agreement) Hours of Service. If the
Elapsed Time Method has been chosen by the Employer in the Adoption Agreement,
an Employee will receive credit for the aggregate of all time period(s)
commencing with the Employee's first day of employment or reemployment and
ending on the date a Break In Service begins. The first day of employment or
reemployment is the first day the Employee performs an Hour of Service. An
Employee will also receive credit for any period of severance of less than 12
consecutive months. Fractional periods of a year will be expressed in terms of
days.
ARTICLE II-- ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION
Unless otherwise specified in the Adoption Agreement, the Plan shall cover all
Employees having completed at least one Year of Service and who have attained
age 21. Employees who meet the eligibility requirements in the Adoption
Agreement on the Effective Date of the Plan shall become Participants as of the
Effective Date of the Plan. Unless stated to the contrary in the Adoption
Agreement, all Employees employed on the Effective Date of the Plan may
participate, even if they have not satisfied the Plan's specified eligibility
requirements. Other Employees shall become Participants on the Entry Date
coinciding with or immediately following the date on which they meet the
eligibility requirements. The Employee must satisfy the eligibility requirements
specified in the Adoption Agreement and be employed on the Entry Date to become
a Participant in the Plan. In the event an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible class, such
Employee shall participate immediately if such Employee has satisfied the
minimum age and service requirements and would have previously become a
Participant had he or she been in the eligible class. A former Participant shall
again become a Participant upon returning to the employ of the Employer. For
this purpose, Participant's Compensation and Service shall be considered from
date of rehire.
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT
If a Participant is transferred to an ineligible class of Employees, or is
otherwise reclassified as an ineligible Employee, any contribution or allocation
of forfeitures which would otherwise be made for him hereunder for the Plan Year
of such transfer or reclassification shall be made. No contribution or
allocation of forfeitures for or by him shall be made, however, for any
subsequent Plan Year prior to the Plan Year in which he again becomes a
Participant.
2.3 COMPUTATION PERIOD
To determine Years of Service and Breaks in Service for purposes of eligibility,
the 12-consecutive month period shall commence on the date on which an Employee
first performs an Hour of Service for the Employer and each anniversary thereof,
such that the succeeding 12-consecutive month period commences with the
employee's first anniversary of employment and so on. If, however, the period so
specified is one year or less, the succeeding 12-consecutive month period shall
commence on the first day of the Plan Year prior to the anniversary of the date
they first performed an Hour of Service regardless of whether the Employee is
entitled to be credited with 1,000 (or such lesser number as specified by the
Employer in the Adoption Agreement) Hours of Service during their first
employment year.
2.4 EMPLOYMENT RIGHTS
Participation in the Plan shall not confer upon a Participant any employment
rights, nor shall it interfere with the Employer's right to terminate the
employment of any Employee at any time.
2.5 SERVICE WITH CONTROLLED GROUPS
All Years of Service with other members of a controlled group of corporations
[as defined in Code Section 414(b)], trades or businesses under common control
[as defined in Code Section 414(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be credited for purposes of
determining an Employee's eligibility to participate.
2.6 OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more Owner-Employees
who control both the business for which this Plan is established and one or more
other trades or businesses, this Plan and the Plan established for other trades
or businesses must, when looked at as a single Plan, satisfy Code Sections
401(a) and (d) for the Employees of this and all other trades or businesses.
13
If the Plan provides contributions or benefits for one or more Owner-Employees
who control one or more other trades or businesses, the Employees of the other
trades or businesses must be included in a Plan which satisfies Code Sections
401(a) and (d) and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled, and the individual controls a
trade or business, then the contributions or benefits of the Employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him or her under the most favorable plan of the trade or
business which is not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
(a) own the entire interest in an unincorporated trade or business, or
(b) in the case of a partnership, own more than 50% of either the
capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control within the meaning
of the preceding sentence.
2.7 LEASED EMPLOYEES
Any leased Employee shall be treated as an Employee of the recipient Employer;
however, contributions or benefits provided by the leasing organization which
are attributable to services performed for the recipient Employer shall be
treated as provided by the recipient Employer. A leased Employee shall not be
considered an Employee of the recipient if such Employee is covered by a money
purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but including
amounts contributed by the Employer pursuant to a salary reduction
agreement, which are excludable from the Employee's gross income under
a cafeteria plan covered by Code Section 125, a cash or deferred
profit-sharing plan under Section 401(k) of the Code, a Simplified
Employee Pension Plan under Code Section 402(h)(1)(B ) and a
tax-sheltered annuity under Code Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute more than
twenty percent (20%) of the recipients non-highly compensated work force.
2.8 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a Participant in
the Plan is erroneously omitted and discovery of such omission is not made until
after a contribution for the year has been made, the omitted Employee shall be
included in the next valuation. The Employer shall make any additional
contribution with respect to the omitted Employee that may be deemed necessary.
Such contribution shall be made regardless of whether it is deductible in whole
or in part in any taxable year under applicable provisions of the Code. The
Employee shall receive credit under the terms of the Plan for any period during
which he should have been included as a Participant.
2.9 INCLUSION OF INELIGIBLE EMPLOYEE
If in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible person shall be removed from the ineligible Employee's Account
and treated as a forfeiture.
ARTICLE III-- EMPLOYER CONTRIBUTIONS
3.1 AMOUNT
The Employer intends to make periodic contributions to the Plan in accordance
with the formula or formulas selected in the Adoption Agreement. However, the
Employer's contribution for any Plan Year shall be subject to the limitations on
allocations contained in Article X.
3.2 EXPENSES AND FEES
The Employer shall also be authorized to reimburse the Fund for all expenses and
fees incurred in the administration of the Plan or Trust and paid out of the
assets of the Fund. Such expenses shall include, but shall not be limited to,
fees for professional services, printing and postage. Commissions may not be
reimbursed.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS
14
The Trustee shall not be required to determine if the Employer has made a
contribution or if the amount contributed is in accordance with the Adoption
Agreement or the Code. The Employer shall have sole responsibility in this
regard. The Trustee shall be accountable solely for contributions actually
received by it, within the limits of Article XI.
3.4 RETURN OF CONTRIBUTIONS
Contributions made to the Fund by the Employer shall be irrevocable except as
provided below:
(a) Any contribution forwarded to the Trustee because of a mistake of
fact, provided that the contribution is returned to the Employer within
one year of the contribution.
(b) In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue
Code, any contribution made incident to that initial qualification by
the Employer must be returned to the Employer within one year after 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.
(c) Contributions forwarded to the Trustee are presumed to be
deductible and are conditioned on their deductibility. Contributions
which are determined to not be deductible will be returned to the
Employer.
3.5 FORM OF CONTRIBUTION
Except as contemplated in paragraphs 4.3 and 4.4, no contribution shall be made
in property other than United States currency or such other property as is
acceptable to the Service Company.
ARTICLE IV-- EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS
Unless otherwise specified in the Adoption Agreement, an Employee may not make
Voluntary Contributions to the Plan established hereunder. If permitted, they
will be made in a uniform and nondiscriminatory manner. Such contributions are
subject to the limitations on Annual Additions and are subject to
antidiscrimination testing.
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS
A Participant may no longer make Qualified Voluntary Contributions to the Plan.
Amounts already contributed may not remain in the Trust Fund. The Participant
must withdraw the Qualified Voluntary Contribution amounts already contributed
by making a written application to the Plan Administrator.
4.3 ROLLOVER CONTRIBUTION
Unless provided otherwise in the Adoption Agreement, a Participant and an
Employee in an eligible class of Employees who has not met the eligibility
requirements for participation in the Plan may make a Rollover Contribution to
any Defined Contribution Plan established hereunder of all or any part of an
amount distributed or distributable to him or her from a Qualified Deferred
Compensation Plan provided:
(a) the amount distributed to the Participant is deposited in the Plan
no later than the sixtieth day after such distribution was received by
the Participant,
(b) the amount distributed is not one of a series of substantially
equal periodic payments made for the life (or life expectancy) of the
Participant or the joint lives (or joint life expectancies) of the
Participant and the Participant's Designated Beneficiary, or for a
specified period of ten years or more;
(c) the amount distributed is not required under section 401(a)(9) of
the Code;
(d) if the amount distributed included property such property is rolled
over, or if sold the proceeds of such property may be rolled over,
(e) the amount distributed is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
In addition, if the Adoption Agreement allows Rollover Contributions, the Plan
will also accept any Eligible Rollover Distribution (as defined at paragraph
1.69) directly to the Plan.
Rollover Contributions, which relate to distributions prior to January 1, 1993,
must be made in accordance with paragraphs (a) through (e) and additionally meet
the requirements of paragraph (f):
(f) the distribution from the Qualified Deferred Compensation Plan
constituted the Participant's entire interest in such Plan and was
distributed within one taxable year to the Participant:
(1) on account of separation from Service, a Plan termination,
or in the case of a profit-sharing or stock bonus plan, a
complete discontinuance of contributions under such plan
within the meaning of Section 402(a)(6)(A) of the Code, or
(2) in one or more distributions which constitute a qualified
lump sum distribution within the meaning of Code Section
402(e)(4)(A),
15
determined without reference to subparagraphs (B) and (H),
Such Rollover Contribution may also be made through an Individual Retirement
Account qualified under Code Section 408 where the ▇▇▇ was used as a conduit
from the Qualified Deferred Compensation Plan, the Rollover Contribution is made
in accordance with the rules provided under paragraph (a) through (e) and the
Rollover Contribution does not include any regular ▇▇▇ contributions, or
earnings thereon, which the Participant may have made to the ▇▇▇. Rollover
Contributions which relate to distributions prior to January 1, 1993, may be
made through an ▇▇▇ in accordance with paragraphs (a) through (f) and additional
requirements as provided in the previous sentence. The Trustee shall not be held
responsible for determining the tax-free status of any Rollover Contribution
made under this Plan.
4.4 TRANSFER CONTRIBUTION
Unless provided otherwise in the Adoption Agreement, a Participant and an
Employee in an eligible class of Employees who has not met the eligibility
requirements for participation in the Plan, may, subject to the provisions of
paragraph 4.5, also arrange for the direct transfer of his or her benefit from a
Qualified Deferred Compensation Plan to this Plan. For accounting and record
keeping purposes, Transfer Contributions shall be identical to Rollover
Contributions.
In the event the Employer accepts a Transfer Contribution from a Plan in which
the Employee was directing the investments of his or her account, the Employer
may continue to permit the Employee to direct his or her investments in
accordance with paragraph 13.7 with respect only to such Transfer Contribution.
Notwithstanding the above, the Employer may refuse to accept such Transfer
Contributions.
Notwithstanding anything to the contrary, if a Participant changes
classification of employment between eligible and ineligible classes, then the
Employer may transfer said Participant's account balance between the appropriate
plans maintained by the Employer, so long as such transfer will not result in an
illegal cut back in benefits in violation of Code Section 411(d)(6).
4.5 EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS
The Employer maintaining a Safe-Harbor Profit-Sharing Plan in accordance with
the provisions of paragraph 8.7, acting in a nondiscriminatory manner, may in
its sole discretion refuse to allow Transfer Contributions to its profit-sharing
plan, if such contributions are directly or indirectly being transferred from a
defined benefit plan, a money purchase pension plan (including a target benefit
plan), a stock bonus plan, or another profit-sharing plan which would otherwise
provide for a life annuity form of payment to the Participant.
4.6 ELECTIVE DEFERRALS
A Participant may enter into a Salary Savings Agreement with the Employer
authorizing the Employer to withhold a portion of such Participant's
Compensation not to exceed $7,000 per calendar year as adjusted under Code
Section 415(d) or, if lesser, the percentage of Compensation specified in the
Adoption Agreement and to deposit such amount to the Plan. No Participant shall
be permitted to have Elective Deferrals made under this Plan or any other
qualified plan maintained by the Employer, during any taxable year, in excess of
the dollar limitation contained in Code Section 402(g) in effect at the
beginning of such taxable year. Thus, the $7,000 limit may be reduced if a
Participant contributes pre-tax contributions to qualified plans of this or
other Employers. Any such contribution shall be credited to the Employee's
Salary Savings Account. Unless otherwise specified in the Adoption Agreement, a
Participant may amend his or her Salary Savings Agreement to increase, decrease
or terminate the percentage upon 30 days written notice to the Employer. If a
Participant terminates his or her agreement, such Participant shall not be
permitted to put a new Salary Savings Agreement into effect until the first pay
period in the next Plan Year, unless otherwise stated in the Adoption Agreement.
The Employer may also amend or terminate said agreement on written notice to the
Participant. If a Participant has not authorized the Employer to withhold at the
maximum rate and desires to increase the total withheld for a Plan Year, such
Participant may authorize the Employer upon 30 days notice to withhold a
supplemental amount up to 100% of his or her Compensation for one or more pay
periods. In no event may the sum of the amounts withheld under the Salary
Savings Agreement plus the supplemental withholding exceed 25% of a
Participant's Compensation for a Plan Year. Elective Deferrals shall be
deposited in the Trust no later than the date described in Section 2510.3-102 of
the Department of Labor Regulations.
4.7 DIRECT ROLLOVER OF BENEFITS
Notwithstanding any provision of the plan to the contrary that would otherwise
limit a Participant's election under this Paragraph, for distributions made on
or after January 1, 1993, a Participant may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Participant in a Direct Rollover. Any portion of a distribution which is not
paid directly to an Eligible Retirement Plan shall be distributed to the
Participant. For purposes of this Paragraph, a Surviving Spouse or a spouse or
former spouse who is an alternate payee under a Qualified
16
Domestic Relations Order as defined in section 414(p) of the Code, will be
permitted to elect to have any Eligible Rollover Distribution paid directly to
an individual retirement account (▇▇▇), an individual retirement annuity (▇▇▇),
or another qualified retirement Plan.
The plan provisions otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.
ARTICLE V-- PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS
The Employer shall establish a separate bookkeeping account for each Participant
showing the total value of his or her interest in the Fund. Each Participant's
account shall be separated for bookkeeping purposes into the following
sub-accounts:
(a) Employer contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including required
contributions and, if applicable, either repayments of loans previously
defaulted on and treated as "deemed distributions" on which a tax
report has been issued, and amounts paid out upon a separation from
service which have been included in income and which are repaid after
being re-hired by the Employer).
(c) Transfer Contributions.
(d) Rollover Contributions.
5.2 ADJUSTMENTS TO PARTICIPANT ACCOUNTS
As of each Valuation Date of the Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer
Contributions made by the Participant,
(c) any repayment of amounts previously paid out to a Participant upon
a separation from Service and repaid by the Participant since the last
Valuation Date, and
(d) the Participant's proportionate share of any investment earnings
and increase in the fair market value of the Fund since the last
Valuation Date, as determined at paragraph 5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's account
since the last Valuation Date, and
(f) the Participant's proportionate share of any decrease in the fair
market value of the Fund since the last Valuation Date, as determined
at paragraph 5.4.
5.3 ALLOCATING EMPLOYER CONTRIBUTIONS
The Employer's contribution shall be allocated to Participants in accordance
with the allocation formula selected by the Employer in the Adoption Agreement,
and the minimum contribution and allocation requirements for Top-Heavy Plans.
Unless otherwise specified in the Adoption Agreement, the Plan will not be
integrated with Social Security. Beginning with the 1990 Plan Year and
thereafter, for plans on Standardized Adoption Agreement 001, Participants who
are credited with more than 500 Hours of Service or are employed on the last day
of the Plan Year must receive a full allocation of Employer contributions. In
Nonstandardized Adoption Agreement 002, Employer contributions shall be
allocated to the accounts of Participants employed by the Employer on the last
day of the Plan Year unless indicated otherwise in the Adoption Agreement. In
the case of a non-Top-Heavy, Nonstandardized Plan, Participants must also have
completed a Year of Service unless otherwise specified in the Adoption
Agreement. For Nonstandardized Adoption Agreement 002, the Employer may only
apply the last day of the Plan Year and Year of Service requirements if the Plan
satisfies the requirements of Code Sections 401(a)(26) and 410(b) and the
regulations thereunder including the exception for 401(k) plans. If, when
applying the last day and Year of Service requirements, the Plan fails to
satisfy the aforementioned requirements, additional Participants will be
eligible to receive an allocation of Employer Contributions until the
requirements are satisfied. Participants who are credited with a Year of
Service, but not employed at Plan Year end, are the first category of additional
Participants eligible to receive an allocation. If the requirements are still
not satisfied, Participants credited with more than 500 Hours of Service and
employed at Plan Year end are the next category of Participants eligible to
receive an allocation. Finally, if necessary to satisfy the said requirements,
any Participant credited with more than 500 Hours of Service will be eligible
for an allocation of Employer Contributions. The Service requirement is not
applicable with respect to any Plan Year during which the Employer's Plan is
Top-Heavy.
17
In the event the Employer selects an integrated allocation formula, the
Employer's contribution will be allocated in accordance with the following
method unless otherwise specified in the Adoption Agreement:
(a) First, to the extent contributions and forfeitures are sufficient,
all Participants will receive an allocation equal to 3% of their
Compensation.
(b) Next, any remaining Employer Contributions and forfeitures will be
allocated to Participants who have Compensation in excess of the
Taxable Wage Base (excess Compensation). Each such Participant will
receive an allocation in the ratio that his or her excess compensation
bears to the excess Compensation of all Participants. Participants may
only receive an allocation of 3% of excess Compensation.
(c) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants in the ratio that their Compensation plus
excess Compensation bears to the total Compensation plus excess
Compensation of all Participants. Participants may only receive an
allocation of up to 2.7% of their Compensation plus excess
Compensation, under this allocation method. If the Taxable Wage Base as
defined in Section 3 of the Adoption Agreement is less than the
maximum, but more than the greater of $10,000 or 20% of the maximum,
then the 2.7% must be reduced. If the amount specified is greater than
80% but less than 100% of the maximum Taxable Wage Base, the 2.7% must
be reduced to 2.4%. If the amount specified is greater than the greater
of $10,000 or 20% of the maximum Taxable Wage Base, but not more than
80%, 2.7% must be reduced to 1.3%.
(d) Next, any remaining Employer contributions and forfeitures will be
allocated to all Participants (whether or not they received an
allocation under the preceding paragraphs) in the ratio that each
Participant's Compensation bears to all Participants' Compensation.
If the Plan is not Top-Heavy, subparagraphs (a) and (b) above may be disregarded
and 5.7%, 5.4% or 4.3% may be substituted for 2.7%, 2.4% or 1.3% where it
appears in (c) above.
5.4 ALLOCATING INVESTMENT EARNINGS AND LOSSES
A Participant's share of investment earnings and any increase or decrease in the
fair market value of the Fund shall be based on the proportionate value of all
active accounts (other than accounts with segregated investments) as of the last
Valuation Date less withdrawals since the last Valuation Date. If applicable,
segregated accounts may be allocated earnings, up through the date of
segregation, under the above method, at the Plan Administrator's discretion. If
Employer and/or Employee contributions are made monthly, quarterly, or on some
other systematic basis, the adjusted value of such accounts for allocation of
investment income and gains or losses shall include one-half the contributions
for such period. If Employer and/or Employee contributions are not made on a
systematic basis, it is assumed that they are made at the end of the valuation
period and therefore will not receive an allocation of investment earnings and
gains or losses for such period. Notwithstanding the above, if contributions are
made on a nonsystematic basis, at the Plan Administrator's discretion, such
contributions will be credited with an allocation of the actual investment
earnings and gains and losses from the actual date of deposit of each such
contribution until the end of the period. In no event shall this election of
allocating gains and losses be used to discriminate. Finally, the Plan
Administrator may elect to disregard nonsystematic contributions made during the
year, altogether, and allocate earnings exclusively on the basis of all active
accounts (other than accounts with segregated investments) as of the last
Valuation Date less withdrawals since the last Valuation Date, or, if
applicable, take into consideration any systematic contributions, as provided
above. Accounts with segregated investments shall receive only the income or
loss on such segregated investments.
5.5 PARTICIPANT STATEMENTS
The Employer shall periodically (not less often than annually), prepare a
statement for each Participant showing the additions to and subtractions from
his or her account since the last such statement and the fair market value of
his or her account as of the date for which the statement is prepared.
ARTICLE VI-- RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS
A Participant shall be entitled to receive the balance held in his or her
account from Employer contributions upon attaining Normal Retirement Age or at
such earlier dates as the provisions of this Article VI may allow. If the
Participant elects to continue working past his or her Normal Retirement Age, he
or she will continue as an active Plan Participant and no distribution shall be
made to such Participant until his or her actual retirement date unless the
employer elects otherwise in the Adoption Agreement, or a minimum distribution
is required by law. Settlement shall be made in the normal form, or if elected,
in one of the optional forms of payment provided below.
18
6.2 EARLY RETIREMENT BENEFITS
If the Employer so provides in the Adoption Agreement, an Early Retirement
Benefit will be available to individuals who meet the age and Service
requirements. An individual who meets the Early Retirement Age requirements and
separates from Service, will become fully vested, regardless of any vesting
schedule which otherwise might apply. If a Participant separates from Service
before satisfying the age requirements, but after having satisfied the Service
requirement, the Participant will be entitled to elect an Early Retirement
benefit upon satisfaction of the age requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal Retirement
Age, such Participant shall be entitled to receive the vested balance
held in his or her account payable at Normal Retirement Age in the
normal form, or if elected, in one of the optional forms of payment
provided hereunder. If applicable, the Early Retirement Benefit
provisions may be elected. Notwithstanding the preceding sentence, a
former Participant may, if allowed in the Adoption Agreement, make
application to the Employer requesting early payment of any deferred
vested and nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of that
Participant's vested account balance derived from Employer and Employee
contributions is not greater than $3,500, the Participant may receive a
lump sum distribution of the value of the entire vested portion of such
account balance and the non-vested portion will be treated as a
forfeiture. The Employer shall continue to follow their consistent
policy, as may be established, regarding immediate cash-outs of Vested
Account Balances of $3,500 or less. For purposes of this Article, if
the value of a Participant's Vested Account Balance is zero, the
Participant shall be deemed to have received a distribution of such
Vested Account Balance immediately following termination. Likewise, if
the Participant is reemployed prior to incurring 5 consecutive 1-year
Breaks In Service they will be deemed to have immediately repaid such
distribution. For Plan Years beginning prior to 1989, a Participant's
Vested Account Balance shall not include Qualified Voluntary
Contributions. Notwithstanding the above, if the Employer maintains or
has maintained a policy of not distributing any amounts until the
Participant's Normal Retirement Age, the Employer can continue to
uniformly apply such policy.
(c) If a Participant terminates employment with a Vested Account
Balance derived from Employer and Employee contributions in excess of
$3,500, and elects (with his or her Spouse's consent, if required) to
receive 100% of the value of his or her Vested Account Balance in a
lump sum, the non-vested portion will be treated as a forfeiture. The
Participant (and his or her Spouse, if required) must consent to any
distribution, when the Vested Account Balance described above exceeds
$3,500 or if at the time of any prior distribution it exceeded $3,500.
For purposes of this paragraph, for Plan Years beginning prior to 1989,
a Participant's Vested Account Balance shall not include Qualified
Voluntary Contributions.
(d) Distribution of less than 100% of the Participant's Vested Account
Balance shall be permitted upon termination of employment.
(e) If a Participant who is not 100% vested receives or is deemed to
receive a distribution pursuant to this paragraph and resumes
employment covered under this Plan, the Participant shall have the
right to repay to the Plan the full amount of the distribution
attributable to Employer contributions on or before the earlier of the
date that the Participant incurs 5 consecutive 1-year Breaks in Service
following the date of distribution or five years after the first date
on which the Participant is subsequently reemployed. In such event, the
Participant's account shall be restored to the value thereof at the
time the distribution was made and may further be increased by the
Plan's income and investment gains and/or losses on the undistributed
amount from the date of distribution to the date of repayment.
(f) A Participant shall also have the option, to postpone payment of
his or her Plan benefits until the first day of April following the
calendar year in which he or she attains age 70-1/2. Any balance of a
Participant's account resulting from his or her Employee contributions
not previously withdrawn, if any, may be withdrawn by the Participant
immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a result of a
Disability as defined at paragraph 1.21, such Participant shall be able
to make an application for a disability retirement benefit payment. The
Participant's account balance will be deemed "immediately
distributable" as set forth in paragraph 6.4, and will be fully vested
pursuant to paragraph 9.2.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains (or would have attained if not
deceased) the later of the Normal Retirement Age or age 62.
19
(b) If the value of a Participant's vested account balance derived from
Employer and Employee Contributions exceeds (or at the time of any
prior distribution exceeded) $3,500, and the account balance is
immediately distributable, the Participant and his or her Spouse (or
where either the Participant or the Spouse has died, the survivor) must
consent to any distribution of such account balance. The consent of the
Participant and the Spouse shall be obtained in writing within the
90-day period ending on the annuity starting date, which is the first
day of the first period for which an amount is paid as an annuity or
any other form. The Plan Administrator shall notify the Participant and
the Participant's Spouse of the right to defer any distribution until
the Participant's account balance is no longer immediately
distributable. Such notification shall include a general description of
the material features, and an explanation of the relative values of,
the optional forms of benefit available under the plan in a manner that
would satisfy the notice requirements of Code Section 417(a)(3), and
shall be provided no less than 30 days and no more than 90 days prior
to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need consent to
the commencement of a distribution in the form of a qualified Joint and
Survivor Annuity while the account balance is immediately
distributable. Furthermore, if payment in the form of a Qualified Joint
and Survivor Annuity is not required with respect to the Participant
pursuant to paragraph 8.7 of the Plan, only the Participant need
consent to the distribution of an account balance that is immediately
distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Code
Section 415. In addition, upon termination of this Plan if the Plan
does not offer an annuity option (purchased from a commercial
provider), the Participant's account balance may, without the
Participant's consent, be distributed to the Participant or transferred
to another Defined Contribution Plan [other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)] within the same
controlled group.
(d) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the
first Plan Year beginning after 1988, the Participant's vested account
balance shall not include amounts attributable to Qualified Voluntary
Contributions.
(e) If a distribution is one to which Code Section 401(a)(11) and 417
do not apply, such distribution may commence less than 30 days after
the notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least 30
days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
6.5 NORMAL FORM OF PAYMENT
The normal form of payment for a profit- sharing plan satisfying the
requirements of paragraph 8.7 hereof shall be a lump sum with no option for
annuity payments. For all other plans, the normal form of payment hereunder
shall be a Qualified Joint and Survivor Annuity as provided under Article VIII.
A Participant whose vested account balance derived from Employer and Employee
contributions exceeds $3,500, or if at the time of any prior distribution it
exceeded $3,500, shall (with the consent of his or her Spouse) have the right to
receive his or her benefit in a lump sum or in monthly, quarterly, semi-annual
or annual payments from the Fund over any period not extending beyond the life
expectancy of the Participant and his or her Beneficiary. For purposes of this
paragraph, for Plan Years prior to 1989, a Participant's Vested Account Balance
shall not include Qualified Voluntary Contributions. The normal form of payment
shall be automatic, unless the Participant files a written request with the
Employer prior to the date on which the benefit is automatically payable,
electing a lump sum or installment payment option. No amendment to the Plan may
eliminate one of the optional distribution forms listed above.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of benefits
will begin no later than the 60th day after the close of the Plan Year
in which the latest of the following events occurs:
(1) the Participant attains age 65 (or normal retirement age
if earlier),
(2) the 10th anniversary of the year in which the Participant
commenced participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant and
Spouse (if necessary) to consent to a distribution while a benefit is
immediately distributable, within the meaning of paragraph 6.4
20
hereof, shall be deemed an election to defer commencement of payment of
any benefit sufficient to satisfy this paragraph.
6.7 CLAIMS PROCEDURES
Upon retirement, death, or other severance of employment, the Participant or his
or her representative may make application to the Employer requesting payment of
benefits due and the manner of payment. If no application for benefits is made,
the Employer shall automatically pay any vested benefit due hereunder in the
normal form at the time prescribed at paragraph 6.4. If an application for
benefits is made, the Employer shall accept, reject, or modify such request and
shall notify the Participant in writing setting forth the response of the
Employer and in the case of a denial or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on which
the denial is based,
(c) provide a description of any additional material or information
necessary for the Participant or his representative to perfect the
claim and an explanation of why such material or information is
necessary, and
(d) explain the Plan's claim review procedure as contained in this
Plan.
In the event the request is rejected or modified, the Participant or his or her
representative may within 60 days following receipt by the Participant or
representative of such rejection or modification, submit a written request for
review by the Employer of its initial decision. Within 60 days following such
request for review, the Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision. If
the Participant or representative is not satisfied with the Employer's final
decision, the Participant or representative can institute an action in a federal
court of competent jurisdiction; for this purpose, process would be served on
the Employer.
6.8 IN-SERVICE WITHDRAWALS
An Employee may withdraw all or any part of the fair market value of his or her
Voluntary Contributions, Qualified Voluntary Contributions, Rollover
Contributions, upon written request to the Employer. Transfer Contributions,
which originate from a Plan meeting the safe-harbor provisions of paragraph 8.7,
may also be withdrawn, by an Employee, upon written request to the Employer.
Transfer Contributions not meeting the safe-harbor provisions may only be
withdrawn upon retirement, death, disability, termination or termination of the
Plan, and will be subject to Spousal consent requirements contained in Code
Sections 411(a)(11) and 417. No such withdrawals are permitted from a money
purchase plan until the participant reaches Normal Retirement Age. Such request
shall include the Employee's address, social security number, birthdate, and
amount of the withdrawal. If at the time a distribution of Qualified Voluntary
Contributions is received the Participant has not attained age 59-1/2 and is not
disabled, as defined at Code Section 22(e)(3), the Participant will be subject
to a federal income tax penalty, unless the distribution is rolled over to a
qualified plan or individual retirement plan within 60 days of the date of
distribution. A Participant may withdraw all or any part of the fair market
value of his or her pre-1987 Voluntary Contributions with or without withdrawing
the earnings attributable thereto. Post-1986 Voluntary Contributions may only be
withdrawn along with a portion of the earnings thereon. The amount of the
earnings to be withdrawn is determined by using the formula: DA [1-(V / V+E)],
where DA is the distribution amount, V is the amount of Voluntary Contributions
and V+E is the amount of Voluntary Contributions plus the earnings attributable
thereto. A Participant withdrawing his or her other contributions prior to
attaining age 59-1/2, will be subject to a federal tax penalty to the extent
that the withdrawn amounts are includible in income. Any Participant in a
profit-sharing plan may, if permitted by the Employer in the Adoption Agreement,
withdraw all or any part of the fair market value of any of such vested
contributions, plus the investment earnings thereon, after attaining age 59-1/2
without separating from Service. Such Employer contributions may not have been
used to satisfy the antidiscrimination test of Code Section 401(k). Such
distributions shall not be eligible for redeposit to the Fund. A withdrawal
under this paragraph shall not prohibit such Participant from sharing in any
future Employer Contribution he or she would otherwise be eligible to share in.
A request to withdraw amounts pursuant to this paragraph must if applicable, be
consented to by the Participant's Spouse. The consent shall comply with the
requirements of paragraph 6.4 relating to immediate distributions.
6.9 HARDSHIP WITHDRAWAL
Unless otherwise specified by the Employer in the Adoption Agreement, a
Participant may not request a Hardship withdrawal prior to attaining age 59-1/2.
If permitted and the Participant has not attained age 59-1/2, the Participant
may be subject to a federal income tax penalty. Such request shall be in writing
to the Employer who shall have sole authority to authorize a hardship
withdrawal, pursuant to the rules below. Hardship withdrawals may include
Elective Deferrals regardless of when contributed and any earnings accrued and
credited thereon as of the last day of the Plan Year ending before July 1, 1989
and Employer related contributions including but not limited to Employer
Matching Contributions, plus
21
the investment earnings thereon to the extent vested. Qualified
Matching Contributions, Qualified Non-Elective Contributions and
Elective Deferrals reclassified as Voluntary Contributions plus the
investment earnings thereon are only available for hardship withdrawal
prior to age 59-1/2 to the extent that they were credited to the
Participant's Account as of the last day of the Plan Year ending prior
to July 1, 1989. The Plan Administrator may limit withdrawals to
Elective Deferrals and the earnings thereon as stipulated above.
Hardship withdrawals are subject to the Spousal consent requirements
contained in Code Sections 401(a)(11) and 417. Only the following
reasons are valid to obtain hardship withdrawal:
(a) medical expenses [within the meaning of Code Section 213(d)],
incurred or necessary for the medical care of the Participant, his or
her Spouse, children and other dependents,
(b) purchase (excluding mortgage payments) of the principal residence
for the Participant,
(c) payment of tuition and related educational expenses for the next
twelve (12) months of post-secondary education for the Participant, his
or her Spouse, children or other dependents, or
(d) the need to prevent eviction of the Employee from or a foreclosure
on the mortgage of, the Employee's principal residence.
Furthermore, the following conditions must be met in order for a withdrawal to
be authorized:
(e) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by
the Employer,
(f) all plans maintained by the Employer, other than flexible benefit
plans under Code Section 125 providing for current benefits, provide
that the Employee's Elective Deferrals and Voluntary Contributions will
be suspended for twelve months after the receipt of the Hardship
distribution,
(g) the distribution is not in excess of the amount of the immediate
and heavy financial need [(a) through (d) above], including amounts
necessary to pay any federal, state or local income tax or penalties
reasonably anticipated to result from the distribution, and
(h) all plans maintained by the Employer provide that an Employee may
not make Elective Deferrals for the Employee's taxable year immediately
following the taxable year of the hardship distribution in excess of
the applicable limit under Code Section 402(g) for such taxable year,
less the amount of such Employee's pre-tax contributions for the
taxable year of the hardship distribution.
If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived from Employer
contributions and the Participant may increase the nonforfeitable percentage in
the account:
(i) A separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
(j) At any relevant time the Participant's nonforfeitable portion of
the separate account will be equal to an amount ("X") determined by the
formula:
X = P [AB + (R * D)] - (R * D)
For purposes of applying the formula: "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance at the relevant time, "D" is the
amount of the distribution and "R" is the ratio of the account balance at the
relevant time to the account balance after distribution.
6.10 ORDER OF WITHDRAWALS
Unless the Participant directs otherwise, withdrawals shall be made:
(a) First, from amounts attributable to Voluntary Contributions;
(b) Second, from amounts attributable to Rollover Contributions;
(c) Third, from amounts attributable to Transfer Contributions;
(d) Fourth, from amounts attributable to Elective Deferrals;
(e) Fifth, from amounts attributable to Qualified Non-Elective
Contributions;
(f) Sixth, from amounts attributable to Qualified Matching
Contributions;
(g) Seventh, from amounts attributable to vested matching
Contributions; and
(h) Eighth, from amounts attributable to vested Discretionary
Contributions.
ARTICLE VII-- DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
All distributions made under the terms of this Plan must comply with the
provisions of Article VIII including, if applicable, the safe harbor provisions
thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS
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All distributions required under this Article shall be determined and made in
accordance with the minimum distribution requirements of Code Section 401(a)(9)
and the regulations thereunder, including the minimum distribution incidental
benefit rules found at Regulations Section 1.401(a)(9)-2. The entire interest of
a Participant must be distributed or begin to be distributed no later than the
Participant's Required Beginning Date. Life expectancy and joint and last
survivor life expectancy are computed by using the expected return multiples
found in Tables V and VI of Regulations Section 1.72-9.
In determining required distributions under the Plan, Participants and/or their
Spouse (Surviving Spouse) shall have the right to have their life expectancy
recalculated annually. Whether the Participant only or both the Participant and
Spouse's lives shall be recalculated shall be determined by the Participant.
7.3 LIMITS ON DISTRIBUTION PERIODS
As of the First Distribution Calendar Year, distributions if not made in a
single-sum, may only be made over one of the following periods (or a combination
thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
participant, or
(d) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated beneficiary.
7.4 REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE
(a) If a participant's benefit is to be distributed over (1) a period
not extending beyond the life expectancy of the Participant or the
joint life and last survivor expectancy of the Participant and the
Participant's Designated Beneficiary or (2) a period not extending
beyond the life expectancy of the Designated Beneficiary, the amount
required to be distributed for each calendar year, beginning with
distributions for the First Distribution Calendar Year, must at least
equal the quotient obtained by dividing the Participant's benefit by
the Applicable Life Expectancy.
(b) For calendar years beginning before 1989, if the Participant's
Spouse is not the Designated Beneficiary, the method of distribution
selected must have assured that at least 50% of the Present Value of
the amount available for distribution was to be paid within the life
expectancy of the Participant.
(c) For calendar years beginning after 1988, the amount to be
distributed each year, beginning with distributions for the First
Distribution Calendar Year shall not be less than the quotient obtained
by dividing the Participant's benefit by the lesser of (1) the
Applicable Life Expectancy or (2) if the Participant's Spouse is not
the Designated Beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of Regulations Section 1.401(a)(9)-2.
Distributions after the death of the Participant shall be distributed
using the Applicable Life Expectancy as the relevant divisor without
regard to Regulations Section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's First
Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for other calendar
years, including the minimum distribution for the Distribution Calendar
Year in which the Participant's Required Beginning Date occurs, must be
made on or before December 31 of that Distribution Calendar Year.
(e) If the Participant's benefit is distributed in the form of an
annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Code Section
401(a)(9) and the Regulations thereunder.
(f) For purposes of determining the amount of the required distribution
for each Distribution Calendar Year, the account balance to be used is
the account balance determined as of the last valuation preceding the
Distribution Calendar Year. This balance will be increased by the
amount of any contributions or forfeitures allocated to the account
balance after the valuation date in such preceding calendar year. Such
balance will also be decreased by distributions made after the
Valuation Date in such preceding Calendar Year.
(g) For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the First Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the Required Beginning
Date, the amount of the minimum distribution made in the second
Distribution Calendar Year shall be treated as if it had been made in
the immediately preceding Distribution Calendar Year.
7.5 REQUIRED BEGINNING DATE
(a) General Rule. The Required Beginning Date of a Participant is the
first day of April of the calendar year following the calendar year in
which the Participant attains age 70-1/2.
23
(b) Transitional Rules. The Required Beginning Date of a Participant
who attains age 70-1/2 before 1988, shall be determined in accordance
with (1) or (2) below:
(1) Non-5-percent owners. The Required Beginning Date of a
Participant who is not a 5-percent owner is the first day of
April of the calendar year following the calendar year in
which the later of retirement or attainment of age 70-1/2
occurs. In the case of a Participant who is not a 5-percent
owner who attains age 70-1/2 during 1988 and who has not
retired as of January 1, 1989, the Required Beginning Date is
April 1, 1990.
(2) 5-percent owners. The Required Beginning Date of a
Participant who is a 5-percent owner during any year beginning
after 1979, is the first day of April following the later of:
(i) the calendar year in which the Participant
attains age 70-1/2, or
(ii) the earlier of the calendar year with or within
which ends the plan year in which the Participant
becomes a 5-percent owner, or the calendar year in
which the Participant retires.
(c) A Participant is treated as a 5-percent owner for purposes of this
Paragraph if such Participant is a 5-percent owner as defined in Code
Section 416(i) (determined in accordance with Code Section 416 but
without regard to whether the Plan is Top-Heavy) at any time during the
Plan Year ending with or within the calendar year in which such Owner
attains age 66-1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under this
paragraph, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
7.6 TRANSITIONAL RULE
(a) Notwithstanding the other requirements of this Article and subject
to the requirements of Article VIII, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee, including a
5-percent owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the Trust is one which would not have
disqualified such Trust under Code Section 401(a)(9) as in
effect prior to amendment by the Deficit Reduction Act of
1984.
(2) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
Trust is being distributed or, if the Employee is deceased, by
a beneficiary of such Employee.
(3) Such designation was in writing, was signed by the
Employee or the beneficiary, and was made before 1984.
(4) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(5) The method of distribution designated by the Employee or
the beneficiary specifies the time at which distribution will
commence, the period over which distributions will be made,
and in the case of any distribution upon the Employee's death,
the beneficiaries of the Employee listed in order of priority.
(b) A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be
made upon the death of the Employee.
(c) For any distribution which commences before 1984, but continues
after 1983, the Employee or the beneficiary, to whom such distribution
is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method
of distribution was specified in writing and the distribution satisfies
the requirements in subparagraphs (a)(1) and (5) above.
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of Code Section 401(a)(9) and the regulations
thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the
end of the calendar year following the calendar year in which the
revocation occurs the total amount not yet distributed which would have
been required to have been distributed to satisfy Code Section
401(a)(9) and the regulations thereunder, but for the section 242(b)(2)
election of the Tax Equity and Fiscal Responsibility Act of 1982. For
calendar years beginning after 1988, such distributions must meet the
minimum distribution incidental benefit requirements in section
1.401(a)(9)-2 of the Income Tax Regulations. Any changes in the
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another beneficiary (one
not named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made
24
under the designation, directly or indirectly (for example, by altering
the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in
Q&A J-2 and Q&A J-3 of the regulations shall apply.
7.7 DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT
Each Participant shall file a written designation of beneficiary with the
Employer upon qualifying for participation in this Plan. Such designation shall
remain in force until revoked by the Participant by filing a new beneficiary
form with the Employer. The Participant may elect to have a portion of his or
her account balance invested in an insurance contract. If an insurance contract
is purchased under the Plan, the Trustee must be named as Beneficiary under the
terms of the contract. However, the Participant shall designate a Beneficiary to
receive the proceeds of the contract after settlement is received by the
Trustee. Under a profit-sharing plan satisfying the requirements of paragraph
8.7, the Designated Beneficiary shall be the Participant's Surviving Spouse, if
any, unless such Spouse properly consents otherwise.
7.8 NONEXISTENCE OF BENEFICIARY
Any portion of the amount payable hereunder which is not disposed of because of
the Participant's or former Participant's failure to designate a beneficiary, or
because all of the Designated Beneficiaries predeceased the Participant, shall
be paid to his or her Spouse. If the Participant had no Spouse at the time of
death, payment shall be made to the personal representative of his or her estate
in a lump sum.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH
If the Participant dies after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
Participant's death.
7.10 DISTRIBUTION BEGINNING AFTER DEATH
If the Participant dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be completed by December
31 of the calendar year containing the fifth anniversary of the Participant's
death except to the extent that an election is made to receive distributions in
accordance with (a) or (b) below:
(a) If any portion of the Participant's interest is payable to a
Designated Beneficiary, distributions may be made over the life or over
a period certain not greater than the life expectancy of the Designated
Beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Participant died;
(b) If the Designated Beneficiary is the Participant's surviving
Spouse, the date distributions are required to begin in accordance with
(a) above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the
participant died or (2) December 31 of the calendar year in which the
Participant would have attained age 70-1/2.
If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's Designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the participant. If the Participant has no
Designated Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, then distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
For purposes of this paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions of this
paragraph with the exception of paragraph (b) therein, shall be applied as if
the Surviving Spouse were the Participant. For the purposes of this paragraph
and paragraph 7.9, distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date (or, if the preceding
sentence is applicable, the date distribution is required to begin to the
Surviving Spouse). If distribution in the form of an annuity described in
paragraph 7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is payable to
either a minor or an individual who has been declared incompetent, the benefits
shall be paid to the legally appointed guardian for the benefit of said minor or
incompetent individual, unless the court which appointed the guardian has
ordered otherwise.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
(a) Notwithstanding any other provision of the Plan, Excess Elective
Deferrals plus any income and minus any loss allocable thereto, shall
be distributed no later than April 15, 1988, and each April 15
thereafter, to Participants to whose accounts Excess Elective Deferrals
were allocated for the preceding taxable year, and who claim Excess
Elective Deferrals for
25
such taxable year. Excess Elective Deferrals shall be treated as Annual
Additions under the plan, unless such amounts are distributed no later
than the first April 15th following the close of the Participant's
taxable year. A Participant is deemed to notify the Plan Administrator
of any Excess Elective Deferrals that arise by taking into account only
those Elective Deferrals made to this Plan and any other plans of this
Employer.
(b) Furthermore, a Participant who participates in another plan
allowing Elective Deferrals may assign to this Plan any Excess Elective
Deferrals made during a taxable year of the Participant, by notifying
the Plan Administrator of the amount of the Excess Elective Deferrals
to be assigned. The Participant's claim shall be in writing; shall be
submitted to the Plan Administrator not later than March 1 of each
year; shall specify the amount of the Participant's Excess Elective
Deferrals for the preceding taxable year; and shall be accompanied by
the Participant's written statement that if such amounts are not
distributed, such Excess Elective Deferrals, when added to amounts
deferred under other plans or arrangements described in Code Sections
401(k), 408(k) [Simplified Employee Pensions], or 403(b) [annuity
programs for public schools and charitable organizations] will exceed
the $7,000 limit as adjusted under Code Section 415(d) imposed on the
Participant by Code Section 402(g) for the year in which the deferral
occurred.
(c) Excess Elective Deferrals shall be adjusted for any income or loss
up to the end of the taxable year, during which such excess was
deferred. Income or loss will be calculated under the method used to
calculate investment earnings and losses elsewhere in the Plan or any
other reasonable method. Whichever method is selected shall be used for
all Participants and for all corrective distributions made from the
Plan for the Plan Year.
(d) If the Participant receives a return of his or her Elective
Deferrals, the amount of such contributions which are returned must be
brought into the Employee's taxable income.
7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS
(a) Notwithstanding any other provision of this Plan, Excess
Contributions, plus any income and minus any loss allocable thereto,
shall be distributed no later than the last day of each Plan Year to
Participants to whose accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are distributed
more than 2-1/2 months after the last day of the Plan Year in which
such excess amounts arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly Compensated
Employees on the basis of the respective portions of the Excess
Contributions attributable to each of such Employees. Excess
Contributions of Participants who are subject to the Family Member
aggregation rules of Code Section 414(q)(6) shall be allocated among
the Family Members in proportion to the Elective Deferrals (and amounts
treated as Elective Deferrals) of each Family Member that is combined
to determine the Average Deferral Percentage.
(b) Excess Contributions (including the amounts recharacterized) shall
be treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or loss up to
the end of the Plan Year. Income or loss will be calculated under the
method used to calculate investment earnings and losses elsewhere in
the Plan.
(d) Excess Contributions shall be distributed from the Participant's
Elective Deferral account and Qualified Matching Contribution account
(if applicable) in proportion to the Participant's Elective Deferrals
and Qualified Matching Contributions (to the extent used in the ADP
test) for the Plan Year. Excess Contributions shall be distributed from
the Participant's Qualified Non-Elective Contribution account only to
the extent that such Excess Contributions exceed the balance in the
Participant's Elective Deferral account and Qualified Matching
Contribution account.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if forfeitable, or if not forfeitable, distributed
no later than the last day of each Plan Year to Participants to whose
accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions shall be allocated
to Participants who are subject to the Family Member aggregation rules
of Code Section 414(q)(6) in the manner prescribed by the regulations.
If such Excess Aggregate Contributions are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the plan.
26
(b) Excess Aggregate Contributions shall be adjusted for any income or
loss up to the end of the Plan Year. The income or loss allocable to
Excess Aggregate Contributions is the sum of income or loss for the
Plan Year allocable to the Participant's Voluntary Contribution
account, Matching Contribution account (if any, and if all amounts
therein are not used in the ADP test) and, if applicable, Qualified
Non-Elective Contribution account and Elective Deferral account. Income
or loss will be calculated under the method used to calculate
investment earnings and losses elsewhere in the Plan.
(c) Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts of non-Highly Compensated Employees or
applied to reduce Employer contributions, as elected by the employer in
the Adoption Agreement.
(d) Excess Aggregate Contributions shall be forfeited if such amount is
not vested. If vested, such excess shall be distributed in the
following order:
(i) First, from the Participant's Voluntary Contribution
account;
(ii) Second, from the Participant's Matching Contribution
account; and
(iii) Third, from the Participant's Qualified Matching
Contribution account (if applicable).
ARTICLE VIII--JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS
The provisions of this Article shall apply to any Participant who is credited
with at least one Hour of Service with the Employer on or after August 23, 1984
and such other Participants as provided in paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY
Unless an optional form of benefit is selected pursuant to a Qualified Election
within the 90-day period ending on the Annuity Starting Date, a married
Participant's Vested Account Balance will be paid in the form of a Qualified
Joint and Survivor Annuity and an unmarried Participant's Vested Account Balance
will be paid in the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the Early Retirement Age under the
Plan.
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY
Unless an optional form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before benefits have
commenced then the Participant's vested account balance shall be paid in the
form of an annuity for the life of the Surviving Spouse. The Surviving Spouse
may elect to have such annuity distributed within a reasonable period after the
Participant's death.
A Participant who does not meet the age 35 requirement set forth in the Election
Period as of the end of any current Plan Year may make a special qualified
election to waive the qualified Pre-retirement Survivor Annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age 35. Such election shall not be
valid unless the Participant receives a written explanation of the Qualified
Pre-retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-retirement Survivor
Annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this Article.
8.4 QUALIFIED ELECTION
A Qualified Election is an election to either waive a Qualified Joint and
Survivor Annuity or a qualified pre-retirement survivor annuity. Any such
election shall not be effective unless:
(a) the Participant's Spouse consents in writing to the election;
(b) the election designates a specific beneficiary, including any class
of beneficiaries or any contingent beneficiaries, which may not be
changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the election; and
(d) the Spouse's consent is witnessed by a Plan representative or
notary public.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
shall not be effective unless the election designates a form of benefit payment
which may not be changed without spousal consent (or the Spouse expressly
permits designations by the Participant without any further spousal consent). If
it is established to the satisfaction of the Plan Administrator that there is no
Spouse or that the Spouse cannot be located, a waiver will be deemed a Qualified
Election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent
27
that permits designations by the Participant without any requirement of further
consent by such Spouse must acknowledge that the Spouse has the right to limit
consent to a specific beneficiary, and a specific form of benefit where
applicable, and that the Spouse voluntarily elects to relinquish either or both
of such rights. A revocation of a prior waiver may be made by a Participant
without the consent of the Spouse at any time before the commencement of
benefits. The number of revocations shall not be limited. No consent obtained
under this provision shall be valid unless the Participant has received notice
as provided in paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY
In the case of a Qualified Joint and Survivor Annuity, the Plan Administrator
shall, no less than 30 days and no more than 90 days prior to the Annuity
Starting date, provide each Participant a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity;
(b) the Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY
In the case of a qualified pre-retirement survivor annuity as described in
paragraph 8.3, the Plan Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of the qualified
pre-retirement survivor annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the requirements of paragraph
8.5 applicable to a Qualified Joint and Survivor Annuity. The applicable period
for a Participant is whichever of the following periods ends last:
(a) the period beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age 35;
(b) a reasonable period ending after the individual becomes a
Participant;
(c) a reasonable period ending after this Article first applies to the
Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from Service in the
case of a Participant who separates from Service before attaining age
35.
For purposes of applying the preceding paragraph, a reasonable period ending
after the events described in (b) and (c) is the end of the two-year period
beginning one-year prior to the date the applicable event occurs, and ending
one-year after that date. In the case of a Participant who separates from
Service before the Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior to separation and
ending one year after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such Participant shall
be re-determined.
8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLANS
(a) This paragraph shall apply to a Participant in a profit-sharing
plan, and to any distribution, made on or after the first day of the
first plan year beginning after 1988, from or under a separate account
attributable solely to Qualified Voluntary contributions, as maintained
on behalf of a Participant in a money purchase pension plan, (including
a target benefit plan) if the following conditions are satisfied:
(1) the Participant does not or cannot elect payments in the
form of a life annuity; and
(2) on the death of a Participant, the Participant's Vested
Account Balance will be paid to the Participant's Surviving
Spouse, but if there is no Surviving Spouse, or if the
Surviving Spouse has consented in a manner conforming to a
Qualified Election, then to the Participant's Designated
Beneficiary.
The Surviving Spouse may elect to have distribution of the Vested Account
Balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of the
Plan governing the adjustment of account balances for other types of
distributions. These safe-harbor rules shall not be operative with respect to a
Participant in a profit-sharing plan if that plan is a direct or indirect
transferee of a Defined Benefit Plan, money purchase plan, a target benefit
plan, stock bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements of Code Section 401(a)(11) and Code Section 417, and would
therefore have a Qualified Joint and Survivor Annuity as its normal form of
benefit.
(b) The Participant may waive the spousal death benefit described in
this paragraph at any time provided that no such waiver shall be
effective unless
28
it satisfies the conditions (described in paragraph 8.4) that would
apply to the Participant's waiver of the Qualified Pre-Retirement
Survivor Annuity.
(c) If this paragraph 8.7 is operative, then all other provisions of
this Article other than paragraph 8.8 are inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES
Special transition rules apply to Participants who were not receiving benefits
on August 23, 1984.
(a) Any living Participant not receiving benefits on August 23, 1984,
who would otherwise not receive the benefits prescribed by the previous
paragraphs of this Article, must be given the opportunity to elect to
have the prior paragraphs of this Article apply if such Participant is
credited with at least one Hour of Service under this Plan or a
predecessor Plan in a Plan Year beginning on or after January 1, 1976
and such Participant had at least 10 Years of Service for vesting
purposes when he or she separated from Service.
(b) Any living Participant not receiving benefits on August 23, 1984,
who was credited with at least one Hour of Service under this Plan or a
predecessor Plan on or after September 2, 1974, and who is not
otherwise credited with any Service in a Plan Year beginning on or
after January 1, 1976, must be given the opportunity to have his or her
benefits paid in accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a) and (b)
above] must be afforded to the appropriate Participants during the
period commencing on August 23, 1984 and ending on the date benefits
would otherwise commence to said Participants.
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY
Any Participant who has elected pursuant to paragraph 8.8(b) and any Participant
who does not elect under paragraph 8.8(a) or who meets the requirements of
paragraph 8.8(a), except that such Participant does not have at least 10 years
of vesting Service when he or she separates from Service, shall have his or her
benefits distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the form of a
life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age, or
(2) dies on or after Normal Retirement Age while still working
for the Employer, or
(3) begins to receive payments on or after the Qualified Early
Retirement Age, or
(4) separates from Service on or after attaining Normal
Retirement (or the Qualified Early Retirement Age) and after
satisfying the eligibility requirements for the payment of
benefits under the Plan and thereafter dies before beginning
to receive such benefits, then such benefits will be received
under this Plan in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during
the Election Period. The Election Period must begin at least 6
months before the Participant attains Qualified Early
Retirement Age and end not more than 90 days before the
commencement of benefits. Any election will be in writing and
may be changed by the Participant at any time.
(b) Election of Early Survivor Annuity. A Participant who is employed
after attaining the Qualified Early Retirement Age will be given the
opportunity to elect, during the Election Period, to have a survivor
annuity payable on death. If the Participant elects the survivor
annuity, payments under such annuity must not be less than the payments
which would have been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day before his
or her death. Any election under this provision will be in writing and
may be changed by the Participant at any time. The Election Period
begins on the later of:
(1) the 90th day before the Participant attains the Qualified
Early Retirement Age, or
(2) the date on which participation begins, and ends on the
date the Participant terminates employment.
8.10 ANNUITY CONTRACTS
Any annuity contract distributed under this Plan must be nontransferable. The
terms of any annuity contract purchased and distributed by the Plan to a
Participant or Spouse shall comply with the requirements of this Plan.
ARTICLE IX--VESTING
9.1 EMPLOYEE CONTRIBUTIONS
A Participant shall always have a 100% vested and nonforfeitable interest in his
or her Elective Deferrals, Voluntary Contributions, Qualified Voluntary
Contributions, Rollover Contributions, and Transfer Contributions plus the
earnings thereon. No forfeiture of
29
Employer related contributions (including any minimum contributions made under
paragraph 14.2) will occur solely as a result of an Employee's withdrawal of any
Employee contributions.
9.2 EMPLOYER CONTRIBUTIONS
A Participant shall acquire a vested and nonforfeitable interest in his or her
account attributable to Employer contributions in accordance with the table
selected in the Adoption Agreement, provided that if a Participant is not
already fully vested, he or she shall become so upon attaining Normal Retirement
Age, Early Retirement Age, on death prior to normal retirement, on retirement
due to Disability, or on termination of the Plan. If no table is selected in the
Adoption Agreement, an Employee shall acquire a vested and nonforfeitable
interest in his or her account attributable to Employer contributions in
accordance with the following percentages: 20% after 2 Years Of Service, 20%
additional for each of the following Years Of Service, reaching 100% after 6
Years Of Service with the Employer.
9.3 COMPUTATION PERIOD
The computation period for purposes of determining Years of Service and Breaks
in Service for purposes of computing a Participant's nonforfeitable right to his
or her account balance derived from Employer contributions shall be the Plan
Year. In the event a former Participant with no vested interest in his or her
Employer contribution account requalifies for participation in the Plan after
incurring a Break in Service, such Participant shall be credited for vesting
with all pre-break and post-break Service.
9.4 REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE
The account balance of such Participant shall consist of any undistributed
amount in his or her account as of the date of re-employment plus any future
contributions added to such account plus the investment earnings on the account.
The vested account balance of such Participant shall be determined by
multiplying the Participant's account balance (adjusted to include any
distribution or redeposit made under paragraph 6.3) by such Participant's vested
percentage. All Service of the Participant, both prior to and following the
break, shall be counted when computing the Participant's vested percentage.
9.5 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE
If such Participant is not fully vested upon re-employment, a new account shall
be established for such Participant to separate his or her deferred vested and
nonforfeitable account, if any, from the account to which new allocations will
be made. The Participant's deferred account to the extent remaining shall be
fully vested and shall continue to share in earnings and losses of the Fund.
When computing the Participant's vested portion of the new account, all
pre-break and post-break Service shall be counted. However, notwithstanding this
provision, no such former Participant who has had five consecutive one-year
Breaks in Service shall acquire a larger vested and nonforfeitable interest in
his or her prior account balance as a result of requalification hereunder.
9.6 CALCULATING VESTED INTEREST
A Participant's vested and nonforfeitable interest shall be calculated by
multiplying the fair market value of his or her account attributable to Employer
contributions on the Valuation Date preceding distribution by the decimal
equivalent of the vested percentage as of his or her termination date. The
amount attributable to Employer contributions for purposes of the calculation
includes amounts previously paid out pursuant to paragraph 6.3 and not repaid if
the non-vested portion has not been forfeited. The Participant's vested and
nonforfeitable interest, once calculated above, shall be reduced to reflect
those amounts previously paid out to the Participant and not repaid by the
Participant. The Participant's vested and nonforfeitable interest so determined
shall continue to share in the investment earnings and any increase or decrease
in the fair market value of the Fund up to the Valuation Date preceding or
coinciding with payment.
9.7 FORFEITURES
Any balance in the account of a Participant who has separated from Service to
which he or she is not entitled under the foregoing provisions, shall be
forfeited and applied as provided in the Adoption Agreement. A forfeiture may
only occur if the Participant has received a distribution from the Plan or if
the Participant has incurred five consecutive 1-year Breaks in Service.
Furthermore, a Highly Compensated Employee's Matching Contributions may be
forfeited, even if vested, if the contributions to which they relate are Excess
Deferrals, Excess Contributions or Excess Aggregate Contributions.
9.8 AMENDMENT OF VESTING SCHEDULE
No amendment to the Plan shall have the effect of decreasing a Participant's
vested interest determined without regard to such amendment as of the later of
the date such amendment is adopted or the date it becomes effective. Further, if
the vesting schedule of the Plan is amended, or the Plan is amended in any way
that directly or indirectly affects the computation of any Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a Top-Heavy vesting schedule, each Participant with at least
three Years of Service with the Employer may elect, within a reasonable period
after the adoption of the amendment,
30
to have his or her nonforfeitable percentage computed under the Plan without
regard to such amendment. For Participants who do not have at least one Hour of
Service in any Plan Year beginning after 1988, the preceding sentence shall be
applied by substituting "Five Years of Service" for "Three Years of Service"
where such language appears. The period during which the election may be made
shall commence with the date the amendment is adopted and shall end on the later
of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of the
amendment by the Employer or the Trustee. If the Trustee is asked to so
notify, the Fund will be charged for the costs thereof.
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Participant's accrued benefit. Notwithstanding the preceding
sentence, a Participant's account balance may be reduced to the extent permitted
under section 412(c)(8) of the Code (relating to financial hardships). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment, shall be
treated as reducing an accrued benefit.
9.9 SERVICE WITH CONTROLLED GROUPS
All Years of Service with other members of a controlled group of corporations
[as defined in Code Section 414(b)], trades or businesses under common control
[as defined in Code Section 414(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be considered for purposes of
determining a Participant's nonforfeitable percentage.
ARTICLE X--LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION TESTING
10.1 PARTICIPATION IN THIS PLAN ONLY
If the Participant does not participate in and has never participated in another
qualified plan, a Welfare Benefit Fund (as defined in paragraph 1.89) or an
individual medical account, as defined in Code Section 415(l)(2), or a
Simplified Employee Pension Plan, as defined in Code Section 408(k), maintained
by the adopting Employer, which provides an Annual Addition as defined in
paragraph 1.4, the amount of Annual Additions which may be credited to the
Participant's account for any Limitation Year will not exceed the lesser of the
Maximum Permissible Amount or any other limitation contained in this Plan. If
the Employer contribution that would otherwise be contributed or allocated to
the Participant's account would cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount. Prior to determining the
Participant's actual Compensation for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on the basis of a
reasonable estimate of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year will be determined on the basis of
the Participant's actual Compensation for the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS
If, pursuant to paragraph 10.1 or as a result of the allocation of forfeitures,
there is an Excess Amount, the excess will be disposed of under one of the
following methods as determined in the Adoption Agreement. If no election is
made in the Adoption Agreement then method "(a)" below shall apply.
(a) Suspense Account Method
(1) Any Elective Deferrals and nondeductible Employee
Voluntary Contributions, to the extent they would reduce the
Excess Amount, will be returned to the Participant;
(2) If after the application of paragraph (1) an Excess Amount
still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the Excess Amount in the
Participant's account will be used to reduce Employer
contributions (including any allocation of forfeitures) for
such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(3) If after the application of paragraph (1) an Excess Amount
still exists, and the Participant is not covered by the Plan
at the end of the Limitation Year, the Excess Amount will be
held unallocated in a suspense account. The suspense account
will be applied to reduce future Employer contributions
(including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary;
(4) If a suspense account is in existence at any time during
the Limitation Year pursuant to this
31
paragraph, it will not participate in the allocation of
investment gains and losses. If a suspense account is in
existence at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any Employer
contributions or any Employee Contributions may be made to the
Plan for that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
(b) Spillover Method
(1) Any Elective Deferrals and nondeductible Employee
Voluntary Contributions, to the extent they would reduce the
Excess Amount, will be returned to the Participant.
(2) Any Excess Amount which would be allocated to the account
of an individual Participant under the Plan's allocation
formula will be reallocated to other Participants in the same
manner as other Employer contributions. No such reallocation
shall be made to the extent that it will result in an Excess
Amount being created in such Participant's own account.
(3) To the extent that amounts cannot be reallocated under (1)
above, the suspense account provisions of (a) above will
apply.
10.3 PARTICIPATION IN THIS PLAN AND ANOTHER QUALIFIED MASTER AND PROTOTYPE
DEFINED CONTRIBUTION PLAN, WELFARE BENEFIT FUND, INDIVIDUAL MEDICAL ACCOUNT OR
SIMPLIFIED EMPLOYEE PENSION PLAN MAINTAINED BY THE EMPLOYER
The Annual Additions which may be credited to a Participant's account under this
Plan for any Limitation Year will not exceed the Maximum Permissible Amount
reduced by the Annual Additions credited to a Participant's account under the
other qualified Master or Prototype Defined Contribution Plans, Welfare Benefit
Funds, and individual medical accounts as defined in Code Section 415(l)(2), or
Simplified Employee Pension Plan, maintained by the Employer, which provide an
Annual Addition as defined in paragraph 1.4 for the same Limitation Year. If the
Annual Additions, with respect to the Participant under other Defined
Contribution Plans and Welfare Benefit Funds maintained by the Employer, are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's account under
this Plan would cause the Annual Additions for the Limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced so that the
Annual Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with respect to
the Participant under such other Defined Contribution Plans and Welfare Benefit
Funds in the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to the Participant's account
under this Plan for the Limitation Year. Prior to determining the Participant's
actual Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph 10.1. As soon as administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS
If, pursuant to paragraph 10.3 or as a result of forfeitures, a Participant's
Annual Additions under this Plan and such other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed to consist of the
Annual Additions last allocated except that Annual Additions attributable to a
Simplified Employee Pension Plan will be deemed to have been allocated first,
followed by Annual Additions attributable to a Welfare Benefit Fund or
Individual Medical Account as defined in Code Section 415(l)(2) regardless of
the actual allocation date. If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this Plan will be the product of:
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for the
Limitation Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant
for the Limitation Year as of such date under this and all the
other qualified Master or Prototype Defined Contribution
Plans.
Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED CONTRIBUTION PLAN WHICH
IS NOT A QUALIFIED MASTER OR PROTOTYPE PLAN
If the Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer which is not a qualified Master or Prototype Plan,
Annual Additions which may be credited to the Participant's account under this
Plan for any Limitation Year will be limited in accordance with paragraphs 10.3
and 10.4 as
32
though the other plan were a Master or Prototype Plan, unless the Employer
provides other limitations in the Adoption Agreement.
10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN
If the Employer maintains, or at any time maintained, a qualified Defined
Benefit Plan covering any Participant in this Plan, the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction will not
exceed 1.0 in any Limitation Year. For any Plan Year during which the Plan is
Top-Heavy, the Defined Benefit and Defined Contribution Plan Fractions shall be
calculated in accordance with Code Section 416(h). The Annual Additions which
may be credited to the Participant's account under this Plan for any Limitation
Year will be limited in accordance with the provisions set forth in the Adoption
Agreement.
10.7 AVERAGE DEFERRAL PERCENTAGE (ADP) TEST
With respect to any Plan Year, the Average Deferral Percentage for Participants
who are Highly Compensated Employees and the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees must satisfy one of the
following tests:
(a) Basic Test - The Average Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year is not more than
1.25 times the Average Deferral Percentage for Participants who are
non-Highly Compensated Employees for the same Plan Year, or
(b) Alternative Test - The Average Deferral Percentage for Participants
who are Highly Compensated Employees for the Plan Year does not exceed
the Average Deferral Percentage for Participants who are non-Highly
Compensated Employees for the same Plan Year by more than 2 percentage
points provided that the Average Deferral Percentage for Participants
who are Highly Compensated Employees is not more than 2.0 times the
Average Deferral Percentage for Participants who are non-Highly
Compensated Employees.
10.8 SPECIAL RULES RELATING TO APPLICATION OF ADP TEST
(a) The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP test) allocated to his or her
accounts under two or more arrangements described in Code Section
401(k), that are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both) were made under a single arrangement. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that
have different Plan Years, all cash or deferred arrangements ending
with or within the same calendar year shall be treated as a single
arrangement.
(b) In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b), only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan,
then this Section shall be applied by determining the Actual Deferral
Percentage of Employees as if all such plans were a single plan. For
Plan Years beginning after 1989, plans may be aggregated in order to
satisfy Code Section 401(k) only if they have the same Plan Year.
(c) For purposes of determining the Actual Deferral Percentage of a
Participant who is a 5-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test)
and Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Non-Elective Contributions and
Qualified Matching Contributions, or both) for the Plan Year of Family
Members as defined in paragraph 1.36 of this Plan. Family Members, with
respect to such Highly Compensated Employees, shall be disregarded as
separate Employees in determining the ADP both for Participants who are
non-Highly Compensated Employees and for Participants who are Highly
Compensated Employees. In the event of repeal of the family aggregation
rules under Code Section 414(q)(6), all applications of such rules
under this Plan will cease as of the effective date of such repeal.
(d) For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-Elective Contributions and Qualified Matching
Contributions must be made before the last day of the twelve-month
period immediately following the Plan Year to which contributions
relate.
(e) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in
such test.
(f) The determination and treatment of the Actual Deferral Percentage
amounts of any Participant shall
33
satisfy such other requirements as may be prescribed by the Secretary
of the Treasury.
10.9 AVERAGE CONTRIBUTION PERCENTAGE (ACP) TEST
If the Employer makes Matching Contributions or if the Plan allows Employees to
make Voluntary Contributions the Plan must meet additional nondiscrimination
requirements provided under Code Section 401(m). If Employee Contributions
(including any Elective Deferrals recharacterized as Voluntary Contributions)
are made pursuant to this Plan, then in addition to the ADP test referenced in
paragraph 10.7, the Average Contribution Percentage test is also applicable. The
Average Contribution Percentage for Participants who are Highly Compensated
Employees for each Plan Year and the Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(a) Basic Test - The Average Contribution Percentage for Participants
who are Highly Compensated Employees for the Plan Year shall not exceed
the Average Contribution Percentage for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(b) Alternative Test - The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year multiplied by two (2), provided that
the Average Contribution Percentage for Participants who are Highly
Compensated Employees does not exceed the Average Contribution
Percentage for Participants who are non-Highly Compensated Employees by
more than two (2) percentage points.
10.10 SPECIAL RULES RELATING TO APPLICATION OF ACP TEST
(a) If one or more Highly Compensated Employees participate in both a
cash or deferred arrangement and a plan subject to the ACP test
maintained by the Employer and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ADP or ACP of those Highly Compensated
Employees who also participate in a cash or deferred arrangement will
be reduced (beginning with such Highly Compensated Employee whose ADP
or ACP is the highest) as set forth in the Adoption Agreement so that
the limit is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts is reduced shall be treated
as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to
meet the ADP and ACP tests. Multiple use does not occur if both the ADP
and ACP of the Highly Compensated Employees does not exceed 1.25
multiplied by the ADP and ACP of the non-Highly Compensated Employees.
(b) For purposes of this Article, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to
have Contribution Percentage Amounts allocated to his or her account
under two or more plans described in Code Section 401(a), or
arrangements described in Code Section 401(k) that are maintained by
the Employer, shall be determined as if the total of such Contribution
Percentage Amounts was made under each Plan. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that
have different plan years, all cash or deferred arrangements ending
with or within the same calendar year shall be treated as a single
arrangement.
(c) In the event that this Plan satisfies the requirements of Code
Sections 401(a)(4), 401(m), or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this Plan,
then this Section shall be applied by determining the Contribution
Percentage of Employees as if all such plans were a single plan. For
plan years beginning after 1989, plans may be aggregated in order to
satisfy Code Section 401(m) only if the aggregated plans have the same
Plan Year.
(d) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten most
highly-paid, Highly Compensated Employees, the Contribution Percentage
Amounts and Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation for the Plan Year of
Family Members as defined in Paragraph 1.36 of this Plan. Family
Members, with respect to Highly Compensated Employees, shall be
disregarded as separate Employees in determining the Contribution
Percentage both for Participants who are non-Highly Compensated
Employees and for Participants who are Highly Compensated Employees. In
the event of repeal of the family aggregation rules under Code Section
414(q)(6), all applications of such rules under this Plan will cease as
of the effective date of such repeal.
(e) For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the Plan
Year in
34
which contributed to the trust. Matching Contributions and Qualified
Non-Elective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period beginning on the
day after the close of the Plan Year.
(f) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in
such test.
(g) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not be used to satisfy
the ACP test.
ARTICLE XI -- ADMINISTRATION
11.1 PLAN ADMINISTRATOR
The Employer shall be the named fiduciary and Plan Administrator. These duties
shall include:
(a) appointing the Plan's attorney, accountant, actuary, or any other
party needed to administer the Plan,
(b) directing the Trustee with respect to payments from the Fund,
(c) communicating with Employees regarding their participation and
benefits under the Plan, including the administration of all claims
procedures,
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other governmental agency,
(e) reviewing and approving any financial reports, investment reviews,
or other reports prepared by any party appointed by the Employer under
paragraph (a),
(f) establishing a funding policy and investment objectives consistent
with the purposes of the Plan and the Employee Retirement Income
Security Act of 1974, and
(g) construing and resolving any question of Plan interpretation. The
Plan Administrator's interpretation of Plan provisions including
eligibility and benefits under the Plan is final, and unless it can be
shown to be arbitrary and capricious will not be subject to "de novo"
review.
11.2 TRUSTEE
The Trustee shall only be responsible for maintaining the trust account(s) in
accordance with applicable laws on behalf of the Employer. The Trustee's duties
shall include:
(a) receiving contributions under the terms of the Plan, but not
determining the amount or enforcing the payment thereof,
(b) making distributions from the Fund in accordance with written
instructions received from an authorized representative of the
Employer, and
(c) keeping accurate and detailed records of all contributions,
receipts, investments, distributions, disbursements and all other
transactions with respect to each account (in the case of Employee
Investment Direction) or the Fund (in the case of Employer Investment
Direction). Periodically (not less than annually), the Trustee shall
provide a transcript of all activity in the account or in the Fund
(which may consist of regularly issued statements from the Service
Company). In the case of Employee Investment Direction, each such
transcript will be provided to the Participant. In the case of Employer
Investment Direction, each such transcript will be provided to the
Employer. Each such transcript shall be the sole accounting required of
the Trustee. Unless the Participant or Employer files a written
objection to the transcript within 60 days following the date it is
furnished, he shall be deemed to have consented to the accounting, and
the Trustee and Service Company shall be forever released and
discharged from all liability and accountability to anyone with respect
to its acts, transactions, duties, obligations or responsibilities as
shown in, or reflected by the transcript.
(d) employing such agents, attorneys or other professionals as the
Trustee may deem necessary or advisable in the performance of its
duties.
The Trustee's duties shall be limited to those described above. The Employer
shall be responsible for any other administrative duties required under the Plan
or by applicable law.
11.3 ADMINISTRATIVE FEES AND EXPENSES
All reasonable costs, charges and expenses incurred by the Trustee and Service
Company in connection with the administration of the Fund and all reasonable
costs, charges and expenses incurred by the Plan Administrator in connection
with the administration of the Plan (including fees for legal services rendered
to the Trustee and Service Company or Plan Administrator) may be paid by the
Employer, but if not paid by the Employer when due, shall be paid from the Fund.
Such reasonable compensation to the Trustee and Service Company as
35
may be agreed upon from time to time between the Employer and the Trustee and
Service Company and such reasonable compensation to the Plan Administrator as
may be agreed upon from time to time between the Employer and Plan Administrator
and the compensation of the Service Company in accordance with its fee schedule
as in effect at the applicable time, may be paid by the Employer, but if not
paid by the Employer when due shall be paid by the Fund. The Trustee and Service
Company shall have the right to liquidate trust assets to cover its fees.
Notwithstanding the foregoing, no compensation other than reimbursement for
expenses shall be paid to a Plan Administrator who is the Employer or a
full-time Employee of the Employer. In the event any part of the Trust becomes
subject to tax, all taxes incurred will be paid from the Fund unless the Plan
Administrator advises the Trustee not to pay such tax.
11.4 DUTIES AND INDEMNIFICATION
(a) The Trustee shall have the authority and discretion to manage and
govern the Fund to the extent provided in this instrument, but does not
guarantee the Fund in any manner against investment loss or
depreciation in asset value, or guarantee the adequacy of the Fund to
meet and discharge all or any liabilities of the Plan.
(b) The Trustee shall not be liable for the making, retention or sale
of any investment or reinvestment made by it, as herein provided, or
for any loss to, or diminution of the Fund, or for any other loss or
damage which may result from the discharge of its duties hereunder
except to the extent it is judicially determined that the Trustee has
failed to exercise the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character with like aims.
(c) The Employer warrants that all directions issued to the Trustee by
it or the Plan Administrator will be in accordance with the terms of
the Plan and not contrary to the provisions of the Employee Retirement
Income Security Act of 1974 and regulations issued thereunder.
(d) The Trustee shall not be answerable for any action taken pursuant
to any direction, consent, certificate, or other paper or document on
the belief that the same is genuine and signed by the proper person.
All directions by the Employer, Participant or the Plan Administrator
shall be given in a manner and form prescribed by the Trustee and
approved by the Service Company. The Employer shall deliver to the
Trustee certificates evidencing the individual or individuals
authorized to act as set forth in the Adoption Agreement or as the
Employer may subsequently inform the Trustee in writing and shall
deliver to the Trustee specimens of their signatures.
(e) The duties and obligations of the Trustee shall be limited to those
expressly imposed upon it by this instrument or subsequently agreed
upon by the parties. Responsibility for administrative duties required
under the Plan or applicable law not expressly imposed upon or agreed
to by the Trustee shall rest solely with the Employer.
(f) The Trustee shall be indemnified and saved harmless by the Employer
from and against any and all liability to which the Trustee may be
subjected, including all expenses reasonably incurred in its defense,
for any action or failure to act resulting from compliance with the
instructions of the Employer, the employees or agents of the Employer,
the Plan Administrator, or any other fiduciary to the Plan, and for any
liability arising from the actions or non-actions of any predecessor
Trustee or fiduciary or other fiduciaries of the Plan.
(g) The Trustee shall not be responsible in any way for the application
of any payments it is directed to make or for the adequacy of the Fund
to meet and discharge any and all liabilities under the Plan.
(h) With respect to non-mutual fund investments, the Trustee in
administering the Trust Fund is authorized and empowered to exercise
generally, any of the powers which a trustee might customarily exercise
in connection with investments held by the Trust Fund and to do all
other acts that the Trustee may deem necessary or proper to carry out
any of the powers and duties set forth in this Article XI.
11.5 SPECIAL PROVISIONS CONCERNING THE SERVICE COMPANY
(a) To the full extent permitted under ERISA, the Code, any other
applicable federal or state law, the regulations, rules and
interpretations thereunder, and subject to any written instrument
executed by the Trustee and the Service Company allocating
responsibilities between them, all ministerial functions assigned to
the Trustee under the Plan shall be delegated to the Service Company.
All instructions required to be given to the Trustee under the Plan
will be effective if given to the Service Company in the manner
prescribed by the Service Company. To the extent the Service Company is
performing a function assigned to the Trustee under the Plan, the
Service Company shall have the benefit of all of the limitations of the
scope of the Trustee's duties and liabilities, all rights of
indemnification granted to the Trustee and all other protections of any
nature afforded the Trustee under the Plan.
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(b) It is understood and agreed that while the Service Company will
perform certain ministerial duties (such as custodial, reporting,
recording, and bookkeeping functions) with respect to Plan assets, such
duties do not involve the exercise of any discretionary authority or
other authority to manage or control Plan assets.
(c) With respect to any transaction which the Service Company is
directed to engage in, the Employer, the Trustee, the Named Investment
Fiduciary and the person directing the transaction shall be responsible
for making sure that the transaction does not violate any applicable
provision of law or disqualify the Plan under the Code, and the Service
Company shall have no responsibility therefor.
(d) The Employer and, where the Service Company is following the
directions or instructions of a Participant, the Trustee, Plan
Administrator or the Named Investment Fiduciary, such Participant, the
Trustee, Plan Administrator or the Named Investment Fiduciary (as the
case may be) shall at all times fully indemnify and save harmless the
Service Company from any liability which may arise in connection with
this Plan, except liability arising from the gross negligence or
willful misconduct of the Service Company. For purposes of this Section
11.5, "liability" shall include, without limitation, taxes, expenses,
claims, damages, actions, suits, attorneys' fees, expenses of
litigation or preparation for threatened litigation, and any other
charges. The Service Company shall be liable for its own gross
negligence or willful misconduct in the performance of the duties
expressly assumed by it under the Plan.
ARTICLE XII -- TRUST FUND
12.1 THE FUND
The Fund shall consist of all contributions made under Article III and Article
IV of the Plan and the investment thereof and earnings thereon. All
contributions and the earnings thereon less payments made under the terms of the
Plan, shall constitute the Fund. The Fund shall be administered as provided in
this document.
12.2 CONTROL OF PLAN ASSETS
The assets of the Fund or evidence of ownership shall be held by the Trustee
under the terms of the Plan and Trust. If the assets represent amounts
transferred from another trustee under a former plan, the Trustee named
hereunder shall not be responsible for the propriety of any investment under the
former plan.
12.3 EXCLUSIVE BENEFIT RULES
No part of the Fund shall be used for, or diverted to, purposes other than for
the exclusive benefit of Participants, former Participants with a vested
interest, and the beneficiary or beneficiaries of deceased Participants having a
vested interest in the Fund at death.
12.4 ASSIGNMENT AND ALIENATION OF BENEFITS
No right or claim to, or interest in, any part of the Fund, or any payment from
the Fund, shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, commutation, anticipation, garnishment, attachment,
execution, or levy of any kind. The Trustee shall not recognize any attempt to
assign, transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate
the same, except to the extent required by law. The preceding sentences shall
also apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations order, as
defined in Code Section 414(p), or any domestic relations order entered before
January 1, 1985 which the Plan attorney and Plan Administrator deem to be
qualified.
12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO)
A Domestic Relations Order shall specifically state all of the following in
order to be deemed a Qualified Domestic Relations Order ("QDRO"):
(a) The name and last known mailing address (if any) of the Participant
and of each alternate payee covered by the QDRO. However, if the QDRO
does not specify the current mailing address of the alternate payee,
but the Plan Administrator has independent knowledge of that address,
the QDRO will still be valid.
(b) The dollar amount or percentage of the Participant's benefit to be
paid by the Plan to each alternate payee, or the manner in which the
amount or percentage will be determined.
(c) The number of payments or period for which the order applies.
(d) The specific plan (by name) to which the Domestic Relations Order
applies.
The Domestic Relations Order shall not be deemed a QDRO if it requires the Plan
to provide:
(e) any type or form of benefit, or any option not already provided for
in the Plan;
(f) increased benefits, or benefits in excess of the Participant's
vested rights;
(g) payment of a benefit earlier than allowed by the Plan's earliest
retirement provisions or in the case of a profit-sharing plan, prior to
the allowability of in-service withdrawals, or
37
(h) payment of benefits to an alternate payee which are required to be
paid to another alternate payee under another QDRO.
Promptly, upon receipt of a Domestic Relations Order ("Order") which may or may
not be "Qualified", the Plan Administrator shall notify the Participant and any
alternate payee(s) named in the Order of such receipt, and include a copy of
this paragraph 12.5. The Plan Administrator shall then forward the Order to the
Plan's legal counsel for an opinion as to whether or not the Order is in fact
"Qualified" as defined in Code Section 414(p). Within a reasonable time after
receipt of the Order, not to exceed 60 days, the Plan's legal counsel shall make
a determination as to its "Qualified" status and the Participant and any
alternate payee(s) shall be promptly notified in writing of the determination.
If the "Qualified" status of the Order is in question, there will be a delay in
any payout to any payee including the Participant, until the status is resolved.
In such event, the Plan Administrator shall segregate the amount that would have
been payable to the alternate payee(s) if the Order had been deemed a QDRO. If
the Order is not Qualified, or the status is not resolved (for example, it has
been sent back to the Court for clarification or modification) within 18 months
beginning with the date the first payment would have to be made under the Order,
the Plan Administrator shall pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been no Order.
If a determination as to the Qualified status of the Order is made after the
18-month period described above, then the Order shall only be applied on a
prospective basis. If the Order is determined to be a QDRO, the Participant and
alternate payee(s) shall again be notified promptly after such determination.
Once an Order is deemed a QDRO, the Plan Administrator shall pay to the
alternate payee(s) all the amounts due under the QDRO, including segregated
amounts plus interest which may have accrued during a dispute as to the Order's
qualification.
Unless specified otherwise in the Adoption Agreement, the earliest retirement
age with regard to the Participant against whom the order is entered shall be
the date the order is determined to be qualified. This will only allow payouts
to alternate payee(s) and not the Participant.
ARTICLE XIII -- INVESTMENTS
13.1 FIDUCIARY STANDARDS
The Trustee shall invest and reinvest income in the same Fund in accordance with
the investment objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement Income
Security Act of 1974 and the regulations promulgated thereunder,
(b) such investments are sufficiently diversified or otherwise insured
or guaranteed to minimize the risk of large losses, and
(c) such investments are similar to those which would be purchased by
another professional money manager for a like plan with similar
investment objectives.
13.2 NO INVESTMENT DISCRETION
The Plan Sponsor and the Trustee shall have no discretion to direct any
investments of the Trust and are authorized solely to make and hold investments
only as directed pursuant to Section 13.3.
13.3 INVESTMENT DIRECTIONS
(a) Responsibility for directing the Trustee with respect to the
investment of the Trust Fund shall be allocated to the Employer, or a
named fiduciary appointed by the Employer for that purpose (the "Named
Investment Fiduciary"), the Participants, or any investment manager (an
"Investment Manager"), who meets the requirements of Section 3(38) of
the Employee Retirement Income Security Act of 1974 (ERISA) appointed
by the Named Investment Fiduciary, all as provided in the Plan
(including the Adoption Agreement). To the extent investment
responsibility is allocated to the Participant, the Designated
Beneficiary of a deceased Participant shall discharge the
responsibility subsequent to the Participant's death and any reference
to the Participant in any provision of the Plan pertaining to
investment directions shall in such event be construed as a reference
to the Designated Beneficiary.
(b) Investment directions shall be given in a manner and form
prescribed by the Trustee and shall be subject to such limitations,
including limitations as to the frequency with which any standing
investment instructions may be changed and funds may be moved among
investment choices, as the Employer or other Named Investment Fiduciary
shall prescribe. If Investment responsibility is allocated to
Participants, to the extent permitted by the Trustee, investment
directions may be given directly to the Service Company in a manner and
form prescribed by the Service Company.
(c) Cash for which no investments are directed shall be automatically
invested in such investment or investments as the Employer or other
Named Investment Fiduciary shall select from the investments the
Service Company makes available for that purpose unless and until the
person responsible
38
for giving directions directs otherwise. Such automatic investment
shall be made at regular intervals and pursuant to procedures provided
by the Service Company (which procedures may, without limitation,
provide for more frequent intervals only if reinvested balances exceed
a stated amount). Absent a contrary direction in accordance with the
preceding provisions of Section 13.2 the Service Company is hereby
directed to make such automatic investments.
Notwithstanding other provisions of the Plan to the contrary, if another
qualified plan is amended and restated in the form of this Plan, the Employer or
the named investment fiduciary shall have the power to prescribe rules regarding
the investment of the assets held under the other qualified plan until such time
as any resulting reconciliation of Participant Accounts is completed and the
assets may be reinvested in investments permitted under Section 13.4 of the
Plan.
13.4 PERMITTED INVESTMENTS
Except as Section 13.9 may apply, all amounts held in the Trust Fund under the
Plan shall be invested in mutual fund shares and annuities which are offered
through the Service Company, and such other investments as shall be accepted in
writing by the Service Company for availability under the Plan.
All dividends, including capital gain dividends, paid by any mutual fund shall
be reinvested in full and fractional shares of the mutual fund paying the
dividend in the manner specified in the prospectus of the mutual fund, and such
dividends shall be credited to the Trust Fund.
Each of the mutual funds in which the Plan may invest carries its own fees and
expenses, which may include management fees, Rule 12b-1 fees and/or other fees
and expenses, which are described in detail in each fund's prospectus.
Participants who invest in these mutual funds will, as shareholders of those
funds, bear their prorata portion of each fund's fees and expenses. Employer
acknowledges that Prudential Mutual Fund Distributors (PMFD) and Prudential
Securities Incorporated (PSI) may act as distributor of each fund's shares and
that PSI, PMFD and Pruco Securities Corporation (Prusec) are subsidiaries of The
Prudential Insurance Company of America (Prudential) (through which the
Guaranteed Interest Account is offered) and are each affiliated with the Funds
as described in each fund's prospectus. Employer acknowledges that Prudential,
PMFD, PSI and Prusec are not fiduciaries to the Plan, have no obligation to the
Plan or the Participants and are acting solely in their own interest. Employer
further acknowledges that Prudential, PMFD, PSI and Prusec may be deemed to
benefit from advisory and other fees paid to it or its affiliates in connection
with the management and operation of the mutual funds in which the Participants
may invest, from sales charges and contingent deferred sales charges imposed as
described in the prospectus and from fees paid to The Prudential Insurance
Company of America in connection with the Guaranteed Interest Account.
13.5 SHAREHOLDER RIGHTS
The Trustee shall exercise any rights of a shareholder (including voting rights)
with respect to any securities held, but only in accordance with the
instructions of the Participant or the Designated Beneficiary of a deceased
Participant subject to and except as permitted by any applicable rules of the
Securities and Exchange Commission and any national securities exchange.
13.6 LIQUIDATION OF ASSETS
If the Trustee must liquidate assets in order to make distributions, transfer
assets, or pay fees, expenses or taxes assessed against all or a part of the
Fund, and the Trustee is not instructed as to the liquidation of such assets,
assets will be liquidated in accordance with the rules and procedures
customarily followed by the Service Company, which rules shall be formulated in
a manner to eliminate the potential for exercise of discretion by the Service
Company in the liquidation of assets and shall be applied consistently with
respect to all similarly situated plans in the form of the Prototype Plan;
provided that if a contribution is being made to an affected subaccount as of
the date the Trustee would otherwise be liquidating assets pursuant to this
section, the Trustee may withdraw the necessary amount of cash and invest the
remainder of the contribution in investments in the same proportion as would
have resulted had the withdrawal not been made. The Trustee is expressly
authorized to liquidate assets in order to satisfy the Trust Fund's obligation
to pay the Trustee's compensation if such compensation is not paid on a timely
basis.
13.7 ARBITRATION
This Plan requires that certain controversies be arbitrated as provided below.
In this regard it is to be noted that:
(a) Arbitration is final and binding on the parties.
(b) The parties are waiving their right to seek remedies in court
including the right to jury trial.
(c) Pre-arbitration discovery is generally more limited than and
different from court proceedings.
(d) The arbitrator's award is not required to include factual findings
or legal reasoning and any party's right to appeal or to seek
modification of rulings by the arbitrators is strictly limited.
(e) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
39
Unless the following procedure for the resolution of controversies is not
enforceable under ERISA, any controversy arising out of or relating to the Plan,
or with respect to transactions of any kind executed by, through or with the
Service Company or otherwise pertaining to the Plan shall be settled by
arbitration. The arbitration may be before either the National Association of
Securities Dealers, Inc. (NASD) or the New York Stock Exchange, Inc., as
Employer/Employee, as the case may be, may elect and shall be governed by the
laws of the State of New York. If Employer/Employee does not make the above
election by registered mail addressed to PSI at its main office within 5
business days after demand by PSI that Employer/Employee make such election,
then PSI shall have the right to elect the arbitration tribunal of its choice.
Notice preliminary to, in conjunction with or incident to arbitration, may be
sent to Employer/Employee by mail and personal service is hereby waived.
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof, without notice to Employer/Employee.
No person shall bring a putative or certified class action to arbitration, nor
seek to enforce any pre-dispute arbitration agreement against any person who has
initiated in court a putative class action; or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is denied; or
(ii) the class is decertified; or (iii) the customer is excluded from the class
by the court. Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this agreement except to the extent
stated herein.
13.8 PARTICIPANT LOANS
Unless otherwise specified in the Adoption Agreement, Participant Loans will not
be permitted. If permitted by the Adoption Agreement, a Participant may make
application to the Employer requesting a loan from the Fund. Loans shall be made
available to all Participants on a reasonably equivalent basis and shall not be
made available to highly compensated employees who are Participants in amounts
greater than made available to all other Participants. The Employer will
administer all Participant Loans unless the Trustee otherwise agrees in writing
to accept these duties. Loan administration duties shall include, but are not
limited to: approving or disapproving loan applications from Participants, loan
origination and closing, providing proper disclosures to Participant borrowers
under applicable federal and state lending laws, notifying Participant borrowers
of default, and collecting current and past due payments on such loans. The
Employer will notify the Trustee of any loan to be made from the Fund. The
Trustee will reflect the amount of each such loan and its repayments on records
of the Fund. Any loan granted hereunder shall be made subject to the following
rules:
(a) No loan when aggregated with any outstanding Participant loan(s),
shall exceed the lesser of (i) $50,000 reduced by the excess, if any,
of the highest outstanding balance of loans during the one year period
ending on the day before the loan is made, over the outstanding balance
of loans from the Plan on the date the loan is made or (ii) one-half of
the fair market value of a Participant's vested account balance built
up from Employer Contributions, Voluntary Contributions, and Rollover
Contributions. For the purpose of the above limitation, all loans from
all plans of the Employer and other members of a group of employers
described in Code Sections 414(b), 414(c), and 414(m) are aggregated.
An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any
insurance contract purchased under the Plan, will be treated as a loan
under this paragraph.
(b) All applications must be made on forms provided by the Employer and
must be signed by the Participant.
(c) Any loan granted hereunder shall bear interest at a rate reasonable
at the time of application, considering the purpose of the loan and the
rate being charged by representative commercial banks in the local area
for a similar loan unless the Employer sets forth a different method
for determining loan interest rates in its loan procedures. The loan
agreement shall also provide that the payment of principal and interest
be amortized in level payments not less frequently than quarterly.
(d) The term of such loan shall not exceed five years except in the
case of a loan for the purpose of acquiring any house, apartment,
condominium, or mobile home (not used on a transient basis) which is
used or is to be used within a reasonable time as the principal
residence of the Participant. The term of such loan shall be determined
by the Employer considering the maturity dates quoted by representative
commercial banks in the local area for a similar loan.
(e) The principal and interest paid by a Participant on his or her loan
shall be credited to the Fund in the same manner as for any other Plan
investment. Loans will be treated as segregated investments of the
individual Participants.
(f) If a Participant's loan application is approved by the Employer,
such Participant shall be required to sign a note, loan agreement, and
assignment of one-half of his or her interest in the Fund as collateral
for
40
the loan. The Participant, except in the case of a profit-sharing plan
satisfying the requirements of paragraph 8.7, must obtain the consent
of his or her Spouse, if any, within the 90 day period before the time
his or her account balance is used as security for the loan. A new
consent is required if the account balance is used for any
renegotiation, extension, renewal or other revision of the loan,
including an increase in the amount thereof. The consent must be
written, must acknowledge the effect of the loan, and must be witnessed
by a plan representative or notary public. Such consent shall
thereafter be binding with respect to the consenting Spouse or any
subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then, notwithstanding
any other provision of this Plan, the portion of the Participant's
vested account balance used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account balance
payable at the time of death or distribution, but only if the reduction
is used as repayment of the loan. If less than 100% of the
Participant's vested account balance (determined without regard to the
preceding sentence) is payable to the surviving Spouse, then the
account balance shall be adjusted by first reducing the vested account
balance by the amount of the security used as repayment of the loan,
and then determining the benefit payable to the Surviving Spouse.
(h) (h) The Employer may also require additional collateral in order to
adequately secure the loan.
(i) (i) A Participant's loan shall immediately become due and payable
if such Participant terminates employment for any reason or fails to
make a principal and/or interest payment as provided in the loan
agreement. If such Participant terminates employment, the Employer
shall immediately request payment of principal and interest on the
loan. If the Participant refuses payment following termination, the
Employer shall reduce the Participant's vested account balance by the
remaining principal and interest on his or her loan. If the
Participant's vested account balance is less than the amount due, the
Employer shall take whatever steps are necessary to collect the balance
due directly from the Participant. However, no foreclosure on the
Participant's note or attachment of the Participant's account balance
will occur until a distributable event occurs in the Plan.
(j) No loans will be made to Owner-Employees (as defined in paragraph
1.50) or Shareholder-Employees (as defined in paragraph 1.74), unless
an exemption from the prohibited transactions rules is first obtained
from the Department of Labor.
(k) If a Participant requests a loan, the funds to be loaned will be
taken from the subaccount or subaccounts specified by the Participant
or, in the absence of such a specification, form the subaccounts in the
order specified in Section 6.10 pertaining to withdrawals. If specific
assets of the Trust Fund are allocable to individual Participants'
Accounts, such assets equal in value to the amount of the loan shall be
sold at the direction of the Participant to provide the funds to be
loaned.
13.9 INSURANCE POLICIES
Unless otherwise specified in the Adoption Agreement, the insurance provisions
of this Section 13.9 shall not be applicable. If agreed upon by the Trustee and
approved by the Employer in the Adoption Agreement, Employees may elect the
purchase of life insurance policies under the Plan. If elected, the maximum
annual premium for a whole life policy shall not exceed 50% of the aggregate
cumulative Employer contributions allocated to the account of a Participant.
Whole life policies are policies with both nondecreasing death benefits and
nonincreasing premiums. The maximum annual premium for term contracts or
universal life policies and all other policies which are not whole life shall
not exceed 25% of aggregate Employer contributions allocated to the account of a
Participant. The maximum annual premiums for a Participant with both a whole
life and a term contract or universal life policies shall be limited to one-half
of the whole life premiums plus the term premium but shall not exceed 25% of the
aggregate Employer contributions allocated to the account of a Participant. It
may also be elected to have policies purchased on behalf of a Participant's
spouse, their dependents, or any individual in whom the Participant has an
insurable interest. If any policy is maintained on the joint lives of a
Participant and another individual, it may not be maintained under the Plan
should the other individual predecease the Participant. Any policies purchased
under this Plan shall be held subject to the following rules:
(a) The Trustee shall be applicant and owner of any policies issued.
(b) All policies or contracts purchased shall be endorsed as
nontransferable, and must provide that proceeds will be payable to the
Trustee; however, the Trustee shall be required to pay over all
proceeds of the contracts to the Participant's Designated Beneficiary
in accordance with the distribution provisions of this Plan. Under no
circumstances shall the Trust retain any part of the proceeds.
41
(c) Each Participant shall be entitled to designate a beneficiary under
the terms of any contract issued; however, such designation will be
given to the Trustee which must be the named beneficiary on any policy.
Such designation shall remain in force, until revoked by the
Participant, by filing a new beneficiary form with the Trustee. A
Participant's Spouse will be the Designated Beneficiary of the proceeds
in all circumstances unless a Qualified Election has been made in
accordance with paragraph 8.4. The beneficiary of a deceased
Participant shall receive, in addition to the proceeds of the
Participant's policy or policies, the amount credited to such
Participant's investment account.
(d) A Participant who is uninsurable or insurable at substandard rates,
may elect to receive a reduced amount of insurance, if available, or
may waive the purchase of any insurance.
(e) At the discretion of the Participant, any dividends or credits
earned on a life insurance contract shall, either be allocated to the
Participant's account in the Fund, applied in reduction of any premiums
thereon, or, if no premiums are due, applied to increase the proceeds
of the life insurance contract.
(f) If Employer contributions are inadequate to pay all premiums on all
insurance policies, the Trustee may, at the option of the Employer,
utilize other amounts remaining in each Participant's account to pay
the premiums on his or her respective policy or policies, allow the
policies to lapse, reduce the policies to a level at which they may be
maintained, or borrow against the policies on a prorated basis,
provided that the borrowing does not discriminate in favor of the
policies on the lives of Officers, Shareholders, and highly compensated
Employees.
(g) On retirement or termination of employment of a Participant, the
Employer shall direct the Trustee to cash surrender the Participant's
policy and credit the proceeds to his or her account for distribution
under the terms of the Plan. However, before so doing, the Trustee
shall first offer to distribute the policy to the Participant as a part
of the benefit distribution. If a Participant on whose life an
insurance policy is held under the Plan does not make a timely
direction regarding the policy under this Section (g), the Participant
shall be deemed to have directed that the policy be converted into cash
to be distributed in the manner in which the balance of the
Participant's Account is to be distributed. All distributions resulting
from the application of this paragraph shall be subject to the Joint
and Survivor Annuity Rules of Article VIII, if applicable.
(h) The Employer shall be solely responsible to see that these
insurance provisions are administered properly and that if there is any
conflict between the provisions of this Plan and any insurance
contracts issued that the terms of this Plan will control.
ARTICLE XIV--TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES
If the Plan is or becomes Top-Heavy in any Plan Year beginning after 1983, the
provisions of this Article will supersede any conflicting provisions in the Plan
or Adoption Agreement.
14.2 MINIMUM CONTRIBUTION
Notwithstanding any other provision in the Employer's Plan, for any Plan Year in
which the Plan is Top-Heavy or Super Top-Heavy, the aggregate Employer
contributions and forfeitures allocated on behalf of any Participant (without
regard to any Social Security contribution) under this Plan and any other
Defined Contribution Plan of the Employer shall be lesser of 3% of such
Participant's Compensation or the largest percentage of Employer contributions
and forfeitures, as a percentage of the Key Employee's annual Compensation
allocated on behalf of any Key Employee for that year.
Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of the Employer's minimum
contribution for such Plan Year. The minimum allocation applies even though
under other Plan provisions the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the year
because the Participant fails to make Mandatory Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the Participant
fails to complete 1,000 Hours of Service (or such lesser number designated by
the Employer in the Adoption Agreement) during the Plan Year. A Paired
profit-sharing plan designated to provide the minimum Top-Heavy contribution
must do so regardless of profits. An Employer may make the minimum Top-Heavy
contribution available to all Participants or just non-Key Employees.
For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in the second paragraph of paragraph 1.12 of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other plan(s) of the Employer and
the Employer has provided in Section 11 of the Adoption Agreement that the
minimum allocation or benefit
42
requirements applicable to Top-Heavy Plans will be met in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions made to his or her account, a Top-Heavy minimum will be required
for non-Key Employees who are Participants, however, neither Elective Deferrals
by nor Matching Contributions to non-Key Employees may be taken into account for
purposes of satisfying the top-heavy Minimum Contribution requirement.
14.3 MINIMUM VESTING
For any Plan Year in which this Plan is Top-Heavy, the minimum vesting schedule
elected by the Employer in the Adoption Agreement will automatically apply to
the Plan. If the vesting schedule selected by the Employer in the Adoption
Agreement is less liberal than the allowable schedule, the schedule will
automatically be modified. If the vesting schedule under the Employer's Plan
shifts in or out of the Top-Heavy schedule for any Plan Year, such shift is an
amendment to the vesting schedule and the election in paragraph 9.8 of the Plan
applies. The minimum vesting schedule applies to all accrued benefits within the
meaning of Code Section 411(a)(7) except those attributable to Employee
contributions, including benefits accrued before the effective date of Code
Section 416 and benefits accrued before the Plan became Top-Heavy. Further, no
reduction in vested benefits may occur in the event the Plan's status as
Top-Heavy changes for any Plan Year. However, this paragraph does not apply to
the account balances of any Employee who does not have an Hour of Service after
the Plan initially becomes Top-Heavy and such Employee's account balance
attributable to Employer contributions and forfeitures will be determined
without regard to this paragraph.
14.4 LIMITATIONS ON ALLOCATIONS
In any Plan Year in which the Top-Heavy Ratio exceeds 90% (i.e., the Plan
becomes Super Top-Heavy), the denominators of the Defined Benefit Fraction (as
defined in paragraph 1.15) and Defined Contribution Fraction (as defined in
paragraph 1.18) shall be computed using 100% of the dollar limitation instead of
125%.
ARTICLE XV-- AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR
The Sponsor may amend any or all provisions of this Plan and Trust at any time
without obtaining the approval or consent of any Employer which has adopted this
Plan and Trust provided that no amendment shall authorize or permit any part of
the corpus or income of the Fund to be used for or diverted to purposes other
than for the exclusive benefit of Participants and their beneficiaries, or
eliminate an optional form of distribution. In the case of a mass-submitted
plan, the mass-submitter shall amend the Plan on behalf of the Sponsor.
15.2 AMENDMENT BY EMPLOYER
The Employer may amend any option in the Adoption Agreement, and may include
language as permitted in the Adoption Agreement,
(a) to satisfy Code Section 415, or
(b) to avoid duplication of minimums under Code Section 416, because of
the required aggregation of multiple plans.
The Employer may add certain model amendments published by the Internal Revenue
Service which specifically provide that their adoption will not cause the Plan
to be treated as an individually designed plan for which the Employer must
obtain a separate determination letter.
If the Employer amends the Plan and Trust other than as provided above, the
Employer's Plan shall no longer participate in this Prototype Plan and will be
considered an individually designed plan.
15.3 TERMINATION
Employers shall have the right to terminate their Plans upon 60 days notice in
writing to the Trustee. If the Plan is terminated, partially terminated, or if
there is a complete discontinuance of contributions under a profit-sharing plan
maintained by the Employer, all amounts credited to the accounts of Participants
shall vest and become nonforfeitable. In the event of a partial termination,
only those who are affected by such partial termination shall be fully vested.
In the event of termination, the Employer shall direct the Trustee with respect
to the distribution of accounts to or for the exclusive benefit of Participants
or their beneficiaries. The Trustee shall dispose of the Fund in accordance with
the written directions of the Plan Administrator, provided that no liquidation
of assets and payment of benefits, (or provision therefor), shall actually be
made by the Trustee until after it is established by the Employer in a manner
satisfactory to the Trustee, that the applicable requirements, if any, of ERISA
and the Internal Revenue Code governing the termination of employee benefit
plans, have been or are being, complied with, or that appropriate
authorizations, waivers, exemptions, or variances have been, or are being
obtained.
15.4 QUALIFICATION OF EMPLOYER'S PLAN
If the adopting Employer fails to attain or retain Internal Revenue Service
qualification, such Employer's Plan shall
43
no longer participate in this Prototype Plan and will be considered an
individually designed plan.
15.5 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's Plan
with, or transfer of assets or liabilities of the Employer's Plan to,
any other plan, Participants in the Employer's Plan shall be entitled
to receive benefits immediately after the merger, consolidation, or
transfer which are equal to or greater than the benefits they would
have been entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
(b) Any corporation into which the Trustee or any successor trustee may
be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Trustee or any
successor trustee may be a party, or any corporation to which all or
substantially all the trust business of the Trustee or any successor
trustee may be transferred, shall be the successor of such Trustee
without the filing of any instrument or performance of any further act,
before any court.
15.6 RESIGNATION AND REMOVAL
The Trustee may resign by written notice to the Employer which shall be
effective 60 days after delivery. The Employer may discontinue its participation
in this Prototype Plan and Trust effective upon 60 days written notice to the
Sponsor. In such event the Employer shall, prior to the effective date thereof,
amend the Plan to eliminate any reference to this Prototype Plan and Trust and
appoint a successor trustee or arrange for another funding agent. The Trustee
shall deliver the Fund to its successor on the effective date of the resignation
or removal, or as soon thereafter as practicable, provided that this shall not
waive any lien the Trustee may have upon the Fund for its compensation or
expenses. If the Employer fails to amend the Plan and appoint a successor
trustee, or other funding agent within the said 60 days, or such longer period
as the Trustee may specify in writing, the Plan shall be deemed individually
designed and the Employer shall be deemed the successor trustee. The Employer
must then obtain its own determination letter.
15.7 QUALIFICATION OF PROTOTYPE
The Sponsor intends that this Prototype Plan will meet the requirements of the
Code as a qualified Prototype Retirement Plan and Trust. Should the Commissioner
of Internal Revenue or any delegate of the Commissioner at any time determine
that the Plan and Trust fails to meet the requirements of the Code, the Sponsor
will amend the Plan and Trust to maintain its qualified status.
ARTICLE XVI -- GOVERNING LAW
Construction, validity and administration of the Prototype Plan and Trust, and
any Employer Plan and Trust as embodied in the Prototype document and
accompanying Adoption Agreement, shall be governed by Federal law to the extent
applicable and to the extent not applicable by the laws of the
State/Commonwealth in which the principal office of the Sponsor is located.
44
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
Plan Description: Prototype Standardized Profit Sharing Plan with CODA ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
FFN: 50296321903-001 Case: 9400380 EIN: ▇▇-▇▇▇▇▇▇▇
BPD: 03 Plan: 001 Letter Serial No: D256803b Person to Contact: Mr. Dua
PRUDENTIAL MUTUAL FUND MANAGEMENT INC. Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Refer Reply to: CP:E:EP:Q:3
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Date: 03/11/94
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under Section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for highly compensated employees than for
other employees. Except as stated below, the Key District Director will not
issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
within the meaning of Section 7 of Rev. Proc. 89-9, 1989-1 C.B. 780: or (2)
after December 31, 1985, the employer maintains a welfare benefit fund defined
in Code Section 419(e), which provides post retirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3).
An employer that has adopted a standardized plan may not rely on this opinion
letter with respect to: (1) whether any amendment or series of amendments to the
plan satisfies the nondiscrimination requirements of section. 1.401(a)(4)-5(a)
of the regulations, except with respect to the plan amendments granting past
service that meet the safe harbor described in section 1.401(a)(4)-5(a)(5) and
are not part of a pattern of amendments that significantly discriminates in
favor of a highly compensated employees; or (2) whether the plan satisfies the
effective availability requirement of section 1.401(a)(4)-4(c) of the
regulations with respect to any benefits, right or feature.
An employer that has adopted a standardized plan as an amendment to a plan other
than a standardized plan may not rely on this opinion letter with respect to
whether a benefit, right or other feature that is prospectively eliminated
satisfies the current availability requirements of section 1.401(a)-4 of the
regulations.
45
PRUDENTIAL MUTUAL FUND MANAGEMENT INC
FFN:50296321903-001
Page 2
The employer may request a determination (1) as to whether the plan, considered
with all related qualified plans and, if appropriate, welfare benefit funds,
satisfies the requirements of Code section 401(a)(16) as to limitations on
benefits and contributions in Code section 415; (2) regarding the
nondiscriminatory effect of grants of past service; and (3) with respect to
whether a prospectively eliminated benefit, right or feature satisfies the
current availability requirements.
Our opinion does not apply to the form of the plan for purposes of section
401(a) of the code unless the terms of the plan, as adopted or amended, that
pertain to the requirements of sections 401(a)(4), 401(a)(5), 401(a)(17),
401(l), 401(b) and 401(s) of the Code, as amended by the Tax Reform Act of 1986
or subsequent legislation, (a) are made effective retroactively to the first day
of the first plan year beginning after December 31, 1988 (or such other date on
which these requirements first became effective with respect to this plan); or
(b) are made effective no later than the first day on which the employer is no
longer entitled, under regulations, to rely on a reasonable, good faith
interpretation of these requirements, and the prior provisions of the plan
constitute such an interpretation.
This letter with respect to the amendment to the form of the plan does no affect
the applicability to the plan of the continued, interim and extended reliance
provisions of section 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B. 780 The
applicability of such provisions may be determined by reference to the initial
opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
/s/
-------------------------------
Chief Employee Plans Qualifications Branch
46
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
Plan Description: Prototype Non-standardized Profit Sharing Plan with CODA ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
FFN: 50396321903-002 Case: 9400381 EIN: ▇▇-▇▇▇▇▇▇▇
BPD: 03 Plan: 002 Letter Serial No: D356804b Person to Contact: Mr. Dua
PRUDENTIAL MUTUAL FUND MANAGEMENT INC. Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Refer Reply to: CP:E:EP:Q:3
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Date: 03/11/94
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does not
in and of itself adversely affect the plan's acceptability under Section 401 of
the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole, or as to the effect of other
Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this plan.
You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of the Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the Sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and./or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours
/s/
-------------------------------
Chief Employees Plan Qualifications Branch
47