----------
QUALIFIED
RETIREMENT
PLAN
------
BASIC
PLAN
DOCUMENT
----------
BASIC PLAN DOCUMENT 04
TABLE OF CONTENTS
SECTION ONE: DEFINITIONS
1.01 Adoption Agreement.............................................1
1.02 Basic Plan Document............................................1
1.03 Beneficiary....................................................1
1.04 Break in Eligibility Service...................................1
1.05 Break in Vesting Service.......................................1
1.06 Code...........................................................1
1.07 Compensation...................................................1
1.08 Custodian......................................................3
1.09 Disability.....................................................3
1.10 Early Retirement Age...........................................3
1.11 Earned Income..................................................3
1.12 Effective Date.................................................3
1.13 Eligibility Computation Period.................................3
1.14 Employee.......................................................3
1.15 Employer.......................................................3
1.16 Employer Contribution..........................................3
1.17 Employment Commencement Date...................................3
1.18 Employer Profit Sharing Contribution...........................3
1.19 Entry Dates....................................................4
1.20 ERISA..........................................................4
1.21 Forfeiture.....................................................4
1.22 Fund...........................................................4
1.23 Highly Compensated Employee....................................4
1.24 Hours of Service...............................................4
1.25 Individual Account.............................................5
1.26 Investment Fund................................................5
1.27 Key Employee...................................................5
1.28 Leased Employee................................................5
1.29 Nondeductible Employee Contributions...........................5
1.30 Normal Retirement Age..........................................6
1.31 Owner-Employee.................................................6
1.32 Participant....................................................6
1.33 Plan...........................................................6
1.34 Plan Administrator.............................................6
1.35 Plan Year......................................................6
1.36 Prior Plan.....................................................6
1.37 Prototype Sponsor..............................................6
1.38 Qualifying Participant.........................................6
1.39 Related Employer...............................................6
1.40 Related Employer Participation Agreement.......................6
1.41 Self-Employed Individual.......................................6
1.42 Separate Fund..................................................6
1.43 Taxable Wage Base..............................................6
1.44 Termination of Employment......................................6
1.45 Top-Heavy Plan.................................................7
1.46 Trustee........................................................7
1.47 Valuation Date.................................................7
1.48 Vested.........................................................7
1.49 Year of Eligibility Service....................................7
1.50 Year of Vesting Service........................................7
SECTION TWO: ELIGIBILITY AND PARTICIPATION
2.01 Eligibility To Participate.....................................7
2.02 Plan Entry.....................................................7
2.03 Transfer to or From Ineligible Class...........................8
2.04 Return as a Participant After Break in Eligibility Service.....8
2.05 Determinations Under This Section..............................8
2.06 Terms of Employment............................................8
2.07 Special Rules Where Elapsed Time Method Is Being Used..........8
2.08 Election Not To Participate....................................9
SECTION THREE: CONTRIBUTIONS
3.01 Employer Contributions.........................................9
3.02 Nondeductible Employee Contributions..........................11
3.03 Rollover Contributions........................................12
3.04 Transfer Contributions........................................12
3.05 Limitation on Allocations.....................................12
SECTION FOUR: INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 Individual Accounts...........................................16
4.02 Valuation of Fund.............................................16
4.03 Valuation of Individual Accounts..............................16
4.04 Modification of Method for Valuing Individual Accounts........17
4.05 Segregation of Assets.........................................17
4.06 Statement of Individual Accounts..............................17
SECTION FIVE: TRUSTEE OR CUSTODIAN
5.01 Creation of Fund..............................................17
5.02 Investment Authority..........................................17
5.03 Financial Organization Custodian or Trustee Without Full
Trust Powers .................................................17
5.04 Financial Organization Trustee With Full Trust Powers and
Individual Trustee............................................18
5.05 Division of Fund Into Investment Funds........................19
5.06 Compensation and Expenses.....................................19
5.07 Not Obligated to Question Data................................20
5.08 Liability For Withholding on Distributions....................20
5.09 Resignation or Removal of Trustee (or Custodian)..............20
5.10 Degree of Care - Limitations of Liability.....................20
5.11 Indemnification of Prototype Sponsor and Trustee (or
Custodian) ...................................................20
5.12 Investment Managers...........................................21
5.13 Matters Relating to Insurance.................................21
5.14 Direction of Investments by Participant.......................22
SECTION SIX: VESTING AND DISTRIBUTION
6.01 Distribution To Participant...................................22
6.02 Form of Distribution to a Participant.........................25
6.03 Distributions Upon the Death of a Participant.................26
6.04 Form of Distribution to Beneficiary...........................26
6.05 Joint and Survivor Annuity Requirements.......................27
6.06 Distribution Requirements.....................................30
6.07 Annuity Contracts.............................................33
6.08 Loans to Participants.........................................33
6.09 Distribution in Kind..........................................34
6.10 Direct Rollovers of Eligible Rollover Distributions...........34
6.11 Procedure for Missing Participants or Beneficiaries...........35
SECTION SEVEN: CLAIMS PROCEDURE
7.01 Filing a Claim for Plan Distributions.........................35
7.02 Denial of Claim...............................................35
7.03 Remedies Available............................................35
SECTION EIGHT: PLAN ADMINISTRATOR
8.01 Employer is Plan Administrator................................36
8.02 Powers and Duties of the Plan Administrator...................36
8.03 Expenses and Compensation.....................................37
8.04 Information from Employer.....................................37
SECTION NINE: AMENDMENT AND TERMINATION
9.01 Right of Prototype Sponsor to Amend the Plan..................37
9.02 Right of Employer to Amend the Plan...........................37
9.03 Limitation on Power to Amend..................................37
9.04 Amendment of Vesting Schedule.................................38
9.05 Permanency....................................................38
9.06 Method and Procedure for Termination..........................38
9.07 Continuance of Plan by Successor Employer.....................38
9.08 Failure of Plan Qualification.................................38
SECTION TEN: MISCELLANEOUS
10.01 State Community Property Laws.................................38
10.02 Headings......................................................38
10.03 Gender and Number.............................................39
10.04 Plan Merger or Consolidation..................................39
10.05 Standard of Fiduciary Conduct.................................39
10.06 General Undertaking Of All Parties............................39
10.07 Agreement Binds Heirs, Etc....................................39
10.08 Determination Of Top-Heavy Status.............................39
10.09 Special Limitations for Owner-Employees.......................40
10.10 Inalienability of Benefits....................................41
10.11 Cannot Eliminate Protected Benefits...........................41
SECTION ELEVEN: 401(k) PROVISIONS
11.100 Definitions...................................................41
11.101 Actual Deferral Percentage (ADP)..............................41
11.102 Aggregate Limit...............................................42
11.103 Average Contribution Percentage (ACP).........................42
11.104 Contributing Participant......................................42
11.105 Contribution Percentage.......................................42
11.106 Contribution Percentage Amounts...............................42
11.107 Elective Deferrals............................................42
11.108 Eligible Participant..........................................42
11.109 Excess Aggregate Contributions................................42
11.110 Excess Contributions..........................................43
11.111 Excess Elective Deferrals.....................................43
11.112 Matching Contribution.........................................43
11.113 Qualified Nonelective Contributions...........................43
11.114 Qualified Matching Contributions..............................43
11.115 Qualifying Contributing Participant...........................43
11.200 Contributing Participant......................................43
11.201 Requirements to Enroll as a Contributing Participant..........43
11.202 Changing Elective Deferral Amounts............................43
11.203 Ceasing Elective Deferrals....................................44
11.204 Return as a Contributing Participant After Ceasing
Elective Deferrals............................................44
11.205 Certain One-Time Irrevocable Elections........................44
11.300 Contributions.................................................44
11.301 Contributions By Employer.....................................44
11.302 Matching Contributions........................................44
11.303 Qualified Nonelective Contributions...........................44
11.304 Qualified Matching Contributions..............................44
11.305 Nondeductible Employee Contributions..........................45
11.400 Nondiscrimination Testing.....................................45
11.401 Actual Deferral Percentage Test (ADP).........................45
11.402 Limits on Nondeductible Employee Contributions and
Matching Contributions........................................46
11.500 Distribution Provisions.......................................47
11.501 General Rule..................................................47
11.502 Distribution Requirements.....................................47
11.503 Hardship Distribution.........................................48
11.504 Distribution of Excess Elective Deferrals.....................48
11.505 Distribution of Excess Contributions..........................48
11.506 Distribution of Excess Aggregate Contributions................49
11.507 Recharacterization............................................50
11.508 Distribution of Elective Deferrals if Excess Annual
Additions ....................................................50
11.600 Vesting.......................................................50
11.601 100% Vesting on Certain Contributions.........................50
11.602 Forfeitures and Vesting of Matching Contributions.............50
QUALIFIED RETIREMENT PLAN AND TRUST
Defined Contribution Basic Plan Document 04
--------------------------------------------------------------------------------
SECTION ONE
DEFINITIONS
The following words and phrases when used in the Plan with initial capital
letters shall, for the purpose of this Plan, have the meanings set forth
below unless the context indicates that other meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it adopts the
Plan and Trust and thereby agrees to be bound by all terms and conditions
of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BENEFICIARY
Means the individual or individuals designated pursuant to Section 6.03(A)
of the Plan.
1.04 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee fails to complete more than
500 Hours of Service (or such lesser number of Hours of Service specified
in the Adoption Agreement for this purpose).
1.05 BREAK IN VESTING SERVICE
Means a Plan Year (or other vesting computation period described in
Section 1.50) during which an Employee fails to complete more than 500
Hours of Service (or such lesser number of Hours of Service specified in
the Adoption Agreement for this purpose).
1.06 CODE
Means the Internal Revenue Code of 1986 as amended from time-to-time.
1.07 COMPENSATION
A. Basic Definition
For Plan Years beginning on or after January 1, 1989, the following
definition of Compensation shall apply:
As elected by the Employer in the Adoption Agreement (and if no
election is made, W-2 wages will be deemed to have been selected),
Compensation shall mean one of the following:
1. W-2 wages. Compensation is defined as information required to
be reported under Sections 6041 and 6051, and 6052 of the Code
(Wages, tips and other compensation as reported on Form W-2).
Compensation is defined as wages within the meaning of Section
3401(a) of the Code and all other payments of compensation to
an Employee by the Employer (in the course of the Employer's
trade or business) for which the Employer is required to
furnish the Employee a written statement under Sections
6041(d) and 6051(a)(3), and 6052 of the Code. Compensation
must be determined without regard to any rules under Section
3401(a) that limit the remuneration included in wages based on
the nature or location of the employment or the services
performed (such as the exception for agricultural labor in
Section 3401(a)(2)).
2. Section 3401(a) wages. Compensation is defined as wages within
the meaning of Section 3401(a) of the Code, for the purposes
of income tax withholding at the source but determined without
regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural
labor in Section 3401(a)(2)).
3. 415 safe-harbor compensation. Compensation is defined as
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 1.62-2(c)), and excluding the following:
a. Employer contributions to a plan of deferred
compensation which are not includible in the Employee's
gross income for the taxable year in which contributed,
or employer contributions under a simplified
1
employee pension plan to the extent such contributions
are deductible by the Employee, or any distributions
from a plan of deferred compensation;
b. Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely transferable
or is no longer subject to a substantial risk of
forfeiture;
c. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
d. 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 contract described in Section 403(b) of the Code
(whether or not the contributions are actually
excludable from the gross income of the Employee).
For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.
B. Determination Period And Other Rules
Compensation shall include only that Compensation which is actually
paid to the Participant during the determination period. Except as
provided elsewhere in this Plan, the determination period shall be
the Plan Year unless the Employer has selected another period in the
Adoption Agreement. If the Employer makes no election, the
determination period shall be the Plan Year.
Unless otherwise indicated in the Adoption Agreement, Compensation
shall include any amount which is contributed by the Employer
pursuant to a salary reduction agreement and which is not includible
in the gross income of the Employee under Sections 125, 402(e)(3),
402(h)(1)(B) or 403(b) of the Code.
Where this Plan is being adopted as an amendment and restatement to
bring a Prior Plan into compliance with the Tax Reform Act of 1986,
such Prior Plan's definition of Compensation shall apply for Plan
Years beginning before January 1, 1989.
C. Limits On Compensation
For years beginning after December 31, 1988 and before January 1,
1994, the annual Compensation of each Participant taken into account
for determining all benefits provided under the Plan for any
determination period shall not exceed $200,000. This limitation
shall be adjusted by the Secretary at the same time and in the same
manner as under Section 415(d) of the Code, except that the dollar
increase in effect on January 1 of any calendar year is effective
for Plan Years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effective on January 1,
1990.
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 Section 401(a)(17)(B) of the Internal Revenue Code.
The cost-of-living adjustment in effect for a calendar year applies
to any determination period beginning in such calendar year.
If the period for determining Compensation used in calculating an
Employee's allocation for a determination period is a short Plan
Year (i.e., shorter than 12 months), the annual Compensation limit
is an amount equal to the otherwise applicable annual Compensation
limit multiplied by a fraction, the numerator of which is the number
of months in the short Plan Year, and the denominator of which is
12.
In determining the Compensation of a Participant for purposes of
this limitation, the rules of Section 414(q)(6) of the Code 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 close of the year. If, as a result of the application of such
rules the adjusted $200,000 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 Compensation for any prior determination period is taken into
account in determining an Employee's allocations or benefits for the
current determination period, the Compensation for such prior
determination period is subject to the applicable annual
Compensation limit in effect for that prior period. For this
purpose, in determining allocations in Plan Years beginning on or
after January 1, 1989, the annual Compensation limit in effect for
determination periods beginning before that date is $200,000. In
addition, in determining allocations in Plan Years beginning on or
after January 1, 1994, the annual Compensation limit in effect for
determination periods beginning before that date is $150,000.
2
1.08 CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian or any
duly appointed successor as provided in Section 5.09.
1.09 DISABILITY
Unless the Employer has elected a different definition in the Adoption
Agreement, Disability means the inability to engage in any substantial,
gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
12 months. The permanence and degree of such impairment shall be supported
by medical evidence.
1.10 EARLY RETIREMENT AGE
Means the age specified in the Adoption Agreement. The Plan will not have
an Early Retirement Age if none is specified in the Adoption Agreement.
1.11 EARNED INCOME
Means the net earnings from self-employment in the trade or business with
respect to which the Plan is established, for which personal services of
the individual are a material income-producing factor. Net earnings will
be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified plan to the extent deductible
under Section 404 of the Code.
Net earnings shall be determined with regard to the deduction allowed to
the Employer by Section 164(f) of the Code for taxable years beginning
after December 31, 1989.
1.12 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the Adoption
Agreement. However, as indicated in the Adoption Agreement, certain
provisions may have specific effective dates. Further, where a separate
date is stated in the Plan as of which a particular Plan provision becomes
effective, such date will control with respect to that provision.
1.13 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the 12
consecutive month period commencing on the Employee's Employment
Commencement Date. The Employee's subsequent Eligibility Computation
Periods shall be the 12 consecutive month periods commencing on the
anniversaries of his or her Employment Commencement Date; provided,
however, if pursuant to the Adoption Agreement, an Employee is required to
complete one or less Years of Eligibility Service to become a Participant,
then his or her subsequent Eligibility Computation Periods shall be the
Plan Years commencing with the Plan Year beginning during his or her
initial Eligibility Computation Period. An Employee does not complete a
Year of Eligibility Service before the end of the 12 consecutive month
period regardless of when during such period the Employee completes the
required number of Hours of Service.
1.14 EMPLOYEE
Means any person employed by an Employer maintaining the Plan or of any
other employer required to be aggregated with such Employer under Sections
414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any Leased Employee deemed to be an
Employee of any Employer described in the previous paragraph as provided
in Section 414(n) or (o) of the Code.
1.15 EMPLOYER
Means any corporation, partnership, sole-proprietorship or other entity
named in the Adoption Agreement and any successor who by merger,
consolidation, purchase or otherwise assumes the obligations of the Plan.
A partnership is considered to be the Employer of each of the partners and
a sole-proprietorship is considered to be the Employer of a sole
proprietor. Where this Plan is being maintained by a union or other entity
that represents its member Employees in the negotiation of collective
bargaining agreements, the term Employer shall mean such union or other
entity.
1.16 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as determined under
this Plan.
1.17 EMPLOYMENT COMMENCEMENT DATE
An Employee's Employment Commencement date means the date the Employee
first performs an Hour of Service for the Employer.
1.18 EMPLOYER PROFIT SHARING CONTRIBUTION
Means an Employer Contribution made pursuant to the Section of the
Adoption Agreement titled "Employer Profit Sharing Contributions." The
Employer may make Employer Profit Sharing Contributions without regard to
current or accumulated earnings or profits.
3
1.19 ENTRY DATES
Means the first day of the Plan Year and the first day of the seventh
month of the Plan Year, unless the Employer has specified different dates
in the Adoption Agreement.
1.20 ERISA
Means the Employee Retirement Income Security Act of 1974 as amended from
time-to-time.
1.21 FORFEITURE
Means that portion of a Participant's Individual Account derived from
Employer Contributions which he or she is not entitled to receive (i.e.,
the nonvested portion).
1.22 FUND
Means the Plan assets held by the Trustee for the Participants' exclusive
benefit.
1.23 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated active
employees and highly compensated former employees.
A highly compensated active employee includes any Employee who performs
service for the Employer during the determination year and who, during the
look-back year: (a) received Compensation from the Employer in excess of
$75,000 (as adjusted pursuant to Section 415(d) of the Code); (b) received
Compensation from the Employer in excess of $50,000 (as adjusted pursuant
to Section 415(d) of the Code) and was a member of the top-paid group for
such year; or (c) was an officer of the Employer and received Compensation
during such year that is greater than 50% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code. The term Highly Compensated
Employee also includes: (a) Employees who are both described in the
preceding sentence if the term "determination year" is substituted for the
term "look-back year" and the Employee is one of the 100 Employees who
received the most Compensation from the Employer during the determination
year; and (b) Employees who are 5% owners at any time during the look-back
year or determination year.
If no officer has satisfied the Compensation requirement of (c) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12 month period immediately preceding the
determination year.
A highly compensated former employee includes any Employee who separated
from service (or was deemed to have separated) prior to the determination
year, performs no service for the Employer during the determination year,
and was a highly compensated active employee for either the separation
year or any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5% owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Compensation paid by the Employer during
such year, then the family member and the 5% owner or top 10 Highly
Compensated Employee shall be aggregated. In such case, the family member
and 5% owner or top 10 Highly Compensated Employee shall be treated as a
single Employee receiving Compensation and Plan contributions or benefits
equal to the sum of such Compensation and contributions or benefits of the
family member and 5% owner or top 10 Highly Compensated Employee. For
purposes of this Section, family member includes the spouse, lineal
ascendants and descendants of the Employee or former Employee and the
spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid
group, the top 100 Employees, the number of Employees treated as officers
and the Compensation that is considered, will be made in accordance with
Section 414(q) of the Code and the regulations thereunder.
1.24 HOURS OF SERVICE - Means
A. Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours will be
credited to the Employee for the computation period in which the
duties are performed; and
B. Each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service will 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 is
incorporated herein by this reference; and
4
C. Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours of
Service will not be credited both under paragraph (A) or paragraph
(B), as the case may be, and under this paragraph (C). These hours
will be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement, or payment is
made.
D. Solely for purposes of determining whether a Break in Eligibility
Service or a Break in Vesting Service has occurred in a computation
period (the computation period for purposes of determining whether a
Break in Vesting Service has occurred is the Plan Year or other
vesting computation period described in Section 1.50), an individual
who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have
been credited to such individual but for such absence, or in any
case in which such hours cannot be determined, 8 Hours of Service
per day of such absence. For purposes of this paragraph, an absence
from work for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of a birth
of a child of the individual, (3) by reason of the placement of a
child with the individual in connection with the adoption of such
child by such individual, or (4) for purposes of caring for such
child for a period beginning immediately following such birth or
placement. The Hours of Service credited under this paragraph shall
be credited (1) in the Eligibility Computation Period or Plan Year
or other vesting computation period described in Section 1.50 in
which the absence begins if the crediting is necessary to prevent a
Break in Eligibility Service or a Break in Vesting Service in the
applicable period, or (2) in all other cases, in the following
Eligibility Computation Period or Plan Year or other vesting
computation period described in Section 1.50.
E. Hours of Service will be credited for employment with other members
of an affiliated service group (under Section 414(m) of the Code), a
controlled group of corporations (under Section 414(b) of the Code),
or a group of trades or businesses under common control (under
Section 414(c) of the Code) of which the adopting Employer is a
member, and any other entity required to be aggregated with the
Employer pursuant to Section 414(o) of the Code and the regulations
thereunder.
Hours of Service will also be credited for any individual considered
an Employee for purposes of this Plan under Code Sections 414(n) or
414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as service
for the Employer.
G. The above method for determining Hours of Service may be altered as
specified in the Adoption Agreement.
1.25 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for each
Participant in accordance with Section 4.01.
1.26 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section 5.05.
1.27 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under Section
10.08.
1.28 LEASED EMPLOYEE
Means 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 Section
414(n)(6) of the Code) 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.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient Employer.
A Leased Employee shall not be considered an Employee of the recipient if:
(1) such employee is covered by a money purchase pension plan providing:
(a) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Section 415(c)(3) of the Code, but including
amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under Section 125, Section
402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code, (b)
immediate participation, and (c) full and immediate vesting; and (2)
Leased Employees do not constitute more than 20% of the recipient's
nonhighly compensated work force.
1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Means any 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.
5
1.30 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if the
Employer enforces a mandatory retirement age which is less than the Normal
Retirement Age, such mandatory age is deemed to be the Normal Retirement
Age. If no age is specified in the Adoption Agreement, the Normal
Retirement Age shall be age 65.
1.31 OWNER - EMPLOYEE
Means an individual who is a sole proprietor, or who is a partner owning
more than 10% of either the capital or profits interest of the
partnership.
1.32 PARTICIPANT
Means any Employee or former Employee of the Employer who has met the
Plan's eligibility requirements, has entered the Plan and who is or may
become eligible to receive a benefit of any type from this Plan or whose
Beneficiary may be eligible to receive any such benefit.
1.33 PLAN
Means the prototype defined contribution plan adopted by the Employer. The
Plan consists of this Basic Plan Document plus the corresponding Adoption
Agreement as completed and signed by the Employer.
1.34 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan Administrator in
accordance with Section 8.01.
1.35 PLAN YEAR
Means the 12 consecutive month period which coincides with the Employer's
fiscal year or such other 12 consecutive month period as is designated in
the Adoption Agreement.
1.36 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this Plan
document as indicated in the Adoption Agreement.
1.37 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement that makes this
prototype plan available to employers for adoption.
1.38 QUALIFYING PARTICIPANT
Means a Participant who has satisfied the requirements described in
Section 3.01(B)(2) to be entitled to share in any Employer Contribution
(and Forfeitures, if applicable) for a Plan Year.
1.39 RELATED EMPLOYER
Means an employer that may be required to be aggregated with the Employer
adopting this Plan for certain qualification requirements under Sections
414(b), (c), (m) or (o) of the Code (or any other employer that has
ownership in common with the Employer). A Related Employer may participate
in this Plan if so indicated in the Section of the Adoption Agreement
titled "Employer Information" or if such Related Employer executes a
Related Employer Participation Agreement.
1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT
Means the agreement under this prototype Plan that a Related Employer may
execute to participate in this Plan.
1.41 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable year from the
trade or business for which the Plan is established; also, an individual
who would have had Earned Income but for the fact that the trade or
business had no net profits for the taxable year.
1.42 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that Participant. The
assets which comprise a Participant's Separate Fund are those assets
earmarked for him or her and those assets subject to the Participant's
individual direction pursuant to Section 5.14.
1.43 TAXABLE WAGE BASE
Means, with respect to any taxable year, the contribution and benefit base
in effect under Section 230 of the Social Security Act at the beginning of
the Plan Year.
1.44 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall occur
whenever his or her status as an Employee of such Employer ceases for any
reason other than death. An Employee who does not return to work for the
Employer on or before the expiration of an authorized leave of absence
from such Employer shall be deemed to have incurred a Termination of
Employment when such leave ends.
6
1.45 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is determined to be
such pursuant to Section 10.08.
1.46 TRUSTEE
Means an individual, individuals or corporation specified in the Adoption
Agreement as Trustee or any duly appointed successor as provided in
Section 5.09. Trustee shall mean Custodian in the event the financial
organization named as Trustee does not have full trust powers.
1.47 VALUATION DATE
Means the date or dates as specified in the Adoption Agreement. If no date
is specified in the Adoption Agreement, the Valuation Date shall be the
last day of the Plan Year and each other date designated by the Plan
Administrator which is selected in a uniform and nondiscriminatory manner
when the assets of the Fund are valued at their then fair market value.
1.48 VESTED
Means nonforfeitable, that is, a claim which is unconditional and legally
enforceable against the Plan obtained by a Participant or the
Participant's Beneficiary to that part of an immediate or deferred benefit
under the Plan which arises from a Participant's Years of Vesting Service.
1.49 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee completes at least 1,000 Hours
of Service (or such lesser number of Hours of Service specified in the
Adoption Agreement for this purpose). An Employee does not complete a Year
of Eligibility Service before the end of the 12 consecutive month period
regardless of when during such period the Employee completes the required
number of Hours of Service.
1.50 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least 1,000 Hours
of Service (or such lesser number of Hours of Service specified in the
Adoption Agreement for this purpose). Notwithstanding the preceding
sentence, where the Employer so indicates in the Adoption Agreement,
vesting shall be computed by reference to the 12 consecutive month period
beginning with the Employee's Employment Commencement Date and each
successive 12 month period commencing on the anniversaries thereof.
In the case of a Participant who has 5 or more consecutive Breaks in
Vesting Service, all Years of Vesting Service after such Breaks in Vesting
Service will be disregarded for the purpose of determining the Vested
portion of his or her Individual Account derived from Employer
Contributions that accrued before such breaks. Such Participant's prebreak
service will count in vesting the postbreak Individual Account derived
from Employer Contributions only if either:
(A) such Participant had any Vested right to any portion of his or her
Individual Account derived from Employer Contributions at the time
of his or her Termination of Employment; or
(B) upon returning to service, the number of consecutive Breaks in
Vesting Service is less than his or her number of Years of Vesting
Service before such breaks.
Separate subaccounts will be maintained for the Participant's prebreak and
postbreak portions of his or her Individual Account derived from Employer
Contributions. Both subaccounts will share in the gains and losses of the
Fund.
Years of Vesting Service shall not include any period of time excluded
from Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period, Employees
shall receive credit for Years of Vesting Service, in accordance with the
preceding provisions of this definition, for each of the Plan Years (the
old and new Plan Years) which overlap as a result of such change.
SECTION TWO
ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong to a
class of Employees which is excluded from participation as indicated in
the Adoption Agreement, shall be eligible to participate in this Plan upon
the satisfaction of the age and Years of Eligibility Service requirements
specified in the Adoption Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a Participant in
said Prior Plan before the Effective Date shall continue to be a
Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the
Effective Date if the Employee has met the eligibility requirements
of Section 2.01 as of such date. After the Effective Date, each
Employee shall become a Participant on
7
the first Entry Date following the date the Employee satisfies the
eligibility requirements of Section 2.01 unless otherwise indicated
in the Adoption Agreement.
C. The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall furnish the
Employee with the application form, enrollment forms or other
documents which are required of Participants. The eligible Employee
shall execute such forms or documents and make available such
information as may be required in the administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to
participate because he or she is no longer a member of an eligible class
of Employees, but has not incurred a Break in Eligibility Service, such
Employee shall participate immediately upon his or her return to an
eligible class of Employees. If such Employee incurs a Break in
Eligibility Service, his or her eligibility to participate shall be
determined by Section 2.04.
An Employee who is not a member of the eligible class of Employees will
become a Participant immediately upon becoming a member of the eligible
class provided such Employee has satisfied the age and Years of
Eligibility Service requirements. If such Employee has not satisfied the
age and Years of Eligibility Service requirements as of the date he or she
becomes a member of the eligible class, such Employee shall become a
Participant on the first Entry Date following the date he or she satisfies
those requirements unless otherwise indicated in the Adoption Agreement.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. Employee Not Participant Before Break - If an Employee incurs a
Break in Eligibility Service before satisfying the Plan's
eligibility requirements, such Employee's Years of Eligibility
Service before such Break in Eligibility Service will not be taken
into account.
B. Nonvested Participants - In the case of a Participant who does not
have a Vested interest in his or her Individual Account derived from
Employer Contributions, Years of Eligibility Service before a period
of consecutive Breaks in Eligibility Service will not be taken into
account for eligibility purposes if the number of consecutive Breaks
in Eligibility Service in such period equals or exceeds the greater
of 5 or the aggregate number of Years of Eligibility Service before
such break. Such aggregate number of Years of Eligibility Service
will not include any Years of Eligibility Service disregarded under
the preceding sentence by reason of prior breaks.
If a Participant's Years of Eligibility Service are disregarded
pursuant to the preceding paragraph, such Participant will be
treated as a new Employee for eligibility purposes. If a
Participant's Years of Eligibility Service may not be disregarded
pursuant to the preceding paragraph, such Participant shall continue
to participate in the Plan, or, if terminated, shall participate
immediately upon reemployment.
C. Vested Participants - A Participant who has sustained a Break in
Eligibility Service and who had a Vested interest in all or a
portion of his or her Individual Account derived from Employer
Contributions shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each Employee to
be a Participant. This determination shall be conclusive and binding upon
all persons except as otherwise provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact that a
common law Employee has become a Participant shall give to that common law
Employee any right to continued employment; nor shall either fact limit
the right of the Employer to discharge or to deal otherwise with a common
law Employee without regard to the effect such treatment may have upon the
Employee's rights under the Plan.
2.07 SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED
This Section 2.07 shall apply where the Employer has indicated in the
Adoption Agreement that the elapsed time method will be used. When this
Section applies, the definitions of year of service, break in service and
hour of service in this Section will replace the definitions of Year of
Eligibility Service, Year of Vesting Service, Break in Eligibility
Service, Break in Vesting Service and Hours of Service found in the
Definitions Section of the Plan (Section One).
For purposes of determining an Employee's initial or continued eligibility
to participate in the Plan or the Vested interest in the Participant's
Individual Account balance derived from Employer Contributions, (except
for periods of service which may be disregarded on account of the "rule of
parity" described in Sections 1.50 and 2.04) 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.
8
For purposes of this Section, hour of service will mean each hour for
which an Employee is paid or entitled to payment for the performance of
duties for the Employer. Break in service is a period of severance of at
least 12 consecutive months. 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.
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 (1) by reason of the
pregnancy of the individual, (2) by reason of the birth of a child of the
individual, (3) by reason of the placement of a child with the individual
in connection with the adoption of such child by such individual, or (4)
for purposes of caring for such child for a period beginning immediately
following such birth or placement.
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.
If the Employer is a member of an affiliated service group (under Section
414(m) of the Code), a controlled group of corporations (under Section
414(b) of the Code), a group of trades or businesses under common control
(under Section 414(c) of the Code), or any other entity required to be
aggregated with the Employer pursuant to Section 414(o) of the Code,
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) of the Code.
2.08 ELECTION NOT TO PARTICIPATE
This Section 2.08 will apply if this Plan is a nonstandardized plan and
the Adoption Agreement so provides. If this Section applies, then an
Employee or a Participant may elect not to participate in the Plan for one
or more Plan Years. The Employer may not contribute for an Employee or
Participant for any Plan Year during which such Employee's or
Participant's election not to participate is in effect. Any election not
to participate must be in writing and filed with the Plan Administrator.
The Plan Administrator shall establish such uniform and nondiscriminatory
rules as it deems necessary or advisable to carry out the terms of this
Section, including, but not limited to, rules prescribing the timing of
the filing of elections not to participate and the procedures for electing
to re-participate in the Plan.
An Employee or Participant continues to earn credit for vesting and
eligibility purposes for each Year of Vesting Service or Year of
Eligibility Service he or she completes and his or her Individual Account
(if any) will share in the gains or losses of the Fund during the periods
he or she elects not to participate.
SECTION THREE
CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute - The Employer shall make contributions to
the Plan in accordance with the contribution formula specified in
the Adoption Agreement. If this Plan is a profit sharing plan, the
Employer shall, in its sole discretion, make contributions without
regard to current or accumulated earnings or profits.
B. Allocation Formula and the Right to Share in the Employer
Contribution -
1. General - The Employer Contribution for any Plan Year will be
allocated or contributed to the Individual Accounts of
Qualifying Participants in accordance with the allocation or
contribution formula specified in the Adoption Agreement. The
Employer Contribution for any Plan Year will be allocated to
each Participant's Individual Account as of the last day of
that Plan Year.
Any Employer Contribution for a Plan Year must satisfy Section
401(a)(4) and the regulations thereunder for such Plan Year.
2. Qualifying Participants - A Participant is a Qualifying
Participant and is entitled to share in the Employer
Contribution for any Plan Year if the Participant was a
Participant on at least one day during the Plan Year and
satisfies any additional conditions specified in the Adoption
Agreement. If this Plan is a standardized plan, unless the
Employer specifies more favorable conditions in the Adoption
Agreement, a Participant will not be a qualifying Participant
for a Plan Year if he or she incurs a Termination of
Employment during such Plan Year with not more than 500 Hours
of Service if he or she is not an Employee on the last day of
the Plan Year. The determination of whether a Participant is
entitled to share in the Employer Contribution shall be made
as of the last day of each Plan Year.
9
3. Special Rules for Integrated Plans - This Plan may not
allocate contributions based on an integrated formula if the
Employer maintains any other plan that provides for allocation
of contributions based on an integrated formula that benefits
any of the same Participants. If the Employer has selected the
integrated contribution or allocation formula in the Adoption
Agreement, then the maximum disparity rate shall be determined
in accordance with the following table.
MAXIMUM DISPARITY RATE
Top-Heavy Nonstandardized and
Integration Level Money Purchase Profit Sharing Non-Top-Heavy Profit Sharing
-----------------------------------------------------------------------------------------
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more
than 20% of TWB 5.7% 2.7% 5.7%
More than 20% of TWB but
not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but
not more than TWB 5.4% 2.4% 5.4%
C. Allocation of Forfeitures - Forfeitures for a Plan Year which arise
as a result of the application of Section 6.01(D) shall be allocated
as follows:
1. Profit Sharing Plan - If this is a profit sharing plan, unless
the Adoption Agreement indicates otherwise, Forfeitures shall
be allocated in the manner provided in Section 3.01(B) (for
Employer Contributions) to the Individual Accounts of
Qualifying Participants who are entitled to share in the
Employer Contribution for such Plan Year. Forfeitures shall be
allocated as of the last day of the Plan Year during which the
Forfeiture arose (or any subsequent Plan Year if indicated in
the Adoption Agreement).
2. Money Purchase Pension and Target Benefit Plan - If this Plan
is a money purchase plan or a target benefit plan, unless the
Adoption Agreement indicates otherwise, Forfeitures shall be
applied towards the reduction of Employer Contributions to the
Plan. Forfeitures shall be allocated as of the last day of the
Plan Year during which the Forfeiture arose (or any subsequent
Plan Year if indicated in the Adoption Agreement).
D. Timing of Employer Contribution - The Employer Contribution for each
Plan Year shall be delivered to the Trustee (or Custodian, if
applicable) not later than the due date for filing the Employer's
income tax return for its fiscal year in which the Plan Year ends,
including extensions thereof.
E. Minimum Allocation for Top-Heavy Plans - The contribution and
allocation provisions of this Section 3.01(E) shall apply for any
Plan Year with respect to which this Plan is a Top-Heavy Plan.
1. Except as otherwise provided in (3) and (4) below, the
Employer Contributions and Forfeitures allocated on behalf of
any Participant who is not a Key Employee shall not be less
than the lesser of 3% of such Participant's Compensation or
(in the case where the Employer has no defined benefit plan
which designates this Plan to satisfy Section 401 of the Code)
the largest percentage of Employer Contributions and
Forfeitures, as a percentage of the first $200,000 ($150,000
for Plan Years beginning after December 31, 1993), (increased
by any cost of living adjustment made by the Secretary of
Treasury or the Secretary's delegate) of the Key Employee's
Compensation, allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without regard to
any Social Security contribution. The Employer may, in the
Adoption Agreement, limit the Participants who are entitled to
receive the minimum allocation. This minimum allocation shall
be made 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 of (a) the Participant's failure to complete
1,000 Hours of Service (or any equivalent provided in the
Plan), or (b) the Participant's failure to make mandatory
Nondeductible Employee Contributions to the Plan, or (c)
Compensation less than a stated amount.
2. For purposes of computing the minimum allocation, Compensation
shall mean Compensation as defined in Section 1.07 of the Plan
and shall exclude any amounts contributed by the Employer
pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections
125,
10
402(e)(3), 402(h)(1)(B) or 403(b) of the Code even if the
Employer has elected to include such contributions in the
definition of Compensation used for other purposes under the
Plan.
3. The provision in (1) above shall not apply to any Participant
who was not employed by the Employer on the last day of the
Plan Year.
4. The provision in (1) above shall not apply to any Participant
to the extent the Participant is covered under any other plan
or plans of the Employer and the Employer has provided in the
adoption agreement that the minimum allocation or benefit
requirement applicable to Top-Heavy Plans will be met in the
other plan or plans.
5. The minimum allocation required under this Section 3.01(E) and
Section 3.01(F)(1) (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited
under Code Section 411(a)(3)(B) or 411(a)(3)(D).
F. Special Requirements for Paired Plans - The Employer maintains
paired plans if the Employer has adopted both a standardized profit
sharing plan and a standardized money purchase pension plan using
this Basic Plan Document.
1. Minimum Allocation - When the paired plans are top-heavy, the
top-heavy requirements set forth in Section 3.01(E)(1) of the
Plan shall apply.
a. Same eligibility requirements. In satisfying the
top-heavy minimum allocation requirements set forth in
Section 3.01(E) of the Plan, if the Employees benefiting
under each of the paired plans are identical, the
top-heavy minimum allocation shall be made to the money
purchase pension plan.
b. Different eligibility requirements. In satisfying the
top-heavy minimum allocation requirements set forth in
Section 3.01(E) of the Plan, if the Employees benefiting
under each of the paired plans are not identical, the
top-heavy minimum allocation will be made to both of the
paired plans.
A Participant is treated as benefiting under the Plan for any
Plan Year during which the Participant received or is deemed
to receive an allocation in accordance with Section
1.410(b)-3(a).
2. Only One Plan Can Be Integrated - If the Employer maintains
paired plans, only one of the Plans may provide for the
disparity in contributions which is permitted under Section
401(l) of the Code. In the event that both Adoption Agreements
provide for such integration, only the money purchase pension
plan shall be deemed to be integrated.
G. Return of the Employer Contribution to the Employer Under Special
Circumstances - Any contribution made by the Employer because of a
mistake of fact must be returned to the Employer within one year of
the contribution.
In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Code, any
contributions 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 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.
In the event that a contribution made by the Employer under this
Plan is conditioned on deductibility and is not deductible under
Code Section 404, the contribution, to the extent of the amount
disallowed, must be returned to the Employer within one year after
the deduction is disallowed.
▇. ▇▇▇▇▇▇▇▇ of Participant
1. If the Plan is a money purchase plan or a target benefit plan
and, if in any Plan Year, any Employee who should be included
as a Participant is erroneously omitted and discovery of such
omission is not made until after a contribution by the
Employer for the year has been made and allocated, the
Employer shall make a subsequent contribution to include
earnings thereon, with respect to the omitted Employee in the
amount which the Employer would have contributed with respect
to that Employee had he or she not been omitted.
2. If the Plan is a profit sharing plan, and if in any Plan Year,
any Employee who should be included as a Participant is
erroneously omitted and discovery of such omission is not made
until after the Employer Contribution has been made and
allocated, then the Plan Administrator must re-do the
allocation (if a correction can be made) and inform the
Employee. Alternatively, the Employer may choose to contribute
for the omitted Employee the amount to include earnings
thereon, which the Employer would have contributed for the
Employee.
3.02 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
11
This Plan will not accept Nondeductible Employee Contributions and
matching contributions for Plan Years beginning after the Plan Year in
which this Plan is adopted by the Employer. Nondeductible Employee
Contributions for Plan Years beginning after December 31, 1986, together
with any matching contributions as defined in Section 401(m) of the Code,
will be limited so as to meet the nondiscrimination test of Section 401(m)
of the Code.
A separate account will be maintained by the Plan Administrator for the
Nondeductible Employee Contributions of each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator withdraw the lesser of the portion of his or her Individual
Account attributable to his or her Nondeductible Employee Contributions or
the amount he or she contributed as Nondeductible Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as a result
of an Employee's withdrawal of Nondeductible Employee Contributions.
The Plan Administrator will not accept deductible employee contributions
which are made for a taxable year beginning after December 31, 1986.
Contributions made prior to that date will be maintained in a separate
account which will be nonforfeitable at all times. The account will share
in the gains and losses of the Fund in the same manner as described in
Section 4.03 of the Plan. No part of the deductible employee contribution
account will be used to purchase life insurance. Subject to Section 6.05,
joint and survivor annuity requirements (if applicable), the Participant
may withdraw any part of the deductible employee contribution account by
making a written application to the Plan Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If so indicated in the Adoption Agreement, an Employee may contribute a
rollover contribution to the Plan. The Plan Administrator may require the
Employee to submit a written certification that the contribution qualifies
as a rollover contribution under the applicable provisions of the Code. If
it is later determined that all or part of a rollover contribution was
ineligible to be rolled into the Plan, the Plan Administrator shall direct
that any ineligible amounts, plus earnings attributable thereto, be
distributed from the Plan to the Employee as soon as administratively
feasible.
A separate account shall be maintained by the Plan Administrator for each
Employee's rollover contributions which will be nonforfeitable at all
times. Such account will share in the income and gains and losses of the
Fund in the manner described in Section 4.03 and shall be subject to the
Plan's provisions governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only allow
Employees who have become Participants in the Plan to make rollover
contributions.
3.04 TRANSFER CONTRIBUTIONS
If so indicated in the Adoption Agreement, the Trustee (or Custodian, if
applicable) may receive any amounts transferred to it from the trustee or
custodian of another plan qualified under Code Section 401(a). If it is
later determined that all or part of a transfer contribution was
ineligible to be transferred into the Plan, the Plan Administrator shall
direct that any ineligible amounts, plus earnings attributable thereto, be
distributed from the Plan to the Employee as soon as administratively
feasible.
A separate account shall be maintained by the Plan Administrator for each
Employee's transfer contributions which will be nonforfeitable at all
times. Such account will share in the income and gains and losses of the
Fund in the manner described in Section 4.03 and shall be subject to the
Plan's provisions governing distributions. Notwithstanding any provision
of this Plan to the contrary, to the extent that any optional form of
benefit under this Plan permits a distribution prior to the Employee's
retirement, death, Disability, or severance from employment, and prior to
Plan termination, the optional form of benefit is not available with
respect to benefits attributable to assets (including the post-transfer
earnings thereon) and liabilities that are transferred, within the meaning
of Section 414(l) of the Internal Revenue Code, to this Plan from a money
purchase pension plan qualified under Section 401(a) of the Internal
Revenue Code (other than any portion of those assets and liabilities
attributable to voluntary employee contributions).
The Employer may, in a uniform and nondiscriminatory manner, only allow
Employees who have become Participants in the Plan to make transfer
contributions.
3.05 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer or
a welfare benefit fund, as defined in Section 419(e) of the Code
maintained by the Employer, or an individual medical account, as
defined in Section 415(l)(2) of the Code, or a simplified employee
pension plan, as defined in Section 408(k) of the Code, maintained
by the Employer, which provides an annual addition as defined in
Section 3.08(E)(1), the following rules shall apply:
1. The amount of annual additions which may be credited to the
Participant's Individual Account for any limitation year will
not exceed the lesser of the maximum permissible amount or any
other limitation contained in this
12
Plan. If the Employer Contribution that would otherwise be
contributed or allocated to the Participant's Individual
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.
2. Prior to determining the Participant's actual Compensation for
the limitation year, the Employer may determine the maximum
permissible amount for a Participant on the basis of a
reasonable estimation of the Participant's Compensation for
the limitation year, uniformly determined for all Participants
similarly situated.
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual Compensation for the limitation year.
4. If pursuant to Section 3.05(A)(3) or as a result of the
allocation of Forfeitures there is an excess amount, the
excess will be disposed of as follows:
a. Any Nondeductible Employee Contributions, to the extent
they would reduce the excess amount, will be returned to
the Participant;
b. If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered by
the Plan at the end of the limitation year, the excess
amount in the Participant's Individual Account will be
used to reduce Employer Contributions (including any
allocation of Forfeitures) for such Participant in the
next limitation year, and each succeeding limitation
year if necessary;
c. If after the application of paragraph (b) an excess
amount still exists, and the Participant is not covered
by the Plan at the end of a limitation year, the excess
amount will be held unallocated in a suspense account.
The suspense account will be applied to reduce future
Employer Contributions (including allocation of any
Forfeitures) for all remaining Participants in the next
limitation year, and each succeeding limitation year if
necessary;
d. If a suspense account is in existence at any time during
a limitation year pursuant to this Section, it will not
participate in the allocation of the Fund's 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' Individual Accounts before
any Employer Contributions or any Nondeductible Employee
Contributions may be made to the Plan for that
limitation year. Excess amounts may not be distributed
to Participants or former Participants.
B. If, in addition to this Plan, the Participant is covered under
another qualified master or prototype defined contribution plan
maintained by the Employer, a welfare benefit fund maintained by the
Employer, an individual medical account maintained by the Employer,
or a simplified employee pension maintained by the Employer that
provides an annual addition as defined in Section 3.05(E)(1), during
any limitation year, the following rules apply:
1. The annual additions which may be credited to a Participant's
Individual Account under this Plan for any such limitation
year will not exceed the maximum permissible amount reduced by
the annual additions credited to a Participant's Individual
Account under the other qualified master or prototype plans,
welfare benefit funds, individual medical accounts and
simplified employee pensions for the same limitation year. If
the annual additions with respect to the Participant under
other qualified master or prototype defined contribution
plans, welfare benefit funds, individual medical accounts and
simplified employee pensions 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 Individual 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 qualified master or prototype
defined contribution plans, welfare benefit funds, individual
medical accounts and simplified employee pensions in the
aggregate are equal to or greater than the maximum permissible
amount, no amount will be contributed or allocated to the
Participant's Individual Account under this Plan for the
limitation year.
2. 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 Section 3.05(A)(2).
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual Compensation for the limitation year.
13
4. If, pursuant to Section 3.05(B)(3) or as a result of the
allocation 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
will be deemed to have been allocated first, followed by
annual additions to a welfare benefit fund or individual
medical account, regardless of the actual allocation date.
5. If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the excess amount attributed
to this Plan will be the product of,
a. the total excess amount allocated as of such date, times
b. the ratio of (i) the annual additions allocated to the
Participant for the limitation year as of such date
under this Plan to (ii) the total annual additions
allocated to the Participant for the limitation year as
of such date under this and all the other qualified
prototype defined contribution plans.
6. Any excess amount attributed to this Plan will be disposed in
the manner described in Section 3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a master
or prototype plan, annual additions which may be credited to the
Participant's Individual Account under this Plan for any limitation
year will be limited in accordance with Sections 3.05(B)(1) through
3.05(B)(6) as though the other plan were a master or prototype plan
unless the Employer provides other limitations in the Section of the
Adoption Agreement titled "Limitation on Allocation - More Than One
Plan."
D. If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum
of the Participant's defined benefit plan fraction and defined
contribution plan fraction will not exceed 1.0 in any limitation
year. The annual additions which may be credited to the
Participant's Individual Account under this Plan for any limitation
year will be limited in accordance with the Section of the Adoption
Agreement titled "Limitation on Allocation - More Than One Plan."
E. The following terms shall have the following meanings when used in
this Section 3.05:
1. Annual additions: The sum of the following amounts credited to
a Participant's Individual Account for the limitation year:
a. Employer Contributions,
b. Nondeductible Employee Contributions,
c. Forfeitures,
d. amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section
415(l)(2) of the Code, which is part of a pension or
annuity plan maintained by the Employer are treated as
annual additions to a defined contribution plan. Also
amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such
date, which are attributable to post-retirement medical
benefits, allocated to the separate account of a key
employee, as defined in Section 419A(d)(3) of the Code,
under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the Employer are
treated as annual additions to a defined contribution
plan, and
e. allocations under a simplified employee pension.
For this purpose, any excess amount applied under Section
3.05(A)(4) or 3.05(B)(6) in the limitation year to reduce
Employer Contributions will be considered annual additions for
such limitation year.
2. Compensation: Means Compensation as defined in Section 1.07 of
the Plan except that Compensation for purposes of this Section
3.05 shall not include any amounts contributed by the Employer
pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections
125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code even if the
Employer has elected to include such contributions in the
definition of Compensation used for other purposes under the
Plan. Further, any other exclusion the Employer has elected
(such as the exclusion of certain types of pay or pay earned
before the Employee enters the Plan) will not apply for
purposes of this Section.
Notwithstanding the preceding sentence, Compensation for a
Participant in a defined contribution plan who is permanently
and totally disabled (as defined in Section 22(e)(3) of the
Code) 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
14
Compensation for the disabled Participant may be taken into
account only if the Participant is not a Highly Compensated
Employee (as defined in Section 414(q) of the Code) and
contributions made on behalf of such Participant are
nonforfeitable when made.
3. Defined benefit fraction: A fraction, the numerator of which
is the sum of the Participant's projected annual benefits
under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of
which is the lesser of 125% of the dollar limitation
determined for the limitation year under Section 415(b) and
(d) of the Code or 140% of the highest average compensation,
including any adjustments under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125% 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 January 1,
1987, disregarding any changes in the terms and conditions of
the plan after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Section 415 of the
Code for all limitation years beginning before January 1,
1987.
4. Defined contribution dollar limitation: $30,000 or if greater,
one-fourth of the defined benefit dollar limitation set forth
in Section 415(b)(1) of the Code as in effect for the
limitation year.
5. Defined contribution fraction: A fraction, the numerator of
which is the sum of the annual additions to the Participant's
account under all the defined contribution plans (whether or
not terminated) maintained by the Employer for the current and
all prior limitation years (including the annual additions
attributable to the Participant's 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 Section 419(e) of the Code, individual medical
accounts, and simplified employee pensions, maintained by the
Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior
limitation years of service with the Employer (regardless of
whether a defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any limitation year
is the lesser of 125% of the dollar limitation determined
under Section 415(b) and (d) of the Code in effect under
Section 415(c)(1)(A) of the Code or 35% 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 December 31,
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 January 1, 1987, and
disregarding any changes in the terms and conditions of the
Plan made after May 5, 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
January 1, 1987, shall not be recomputed to treat all
Nondeductible Employee Contributions as annual additions.
6. Employer: For purposes of this Section 3.05, Employer shall
mean the Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section 414(b)
of the Code as modified by Section 415(h)), all commonly
controlled trades or businesses (as defined in Section 414(c)
as modified by Section 415(h)) or affiliated service groups
(as defined in 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 Section 414(o) of
the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum permissible
amount.
8. Highest average compensation: The average compensation for the
three consecutive years of service with the Employer that
produces the highest average.
9. Limitation year: A calendar year, or the 12-consecutive month
period elected by the Employer in the Adoption Agreement. 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.
10. Master or prototype plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal
Revenue Service.
15
11. Maximum permissible amount: The maximum annual addition that
may be contributed or allocated to a Participant's Individual
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 Section 401(h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an annual addition under Section
415(l)(1) or 419A(d)(2) of the Code.
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
---------------------------------------------
12
12. Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity
if such benefit is expressed in a form other than a straight
life annuity or qualified joint and survivor annuity) to which
the Participant would be entitled under the terms of the Plan
assuming:
a. the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if
later), and
b. the Participant's Compensation for the current
limitation year and all other relevant factors used to
determine benefits under the Plan will remain constant
for all future limitation years.
Straight life annuity means an annuity payable in equal
installments for the life of the Participant that terminates
upon the Participant's death.
SECTION FOUR
INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain an Individual
Account in the name of each Participant to reflect the total value
of his or her interest in the Fund. Each Individual Account
established hereunder shall consist of such subaccounts as may be
needed for each Participant including:
1. a subaccount to reflect Employer Contributions and Forfeitures
allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's Nondeductible Employee
Contributions; and
5. a subaccount to reflect a Participant's deductible employee
contributions.
B. The Plan Administrator may establish additional accounts as it may
deem necessary for the proper administration of the Plan, including,
but not limited to, a suspense account for Forfeitures as required
pursuant to Section 6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's Individual
Account are invested in a Separate Fund for the Participant, then
the value of that portion of such Participant's Individual Account
at any relevant time equals the sum of the fair market values of the
assets in such Separate Fund, less any applicable charges or
penalties.
B. The fair market value of the remainder of each Individual Account is
determined in the following manner:
1. First, the portion of the Individual Account invested in each
Investment Fund as of the previous Valuation Date is
determined. Each such portion is reduced by any withdrawal
made from the applicable Investment Fund to or for the benefit
of a Participant or the Participant's Beneficiary, further
reduced by any amounts forfeited by the Participant pursuant
to Section 6.01(D) and further reduced by any transfer to
another Investment Fund since the previous Valuation Date and
is increased by any amount transferred from another Investment
Fund since the previous Valuation Date. The resulting amounts
are the net Individual Account portions invested in the
Investment Funds.
16
2. Secondly, the net Individual Account portions invested in each
Investment Fund are adjusted upwards or downwards, pro rata
(i.e., ratio of each net Individual Account portion to the sum
of all net Individual Account portions) so that the sum of all
the net Individual Account portions invested in an Investment
Fund will equal the then fair market value of the Investment
Fund. Notwithstanding the previous sentence, for the first
Plan Year only, the net Individual Account portions shall be
the sum of all contributions made to each Participant's
Individual Account during the first Plan Year.
3. Thirdly, any contributions to the Plan and Forfeitures are
allocated in accordance with the appropriate allocation
provisions of Section 3. For purposes of Section 4,
contributions made by the Employer for any Plan Year but after
that Plan Year will be considered to have been made on the
last day of that Plan Year regardless of when paid to the
Trustee (or Custodian, if applicable).
Amounts contributed between Valuation Dates will not be
credited with investment gains or losses until the next
following Valuation Date.
4. Finally, the portions of the Individual Account invested in
each Investment Fund (determined in accordance with (1), (2)
and (3) above) are added together.
4.04 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may establish
different or additional procedures (which shall be uniform and
nondiscriminatory) for determining the fair market value of the Individual
Accounts.
4.05 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a lump sum, the
Plan Administrator may place that Participant's account balance into a
segregated Investment Fund for the purpose of maintaining the necessary
liquidity to provide benefit installments on a periodic basis.
4.06 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the Plan
Administrator shall furnish a statement to each Participant indicating the
Individual Account balances of such Participant as of the last Valuation
Date in such Plan Year.
SECTION FIVE
TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which shall
consist of the assets of the Plan held by the Trustee (or Custodian, if
applicable) pursuant to this Section 5. Assets within the Fund may be
pooled on behalf of all Participants, earmarked on behalf of each
Participant or be a combination of pooled and earmarked. To the extent
that assets are earmarked for a particular Participant, they will be held
in a Separate Fund for that Participant.
No part of the corpus or income of the Fund may be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or their
Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual direction of
investments by Participants), the Employer, not the Trustee (or Custodian,
if applicable), shall have exclusive management and control over the
investment of the Fund into any permitted investment. Notwithstanding the
preceding sentence, a Trustee may make an agreement with the Employer
whereby the Trustee will manage the investment of all or a portion of the
Fund. Any such agreement shall be in writing and set forth such matters as
the Trustee deems necessary or desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST POWERS
This Section 5.03 applies where a financial organization has indicated in
the Adoption Agreement that it will serve, with respect to this Plan, as
Custodian or as Trustee without full trust powers (under applicable law).
Hereinafter, a financial organization Trustee without full trust powers
(under applicable law) shall be referred to as a Custodian. The Custodian
shall have no discretionary authority with respect to the management of
the Plan or the Fund but will act only as directed by the entity who has
such authority.
A. Permissible Investments - The assets of the Plan shall be invested
only in those investments which are available through the Custodian
in the ordinary course of business which the Custodian may legally
hold in a qualified plan and which the Custodian chooses to make
available to Employers for qualified plan investments.
Notwithstanding the preceding sentence, the Prototype Sponsor may,
as a condition of making the Plan available to the Employer, limit
the types of property in which the assets of the Plan may be
invested.
B. Responsibilities of the Custodian - The responsibilities of the
Custodian shall be limited to the following:
17
1. To receive Plan contributions and to hold, invest and reinvest
the Fund without distinction between principal and interest;
provided, however, that nothing in this Plan shall require the
Custodian to maintain physical custody of stock certificates
(or other indicia of ownership of any type of asset)
representing assets within the Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Custodian deems relevant
with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Custodian as of the end of each Plan Year and as of any other
times as the Custodian and Plan Administrator may agree.
▇. ▇▇▇▇▇▇ of the Custodian - Except as otherwise provided in this Plan,
the Custodian shall have the power to take any action with respect
to the Fund which it deems necessary or advisable to discharge its
responsibilities under this Plan including, but not limited to, the
following powers:
1. To invest all or a portion of the Fund (including idle cash
balances) in time deposits, savings accounts, money market
accounts or similar investments bearing a reasonable rate of
interest in the Custodian's own savings department or the
savings department of another financial organization;
2. To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges or subscription rights and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes
affecting corporate securities, and to pay any assessment or
charges in connection therewith; and generally to exercise any
of the powers of an owner with respect to stocks, bonds,
securities or other property;
3. To hold securities or other property of the Fund in its own
name, in the name of its nominee or in bearer form; and
4. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND INDIVIDUAL
TRUSTEE
This Section 5.04 applies where a financial organization has indicated in
the Adoption Agreement that it will serve as Trustee with full trust
powers. This Section also applies where one or more individuals are named
in the Adoption Agreement to serve as Trustee(s).
A. Permissible Investments - The Trustee may invest the assets of the
Plan in property of any character, real or personal, including, but
not limited to the following: stocks, including shares of open-end
investment companies (mutual funds); bonds; notes; debentures;
options; limited partnership interests; mortgages; real estate or
any interests therein; unit investment trusts; Treasury Bills, and
other U.S. Government obligations; common trust funds, combined
investment trusts, collective trust funds or commingled funds
maintained by a bank or similar financial organization (whether or
not the Trustee hereunder); savings accounts, time deposits or money
market accounts of a bank or similar financial organization (whether
or not the Trustee hereunder); annuity contracts; life insurance
policies; or in such other investments as is deemed proper without
regard to investments authorized by statute or rule of law governing
the investment of trust funds but with regard to ERISA and this
Plan.
Notwithstanding the preceding sentence, the Prototype Sponsor may,
as a condition of making the Plan available to the Employer, limit
the types of property in which the assets of the Plan may be
invested.
B. Responsibilities of the Trustee - The responsibilities of the
Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest and reinvest
the Fund without distinction between principal and interest;
provided, however, that nothing in this Plan shall require the
Trustee to maintain physical custody of stock certificates (or
other indicia of ownership) representing assets within the
Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Trustee deems relevant
with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
18
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Trustee as of the end of each Plan Year and as of any other
times as the Trustee and Plan Administrator may agree.
▇. ▇▇▇▇▇▇ of the Trustee - Except as otherwise provided in this Plan,
the Trustee shall have the power to take any action with respect to
the Fund which it deems necessary or advisable to discharge its
responsibilities under this Plan including, but not limited to, the
following powers:
1. To hold any securities or other property of the Fund in its
own name, in the name of its nominee or in bearer form;
2. To purchase or subscribe for securities issued, or real
property owned, by the Employer or any trade or business under
common control with the Employer but only if the prudent
investment and diversification requirements of ERISA are
satisfied;
3. To sell, exchange, convey, transfer or otherwise dispose of
any securities or other property held by the Trustee, by
private contract or at public auction. No person dealing with
the Trustee shall be bound to see to the application of the
purchase money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or
without advertisement;
4. To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges or subscription rights and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes
affecting corporate securities, and to delegate discretionary
powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities or other
property;
5. To invest any part or all of the Fund (including idle cash
balances) in certificates of deposit, demand or time deposits,
savings accounts, money market accounts or similar investments
of the Trustee (if the Trustee is a bank or similar financial
organization), the Prototype Sponsor or any affiliate of such
Trustee or Prototype Sponsor, which bear a reasonable rate of
interest;
6. To provide sweep services without the receipt by the Trustee
of additional compensation or other consideration (other than
reimbursement of direct expenses properly and actually
incurred in the performance of such services);
7. To hold in the form of cash for distribution or investment
such portion of the Fund as, at any time and from
time-to-time, the Trustee shall deem prudent and deposit such
cash in interest bearing or noninterest bearing accounts;
8. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted;
9. To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to
commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;
10. To employ suitable agents and counsel, to contract with agents
to perform administrative and recordkeeping duties and to pay
their reasonable expenses, fees and compensation, and such
agent or counsel may or may not be agent or counsel for the
Employer;
11. To cause any part or all of the Fund, without limitation as to
amount, to be commingled with the funds of other trusts
(including trusts for qualified employee benefit plans) by
causing such money to be invested as a part of any pooled,
common, collective or commingled trust fund (including any
such fund described in the Adoption Agreement) heretofore or
hereafter created by any Trustee (if the Trustee is a bank),
by the Prototype Sponsor, by any affiliate bank of such a
Trustee or by such a Trustee or the Prototype Sponsor, or by
such an affiliate in participation with others; the instrument
or instruments establishing such trust fund or funds, as
amended, being made part of this Plan and trust so long as any
portion of the Fund shall be invested through the medium
thereof; and
12. Generally to do all such acts, execute all such instruments,
initiate such proceedings, and exercise all such rights and
privileges with relation to property constituting the Fund as
if the Trustee were the absolute owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian) from time-to-time to
divide and redivide the Fund into one or more Investment Funds. Such
Investment Funds may include, but not be limited to, Investment Funds
representing the assets
19
under the control of an investment manager pursuant to Section 5.12 and
Investment Funds representing investment options available for individual
direction by Participants pursuant to Section 5.14. Upon each division or
redivision, the Employer may specify the part of the Fund to be allocated
to each such Investment Fund and the terms and conditions, if any, under
which the assets in such Investment Fund shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such reasonable
compensation as may be agreed upon by the Trustee (or Custodian) and the
Employer. The Trustee (or Custodian) shall be entitled to reimbursement by
the Employer for all proper expenses incurred in carrying out his or her
duties under this Plan, including reasonable legal, accounting and
actuarial expenses. If not paid by the Employer, such compensation and
expenses may be charged against the Fund.
All taxes of any kind that may be levied or assessed under existing or
future laws upon, or in respect of, the Fund or the income thereof shall
be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if applicable) and
Plan Administrator the information which each party deems necessary for
the administration of the Plan including, but not limited to, changes in a
Participant's status, eligibility, mailing addresses and other such data
as may be required. The Trustee (or Custodian) and Plan Administrator
shall be entitled to act on such information as is supplied them and shall
have no duty or responsibility to further verify or question such
information.
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding federal income
taxes from distributions from the Plan, unless the Participant (or
Beneficiary, where applicable) elects not to have such taxes withheld. The
Trustee (or Custodian) or other payor may act as agent for the Plan
Administrator to withhold such taxes and to make the appropriate
distribution reports, if the Plan Administrator furnishes all the
information to the Trustee (or Custodian) or other payor it may need to do
withholding and reporting.
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any time by giving
30 days advance written notice to the Employer. The resignation shall
become effective 30 days after receipt of such notice unless a shorter
period is agreed upon.
The Employer may remove any Trustee (or Custodian) at any time by giving
written notice to such Trustee (or Custodian) and such removal shall be
effective 30 days after receipt of such notice unless a shorter period is
agreed upon. The Employer shall have the power to appoint a successor
Trustee (or Custodian).
Upon such resignation or removal, if the resigning or removed Trustee (or
Custodian) is the sole Trustee (or Custodian), he or she shall transfer
all of the assets of the Fund then held by such Trustee (or Custodian) as
expeditiously as possible to the successor Trustee (or Custodian) after
paying or reserving such reasonable amount as he or she shall deem
necessary to provide for the expense in the settlement of the accounts and
the amount of any compensation due him or her and any sums chargeable
against the Fund for which he or she may be liable. If the Funds as
reserved are not sufficient for such purpose, then he or she shall be
entitled to reimbursement from the successor Trustee (or Custodian) out of
the assets in the successor Trustee's (or ▇▇▇▇▇▇▇▇▇'s) hands under this
Plan. If the amount reserved shall be in excess of the amount actually
needed, the former Trustee (or Custodian) shall return such excess to the
successor Trustee (or Custodian).
Upon receipt of the transferred assets, the successor Trustee (or
Custodian) shall thereupon succeed to all of the powers and
responsibilities given to the Trustee (or Custodian) by this Plan.
The resigning or removed Trustee (or Custodian) shall render an accounting
to the Employer and unless objected to by the Employer within 30 days of
its receipt, the accounting shall be deemed to have been approved and the
resigning or removed Trustee (or Custodian) shall be released and
discharged as to all matters set forth in the accounting. Where a
financial organization is serving as Trustee (or Custodian) and it is
merged with or bought by another organization (or comes under the control
of any federal or state agency), that organization shall serve as the
successor Trustee (or Custodian) of this Plan, but only if it is the type
of organization that can so serve under applicable law.
Where the Trustee or Custodian is serving as a nonbank trustee or
custodian pursuant to Section 1.401-12(n) of the Income Tax Regulations,
the Employer will appoint a successor Trustee (or Custodian) upon
notification by the Commissioner of Internal Revenue that such
substitution is required because the Trustee (or Custodian) has failed to
comply with the requirements of Section 1.401-12(n) or is not keeping such
records or making such returns or rendering such statements as are
required by forms or regulations.
5.10 DEGREE OF CARE - LIMITATIONS OF LIABILITY
The Trustee (or Custodian) shall not be liable for any losses incurred by
the Fund by any direction to invest communicated by the Employer, Plan
Administrator, investment manager appointed pursuant to Section 5.12 or
any Participant or Beneficiary. The Trustee (or Custodian) shall be under
no liability for distributions made or other action taken or not
20
taken at the written direction of the Plan Administrator. It is
specifically understood that the Trustee (or Custodian) shall have no duty
or responsibility with respect to the determination of matters pertaining
to the eligibility of any Employee to become a Participant or remain a
Participant hereunder, the amount of benefit to which a Participant or
Beneficiary shall be entitled to receive hereunder, whether a distribution
to Participant or Beneficiary is appropriate under the terms of the Plan
or the size and type of any policy to be purchased from any insurer for
any Participant hereunder or similar matters; it being understood that all
such responsibilities under the Plan are vested in the Plan Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
Notwithstanding any other provision herein, and except as may be otherwise
provided by ERISA, the Employer shall indemnify and hold harmless the
Trustee (or Custodian, if applicable) and the Prototype Sponsor, their
officers, directors, employees, agents, their heirs, executors, successors
and assigns, from and against any and all liabilities, damages, judgments,
settlements, losses, costs, charges, or expenses (including legal
expenses) at any time arising out of or incurred in connection with any
action taken by such parties in the performance of their duties with
respect to this Plan, unless there has been a final adjudication of gross
negligence or willful misconduct in the performance of such duties.
Further, except as may be otherwise provided by ERISA, the Employer will
indemnify the Trustee (or Custodian) and Prototype Sponsor from any
liability, claim or expense (including legal expense) which the Trustee
(or Custodian) and Prototype Sponsor shall incur by reason of or which
results, in whole or in part, from the Trustee's (or Custodian's) or
Prototype Sponsor's reliance on the facts and other directions and
elections the Employer communicates or fails to communicate.
5.12 INVESTMENT MANAGERS
A. Definition of Investment Manager - The Employer may appoint one or
more investment managers to make investment decisions with respect
to all or a portion of the Fund. The investment manager shall be any
firm or individual registered as an investment adviser under the
Investment Advisers Act of 1940, a bank as defined in said Act or an
insurance company qualified under the laws of more than one state to
perform services consisting of the management, acquisition or
disposition of any assets of the Plan.
B. Investment Manager's Authority - A separate Investment Fund shall be
established representing the assets of the Fund invested at the
direction of the investment manager. The investment manager so
appointed shall direct the Trustee (or Custodian, if applicable )
with respect to the investment of such Investment Fund. The
investments which may be acquired at the direction of the investment
manager are those described in Section 5.03(A) (for Custodians) or
Section 5.04(A) (for Trustees).
C. Written Agreement - The appointment of any investment manager shall
be by written agreement between the Employer and the investment
manager and a copy of such agreement (and any modification or
termination thereof) must be given to the Trustee (or Custodian).
The agreement shall set forth, among other matters, the effective
date of the investment manager's appointment and an acknowledgement
by the investment manager that it is a fiduciary of the Plan under
▇▇▇▇▇.
D. Concerning the Trustee (or Custodian) - Written notice of each
appointment of an investment manager shall be given to the Trustee
(or Custodian) in advance of the effective date of such appointment.
Such notice shall specify which portion of the Fund will constitute
the Investment Fund subject to the investment manager's direction.
The Trustee (or Custodian) shall comply with the investment
direction given to it by the investment manager and will not be
liable for any loss which may result by reason of any action (or
inaction) it takes at the direction of the investment manager.
5.13 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a Participant, the
aggregate premium for certain life insurance for each Participant
must be less than a certain percentage of the aggregate Employer
Contributions and Forfeitures allocated to a Participant's
Individual Account at any particular time as follows:
1. Ordinary Life Insurance - For purposes of these incidental
insurance provisions, ordinary life insurance contracts are
contracts with both nondecreasing death benefits and
nonincreasing premiums. If such contracts are purchased, less
than 50% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual Account
will be used to pay the premiums attributable to them.
2. Term and Universal Life Insurance - No more than 25% of the
aggregate Employer Contributions and Forfeitures allocated to
any Participant's Individual Account will be used to pay the
premiums on term life insurance contracts, universal life
insurance contracts, and all other life insurance contracts
which are not ordinary life.
21
3. Combination - The sum of 50% of the ordinary life insurance
premiums and all other life insurance premiums will not exceed
25% of the aggregate Employer Contributions and Forfeitures
allocated to any Participant's Individual Account.
If this Plan is a profit sharing plan, the above incidental benefits
limits do not apply to life insurance contracts purchased with
Employer Contributions and Forfeitures that have been in the
Participant's Individual Account for at least 2 full Plan Years,
measured from the date such contributions were allocated.
B. Any dividends or credits earned on insurance contracts for a
Participant shall be allocated to such Participant's Individual
Account.
C. Subject to Section 6.05, the contracts on a Participant's life will
be converted to cash or an annuity or distributed to the Participant
upon commencement of benefits.
D. The Trustee (or Custodian, if applicable) shall apply for and will
be the owner of any insurance contract(s) purchased under the terms
of this Plan. The insurance contract(s) must provide that proceeds
will be payable to the Trustee (or Custodian), however, the Trustee
(or Custodian) shall be required to pay over all proceeds of the
contract(s) to the Participant's designated Beneficiary in
accordance with the distribution provisions of this Plan. 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 Section 6.05. Under no circumstances shall
the Fund retain any part of the proceeds. In the event of any
conflict between the terms of this Plan and the terms of any
insurance contract purchased hereunder, the Plan provisions shall
control.
E. The Plan Administrator may direct the Trustee (or Custodian) to sell
and distribute insurance or annuity contracts to a Participant (or
other party as may be permitted) in accordance with applicable law
or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Trustee (or Custodian, if applicable) regarding
the investment of part or all of his or her Individual Account. To the
extent so directed, the Employer, Plan Administrator, Trustee (or
Custodian) and all other fiduciaries are relieved of their fiduciary
responsibility under Section 404 of ERISA.
The Plan Administrator shall direct that a Separate Fund be established in
the name of each Participant who directs the investment of part or all of
his or her Individual Account. Each Separate Fund shall be charged or
credited (as appropriate) with the earnings, gains, losses or expenses
attributable to such Separate Fund. No fiduciary shall be liable for any
loss which results from a Participant's individual direction. The assets
subject to individual direction shall not be invested in collectibles as
that term is defined in Section 408(m) of the Code.
The Plan Administrator shall establish such uniform and nondiscriminatory
rules relating to individual direction as it deems necessary or advisable
including, but not limited to, rules describing (1) which portions of
Participant's Individual Account can be individually directed; (2) the
frequency of investment changes; (3) the forms and procedures for making
investment changes; and (4) the effect of a Participant's failure to make
a valid direction.
The Plan Administrator may, in a uniform and nondiscriminatory manner,
limit the available investments for Participants' individual direction to
certain specified investment options (including, but not limited to,
certain mutual funds, investment contracts, deposit accounts and group
trusts). The Plan Administrator may permit, in a uniform and
nondiscriminatory manner, a Beneficiary of a deceased Participant or the
alternate payee under a qualified domestic relations order (as defined in
Section 414(p) of the Code) to individually direct in accordance with this
Section.
SECTION SIX
VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. Distributable Events
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account shall be distributable to the
Participant upon (1) the occurrence of any of the
distributable events specified in the Adoption Agreement; (2)
the Participant's Termination of Employment after attaining
Normal Retirement Age; (3) the termination of the Plan; and
(4) the Participant's Termination of Employment after
satisfying any Early Retirement Age conditions.
If a Participant separates from service before satisfying the
Early Retirement Age requirement, but has satisfied the
service requirement, the Participant will be entitled to elect
an early retirement benefit upon satisfaction of such age
requirement.
2. Written Request: When Distributed - A Participant entitled to
distribution who wishes to receive a distribution must submit
a written request to the Plan Administrator. Such request
shall be made upon a form provided by
22
the Plan Administrator. Upon a valid request, the Plan
Administrator shall direct the Trustee (or Custodian, if
applicable) to commence distribution no later than the time
specified in the Adoption Agreement for this purpose and, if
not specified in the Adoption Agreement, then no later than 90
days following the later of:
a. the close of the Plan Year within which the event occurs
which entitles the Participant to distribution; or
b. the close of the Plan Year in which the request is
received.
3. Special Rules for Withdrawals During Service - If this is a
profit sharing plan and the Adoption Agreement so provides, a
Participant may elect to receive a distribution of all or part
of the Vested portion of his or her Individual Account,
subject to the requirements of Section 6.05 and further
subject to the following limits:
a. Participant for 5 or more years. An Employee who has
been a Participant in the Plan for 5 or more years may
withdraw up to the entire Vested portion of his or her
Individual Account.
b. Participant for less than 5 years. An Employee who has
been a Participant in the Plan for less than 5 years may
withdraw only the amount which has been in his or her
Individual Account attributable to Employer
Contributions for at least 2 full Plan Years, measured
from the date such contributions were allocated.
However, if the distribution is on account of hardship,
the Participant may withdraw up to his or her entire
Vested portion of the Participant's Individual Account.
For this purpose, hardship shall have the meaning set
forth in Section 6.01(A)(4) of the Code.
4. Special Rules for Hardship Withdrawals - If this is a profit
sharing plan and the Adoption Agreement so provides, a
Participant may elect to receive a hardship distribution of
all or part of the Vested portion of his or her Individual
Account, subject to the requirements of Section 6.05 and
further subject to the following limits:
a. Participant for 5 or more years. An Employee who has
been a Participant in the Plan for 5 or more years may
withdraw up to the entire Vested portion of his or her
Individual Account.
b. Participant for less than 5 years. An Employee who has
been a Participant in the Plan for less than 5 years may
withdraw only the amount which has been in his or her
Individual Account attributable to Employer
Contributions for at least 2 full Plan Years, measured
from the date such contributions were allocated.
For purposes of this Section 6.01(A)(4) and Section
6.01(A)(3) hardship is defined as an immediate and heavy
financial need of the Participant where such Participant
lacks other available resources. The following are the
only financial needs considered immediate and heavy:
expenses incurred or necessary for medical care,
described in Section 213(d) of the Code, of the
Employee, the Employee's spouse or dependents; the
purchase (excluding mortgage payments) of a principal
residence for the Employee; payment of tuition and
related educational fees for the next 12 months of
post-secondary education for the Employee, the
Employee's spouse, children or dependents; or the need
to prevent the eviction of the Employee from, or a
foreclosure on the mortgage of, the Employee's principal
residence.
A distribution will be considered as necessary to
satisfy an immediate and heavy financial need of the
Employee only if:
1) The employee has obtained all distributions, other
than hardship distributions, and all nontaxable
loans under all plans maintained by the Employer;
2) The distribution is not in excess of the amount of
an immediate and heavy financial need (including
amounts necessary to pay any federal, state or
local income taxes or penalties reasonably
anticipated to result from the distribution).
5. One-Time In-Service Withdrawal Option - If this is a profit
sharing plan and the Employer has elected the one-time
in-service withdrawal option in the Adoption Agreement, then
Participants will be permitted only one in-service withdrawal
during the course of such Participants employment with the
Employer. The amount which the Participant can withdraw will
be limited to the lesser of the amount determined under the
limits set forth in Section 6.01(A)(3) or the percentage of
the Participant's Individual Account specified by the Employer
in the Adoption Agreement. Distributions under this Section
will be subject to the requirements of Section 6.05.
6. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the 60th day
after the latest of the close of the Plan Year in which:
a. the Participant attains Normal Retirement Age;
23
b. occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
c. the Participant incurs a Termination of Employment.
Notwithstanding the foregoing, the failure of a Participant and
spouse to consent to a distribution while a benefit is immediately
distributable, within the meaning of Section 6.02(B) of the Plan,
shall be deemed to be an election to defer commencement of payment
of any benefit sufficient to satisfy this Section.
B. Determining the Vested Portion - In determining the Vested portion
of a Participant's Individual Account, the following rules apply:
1. Employer Contributions and Forfeitures - The Vested portion of
a Participant's Individual Account derived from Employer
Contributions and Forfeitures is determined by applying the
vesting schedule selected in the Adoption Agreement (or the
vesting schedule described in Section 6.01(C) if the Plan is a
Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is fully
Vested in his or her rollover contributions and transfer
contributions.
3. Fully Vested Under Certain Circumstances - A Participant is
fully Vested in his or her Individual Account if any of the
following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Plan is terminated or partially terminated; or
c. there exists a complete discontinuance of contributions
under the Plan.
Further, unless otherwise indicated in the Adoption Agreement,
a Participant is fully Vested if the Participant dies, incurs
a Disability, or satisfies the conditions for Early Retirement
Age (if applicable).
4. Participants in a Prior Plan - If a Participant was a
participant in a Prior Plan on the Effective Date, his or her
Vested percentage shall not be less than it would have been
under such Prior Plan as computed on the Effective Date.
C. Minimum Vesting Schedule for Top-Heavy Plans - The following vesting
provisions apply for any Plan Year in which this Plan is a Top-Heavy
Plan.
Notwithstanding the other provisions of this Section 6.01 or the
vesting schedule selected in the Adoption Agreement (unless those
provisions or that schedule provide for more rapid vesting), a
Participant's Vested portion of his or her Individual Account
attributable to Employer Contributions and Forfeitures shall be
determined in accordance with the vesting schedule elected by the
Employer in the Adoption Agreement (and if no election is made the 6
year graded schedule will be deemed to have been elected) as
described below:
6 YEAR GRADED 3 YEAR CLIFF
Years of Years of
Vesting Service Vested Percentage Vesting Service Vested Percentage
--------------- ----------------- --------------- -----------------
1 0 1 0
2 20 2 0
3 40 3 100
4 60
5 80
6 100
This minimum vesting schedule applies to all benefits within the
meaning of Section 411(a)(7) of the Code, except those attributable
to Nondeductible Employee Contributions including benefits accrued
before the effective date of Section 416 of the Code and benefits
accrued before the Plan became a Top-Heavy Plan. Further, no
decrease in a Participant's Vested percentage may occur in the event
the Plan's status as a Top-Heavy Plan changes for any Plan Year.
However, this Section 6.01(C) does not apply to the Individual
Account of any Employee who does not have an Hour of Service after
the Plan has initially become a Top-Heavy Plan and such Employee's
Individual Account attributable to Employer Contributions and
Forfeitures will be determined without regard to this Section.
If this Plan ceases to be a Top-Heavy Plan, then in accordance with
the above restrictions, the vesting schedule as selected in the
Adoption Agreement will govern. If the vesting schedule under the
Plan shifts in or out of top-heavy status, such shift is an
amendment to the vesting schedule and the election in Section 9.04
applies.
24
D. Break in Vesting Service and Forfeitures - If a Participant incurs a
Termination of Employment, any portion of his or her Individual
Account which is not Vested shall be held in a suspense account.
Such suspense account shall share in any increase or decrease in the
fair market value of the assets of the Fund in accordance with
Section 4 of the Plan. The disposition of such suspense account
shall be as follows:
1. Breaks in Vesting Service - If a Participant neither receives
nor is deemed to receive a distribution pursuant to Section
6.01(D)(3) or (4) and the Participant returns to the service
of the Employer before incurring 5 consecutive Breaks in
Vesting Service, there shall be no Forfeiture and the amount
in such suspense account shall be recredited to such
Participant's Individual Account.
2. Five Consecutive Breaks in Vesting Service - If a Participant
neither receives nor is deemed to receive a distribution
pursuant to Section 6.01(D)(3) or (4) and the Participant does
not return to the service of the Employer before incurring 5
consecutive Breaks in Vesting Service, the portion of the
Participant's Individual Account which is not Vested shall be
treated as a Forfeiture and allocated in accordance with
Section 3.01(C).
3. Cash-out of Certain Participants - If the value of the Vested
portion of such Participant's Individual Account derived from
Nondeductible Employee Contributions and Employer
Contributions does not exceed $3,500, the Participant shall
receive a distribution of the entire Vested portion of such
Individual Account and the portion which is not Vested shall
be treated as a Forfeiture and allocated in accordance with
Section 3.01(C). For purposes of this Section, if the value of
the Vested portion of a Participant's Individual Account is
zero, the Participant shall be deemed to have received a
distribution of such Vested Individual Account. A
Participant's Vested Individual Account balance shall not
include accumulated deductible employee contributions within
the meaning of Section 72(o)(5)(B) of the Code for Plan Years
beginning prior to January 1, 1989.
4. Participants Who Elect to Receive Distributions - If such
Participant elects to receive a distribution, in accordance
with Section 6.02(B), of the value of the Vested portion of
his or her Individual Account derived from Nondeductible
Employee Contributions and Employer Contributions, the portion
which is not Vested shall be treated as a Forfeiture and
allocated in accordance with Section 3.01(C).
5. Re-employed Participants - If a Participant receives or is
deemed to receive a distribution pursuant to Section
6.01(D)(3) or (4) above and the Participant resumes employment
covered under this Plan, the Participant's Employer-derived
Individual Account balance will be restored to the amount on
the date of distribution if the Participant repays to the Plan
the full amount of the distribution attributable to Employer
Contributions before the earlier of 5 years after the first
date on which the Participant is subsequently re-employed by
the Employer, or the date the Participant incurs 5 consecutive
Breaks in Vesting Service following the date of the
distribution.
Any restoration of a Participant's Individual Account pursuant
to Section 6.01(D)(5) shall be made from other Forfeitures,
income or gain to the Fund or contributions made by the
Employer.
E. Distribution Prior to Full Vesting - If a distribution is made to a
Participant who was not then fully Vested in his or her Individual
Account derived from Employer Contributions and the Participant may
increase his or her Vested percentage in his or her Individual
Account, then the following rules shall apply:
1. a separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
2. at any relevant time the Participant's Vested portion of the
separate account will be equal to an amount ("X") determined
by the formula: X=P (AB + (R x D)) - (R x D) where "P" is the
Vested percentage at the relevant time, "AB" is the separate
account balance at the relevant time; "D" is the amount of the
distribution; and "R" is the ratio of the separate account
balance at the relevant time to the separate account balance
after distribution.
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $3,500 - If the value of
the Vested portion of a Participant's Individual Account derived
from Nondeductible Employee Contributions and Employer Contributions
does not exceed $3,500, distribution from the Plan shall be made to
the Participant in a single lump sum in lieu of all other forms of
distribution from the Plan as soon as administratively feasible.
B. Value of Individual Account Exceeds $3,500
1. If the value of the Vested portion of a Participant's
Individual Account derived from Nondeductible Employee
Contributions and Employer Contributions exceeds (or at the
time of any prior distribution exceeded) $3,500, and the
Individual Account is immediately distributable, the
Participant and the Participant's spouse (or where either the
Participant or the spouse died, the survivor) must consent to
any distribution of such Individual Account. The consent of
the Participant and the Participant's spouse shall be obtained
in writing within the
25
90-day period ending on the annuity starting date. The annuity
starting date 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 Individual Account 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 Section 417(a)(3) of the
Code, and shall be provided no less than 30 days and no more
than 90 days prior to the annuity starting date.
If a distribution is one to which Sections 401(a)(11) and 417
of the Internal Revenue Code 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:
a. 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
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
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 Individual
Account 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
Section 401(a)(9) or Section 415 of the Code. In addition,
upon termination of this Plan if the Plan does not offer an
annuity option (purchased from a commercial provider), the
Participant's Individual Account 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 Section
4975(e)(7) of the Code) within the same controlled group.
An Individual Account is immediately distributable if any part
of the Individual Account could be distributed to the
Participant (or surviving spouse) before the Participant
attains or would have attained (if not deceased) the later of
Normal Retirement Age or age 62.
2. 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 December 31, 1988,
the Vested portion of a Participant's Individual Account shall
not include amounts attributable to accumulated deductible
employee contributions within the meaning of Section
72(o)(5)(B) of the Code.
C. Other Forms of Distribution to Participant - If the value of the
Vested portion of a Participant's Individual Account exceeds $3,500
and the Participant has properly waived the joint and survivor
annuity, as described in Section 6.05, the Participant may request
in writing that the Vested portion of his or her Individual Account
be paid to him or her in one or more of the following forms of
payment: (1) in a lump sum; (2) in installment payments over a
period not to exceed the life expectancy of the Participant or the
joint and last survivor life expectancy of the Participant and his
or her designated Beneficiary; or (3) applied to the purchase of an
annuity contract.
Notwithstanding anything in this Section 6.02 to the contrary, a
Participant cannot elect payments in the form of an annuity if the
Retirement Equity Act safe harbor rules of Section 6.05(F) apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Spousal Consent - Each Participant may
designate, upon a form provided by and delivered to the Plan
Administrator, one or more primary and contingent Beneficiaries to
receive all or a specified portion of the Participant's Individual
Account in the event of his or her death. A Participant may change
or revoke such Beneficiary designation from time to time by
completing and delivering the proper form to the Plan Administrator.
In the event that a Participant wishes to designate a primary
Beneficiary who is not his or her spouse, his or her spouse must
consent in writing to such designation, and the spouse's consent
must acknowledge the effect of such designation and be witnessed by
a notary public or plan representative. Notwithstanding this consent
requirement, if the Participant establishes to the satisfaction of
the Plan Administrator that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, no
consent shall be required. Any change of Beneficiary will require a
new spousal consent.
B. Payment to Beneficiary - If a Participant dies before the
Participant's entire Individual Account has been paid to him or her,
such deceased Participant's Individual Account shall be payable to
any surviving Beneficiary designated by the Participant, or, if no
Beneficiary survives the Participant, to the Participant's estate.
26
C. Written Request: When Distributed - A Beneficiary of a deceased
Participant entitled to a distribution who wishes to receive a
distribution must submit a written request to the Plan
Administrator. Such request shall be made upon a form provided by
the Plan Administrator. Upon a valid request, the Plan Administrator
shall direct the Trustee (or Custodian) to commence distribution no
later than the time specified in the Adoption Agreement for this
purpose and if not specified in the Adoption Agreement, then no
later than 90 days following the later of:
1. the close of the Plan Year within which the Participant dies;
or
2. the close of the Plan Year in which the request is received.
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Does Not Exceed $3,500 - If the value of
the Participant's Individual Account derived from Nondeductible
Employee Contributions and Employer Contributions does not exceed
$3,500, the Plan Administrator shall direct the Trustee (or
Custodian, if applicable) to make a distribution to the Beneficiary
in a single lump sum in lieu of all other forms of distribution from
the Plan.
B. Value of Individual Account Exceeds $3,500 - If the value of a
Participant's Individual Account derived from Nondeductible Employee
Contributions and Employer Contributions exceeds $3,500 the
preretirement survivor annuity requirements of Section 6.05 shall
apply unless waived in accordance with that Section or unless the
Retirement Equity Act safe harbor rules of Section 6.05(F) apply.
However, a surviving spouse Beneficiary may elect any form of
payment allowable under the Plan in lieu of the preretirement
survivor annuity. Any such payment to the surviving spouse must meet
the requirements of Section 6.06.
C. Other Forms of Distribution to Beneficiary - If the value of a
Participant's Individual Account exceeds $3,500 and the Participant
has properly waived the preretirement survivor annuity, as described
in Section 6.05 (if applicable) or if the Beneficiary is the
Participant's surviving spouse, the Beneficiary may, subject to the
requirements of Section 6.06, request in writing that the
Participant's Individual Account be paid as follows: (1) in a lump
sum; or (2) in installment payments over a period not to exceed the
life expectancy of such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant who is
credited with at least one Hour of Eligibility Service with the
Employer on or after August 23, 1984, and such other Participants as
provided in Section 6.05(G).
B. 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 earliest retirement age under the Plan.
C. Qualified Preretirement Survivor Annuity - Unless an optional form
of benefit has been selected within the election period pursuant to
a qualified election, if a Participant dies before the annuity
starting date then the Participant's Vested account balance shall be
applied toward the purchase 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.
D. Definitions
1. Election Period - The period which begins on the first day of
the Plan Year in which the Participant attains age 35 and ends
on the date of the Participant's death. If a Participant
separates from service prior to the first day of the Plan Year
in which age 35 is attained, with respect to the account
balance as of the date of separation, the election period
shall begin on the date of separation.
Pre-age 35 waiver - A Participant who will not yet attain age
35 as of the end of any current Plan Year may make special
qualified election to waive the qualified preretirement
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 preretirement survivor annuity in such terms as
are comparable to the explanation required under Section
6.05(E)(1). Qualified preretirement 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 Section 6.05.
2. Earliest Retirement Age - The earliest date on which, under
the Plan, the Participant could elect to receive retirement
benefits.
27
3. Qualified Election - A waiver of a qualified joint and
survivor annuity or a qualified preretirement survivor
annuity. Any waiver of a qualified joint and survivor annuity
or a qualified preretirement survivor annuity 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 a plan representative 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 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 Section 6.05(E)
below.
4. Qualified Joint and Survivor Annuity - An immediate annuity
for the life of the Participant with a survivor annuity for
the life of the spouse which is not less than 50% and not more
than 100% of the amount of the annuity which is payable during
the joint lives of the Participant and the spouse and which is
the amount of benefit which can be purchased with the
Participant's vested account balance. The percentage of the
survivor annuity under the Plan shall be 50% (unless a
different percentage is elected by the Employer in the
Adoption Agreement).
5. 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 Section 414(p) of the Code.
6. Annuity Starting Date - The first day of the first period for
which an amount is paid as an annuity or any other form.
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from Employer
and Nondeductible 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 this Section 6.05 shall apply to a
Participant who is Vested in amounts attributable to Employer
Contributions, Nondeductible Employee Contributions (or both)
at the time of death or distribution.
E. Notice Requirements
1. In the case of a qualified joint and survivor annuity, the
Plan Administrator shall no less than 30 days and not 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.
2. In the case of a qualified preretirement annuity as described
in Section 6.05(C), the Plan Administrator shall provide each
Participant within the applicable period for such Participant
a written explanation of the qualified preretirement survivor
annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the
requirements of Section 6.05(E)(1) 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 Section
6.05(E)(3) ceases to apply to the Participant; and (d) a
reasonable period ending after this Section 6.05 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.
28
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (b),
(c) and (d) 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 thereafter returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
3. Notwithstanding the other requirements of this Section
6.05(E), the respective notices prescribed by this Section
6.05(E), need not be given to a Participant if (a) the Plan
"fully subsidizes" the costs of a qualified joint and survivor
annuity or qualified preretirement survivor annuity, and (b)
the Plan does not allow the Participant to waive the qualified
joint and survivor annuity or qualified preretirement survivor
annuity and does not allow a married Participant to designate
a nonspouse beneficiary. For purposes of this Section
6.05(E)(3), a plan fully subsidizes the costs of a benefit if
no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect
another benefit.
F. Retirement Equity Act Safe Harbor Rules
1. If the Employer so indicates in the Adoption Agreement, this
Section 6.05(F) shall apply to a Participant in a profit
sharing plan, and shall always apply to any distribution, made
on or after the first day of the first Plan Year beginning
after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible employee
contributions, as defined in Section 72(o)(5)(B) of the Code,
and maintained on behalf of a Participant in a money purchase
pension plan, (including a target benefit plan) if the
following conditions are satisfied:
a. the Participant does not or cannot elect payments in the
form of a life annuity; and
b. 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.
This Section 6.05(F) shall not be operative with respect
to a Participant in a profit sharing plan if the plan is
a direct or indirect transferee of a defined benefit
plan, money purchase plan, a target benefit plan, stock
bonus, or profit sharing plan which is subject to the
survivor annuity requirements of Section 401(a)(11) and
Section 417 of the code. If this Section 6.05(F) is
operative, then the provisions of this Section 6.05
other than Section 6.05(G) shall be inoperative.
2. The Participant may waive the spousal death benefit described
in this Section 6.05(F) at any time provided that no such
waiver shall be effective unless it satisfies the conditions
of Section 6.05(D)(3) (other than the notification requirement
referred to therein) that would apply to the Participant's
waiver of the qualified preretirement survivor annuity.
3. For purposes of this Section 6.05(F), Vested account balance
shall mean, in the case of a money purchase pension plan or a
target benefit plan, the Participant's separate account
balance attributable solely to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of the
Code. In the case of a profit sharing plan, Vested account
balance shall have the same meaning as provided in Section
6.05(D)(7).
G. Transitional Rules
1. Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by the previous subsections of this Section 6.05 must be given
the opportunity to elect to have the prior subsections of this
Section apply if such Participant is credited with at least
one Hour of Service under this Plan or a predecessor plan in a
Plan Year beginning on or after January 1, 1976, and such
Participant had at least 10 Years of Vesting Service when he
or she separated from service.
2. 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 Section 6.05(G)(4).
29
3. The respective opportunities to elect (as described in Section
6.05(G)(1) and (2) 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.
4. Any Participant who has elected pursuant to Section 6.05(G)(2)
and any Participant who does not elect under Section
6.05(G)(1) or who meets the requirements of Section 6.05(G)(1)
except that such Participant does not have at least 10 Years
of Vesting Service when he or she separates from service,
shall have his or her benefits distributed in accordance with
all of the following requirements if benefits would have been
payable in the form of a life annuity:
a. Automatic Joint and Survivor Annuity - If benefits in
the form of a life annuity become payable to a married
Participant who:
(1) begins to receive payments under the Plan on or
after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while still
working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after attaining
Normal Retirement Age (or the qualified early
retirement age) and after satisfying the
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 ends not more than 90 days before the
commencement of benefits. Any election hereunder
will be in writing and may be changed by the
Participant at any time.
b. Election of Early Survivor Annuity - A Participant who
is employed after attaining the qualified early
retirement age will be given the opportunity to elect,
during the election period, to have a survivor annuity
payable on death. If the Participant elects the survivor
annuity, payments under such annuity must not be less
than the payments which would have been made to the
spouse under the qualified joint and survivor annuity if
the Participant had retired on the day before his or 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.
c. For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is the latest of:
a. the earliest date, under the Plan, on which
the Participant may elect to receive
retirement benefits,
b. the first day of the 120th month beginning
before the Participant reaches Normal
Retirement Age, or
c. the date the Participant begins
participation.
2. Qualified joint and survivor annuity is an annuity
for the life of the Participant with a survivor
annuity for the life of the spouse as described in
Section 6.05(D)(4) of this Plan.
6.06 DISTRIBUTION REQUIREMENTS
A. General Rules
1. Subject to Section 6.05 Joint and Survivor Annuity
Requirements, the requirements of this Section shall apply to
any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this Section
6.06 apply to calendar years beginning after December 31,
1984.
2. All distributions required under this Section 6.06 shall be
determined and made in accordance with the Income Tax
Regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
30
B. Required Beginning Date - The entire interest of a Participant must
be distributed or begin to be distributed no later than the
Participant's required beginning date.
C. 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):
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the life expectancy of
the Participant, or
4. a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
D. Determination of Amount to be Distributed Each Year - If the
Participant's interest is to be distributed in other than a single
sum, the following minimum distribution rules shall apply on or
after the required beginning date:
1. Individual Account
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 January 1, 1989, if
the Participant's spouse is not the designated
Beneficiary, the method of distribution selected must
assure that at least 50% of the present value of the
amount available for distribution is paid within the
life expectancy of the Participant.
c. For calendar years beginning after December 31, 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
Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Distributions after the death of the
Participant shall be distributed using the applicable
life expectancy in Section 6.05(D)(1)(a) above as the
relevant divisor without regard to proposed regulations
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 Employee's required beginning date
occurs, must be made on or before December 31 of that
distribution calendar year.
2. Other Forms - 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 Section 401(a)(9) of the Code and the
regulations thereunder.
E. Death Distribution Provisions
1. 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.
2. 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;
31
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 dies 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 Section 6.05(E)(2) 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
6.05(E)(2), 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, 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.
3. For purposes of Section 6.06(E)(2) above, if the surviving
spouse dies after the Participant, but before payments to such
spouse begin, the provisions of Section 6.06(E)(2), with the
exception of paragraph (b) therein, shall be applied as if the
surviving spouse were the Participant.
4. For purposes of this Section 6.06(E), any amount paid to a
child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of
majority.
5. For purposes of this Section 6.06(E), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section
6.06(E)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Section
6.06(E)(2) above). If distribution in the form of an annuity
irrevocably commences to the Participant before the required
beginning date, the date distribution is considered to begin
is the date distribution actually commences.
F. Definitions
1. Applicable Life Expectancy - The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of
the Participant (or 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 applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is designated as
the Beneficiary under the Plan in accordance with Section
401(a)(9) of the Code and the regulations thereunder.
3. Distribution Calendar Year - A calendar year for which a
minimum distribution is required. 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 Section 6.05(E) above.
4. Life Expectancy - Life expectancy and joint and last survivor
expectancy are computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income
Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the
case of distributions described in Section 6.05(E)(2)(b)
above) by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or spouse) and
shall apply to all subsequent years. The life expectancy of a
nonspouse Beneficiary may not be recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation date in the
valuation calendar year (the calendar year immediately
preceding the distribution calendar year) increased by
the amount of any Contributions or Forfeitures allocated
to the account balance as of dates in the valuation
calendar year after the valuation date and decreased by
distributions made in the valuation calendar year after
the valuation date.
b. Exception for second distribution calendar year. For
purposes of paragraph (a) above, 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.
32
6. 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.
b. Transitional Rules - The required beginning date of a
Participant who attains age 70 1/2 before January 1,
1988, shall be determined in accordance with (1) or (2)
below:
(1) Non 5% Owners - The required beginning date of a
Participant who is not a 5% 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.
(2) 5% Owners - The required beginning date of a
Participant who is a 5% owner during any year
beginning after December 31, 1979, is the first
day of April following the later of:
(a) the calendar year in which the Participant
attains age 70 1/2, or
(b) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a 5% owner, or the
calendar year in which the Participant
retires.
The required beginning date of a Participant who
is not a 5% owner who attains age 70 1/2 during
1988 and who has not retired as of January 1,
1989, is April 1, 1990.
c. 5% Owner - A Participant is treated as a 5% owner for
purposes of this Section 6.06(F)(6) if such Participant
is a 5% owner as defined in Section 416(i) of the Code
(determined in accordance with 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% owner under this
Section 6.06(F)(6) they must continue to be distributed,
even if the Participant ceases to be a 5% owner in a
subsequent year.
G. Transitional Rule
1. Notwithstanding the other requirements of this Section 6.06
and subject to the requirements of Section 6.05, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a 5% owner, may be made in accordance with
all of the following requirements (regardless of when such
distribution commences):
a. The distribution by the Fund is one which would not have
qualified such Fund under Section 401(a)(9) of the Code
as in effect prior to amendment by the Deficit Reduction
Act of 1984.
b. The distribution is in accordance with a method of
distribution designated by the Employee whose interest
in the Fund is being distributed or, if the Employee is
deceased, by a Beneficiary of such Employee.
c. Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January
1, 1984.
d. The Employee had accrued a benefit under the Plan as of
December 31, 1983.
e. The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distribution
will commence, the period over which distributions will
be made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority.
2. 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.
3. For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in Sections 6.06(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and
the regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Plan must distribute by the end of the calendar year
following the calendar year in which
33
the revocation occurs the total amount not yet distributed
which would have been required to have been distributed to
satisfy Section 401(a)(9) of the Code and the regulations
thereunder, but for the Section 242(b)(2) election. For
calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental
benefit requirements in Section 1.401(a)(9)-2 of the Proposed
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 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 shall apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or required
by this Section 6) 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 the Plan.
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive a loan
from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a reasonably
equivalent basis.
B. Loans shall not be made available to Highly Compensated Employees
(as defined in Section 414(q) of the Code) in an amount greater than
the amount made available to other Employees.
C. Loans must be adequately secured and bear a reasonable interest
rate.
D. No Participant loan shall exceed the present value of the Vested
portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse, if any,
to the use of the Individual Account as security for the loan.
Spousal consent shall be obtained no earlier than the beginning of
the 90 day period that ends on the date on which the loan is to be
so secured. The consent must be in writing, 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 with
respect to that loan. A new consent shall be required if the account
balance is used for renegotiation, extension, renewal, or other
revision of the loan. Notwithstanding the foregoing, no spousal
consent is necessary if, at the time the loan is secured, no consent
would be required for a distribution under Section 417(a)(2)(B). In
addition, spousal consent is not required if the Plan or the
Participant is not subject to Section 401(a)(11) at the time the
Individual Account is used as security, or if the total Individual
Account subject to the security is less than or equal to $3,500.
F. In the event of default, foreclosure on the note and attachment of
security will not occur until a distributable event occurs in the
Plan. Notwithstanding the preceding sentence, a Participant's
default on a loan will be treated as a distributable event and as
soon as administratively feasible after the default, the
Participant's Vested Individual Account will be reduced by the
lesser of the amount in default (plus accrued interest) or the
amount secured. If this Plan is a 401(k) plan, then to the extent
the loan is attributable to a Participant's Elective Deferrals,
Qualified Nonelective Contributions or Qualified Matching
Contributions, the Participant's Individual Account will not be
reduced unless the Participant has attained age 59 1/2 or has
another distributable event. A Participant will be deemed to have
consented to the provision at the time the loan is made to the
Participant.
G. No loans will be made to any shareholder-employee or Owner-Employee.
For purposes of this requirement, a shareholder-employee means an
employee or officer of an electing small business (Subchapter S)
corporation who owns (or is considered as owning within the meaning
of Section 318(a)(1) of the Code), on any day during the taxable
year of such corporation, more than 5% of the outstanding stock of
the corporation.
If a valid spousal consent has been obtained in accordance with 6.08(E),
then, notwithstanding any other provisions of this Plan, the portion of
the Participant's Vested Individual Account 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 Individual Account (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 Individual Account
by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the surviving spouse.
To avoid taxation to the Participant, no loan to any Participant can be
made to the extent that such loan when added to the outstanding balance of
all other loans to the Participant would exceed the lesser of (a) $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 (b) 50% of the present value of the nonforfeitable Individual
Account of the Participant or, if greater, the total Individual Account up
to $10,000. For the
34
purpose of the above limitation, all loans from all plans of the Employer
and other members of a group of employers described in Sections 414(b),
414(c), and 414(m) of the Code are aggregated. Furthermore, any loan shall
by its terms require that repayment (principal and interest) be amortized
in level payments, not less frequently than quarterly, over a period not
extending beyond 5 years from the date of the loan, unless such loan is
used to acquire a dwelling unit which within a reasonable time (determined
at the time the loan is made) will be used as the principal residence of
the Participant. 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.
The Plan Administrator shall administer the loan program in accordance
with a written document. Such written document shall include, at a
minimum, the following: (i) the identity of the person or positions
authorized to administer the Participant loan program; (ii) the procedure
for applying for loans; (iii) the basis on which loans will be approved or
denied; (iv) limitations (if any) on the types and amounts of loans
offered; (v) the procedure under the program for determining a reasonable
rate of interest; (vi) the types of collateral which may secure a
Participant loan; and (vii) the events constituting default and the steps
that will be taken to preserve Plan assets in the event of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this Plan to be
made either in a form actually held in the Fund, or in cash by converting
assets other than cash into cash, or in any combination of the two
foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. Direct Rollover Option
This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an eligible rollover
distribution that is equal to at least $500 paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
B. Definitions
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include:
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 distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a specified
period of ten years or more;
b. any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code;
c. the portion of any other distribution that is not
includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with
respect to employer securities); and
d. any other distribution(s) that is reasonably expected to
total less than $200 during a year.
2. Eligible retirement plan - An eligible retirement plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
3. Distributee - A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section
414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
4. Direct rollover - A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
6.11 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES
The Plan Administrator must use all reasonable measures to locate
Participants or Beneficiaries who are entitled to distributions from the
Plan. In the event that the Plan Administrator cannot locate a Participant
or Beneficiary who is entitled to a distribution from the Plan after using
all reasonable measures to locate him or her, the Plan Administrator may,
consistent with applicable laws, regulations and other pronouncements
under ERISA, use any reasonable procedure to dispose of distributable plan
assets, including any of the following: (1) establish a bank account for
and in the name of the Participant or Beneficiary and transfer the assets
to such bank account, (2) purchase an annuity contract with the assets
35
in the name of the Participant or Beneficiary, or (3) after the expiration
of 5 years after the benefit becomes payable, treat the amount
distributable as a Forfeiture and allocate it in accordance with the terms
of the Plan and if the Participant or Beneficiary is later located,
restore such benefit to the Plan.
SECTION SEVEN
CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the Vested
portion of the Participant's Individual Account shall file a written
request with the Plan Administrator on a form to be furnished to him or
her by the Plan Administrator for such purpose. The request shall set
forth the basis of the claim. The Plan Administrator is authorized to
conduct such examinations as may be necessary to facilitate the payment of
any benefits to which the Participant or Beneficiary may be entitled under
the terms of the Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or Beneficiary
has been wholly or partially denied, the Plan Administrator must furnish
such Participant or Beneficiary written notice of the denial within 60
days of the date the original claim was filed. This notice shall set forth
the specific reasons for the denial, specific reference to pertinent Plan
provisions on which the denial is based, a description of any additional
information or material needed to perfect the claim, an explanation of why
such additional information or material is necessary and an explanation of
the procedures for appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of the
denial notice in which to make written application for review by the Plan
Administrator. The Participant or Beneficiary may request that the review
be in the nature of a hearing. The Participant or Beneficiary shall have
the right to representation, to review pertinent documents and to submit
comments in writing. The Plan Administrator shall issue a decision on such
review within 60 days after receipt of an application for review as
provided for in Section 7.02. Upon a decision unfavorable to the
Participant or Beneficiary, such Participant or Beneficiary shall be
entitled to bring such actions in law or equity as may be necessary or
appropriate to protect or clarify his or her right to benefits under this
Plan.
SECTION EIGHT
PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the managing
body of the Employer designates a person or persons other than the
Employer as the Plan Administrator and so notifies the Trustee (or
Custodian, if applicable). The Employer shall also be the Plan
Administrator if the person or persons so designated cease to be the
Plan Administrator. The Employer may establish an administrative
committee that will carry out the Plan Administrator's duties.
Members of the administrative committee may allocate the Plan
Administrator's duties among themselves.
B. If the managing body of the Employer designates a person or persons
other than the Employer as Plan Administrator, such person or
persons shall serve at the pleasure of the Employer and shall serve
pursuant to such procedures as such managing body may provide. Each
such person shall be bonded as may be required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the duties of
the Plan Administrator among several individuals or entities. Such
appointments shall not be effective until the party designated
accepts such appointment in writing.
B. The Plan Administrator shall have the authority to control and
manage the operation and administration of the Plan. The Plan
Administrator shall administer the Plan for the exclusive benefit of
the Participants and their Beneficiaries in accordance with the
specific terms of the Plan.
C. The Plan Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited to,
the following:
1. To determine all questions of interpretation or policy in a
manner consistent with the Plan's documents and the Plan
Administrator's construction or determination in good faith
shall be conclusive and binding on all persons except as
otherwise provided herein or by law. Any interpretation or
construction shall be done in a nondiscriminatory manner and
shall be consistent with the intent that the Plan shall
continue to be deemed a qualified plan under the terms of
Section 401(a) of the Code, as amended from time-to-time, and
shall comply with the terms of ERISA, as amended from
time-to-time;
2. To determine all questions relating to the eligibility of
Employees to become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
36
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary shall be entitled under the Plan
and to direct the Trustee (or Custodian, if applicable) with
respect to all disbursements under the Plan, and, when
requested by the Trustee (or Custodian), to furnish the
Trustee (or Custodian) with instructions, in writing, on
matters pertaining to the Plan and the Trustee (or Custodian)
may rely and act thereon;
5. To maintain all records necessary for the administration of
the Plan;
6. To be responsible for preparing and filing such disclosure and
tax forms as may be required from time-to-time by the
Secretary of Labor or the Secretary of the Treasury; and
7. To furnish each Employee, Participant or Beneficiary such
notices, information and reports under such circumstances as
may be required by law.
D. The Plan Administrator shall have all of the powers necessary or
appropriate to accomplish his or her duties under the Plan,
including, but not limited to, the following:
1. To appoint and retain such persons as may be necessary to
carry out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other persons as
the Plan Administrator deems necessary or advisable in the
administration of the Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules which it
deems necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory
manner which it deems necessary to correct any arithmetical or
accounting errors which may have been made for any Plan Year;
and
6. To correct any defect, supply any omission or reconcile any
inconsistency in such manner and to such extent as shall be
deemed necessary or advisable to carry out the purpose of the
Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not limited to,
those involved in retaining necessary professional assistance may be paid
from the assets of the Fund. Alternatively, the Employer may, in its
discretion, pay any or all such expenses. Pursuant to uniform and
nondiscriminatory rules that the Plan Administrator may establish from
time-to-time, administrative expenses and expenses unique to a particular
Participant may be charged to a Participant's Individual Account or the
Plan Administrator may allow Participants to pay such fees outside of the
Plan. The Employer shall furnish the Plan Administrator with such clerical
and other assistance as the Plan Administrator may need in the performance
of his or her duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his or her duties, the
Employer shall supply full and timely information to the Plan
Administrator (or his or her designated agents) on all matters relating to
the Compensation of all Participants, their regular employment,
retirement, death, Disability or Termination of Employment, and such other
pertinent facts as the Plan Administrator (or his or her agents) may
require. The Plan Administrator shall advise the Trustee (or Custodian, if
applicable) of such of the foregoing facts as may be pertinent to the
Trustee's (or Custodian's) duties under the Plan. The Plan Administrator
(or his or her agents) is entitled to rely on such information as is
supplied by the Employer and shall have no duty or responsibility to
verify such information.
SECTION NINE
AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates to the
Prototype Sponsor the power, but not the duty, to amend the Plan
without any further action or consent of the Employer as the
Prototype Sponsor deems necessary for the purpose of adjusting the
Plan to comply with all laws and regulations governing pension or
profit sharing plans. Specifically, it is understood that the
amendments may be made unilaterally by the Prototype Sponsor.
However, it shall be understood that the Prototype Sponsor shall be
under no obligation to amend the Plan documents and the Employer
expressly waives any rights or claims against the Prototype Sponsor
for not exercising this power to amend. For purposes of Prototype
Sponsor amendments, the mass submitter shall be recognized as the
agent of the Prototype Sponsor. If the Prototype Sponsor does not
adopt the amendments made by the mass submitter, it will no longer
be identical to or a minor modifier of the mass submitter plan.
B. An amendment by the Prototype Sponsor shall be accomplished by
giving written notice to the Employer of the amendment to be made.
The notice shall set forth the text of such amendment and the date
such amendment is to be
37
effective. Such amendment shall take effect unless within the 30 day
period after such notice is provided, or within such shorter period
as the notice may specify, the Employer gives the Prototype Sponsor
written notice of refusal to consent to the amendment. Such written
notice of refusal shall have the effect of withdrawing the Plan as a
prototype plan and shall cause the Plan to be considered an
individually designed plan. The right of the Prototype Sponsor to
cause the Plan to be amended shall terminate should the Plan cease
to conform as a prototype plan as provided in this or any other
section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the Adoption
Agreement; (2) add overriding language in the Adoption Agreement when such
language is necessary to satisfy Section 415 or Section 416 of the Code
because of the required aggregation of multiple plans; and (3) 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 individually designed. An Employer that amends the Plan for any
other reason, including a waiver of the minimum funding requirement under
Section 412(d) of the Code, will no longer participate in this prototype
plan and will be considered to have an individually designed plan.
An Employer who wishes to amend the Plan to change the options it has
chosen in the Adoption Agreement must complete and deliver a new Adoption
Agreement to the Prototype Sponsor and Trustee (or Custodian, if
applicable). Such amendment shall become effective upon execution by the
Employer and Trustee (or Custodian).
The Employer further reserves the right to replace the Plan in its
entirety by adopting another retirement plan which the Employer designates
as a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
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 Individual Account may be reduced to
the extent permitted under Section 412(c)(8) of the Code. For purposes of
this paragraph, a plan amendment which has the effect of decreasing a
Participant's Individual Account 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. Furthermore, if
the vesting schedule of a Plan is amended, in the case of an Employee who
is a Participant as of the later of the date such amendment is adopted or
the date it becomes effective, the Vested percentage (determined as of
such date) of such Employee's Individual Account derived from Employer
Contributions will not be less than the percentage computed under the Plan
without regard to such amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended in any
way that directly or indirectly affects the computation of the
Participant's Vested percentage, or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each Participant
with at least 3 Years of Vesting Service with the Employer may elect,
within the time set forth below, to have the Vested percentage computed
under the Plan without regard to such amendment.
For Participants who do not have at least 1 Hour of Service in any Plan
Year beginning after December 31, 1988, the preceding sentence shall be
applied by substituting "5 Years of Vesting Service" for "3 Years of
Vesting Service" where such language appears.
The Period during which the election may be made shall commence with the
date the amendment is adopted or deemed to be made and shall end 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 Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions thereto indefinitely, but such continuance and payment is
not assumed as a contractual obligation. Neither the Adoption Agreement
nor the Plan nor any amendment or modification thereof nor the making of
contributions hereunder shall be construed as giving any Participant or
any person whomsoever any legal or equitable right against the Employer,
the Trustee (or Custodian, if applicable) the Plan Administrator or the
Prototype Sponsor except as specifically provided herein, or as provided
by law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by appropriate
action of its managing body. Such termination shall be effective on the
date specified by the Employer. The Plan shall terminate if the Employer
shall be dissolved, terminated, or declared bankrupt. Written notice of
the termination and effective date thereof shall be given to the
38
Trustee (or Custodian), Plan Administrator, Prototype Sponsor,
Participants and Beneficiaries of deceased Participants, and the required
filings (such as the Form 5500 series and others) must be made with the
Internal Revenue Service and any other regulatory body as required by
current laws and regulations. Until all of the assets have been
distributed from the Fund, the Employer must keep the Plan in compliance
with current laws and regulations by (a) making appropriate amendments to
the Plan and (b) taking such other measures as may be required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the Employer
may continue the Plan and be substituted in the place of the present
Employer. The successor and the present Employer (or, if deceased, the
executor of the estate of a deceased Self-Employed Individual who was the
Employer) must execute a written instrument authorizing such substitution
and the successor must complete and sign a new plan document.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan will no longer
be considered to be part of a prototype plan, and such Employer can no
longer participate under this prototype. In such event, the Plan will be
considered an individually designed plan.
SECTION TEN
MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without regard
to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they shall be
construed as though they were also used in the feminine gender in all
cases where they would so apply, and whenever any words are used herein in
the singular form they shall be construed as though they were also used in
the plural form in all cases where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or transfer
of assets or liabilities of such Plan to, any other plan, each Participant
shall be entitled to receive benefits immediately after the merger,
consolidation, or transfer (if the Plan had then terminated) which are
equal to or greater than the benefits he or she would have been entitled
to receive immediately before the merger, consolidation, or transfer (if
the Plan had then terminated). The Trustee (or Custodian) has the
authority to enter into merger agreements or agreements to directly
transfer the assets of this Plan but only if such agreements are made with
trustees or custodians of other retirement plans described in Section
401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other fiduciary under
this Plan shall discharge their duties with respect to this Plan solely in
the interests of Participants and their Beneficiaries and with the care,
skill, prudence and diligence under the circumstances then prevailing that
a prudent man acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like
aims. No fiduciary shall cause the Plan to engage in any transaction known
as a "prohibited transaction" under ERISA.
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest whatsoever
hereunder agree to perform any and all acts and execute any and all
documents and papers which may be necessary or desirable for the carrying
out of this Plan and any of its provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors, administrators,
successors and assigns, as those terms shall apply to any and all parties
hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this Plan is a
Top-Heavy Plan if any of the following conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60% and this Plan
is not part of any required aggregation group or permissive
aggregation group of plans.
2. If this Plan is 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%.
39
3. If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the
top-heavy ratio for the permissive aggregation group exceeds
60%.
For purposes of this Section 10.08, the following terms shall have
the meanings indicated below:
B. 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 Section 415(b)(1)(A) of the Code, an owner (or
considered an owner under Section 318 of the Code) of one of the 10
largest interests in the Employer if such individual's compensation
exceeds 100% of the dollar limitation under Section 415(c)(1)(A) of
the Code, a 5% owner of the Employer, or a 1% owner of the Employer
who has an annual compensation of more than $150,000. Annual
compensation means compensation as defined in Section 415(c)(3) of
the Code, but including amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the
Employee's gross income under Section 125, Section 402(e)(3),
Section 402(h)(1)(B) or Section 403(b) of the Code. The
determination period is the Plan Year containing the determination
date and the 4 preceding Plan Years.
The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the regulations
thereunder.
C. Top-heavy ratio
1. If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the
Employer has not maintained any defined benefit plan which
during the 5-year period ending on the determination date(s)
has or has had accrued benefits, the top-heavy ratio for this
Plan alone or for the required or permissive aggregation group
as appropriate is a fraction, the numerator of which is the
sum of the account balances of all Key Employees as of the
determination date(s) (including any part of any account
balance distributed in the 5-year period ending on the
determination date(s)), and the denominator of which is the
sum of all account balances (including any part of any account
balance distributed in the 5-year period ending on the
determination date(s)), both computed in accordance with
Section 416 of the Code and the regulations thereunder. Both
the numerator and the 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 Section 416 of the Code and the
regulations thereunder.
2. If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
determination date(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 (1) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans
for all Key Employees as of the determination date(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 (1) 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 Section 416 of the
Code 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.
3. For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent valuation date that falls
within or ends with the 12-month period ending on the
determination date, except as provided in Section 416 of the
Code 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 (a) who is not a Key
Employee but who was a Key Employee in a Prior Year, or (b)
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 Section 416
of the Code and the regulations thereunder. Deductible
employee contributions will not be taken into account for
purposes of computing the top-heavy ratio. 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 (a) the method, if any, that
uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) 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 Section 411(b)(1)(C) of the Code.
40
4. Permissive aggregation group: The required aggregation group
of plans plus any other plan or plans of the Employer which,
when considered as a group with the required aggregation
group, would continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
5. Required aggregation group: (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 Sections
401(a)(4) or 410 of the Code.
6. 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.
7. Valuation date: For purposes of calculating the top-heavy
ratio, the valuation date shall be the last day of each Plan
Year.
8. Present value: For purposes of establishing the "present
value" of benefits under a defined benefit plan to compute the
top-heavy ratio, any benefit shall be discounted only for
mortality and interest based on the interest rate and
mortality table specified for this purpose in the defined
benefit plan, unless otherwise indicated in the Adoption
Agreement.
10.09 SPECIAL LIMITATIONS FOR 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 Sections 401(a) and (d) of the Code for the employees
of those trades or businesses.
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 Sections 401(a) and (d) of the Code 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 trade or business which is 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 paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business if
the Owner-Employee, or two or more Owner-Employees, together:
A. own the entire interest in a unincorporated trade or business, or
B. in the case of a partnership, own more than 50% of either the
capital interest or the profit 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.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to assignment
or alienation, either voluntarily or involuntarily. The preceding sentence
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 Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified domestic
relations order until January 1, 1985. However, in the case of a domestic
relations order entered before such date, the Plan Administrator:
(1) shall treat such order as a qualified domestic relations order if
such Plan Administrator is paying benefits pursuant to such order on
such date, and
(2) may treat any other such order entered before such date as a
qualified domestic relations order even if such order does not meet
the requirements of Section 414(p) of the Code.
Notwithstanding any provision of the Plan to the contrary, a distribution
to an alternate payee under a qualified domestic relations order shall be
permitted even if the Participant affected by such order is not otherwise
entitled to a distribution and even if such Participant has not attained
earliest retirement age as defined in Section 414(p) of the Code.
41
10.11 CANNOT ELIMINATE PROTECTED BENEFITS
Pursuant to Section 411(d)(6) of the Code, and the regulations thereunder,
the Employer cannot reduce, eliminate or make subject to Employer
discretion any Section 411(d)(6) protected benefit. Where this Plan
document is being adopted to amend another plan that contains a protected
benefit not provided for in this document, the Employer may attach a
supplement to the Adoption Agreement that describes such protected benefit
which shall become part of the Plan.
SECTION ELEVEN
401(k) PROVISIONS
In addition to Sections 1 through 10, the provisions of this Section 11
shall apply if the Employer has established a 401(k) cash or deferred
arrangement (CODA) by completing and signing the appropriate Adoption
Agreement.
11.100 DEFINITIONS
The following words and phrases when used in the Plan with initial capital
letters shall, for the purposes of this Plan, have the meanings set forth
below unless the context indicates that other meanings are intended.
11.101 ACTUAL DEFERRAL PERCENTAGE (ADP)
Means, for a specified group of Participants for a Plan Year, the average
of the ratios (calculated separately for each Participant in such group)
of (1) the amount of Employer Contributions actually paid over to the Fund
on behalf of such Participant for the Plan Year to (2) the Participant's
Compensation for such Plan Year (taking into account only that
Compensation paid to the Employee during the portion of the Plan Year he
or she was an eligible Participant, unless otherwise indicated in the
Adoption Agreement). For purposes of calculating the ADP, Employer
Contributions on behalf of any Participant shall include: (1) any Elective
Deferrals made pursuant to the Participant's deferral election, (including
Excess Elective Deferrals of Highly Compensated Employees), but excluding
(a) Excess Elective Deferrals of Non-highly Compensated Employees that
arise solely from Elective Deferrals made under the Plan or plans of this
Employer and (b) Elective Deferrals that are taken into account in the
Contribution Percentage test (provided the ADP test is satisfied both with
and without exclusion of these Elective Deferrals); and (2) at the
election of the Employer, Qualified Nonelective 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.
11.102 AGGREGATE LIMIT
Means the sum of (1) 125% of the greater of the ADP of the Participants
who are not Highly Compensated Employees for the Plan Year or the ACP of
the Participants who are not 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 CODA; and (2) the lesser of 200% or two plus the
lesser of such ADP or ACP. "Lesser" is substituted for "greater" in "(1)"
above, and "greater" is substituted for "lesser" after "two plus the" in
"(2)" if it would result in a larger Aggregate Limit.
11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means the average of the Contribution Percentages of the Eligible
Participants in a group.
11.104 CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing Participant
pursuant to Section 11.201 and on whose behalf the Employer is
contributing Elective Deferrals to the Plan (or is making Nondeductible
Employee Contributions).
11.105 CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the Participant's
Contribution Percentage Amounts to the Participant's Compensation for the
Plan Year (taking into account only the Compensation paid to the Employee
during the portion of the Plan Year he or she was an eligible Participant,
unless otherwise indicated in the Adoption Agreement).
11.106 CONTRIBUTION PERCENTAGE AMOUNTS
Means the sum of the Nondeductible Employee Contributions, Matching
Contributions, and Qualified Matching Contributions made under the Plan on
behalf of the Participant for the Plan Year. Such Contribution Percentage
Amounts shall not include Matching Contributions that are forfeited either
to correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions, Excess
Aggregate Contributions or excess annual additions which are distributed
pursuant to Section 11.508. If so elected in the Adoption Agreement, the
Employer may include Qualified Nonelective Contributions in the
Contribution Percentage Amount. 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.
11.107 ELECTIVE DEFERRALS
Means any Employer Contributions made to the Plan at the election of the
Participant, in lieu of cash compensation, and shall include contributions
made pursuant to a salary reduction agreement or other deferral mechanism.
With respect to any taxable year, a Participant's Elective Deferral is the
sum of all Employer contributions made on behalf of such
42
Participant pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee pension
cash or deferred arrangement as described in Section 402(h)(1)(B), any
eligible deferred compensation plan under Section 457, any plan as
described under Section 501(c)(18), and any Employer contributions made on
the behalf of a Participant for the purchase of an annuity contract under
Section 403(b) pursuant to a salary reduction agreement. Elective
Deferrals shall not include any deferrals properly distributed as excess
annual additions.
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 Section
402(g) of the Code in effect at the beginning of such taxable year.
Elective Deferrals may not be taken into account for purposes of
satisfying the minimum allocation requirement applicable to Top-Heavy
Plans described in Section 3.01(E).
11.108 ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make a Nondeductible Employee
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
thereof) or a Qualified Matching Contribution.
If a Nondeductible Employee Contribution 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 on behalf of whom no Nondeductible Employee
Contributions are made.
11.109 EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess 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
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 Section 11.111 and then determining
Excess Contributions pursuant to Section 11.110.
11.110 EXCESS CONTRIBUTIONS
Means, 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).
11.111 EXCESS ELECTIVE DEFERRALS
Means those Elective Deferrals that are includible in a Participant's
gross income under Section 402(g) of the Code 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.
11.112 MATCHING CONTRIBUTION
Means an Employer Contribution made to this or any other defined
contribution plan on behalf of a Participant on account of an Elective
Deferral or a Nondeductible Employee Contribution made by such Participant
under a plan maintained by the Employer.
Matching Contributions may not be taken into account for purposes of
satisfying the minimum allocation requirement applicable to Top-Heavy
Plans described in Section 3.01(E).
11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS
Means contributions (other than Matching Contributions or Qualified
Matching Contributions) made by the Employer and allocated to
Participants' Individual 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.
Qualified Nonelective Contribution may be taken into account for purposes
of satisfying the minimum allocation requirement applicable to Top-Heavy
Plans described in Section 3.01(E).
43
11.114 QUALIFIED MATCHING CONTRIBUTIONS
Means Matching Contributions which are subject to the distribution and
nonforfeitability requirements under Section 401(k) of the Code when made.
11.115 QUALIFYING CONTRIBUTING PARTICIPANT
Means a Contributing Participant who satisfies the requirements described
in Section 11.302 to be entitled to receive a Matching Contribution (and
Forfeitures, if applicable) for a Plan Year.
11.200 CONTRIBUTING PARTICIPANT
11.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
A. Each Employee who satisfies the eligibility requirements specified
in the Adoption Agreement may enroll as a Contributing Participant
as of any subsequent Entry Date (or earlier if required by Section
2.03) specified in the Adoption Agreement for this purpose. A
Participant who wishes to enroll as a Contributing Participant must
complete, sign and file a salary reduction agreement (or agreement
to make Nondeductible Employee Contributions) with the Plan
Administrator.
B. Notwithstanding the times set forth in Section 11.201(A) as of which
a Participant may enroll as a Contributing Participant, the Plan
Administrator shall have the authority to designate, in a
nondiscriminatory manner, additional enrollment times during the 12
month period beginning on the Effective Date (or the date that
Elective Deferrals may commence, if later) in order that an orderly
first enrollment might be completed. In addition, if the Employer
has indicated in the Adoption Agreement that Elective Deferrals may
be based on bonuses, then Participants shall be afforded a
reasonable period of time prior to the issuance of such bonuses to
elect to defer them into the Plan.
11.202 CHANGING ELECTIVE DEFERRAL AMOUNTS
A Contributing Participant may modify his or her salary reduction
agreement (or agreement to make Nondeductible Employee Contributions) to
increase or decrease (within the limits placed on Elective Deferrals (or
Nondeductible Employee Contributions) in the Adoption Agreement) the
amount of his or her Compensation deferred into the Plan. Such
modification may only be made as of the dates specified in the Adoption
Agreement for this purpose, or as of any other more frequent date(s) if
the Plan Administrator permits in a uniform and nondiscriminatory manner.
A Contributing Participant who desires to make such a modification shall
complete, sign and file a new salary reduction agreement (or agreement to
make Nondeductible Employee Contribution) with the Plan Administrator. The
Plan Administrator may prescribe such uniform and nondiscriminatory rules
it deems appropriate to carry out the terms of this Section.
11.203 CEASING ELECTIVE DEFERRALS
A Participant may cease Elective Deferrals (or Nondeductible Employee
Contributions) and thus withdraw as a Contributing Participant as of the
dates specified in the Adoption Agreement for this purpose (or as of any
other date if the Plan Administrator so permits in a uniform and
nondiscriminatory manner) by revoking the authorization to the Employer to
make Elective Deferrals (or Nondeductible Employee Contributions) on his
or her behalf. A Participant who desires to withdraw as a Contributing
Participant shall give written notice of withdrawal to the Plan
Administrator at least thirty days (or such lesser period of days as the
Plan Administrator shall permit in a uniform and nondiscriminatory manner)
before the effective date of withdrawal. A Participant shall cease to be a
Contributing Participant upon his or her Termination of Employment, or an
account of termination of the Plan.
11.204 RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE
DEFERRALS A Participant who has withdrawn as a Contributing Participant
under Section 11.203 (or because the Participant has taken a hardship
withdrawal pursuant to Section 11.503) may not again become a Contributing
Participant until the dates set forth in the Adoption Agreement for this
purpose, unless the Plan Administrator, in a uniform and nondiscriminatory
manner, permits withdrawing Participants to resume their status as
Contributing Participants sooner.
11.205 CERTAIN ONE-TIME IRREVOCABLE ELECTIONS
This Section 11.205 applies where the Employer has indicated in the
Adoption Agreement that an Employee may make a one-time irrevocable
election to have the Employer make contributions to the Plan on such
Employee's behalf. In such event, an Employee may elect, upon the
Employee's first becoming eligible to participate in the Plan, to have
contributions equal to a specified amount or percentage of the Employee's
Compensation (including no amount of Compensation) made by the Employer on
the Employee's behalf to the Plan (and to any other plan of the Employer)
for the duration of the Employee's employment with the Employer. Any
contributions made pursuant to a one-time irrevocable election described
in this Section are not treated as made pursuant to a cash or deferred
election, are not Elective Deferrals and are not includible in an
Employee's gross income.
The Plan Administrator shall establish such uniform and nondiscriminatory
procedures as it deems necessary or advisable to administer this
provision.
11.300 CONTRIBUTIONS
44
11.301 CONTRIBUTIONS BY EMPLOYER
The Employer shall make contributions to the Plan in accordance with the
contribution formulas specified in the Adoption Agreement.
11.302 MATCHING CONTRIBUTIONS
The Employer may elect to make Matching Contributions under the Plan on
behalf of Qualifying Contributing Participants as provided in the Adoption
Agreement. To be a Qualifying Contributing Participant for a Plan Year,
the Participant must make Elective Deferrals (or Nondeductible Employee
Contributions, if the Employer has agreed to match such contributions) for
the Plan Year, satisfy any age and Years of Eligibility Service
requirements that are specified for Matching Contributions in the Adoption
Agreement and also satisfy any additional conditions set forth in the
Adoption Agreement for this purpose. In a uniform and nondiscriminatory
manner, the Employer may make Matching Contributions at the same time as
it contributes Elective Deferrals or at any other time as permitted by
laws and regulations.
11.303 QUALIFIED NONELECTIVE CONTRIBUTIONS
The Employer may elect to make Qualified Nonelective Contributions under
the Plan on behalf of Participants as provided in the Adoption Agreement.
In addition, in lieu of distributing Excess Contributions as provided in
Section 11.505 of the Plan, or Excess Aggregate Contributions as provided
in Section 11.506 of the Plan, and to the extent elected by the Employer
in the Adoption Agreement, the Employer may make Qualified Nonelective
Contributions on behalf of Participants who are not Highly Compensated
Employees that are sufficient to satisfy either the Actual Deferral
Percentage test or the Average Contribution Percentage test, or both,
pursuant to regulations under the Code.
11.304 QUALIFIED MATCHING CONTRIBUTIONS
The Employer may elect to make Qualified Matching Contributions under the
Plan on behalf of Participants as provided in the Adoption Agreement.
11.305 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Notwithstanding Section 3.02, if the Employer so allows in the Adoption
Agreement, a Participant may contribute Nondeductible Employee
Contributions to the Plan.
If the Employer has indicated in the Adoption Agreement that Nondeductible
Employee Contributions will be mandatory, then the Employer shall
establish uniform and nondiscriminatory rules and procedures for
Nondeductible Employee Contributions as it deems necessary and advisable
including, but not limited to, rules describing in amounts or percentages
of Compensation Participants may or must contribute to the Plan.
A separate account will be maintained by the Plan Administrator for the
Nondeductible Employee Contributions for each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator, withdraw the lesser of the portion of his or her Individual
Account attributable to his or her Nondeductible Employee Contributions or
the amount he or she contributed as Nondeductible Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as a result
of an Employee's withdrawal of Nondeductible Employee Contributions.
11.400 NONDISCRIMINATION TESTING
11.401 ACTUAL DEFERRAL PERCENTAGE TEST (ADP)
A. Limits on Highly Compensated Employees - The Actual Deferral
Percentage (hereinafter "ADP") for Participants who are Highly
Compensated Employees for each Plan Year and the ADP for
Participants who are not Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
1. The ADP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ADP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
2. The ADP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ADP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 2.0 provided that the ADP for Participants
who are Highly Compensated Employees does not exceed the ADP
for Participants who are not Highly Compensated Employees by
more than 2 percentage points.
B. Special Rules
1. The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or
45
both, if treated as Elective Deferrals for purposes of the ADP
test) allocated to his or her Individual Accounts under two or
more arrangements described in Section 401(k) of the Code,
that are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified
Nonelective 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.
Notwithstanding the foregoing, certain plans shall be treated
as separate if mandatorily disaggregated under regulations
under Section 401(k) of the Code.
2. In the event that this Plan satisfies the requirements of
Sections 401(k), 401(a)(4), or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such sections of the
Code only if aggregated with this Plan, then this Section
11.401 shall be applied by determining the ADP of Employees as
if all such plans were a single plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated in order to
satisfy Section 401(k) of the Code only if they have the same
Plan Year.
3. For purposes of determining the ADP of a Participant who is a
5% owner or one of the 10 most highly paid Highly Compensated
Employees, the Elective Deferrals (and Qualified Nonelective
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 Nonelective
Contributions and Qualified Matching Contributions, or both)
and Compensation for the Plan Year of family members (as
defined in Section 414(q)(6) of the Code). Family members,
with respect to such Highly Compensated Employees, shall be
disregarded as separate Employees in determining the ADP both
for Participants who are not Highly Compensated Employees and
for Participants who are Highly Compensated Employees.
4. For purposes of determining the ADP test, Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the 12 month
period immediately following the Plan Year to which
contributions relate.
5. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both, used in such test.
6. The determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
7. If the Employer elects to take Qualified Matching
Contributions into account as Elective Deferrals for purposes
of the ADP test, then (subject to such other requirements as
may be prescribed by the Secretary of the Treasury) unless
otherwise indicated in the Adoption Agreement, only the amount
of such Qualified Matching Contributions that are needed to
meet the ADP test shall be taken into account.
8. In the event that the Plan Administrator determines that it is
not likely that the ADP test will be satisfied for a
particular Plan Year unless certain steps are taken prior to
the end of such Plan Year, the Plan Administrator may require
Contributing Participants who are Highly Compensated Employees
to reduce their Elective Deferrals for such Plan Year in order
to satisfy that requirement. Said reduction shall also be
required by the Plan Administrator in the event that the Plan
Administrator anticipates that the Employer will not be able
to deduct all Employer Contributions from its income for
Federal income tax purposes.
11.402 LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS
A. Limits on Highly Compensated Employees - The Average Contribution
Percentage (hereinafter "ACP") for Participants who are Highly
Compensated Employees for each Plan Year and the ACP for
Participants who are not Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
1. The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 2, provided that the ACP for the
Participants who are Highly Compensated Employees does not
exceed the ACP for Participants who are not Highly Compensated
Employees by more than 2 percentage points.
B. Special Rules
1. Multiple Use - If one or more Highly Compensated Employees
participate in both a CODA 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, as elected in the
Adoption
46
Agreement, the ACP or the ADP of those Highly Compensated
Employees who also participate in a CODA will be reduced
(beginning with such Highly Compensated Employee whose ACP (or
ADP, if elected) is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts (or ADP, if
elected) is reduced shall be treated as an Excess Aggregate
Contribution (or Excess Contribution, if elected). 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 the ADP and ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the
ADP and ACP of the Participants who are not Highly Compensated
Employees.
2. For purposes of this Section 11.402, 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 Individual Account under two
or more plans described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the Code that are
maintained by the Employer, 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. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated
under regulations under Section 401(m) of the Code.
3. In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such Sections of the
Code only if aggregated with this Plan, then this Section
shall be applied by determining the Contribution Percentage of
Employees as if all such plans were a single plan. For Plan
Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code only
if they have the same Plan Year.
4. For purposes of determining the Contribution Percentage of a
Participant who is a 5% owner or one of the 10 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 Section 414(q)(6) of
the Code). Family members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants
who are not Highly Compensated Employees and for Participants
who are Highly Compensated Employees.
5. For purposes of determining the Contribution Percentage test,
Nondeductible Employee Contributions are considered to have
been made in the Plan Year in which contributed to the Fund.
Matching Contributions and Qualified Nonelective Contributions
will be considered made for a Plan Year if made no later than
the end of the 12 month period beginning on the day after the
close of the Plan Year.
6. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both, used in such test.
7. 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.
8. If the Employer elects to take Qualified Nonelective
Contributions into account as Contribution Percentage Amounts
for purposes of the ACP test, then (subject to such other
requirements as may be prescribed by the Secretary of the
Treasury) unless otherwise indicated in the Adoption
Agreement, only the amount of such Qualified Nonelective
Contributions that are needed to meet the ACP test shall be
taken into account.
9. If the Employer elects to take Elective Deferrals into account
as Contribution Percentage Amounts for purposes of the ACP
test, then (subject to such other requirements as may be
prescribed by the Secretary of the Treasury) unless otherwise
indicated in the Adoption Agreement, only the amount of such
Elective Deferrals that are needed to meet the ACP test shall
be taken into account.
11.500 DISTRIBUTION PROVISIONS
11.501 GENERAL RULE
Distributions from the Plan are subject to the provisions of Section 6 and
the provisions of this Section 11. In the event of a conflict between the
provisions of Section 6 and Section 11, the provisions of Section 11 shall
control.
11.502 DISTRIBUTION REQUIREMENTS
Elective Deferrals, Qualified Nonelective Contributions, and Qualified
Matching Contributions, and income allocable to each are not distributable
to a Participant or his or her Beneficiary or Beneficiaries, in accordance
with such Participant's or Beneficiary or Beneficiaries' election, earlier
than upon separation from service, death or disability.
47
Such amounts may also be distributed upon:
A. Termination of the Plan without the establishment of another defined
contribution plan, other than an employee stock ownership plan (as
defined in Section 4975(e) or Section 409 of the Code) or a
simplified employee pension plan as defined in Section 408(k).
B. The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code used in a trade or business of such
corporation if such corporation continues to maintain this Plan
after the disposition, but only with respect to Employees who
continue employment with the corporation acquiring such assets.
C. The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code) if such corporation continues to
maintain this Plan, but only with respect to Employees who continue
employment with such subsidiary.
D. The attainment of age 59 1/2 in the case of a profit sharing plan.
E. If the Employer has so elected in the Adoption Agreement, the
hardship of the Participant as described in Section 11.503.
All distributions that may be made pursuant to one or more of the
foregoing distributable events are subject to the spousal and
Participant consent requirements (if applicable) contained in
Section 401(a)(11) and 417 of the Code. In addition, distributions
after March 31, 1988, that are triggered by any of the first three
events enumerated above must be made in a lump sum.
11.503 HARDSHIP DISTRIBUTION
A. General - If the Employer has so elected in the Adoption Agreement,
distribution of Elective Deferrals (and any earnings credited to a
Participant's account as of the end of the last Plan Year, ending
before July 1, 1989) may be made to a Participant in the event of
hardship. For the purposes of this Section, hardship is defined as
an immediate and heavy financial need of the Employee where such
Employee lacks other available resources. Hardship distributions are
subject to the spousal consent requirements contained in Sections
401(a)(11) and 417 of the Code.
B. Special Rules
1. The following are the only financial needs considered
immediate and heavy: expenses incurred or necessary for
medical care, described in Section 213(d) of the Code, of the
Employee, the Employee's spouse or dependents; the purchase
(excluding mortgage payments) of a principal residence for the
Employee; payment of tuition and related educational fees for
the next 12 months of post-secondary education for the
Employee, the Employee's spouse, children or dependents; or
the need to prevent the eviction of the Employee from, or a
foreclosure on the mortgage of, the Employee's principal
residence.
2. A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if:
a. The Employee has obtained all distributions, other than
hardship distributions, and all nontaxable loans under
all plans maintained by the Employer;
b. All plans maintained by the Employer provide that the
Employee's Elective Deferrals (and Nondeductible
Employee Contributions) will be suspended for 12 months
after the receipt of the hardship distribution;
c. The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts
necessary to pay any Federal, state or local income
taxes or penalties reasonably anticipated to result from
the distribution); and
d. All plans maintained by the Employer provide that the
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 Section 402(g) of the Code
for such taxable year less the amount of such Employee's
Elective Deferrals for the taxable year of the hardship
distribution.
11.504 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
A. General Rule - A Participant may assign to this Plan any Excess
Elective Deferrals made during a taxable year of the Participant by
notifying the Plan Administrator on or before the date specified in
the Adoption Agreement of the amount of the Excess Elective
Deferrals to be assigned to the Plan. A Participant is deemed to
notify the Plan Administrator of
48
any Excess Elective Deferrals that arise by taking into account only
those Elective Deferrals made to this Plan and any other plans of
the Employer.
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 to any Participant to
whose Individual Account Excess Elective Deferrals were assigned for
the preceding year and who claims Excess Elective Deferrals for such
taxable year.
B. Determination of Income or Loss - Excess Elective Deferrals shall be
adjusted for any income or loss up to the date of distribution. The
income of loss allocable to Excess Elective Deferrals is the sum of
: (1) income or loss allocable to the Participant's Elective
Deferral account for the taxable year multiplied by a fraction, the
numerator of which is such Participant's Elective Deferrals for the
year and the denominator is the Participant's Individual Account
balance attributable to Elective Deferrals without regard to any
income or loss occurring during such taxable year; and (2) 10% of
the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Participant's taxable year
and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month. Notwithstanding
the preceding sentence, the Plan Administrator may compute the
income or loss allocable to Excess Elective Deferrals in the manner
described in Section 4 (i.e., the usual manner used by the Plan for
allocating income or loss to Participants' Individual Accounts),
provided such method is used consistently for all Participants and
for all corrective distributions under the Plan for the Plan Year.
11.505 DISTRIBUTION OF EXCESS CONTRIBUTIONS
A. General Rule - 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 Individual Accounts such Excess
Contributions were allocated for the preceding Plan Year. If such
excess amounts are distributed more than 2 1/2months after the last
day of the Plan Year in which such excess amounts arose, a 10%
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 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 combined ADP.
Excess Contributions (including the amounts recharacterized) shall
be treated as annual additions under the Plan.
B. Determination of Income or Loss - Excess Contributions shall be
adjusted for any income or loss up to the date of distribution. The
income or loss allocable to Excess Contributions is the sum of: (1)
income or loss allocable to Participant's Elective Deferral account
(and, if applicable, the Qualified Nonelective Contribution account
or the Qualified Matching Contributions account or both) for the
Plan Year multiplied by a fraction, the numerator of which is such
Participant's Excess Contributions for the year and the denominator
is the Participant's Individual Account balance attributable to
Elective Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to any
income or loss occurring during such Plan Year; and (2) 10% of the
amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution
occurs after the 15th of such month. Notwithstanding the preceding
sentence, the Plan Administrator may compute the income or loss
allocable to Excess Contributions in the manner described in Section
4 (i.e., the usual manner used by the Plan for allocating income or
loss to Participants' Individual Accounts), provided such method is
used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year.
C. Accounting for Excess Contributions - 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 Nonelective 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.
11.506 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
A. General Rule - 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 of Participants who are subject to the
family member aggregation rules shall be allocated among the family
members in proportion to the Employee and Matching Contributions (or
amounts treated as Matching Contributions) of each family member
that is combined to determine the combined ACP. If such Excess
Aggregate Contributions are distributed more than 2 1/2months after
the last day of the Plan Year in which such excess amounts arose, a
10% excise tax will be imposed on the Employer maintaining the Plan
with respect to those amounts.
49
Excess Aggregate Contributions shall be treated as annual additions
under the Plan.
B. Determination of Income or Loss - Excess Aggregate Contributions
shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Aggregate
Contributions is the sum of: (1) income or loss allocable to the
Participant's Nondeductible Employee Contribution account, Matching
Contribution account (if any, and if all amounts therein are not
used in the ADP test) and, if applicable, Qualified Nonelective
Contribution account and Elective Deferral account for the Plan Year
multiplied by a fraction, the numerator of which is such
Participant's Excess Aggregate Contributions for the year and the
denominator is the Participant's Individual Account balance(s)
attributable to Contribution Percentage Amounts without regard to
any income or loss occurring during such Plan Year; and (2) 10% of
the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution
occurs after the 15th of such month. Notwithstanding the preceding
sentence, the Plan Administrator may compute the income or loss
allocable to Excess Aggregate Contributions in the manner described
in Section 4 (i.e., the usual manner used by the Plan for allocating
income or loss to Participants' Individual Accounts), provided such
method is used consistently for all Participants and for all
corrective distributions under the Plan for the Plan Year.
C. Forfeitures of Excess Aggregate Contributions - Forfeitures of
Excess Aggregate Contributions may either be reallocated to the
accounts of Contributing Participants who are not Highly Compensated
Employees or applied to reduce Employer Contributions, as elected by
the Employer in the Adoption Agreement.
D. Accounting for Excess Aggregate Contributions - Excess Aggregate
Contributions shall be forfeited, if forfeitable or distributed on a
pro rata basis from the Participant's Nondeductible Employee
Contribution account, Matching Contribution account, and Qualified
Matching Contribution account (and, if applicable, the Participant's
Qualified Nonelective Contribution account or Elective Deferral
account, or both).
50
11.507 RECHARACTERIZATION
A Participant may treat his or her Excess Contributions as an amount
distributed to the Participant and then contributed by the Participant to
the Plan. Recharacterized amounts will remain nonforfeitable and subject
to the same distribution requirements as Elective Deferrals. Amounts may
not be recharacterized by a Highly Compensated Employee to the extent that
such amount in combination with other Nondeductible Employee Contributions
made by that Employee would exceed any stated limit under the Plan on
Nondeductible Employee Contributions.
Recharacterization must occur no later than two and one-half months after
the last day of the Plan Year in which such Excess Contributions arose and
is deemed to occur no earlier than the date the last Highly Compensated
Employee is informed in writing of the amount recharacterized and the
consequences thereof. Recharacterized amounts will be taxable to the
Participant for the Participant's tax year in which the Participant would
have received them in cash.
11.508 DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS
Notwithstanding any other provision of the Plan, a Participant's Elective
Deferrals shall be distributed to him or her to the extent that the
distribution will reduce an excess annual addition (as that term is
described in Section 3.05 of the Plan).
11.600 VESTING
11.601 100% VESTING ON CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective Deferrals,
Qualified Nonelective Contributions, Nondeductible Employee Contributions,
and Qualified Matching Contributions is nonforfeitable. Separate accounts
for Elective Deferrals, Qualified Nonelective Contributions, Nondeductible
Employee Contributions, Matching Contributions, and Qualified Matching
Contributions will be maintained for each Participant. Each account will
be credited with the applicable contributions and earnings thereon.
11.602 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the vesting
schedule for Matching Contributions in the Adoption Agreement. In any
event, Matching Contributions shall be fully Vested at Normal Retirement
Age, upon the complete or partial termination of the profit sharing plan,
or upon the complete discontinuance of Employer Contributions.
Notwithstanding any other provisions of the Plan, Matching Contributions
or Qualified Matching Contributions must be forfeited if the contributions
to which they relate are Excess Elective Deferrals, Excess Contributions,
Excess Aggregate Contributions or excess annual additions which are
distributed pursuant to Section 11.508. Such Forfeitures shall be
allocated in accordance with Section 3.01(C).
When a Participant incurs a Termination of Employment, whether a
Forfeiture arises with respect to Matching Contributions shall be
determined in accordance with Section 6.01(D).
51
Page 1
Comprehensive Nonstandardized Safe Harbor 401(k) Profit Sharing Plan
ADOPTION AGREEMENT
--------------------------------------------------------------------------------
SECTION 1. EMPLOYER INFORMATION
Name of Employer: Tear Drop Golf Company
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
City: ▇▇▇▇▇▇ Grove State: IL Zip: 60053
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Employer's Federal Tax Identification Number: ▇▇-▇▇▇▇▇▇▇
Type of Business (Check only one) [ ] Sole Proprietorship
[ ] Partnership
[X] C Corporation
[ ] S Corporation
[ ] Other (Specify)____________
[ ] Check here if Related Employers may participate in this Plan
and attach a Related Employer Participation Agreement for each
Related Employer who will participate in this Plan.
Business Code: 5091
Name of Plan: Tear Drop Golf Co. & Subsidiaries 401(k) Plan
Name of Trust (if different from Plan name)________________________
Plan Sequence Number: 001 (Enter 001 if this is the first qualified
plan the Employer has ever maintained, enter 002 if it is the
second, etc.)
Trust Identification Number (if applicable)______________
Account Number (Optional) 777092
SECTION 2. EFFECTIVE DATES Complete Parts A and B
Part A. General Effective Dates (Check and Complete Option 1 or 2):
Option 1: [ ] This is the initial adoption of a profit sharing
plan by the Employer.
The Effective Date of this Plan is ______, 19__.
NOTE: The effective date is usually the first day
of the Plan Year in which this Adoption Agreement
is signed.
Option 2: [X] This is an amendment and restatement of an
existing profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on April 1,
1991.
The Effective Date of this amendment and
restatement is January 1, 1998.
NOTE: The effective date is usually the first day
of the Plan Year in which this Adoption Agreement
is signed.
Part B. Specific Effective Dates:
The provisions of the Plan will generally be effective as of the
Effective Date specified in Section 2, Part A. However, the
following provisions will be effective on the dates indicated below
(Specify effective date only if later than the general Effective
Date described in Section 2, Part A):
Provision Effective Date
1. Commencement of Elective Deferrals* _______________
2. Matching Contributions (Section 7) _______________
3. Qualified Nonelective Contributions
(Section 8) _______________
4. Qualified Matching Contributions (Section
9) _______________
5. In-Service Withdrawals (Section 15, Part
A, Item 6) _______________
6. Hardship Withdrawals of Elective Deferrals
(Section 15, Part A, Item 5) _______________
7. Hardship Withdrawals (Section 15, Part A,
Item 8) _______________
8. Loans (Section 17, Item A) _______________
Page 2
9. Participant Direction of Investments
(Section 18) _______________
*NOTE: Elective Deferrals may commence no earlier than the date this
Adoption Agreement is signed because Elective Deferrals cannot be
made retroactively.
SECTION 3. RELEVANT TIME PERIODS Complete Parts A through D
Part A. Employer's Fiscal Year:
The Employer's fiscal year ends (Specify month and date) 12-31
Part B. Plan Year Means:
Option 1: [ ] The 12-consecutive month period which coincides
with the Employer's fiscal year.
Option 2: [X] The calendar year.
Option 3: [ ] Other (Specify)____________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
If the initial Plan Year is less than 12 months (a short Plan Year)
specify such Plan Year's beginning and ending dates_________________
Part C. Limitation Year Means:
Option 1: [X] The Plan Year.
Option 2: [ ] The calendar year.
Option 3: [ ] Other (Specify)__________________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part D. Measuring Period For Vesting:
Years of Vesting Service shall be measured over the following
12-consecutive month period:
Option 1: [X] The Plan Year.
Option 2: [ ] The 12-consecutive month period commencing with
the Employee's Employment Commencement Date and
each successive 12-month period commencing on the
anniversaries of the Employee's Employment
Commencement Date.
Option 3: [ ] Other (Specify)_________________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 4. ELIGIBILITY REQUIREMENTS Complete Parts A through G
Part A. Years of Eligibility Service Requirement:
1. Elective Deferrals.
An Employee will be eligible to become a Contributing
Participant in the Plan (and thus be eligible to make Elective
Deferrals) after completing .08 (enter 0, 1 or any fraction
less than 1) Years of Eligibility Service.
2. Matching Contributions.
If Matching Contributions (or Qualified Matching
Contributions, if applicable) will be made to the Plan, a
Contributing Participant will be eligible to receive Matching
Contributions (or Qualified Matching Contributions, if
applicable) after completing 1 (enter 0, 1, 2 or any fraction
less than 2) Years of Eligibility Service.
3. Employer Profit Sharing Contributions.
An Employee will be eligible to become a Participant in the
Plan for purposes of receiving an allocation of any Employer
Profit Sharing Contribution made pursuant to Section 11 of the
Adoption Agreement after completing 1 (enter 0, 1, 2 or any
fraction less than 2) Years of Eligibility Service.
NOTE: If more than 1 year is selected for Item 2 or Item 3, the
immediate 100% vesting schedule of Section 13 will automatically
apply for contributions described in such item. If any item is left
blank, the Years of Eligibility Service required for such item will
be deemed to be 0. If a fraction is selected, an Employee will not
be required to complete any specified number of Hours of Service to
receive credit for a fractional year. If a single Entry Date is
selected in Section 4, Part G for an item, the Years of Eligibility
Service required for such item cannot exceed 1 1/2 (1/2 for Elective
Deferrals).
Page 3
Part B. Age Requirement:
1. Elective Deferrals.
An Employee will be eligible to become a Contributing
Participant (and thus be eligible to make Elective Deferrals)
after attaining age 21 (no more than 21).
2. Matching Contributions.
If Matching Contributions (or Qualified Matching
Contributions, if applicable) will be made to the Plan, a
Contributing Participant will be eligible to receive Matching
Contributions (or Qualified Matching Contributions, if
applicable) after attaining age 21 (no more than 21).
3. Employer Profit Sharing Contributions.
An Employee will be eligible to become a Participant in the
Plan for purposes of receiving an allocation of any Employer
Profit Sharing Contribution made pursuant to Section 11 of the
Adoption Agreement after attaining age 21 (no more than 21).
NOTE: If any of the above items in this Section 4, Part B is left
blank, it will be deemed there is no age requirement for such item.
If a single Entry Date is selected in Section 4, Part G for an item,
no age requirement can exceed 20 1/2 for such item.
Part C. Employees Employed As of Effective Date:
1. Elective Deferrals.
Will all Employees employed as of the date that Elective
Deferrals may commence as specified in Section 2, Part B who
have not otherwise met the Years of Eligibility Service and
age requirements specified above for Elective Deferrals be
considered to have met those requirements as of the Elective
Deferral commencement date? [X] Yes [ ] No
2. Matching Contributions.
If Matching Contributions (or Qualified Matching
Contributions, if applicable) will be made to the Plan, will
all Employees employed as of the date that Elective Deferrals
may commence as specified in Section 2, Part B who have not
otherwise met the Years of Eligibility Service and age
requirements specified above for Matching Contributions be
considered to have met those requirements as of the Elective
Deferral commencement date? [X] Yes [ ] No
3. Employer Profit Sharing Contributions.
Will all Employees employed as of the Effective Date of this
Plan who have not otherwise met the Years of Eligibility
Service and age requirements specified above for Employer
Profit Sharing Contributions be considered to have met those
requirements as of the Effective Date? [X] Yes [ ] No
NOTE: If a box is not checked for any item in this Section 4, Part
C, "No" will be deemed to be selected for that item.
Part D. Exclusion of Certain Classes of Employees:
1. Elective Deferrals.
All Employees will be eligible to become Contributing
Participants (and thus eligible to make Elective Deferrals)
except:
a. [X] Those 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 Section
1.410(b)-9 of the regulations. For this purpose,
the term "employee representatives" does not
include any organization more than half of whose
members are Employees who are owners, officers, or
executives of the Employer.
b. [ ] Those Employees who are non-resident aliens
(within the meaning of Section 7701(b)(1)(B) of
the Code) and who received no earned income
(within the meaning of Section 911(d)(2) of the
Code) from the Employer which constitutes income
from sources within the United States (within the
meaning of Section 861(a)(3) of the Code).
c. [ ] Those Employees of a Related Employer that have
not executed a Related Employer Participation
Agreement.
d. [ ] Other (Define) ___________________________________
Page 4
2. Matching Contributions.
All Contributing Participants will be eligible to receive
Matching Contributions (or Qualified Matching Contributions)
if applicable, except:
a. [X] Those 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 Section
1.410(b)-9 of the regulations. For this purpose,
the term "employee representatives" does not
include any organization more than half of whose
members are Employees who are owners, officers, or
executives of the Employer.
b. [ ] Those Employees who are non-resident aliens
(within the meaning of Section 7701(b)(1)(B) of
the Code) and who received no earned income
(within the meaning of Section 911(d)(2) of the
Code) from the Employer which constitutes income
from sources within the United States (within the
meaning of Section 861(a)(3) of the Code).
c. [ ] Those Employees of a Related Employer that have
not executed a Related Employer Participation
Agreement.
d. [ ] Other Define)_____________________________________
__________________________________________________
3. Employer Profit Sharing Contributions.
All Employees will be eligible to become a Participant in the
Plan for purposes of receiving an allocation of any Employer
Profit Sharing Contribution made pursuant to Section 11 of the
Adoption Agreement except:
a. [X] Those 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 Section
1.410(b)-9 of the regulations. For this purpose,
the term "employee representatives" does not
include any organization more than half of whose
members are Employees who are owners, officers, or
executives of the Employer.
b. [ ] Those Employees who are non-resident aliens
(within the meaning of Section 7701(b)(1)(B) of
the Code) and who received no earned income
(within the meaning of Section 911(d)(2) of the
Code) from the Employer which constitutes income
from sources within the United States (within the
meaning of Section 861(a)(3) of the Code).
c. [ ] Those Employees of a Related Employer that have
not executed a Related Employer Participation
Agreement.
d. [ ] Other
Define)___________________________________________
__________________________________________________
Part E. Election Not To Participate:
May an Employee or a Participant elect not to participate in this
Plan pursuant to Section 2.08 of the Plan?
Option 1: [X] Yes.
Option 2: [ ] No.
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
Part F. Hours Required For Eligibility Purposes:
1. 1000 Hours of Service (no more than 1,000) shall be required
to constitute a Year of Eligibility Service.
2. 500 Hours of Service (no more than 500 but less than the
number specified in Section 4, Part F, Item 1, above) must be
exceeded to avoid a Break in Eligibility Service.
3. For purposes of determining Years of Eligibility Service,
Employees shall be given credit for Hours of Service with the
following predecessor employer(s) (Complete if applicable):
Ram Golf Company
______________________________________________________________
Part G. Entry Dates:
1. Elective Deferrals.
The Entry Dates for purposes of making Elective Deferrals
shall be (Choose one):
Option 1: [ ] The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
Option 2: [ ] The first day of the Plan Year and the first
day of the fourth, seventh and tenth months
of the Plan Year.
Page 5
Option 3: [ ] The first day of the Plan Year.
Option 4: [X] Other (Specify): The first day of each
month.
2. Matching Contributions.
If Matching Contributions (or Qualified Matching
Contributions) will be made to the Plan, the Entry Dates for
purposes of Matching Contributions (or Qualified Matching
Contributions, if applicable) shall be (Choose one):
Option 1: [ ] The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
Option 2: [ ] The first day of the Plan Year and the first
day of the fourth, seventh and tenth months
of the Plan Year.
Option 3: [ ] The first day of the Plan Year.
Option 4: [X] Other (Specify): The first day of each
month.
3. Employer Profit Sharing Contributions.
The Entry Dates for purposes of Employer Profit Sharing
Contributions shall be (Choose one):
Option 1: [ ] The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
Option 2: [ ] The first day of the Plan Year and the first
day of the fourth, seventh and tenth months
of the Plan Year.
Option 3: [ ] The first day of the Plan Year.
Option 4: [X] Other (Specify): The first day of each
month.
NOTE: If no option is selected for an item, Option 1 will be deemed
to be selected for that item. Option 3 or Option 4 can be selected
for an item only if the eligibility requirements and Entry Dates are
coordinated such that each Employee will become a Participant in the
Plan no later than the earlier of: (1) the first day of the Plan
Year beginning after the date the Employee satisfies the age and
service requirements of Section 410(a) of the Code; or (2) 6 months
after the date the Employee satisfies such requirements.
SECTION 5. METHOD OF DETERMINING SERVICE Complete Part A or B
Part A. Hours of Service Equivalencies:
Service will be determined on the basis of the method selected
below. Only one method may be selected. The method selected will be
applied to all Employees covered under the Plan. (Choose one):
Option 1. [X] On the basis of actual hours for which an Employee
is paid or entitled to payment.
Option 2. [ ] On the basis of days worked. An Employee will be
credited with 10 Hours of Service if under Section
1.24 of the Plan such Employee would be credited
with at least 1 Hour of Service during the day.
Option 3. [ ] On the basis of weeks worked. An Employee will be
credited with 45 Hours of Service if under Section
1.24 of the Plan such Employee would be credited
with at least 1 Hour of Service during the week.
Option 4. [ ] On the basis of months worked. An Employee will be
credited with 190 Hours of Service if under
Section 1.24 of the Plan such Employee would be
credited with at least 1 Hour of Service during
the month.
NOTE: If no option is selected, Option 1 will be deemed to be
selected. This Section 5, Part A will not apply if the Elapsed Time
Method of Section 5, Part B is selected.
Part B. Elapsed Time Method:
In lieu of tracking Hours of Service of Employees, will the elapsed
time method described in Section 2.07 of the Plan be used? (Choose
one)
Option 1: [ ] No.
Option 2: [X] Yes.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 6. ELECTIVE DEFERRALS
Part A. Authorization of Elective Deferrals:
Will Elective Deferrals be permitted under this Plan (Choose one)?
Option 1. [X] Yes.
Option 2. [ ] No.
Page 6
NOTE: If no option is selected, Option 1 will be deemed to be
selected. Complete the remainder of Section 6 only if Option 1 is
selected.
Part B. Limits on Elective Deferrals:
If Elective Deferrals are permitted under the Plan, a Contributing
Participant may elect under a salary reduction agreement to have his
or her Compensation reduced by an amount as described below (Choose
one):
Option 1. [X] An amount equal to a percentage of the
Contributing Participant's Compensation from 1% to
20% in increments of 1%.
Option 2. [ ] An amount of the Contributing Participant's
Compensation not less than $________ and not more
than $________.
The amount of such reduction shall be contributed to the Plan by the
Employer on behalf of the Contributing Participant. For any taxable
year, a Contributing Participant's Elective Deferrals shall not
exceed the limit contained in Section 402(g) of the Code in effect
at the beginning of such taxable year.
Part C. Elective Deferrals Based on Bonuses:
Instead of or in addition to making Elective Deferrals through
payroll deduction, may a Contributing Participant elect to
contribute to the Plan, as an Elective Deferral, part or all of a
bonus rather than receive such bonus in cash (Choose one)?
Option 1: [ ] Yes.
Option 2: [X] No.
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
Part D. Ceasing Elective Deferrals:
A Contributing Participant may prospectively revoke a salary
reduction agreement to cease Elective Deferrals (Choose one):
Option 1: [ ] As of the first day of any payroll period.
Option 2: [ ] As of the first day of any month.
Option 3: [ ] As of the first day of any quarter.
Option 4: [ ] As of any Entry Date.
Option 5: [X] As of such times established by the Plan
Administrator in a uniform and nondiscriminatory
manner.
Option 6: [ ] Other (Specify. Must be at least once per
year)___________________________________
NOTE: If no option is selected, Option 3 will be deemed to be
selected.
Part E. Return As A Contributing Participant After Ceasing Elective
Deferrals:
A Participant who ceases Elective Deferrals by revoking a salary
reduction agreement may return as a Contributing Participant (Choose
one):
Option 1: [ ] No sooner than as of the first day of the next
Plan Year.
Option 2: [ ] As of any subsequent Entry Date.
Option 3: [X] As of the first day of any subsequent quarter.
Option 4: [ ] As of such times established by the Plan
Administrator in a uniform and nondiscriminatory
manner.
Option 5: [ ] Other (Specify. Must be at least once per
year)___________________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part F. Changing Elective Deferral Amounts:
A Contributing Participant may modify a salary reduction agreement
to prospectively increase or decrease the amount of his or her
Elective Deferrals (Choose one):
Option 1: [ ] As of the first day of any payroll period.
Option 2: [ ] As of the first day of any month.
Option 3: [X] As of the first day of any quarter.
Option 4: [ ] As of any Entry Date.
Option 5: [ ] As of such times established by the Plan
Administrator in a uniform and nondiscriminatory
manner.
Option 6: [ ] Other (Specify)__________________________________
NOTE: If no option is selected, Option 3 will be deemed to be
selected.
Part G. Claiming Excess Elective Deferrals:
Page 7
Participants who claim Excess Elective Deferrals for the preceding
calendar year must submit their claims in writing to the Plan
Administrator by (Choose one):
Option 1: [X] March 1.
Option 2: [ ] Other (Specify a date not later than April
15)_____________________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part H. One-Time Irrevocable Elections:
May an Employee make a one-time irrevocable election, as described
in Section 11.205 of the Plan, upon first becoming eligible to
participate in the Plan to have the Employer make contributions to
the Plan on such Employee's behalf? (Choose one)
Option 1: [ ] Yes.
Option 2: [X] No.
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
SECTION 7. MATCHING CONTRIBUTIONS
Part A. Authorization of Matching Contributions:
Will the Employer make Matching Contributions to the Plan on behalf
of Qualifying Contributing Participants? (Choose one)
Option 1: [X] Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
Option 2: [ ] Yes, but only with respect to a Participant's
Nondeductible Employee Contributions.
Option 3: [ ] Yes, with respect to both Elective Deferrals and
Nondeductible Employee Contributions.
Option 4: [ ] No.
NOTE: If no option is selected, Option 4 will be deemed to be
selected. Complete the remainder of Section 7 only if Option 1, 2 or
3 is selected.
Part B. Matching Contribution Formula:
If the Employer will make Matching Contributions, then the amount of
such Matching Contributions made on behalf of a Qualifying
Contributing Participant each Plan Year shall be (Choose one):
Option 1: [ ] An amount equal to ____% of such Contributing
Participant's Elective Deferral (and/or
Nondeductible Employee Contribution, if
applicable).
Option 2: [ ] An amount equal to the sum of ____% of the portion
of such Contributing Participant's Elective
Deferral (and/or Nondeductible Employee
Contribution, if applicable) which does not exceed
____% of the Contributing Participant's
Compensation plus ____% of the portion of such
Contributing Participant's Elective Deferral
(and/or Nondeductible Employee Contribution, if
applicable) which exceeds ____% of the
Contributing Participant's Compensation.
Option 3: [X] Such amount, if any, equal to that percentage of
each Contributing Participant's Elective Deferral
(and/or Nondeductible Employee Contribution, if
applicable) which the Employer, in its sole
discretion, determines from year to year.
Option 4: [ ] Other Formula. (Specify)__________________________
NOTE: If Option 4 is selected, the formula specified can only allow
Matching Contributions to be made with respect to a Contributing
Participant's Elective Deferrals (and/or Nondeductible Employee
Contribution, if applicable).
Part C. Limit on Matching Contributions:
Notwithstanding the Matching Contribution formula specified above,
no Matching Contribution will be made with respect to a Contributing
Participant's Elective Deferrals (and/or Nondeductible Employee
Contributions, if applicable) in excess of $________ or ____% of
such Contributing Participant's Compensation.
Part D. Qualifying Contributing Participants:
A Contributing Participant who satisfies the eligibility
requirements described in Section 4 will be a Qualifying
Contributing Participant and thus entitled to share in Matching
Contributions for any Plan Year only if the Participant is a
Contributing Participant and satisfies the following additional
conditions (Check one or more Options):
Option 1: [ ] No Additional Conditions.
Option 2: [ ] Hours of Service Requirement. The Contributing
Participant completes at least ______ Hours of
Service during the Plan Year. However, this
condition will be waived for the following reasons
Page 8
(Check at least one):
[ ] The Contributing Participant's Death.
[ ] The Contributing Participant's Termination
of Employment after having incurred a
Disability.
[ ] The Contributing Participant's Termination
of Employment after having reached Normal
Retirement Age.
[ ] This condition will not be waived.
Option 3: [X] Last Day Requirement. The Participant is an
Employee of the Employer on the last day of the
Plan Year. However, this condition will be waived
for the following reasons (Check at least one):
[ ] The Contributing Participant's Death.
[ ] The Contributing Participant's Termination
of Employment after having incurred a
Disability.
[X] The Contributing Participant's Termination
of Employment after having reached Normal
Retirement Age.
[ ] This condition will not be waived.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 8. QUALIFIED NONELECTIVE CONTRIBUTIONS
Part A. Authorization of Qualified Nonelective Contributions:
Will the Employer make Qualified Nonelective Contributions to the
Plan? (Choose one)
Option 1: [X] Yes.
Option 2: [ ] No.
If the Employer elects to make Qualified Nonelective Contributions,
then the amount, if any, of such contribution to the Plan for each
Plan Year shall be an amount determined by the Employer.
NOTE: If no option is selected, Option 1 will be deemed to be
selected. Complete the remainder of Section 8 only if Option 1 is
selected.
Part B. Participants Entitled to Qualified Nonelective Contributions:
Allocation of Qualified Nonelective Contributions shall be made to
the Individual Accounts of (Choose one):
Option 1: [X] Only Participants who are not Highly Compensated
Employees.
Option 2: [ ] All Participants.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part C. Allocation of Qualified Nonelective Contributions:
Allocation of Qualified Nonelective Contributions to Participants
entitled thereto shall be made (Choose one):
Option 1: [X] In the ratio which each Participant's Compensation
for the Plan Year bears to the total Compensation
of all Participants for such Plan Year.
Option 2: [ ] In the ratio which each Participant's Compensation
not in excess of $________ for the Plan Year bears
to the total Compensation of all Participants not
in excess of $________ for such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 9. QUALIFIED MATCHING CONTRIBUTIONS
Part A. Authorization of Qualified Matching Contributions:
Will the Employer make Qualified Matching Contributions to the Plan
on behalf of Qualifying Contributing Participants? (Choose one)
Option 1: [X] Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
Option 2: [ ] Yes, but only with respect to a Participant's
Nondeductible Employee Contributions.
Option 3: [ ] Yes, with respect to both Elective Deferrals and
Nondeductible Employee Contributions.
Option 4: [ ] No.
NOTE: If no option is selected, Option 3 will be deemed to be
selected. Complete the remainder of Section 9 only if Option 1, 2 or
3 is selected.
Page 9
Part B. Qualified Matching Contribution Formula:
If the Employer will make Qualified Matching Contributions, then the
amount of such Qualified Matching Contributions made on behalf of a
Qualifying Contributing Participant each Plan Year shall be (Choose
one):
Option 1: [ ] An amount equal to ____% of such Contributing
Participant's Elective Deferral (and/or
Nondeductible Employee Contribution, if
applicable).
Option 2: [ ] An amount equal to the sum of ____% of the portion
of such Contributing Participant's Elective
Deferral (and/or Nondeductible Employee
Contribution, if applicable) which does not exceed
____% of the Contributing Participant's
Compensation plus ____% of the portion of such
Contributing Participant's Elective Deferral
(and/or Nondeductible Employee Contribution, if
applicable) which exceeds ____% of the
Contributing Participant's Compensation.
Option 3: [X] Such amount, if any, as determined by the Employer
in its sole discretion, equal to that percentage
of the Elective Deferrals (and/or Nondeductible
Employee Contribution, if applicable) of each
Contributing Participant entitled thereto which
would be sufficient to cause the Plan to satisfy
the Actual Contribution Percentage tests
(described in Section 11.402 of the Plan) for the
Plan Year.
Option 4: [ ] Other Formula. (Specify)__________________________
NOTE: If no option is selected, Option 3 will be deemed to be
selected.
Part C. Participants Entitled to Qualified Matching Contributions:
Qualified Matching Contributions, if made to the Plan, will be made
on behalf of? (Choose one)
Option 1: [X] Only Contributing Participants who make Elective
Deferrals who are not Highly Compensated
Employees.
Option 2: [ ] All Contributing Participants who make Elective
Deferrals.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part D. Limit on Qualified Matching Contributions:
Notwithstanding the Qualified Matching Contribution formula
specified above, the Employer will not match a Contributing
Participant's Elective Deferrals (and/or Nondeductible Employee
Contribution, if applicable) in excess of $________ or ____% of such
Contributing Participant's Compensation.
SECTION 10. ADP AND ACP TESTING OPTIONS
Part A. ACP Test and Elective Deferrals:
Will Elective Deferrals under this Plan (and any other plan of the
Employer, as provided by regulations) be taken into account, and
included as Contribution Percentage Amounts for purposes of
performing the Average Contribution Percentage (ACP) test? (Choose
one)
Option 1: [ ] No.
Option 2: [X] Yes, in the following amounts (Choose one):
Suboption (a): [X] Only such Elective Deferrals
that are needed to meet the
Average Contribution
Percentage test.
Suboption (b): [ ] All Elective Deferrals.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part B. ACP Test and Qualified Nonelective Contributions
Will Qualified Nonelective Contributions under this Plan (and any
other plan of the Employer, as provided by regulations) be taken
into account, and included as Contribution Percentage Amounts for
purposes of performing the Average Contribution Percentage (ACP)
test? (Choose one)
Option 1: [ ] No.
Option 2: [X] Yes, in the following amounts (Choose one):
Suboption (a): [X] Only such Qualified
Nonelective Contributions that
are needed to meet the Average
Contribution Percentage test.
Suboption (b): [ ] All Qualified Nonelective
Contributions.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part C. ADP Test and Qualified Matching Contributions
Will Qualified Matching Contributions under this Plan (or any other
plan of the Employer, as provided by
Page 10
regulations) be taken into account as Elective Deferrals for
purposes of calculating Actual Deferral Percentages when performing
the Actual Deferral Percentage (ADP) test? (Choose one)
Option 1: [ ] No.
Option 2: [X] Yes, in the following amounts (Choose one):
Suboption (a): [X] Only such Qualified Matching
Contribution that are needed
to meet the ADP test.
Suboption (b): [ ] All such Qualified Matching
Contributions.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part D. Correction of Aggregate Limit:
If the Aggregate Limit described in Section 11.102 of the Plan is
exceeded, the following adjustments will be made in accordance with
Section 11.402(B)(1) of the Plan (Choose one):
Option 1: [ ] The ACP of Highly Compensated Employees will be
reduced.
Option 2: [X] The ADP of Highly Compensated Employees will be
reduced.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 11. EMPLOYER PROFIT SHARING CONTRIBUTIONS Complete Parts A, B and C
Part A. Contribution Formula (Choose one):
Option 1: [X] Discretionary Formula. For each Plan Year the
Employer will contribute an amount to be
determined from year to year.
Option 2: [ ] Fixed Formula. ________ % of the Compensation of
all Qualifying Participants under the Plan for the
Plan Year.
Option 3: [ ] Fixed Percent of Profits Formula. ________% of the
Employer's profits that are in excess of
$___________.
Option 4: [ ] Frozen Plan. This Plan is frozen effective
_________________________ and the Employer will
not make additional contributions to the Plan
after such date.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part B. Allocation Formula (Choose one):
Option 1: [X] Pro Rata Formula. Employer Profit Sharing
Contributions shall be allocated to the Individual
Accounts of Qualifying Participants in the ratio
that each Qualifying Participant's Compensation
for the Plan Year bears to the total Compensation
of all Qualifying Participants for the Plan Year.
Option 2: [ ] Flat Dollar Formula. Employer Profit Sharing
Contributions allocated to the Individual Accounts
of Qualifying Participants for each Plan Year
shall be the same dollar amount for each
Qualifying Participant.
Option 3: [ ] Integrated Formula. Employer Profit Sharing
Contributions shall be allocated as follows (Start
with Step 3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Profit Sharing Contributions
shall first be allocated pro rata to
Qualifying Participants in the manner
described in Section 11, Part B,
Option 1. The percent so allocated
shall not exceed 3% of each Qualifying
Participant's Compensation.
Step 2. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 1 shall be
allocated to each Qualifying
Participant's Individual Account in
the ratio that each Qualifying
Participant's Compensation for the
Plan Year in excess of the integration
level bears to all Qualifying
Participants' Compensation in excess
of the integration level, but not in
excess of 3%.
Step 3. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 2 shall be
allocated to each Qualifying
Participant's Individual Account in
the ratio that the sum of each
Qualifying Participant's total
Compensation and Compensation in
excess of the integration level bears
to the sum of all Qualifying
Participants' total Compensation and
Compensation in excess of the
integration level, but not in excess
of the profit sharing maximum
disparity rate as described in Section
3.01(B)(3) of the Plan.
Step 4. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 3 shall be
allocated pro rata to Qualifying
Participants in the manner described
in Section 11, Part B, Option 1.
Page 11
The integration level shall be (Choose one):
Suboption (a): [ ] The Taxable Wage Base.
Suboption (b): [ ] $________ (a dollar amount
less than the Taxable Wage
Base).
Suboption (c): [ ] ______% (not more than 100%)
of the Taxable Wage Base.
NOTE: If no option is selected, Suboption (a) will
be deemed to be selected.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part C. Qualifying Participants:
A Participant will be a Qualifying Participant and thus entitled to
share in the Employer Profit Sharing Contribution for any Plan Year
only if the Participant is a Participant on at least one day of such
Plan Year and satisfies the following additional conditions (Check
one or more Options):
Option 1: [ ] No Additional Conditions.
Option 2: [ ] Hours of Service Requirement. The Participant
completes at least ______ Hours of Service during
the Plan Year. However, this condition will be
waived for the following reasons (Check at least
one):
[ ] The Participant's Death.
[ ] The Participant's Termination of Employment
after having incurred a Disability.
[ ] The Participant's Termination of Employment
after having reached Normal Retirement Age.
[ ] This condition will not be waived.
Option 3: [X] Last Day Requirement. The Participant is an
Employee of the Employer on the last day of the
Plan Year. However, this condition will be waived
for the following reasons (Check at least one):
[ ] The Participant's Death.
[ ] The Participant's Termination of Employment
after having incurred a Disability.
[X] The Participant's Termination of Employment
after having reached Normal Retirement Age.
[ ] This condition will not be waived.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 12. COMPENSATION Complete Parts A through E
Part A. Basic Definition:
1. Elective Deferrals.
For purposes of Elective Deferrals, Compensation will mean all
of each Participant's (Choose one):
Option 1: [X] W-2 wages.
Option 2: [ ] Section 3401(a) wages.
Option 3: [ ] 415 safe-harbor compensation.
2. Matching Contributions.
For purposes of Matching Contributions, Compensation will mean
all of each Participant's (Choose one):
Option 1: [X] W-2 wages.
Option 2: [ ] Section 3401(a) wages.
Option 3: [ ] 415 safe-harbor compensation.
3. Employer Profit Sharing Contributions.
For purposes of Employer Profit Sharing Contributions,
Compensation will mean all of each Participant's (Choose one):
Option 1: [X] W-2 wages.
Option 2: [ ] Section 3401(a) wages.
Option 3: [ ] 415 safe-harbor compensation.
NOTE: If no option is selected for an item, Option 1 will be deemed
to be selected for that item.
Part B. Measuring Period for Compensation:
1. Elective Deferrals.
For purposes of Elective Deferrals, Compensation shall be
determined over the following applicable period (Choose one):
Page 12
Option 1: [X] the Plan Year.
Option 2: [ ] the calendar year ending with or within the
Plan Year.
2. Matching Contributions.
For purposes of Matching Contributions, Compensation shall be
determined over the following applicable period (Choose one):
Option 1: [X] The Plan Year.
Option 2: [ ] The calendar year ending with or within the
Plan Year.
3. Employer Profit Sharing Contributions.
For purposes of Employer Profit Sharing Contributions,
Compensation shall be determined over the following applicable
period (Choose one):
Option 1: [X] The Plan Year.
Option 2: [ ] The calendar year ending with or within the
Plan Year.
NOTE: If no option is selected for an item, Option 1 will be deemed
to be selected for that item.
Part C. Inclusion of Elective Deferrals:
1. Elective Deferrals.
For purposes of Elective Deferrals, does Compensation include
Employer Contributions made pursuant to a salary reduction
agreement which are not includible in the gross income of the
Employee under any of the following Sections of the Code?
(Answer "Included" or "Excluded" for each of the following
items.)
Section 125 (cafeteria plans) [ ] Included [X] Excluded
Section 402(e)(3) (401(k) plans) [ ] Included [X] Excluded
Section 402(h)(1)(B) (salary
deferral SEP plans) [ ] Included [X] Excluded
Section 403(b) (tax-sheltered
annuity plans) [ ] Included [X] Excluded
NOTE: If a box is not checked for an item, "Included" will be
deemed to be selected for that item.
2. Matching Contributions.
For purposes of Matching Contributions, does Compensation
include Employer Contributions made pursuant to a salary
reduction agreement which are not includible in the gross
income of the Employee under any of the following Sections of
the Code? (Answer "Included" or "Excluded" for each of the
following items.)
Section 125 (cafeteria plans) [ ] Included [X] Excluded
Section 402(e)(3) (401(k) plans) [ ] Included [X] Excluded
Section 402(h)(1)(B) (salary
deferral SEP plans) [ ] Included [X] Excluded
Section 403(b) (tax-sheltered
annuity plans) [ ] Included [X] Excluded
NOTE: If a box is not checked for an item, "Included" will be
deemed to be selected for that item.
3. Employer Profit Sharing Contributions.
For purposes of Employer Profit Sharing Contributions, does
Compensation include Employer Contributions made pursuant to a
salary reduction agreement which are not includible in the
gross income of the Employee under any of the following
Sections of the Code? (Answer "Included" or "Excluded" for
each of the following items.)
Section 125 (cafeteria plans) [ ] Included [X] Excluded
Section 402(e)(3) (401(k) plans) [ ] Included [X] Excluded
Section 402(h)(1)(B) (salary
deferral SEP plans) [ ] Included [X] Excluded
Section 403(b) (tax-sheltered
annuity plans) [ ] Included [X] Excluded
NOTE: If a box is not checked for an item, "Included" will be
deemed to be selected for that item.
Part D. Pre-Entry Date Compensation:
1. ADP and ACP Testing Purposes.
For the Plan Year in which an Employee enters the Plan, the
Employee's Compensation which shall be taken into account for
purposes of Actual Deferral Percentage (ADP) and Actual
Contribution Percentage (ACP) testing shall be (Choose one):
Page 13
Option 1: [X] The Employee's Compensation only from the
time the Employee became a Participant in
the Plan.
Option 2: [ ] The Employee's Compensation for the whole of
such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
2. Other Purposes.
For the Plan Year in which an Employee enters the Plan, the
Employee's Compensation which shall be taken into account for
purposes of the Plan (other than ADP or ACP testing) shall be
(Choose one):
Option 1: [X] The Employee's Compensation only from the
time the Employee became a Participant in
the Plan.
Option 2: [ ] The Employee's Compensation for the whole of
such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part E. Exclusions From Compensation:
1. Elective Deferrals
For purposes of Elective Deferrals, Compensation shall not
include the following (Check any that apply):
[ ] Bonuses [ ] Commissions
[ ] Overtime [ ] Other (Specify)______________________
NOTE: No exclusions from Compensation are permitted if the
integrated allocation formula in Section 11, Part B is
selected.
2. Matching Contributions.
For purposes of Matching Contributions, Compensation shall not
include the following (Check any that apply):
[ ] Bonuses [ ] Commissions
[ ] Overtime [ ] Other (Specify)______________________
NOTE: No exclusions from Compensation are permitted if the
integrated allocation formula in Section 11, Part B is
selected.
3. Employer Profit Sharing Contributions.
For purposes of Employer Profit Sharing Contributions,
Compensation shall not include the following (Check any that
apply):
[ ] Bonuses [ ] Commissions
[ ] Overtime [ ] Other (Specify)______________________
NOTE: No exclusions from Compensation are permitted if the
integrated allocation formula in Section 11, Part B is
selected.
SECTION 13. VESTING AND FORFEITURES Complete Parts A through H
Part A. Vesting Schedule For Employer Profit Sharing Contributions. A
Participant shall become Vested in his or her Individual Account
derived from Profit Sharing Contributions made pursuant to Section
11 of the Adoption Agreement as follows (Choose one):
--------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [X] (Complete if Chosen)
--------------------------------------------------------------------------------------------------------------------------
1 0% 0% 100% 0% 20%
2 0% 20% 100% 0% 40%
3 0% 40% 100% 20% 60% (not less than 20%)
4 0% 60% 100% 40% 80% (not less than 40%)
5 100% 80% 100% 60% 100% (not less than 60%)
6 100% 100% 100% 80% 100% (not less than 80%)
7 100% 100% 100% 100% 100% (not less than 100%)
NOTE: If no option is selected, Option 3 will be deemed to be selected.
Page 14
--------------------------------------------------------------------------------
Part B. Vesting Schedule For Matching Contributions. A Participant shall
become Vested in his or her Individual Account derived from Matching
Contributions made pursuant to Section 7 of the Adoption Agreement
as follows (Choose one):
--------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [X] (Complete if Chosen)
--------------------------------------------------------------------------------------------------------------------------
1 0% 0% 100% 0% 20%
2 0% 20% 100% 0% 40%
3 0% 40% 100% 20% 60% (not less than 20%)
4 0% 60% 100% 40% 80% (not less than 40%)
5 100% 80% 100% 60% 100% (not less than 60%)
6 100% 100% 100% 80% 100% (not less than 80%)
7 100% 100% 100% 100% 100% (not less than 100%)
NOTE: If no option is selected, Option 3 will be deemed to be selected.
--------------------------------------------------------------------------------
Part C. Hours Required For Vesting Purposes:
1. 1000 Hours of Service (no more than 1,000) shall be required
to constitute a Year of Vesting Service.
2. 500 Hours of Service (no more than 500 but less than the
number specified in Section 13, Part C, Item 1, above) must be
exceeded to avoid a Break in Vesting Service.
3. For purposes of determining Years of Vesting Service,
Employees shall be given credit for Hours of Service with the
following predecessor employer(s) (Complete if applicable):
Ram Golf Company
--------------------------------------------------------------
Part D. Exclusion of Certain Years of Vesting Service:
All of an Employee's Years of Vesting Service with the Employer are
counted to determine the vesting percentage in the Participant's
Individual Account except (Check any that apply):
[ ] Years of Vesting Service before the Employee reaches age 18.
[ ] Years of Vesting Service before the Employer maintained this
Plan or a predecessor plan.
Part E. Fully Vested Under Certain Circumstances:
Will a Participant be fully Vested under the following
circumstances? (Answer "Yes" or "No" to each of the following items
by checking the appropriate box)
1. The Participant dies. [ ] Yes [X] No
2. The Participant incurs a Disability. [ ] Yes [X] No
3. The Participant satisfies the conditions
for Early Retirement Age (if applicable). [ ] Yes [X] No
NOTE: If a box is not checked for an item, "Yes" will be deemed to
be selected for that item.
Part F. Allocation of Forfeitures of Employer Profit Sharing Contributions:
Forfeitures of Employer Profit Sharing Contributions shall be
(Choose one):
Option 1: [ ] Allocated to the Individual Accounts of the
Participants specified below in the manner as
described in Section 11, Part B (for Employer
Profit Sharing Contributions)
The Participants entitled to receive allocations
of such Forfeitures shall be (Choose one):
Suboption (a): [ ] Only Qualifying Participants.
Suboption (b): [ ] All Participants.
Option 2: [X] Applied to reduce Employer Profit Sharing
Contributions (Choose one):
Suboption (a): [ ] For the Plan Year for which
the Forfeiture arises.
Suboption (b): [X] For any Plan Year subsequent
to the Plan Year for which the
Forfeiture arises.
Option 3: [ ] Applied first to the payment of the Plan's
administrative expenses and any excess applied to
reduce Employer Profit Sharing Contributions
(Choose one):
Suboption (a): [ ] For the Plan Year for which
the Forfeiture arises.
Page 15
Suboption (b): [ ] For any Plan Year subsequent
to the Plan Year for which the
Forfeiture arises.
NOTE: If no option is selected, Option 1 and Suboption (a) will be
deemed to be selected.
Part G. Allocation of Forfeitures of Matching Contributions:
Forfeitures of Matching Contributions shall be (Choose one):
Option 1: [ ] Allocated, after all other Forfeitures under the
Plan, to each Participant's Individual Account in
the ratio which each Participant's Compensation
for the Plan Year bears to the total Compensation
of all Participants for such Plan Year.
The Participants entitled to receive allocations
of such Forfeitures shall be (Choose one):
Suboption (a): [ ] Only Qualifying Contributing
Participants.
Suboption (b): [ ] Only Qualifying Participants.
Suboption (c): [ ] All Participants.
Option 2: [X] Applied to reduce Matching Contributions (Choose
one):
Suboption (a): [ ] For the Plan Year for which
the Forfeiture arises.
Suboption (b): [X] For any Plan Year subsequent
to the Plan Year for which the
Forfeiture arises.
Option 3: [ ] Applied first to the payment of the Plan's
administrative expenses and any excess applied to
reduce Matching Contributions (Choose one):
Suboption (a): [ ] For the Plan Year for which
the Forfeiture arises.
Suboption (b): [ ] For any Plan Year subsequent
to the Plan Year for which the
Forfeiture arises.
NOTE: If no option is selected, Option 1 and Suboption (a) will be
deemed to be selected.
Part H. Allocation of Forfeitures of Excess Aggregate Contributions:
Forfeitures of Excess Aggregate Contributions shall be (Choose one):
Option 1: [ ] Allocated, after all other Forfeitures under the
Plan, to each Contributing Participant's Matching
Contribution account in the ratio which each
Contributing Participant's Compensation for the
Plan Year bears to the total Compensation of all
Contributing Participants for such Plan Year. Such
Forfeitures will not be allocated to the account
of any Highly Compensated Employee.
Option 2: [X] Applied to reduce Matching Contributions (Choose
one):
Suboption (a): [ ] For the Plan Year for which
the Forfeiture arises.
Suboption (b): [X] For any Plan Year subsequent
to the Plan Year for which the
Forfeiture arises.
Option 3: [ ] Applied first to the payment of the Plan's
administrative expenses and any excess applied to
reduce Matching Contributions (Choose one):
Suboption (a): [ ] For the Plan Year for which
the Forfeiture arises.
Suboption (b): [ ] For any Plan Year subsequent
to the Plan Year for which the
Forfeiture arises.
NOTE: If no option is selected, Option 2 and Suboption (a) will be
deemed to be selected.
SECTION 14. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE
Part A. The Normal Retirement Age under the Plan shall be (Check and
complete one option):
Option 1: [X] Age 65.
Option 2: [ ] Age ________ (not to exceed 65).
Option 3: [ ] The later of age ________ (not to exceed 65) or
the ________ (not to exceed 5th) anniversary of
the first day of the first Plan Year in which the
Participant commenced participation in the Plan.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part B. Early Retirement Age (Choose one option):
Page 16
Option 1: [X] An Early Retirement Age is not applicable under
the Plan.
Option 2: [ ] Age ______ (not less than 55 nor more than 65).
Option 3: [ ] A Participant satisfies the Plan's Early
Retirement Age conditions by attaining age
________ (not less than 55) and completing
________ Years of Vesting Service.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 15. DISTRIBUTIONS (Complete Parts A and B)
Part A. Distributable Events. Answer each of the following items.
1. Termination of Employment Before Normal
Retirement Age. May a Participant who has
not reached Normal Retirement Age request
a distribution from the Plan of that
portion of the Participant's Individual
Account attributable to the following
types of contributions upon Termination of
Employment?
Elective Deferrals [X] Yes [ ] No
Matching Contributions (if made) [X] Yes [ ] No
Employer Profit Sharing Contributions [X] Yes [ ] No
2. Disability. May a Participant who has
incurred a Disability request a
distribution from the Plan of that portion
of the Participant's Individual Account
attributable to the following types of
contributions?
Elective Deferrals [X] Yes [ ] No
Matching Contributions (if made) [X] Yes [ ] No
Employer Profit Sharing Contributions [X] Yes [ ] No
3. Attainment of Normal Retirement Age. May a
Participant who has attained Normal
Retirement Age but has not incurred a
Termination of Employment request a
distribution from the Plan of that portion
of the Participant's Individual Account
attributable to the following types of
contributions?
Elective Deferrals [X] Yes [ ] No
Matching Contributions (if made) [X] Yes [ ] No
Employer Profit Sharing Contributions [X] Yes [ ] No
4. Attainment of Age 59 1/2. Will
Participants who have attained age 59 1/2
be permitted to withdraw Elective
Deferrals while still employed by the
Employer? [X] Yes [ ] No
5. Hardship Withdrawals of Elective
Deferrals: Will Participants be permitted
to withdraw Elective Deferrals on account
of hardship pursuant to Section 11.503 of
the Plan? [X] Yes [ ] No
6. In-Service Withdrawals. Will Participants
be permitted to request a distribution of
that portion of the Participant's
Individual Account attributable to the
following types of contributions during
service pursuant to Section 6.01(A)(3) of
the Plan?
Matching Contributions (if made) [ ] Yes [X] No
Employer Profit Sharing Contributions [ ] Yes [X] No
7. One-Time In-Service Withdrawal Option.
Will the one-time in-service withdrawal
provisions described in Section 6.01(A)(5)
of the Plan apply to the following types
of contributions?
Matching Contributions (if made) [ ] Yes [X] No
Employer Profit Sharing Contributions [ ] Yes [X] No
If the answer is "Yes," specify percentage
that a Participant may withdraw: _____%
8. Hardship Withdrawals. Will Participants be
permitted to make hardship withdrawals of
that portion of the Participant's
Individual Account attributable to the
following types of contributions pursuant
to Section 6.01(A)(4) of the Plan?
Page 17
Matching Contributions (if made) [X] Yes [ ] No
Employer Profit Sharing Contributions [X] Yes [ ] No
9. Withdrawals of Rollover or Transfer
Contributions. Will Employees be permitted
to withdraw their Rollover or Transfer
Contributions at any time? [X] Yes [ ] No
NOTE: If a box is not checked for an item, "Yes" will be deemed to
be selected for that item. Section 411(d)(6) of the Code prohibits
the elimination of protected benefits. In general, protected
benefits include the forms and timing of payout options. If the Plan
is being adopted to amend and replace a Prior Plan that permitted a
distribution option described above, you must answer "Yes" to that
item. SEE ADDENDUM 1
Part B. Timing of Distributions:
1. Termination of Employment. Where a Participant who is entitled
to a distribution under the Plan has a Termination of
Employment (for reasons other than death, Disability or
attainment of Normal Retirement Age), distributions shall
commence (Check one):
Option (a): [X] As soon as administratively feasible
following the date the Participant requests
a distribution.
Option (b): [ ] As soon as administratively feasible
following the close of the Plan Year within
which the Participant requests a
distribution.
Option (c): [ ] As soon as administratively feasible
following the close of the Plan Year within
which the Participant requests a
distribution or the Participant incurs
________ (not more than 5) consecutive
one-year Breaks in Vesting Service,
whichever is later.
NOTE: If no option is selected, Option (a) will be deemed to
be selected.
2. Death, Disability or Attainment of Normal Retirement Age.
Where a Participant dies, incurs a Disability or attains
Normal Retirement Age, and a distributable event has occurred,
distributions shall commence (Check one):
Option (a): [X] As soon as administratively feasible
following the date the Participant (or
Beneficiary of a deceased Participant)
requests a distribution.
Option (b): [ ] As soon as administratively feasible
following the close of the Plan Year within
which the Participant (or Beneficiary of a
deceased Participant) requests a
distribution.
Option (c): [ ] As soon as administratively feasible
following the close of the Plan Year within
which the Participant (or Beneficiary of a
deceased Participant) requests a
distribution or the Participant incurs
________ (not more than 5) consecutive
one-year Breaks in Vesting Service,
whichever is later.
NOTE: If no option is selected, Option (a) will be deemed to
be selected.
SECTION 16. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply
(Choose only one Option)?
Option 1: [ ] Yes.
Option 2: [X] No.
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the
joint and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in
Section 16, Part A is "No.")
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to 50% (at least 50% but no more than 100%) of
the amount paid to the Participant prior to his or her death.
SECTION 17. OTHER OPTIONS
Answer "Yes" or "No" to each of the following questions by checking
the appropriate box. If a box is not checked for a question, the
answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant
to Section 6.08 of the Plan be permitted? [X] Yes [ ] No
B. Insurance: Will the Plan allow for the
investment in insurance policies pursuant
to Section 5.13 of the Plan? [ ] Yes [X] No
Page 18
C. Employer Securities: Will the Plan allow
for the investment in qualifying Employer
securities or qualifying Employer real
property? [X] Yes [ ] No
▇. ▇▇▇▇▇▇▇▇ Contributions: Will Employees be
permitted to make rollover contributions
to the Plan pursuant to Section 3.03 of
the Plan? [X] Yes [ ] No
[ ] Yes, but
only after
becoming a
Participant.
E. Transfer Contributions: Will Employees be
permitted to make transfer contributions
to the Plan pursuant to Section 3.04 of
the Plan? [X] Yes [ ] No
[ ] Yes, but
only after
becoming a
Participant.
F. Nondeductible Employee Contributions: Will
Participants be permitted to make
Nondeductible Employee Contributions
pursuant to Section 11.305 of the Plan? [ ] Yes [X] No
Check here if such contributions will be
mandatory. [ ]
SECTION 18. PARTICIPANT DIRECTION OF INVESTMENTS
Part A. Authorization:
Will Participants be permitted to direct the investment of their
Plan assets pursuant to Section 5.14 of the Plan? (Choose one)
Option 1: [X] Yes.
Option 2: [ ] No.
NOTE: If no option is selected, Option 2 will be deemed to be
selected. Complete the remainder of Section 18 only if Option 1 is
selected.
Part B. Investment Options:
Participants can direct the investment of their Plan assets among
the following investments (Choose one):
Option 1: [X] Only those investment options designated by the
Plan Administrator or other fiduciary.
Option 2: [ ] Any allowable investment.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part C. Accounts Subject to Participant Direction:
Participants can direct the following portions of their Individual
Accounts (Choose one):
Option 1: [ ] Those accounts that the Plan Administrator may
designate from time to time in a uniform and
nondiscriminatory manner.
Option 2: [X] Entire Individual Account.
Option 3: [ ] The following accounts (Check all that apply):
[ ] Elective Deferral Account.
[ ] Matching Contribution Account.
[ ] Employer Profit Sharing Account.
[ ] Rollover Contribution Account.
[ ] Transfer Contribution Account.
[ ] Other (Specify)_____________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part D. Frequency of Investment Changes:
Participants may make changes to the investments within their
Individual Accounts with the following frequency (Choose one):
Option 1: [ ] In accordance with uniform and nondiscriminatory
rules established by the Plan Administrator or
other fiduciary.
Option 2: [X] Daily.
Option 3: [ ] Monthly.
Option 4: [ ] Quarterly.
Option 5: [ ] Other (Specify)__________________________________
Page 19
NOTE: If no option is selected, Option 1 will be deemed to be
selected. Also note that the Plan's Valuation Dates must be at least
as often as the frequency chosen here.
SECTION 19. MISCELLANEOUS DEFINITIONS Complete Parts A and B
Part A. Valuation Date:
The Plan Valuation Date shall be (Choose one):
Option 1: [ ] The last day of the Plan Year and each other date
designated by the Plan Administrator which is
selected in a uniform and nondiscriminatory
manner.
Option 2: [X] Daily.
Option 3: [ ] The last day of each Plan quarter.
Option 4: [ ] The last day of each month.
Option 5: [ ] Other (Specify)___________________________________
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part B. Disability:
For purposes of this Plan, Disability shall mean (Choose one):
Option 1: [ ] The inability to engage in any substantial,
gainful activity by reason of any medically
determinable physical or mental impairment that
can be expected to result in death or which has
lasted or can be expected to last for a continuous
period of not less than 12 months.
Option 2: [ ] The inability to engage in any substantial,
gainful activity in the Employee's trade or
profession for which the Employee is best
qualified through training or experience.
Option 3: [X] Other (Specify): See Attached
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 20. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan in which
any Participant in this Plan is (or was) a Participant or could
become a Participant, you must complete this section. You must also
complete this section if you maintain a welfare benefit fund, as
defined in Section 419(e) of the Code, or an individual medical
account, as defined in Section 415(l)(2) of the Code, under which
amounts are treated as annual additions with respect to any
Participant in this Plan.
Part A. Individually Designed Defined Contribution Plan:
If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan:
1. [X] The provisions of Section 3.05(B)(1) through 3.05(B)(6)
of the Plan will apply as if the other plan were a
master or prototype plan.
2. [ ] Other method. (Provide 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.)____________________________________________
Part B. Defined Benefit Plan:
If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code.
1. [ ] If the projected annual addition to this Plan to the
account of a Participant for any limitation year would
cause the 1.0 limitation of Section 415(e) of the Code
to be exceeded, the annual benefit of the defined
benefit plan for such limitation year shall be reduced
so that the 1.0 limitation shall be satisfied.
If it is not possible to reduce the annual benefit of
the defined benefit plan and the projected annual
addition to this Plan to the account of a Participant
for a limitation year would cause the 1.0 limitation to
be exceeded, the Employer shall reduce the Employer
Contribution which is to be allocated to this Plan on
behalf of such Participant so that the 1.0 limitation
will be satisfied. (The provisions of Section 415(e) of
the Code are incorporated herein by reference under the
authority of Section 1106(h) of the Tax Reform Act of
1986.)
2. [ ] Other method. (Provide language describing another
method. Such language must preclude
Page 20
Employer
discretion.)____________________________________________
SECTION 21. TOP-HEAVY ISSUES Complete Parts A, B, C and D
Part A. Minimum Allocation or Benefit:
For any Plan Year with respect to which this Plan is a Top-Heavy
Plan, any minimum allocation required pursuant to Section 3.01(E) of
the Plan shall be made (Choose one):
Option 1: [X] To this Plan.
Option 2: [ ] To the following other plan maintained by the
Employer (Specify name and plan number of plan)
__________________________________________________
Option 3: [ ] In accordance with the method described on an
attachment to this Adoption Agreement. (Attach
language describing the method that will be used
to satisfy Section 416 of the Code. Such method
must preclude Employer discretion.)
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part B. Participants Entitled To Receive Minimum Allocation:
Any minimum allocation required pursuant to Section 3.01(E) of the
Plan shall be allocated to the Individual Accounts of (Choose one):
Option 1: [X] Only Participants who are not Key Employees.
Option 2: [ ] All Participants.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
Part C. Top-Heavy Ratio:
For purposes of establishing the present value of benefits under a
defined benefit plan to compute the top-heavy ratio as described in
Section 10.08(C) of the Plan, any benefit shall be discounted only
for mortality and interest based on the following (Choose one):
Option 1: [X] Not applicable because the Employer has not
maintained a defined benefit plan.
Option 2: [ ] The interest rate and mortality table specified
for this purpose in the defined benefit plan.
Option 3: [ ] Interest rate of ______% and the following
mortality table (Specify)___________________
_________________________________________________
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
Part D. Top-Heavy Vesting Schedule:
Pursuant to Section 6.01(C) of the Plan, the vesting schedule that
will apply when this Plan is a Top-Heavy Plan (unless the Plan's
regular vesting schedule provides for more rapid vesting) shall be
(Choose one):
Option 1: [ ] 6 Year Graded.
Option 2: [ ] 3 Year Cliff.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 22. PROTOTYPE SPONSOR
Name of Prototype Sponsor: Aetna Life Insurance and Annuity Co.
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone Number: ▇▇▇-▇▇▇-▇▇▇▇
Permissible Investments
The assets of the Plan shall be invested only in those investments
described below (To be completed by the Prototype Sponsor):
Only those elected in the Plan Sponsor/Trustee Information document.
____________________________________________________________________
____________________________________________________________________
Page 21
____________________________________________________________________
SECTION 23. TRUSTEE OR CUSTODIAN
Option A. [ ] Financial Organization as Trustee or Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust powers, or
[ ] Trustee with full trust powers
Financial Organization
____________________________________________________________________
Signature __________________________________________________________
Type Name___________________________________________________________
Collective or Commingled Funds
List any collective or commingled funds maintained by the financial
organization Trustee in which assets of the Plan may be invested
(Complete if applicable).
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Option B. [X] Individual Trustee(s)
Signature _________________________ Signature______________________
Type Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Type Name______________________
Signature _________________________ Signature______________________
Type Name:_________________________ Type Name______________________
SECTION 24. RELIANCE
The 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 Section 401 of the Internal Revenue Code. 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 be used only in conjunction with Basic
Plan Document No. 04.
SECTION 25. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors
regarding the completion of this Adoption Agreement and the
legal tax implications of adopting this Plan.
2. I understand that my failure to properly complete this
Adoption Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer ____________________ Date Signed ____________
Type Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: VP & CFO
Page 22
Attachment
Section 19. Miscellaneous Definitions
Part B. Disability
Option 3 is defined as follows:
Total and Permanent Disability means permanent incapacity which results in a
Participant being unable to engage in regular employment or occupation by reason
of any medically demonstrable physical or mental condition acceptable to the
Committee on a nondiscriminatory basis and which would entitle the Participant
to benefits under the Employer's long-term disability plan, if any, or to Social
Security benefits as evidenced by a disability award letter. However, no
Participant shall be deemed to be disabled if such incapacity (a) resulted from
or consists of habitual drunkenness or addiction to narcotics, or (b) was
incurred, suffered or occurred while the Participant was engaged in, or resulted
from having engaged in, a criminal enterprise, or (c) was intentionally
self-inflicted.
Page 23
Addendum I
Section 15. Distributions
Part A. Distributable Events #4
The following is added:
Upon attainment of age 59-1/2, the vested portion of such Participant's Employer
Contributions Account plus the entire balance in all of the Participant's other
accounts may be withdrawn. A Participant may request that whole numbers of
Employer Securities contained in the Participant's account be distributed In
Kind.
Part A. Distributable Events #5
The following is added:
Participants will be permitted to make hardship withdrawals of that portion of
the Participant's account attributable to Nondeductible Employee Contributions.
Elective Deferrals and Rollover Contributions to date together with any income
allocable to such contributions as of December 31, 1988. A Participant may
request that whole numbers of Employer Securities contained In these accounts be
distributed in Kind.