<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------------------
POTTERS FINANCIAL CORPORATION
(Exact name of Registrant as specified in its Articles)
Ohio 34-1817924
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
519 Broadway
East Liverpool, Ohio 43920
----------------------------------------
(Address of Principal Executive Offices)
Potters Savings and Loan
401(k) Retirement Savings Plan
------------------------------
(Full title of the plan)
The Potters Savings and Loan Company
Attention: Edward L. Baumgardner
519 Broadway
East Liverpool, Ohio 43920
---------------------------------------
(Name and address of agent for service)
(330) 385-0770
-------------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of securities Amount to be Proposed maximum offering Proposed maximum Amount of
to be registered registered(1) price per share(2) aggregate offering price registration fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares 50,000 $21.00 $1,050,000 $319
No par value
</TABLE>
- ------------------
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(2) Estimated solely for purposes of calculating the registration fee;
based upon the average of the high and low sale prices for a share of
Potters Financial Corporation on May 27, 1997, as quoted on The Nasdaq
SmallCap Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
The following documents previously filed with the Securities
and Exchange Commission (the "Commission") by Potters Financial Corporation
(the "Registrant") (SEC File No. 0-27980) and the Potters Savings and Loan
401(k) Retirement Savings Plan (the "Plan") are incorporated herein by
reference and made a part hereof as of the respective dates of filing of such
documents:
(1) The Registrant's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996, and all documents filed with the
Commission pursuant to the requirements of Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934 ("Exchange Act") since that date;
(2) The description of the Common Shares of the Registrant
contained in the Registrant's Registration Statement on Form 8-A (No. 0-27980),
declared effective by the Commission on March 7, 1996; and
(3) The Annual Report on Form 11-K for the year ended
December 31, 1996, filed by the Plan concurrently with the filing of this
Registration Statement.
Any documents that may be filed by the Registrant or the Plan
with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall also be
deemed to be incorporated herein by reference and to be made a part hereof from
the date of filing of such documents.
ITEM 4. Description of Securities.
Not Applicable.
ITEM 5. Interests of Named Experts and Counsel.
None.
ITEM 6. Indemnification of Directors and Officers.
A. Division (E) of Section 1701.13 of the Ohio Revised Code
governs indemnification by a corporation and provides as follows:
(E)(1) A corporation may indemnify or agree to indemnify any
person who was or is a party or is threatened to be made a party, to
any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, other than
an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as
a director, trustee, officer, employee, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a limited
liability company, or a partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees, judgments,
fines, and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, if he had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit,
or proceeding by judgment, order, settlement, or conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in
a manner he
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<PAGE> 3
reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was
unlawful.
(2) A corporation may indemnify or agree to indemnify any
person who was or is a party or is threatened to be made a party, to
any threatened, pending, or completed action or suit by or in the
right of the corporation to procure a judgment in its favor, by reason
of the fact that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, member,
manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred
by him in connection with the defense or settlement of such action or
suit, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made in respect of any of the
following:
(a) Any claim, issue, or matter as to which
such person is adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation
unless, and only to the extent that, the court of common
pleas or the court in which such action or suit was brought
determines, upon application, that, despite the adjudication
of liability, but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court of common pleas or
such other court shall deem proper;
(b) Any action or suit in which the only
liability asserted against a director is pursuant to section
1701.95 of the Revised Code.
(3) To the extent that a director, trustee, officer,
employee, member, manager, or agent has been successful on the merits
or otherwise in defense of any action, suit, or proceeding referred to
in divisions (E)(1) and (2) of this section, or in defense of any
claim, issue, or matter therein, he shall be indemnified against
expenses, including attorney's fees, actually and reasonably incurred
by him in connection with the action, suit, or proceeding.
(4) Any indemnification under division (E)(1) or (2) of this
section, unless ordered by a court, shall be made by the corporation
only as authorized in the specific case, upon a determination that
indemnification of the director, trustee, officer, employee, member,
manager, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in division (E)(1) or (2)
of this section. Such determination shall be made as follows:
(a) By a majority vote of a quorum
consisting of directors of the indemnifying corporation who
were not and are not parties to or threatened with any such
action, suit, or proceeding referred to in division (E)(1) or
(2) of this section;
(b) If the quorum described in division
(E)(4)(a) of this section is not obtainable or if a majority
vote of a quorum of disinterested directors so directs, in a
written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney,
who has been retained by or who has performed services for
the corporation or any person to be indemnified within the
past five years;
(c) By the shareholders;
(d) By the court of common pleas or the
court in which such action, suit, or proceeding referred to
in division (E)(1) or (2) of this section was brought.
Any determination made by the disinterested directors under
division (E)(4)(a) or by independent legal counsel under division
(E)(4)(b) of this section shall be promptly communicated to the person
who threatened or brought the action or suit by or in the right of the
corporation under division (E)(2) of this section, and, within ten
days after receipt of such notification, such person shall have the
right to petition the court of common pleas or the court in which
action or suit was brought to review the reasonableness of such
determination.
(5)(a) Unless at the time of a director's act or omission
that is the subject of an action, suit, or proceeding referred to in
division (E)(1) or (2) of this section, the articles or the
regulations of a corporation state, by specific
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<PAGE> 4
reference to this division, that the provisions of this division do
not apply to the corporation and unless the only liability asserted
against a director in an action, suit, or proceeding referred to in
division (E)(1) or (2) of this section is pursuant to section 1701.95
of the Revised Code, expenses, including attorney's fees, incurred by
a director in defending the action, suit, or proceeding shall be paid
by the corporation as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the director in which he agrees to do
both of the following:
(i) Repay such amount if it is proved by
clear and convincing evidence in a court of competent
jurisdiction that his action or failure to act involved an
act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless
disregard for the best interests of the corporation;
(ii) Reasonably cooperate with the
corporation concerning the action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a
director, trustee, officer, employee, member, manager, or agent in
defending any action, suit, or proceeding referred to in division
(E)(1) or (2) of this section, may be paid by the corporation as they
are incurred, in advance of the final disposition of the action, suit,
or proceeding, as authorized by the directors in the specific case,
upon receipt of an undertaking by or on behalf of the director,
trustee, officer, employee, member, manager, or agent to repay such
amount, if it ultimately is determined that he is not entitled to be
indemnified by the corporation.
(6) The indemnification authorized by this section shall not
be exclusive of, and shall be in addition to, any other rights granted
to those seeking indemnification under the articles, the regulations,
any agreement, a vote of shareholders or disinterested directors, or
otherwise, both as to action in their official capacities and as to
action in another capacity while holding their offices or positions,
and shall continue as to a person who has ceased to be a director,
trustee, officer, employee, member, manager, or agent and shall inure
to the benefit of the heirs, executors, and administrators of such a
person.
(7) A corporation may purchase and maintain insurance or
furnish similar protection, including, but not limited to, trust
funds, letters of credit, or self-insurance, on behalf of or for any
person who is or was a director, officer, employee, member, manager,
or agent of the corporation, or is or was serving at the request of
the corporation as a director, trustee, officer, employee, or agent of
another corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust, or
other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify
him against such liability under this section. Insurance may be
purchased from or maintained with a person in which the corporation
has a financial interest.
(8) The authority of a corporation to indemnify persons
pursuant to division (E)(1) or (2) of this section does not limit the
payment of expenses as they are incurred, indemnification, insurance,
or other protection that may be provided pursuant to divisions (E)(5),
(6), and (7) of this section. Divisions (E)(1) and (2) of this section
do not create any obligation to repay or return payments made by the
corporation pursuant to division (E)(5), (6), or (7).
(9) As used in this division, references to "corporation"
includes all constituent corporations in a consolidation or merger and
the new or surviving corporation, so that any person who is or was a
director, officer, employee, trustee, member, manager or agent of such
a constituent corporation, or is or was serving at the request of such
constituent corporation as a director, trustee, officer, employee,
member, manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, shall stand in
the same position under this section with respect to the new or
surviving corporation as he would if he had served the new or
surviving corporation in the same capacity.
B. Article Five of the Registrant's Code of Regulations
provides for the indemnification of officers and directors as follows:
Section 5.01. Mandatory Indemnification. The corporation shall
indemnify any officer or director of the corporation who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, any action threatened or
instituted by or in
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the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer, employee or
agent of another corporation (domestic or foreign, nonprofit or for profit),
partnership, joint venture, trust or other enterprise, against expenses
(including, without limitation, attorneys' fees, filing fees, court reporters'
fees and transcript costs), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and with respect
to any criminal action or proceeding, he had no reasonable cause to believe his
conduct was unlawful. A person claiming indemnification under this Section 5.01
shall be presumed, in respect of any act or omission giving rise to such claim
for indemnification, to have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal matter, to have had no reasonable cause to believe
his conduct was unlawful, and the termination of any action, suit or proceeding
by judgment, order, settlement or conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, rebut such presumption.
Section 5.02. Court-Approved Indemnification. Anything contained in
the Regulations or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise, in respect of any claim, issue or matter
asserted in such action or suit as to which he shall have been adjudged to be
liable for acting with reckless disregard for the best interests of the
corporation or misconduct (other than negligence) in the performance of his
duty to the corporation unless and only to the extent that the Court of Common
Pleas of Columbiana County, Ohio, or the court in which such action or suit was
brought shall determine upon application that, despite such adjudication of
liability, and in view of all the circumstances of the case, he is fairly and
reasonably entitled to such indemnity as such Court of Common Pleas or such
other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by
this Section 5.02.
Section 5.03. Indemnification for Expenses. Anything contained in the
Regulations or elsewhere to the contrary notwithstanding, to the extent that an
officer or director of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemnification required
under Section 5.01 and not precluded under Section 5.02 shall be made by the
corporation only upon a determination that such indemnification of the officer
or director is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 5.01. Such determination may be made
only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (B) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written
opinion by independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the corporation, or any person to be indemnified, within the past
five years, or (C) by the shareholders, or (D) by the Court of Common Pleas of
Columbiana County, Ohio, or (if the corporation is a party thereto) the court
in which such action, suit or proceeding was brought, if any; any such
determination may be made by a court under division (D) of this Section 5.04 at
any time including, without limitation, any time before, during or after the
time when any such determination may be requested of, be under consideration by
or have been denied or disregarded by the disinterested directors under
division (A) or by independent legal counsel under division (B) or by the
shareholders under division (C) of this Section 5.04; and no failure for any
reason to make any such determination, and no decision for any reason to deny
any such determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by shareholders under division
(C) of this Section 5.04 shall be evidence in rebuttal of the presumption
recited in Section 5.01. Any determination made by the disinterested directors
under division (A) or by independent legal counsel under division (B) of this
Section 5.04 to make indemnification in respect of any claim, issue or matter
asserted in an action or suit threatened or brought by or in the right of the
corporation shall be promptly communicated to the person who threatened or
brought such action or suit, and within ten (10) days after receipt of such
notification such person shall have the right to petition the Court of Common
Pleas of Columbiana County, Ohio, or the court in which such action or suit was
brought, if any, to review the reasonableness of such determination.
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Section 5.05. Advances for Expenses. Expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs) incurred in defending any action, suit or proceeding referred to in
Section 5.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer
or director promptly as such expenses are incurred by him, but only if such
officer or director shall first agree, in writing, to repay all amounts so paid
in respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:
(A) if it shall ultimately be determined as provided in
Section 5.04 that he is not entitled to be indemnified by the corporation as
provided under Section 5.01; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or suit, he shall
have been adjudged to be liable for acting with reckless disregard for the best
interests of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation, unless and only to the extent that
the Court of Common Pleas of Columbiana County, Ohio, or the court in which
such action or suit was brought shall determine upon application that, despite
such adjudication of liability, and in view of all the circumstances, he is
fairly and reasonably entitled to all or part of such indemnification.
Section 5.06. Article Five Not Exclusive. The indemnification provided
by this Article Five shall not be deemed exclusive of any other rights to which
any person seeking indemnification may be entitled under the Articles or the
Regulations or any agreement, vote of shareholders or disinterested directors,
or otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be an officer or director of the corporation and shall inure
to the benefit of the heirs, executors, and administrators of such a person.
Section 5.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, or agent of another
corporation (domestic or foreign, nonprofit or for profit), partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the obligation or the power to
indemnify him against such liability under the provisions of this Article Five.
Section 5.08. Certain Definitions. For purposes of this Article Five,
and as examples and not by way of limitation:
(A) A person claiming indemnification under this Article 5
shall be deemed to have been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Section 5.01, or in defense of
any claim, issue or other matter therein, if such action, suit or proceeding
shall be terminated as to such person, with or without prejudice, without the
entry of a judgment or order against him, without a conviction of him, without
the imposition of a fine upon him and without his payment or agreement to pay
any amount in settlement thereof (whether or not any such termination is based
upon a judicial or other determination of the lack of merit of the claims made
against him or otherwise results in a vindication of him); and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references
to "serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties
on, or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" within the meaning of that term as used in this
Article Five.
Section 5.09. Venue. Any action, suit or proceeding to determine a
claim for indemnification under this Article Five may be maintained by the
person claiming such indemnification, or by the corporation, in the Court of
Common Pleas of Columbiana County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Columbiana County, Ohio, in
any such action, suit or proceeding.
ITEM 7. Exemption from Registration Claimed.
Not Applicable.
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ITEM 8. Exhibits.
See the Exhibit Index attached hereto.
A copy of the Internal Revenue Service (the "IRS")
determination letter is included herewith as Exhibit 5. The
Registrant hereby undertakes to submit any amendments to the
Plan to the IRS in a timely manner and to make those changes,
if any, required by the IRS in order for the Plan to qualify
as a tax-qualified employee benefit plan meeting the
requirements of Section 401(a) of the Internal Revenue Code
of 1986, as amended.
ITEM 9. Undertakings.
Registrant hereby undertakes:
(1) To file, during any period in which it offers
or sells securities, a post-effective amendment
to this registration statement to:
(i) Include any prospectus required by
section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the registration
statement; and Notwithstanding the
foregoing, any increase or decrease in
volume of securities offered (if the
total dollar value of securities offered
would not exceed that which was
registered) and any deviation from the
low or high end of the estimated maximum
offering range may be reflected in the
form of prospectus filed with the
commission pursuant to rule 424(b), if,
in the aggregate, the changes in the
volume and price represent no more than a
20% change in the maximum aggregate
offering price set forth in the
"Calculation of Registration Fee" table
in the effective registration statement.
(iii) Include any additional or changed
material information on the plan of
distribution;
Provided, however, That paragraphs
(a)(1)(i) and (a)(1)(ii) of this section
do not apply if the information required
in a post-effective amendment is
incorporated by reference from periodic
reports filed by the small business
issuer under the Exchange Act.
(2) For determining liability under the Securities
Act, treat each post-effective amendment as a
new registration statement of the securities
offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain
unsold at the end of the offering.
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SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of East Liverpool, State of Ohio, on May
22, 1997.
POTTERS FINANCIAL CORPORATION
By: /s/ Anne S. Myers
---------------------
Anne S. Myers
Vice President, Secretary, Chief Financial Officer
and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Edward L. Baumgardner President, Chief Executive May 22, 1997
- ------------------------- Officer, Director
Edward L. Baumgardner
/s/ W. Gaylord Billingsley Director May 22, 1997
- --------------------------
W. Gaylord Billingsley
/s/ Arthur T. Doak Director May 22, 1997
- ------------------
Arthur T. Doak
/s/ Suzanne B. Fitzgerald Director May 22, 1997
- -------------------------
Suzanne B. Fitzgerald
/s/ William L. Miller Chairman of the Board, May 22, 1997
- --------------------- Director
William L. Miller
/s/ Timothy M. O'Hara Director May 22, 1997
- ---------------------
Timothy M. O'Hara
/s/ Peter D. Visnic Director May 22, 1997
- -------------------
Peter D. Visnic
/s/ Anne S. Myers Vice President, Secretary, May 22, 1997
- ----------------- Chief Financial Officer and
Anne S. Myers Chief Operating Officer
</TABLE>
<PAGE> 9
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of East Liverpool, State of
Ohio, on May 22, 1997.
POTTERS SAVINGS AND LOAN 401(K)
RETIREMENT SAVINGS PLAN
By: /s/ Edward L. Baumgardner
---------------------------
Edward L. Baumgardner
By: /s/ Anne S. Myers
---------------------------
Anne S. Myers
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
4(a) Potters Savings and Loan 401(k) Retirement
Savings Plan, as amended
4(b) Articles of Incorporation (Incorporated by
reference to the Registration Statement on
Form 8-A declared effective by the SEC on
March 7, 1996)
5 Internal Revenue Service determination
letter
23 Consent of Independent Accountants
</TABLE>
<PAGE> 1
EXHIBIT 4(a)
PENCO, INC. REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
Copyright 1990 PENCO, Inc.
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
<TABLE>
<S> <C> <C>
2.1 TOP HEAVY PLAN REQUIREMENTS 19
2.2 DETERMINATION OF TOP HEAVY STATUS 19
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 24
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY 25
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 25
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 26
2.7 RECORDS AND REPORTS 27
2.8 APPOINTMENT OF ADVISERS 27
2.9 INFORMATION FROM EMPLOYER 28
2.10 PAYMENT OF EXPENSES 28
2.11 MAJORITY ACTIONS 28
2.12 CLAIMS PROCEDURE 28
2.13 CLAIMS REVIEW PROCEDURE 29
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY 29
3.2 EFFECTIVE DATE OF PARTICIPATION 30
3.3 DETERMINATION OF ELIGIBILITY 30
3.4 TERMINATION OF ELIGIBILITY 30
3.5 OMISSION OF ELIGIBLE EMPLOYEE 30
3.6 INCLUSION OF INELIGIBLE EMPLOYEE 31
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.7 ELECTION NOT TO PARTICIPATE 31
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE 31
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION 32
4.2 EMPLOYER'S CONTRIBUTION FOR TARGET BENEFIT 34
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 35
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS 35
4.5 MAXIMUM ANNUAL ADDITIONS 43
4.6 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS 54
4.7 TRANSFERS FROM QUALIFIED PLANS 54
4.8 VOLUNTARY CONTRIBUTIONS 56
4.9 DIRECTED INVESTMENT ACCOUNT 57
4.10 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS 58
4.11 ACTUAL CONTRIBUTION PERCENTAGE TESTS 58
4.12 INTEGRATION IN MORE THAN ONE PLAN 59
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND 59
5.2 METHOD OF VALUATION 59
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 60
6.2 DETERMINATION OF BENEFITS UPON DEATH 60
</TABLE>
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<TABLE>
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6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 62
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 62
6.5 DISTRIBUTION OF BENEFITS 67
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 73
6.7 TIME OF SEGREGATION OR DISTRIBUTION 79
6.8 DISTRIBUTION FOR MINOR BENEFICIARY 80
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 80
6.10 PRE-RETIREMENT DISTRIBUTION 80
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP 81
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS 82
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS 82
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE 83
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 83
7.3 OTHER POWERS OF THE TRUSTEE 85
7.4 LOANS TO PARTICIPANTS 89
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 92
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES 92
7.7 ANNUAL REPORT OF THE TRUSTEE 92
7.8 AUDIT 93
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE 94
7.10 TRANSFER OF INTEREST 95
7.11 TRUSTEE INDEMNIFICATION 95
7.12 EMPLOYER SECURITIES AND REAL PROPERTY 95
</TABLE>
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ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
<TABLE>
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8.1 AMENDMENT 96
8.2 TERMINATION 97
8.3 MERGER OR CONSOLIDATION 97
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS 98
9.2 PARTICIPANT'S RIGHTS 98
9.3 ALIENATION 98
9.4 CONSTRUCTION OF PLAN 99
9.5 GENDER AND NUMBER 100
9.6 LEGAL ACTION 100
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS 100
9.8 BONDING 101
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 101
9.10 INSURER'S PROTECTIVE CLAUSE 101
9.11 RECEIPT AND RELEASE FOR PAYMENTS 102
9.12 ACTION BY THE EMPLOYER 102
9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY 102
9.14 HEADINGS 103
9.15 APPROVAL BY INTERNAL REVENUE SERVICE 103
9.16 UNIFORMITY 103
9.17 PAYMENT OF BENEFITS 104
</TABLE>
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ARTICLE X
PARTICIPATING EMPLOYERS
<TABLE>
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10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER 104
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS 104
10.3 DESIGNATION OF AGENT 105
10.4 EMPLOYEE TRANSFERS 105
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES 105
10.6 AMENDMENT 106
10.7 DISCONTINUANCE OF PARTICIPATION 106
10.8 ADMINISTRATOR'S AUTHORITY 106
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE 106
ARTICLE XI
CASH OR DEFERRED PROVISIONS
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION 107
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION 108
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS 113
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS 116
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS 119
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS 124
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS 128
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP 133
</TABLE>
<PAGE> 7
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall
have the meanings set forth herein unless a different meaning is clearly
required by the context:
1.l "Act" means the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.2 "Administrator" means the person(s) or entity designated by the
Employer pursuant to Section 2.4 to administer the Plan on behalf of the
Employer.
1.3 "Adoption Agreement" means the separate Agreement which is
executed by the Employer and accepted by the Trustee which sets forth the
elective provisions of this Plan and Trust as specified by the Employer.
1.4 "Affiliated Employer" means the Employer and any corporation which
is a member of a controlled group of corporations (as defined in Code Section
414(b)) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section 414(c))
with the Employer; any organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in Code Section 414(m)) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to Regulations under Code Section 414(o).
1.5 "Aggregate Account" means with respect to each Participant, the
value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the provisions
of Section 2.2.
1.6 "Anniversary Date" means the anniversary date specified in C3 of
the Adoption Agreement.
1.7 "Average Monthly Compensation" means the monthly Compensation of a
Participant as specified in E2 of the Adoption Agreement. If a Participant has
less than the number of Years of Service or Plan Years of Service specified in
the Adoption Agreement from his date of employment (or, if applicable, date of
participation) to his date of termination, his Average Monthly Compensation
will be based on his monthly Compensation during his months of service from his
date of employment (or, if applicable, date of participation). Compensation
subsequent to termination of participation pursuant to Section 3.4 shall not be
recognized.
1.8 "Beneficiary" means the person to whom a share of a deceased
Participant's interest in the Plan is payable, subject to the restrictions of
Sections 6.2 and 6.6.
1.9 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.10 "Compensation" with respect to any Participant means such
Participant's compensation as specified by the Employer in El of the Adoption
Agreement that is paid during the applicable period. Compensation for any
Self-Employed Individual shall be equal to his Earned Income.
In addition, if specified in the Adoption Agreement,
Compensation for all Plan purposes shall also include compensation which is not
currently includible in the Participant's gross income by reason of the
application of Code Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b).
Compensation in excess of $200,000 shall be disregarded. Such
amount shall be adjusted at the same time and in such manner as permitted under
Code Section 415(d). In applying this limitation, the family group of a Highly
Compensated Participant who is subject to the Family Member aggregation rules
of Code Section 414(q)(6) because such Participant is either a "five percent
owner" of the Employer or one of the ten (10) Highly Compensated Employees paid
the greatest "415 Compensation" during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have not attained
age nineteen (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 is integrated), 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.
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For Plan Years beginning prior to January l, 1989, the
$200,000 limit (without regard to Family Member aggregation) shall apply only
for Top Heavy Plan Years and shall not be adjusted.
1.11 "Contract" or "Policy" means any life insurance policy,
retirement income policy, or annuity contract (group or individual) issued by
the Insurer. In the event of any conflict between the terms of this Plan and
the terms of any insurance contract purchased hereunder, the Plan provisions
shall control.
1.12 "Covered Compensation" with respect to any Participant for a Plan
Year means the average (without indexing) of the Taxable Wage Bases in effect
for each calendar year during the 35-year period ending with the last day of
the calendar year in which the Participant attains (or will attain) Social
Security Retirement Age. A Participant's Covered Compensation shall be adjusted
each Plan Year and no increase in Covered Compensation shall decrease a
Participant's Accrued Benefit. In determining the Participant's Covered
Compensation for a Plan Year, the Taxable Wage Base in effect for the current
Plan Year and any subsequent Plan Year will be assumed to be the same as the
Taxable Wage Base in effect as of the beginning of the Plan Year for which the
determination is being made. A Participant's Covered Compensation for a Plan
Year before the 35-year period described above is the Taxable Wage Base in
effect as of the beginning of the Plan Year. A Participant's Covered
Compensation for a Plan Year after the 35-year period described above is the
Participant's Covered Compensation for the Plan Year during which the
Participant attained Social Security Retirement Age.
However, if a frozen Covered Compensation table is selected
in the Adoption Agreement, "Covered Compensation" with respect to any
Participant for a Plan Year means the Participant's Covered Compensation under
the table selected in the Adoption Agreement. For Plan Years beginning six (6)
years after the year selected in the Adoption Agreement, the Participant's
Covered Compensation will be that determined under the Covered Compensation
table for the Plan Year five (5) years prior to the current Plan Year. Any
change in a Participant's Covered Compensation shall not cause any reduction in
his Accrued Benefit.
1.13 "Deferred Compensation" means, with respect to any Participant,
that portion of the Participant's total Compensation which has been contributed
to the Plan in accordance with the Participant's deferral election pursuant to
Section 11.2.
1.14 "Early Retirement Date" means the date specified in the Adoption
Agreement on which a Participant or Former Participant has satisfied the age
and service requirements specified in the Adoption Agreement (Early Retirement
Age). A Participant shall become fully Vested upon satisfying this requirement
if still employed at his Early Retirement Age.
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who thereafter
reaches the age requirement contained herein shall be entitled to receive his
benefits under this Plan.
1.15 "Earned Income" means with respect to a Self-Employed Individual,
the net earnings from self-employment in the trade or business with respect to
which the Plan is established, for which the personal services of the
individual are a material income-producing factor. Net earnings will be
determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions
by the Employer to a qualified Plan to the extent deductible under Code Section
404. In addition, for Plan Years beginning after December 31, 1989, net
earnings shall be determined with regard to the deduction allowed to the
Employer by Code Section 164(f).
1.16 "Elective Contribution" means the Employer's contributions to the
Plan that are made pursuant to the Participant's deferral election pursuant to
Section 11.2. In addition, if selected in E3 of the Adoption Agreement, the
Employer's matching contribution made pursuant to Section 11.1(b) shall be
considered an Elective Contribution for purposes of the Plan. Elective
Contributions shall be subject to the requirements of Sections 11.2(b) and
11.2(c) and shall further be required to satisfy the discrimination
requirements of Regulation l.401(k)-1(b)(3), the provisions of which are
specifically incorporated herein by reference.
1.17 "Eligible Employee" means any Employee specified in Dl of the
Adoption Agreement.
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1.18 "Employee" means any person who is employed by the Employer, but
excludes any person who is employed as an independent contractor. The term
Employee shall also include Leased Employees as provided in Code Section 414(n)
or (o).
Except as provided in the Non-Standardized Adoption Agreement,
all Employees of all entities which are an Affiliated Employer will be treated
as employed by a single employer.
1.19 "Employer" means the entity specified in the Adoption Agreement,
any Participating Employer (as defined in Section 10.1) which shall adopt this
Plan, any successor which shall maintain this Plan and any predecessor which
has maintained this Plan.
1.20 "Excess Compensation" means, with respect to a Plan that is
integrated with Social Security, a Participant's Compensation which is in
excess of the amount set forth in the Adoption Agreement.
1.21 "Excess Contributions" means, with respect to a Plan Year, the
excess of Elective Contributions and Qualified Non-Elective Contributions made
on behalf of Highly Compensated Participants for the Plan Year over the maximum
amount of such contributions permitted under Section 11.4(a).
1.22 "Excess Deferred Compensation" means, with respect to any taxable
year of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 1l.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference.
1.23 "Family Member" means, with respect to an affected Participant,
such Participant's spouse, and such Participant's lineal descendants and
ascendants and their spouses, all as described in Code Section 4l4(q)(6)(B).
1.24 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct
or indirect, with respect to any monies or other property of the Plan or has
any authority or responsibility to do so, or (c) has any discretionary
authority or discretionary responsibility in the administration of the Plan,
including, but not limited to, the Trustee, the Employer and its representative
body, and the Administrator.
1.25 "Fiscal Year" means the employer's accounting year as specified
in the Adoption Agreement.
1.26 "Forfeiture" means that portion of a Participant's Account that
is not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Participant's Account, or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive 1-Year Breaks in
Service.
Furthermore, for purposes of paragraph (a) above, in the case
of a Terminated Participant whose Vested benefit is zero, such Terminated
Participant shall be deemed to have received a distribution of his Vested
benefit upon his termination of employment. In addition, the term Forfeiture
shall also include amounts deemed to be Forfeitures pursuant to any other
provision of this Plan.
1.27 "Former Participant" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.28 "414(s) Compensation" with respect to any Employee means his
Compensation as defined in Section 1.10. However, for purposes of this Section,
Compensation shall be Compensation paid and shall be determined by including,
in the case of a non-standardized Adoption Agreement, any items that are
excluded from Compensation pursuant to the Adoption Agreement. The amount of
"414(s) Compensation" with respect to any Employee shall include "414(s)
Compensation" during the entire twelve (12) month period ending on the last day
of such Plan Year, except that for Plan Years beginning prior to the later of
January l, 1992, or the date that is sixty (60) days after the date final
Regulations are issued, "414(s) Compensation" shall only be recognized as of an
Employee's effective date of participation.
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In addition, if specified in the Adoption Agreement, "414(s)
Compensation" shall also include compensation which is not currently includible
in the Participant's gross income by reason of the application of Code Sections
125, 402(a)(8), 402(h)(l)(B), or 403(b), plus Elective Contributions
attributable to Deferred Compensation recharacterized as voluntary Employee
contributions pursuant to 11.5(a).
1.29 "415 Compensation" means compensation as defined in Section
4.5(f)(2).
1.30 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination
year" or "look-back year" were "five percent owners" as
defined in Section 1.37(c).
(b) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess of $50,000
and were in the Top Paid Group of Employees for the Plan
Year.
(d) Employees who during the "look-back year" were
officers of the Employer (as that term is defined within the
meaning of the regulations under Code Section 416) and
received "415 Compensation" during the "look-back year" from
the Employer greater than 50 percent of the limit in effect
under Code Section 4l5(b)(1)(A) for any such Plan Year. The
number of officers shall be limited to the lesser of (i) 50
employees; or (ii) the greater of 3 employees or 10 percent
of all employees. If the Employer does not have at least one
officer whose annual "415 Compensation" is in excess of 50
percent of the Code Section 4l5(b)(1)(A) limit, then the
highest paid officer of the Employer will be treated as a
Highly Compensated Employee.
(e) Employees who are in the group consisting of the
100 Employees paid the greatest "415 Compensation during the
"determination year" and are also described in (b), (c) or
(d) above when these paragraphs are modified to substitute
"determination year" for "look-back year".
The "determination year" shall be the Plan Year for which
testing is being performed, and the "look-back year" shall be the immediately
preceding twelve-month period. However, if the Plan Year is a calendar year, or
if another Plan of the Employer so provides, then the "look-back year" shall be
the calendar year ending with or within the Plan Year for which testing is
being performed, and the "determination year" (if applicable) shall be the
period of time, if any, which extends beyond the "look-back year" and ends on
the last day of the Plan Year for which testing is being performed (the "lag
period"). With respect to this election, it shall be applied on a uniform and
consistent basis to all plans, entities, and arrangements of the Employer.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would otherwise be
excluded from a Participant's gross income by reason of the application of Code
Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of Employer
contributions made pursuant to a salary reduction agreement, Code Section
403(b). Additionally, the dollar threshold amounts specified in (b) and (c)
above shall be adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar limits which shall
be applied are those for the calendar year in which the "determination year" or
"look back year" begins.
In determining who is a Highly Compensated Employee,
Employees who are non-resident aliens and who received no earned income (within
the meaning of Code Section 911(d)) from the Employer constituting United
States source income within the meaning of Code Section 861(a)(3) shall not be
treated as Employees. Additionally, all Affiliated Employers shall be taken
into account as a single employer and Leased Employees within the meaning of
Code Sections 414(n)(2) and 414(o)(2) shall be considered Employees unless such
Leased Employees are covered by a plan described in Code Section 4l4(n)(5) and
are not covered in any qualified plan maintained by the Employer. The exclusion
of Leased Employees for this purpose shall be applied on a uniform and
consistent basis for all of the Employer's retirement plans. In
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addition, Highly Compensated Former Employees shall be treated as Highly
Compensated Employees without regard to whether they performed services during
the "determination year".
1.31 "Highly Compensated Former Employee" means a former Employee who
had a separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year after attaining age 55. Notwithstanding the foregoing, an
Employee who separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year (or year
preceding the separation year) or any year after the Employee attains age 55
(or the last year ending before the Employee's 55th birthday), the Employee
either received "415 Compensation" in excess of $50,000 or was a "five percent
owner".
For purposes of this Section, "determination year", "415
Compensation" and "five percent owner" shall be determined in accordance with
Section 1.30. Highly Compensated Former Employees shall be treated as Highly
Compensated Employees. The method set forth in this Section for determining who
is a "Highly Compensated Former Employee" shall be applied on a uniform and
consistent basis for all purposes for which the Code Section 414(q) definition
is applicable.
1.32 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.33 "Hour of Service" means (l) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2)
each hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than performance of
duties (such as vacation, holidays, sickness, jury duty, disability, lay-off,
military duty or leave of absence) during the applicable computation period;
(3) each hour for which back pay is awarded or agreed to by the Employer
without regard to mitigation of damages. The same Hours of Service shall not be
credited both under (1) or (2), as the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of
Service are required to be credited to an Employee on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs in a single computation period); (ii) an hour for which an
Employee is directly or indirectly paid, or entitled to payment, on account of
a period during which no duties are performed is not required to be credited to
the Employee if such payment is made or due under a plan maintained solely for
the purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be
made by or due from the Employer regardless of whether such payment is made by
or due from the Employer directly, or indirectly through, among others, a trust
fund, or insurer, to which the Employer contributes or pays premiums and
regardless of whether contributions made or due to the trust fund, insurer, or
other entity are for the benefit of particular Employees or are on behalf of a
group of Employees in the aggregate.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for purposes of accrued
benefits, a 1-Year Break in Service, and employment commencement date (or
reemployment commencement date). The provisions of Department of Labor
regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
Hours of Service will be credited for employment with all
Affiliated Employers and for any individual considered to be a Leased Employee
pursuant to Code Sections 414(n) or 414(o) and the Regulations thereunder.
Hours of Service will be determined on the basis of the
method selected in the Adoption Agreement.
1.34 "Insurer" means any legal reserve insurance company which shall
issue one or more policies under the Plan.
1.35 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
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1.36 "Joint and Survivor Annuity" means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than 1/2, nor greater than the amount of the annuity payable
during the joint lives of the Participant and the Participant's spouse. The
Joint and Survivor Annuity will be the amount of benefit which can be purchased
with the Participant's Vested interest in the Plan.
1.37 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, any Employee or former
Employee (as well as each of his Beneficiaries) is considered a Key Employee if
he, at any time during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in one of the
following categories:
(a) an officer of the Employer (as that term is
defined within the meaning of the Regulations under Code
Section 416) having annual "415 Compensation" greater than
50 percent of the amount in effect under Code Section
4l5(b)(l)(A) for any such Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater than
the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent interest
and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than five
percent (5%) of the outstanding stock of the Employer or
stock possessing more than five percent (5%) of the total
combined voting power of all stock of the Employer or, in the
case of an unincorporated business, any person who owns more
than five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as
separate employers.
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more than
$150,000. "One percent owner" means any person who owns (or
is considered as owning within the meaning of Code Section
318) more than one percent (1%) of the outstanding stock of
the Employer or stock possessing more than one percent (1%)
of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any
person who owns more than one percent (1%) of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall
be treated as separate employers. However, in determining
whether an individual has "415 Compensation" of more than
$150,000, "415 Compensation" from each employer required to
be aggregated under Code sections 4l4(b), (c), (m) and (o)
shall be taken into account.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would otherwise be
excluded from a Participant's gross income by reason of the application of Code
Sections 125, 402(a)(8), 402(h)(l)(B) and, in the case of Employer
contributions made pursuant to a salary reduction agreement, Code Section
403(b).
1.38 "Late Retirement Date" means the date of, or the first day of the
month or the Anniversary Date coinciding with or next following, whichever
corresponds to the election made for the Normal Retirement Date, a
Participant's actual retirement after having reached his Normal Retirement
Date.
1.39 "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 Code
Section 414(n)(6)) on a substantially full time basis for a period of at least
one year, and such services are of a type historically performed by employees
in the business field of the recipient employer. 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: (i) such employee is covered by a money purchase pension plan
providing: (1) a nonintegrated employer contribution rate of at least l0
percent of
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compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Sections 125, 402(a)(8), 402(h) or
403(b), (2) immediate participation, and (3) full and immediate vesting; and
(ii) leased employees do not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
1.40 "Level Funding Amount" means that level annual amount necessary,
using the factor table specified in the Adoption Agreement, to fund a
Participant's Target Benefit.
1.41 "Net Profit" means with respect to any Fiscal Year the Employer's
net income or profit for such Fiscal Year determined upon the basis of the
Employer's books of account in accordance with generally accepted accounting
principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.42 "Non-Elective Contribution" means the Employer's contributions to
the Plan other than those made pursuant to the Participant's deferral election
made pursuant to Section 11.2 and any Qualified Non-Elective Contribution. In
addition, if selected in E3 of the Adoption Agreement, the Employer's Matching
Contribution made pursuant to Section 4.4(b) shall be considered a Non-Elective
Contribution for purposes of the Plan.
1.43 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.44 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.45 "Normal Retirement Age" means the age specified in the Adoption
Agreement at which time a Participant shall become fully Vested in his
Participant's Account.
1.46 "Normal Retirement Date" means the date specified in the Adoption
Agreement on which a Participant shall become eligible to have his benefits
distributed to him.
1.47 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence."
"Authorized leave of absence" means an unpaid, temporary
cessation from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan
Years beginning after December 31, 1984, an absence from work for any period by
reason of the Employee's pregnancy, birth of the Employee's child, placement of
a child with the Employee in connection with the adoption of such child, or any
absence for the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of Service shall be
credited for the computation period in which the absence from work begins, only
if credit therefore is necessary to prevent the Employee from incurring a
1-Year Break in Service, or, in any other case, in the immediately following
computation period. The Hours of Service credited for a "maternity or paternity
leave of absence" shall be those which would normally have been credited but
for such absence, or, in any case in which the Administrator is unable to
determine such hours normally credited, eight (8) Hours of Service per day. The
total Hours of Service required to be credited for a "maternity or paternity
leave of absence" shall not exceed 501.
1.48 "Owner-Employee" means a sole proprietor who owns the entire
interest in the Employer or a partner who owns more than 10% of either the
capital interest or the profits interest in the Employer and who receives
income for personal services from the Employer.
1.49 "Participant" means any Eligible Employee who participates in the
Plan as provided in Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
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<PAGE> 14
1.50 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest under the Plan resulting from (a) the Employer's contributions in the
case of a Profit Sharing Plan, Target Benefit Plan, or Money Purchase Plan, and
(b) the Employer's Non-Elective Contributions in the case of a 401(k) Profit
Sharing Plan.
1.51 "Participant's Combined Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest under the Plan resulting from the Employer's contributions.
1.52 "Participant's Elective Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest in the Plan and Trust resulting from the Employer's Elective
Contributions and Qualified Non-Elective Contributions. A separate accounting
shall be maintained with respect to that portion of the Participant's Elective
Account attributable to Elective Contributions made pursuant to Section 11.2,
Employer matching contributions if they are deemed to be Elective
Contributions, and any Qualified Non-Elective Contributions.
1.53 "Participant's Rollover Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest in the Plan resulting from amounts transferred from another
qualified plan or "conduit" Individual Retirement Account in accordance with
Section 4.7.
1.54 "Plan" means this instrument (hereinafter referred to as PENCO,
Inc. Regional Prototype Defined Contribution Plan and Trust Basic Plan Document
#01) including all amendments thereto, and the Adoption Agreement as adopted by
the Employer.
1.55 "Plan Year" means the Plan's accounting year as specified in C2
of the Adoption Agreement.
1.56 "Pre-Retirement Survivor Annuity" means an immediate annuity for
the life of the Participant's spouse, the payments under which must be equal to
the actuarial equivalent of 50% of the Participant's Vested interest in the
Plan as of the date of death.
1.57 "Qualified Non-Elective Account" means the account established
hereunder to which Qualified Non-Elective Contributions are allocated.
1.58 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to E5 of the Adoption
Agreement and Section 11.1(d) which are used to satisfy the "Actual Deferral
Percentage" tests. Qualified Non-Elective Contributions are nonforfeitable when
made and are distributable only as specified in Sections 11.2(c) and 11.8. In
addition, the Employer's contributions to the Plan that are made pursuant to
Section 11.7(h) and which are used to satisfy the "Actual Contribution
Percentage" tests shall be considered Qualified Non-Elective Contributions.
1.59 "Qualified Voluntary Employee Contribution Account" means the
account established and maintained by the Administrator for each Participant
with respect to his total interest under the Plan resulting from the
Participant's tax deductible qualified voluntary employee contributions made
pursuant to Section 4.10.
1.60 "Regulation" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or his delegate, and as amended from time to
time.
1.61 "Retired Participant" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.62 "Retirement Date" means the date as of which a Participant
retires for reasons other than Total and Permanent Disability, whether such
retirement occurs on a Participant's Normal Retirement Date, Early or Late
Retirement Date (see Section 6.1).
1.63 "Self-Employed Individual" means an individual who has earned
income for the taxable year from the trade or business for which the Plan is
established, and, also, an individual who would have had earned income but for
the fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
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<PAGE> 15
1.64 "Shareholder-Employee" means a Participant who owns more than
five percent (5%) of the Employer's outstanding capital stock during any year
in which the Employer elected to be taxed as a Small Business Corporation under
the applicable Code Section.
1.65 "Short Plan Year" means, if specified in the Adoption Agreement,
that the Plan Year shall be less than a l2 month period. If chosen, the
following rules shall apply in the administration of this Plan. In determining
whether an Employee has completed a Year of Service for benefit accrual
purposes in the Short Plan Year, the number of the Hours of Service required
shall be proportionately reduced based on the number of days in the Short Plan
Year. The determination of whether an Employee has completed a Year of Service
for vesting and eligibility purposes shall be made in accordance with
Department of Labor Regulation 2530.203-2(c). In addition, if this Plan is
integrated with Social Security, the integration level shall also be
proportionately reduced based on the number of days in the Short Plan Year.
1.66 "Social Security Retirement Age" with respect to a Participant
means age 65 if the Participant attains age 62 before January l, 2000, age 66
if the Participant attains age 62 after December 31, 1999 but before January l,
2017, and age 67 if the Participant attains age 62 after December 31, 2016.
1.67 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.68 "Target Benefit" means the monthly benefit calculated pursuant to
Section 4.2, and which shall be the basis for determining the Level Funding
Amount, but which may be more or less than the benefit actually available upon
a distributable event.
1.69 "Taxable Wage Base" means, with respect to any year, the maximum
amount of earnings which may be considered wages for such year under Code
Section 3l21(a)(l).
1.70 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death,
Total and Permanent Disability or retirement.
1.71 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.72 "Top Heavy Plan Year" means a Plan Year commencing after December
31, 1983 during which the Plan is a Top Heavy Plan.
1.73 "Top Paid Group" shall be determined pursuant to Code Section
414(q) and the Regulations thereunder and generally means the top 20 percent of
Employees who performed services for the Employer during the applicable year,
ranked according to the amount of "415 Compensation" (as determined pursuant to
Section 1.30) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased
Employees shall be treated as Employees pursuant to Code Section 414(n) or (o).
Employees who are non-resident aliens who received no earned income (within the
meaning of Code Section 9l1(d)(2)) from the Employer constituting United States
source income within the meaning of Code Section 86l(a)(3) shall not be treated
as Employees. Additionally, for the purpose of determining the number of active
Employees in any year, the following additional Employees shall also be
excluded, however, such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of
service;
(b) Employees who normally work less than 17-1/2
hours per week;
(c) Employees who normally work less than six (6)
months during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded from
both the total number of active Employees as well as from the identification of
particular Employees in the Top Paid Group.
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<PAGE> 16
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.74 "Total and Permanent 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
l2 months. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. However, if the condition constitutes
total disability under the federal Social Security Acts, the Administrator may
rely upon such determination that the Participant is Totally and Permanently
Disabled for the purposes of this Plan. The determination shall be applied
uniformly to all Participants.
1.75 "Trustee" means the person or entity named in B6 of the Adoption
Agreement and any successors.
1.76 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.77 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.78 "Voluntary Contribution Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest in the Plan resulting from the Participant's nondeductible
voluntary contributions made pursuant to Section 4.8.
1.79 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, and during which an Employee has
completed at least 1000 Hours of Service.
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service (employment commencement date). The computation
period beginning after a 1-Year Break in Service shall be measured from the
date on which an Employee again performs an Hour of Service. The succeeding
computation periods shall begin with the first anniversary of the Employee's
employment commencement date. However, if one (1) Year of Service or less is
required as a condition of eligibility, then after the initial eligibility
computation period, the eligibility computation period shall shift to the
current Plan Year which includes the anniversary of the date on which the
Employee first performed an Hour of Service. An Employee who is credited with
1,000 Hours of Service in both the initial eligibility computation period and
the first Plan Year which commences prior to the first anniversary of the
Employee's initial eligibility computation period will be credited with two
Years of Service for purposes of eligibility to participate.
For vesting purposes, and all other purposes not specifically
addressed in this Section, the computation period shall be the Plan Year,
including periods prior to the Effective Date of the Plan unless specifically
excluded pursuant to the Adoption Agreement.
Years of Service and breaks in service will be measured on
the same computation period.
Years of Service with any predecessor Employer which
maintained this Plan shall be recognized. Years of Service with any other
predecessor Employer shall be recognized as specified in the Adoption
Agreement.
Years of Service with any Affiliated Employer shall be
recognized.
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the
special vesting requirements of Code Section 416(b) pursuant to Section 6.4 of
the Plan and the special minimum allocation requirements of Code Section 416(c)
pursuant to Section 4.4(i) of the Plan.
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<PAGE> 17
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan
Year beginning after December 31, 1983, in which, as of the
Determination Date, (l) the Present Value of Accrued Benefits
of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation
Group, exceeds sixty percent (60%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an
Aggregation Group.
If any Participant is a Non-Key Employee for any
Plan Year, but such Participant was a Key Employee for any
prior Plan Year, such Participant's Present Value of Accrued
Benefit and/or Aggregate Account balance shall not be taken
into account for purposes of determining whether this Plan is
a Top Heavy or Super Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy
Group). In addition, if a Participant or Former Participant
has not performed any services for any Employer maintaining
the Plan at any time during the five year period ending on
the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into
account for the purposes of determining whether this Plan is
a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for
any Plan Year beginning after December 31, 1983, in which, as
of the Determination Date, (l) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of an
Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits and the Aggregate Accounts
of all Key and Non-Key Employees under this Plan and all
plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate
Account as of the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of
the most recent valuation occurring within a twelve
(l2) month period ending on the Determination Date;
(2) for a Profit Sharing Plan, an adjustment for any
contributions due as of the Determination Date. Such
adjustment shall be the amount of any contributions
actually made after the valuation date but before
the Determination Date, except for the first Plan
Year when such adjustment shall also reflect the
amount of any contributions made after the
Determination Date that are allocated as of a date
in that first Plan Year;
(3) for a Money Purchase Plan or Target Benefit
Plan, contributions that would be allocated as of a
date not later than the Determination Date, even
though those amounts are not yet made or required to
be made.
(4) any Plan distributions made within the Plan Year
that includes the Determination Date or within the
four (4) preceding Plan Years. However, in the case
of distributions made after the valuation date and
prior to the Determination Date, such distributions
are not included as distributions for top heavy
purposes to the extent that such distributions are
already included in the Participant's Aggregate
Account balance as of the valuation date. In the
case of a distribution of an annuity Contract, the
amount of such distribution is deemed to be the
current actuarial value of the Contract, determined
on the date of the distribution. Notwithstanding
anything herein to the contrary, all distributions,
including distributions made prior to January 1,
1984, and distributions under a terminated plan
which if it had not been terminated would have been
required to be included in an Aggregation Group,
will be counted. Further, distributions from the
Plan (including the cash value of life insurance
policies) of a Participant's account balance because
of death shall be treated as a distribution for the
purpose of this paragraph.
(5) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified voluntary employee
contributions shall not be considered to be a part
of the Participant's Aggregate Account balance.
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<PAGE> 18
(6) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both
initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by
another employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall always
consider such rollovers or plan-to-plan transfers as
a distribution for the purposes of this Section. If
this Plan is the plan accepting such rollovers or
plan-to-plan transfers, it shall not consider such
rollovers or plan-to-plan transfers accepted after
December 3l, 1983 as part of the Participant's
Aggregate Account balance. However, rollovers or
plan-to-plan transfers accepted prior to January l,
1984 shall be considered as part of the
Participant's Aggregate Account balance.
(7) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by
the Employee or made to a plan maintained by the
same employer), if this Plan provides the rollover
or plan-to-plan transfer, it shall not be counted as
a distribution for purposes of this Section. If this
Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such
rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance,
irrespective of the date on which such rollover or
plan-to-plan transfer is accepted.
(8) For the purposes of determining whether two
employers are to be treated as the same employer in
2.2(c)(6) and 2.2(c)(7) above, all employers
aggregated under Code Section 414(b), (c), (m) and
(o) are treated as the same employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each qualified
plan of the Employer, including any Simplified
Employee Pension Plan, in which a Key Employee is a
participant in the Plan Year containing the
Determination Date or any of the four preceding Plan
Years, and each other qualified plan of the Employer
which enables any qualified plan in which a Key
Employee participates to meet the requirements of
Code Sections 40l(a)(4,) or 4l0, will be required to
be aggregated. Such group shall be known as a
Required Aggregation Group.
In the case of a Required Aggregation Group, each
plan in the group will be considered a Top Heavy
Plan if the Required Aggregation Group is a Top
Heavy Group. No plan in the Required Aggregation
Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan of the Employer,
including any simplified Employee Pension Plan, not
required to be included in the Required Aggregation
Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of
Code Sections 40l(a)(4) and 410. Such group shall be
known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only
a plan that is part of the Required Aggregation
Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is a Top Heavy Group.
No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive
Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar
year shall be aggregated in order to determine
whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any
terminated plan of the Employer if it was maintained
within the last five (5) years ending on the
Determination Date.
(e) "Determination Date" means (a) the last day of
the preceding Plan Year, or (b) in the case of the first Plan
Year, the last day of such Plan Year.
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<PAGE> 19
(f) Present Value of Accrued Benefit: In the case of
a defined benefit plan, the Present Value of Accrued Benefit
for a Participant other than a Key Employee shall be as
determined using the single accrual method used for all plans
of the Employer and Affiliated Employers, or if no such
single method exists, using a method which results in
benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 4l1(b)(1)(C). The
determination of the Present Value of Accrued Benefit shall
be determined as of the most recent valuation date that falls
within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416
and the regulations thereunder for the first and second plan
years of a defined benefit plan.
However, any such determination must include present
value of accrued benefit attributable to any Plan
distributions referred to in Section 2.2(c)(4) above, any
Employee contributions referred to in Section 2.2(c)(5) above
or any related or unrelated rollovers referred to in Sections
2.2(c)(6) and 2.2(c)(7) above.
(g) "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, the sum of:
(l) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included
in the group, and
(2) the Aggregate Accounts of Key Employees under
all defined contribution plans included in the
group, exceeds sixty percent (60%) of a similar sum
determined for all Participants.
(h) The Administrator shall determine whether this
Plan is a Top Heavy Plan on the Anniversary Date specified in
the Adoption Agreement. Such determination of the top heavy
ratio shall be in accordance with Code Section 416 and the
Regulations thereunder.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and
remove the Trustee and the Administrator from time to time as
it deems necessary for the proper administration of the Plan
to assure that the Plan is being operated for the exclusive
benefit of the Participants and their Beneficiaries in
accordance with the terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy
and method", i.e., it shall determine whether the Plan has a
short run need for liquidity (e.g., to pay benefits) or
whether liquidity is a long run goal and investment growth
(and stability of same) is a more current need, or shall
appoint a qualified person to do so. The Employer or its
delegate shall communicate such needs and goals to the
Trustee, who shall coordinate such Plan needs with its
investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive
to the Trustee as to investment of the Trust Funds. Such
"funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I
of the Act.
(c) The Employer may, in its discretion, appoint an
Investment Manager to manage all or a designated portion of
the assets of the Plan. In such event, the Trustee shall
follow the directive of the Investment Manager in investing
the assets of the Plan managed by the Investment Manager.
(d) The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties
have been delegated or allocated by it under the provisions
of this Plan or pursuant to procedures established hereunder.
This requirement may be satisfied by formal periodic review
by the Employer or by a qualified person specifically
designated by the Employer, through day-to-day conduct and
evaluation, or through other appropriate ways.
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<PAGE> 20
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator. Any person so appointed shall signify
his acceptance by filing written acceptance with the Employer. An Administrator
may resign by delivering his written resignation to the Employer or be removed
by the Employer by delivery of written notice of removal, to take effect at a
date specified therein, or upon delivery to the Administrator if no date is
specified.
The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to this
position. If the Employer does not appoint an Administrator, the Employer will
function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Administrator
shall administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Any such determination by the Administrator shall be conclusive
and binding upon all persons. The Administrator may establish procedures,
correct any defect, supply any information, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or advisable to
carry out the purpose of the Plan; provided, however, that any procedure,
discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied and
shall be consistent with the intent that the Plan shall continue to be deemed a
qualified plan under the terms of Code Section 401(a), and shall comply with
the terms of the Act and all regulations issued pursuant thereto. The
Administrator shall have all powers necessary or appropriate to accomplish his
duties under this Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited to, the
following:
(a) the discretion to determine all questions
relating to the eligibility of Employees to participate or
remain a Participant hereunder and to received benefits under
the Plan;
(b) to compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which any
Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with respect
to all nondiscretionary or otherwise directed disbursements
from the Trust Fund;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to
make and publish such rules for regulation of the Plan as are
consistent with the terms hereof;
(f) to determine the size and type of any Contract
to be purchased from any Insurer, and to designate the
Insurer from which such Contract shall be purchased;
(g) to compute and certify to the Employer and to
the Trustee from time to time the sums of money necessary or
desirable to be contributed to the Trust Fund;
14
<PAGE> 21
(h) to consult with the Employer and the Trustee
regarding the short and long-term liquidity needs of the Plan
in order that the Trustee can exercise any investment
discretion in a manner designed to accomplish specific
objectives;
(i) to prepare and distribute to Employees a
procedure for notifying Participants and Beneficiaries of
their rights to elect Joint and Survivor annuities and
Pre-Retirement Survivor annuities if required by the Code and
regulations thereunder;
(j) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken
and shall keep all other books of account, records, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and other persons as
the Administrator or the Trustee deems necessary or desirable in connection
with the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the
Employer shall supply full and timely information to the Administrator on all
matters relating to the Compensation of all Participants, their Hours of
Service, their Years of Service, their retirement, death, disability, or
termination of employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee's duties under the Plan. The
Administrator may rely upon such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Administrator, including, but not limited
to, fees of accountants, counsel, and other specialists and their agents, and
other costs of administering the Plan. Until paid, the expenses shall
constitute a liability of the Trust Fund. However, the Employer may reimburse
the Trust Fund for any administration expense incurred. Any administration
expense paid to the Trust Fund as a reimbursement shall not be considered an
Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing
with the Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the application is filed. In the
event the claim is denied, the reasons for the denial shall be specifically set
forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an explanation of the Plan's
claims review procedure.
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<PAGE> 22
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to
Section 2.12 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator a written request
for a hearing. Such request, together with a written statement of the reasons
why the claimant believes his claim should be allowed, shall be filed with the
Administrator no later than 60 days after receipt of the written notification
provided for in Section 2.12. The Administrator shall then conduct a hearing
within the next 60 days, at which the claimant may be represented by an
attorney or any other representative of his choosing and expense and at which
the claimant shall have an opportunity to submit written and oral evidence and
arguments in support of his claim. At the hearing (or prior thereto upon 5
business days written notice to the Administrator) the claimant or his
representative shall have an opportunity to review all documents in the
possession of the Administrator which are pertinent to the claim at issue and
its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate
hereunder on the date he has satisfied the requirements specified in the
Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has become eligible to be a
Participant shall become a Participant effective as of the day specified in the
Adoption Agreement.
In the event an Employee who has satisfied the Plan's
eligibility requirements and would otherwise have become a Participant shall go
from a classification of a noneligible Employee to an Eligible Employee, such
Employee shall become a Participant as of the date he becomes an Eligible
Employee.
In the event an Employee who has satisfied the Plan's
eligibility requirements and would otherwise become a Participant shall go from
a classification of an Eligible Employee to a noneligible Employee and becomes
ineligible to participate and has not incurred a 1-Year Break in Service, such
Employee shall participate in the Plan as of the date he returns to an eligible
class of Employees. If such Employee does incur a 1-Year Break in Service,
eligibility will be determined under the Break in Service rules of the Plan.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. Such
determination shall be subject to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in his interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his Participant's Account
shall be forfeited or distributed pursuant to the terms of the Plan.
Additionally, his interest in the Plan shall continue to share in the earnings
of the Trust Fund.
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<PAGE> 23
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as
a Participant in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by his Employer for the year has been
made, the Employer shall make a subsequent contribution, if necessary after the
application of Section 4.4(e), so that the omitted Employee receives a total
amount which the said Employee would have received had he not been omitted.
Such contribution shall be made regardless of whether or not it is deductible
in whole or in part in any taxable year under applicable provisions of the
Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been
included as a Participant in the Plan is erroneously included and discovery of
such incorrect inclusion is not made until after a contribution for the year
has been made, the Employer shall not be entitled to recover the contribution
made with respect to the ineligible person regardless of whether or not a
deduction is allowable with respect to such contribution. In such event, the
amount contributed with respect to the ineligible person shall constitute a
Forfeiture for the Plan Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan. The election not to
participate must be communicated to the Employer, in writing, at least thirty
(30) days before the beginning of a Plan Year. For standardized Plans, a
Participant or an Eligible Employee may not elect not to participate.
Furthermore, the foregoing election not to participate shall not be available
with respect to partners in a partnership.
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
(a) 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
entities, this Plan and the plan established for other trades
or businesses must, when looked at as a single Plan, satisfy
Code Sections 401(a) and (d) for the Employees of this and
all other entities.
(b) If the Plan provides contributions or benefits
for one or more Owner-Employees who control one or more other
trades or businesses, the employees of the other trades or
businesses must be included in a plan which satisfies Code
Sections 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-Employees
under this Plan.
(c) 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 benefits or contributions of the employees
under the plan of the trades or businesses which are
controlled must be as favorable as those provided for him
under the most favorable plan of the trade or business which
is not controlled.
(d) For purposes of the preceding paragraphs, an
Owner-Employee, or two or more Owner-Employees, will be
considered to control an entity if the Owner-Employee, or two
or more Owner-Employees together:
(l) own the entire interest in an unincorporated
entity, or
(2) in the case of a partnership, own more than 50
percent of either the capital interest or the
profits interest in the partnership.
(e) For purposes of the preceding sentence, an
Owner-Employee, or two or more Owner-Employees shall be
treated as owning any interest in a partnership which is
owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding
sentence.
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<PAGE> 24
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan -
(l) The Employer shall make contributions over such
period of years as the Employer may determine on the
following basis. On behalf of each Participant
eligible to share in allocations, for each year of
his participation in this Plan, the Employer shall
contribute the amount specified in the Adoption
Agreement. All contributions by the Employer shall
be made in cash or in such property as is acceptable
to the Trustee. The Employer shall be required to
obtain a waiver from the Internal Revenue Service
for any Plan Year in which it is unable to make the
full required contribution to the Plan. In the event
a waiver is obtained, this Plan shall be deemed to
be an individually designed plan.
(2) For any Plan Year beginning prior to January l,
1990, and if elected in the non-standardized
Adoption Agreement for any Plan Year beginning on or
after January l, 1990, the Employer shall not
contribute on behalf of a Participant who performs
less than a Year of Service during any Plan Year,
unless there is a Short Plan Year or a contribution
is required pursuant to 4.4(h).
(3) Notwithstanding the foregoing, the employer's
contribution for any Fiscal Year shall not exceed
the maximum amount allowable as a deduction to the
Employer under the provisions of Code Section 404.
However, to the extent necessary to provide the top
heavy minimum allocations, the Employer shall make a
contribution even if it exceeds the amount which is
deductible under Code Section 404.
(b) For a Profit Sharing Plan -
(1) For each Plan Year, the Employer shall
contribute to the Plan such amount as specified by
the Employer in the Adoption Agreement.
Notwithstanding the foregoing, however, the
Employer's contribution for any Fiscal Year shall
not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of
Code Section 404. All contributions by the Employer
shall be made in cash or in such property as is
acceptable to the Trustee.
(2) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the
Employer shall make a contribution even if it
exceeds current or accumulated Net Profit or the
amount which is deductible under Code Section 404.
4.2 EMPLOYER'S CONTRIBUTION FOR TARGET BENEFIT
(a) The Employer shall contribute on behalf of each
Participant eligible to share in allocations, for each year
of his participation in the Plan, the Level Funding Amount
which is projected to be necessary to fund his Target
Benefit.
(b) For any Plan Year beginning prior to January l,
1990, and if elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or after January l,
1990, a Participant who performs less than a Year of Service
during any Plan Year shall not share in the Employer's
contribution for that year, unless there is a Short Plan Year
or a contribution is required pursuant to Section 4.4(h).
(c) Notwithstanding the foregoing, the Employer's
contribution for any Fiscal Year shall not exceed the maximum
amount allowable as a deduction to the Employer under the
provisions of Code Section 404. However, to the extent
necessary to provide the top heavy minimum allocations, the
Employer shall make a contribution even if it exceeds the
amount which is deductible under Code Section 404.
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<PAGE> 25
(d) The Target Benefit at Normal Retirement Date for
each Participant shall be equal to the formula selected in
the Adoption Agreement and shall be assumed to be a monthly
pension commencing on the Participant's Retirement Date and
continuing for the period specified in the Adoption Agreement
as the Normal Retirement Benefit. The form of distribution of
such benefit, however, shall be determined pursuant to the
provisions of Section 6.5.
(e) A Participant's actual benefit at any point in
time shall be the value of the Participant's Combined
Account.
(f) The Level Funding Amount for each Participant as
of his effective date of participation in the Plan shall be
determined using either the factor Table or the actuarial
assumptions as specified in the Adoption Agreement.
If this Plan is amended to change the
Target Benefit or the factor Table or if this Plan is an
amendment and restatement of a predecessor plan, the Level
Funding Amount shall be adjusted to reflect prior Plan
contributions.
(g) The Level Funding Amount shall remain constant
unless there has been a change in a Participant's Target
Benefit. In the event of such a change, the Level Funding
Amount shall be increased or decreased by an amount equal to
the level amount necessary to fund the increase or decrease
in the Target Benefit from the Anniversary Date, when the
increase or decrease becomes effective, to the Normal
Retirement Date.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time prescribed by law,
including extensions of time, for the filing of the employer's federal income
tax return for the Fiscal Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain
an account in the name of each Participant to which the
Administrator shall credit as of each Anniversary Date, or
other valuation date, all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the Administrator
with all information required by the Administrator to make a
proper allocation of the Employer's contributions for each
Plan Year. Within a reasonable period of time after the date
of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) For a Money Purchase Plan:
(i) The Employer's Contribution shall be
allocated to each Participant's Combined
Account in the manner set forth in Section
4.1 herein and as specified in Section E2
of the Adoption Agreement.
(2) For an Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be
allocated to each Participant's Account,
except as provided in Section 4.4(f), in a
dollar amount equal to 5.7% of the sum of
each Participant's total Compensation plus
Excess Compensation. If the Employer does
not contribute such amount for all
Participants, each Participant will be
allocated a share of the contribution in
the same proportion that his total
Compensation plus his total Excess
Compensation for the Plan Year bears to the
total Compensation plus the total Excess
Compensation of all Participants for that
year.
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<PAGE> 26
Regardless of the preceding, 4.3% shall be
substituted for 5.7% above if Excess Compensation is
based on more than 20% and less than or equal to 80%
of the Taxable Wage Base. If Excess Compensation is
based on less than 100% and more than 80% of the
Taxable Wage Base, then 5.4% shall be substituted
for 5.7% above.
(ii) The balance of the Employer's
contribution over the amount allocated
above, if any, shall be allocated to each
Participant's Combined Account in the same
proportion that his total Compensation for
the Year bears to the total Compensation of
all Participants for such year.
(iii) Except, however, for any Plan Year
beginning prior to January l, 1990, and if
elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or
after January l, 1990, a Participant who
performs less than a Year of Service during
any Plan Year shall not share in the
Employer's contribution for that year,
unless there is a Short Plan Year or a
contribution is required pursuant to
Section 4.4(h).
(3) For a Non-Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be
allocated to each Participant's Account in
the same proportion that each such
Participant's Compensation for the year
bears to the total Compensation of all
Participants for such year.
(ii) Except, however, for any Plan Year
beginning prior to January 1, 1990, and if
elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or
after January 1, 1990, a Participant who
performs less than a Year of Service during
any Plan Year shall not share in the
Employer's contribution for that year,
unless there is a Short Plan Year or a
contribution is required pursuant to
Section 4.4(h).
(4) For a Target Benefit Plan:
(i) The Employer's contribution shall be
allocated to each Participant's Combined
Account in the manner set forth in Section
4.1.
(c) As of each Anniversary Date or other valuation
date, before allocation of Employer contributions and
Forfeitures, any earnings or losses (net appreciation or net
depreciation) of the Trust Fund shall be allocated in the
same proportion that each Participant's and Former
Participant's nonsegregated accounts bear to the total of all
Participants' and Former Participants' nonsegregated accounts
as of such date. If any nonsegregated account of a
Participant has been distributed prior to the Anniversary
Date or other valuation date subsequent to a Participant's
termination of employment, no earnings or losses shall be
credited to such account.
Notwithstanding the above, with respect to
contributions made to Plan after the previous Anniversary
Date or allocation date, the method specified in the Adoption
Agreement shall be used.
(d) Participants' Accounts shall be debited for any
insurance or annuity premiums paid, if any, and credited with
any dividends or interest received on insurance contracts.
(e) As of each Anniversary Date any amounts which
became Forfeitures since the last Anniversary Date shall
first be made available to reinstate previously forfeited
account balances of Former Participants, if any, in
accordance with Section 6.4(g)(2) or be used to satisfy any
contribution that may be required pursuant to Section 3.5
and/or 6.9. The remaining Forfeitures, if any, shall be
treated in accordance with the Adoption Agreement. Provided,
however, that in the event the allocation of Forfeitures
provided herein shall cause the "annual addition" (as defined
in Section 4.5) to any Participant's Account to exceed the
amount allowable by the Code, the excess shall be reallocated
in accordance with Section 4.6. Except, however, for any Plan
Year beginning prior to January l, 1990, and if elected in
the non-standardized Adoption Agreement for any Plan Year
beginning on or after January 1, 1990, a Participant
20
<PAGE> 27
who performs less than a Year of Service during any Plan Year
shall not share in the Plan Forfeitures for that year, unless
there is a Short Plan Year or a contribution required
pursuant to Section 4.4(h).
(f) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan
Year, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each
Non-Key Employee shall be equal to at least three percent
(3%) of such Non-Key Employee's "415 Compensation" (reduced
by contributions and forfeitures, if any, allocated to each
Non-Key Employee in any defined contribution plan included
with this plan in a Required Aggregation Group). However, if
(i) the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each Key
Employee for such Top Heavy Plan Year is less than three
percent (3%) of each Key Employee's "415 Compensation" and
(ii) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet
the requirements of Code Section 40l(a)(4) or 410, the sum of
the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall
be equal to the largest percentage allocated to the
Participant's Combined Account of any Key Employee.
However, for each Non-Key Employee who is a
Participant in a paired Profit Sharing Plan or 401(k) Profit
Sharing Plan and a paired Money Purchase Plan or Target
Benefit Plan, the minimum 3% allocation specified above shall
be provided in the Money Purchase Plan or Target Benefit
Plan.
If this is an integrated Plan, then for any
Top Heavy Plan Year the Employer's contribution shall be
allocated as follows:
(1) An amount equal to 3% multiplied by each
Participant's Compensation for the Plan Year shall
be allocated to each Participant's Account. If the
Employer does not contribute such amount for all
Participants, the amount shall be allocated to each
Participant's Account in the same proportion that
his total Compensation for the Plan Year bears to
the total Compensation of all Participants for such
year.
(2) The balance of the employer's contribution over
the amount allocated under subparagraph (l) hereof
shall be allocated to each Participant's Account in
a dollar amount equal to 3% multiplied by a
Participant's Excess Compensation. If the Employer
does not contribute such amount for all
Participants, each Participant will be allocated a
share of the contribution in the same proportion
that his Excess Compensation bears to the total
Excess Compensation of all Participants for that
year.
(3) The balance of the Employer's contribution over
the amount allocated under subparagraph (2) hereof
shall be allocated to each Participant's Account in
a dollar amount equal to 2.7% multiplied by the sum
of each Participant's total Compensation plus Excess
Compensation. If the Employer does not contribute
such amount for all Participants, each Participant
will be allocated a share of the contribution in the
same proportion that his total Compensation plus his
total Excess Compensation for the Plan Year bears to
the total Compensation plus the total Excess
Compensation of all Participants for that year.
Regardless of the preceding, 1.3% shall be
substituted for 2.7% above if Excess Compensation is
based on more than 20% and less than or equal to 80%
of the Taxable Wage Base. If Excess Compensation is
based on less than 100% and more than 80% of the
Taxable Wage Base, then 2.4% shall be substituted
for 2.7% above.
(4) The balance of the Employer's contributions over
the amount allocated above, if any, shall be
allocated to each Participant's Account in the same
proportion that his total Compensation for the Plan
Year bears to the total Compensation of all
Participants for such year.
For each Non-Key Employee who is a
Participant in this Plan and another non-paired defined
contribution plan maintained by the Employer, the minimum 3%
allocation specified above shall be provided as specified in
F3 of the Adoption Agreement.
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<PAGE> 28
(g) For purposes of the minimum allocations Set
forth above, the percentage allocated to the Participant's
Combined Account of any Key Employee shall be equal to the
ratio of the sum of the Employer's contributions and
Forfeitures allocated on behalf of such Key Employee divided
by the "415 Compensation" for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum
allocations set forth in this Section shall be allocated to
the Participant's Combined Account of all Non-Key Employees
who are Participants and who are employed by the Employer on
the last day of the Plan Year, including Non-Key Employees
who have (l) failed to complete a Year of Service; or (2)
declined to make mandatory contributions (if required) or, in
the case of a cash or deferred arrangement, elective
contributions to the Plan.
(i) Notwithstanding anything herein to the contrary,
in any Plan Year in which the Employer maintains both this
Plan and a defined benefit pension plan included in a
Required Aggregation Group which is top heavy, the Employer
shall not be required to provide a Non-Key Employee with both
the full separate minimum defined benefit plan benefit and
the full separate defined contribution plan allocations.
Therefore, if the Employer maintains both a Defined Benefit
and a Defined Contribution Plan that are a Top Heavy Group,
the top heavy minimum benefits shall be provided as follows:
(1) Applies if Flb (or Glb with respect to a Target
Benefit Plan) of the Adoption Agreement is Selected -
(i) The requirements of Section 2.1 shall
apply except that each Non-Key Employee who
is a Participant in the Profit Sharing
Plan, Target Benefit Plan or Money Purchase
Plan and who is also a Participant in the
Defined Benefit Plan shall receive a
minimum allocation of five percent (5%) of
such Participant's "415 Compensation" from
the applicable Defined Contribution Plan(s).
(ii) For each Non-Key Employee who is a
Participant only in the Defined Benefit
Plan the Employer will provide a minimum
non-integrated benefit equal to 2% of his
highest five consecutive year average "415
Compensation" for each Year of Service
while a Participant in the Plan, in which
the Plan is top heavy, not to exceed ten.
(iii) For each Non-Key Employee who is a
Participant only in this Defined
Contribution Plan, the Employer shall
provide a contribution equal to 3% of his
415 Compensation".
(2) Applies if Flc (or Glc with respect to a Target
Benefit Plan) of the Adoption Agreement is Selected -
(i) The minimum allocation specified in
Section 4.4(i)(l)(i) shall be 7-1/2% if the
Employer elects in the Adoption Agreement
for years in which the Plan is Top Heavy,
but not Super Top Heavy.
(ii) The minimum benefit specified in
Section 4.4(i)(l)(ii) shall be 3% if the
Employer elects in the Adoption Agreement
for years in which the Plan is Top Heavy,
but not Super Top Heavy.
(iii) The minimum allocation specified in
Section 4.4(i)(l)(iii) shall be 4% if the
Employer elects in the Adoption Agreement
for years in which the Plan is Top Heavy,
but not Super Top Heavy.
(j) For the purposes of this Section, "415
Compensation" shall be limited to $200,000 (unless adjusted
in such manner as permitted under Code Section 415(d)).
However, for Plan Years beginning prior to January l, 1989,
the $200,000 limit shall apply only for Top Heavy Plan Years
and shall not be adjusted.
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<PAGE> 29
(k) Notwithstanding anything herein to the contrary,
any Participant who terminated employment during the Plan
Year for reasons other than death, Total and Permanent
Disability, or retirement shall or shall not share in the
allocations of the Employer's Contributions and Forfeitures
as provided in the Adoption Agreement. Notwithstanding the
foregoing, for Plan Years beginning after 1989, if this is a
standardized Plan, any such terminated Participant shall
share in the allocations as provided in this Section provided
such Participant completed more than 500 Hours of Service.
(l) Notwithstanding anything herein to the contrary,
Participants terminating for reasons of death, Total and
Permanent Disability, or retirement shall share in the
allocations as provided in this Section regardless of whether
they completed a Year of Service during the Plan Year.
(m) If a Former Participant is reemployed after five
(5) consecutive 1-Year Breaks in Service, then separate
accounts shall be maintained as follows:
(l) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his employer derived
account balance in the Plan attributable to
post-break service.
(n) Notwithstanding any election in the Adoption
Agreement to the contrary, if this is a non-standardized Plan
that would otherwise fail to meet the requirements of Code
Sections 40l(a)(26), 4l0(b)(l), or 410(b)(2)(A)(i) and the
Regulations thereunder because Employer Contributions have
not been allocated to a sufficient number or percentage of
Participants for a Plan Year, then the following rules shall
apply:
(l) The group of Participants eligible to share in
the Employer's contribution and Forfeitures for the
Plan Year shall be expanded to include the minimum
number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable
test specified above. The specific participants who
shall become eligible under the terms of this
paragraph shall be those who are actively employed
on the last day of the Plan Year and, when compared
to similarly situated Participants, have completed
the greatest number of Hours of Service in the Plan
Year.
(2) If after application of paragraph (l) above, the
applicable test is still not satisfied, then the
group of Participants eligible to share in the
Employer's contribution and Forfeitures for the Plan
Year shall be further expanded to include the
minimum number of Participants who are not actively
employed on the last day of the Plan Year as are
necessary to satisfy the applicable test. The
specific Participants who shall become eligible to
share shall be those Participants, when compared to
similarly situated Participants, who have completed
the greatest number of Hours of Service in the Plan
Year before terminating employment.
Nothing in this Section shall permit the
reduction of a Participant's accrued benefit. Therefore any
amounts that have previously been allocated to Participants
may not be reallocated to satisfy these requirements. In such
event, the Employer shall make an additional contribution
equal to the amount such affected Participants would have
received had they been included in the allocations, even if
it exceeds the amount which would be deductible under Code
Section 404. Any adjustment to the allocations pursuant to
this paragraph shall be considered a retroactive amendment
adopted by the last day of the Plan Year.
4.5 MAXIMUM ANNUAL ADDITIONS
(a)(1) 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 Code Section 419(e)), maintained by the Employer,
or an individual medical account (as defined in Code Section
415(l)(2)) maintained by the Employer, which provides Annual
Additions, the amount of Annual Additions which may be
credited to the Participant's accounts for any Limitation
Year shall not exceed the lesser of the Maximum Permissible
Amount or any other limitation contained in this Plan. If the
Employer contribution that would otherwise be contributed or
allocated to the Participant's accounts would cause the
Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount contributed or
23
<PAGE> 30
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 such Limitation Year shall be
determined on the basis of the Participant's actual
compensation for such Limitation Year.
(4) If pursuant to Section 4.5(a)(2) or as a result
of the allocation of Forfeitures, there is an Excess
Amount, the excess will be disposed of as follows:
(i) Any nondeductible Voluntary Employee
Contributions, to the extent they would reduce
the Excess Amount, will be returned to the
Participant;
(ii) If, after the application of subparagraph
(i), an Excess Amount still exists, and the
Participant is covered by the Plan at the end
of the Limitation Year, the Excess Amount in
the Participant's 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;
(iv) 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 investment gains and losses. If a
suspense account is in existence at any time
during a particular limitation year, all amounts
in the suspense account must be allocated and
reallocated to participants' accounts before any
employer contributions or any employee
contributions may be made to the plan for that
limitation year. Excess amounts may not be
distributed to participants or former
participants.
(b)(l) This subsection applies if, in addition to
this Plan, the Participant is covered under another qualified
Regional Prototype defined contribution plan maintained by
the Employer, or a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer, or an individual
medical account (as defined in Code Section 415(l)(2))
maintained by the Employer, which provides Annual Additions,
during any Limitation Year. The Annual Additions which may be
credited to a Participant's accounts under this Plan for any
such Limitation Year shall not exceed the Maximum Permissible
Amount reduced, by the Annual Additions credited to a
Participant's accounts under the other plans and welfare
benefit funds for the same Limitation Year. If the Annual
Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by
the Employer are less than the Maximum Permissible Amount and
the Employer contribution that would otherwise be contributed
or allocated to the Participant's accounts under this Plan
would cause the Annual Additions for the Limitation Year to
exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such
plans and welfare benefit funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions
with respect to the Participant under such other defined
contribution plans and welfare benefit funds in the aggregate
are equal to or greater than the Maximum Permissible Amount,
no amount will be contributed or allocated to the
Participant's account under this Plan for the Limitation
Year.
24
<PAGE> 31
(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
4.5(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.
(4) If, pursuant to Section 4.5(b)(2) 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
welfare benefit fund or individual medical account
will be deemed to have been allocated first
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,
(i) the total Excess Amount allocated as of
such date, times
(ii) the ratio of (l) the Annual Additions
allocated to the Participant for the
Limitation Year as of such date under this
Plan to (2) the total Annual Additions
allocated to the Participant for the
Limitation Year as of such date under this
and all the other qualified defined
contribution plans.
(6) Any Excess Amount attributed to this Plan will
be disposed in the manner described in Section
4.5(a)(4).
(c) If the Participant is covered under another
qualified defined contribution plan maintained by the
Employer which is not a Regional Prototype Plan, Annual
Additions which may be credited to the Participant's account
under this Plan for any Limitation Year will be limited in
accordance with Section 4.5(b), unless the Employer provides
other limitations in the Adoption Agreement.
(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 account
under this Plan for any Limitation Year will be limited in
accordance with the Limitation on Allocations Section of the
Adoption Agreement.
(e) For purposes of applying the limitations of Code
Section 415, the transfer of funds from one qualified plan to
another is not an "annual addition". In addition, the
following are not Employee contributions for the purposes of
Section 4.5(f)(1)(2): (1) rollover contributions (as defined
in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and
408(d)(3)); (2) repayments of loans made to a Participant
from the Plan; (3) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(7)(B) (cash-outs);
(4) repayments of distributions received by an Employee
pursuant to Code Section 411(a)(3)(D) (mandatory
contributions); and (5) Employee contributions to a
simplified employee pension excludable from gross income
under Code Section 408(k)(6).
(f) For purposes of this Section, the following
terms shall be defined as follows:
(l) Annual Additions means the sum credited to a
Participant's accounts for any Limitation Year of
(1) Employer contributions, (2) effective with
respect to "limitation years" beginning after
December 31, 1986, Employee contributions, (3)
forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined
in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer
and (5) amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years
ending after such date, which are
25
<PAGE> 32
attributable to post-retirement medical benefits
allocated to the separate account of a key employee
(as defined in Code Section 4l9A(d)(3)) under a
welfare benefit fund (as defined in Code Section
419(e)) maintained by the Employer. Except, however,
the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not
apply to: (l) any contribution for medical benefits
(within the meaning of Code Section 4l9A(f)(2))
after separation from service which is otherwise
treated as an "annual addition", or (2) any amount
otherwise treated as an "annual addition" under Code
Section 415(l)(l). Notwithstanding the foregoing,
for "limitation years" beginning prior to January l,
1987, only that portion of Employee contributions
equal to the lesser of Employee contributions in
excess of six percent (6%) of "415 Compensation" or
one-half of Employee contributions shall be
considered an "annual addition".
For this purpose, any Excess Amount applied under
Sections 4.5(a)(4) and 4.5(b)(6) in the Limitation
Year to reduce Employer contributions shall be
considered Annual Additions for such Limitation
Year.
(2) Compensation means a Participant's earned
income, wages, salaries, fees for professional
services and other amounts received for personal
services actually rendered in the course of
employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid
salesmen, compensation for services on the basis of
a percentage of profits, commissions on insurance
premiums, tips, and bonuses) and excluding the
following:
(i) Employer contributions to a plan of
deferred compensation which are not
includible in the Employee's gross income
for the taxable year in which contributed,
or Employer contributions under a
simplified employee pension plan to the
extent such contributions are excludable
from the Employee's gross income, or any
distributions from a plan of deferred
compensation;
(ii) contributions made by the Employer to
a plan of deferred compensation to the
extent that all or a portion of such
contributions are recharacterized as a
voluntary Employee contribution;
(iii) amounts realized from the exercise of
a non-qualified stock option, or when
restricted stock (or property) held by an
Employee becomes freely transferable or is
no longer subject to a substantial risk of
forfeiture;
(iv) amounts realized from the sale,
exchange or other disposition of stock
acquired under a qualified stock option; and
(v) other amounts which received special
tax benefits, or contributions made by an
Employer (whether or not under a salary
reduction agreement) towards the purchase
of an annuity contract described in Code
Section 403(b) (whether or not the
contributions are excludable from the gross
income of the Employee).
For purposes of applying the limitations of this
Section 4.5, Compensation for any Limitation Year is
the Compensation actually paid or includible in
gross income during such year. Notwithstanding the
preceding sentence, Compensation for a Participant
in a profit-sharing plan who is permanently and
totally disabled (as defined in Code Section
22(e)(3)) is the Compensation such Participant would
have received for the Limitation Year if the
Participant had been paid at the rate of
Compensation paid immediately before becoming
permanently and totally disabled; such imputed
Compensation for the disabled Participant may be
taken into account only if the Participant is not a
Highly Compensated Employee and contributions made
on behalf of such Participant are nonforfeitable
when made.
(3) Defined Benefit Fraction means a fraction, the
numerator of which is the sum of the Participant's
Projected Annual Benefits under all the defined
benefit plans (whether or not terminated) maintained
by the Employer, and the denominator of which is the
lesser of 125 percent of the dollar limitation
determined for the Limitation Year under Code
Sections 415(b)
26
<PAGE> 33
and (d) or 140 percent of his Highest Average
Compensation including any adjustments under Code
Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first
Limitation Year beginning after December 3l, 1986,
in one or more defined benefit plans maintained by
the Employer which were in existence on May 6, 1986,
the denominator of this fraction will not be less
than 125 percent of the sum of the annual benefits
under such plans which the Participant had accrued
as of the end of the close of the last Limitation
Year beginning before January l, 1987, disregarding
any changes in the terms and conditions of the plan
after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and
in the aggregate satisfied the requirements of Code
Section 415 for all Limitation Years beginning
before January l, 1987.
Notwithstanding the foregoing, for any Top Heavy
Plan Year, 100 shall be substituted for 125 unless
the extra minimum allocation is being made pursuant
to the Employer's election in Fl of the Adoption
Agreement. However, for any Plan Year in which this
Plan is a Super Top Heavy Plan, 100 shall be
substituted for 125 in any event.
(4) Defined Contribution Dollar Limitation means
$30,000, or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Code Section
4l5(b)(l) as in effect for the Limitation Year.
(5) Defined Contribution Fraction means 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 voluntary employee
contributions to any defined benefit plans, whether
or not terminated, maintained by the Employer and
the annual additions attributable to all welfare
benefit funds, as defined in Code Section 419(e),
and individual medical accounts, as defined in Code
Section 415(l)(2), maintained by the Employer), and
the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior
Limitation Years of Service with the Employer
(regardless of whether a defined contribution plan
was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the
lesser of 125 percent of the Defined Contribution
Dollar Limitation or 35 percent of the Participant's
Compensation for such year. For Limitation Years
beginning prior to January l, 1987, the "annual
addition" shall not be recomputed to treat all
Employee contributions as an Annual Addition.
If the Employee was a Participant as of the end of
the first day of the first Limitation Year beginning
after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which
were in existence on May 5, 1986, the numerator of
this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would
otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product
of (l) 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 l,
1987, and disregarding any changes in the terms and
conditions of the plan made after May 5, 1986, but
using the Code Section 415 limitation applicable to
the first Limitation Year beginning on or after
January l, 1987.
Notwithstanding the foregoing, for any Top Heavy
Plan Year, 100 shall be substituted for 125 unless
the extra minimum allocation is being made pursuant
to the Employer's election in Fl of the Adoption
Agreement. However, for any Plan Year in which this
Plan is a Super Top Heavy Plan, 100 shall be
substituted for 125 in any event.
(6) Employer means the Employer that adopts this
Plan and all Affiliated Employers, except that for
purposes of this Section, Affiliated Employers shall
be determined pursuant to the modification made by
Code Section 415(h).
27
<PAGE> 34
(7) Excess Amount means the excess of the
Participant's Annual Additions for the Limitation
Year over the Maximum Permissible Amount.
(8) Highest Average Compensation means the average
Compensation for the three consecutive Years of
Service with the Employer that produces the highest
average. A Year of Service with the Employer is the
12 consecutive month period defined in Section El of
the Adoption Agreement which is used to determine
Compensation under the Plan.
(9) Limitation Year means the Compensation Year (a
12 consecutive month period) as 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) Maximum Permissible Amount means the maximum
Annual Addition that may be contributed or allocated
to a Participant's account under the plan for any
Limitation Year, which shall not exceed the lesser
of:
(i) the Defined Contribution Dollar
Limitation, or
(ii) 25 percent of the Participant's
Compensation for the Limitation Year. The
Compensation Limitation referred to in (ii)
shall not apply to any contribution for
medical benefits (within the meaning of
Code Sections 401(h) or 419A(f)(2)) which
is otherwise treated as an annual addition
under Code Sections 415(l)(1) or
419A(d)(2).
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a
different 12 consecutive month period, the Maximum
Permissible Amount will not exceed the Defined
Contribution Dollar Contribution multiplied by the
following fraction:
number of months in the short Limitation Year
---------------------------------------------
12
(11) Projected Annual Benefit means the annual
retirement benefit (adjusted to an actuarially
equivalent straight life annuity if such benefit is
expressed in a form other than a straight life
annuity or qualified Joint and Survivor Annuity) to
which the Participant would be entitled under the
terms of the plan assuming:
(12) the Participant will continue employment until
Normal Retirement Age (or current age, if later),
and
(13) 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.
(g) Regional Prototype Plan means a plan the form of
which has been the subject of a favorable notification letter
from the Internal Revenue Service.
(h) Notwithstanding anything contained in this
Section to the contrary, the limitations, adjustments and
other requirements prescribed in this Section shall at all
times comply with the provisions of Code Section 415 and the
regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.6 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If as a result of the allocation of Forfeitures,
a reasonable error in estimating a Participant's annual
Compensation, or other facts and circumstances to which
Regulation 1.415-6(b)(6)
28
<PAGE> 35
shall be applicable, the "annual additions" under this Plan
would cause the maximum provided in Section 4.5 to be
exceeded, the Administrator shall treat the excess in
accordance with Section 4.5(a)(4).
4.7 TRANSFERS FROM QUALIFIED PLANS
(a) If specified in the Adoption Agreement and with
the consent of the Administrator, amounts may be transferred
from other qualified plans, provided that the trust from
which such funds are transferred permits the transfer to be
made and the transfer will not jeopardize the tax exempt
status of the Plan or create adverse tax consequences for the
Employer. The amounts transferred shall be set up in a
separate account herein referred to as a "Participant's
Rollover Account". Such account shall be fully Vested at all
times and shall not be subject to forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account
shall be held by the Trustee pursuant to the provisions of
this Plan and may not be withdrawn by, or distributed to the
Participant, in whole or in part, except as provided in
Paragraphs (c) and (d) of this Section.
(c) Amounts attributable to elective contributions
(as defined in Regulation 1.401(k)-1(g)(4)), including
amounts treated as elective contributions, which are
transferred from another qualified plan in a plan-to-plan
transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-l(d).
(d) At Normal Retirement Date, or such other date
when the Participant or his Beneficiary shall be entitled to
receive benefits, the fair market value of the Participant's
Rollover Account shall be used to provide additional benefits
to the Participant or his Beneficiary. Any distributions of
amounts held in a Participant's Rollover Account shall be
made in a manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited to, all
notice and consent requirements of Code Sections 411(a)(11)
and 417 and the Regulations thereunder. Furthermore, such
amounts shall be considered as part of a Participant's
benefit in determining whether an involuntary cash-out of
benefits without Participant consent may be made.
(e) The Administrator may direct that employee
transfers made after a valuation date be segregated into a
separate account for each Participant until such time as the
allocations pursuant to this Plan have been made, at which
time they may remain segregated or be invested as part of the
general Trust Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term
"qualified plan" shall mean any tax qualified plan under Code
Section 401(a). The term "amounts transferred from other
qualified plans" shall mean: (i) amounts transferred to this
Plan directly from another qualified plan; (ii) lump-sum
distributions received by an Employee from another qualified
plan which are eligible for tax free rollover to a qualified
plan and which are transferred by the Employee to this Plan
within sixty (60) days following his receipt thereof; (iii)
amounts transferred to this Plan from a conduit individual
retirement account provided that the conduit individual
retirement account has no assets other than assets which (A)
were previously distributed to the Employee by another
qualified plan as a lump-sum distribution (B) were eligible
for tax-free rollover to a qualified plan and (C) were
deposited in such conduit individual retirement account
within sixty (60) days of receipt thereof and other than
earnings on said assets; and (iv) amounts distributed to the
Employee from a conduit individual retirement account meeting
the requirements of clause (iii) above, and transferred by
the Employee to this Plan within sixty (60) days of his
receipt thereof from such conduit individual retirement
account.
(g) Prior to accepting any transfers to which this
Section applies, the Administrator may require the Employee
to establish that the amounts to be transferred to this Plan
meet the requirements of this Section and may also require
the Employee to provide an opinion of counsel satisfactory to
the Employer that the amounts to be transferred meet the
requirements of this Section.
(h) Notwithstanding anything herein to the contrary,
a transfer directly to this Plan from another qualified plan
(or a transaction having the effect of such a transfer) shall
only be permitted if it will
29
<PAGE> 36
not result in the elimination or reduction of any "Section
4l1(d)(6) protected benefit" as described in Section 8.1.
4.8 VOLUNTARY CONTRIBUTIONS
(a) If this is an amendment to a Plan that had
previously allowed voluntary Employee contributions, then,
except as provided in 4.8(b) below, this Plan will not accept
voluntary Employee contributions for Plan years beginning
after the Plan Year in which this Plan is adopted by the
Employer.
(b) For 401(k) Plans, if elected in the Adoption
Agreements each Participant may, at the discretion of the
Administrator in a nondiscriminatory manner, elect to
voluntarily contribute a portion of his compensation earned
while a Participant under this Plan. Such contributions shall
be paid to the Trustee within a reasonable period of time but
in no event later than 90 days after the receipt of the
contribution.
(c) The balance in each Participant's Voluntary
Contribution Account shall be fully Vested at all times and
shall not be subject to Forfeiture for any reason.
(d) A Participant may elect to withdraw his
voluntary contributions from his Voluntary Contribution
Account and the actual earnings thereon in a manner which is
consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent
requirements of Code Sections l(a)(11) and 417 and the
regulations thereunder. If the Administrator maintains
sub-accounts with respect to voluntary contributions (and
earnings thereon) which were made on or before a specified
date, a Participant shall be permitted to designate which
sub-account shall be the source for his withdrawal. No
Forfeitures shall occur solely as a result of an employee's
withdrawal of Employee contributions.
In the event such a withdrawal is made, or
in the event a Participant has received a hardship
distribution pursuant to Regulation 1.401(k) -
1(d)(2)(iii)(B) from any plan maintained by the Employer,
then such Participant shall be barred from making any
voluntary contributions for a period of twelve (12) months
after receipt of the withdrawal or distribution.
(e) At Normal Retirement Date, or such other date
when the Participant or his Beneficiary shall be entitled to
receive benefits, the fair market value of the Voluntary
Contribution Account shall be used to provide additional
benefits to the Participant or his Beneficiary.
(f) The Administrator may direct that voluntary
contributions made after a valuation date be segregated into
a separate account until such time as the allocations
pursuant to this Plan have been made, at which time they may
remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
4.9 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all
Participants may direct the Trustee as to the investment of
all or a portion of any one or more of their individual
account balances. Participants may direct the Trustee in
writing to invest their account in specific assets as
permitted by the Administrator provided such investments are
in accordance with the Department of Labor regulations and
are permitted by the Plan. That portion of the account of any
Participant so directing will thereupon be considered a
Directed Investment Account.
(b) A separate Directed Investment Account shall be
established for each Participant who has directed an
investment. Transfers between the Participant's regular
account and their Directed Investment Account shall be
charged and credited as the case may be to each account. The
Directed Investment Account shall not share in Trust Fund
Earnings, but it shall be charged or credited as appropriate
with the net earnings, gains, losses and expenses as well as
any appreciation or depreciation in market value during each
Plan Year attributable to such account.
(c) The Administrator shall establish a procedure,
to be applied in a uniform and nondiscriminatory manner,
setting forth the permissible investment options under this
Section, how often
30
<PAGE> 37
changes between investments may be made, and any other
limitations that the Administrator shall impose on a
Participant's right to direct investments.
4.10 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that
previously permitted deductible voluntary contributions, then
each Participant who made a "Qualified Voluntary Employee
Contribution" within the meaning of Code Section 2l9(e)(2) as
it existed prior to the enactment of the Tax Reform Act of
1986, shall have his contribution held in a separate
Qualified Voluntary Employee Contribution Account which shall
be fully Vested at all times. Such contributions, however,
shall not be permitted if they are attributable to taxable
years beginning after December 31, 1986.
(b) A Participant may, upon written request
delivered to the Administrator, make withdrawals from his
Qualified Voluntary Employee Contribution Account. Any
distribution shall be made in a manner which is consistent
with and satisfies the provisions of Section 6.5, including,
but not limited to, all notice and consent requirements of
Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
(c) At Normal Retirement Date, or such other date
when the Participant or his Beneficiary shall be entitled to
receive benefits, the fair market value of the Qualified
Voluntary Employee Contribution Account shall be used to
provide additional benefits to the Participant or his
Beneficiary.
(d) Unless the Administrator directs Qualified
Voluntary Employee Contributions made pursuant to this
Section be segregated into a separate account for each
Participant, they shall be invested as part of the general
Trust Fund and share in earnings and losses.
4.11 ACTUAL CONTRIBUTION PERCENTAGE TESTS
In the event this Plan previously provided for voluntary or
mandatory Employee contributions, then, with respect to Plan Years beginning
after December 31, 1986, such contributions must satisfy the provisions of Code
Section 401(m) and the Regulations thereunder.
4.12 INTEGRATION IN MORE THAN ONE PLAN
If the Employer and/or an Affiliated Employer maintain
qualified retirement plans integrated with Social Security such that any
Participant in this Plan is covered under more than one of such plans, then
such plans will be considered to be one plan and will be considered to be
integrated if the extent of the integration of all such plans does not exceed
100%. For purposes of the preceding sentence, the extent of integration of a
plan is the ratio, expressed as a percentage, which the actual benefits,
benefit rate, offset rate, or employer contribution rate, whatever is
applicable, under the Plan bears to the limitation applicable to such Plan. If
the Employer maintains two or more standardized paired plans, only one plan may
be integrated with Social Security.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed necessary by the
Administrator, herein called "valuation date", to determine the net worth of
the assets comprising the Trust Fund as it exists on the "valuation date". In
determining such net worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the "valuation date" and shall
deduct all expenses for which the Trustee has not yet obtained reimbursement
from the Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in
the Trust Fund which are listed on a registered stock exchange, the
Administrator shall direct the Trustee to value the same at the prices they
were last traded on such
31
<PAGE> 38
exchange preceding the close of business on the "valuation date". If such
securities were not traded on the "valuation date", or if the exchange on which
they are traded was not open for business on the "valuation date", then the
securities shall be valued at the prices at which they were last traded prior
to the "valuation date". Any unlisted security held in the Trust Fund shall be
valued at its bid price next preceding the close of business on the "valuation
date", which bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of assets other than
securities for which trading or bid prices can be obtained, the Trustee may
appraise such assets itself, or in its discretion, employ one or more
appraisers for that purpose and rely on the values established by such
appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on or after his Normal Retirement
Date or Early Retirement Date. Upon such Normal Retirement Date or Early
Retirement Date, all amounts credited to such Participant's Combined Account
shall become distributable. However, a Participant may postpone the termination
of his employment with the Employer to a later date, in which event the
participation of such Participant in the Plan, including the right to receive
allocations pursuant to Section 4.4, shall continue until his Late Retirement
Date. Upon a Participant's Retirement Date, or as soon thereafter as is
practicable, the Administrator shall direct the distribution of all amounts
credited to such Participant's Combined Account in accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his
Retirement Date or other termination of his employment, all
amounts credited to such Participant's Combined Account shall
become fully Vested. The Administrator shall direct, in
accordance with the provisions of Sections 6.6 and 6.7, the
distribution of the deceased Participant's accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the
Administrator shall direct, in accordance with the provisions
of Sections 6.6 and 6.7, the distribution of any remaining
amounts credited to the accounts of such deceased Former
Participant to such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof
of death and such evidence of the right of any person to
receive payment of the value of the account of a deceased
Participant or Former Participant as the Administrator may
deem desirable. The Administrator's determination of death
and of the right of any person to receive payment shall be
conclusive.
(d) Unless otherwise elected in the manner
prescribed in Section 6.6, the Beneficiary of the
Pre-Retirement Survivor Annuity shall be the Participant's
spouse. Except, however, the Participant may designate a
Beneficiary other than his spouse for the Pre-Retirement
Survivor Annuity if:
(1) the Participant and his spouse have validly
waived the Pre-Retirement Survivor Annuity in the
manner prescribed in Section 6.6, and the spouse has
waived his or her right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and
there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides
otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a
Beneficiary shall be made on a form satisfactory to the
Administrator. A Participant may at any time revoke his
designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the
Administrator. However, the Participant's spouse must again
consent in writing to any change in Beneficiary unless the
original consent
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<PAGE> 39
acknowledged that the spouse had the right to limit consent
only to a specific Beneficiary and that the spouse
voluntarily elected to relinquish such right. The Participant
may, at any time, designate a Beneficiary for death benefits
payable under the Plan that are in excess of the
Pre-Retirement Survivor Annuity. In the event no valid
designation of Beneficiary exists at the time of the
Participant's death, the death benefit shall be payable to
his estate.
(e) If the Plan provides an insured death benefit
and a Participant dies before any insurance coverage to which
he is entitled under the Plan is effected, his death benefit
from such insurance coverage shall be limited to the standard
rated premium which was or should have been used for such
purpose.
(f) In the event of any conflict between the terms
of this Plan and the terms of any Contract issued hereunder,
the Plan provisions shall control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent
Disability prior to his Retirement Date or other termination of his employment,
all amounts credited to such Participant's Combined Account shall become fully
Vested. In the event of a Participant's Total and Permanent Disability, the
Administrator, in accordance with the provisions of Sections 6.5 and 6.7, shall
direct the distribution to such Participant of all amounts credited to such
Participant's Combined Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date, or other
valuation date, coinciding with or subsequent to the
termination of a Participant's employment for any reason
other than retirement, death, or Total and Permanent
Disability, the Administrator may direct that the amount of
the Vested portion of such Terminated Participant's Combined
Account be segregated and invested separately. In the event
the Vested portion of a Participant's Combined Account is not
segregated, the amount shall remain in a separate account for
the Terminated Participant and share in allocations pursuant
to Section 4.4 until such time as a distribution is made to
the Terminated Participant. The amount of the portion of the
Participant's Combined Account which is not Vested may be
credited to a separate account (which will always share in
gains and losses of the Trust Fund) and at such time as the
amount becomes a Forfeiture shall be treated in accordance
with the provisions of the Plan regarding Forfeitures.
Regardless of whether distributions in kind
are permitted, in the event that the amount of the Vested
portion of the Terminated Participant's Combined Account
equals or exceeds the fair market value of any insurance
Contracts, the Trustee, when so directed by the Administrator
and agreed to by the Terminated Participant, shall assign,
transfer, and set over to such Terminated Participant all
Contracts on his life in such form or with such endorsements,
so that the settlement options and. forms of payment are
consistent with the provisions of Section 6.5. In the event
that the Terminated Participant's Vested portion does not at
least equal the fair market value of the Contracts, if any,
the Terminated Participant may pay over to the Trustee the
sum needed to make the distribution equal to the value of the
Contracts being assigned or transferred, or the Trustee,
pursuant to the Participant's election, may borrow the cash
value of the Contracts from the Insurer so that the value of
the Contracts is equal to the Vested portion of the
Terminated Participant's Combined Account and then assign the
Contracts to the Terminated Participant.
Distribution of the funds due to a
Terminated Participant shall be made on the occurrence of an
event which would result in the distribution had the
Terminated Participant remained in the employ of the Employer
(upon the Participant's death, Total and Permanent
Disability, Early or Normal Retirement). However, at the
election of the Participant, the Administrator shall direct
that the entire Vested portion of the Terminated
Participant's Combined Account to be payable to such
Terminated Participant provided the conditions, if any, set
forth in the Adoption Agreement have been satisfied. Any
distribution under this paragraph shall be made in a manner
which is consistent with and satisfies the provisions of
Section 6.5, including but not limited to, all notice and
consent requirements of Code Sections 411(a)(1l) and 417 and
the Regulations thereunder.
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<PAGE> 40
Notwithstanding the above, if the value of
a Terminated Participant's Vested benefit derived from
Employer and Employee contributions does not exceed, and at
the time of any prior distribution, has never exceeded
$3,500, the Administrator shall direct that the entire Vested
benefit be paid to such Participant in a single lump-sum
without regard to the consent of the Participant or the
Participant's spouse. A Participant's Vested benefit shall
not include Qualified Voluntary Employee Contributions within
the meaning of Code Section 72(o)(5)(B) for Plan Years
beginning prior to January l, 1989.
(b) The Vested portion of any Participant's Account
shall be a percentage of such Participant's Account
determined on the basis of the Participant's number of Years
of Service according to the vesting schedule specified in the
Adoption Agreement.
(c) For any Top Heavy Plan Year, one of the minimum
top heavy vesting schedules as elected by the Employer in the
Adoption Agreement will automatically apply to the Plan. The
minimum top heavy vesting schedule applies to all benefits
within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including benefits
accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became top heavy. Further,
no decrease in a Participant's Vested percentage may occur in
the event the Plan's status as top heavy changes for any Plan
Year. However, this Section does not apply to the account
balances of any Employee who does not have an Hour of Service
after the Plan has initially become top heavy and the Vested
percentage of such Employee's Participant's Account shall be
determined without regard to this Section 6.4(c).
If in any subsequent Plan Year, the Plan
ceases to be a Top Heavy Plan, the Administrator shall
continue to use the vesting schedule in effect while the Plan
was a Top Heavy Plan for each Employee who had an Hour of
Service during a Plan Year when the Plan was Top Heavy.
(d) Notwithstanding the vesting schedule above, upon
the complete discontinuance of the Employer's contributions
to the Plan or upon any full or partial termination of the
Plan, all amounts credited to the account of any affected
Participant shall become 100% Vested and shall not thereafter
be subject to Forfeiture.
(e) If this is an amended or restated Plan, then
notwithstanding the vesting schedule specified in the
Adoption Agreement, the Vested percentage of a Participant's
Account shall not be less than the Vested percentage attained
as of the later of the effective date or adoption date of
this amendment and restatement. The computation of a
Participant's nonforfeitable percentage of his interest in
the Plan shall not be reduced as the result of any direct or
indirect amendment to this Article, or due to changes in the
Plan's status as a Top Heavy Plan.
(f) If the Plan's vesting schedule is amended, or if
the Plan is amended in any way that directly or indirectly
affects the computation of the Participant's nonforfeitable
percentage or if the Plan is deemed amended by an automatic
change to a top heavy vesting schedule, then each Participant
with at least 3 Years of Service as of the expiration date of
the election period may elect to have his nonforfeitable
percentage computed under the Plan without regard to such
amendment or change. Notwithstanding the foregoing, for Plan
Years beginning before January l, 1989, or with respect to
Employees who fail to complete at least one (1) Hour of
Service in a Plan Year beginning after December 3l, 1988,
five (5) shall be substituted for three (3) in the preceding
sentence. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence
on the adoption date of the amendment and shall end 60 days
after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice
of the amendment from the Employer or Administrator.
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<PAGE> 41
(g)(l) If any Former Participant shall be reemployed
by the Employer before a 1-Year Break in Service occurs, he
shall continue to participate in the Plan in the same manner
as if such termination had not occurred.
(2) If any Former Participant shall be reemployed by
the Employer before five (5) consecutive 1-Year Breaks in
Service, and such Former Participant had received a
distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated only
if he repays the full amount distributed to him before the
earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the
close of the first period of 5 consecutive 1-Year Breaks in
Service commencing after the distribution. If a distribution
occurs for any reason other than a separation from service,
the time for repayment may not end earlier than five (5)
years after the date of separation. In the event the Former
Participant does repay the full amount distributed to him,
the undistributed portion of the Participant's Account must
be restored in full, unadjusted by any gains or losses
occurring subsequent to the Anniversary Date or other
valuation date preceding his termination. If an employee
receives a distribution pursuant to this section and the
employee resumes employment covered under this plan, the
employee's employer-derived account balance will be restored
to the amount on the date of distribution if the employee
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 1-year breaks in service
following the date of the distribution. If a non-Vested
Former Participant was deemed to have received a distribution
and such Former Participant is reemployed by the Employer
before five (5) consecutive 1-Year Breaks in Service, then
such Participant will be deemed to have repaid the deemed
distribution as of the date of reemployment.
(3) If any Former Participant is reemployed after a
1-Year Break in Service has occurred, Years of Service shall
include Years of Service prior to his 1-Year Break in Service
subject to the following rules:
(i) Any Former Participant who under the
Plan does not have a nonforfeitable right
to any interest in the Plan resulting from
Employer contributions shall lose credits
if his consecutive 1-Year Breaks in Service
equal or exceed the greater of (A) five (5)
or (B) the aggregate number of his
pre-break Years of Service;
(ii) After five (5) consecutive 1-Year
Breaks in Service, a Former Participant's
Vested Account balance attributable to
pre-break service shall not be increased as
a result of post-break service;
(iii) A Former Participant who is
reemployed and who has not had his Years of
Service before a 1-Year Break in Service
disregarded pursuant to (i) above, shall
participate in the Plan as of his date of
reemployment;
(iv) If a Former Participant completes a
Year of Service (a 1-Year Break in Service
previously occurred, but employment had not
terminated), he shall participate in the
Plan retroactively from the first day of
the Plan Year during which he completes one
(1) Year of Service.
(h) In determining Years of Service for purposes of
vesting under the Plan, Years of Service shall be excluded as
specified in the Adoption Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a)(1) Unless otherwise elected as provided below, a
Participant who is married on the "annuity starting date" and
who does not die before the "annuity starting date" shall
receive the value of all of his benefits in the form of a
Joint and Survivor Annuity. The Joint and Survivor Annuity is
an annuity that commences immediately and shall be equal in
value to a single life annuity. Such joint and survivor
benefits following the Participant's death shall continue to
the spouse during the spouse's lifetime at a rate equal to
50% of the rate at which such benefits were payable to the
Participant. This Joint and Survivor
35
<PAGE> 42
Annuity shall be considered the designated qualified Joint
and Survivor Annuity and automatic form of payment for the
purposes of this Plan. However, the Participant may elect to
receive a smaller annuity benefit with continuation of
payments to the spouse at a rate of seventy-five percent
(75%) or one hundred percent (100%) of the rate payable to a
Participant during his lifetime which alternative Joint and
Survivor Annuity shall be equal in value to the automatic
Joint and 50% Survivor Annuity. An unmarried Participant
shall receive the value of his benefit in the form of a life
annuity. Such unmarried Participant, however, may elect in
writing to waive the life annuity. The election must comply
with the provisions of this Section as if it were an election
to waive the Joint and Survivor Annuity by a married
Participant, but without the spousal consent requirement. The
Participant may elect to have any annuity provided for in
this Section distributed upon the attainment of the "earliest
retirement age" under the Plan. The "earliest retirement age"
is the earliest date on which, under the Plan, the
Participant could elect to receive retirement benefits.
(2) Any election to waive the Joint and Survivor
Annuity must be made by the Participant in writing
during the election period and be consented to by
the Participant's spouse. If the spouse is legally
incompetent to give consent, the spouse's legal
guardian, even if such guardian is the Participant,
may give consent. Such election shall designate a
Beneficiary (or a form of benefits) that may not be
changed without spousal consent (unless the consent
of the spouse expressly permits designations by the
Participant without the requirement of further
consent by the spouse). Such spouse's consent shall
be irrevocable and must acknowledge the effect of
such election and be witnessed by a Plan
representative or a notary public. Such consent
shall not be required if it is established to the
satisfaction of the Administrator that the required
consent cannot be obtained because there is no
spouse, the spouse cannot be located, or other
circumstances that may be prescribed by Regulations.
The election made by the Participant and consented
to by his spouse may be revoked by the Participant
in writing without the consent of the spouse at any
time during the election period. The number of
revocations shall not be limited. Any new election
must comply with the requirements of this paragraph.
A former spouse's waiver shall not be binding on a
new spouse.
(3) The election period to waive the Joint and
Survivor Annuity shall be the 90 day period ending
on the "annuity starting date."
(4) For purposes of this Section and Section 6.6,
the "annuity starting date" means the first day of
the first period for which an amount is paid as an
annuity, or, in the case of a benefit not payable in
the form of an annuity, the first day on which all
events have occurred which entitles the Participant
to such benefit.
(5) With regard to the election, the Administrator
shall provide to the Participant no less than 30
days and no more than 90 days before the "annuity
starting date" a written explanation of:
(i) the terms and conditions of the Joint
and Survivor Annuity, and
(ii) the Participant's right to make and
the effect of an election to waive the
Joint and Survivor Annuity, and
(iii) the right of the Participant's spouse
to consent to any election to waive the
Joint and Survivor Annuity, and
(iv) the right of the Participant to revoke
such election, and the effect of such
revocation.
(b) In the event a married Participant duly elects
pursuant to paragraph (a)(2) above not to receive his benefit
in the form of a Joint and Survivor Annuity, or if such
Participant is not married, in the form of a life annuity,
the Administrator, pursuant to the election of the
Participant, shall direct the distribution to a Participant
or his Beneficiary any amount to which he is entitled under
the Plan in one or more of the following methods which are
permitted pursuant to the Adoption Agreement:
(l) One lump-sum payment in cash or in property;
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<PAGE> 43
(2) Payments over a period certain in monthly,
quarterly, semiannual, or annual cash installments.
In order to provide such installment payments, the
Administrator may direct that the Participant's
interest in the Plan be segregated and invested
separately, and that the funds in the segregated
account be used for the payment of the installments.
The period over which such payment is to be made
shall not extend beyond the Participant's life
expectancy (or the life expectancy of the
Participant and his designated Beneficiary);
(3) Purchase of or providing an annuity. However,
such annuity may not be in any form that will
provide for payments over a period extending beyond
either the life of the Participant (or the lives of
the Participant and his designated Beneficiary) or
the life expectancy of the Participant (or the life
expectancy of the Participant and his designated
Beneficiary).
(c) The present value of a Participant's Joint and
Survivor Annuity derived from Employer and Employee
contributions may not be paid without his written consent if
the value exceeds, or has ever exceeded at the time of any
prior distribution, $3,500. Further, the spouse of a
Participant must consent in writing to any immediate
distribution. If the value of the Participant's benefit
derived from Employer and Employee contributions does not
exceed $3,500 and has never exceeded $3,500 at the time of
any prior distribution, the Administrator may immediately
distribute such benefit without such Participant's consent.
No distribution may be made under the preceding sentence
after the "annuity starting date" unless the Participant and
his spouse consent in writing to such distribution. Any
written consent required under this paragraph must be
obtained not more than 90 days before commencement of the
distribution and shall be made in a manner consistent with
Section 6.5(a) (2).
(d) Any distribution to a Participant who has a
benefit which exceeds, or has ever exceeded at the time of
any prior distribution, $3,500 shall require such
Participant's consent if such distribution commences prior to
the later of his Normal Retirement Age or age 62. With regard
to this required consent:
(l) No consent shall be valid unless the Participant
has received a general description of the material
features and an explanation of the relative values
of the optional forms of benefit available under the
Plan that would satisfy the notice requirements of
Code Section 417.
(2) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant
fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.
However, any election to defer the receipt of
benefits shall not apply with respect to
distributions which are required under Section
6.5(e).
(3) Notice of the rights specified under this
paragraph shall be provided no less than 30 days and
no more than 90 days before the "annuity starting
date".
(4) Written consent of the Participant to the
distribution must not be made before the Participant
receives the notice and must not be made more than
90 days before the "annuity starting date".
(5) No consent shall be valid if a significant
detriment is imposed under the Plan on any
Participant who does not consent to the
distribution.
(e) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits, made
on or after January l, 1985, whether under the Plan or
through the purchase of an annuity Contract, shall be made in
accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation Section
l.401(a)(9)-2), the provisions of which are incorporated
herein by reference:
(l) A Participant's benefits shall be distributed to
him not later than April 1st of the calendar year
following the later of (i) the calendar year in
which the Participant attains age 70 1/2 or (ii) the
calendar year in which the Participant retires,
provided, however, that this clause (ii) shall not
apply in the case of a Participant who is a "five
(5) percent owner" at any time during the five (5)
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<PAGE> 44
Plan Year period ending in the calendar year in
which he attains age 70 1/2 or, in the case of a
Participant who becomes a "five (5) percent owner"
during any subsequent Plan Year, clause (ii) shall
no longer apply and the required beginning date
shall be the April 1st of the calendar year
following the calendar year in which such subsequent
Plan Year ends. Alternatively, distributions to a
Participant must begin no later than the applicable
April 1st as determined under the preceding sentence
and must be made over the life of the Participant
(or the lives of the Participant and the
Participant's designated Beneficiary) or, if
benefits are paid in the form of a Joint and
Survivor Annuity, the life expectancy of the
Participant (or the life expectancies of the
Participant and his designated Beneficiary) in
accordance with Regulations. For Plan Years
beginning after December 31, 1988, clause (ii) above
shall not apply to any Participant unless the
Participant had attained age 70 1/2 before January
l, 1988 and was not a "five (5) percent owner" at
any time during the Plan Year ending with or within
the calendar year in which the Participant attained
age 66 1/2 or any subsequent Plan Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with
the incidental death benefit requirements of Code
Section 401(a)(9)(G) and the Regulations thereunder.
Additionally, for calendar years beginning before
1989, distributions may also be made under an
alternative method which provides that the then
present value of the payments to be made over the
period of the Participant's life expectancy exceeds
fifty percent (50%) of the then present value of the
total payments to be made to the Participant and his
Beneficiaries.
(f) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse (other
than in the case of a life annuity) shall be redetermined
annually in accordance with Regulations if permitted pursuant
to the Adoption Agreement. If the Participant or the
Participant's spouse may elect whether recalculations will be
made, then the election, once made, shall be irrevocable. If
no election is made by the time distributions must commence,
then the life expectancy of the Participant and the
Participant's spouse shall not be subject to recalculation.
Life expectancy and joint and last survivor expectancy shall
be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.
(g) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of
any annuity Contract purchased and distributed to a
Participant or spouse shall comply with all of the
requirements of this Plan.
(h) Subject to the spouse's right of consent
afforded under the Plan, the restrictions imposed by this
Section shall not apply if a Participant has, prior to
January l, 1984, made a written designation to have his
retirement benefit paid in an alternative method acceptable
under Code Section 401(a) as in effect prior to the enactment
of the Tax Equity and Fiscal Responsibility Act of 1982.
(i) If a distribution is made at a time when a
Participant who has not terminated employment is not fully
Vested in his Participant's Account and the Participant may
increase the Vested percentage in such account:
(1) A separate account shall 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 shall be equal to an
amount ("X") determined by the formula:
X equals P (AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the
Vested percentage at the relevant time, AB is the
account balance at the relevant time, D is the
amount of distribution, and R is the ratio of the
account balance at the relevant time to the account
balance after distribution.
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<PAGE> 45
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a
Vested Participant who dies before the annuity starting date
and who has a surviving spouse shall have the Pre-Retirement
Survivor Annuity paid to his surviving spouse. The
Participant's spouse may direct that payment of the
Pre-Retirement Survivor Annuity commence within a reasonable
period after the Participant's death. If the spouse does not
so direct, payment of such benefit will commence at the time
the Participant would have attained the later of his Normal
Retirement Age or age 62. However, the spouse may elect a
later commencement date. Any distribution to the
Participant's spouse shall be subject to the rules specified
in Section 6.6(h).
(b) Any election to waive the Pre-Retirement
Survivor Annuity before the Participant's death must be made
by the Participant in writing during the election period and
shall require the spouse's irrevocable consent in the same
manner provided for in Section 6.5(a)(2). Further, the
spouse's consent must acknowledge the specific nonspouse
Beneficiary. Notwithstanding the foregoing, the nonspouse
Beneficiary need not be acknowledged, provided the consent of
the spouse acknowledges that the spouse has the right to
limit consent only to a specific Beneficiary and that the
spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement
Survivor Annuity shall begin on the first day of the Plan
Year in which the Participant attains age 35 and end on the
date of the Participant's death. An earlier waiver (with
spousal consent) may be made provided a written explanation
of the Pre-Retirement Survivor Annuity is given to the
Participant and such waiver becomes invalid at the beginning
of the Plan Year in which the Participant turns age 35. In
the event a Vested Participant separates from service prior
to the beginning of the election period, the election period
shall begin on the date of such separation from service.
(d) With regard to the election, the Administrator
shall provide each Participant within the applicable period,
with respect to such Participant (and consistent with
Regulations), a written explanation of the Pre-Retirement
Survivor Annuity containing comparable information to that
required pursuant to Section 6.5(a)(5). For the purposes of
this paragraph, the term "applicable period" means, with
respect to a Participant, whichever of the following periods
ends last:
(l) The period beginning with the first day of the
Plan Year in which the Participant attains age 32
and ending with the close of the Plan Year preceding
the Plan Year in which the Participant attains age
35;
(2) A reasonable period after the individual becomes
a Participant. For this purpose, in the case of an
individual who becomes a Participant after age 32,
the explanation must be provided by the end of the
three-year period beginning with the first day of
the first Plan Year for which the individual is a
Participant;
(3) A reasonable period ending after the Plan no
longer fully subsidizes the cost of the
Pre-Retirement Survivor Annuity with respect to the
Participant;
(4) A reasonable period ending after Code Section
401(a)(11) applies to the Participant; or
(5) A reasonable period after separation from
service in the case of a Participant who separates
before attaining age 35. For this purpose, the
Administrator must provide the explanation beginning
one year before the separation from service and
ending one year after separation.
(e) The Pre-Retirement Survivor Annuity provided for
in this Section shall apply only to Participants who are
credited with an Hour of Service on or after August 23, 1984.
Former Participants who are not credited with an Hour of
Service on or after August 23, 1984 shall be provided with
rights to the Pre-Retirement Survivor Annuity in accordance
with Section 303(e)(2) of the Retirement Equity Act of 1984.
39
<PAGE> 46
(f) If the value of the Pre-Retirement Survivor
Annuity derived from Employer and Employee contributions does
not exceed $3,500 and has never exceeded $3,500 at the time
of any prior distribution, the Administrator shall direct the
immediate distribution of such amount to the Participant's
spouse. No distribution may be made under the preceding
sentence after the annuity starting date unless the spouse
consents in writing. If the value exceeds, or has ever
exceeded at the time of any prior distribution, $3,500, an
immediate distribution of the entire amount may be made to
the surviving spouse, provided such surviving spouse consents
in writing to such distribution. Any written consent required
under this paragraph must be obtained not more than 90 days
before commencement of the distribution and shall be made in
a manner consistent with Section 6.5(a)(2).
(g)(1) In the event there is an election to waive
the Pre-Retirement Survivor Annuity, and for death benefits
in excess of the Pre-Retirement Survivor Annuity, such death
benefits shall be paid to the Participant's Beneficiary by
either of the following methods, as elected by the
Participant (or if no election has been made prior to the
Participant's death, by his Beneficiary) subject to the rules
specified in Section 6.6(h) and the selections made in the
Adoption Agreement:
(i) One lump-sum payment in cash or in
property;
(ii) Payment in monthly, quarterly,
semi-annual, or annual cash installments
over a period to be determined by the
Participant or his Beneficiary. After
periodic installments commence, the
Beneficiary shall have the right to reduce
the period over which such periodic
installments shall be made, and the cash
amount of such periodic installments shall
be adjusted accordingly.
(iii) If death benefits in excess of the
Pre-Retirement Survivor Annuity are to be
paid to the surviving spouse, such benefits
may be paid pursuant to (i) or (ii) above,
or used to purchase an annuity so as to
increase the payments made pursuant to the
Pre-Retirement Survivor Annuity;
(2) In the event the death benefit payable pursuant
to Section 6.2 is payable in installments, then,
upon the death of the Participant, the Administrator
may direct that the death benefit be segregated and
invested separately, and that the funds accumulated
in the segregated account be used for the payment of
the installments.
(h) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant made
on or after January l, 1985, shall be made in accordance with
the following requirements and shall otherwise comply with
Code Section 40l(a)(9) and the Regulations thereunder.
(1) If it is determined, pursuant to Regulations,
that the distribution of a Participant's interest
has begun and the Participant dies before his entire
interest has been distributed to him, the remaining
portion of such interest shall be distributed at
least as rapidly as under the method of distribution
selected pursuant to Section 6.5 as of his date of
death.
(2) If a Participant dies before he has begun to
receive any distributions of his interest in the
Plan or before distributions are deemed to have
begun pursuant to Regulations, then his death
benefit shall be distributed to his Beneficiaries in
accordance with the following rules subject to the
selections made in the Adoption Agreement and
Subsections 6.6(h)(3) and 6.6(i) below:
(i) The entire death benefit shall be
distributed to the Participant's
Beneficiaries by December 31st of the
calendar year in which the fifth
anniversary of the Participant's death
occurs;
(ii) The 5-year distribution requirement of
(i) above shall not apply to any portion of
the deceased Participant's interest which
is payable to or for the benefit of a
designated Beneficiary. In such event, such
portion shall be distributed over the life
of such designated Beneficiary (or over a
period not extending beyond the life
expectancy of such designated Beneficiary)
provided such distribution begins not later
than December
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31st of the calendar year immediately
following the calendar year in which the
Participant died;
(iii) However, in the event the
Participant's spouse (determined as of the
date of the Participant's death) is his
designated Beneficiary, the provisions of
(ii) above shall apply except that the
requirement that distributions commence
within one year of the Participant's death
shall not apply. In lieu thereof,
distributions must commence on or before
the later of: (1) December 31st of the
calendar year immediately following the
calendar year in which the Participant
died; or (2) December 31st of the calendar
year in which the Participant would have
attained age 70 1/2. If the surviving
spouse dies before distributions to such
spouse begin, then the 5-year distribution
requirement of this Section shall apply as
if the spouse was the Participant.
(3) Notwithstanding subparagraph (2) above, or any
selections made in the Adoption Agreement, if a
Participant's death benefits are to be paid in the
form of a Pre-Retirement Survivor Annuity, then
distributions to the Participant's surviving spouse
must commence on or before the later of: (1)
December 31st of the calendar year immediately
following the calendar year in which the Participant
died; or (2) December 31st of the calendar year in
which the Participant would have attained age 70 1/2.
(i) For purposes of Section 6.6(h)(2), the election
by a designated Beneficiary to be excepted from the 5-year
distribution requirement (if permitted in the Adoption
Agreement) must be made no later than December 31st of the
calendar year following the calendar year of the
Participant's death. Except, however, with respect to a
designated Beneficiary who is the Participant's surviving
spouse, the election must be made by the earlier of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died or, if later, the
calendar year in which the Participant would have attained
age 70 1/2; or (2) December 31st of the calendar year which
contains the fifth anniversary of the date of the
Participant's death. An election by a designated Beneficiary
must be in writing and shall be irrevocable as of the last
day of the election period stated herein. In the absence of
an election by the Participant or a designated Beneficiary,
the 5-year distribution requirement shall apply.
(j) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse (other
than in the case of a life annuity) shall or shall not be
redetermined annually as provided in the Adoption Agreement
and in accordance with Regulations. If the Participant or the
Participant's spouse may elect, pursuant to the Adoption
Agreement, to have life expectancies recalculated, then the
election, once made shall be irrevocable. If no election is
made by the time distributions must commence, then the life
expectancy of the Participant and the Participant's spouse
shall not be subject to recalculation. Life expectancy and
joint and last survivor expectancy shall be computed using
the return multiples in Tables V and VI of Regulation Section
1.72-9.
(k) In the event that less than 100% of a
Participant's interest in the Plan is distributed to such
Participant's spouse, the portion of the distribution
attributable to the Participant's Voluntary Contribution
Account shall be in the same proportion that the
Participant's Voluntary Contribution Account bears to the
Participant's total interest in the Plan.
(l) Subject to the spouse's right of consent
afforded under the Plan, the restrictions imposed by this
Section shall not apply if a Participant has, prior to
January 1, 1984, made a written designation to have his death
benefits paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax
Equity and Fiscal Responsibility Act of 1982.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a
distribution is to be made, or a series of payments are to commence, on or as
of an Anniversary Date, the distribution or series of payments may be made or
begun on such date or as soon thereafter as is practicable, but in no event
later than 180 days after the Anniversary Date. However, unless a Former
Participant elects in writing to defer the receipt of benefits (such election
may not result in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of the Plan
Year in which
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the latest of the following events occurs: (a) the date on which the
Participant attains the earlier of age 65 or the Normal Retirement Age
specified herein; (b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or (c) the date the Participant terminates
his service with the Employer.
Notwithstanding the foregoing, the failure of a Participant
and, if applicable, the Participant's spouse, to consent to a distribution
pursuant to Section 6.5(d), shall be deemed to be an election to defer the
commencement of payment of any benefit sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then
the Administrator may direct that such distribution be paid to the legal
guardian, or if none, to a parent of such Beneficiary or a responsible adult
with whom the Beneficiary maintains his residence, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors Act, if such
is permitted by the laws of the state in which said Beneficiary resides. Such a
payment to the legal guardian, custodian or parent of a minor Beneficiary shall
fully discharge the Trustee, Employer, and Plan from further liability on
account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at the later of
the Participant's attainment of age 62 or his Normal Retirement Age, remain
unpaid solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a
Forfeiture pursuant to the Plan. In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such benefit shall be
restored, first from Forfeitures, if any, and then from an additional Employer
contribution if necessary.
6.10 PRE-RETIREMENT DISTRIBUTION
For Profit Sharing Plans and 401(k) Profit Sharing Plans, if
elected in the Adoption Agreement, at such time as a Participant shall have
attained the age specified in the Adoption Agreement, the Administrator, at the
election of the Participant, shall direct the distribution of up to the entire
amount then credited to the accounts maintained on behalf of the Participant.
However, no such distribution from the Participant's Account shall occur prior
to 100% Vesting. In the event that the Administrator makes such a distribution,
the Participant shall continue to be eligible to participate in the Plan on the
same basis as any other Employee. Any distribution made pursuant to this
Section shall be made in a manner consistent with Section 6.5, including, but
not limited to, all notice and consent requirements of Code Sections 411(a)(11)
and 417 and the Regulations thereunder.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans, if elected in the
Adoption Agreement, the Administrator, at the election of the
Participant, shall direct the distribution to any Participant
in any one Plan Year up to the lesser of 100% of his
Participant's Combined Account valued as of the last
Anniversary Date or other valuation date or the amount
necessary to satisfy the immediate and heavy financial need
of the Participant. Any distribution made pursuant to this
Section shall be deemed to be made as of the first day of the
Plan Year or, if later, the valuation date immediately
preceding the date of distribution, and the account from
which the distribution is made shall be reduced accordingly.
Withdrawal under this Section shall be authorized only if the
distribution is on account of:
(l) Medical expenses described in Code Section
213(d) incurred by the Participant, his spouse, or
any of his dependents (as defined in Code Section
152);
(2) The purchase (excluding mortgage payments) of a
principal residence for the Participant;
(3) Funeral expenses for a member of the
Participant's family;
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<PAGE> 49
(4) Payment of tuition for the next semester or
quarter of post-secondary education for the
Participant, his spouse, children or dependents; or
(5) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(b) No such distribution shall be made from the
Participant's Account until such Account has become fully
Vested.
(c) Any distribution made pursuant to this Section
shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code
Sections 411(a)(11) and 417 and the Regulations thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under the Plan. For
the purposes of this Section, "alternate payee, "qualified domestic relations
order" and "earliest retirement age" shall have the meaning set forth under
Code Section 414(p).
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
If elected in the Adoption Agreement, the following shall
apply to a Participant in a Profit Sharing Plan or 401(k) Profit Sharing Plan
and to any distribution, made on or after the first day of the first plan year
beginning after December 3l, 1988, from or under a separate account
attributable solely to accumulated deductible employee contributions, as
defined in Code Section 72(o)(5)(B), and maintained on behalf of a participant
in a money purchase pension plan, (including a target benefit plan):
(a) The Participant shall be prohibited from
electing benefits in the form of a life annuity;
(b) Upon the death of the Participant, the
Participant's entire Vested account balances will be paid to
his or her surviving spouse, or, if there is no surviving
spouse or the surviving spouse has already consented to waive
his or her benefit, in accordance with Section 6.6, to his
designated Beneficiary; and
(c) Except to the extent otherwise provided in this
Section and Section 6.5(h), the other provisions of Sections
6.2, 6.5 and 6.6 regarding spousal consent and the forms of
distributions shall be inoperative with respect to this Plan.
This Section shall not apply to any
Participant if it is determined that this Plan is a direct or
indirect transferee of a defined benefit plan or money
purchase plan, or a target benefit plan, stock bonus or
profit sharing plan which would otherwise provide for a life
annuity form of payment to the Participant.
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of
responsibilities:
(a) Consistent with the "funding policy and method"
determined by the Employer to invest, manage, and control the
Plan assets subject, however, to the direction of an
Investment Manager if the Employer should appoint such
manager as to all or a portion of the assets of the Plan;
(b) At the direction of the Administrator, to pay
benefits required under the Plan to be paid to Participants,
or, in the event of their death, to their Beneficiaries;
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<PAGE> 50
(c) To maintain records of receipts and
disbursements and furnish to the Employer and/or
Administrator for each Plan Year a written annual report per
Section 7.7; and
(d) If there shall be more than one Trustee, they
shall act by a majority of their number, but may authorize
one or more of them to sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust
Fund to keep the Trust Fund invested without distinction
between principal and income and in such securities or
property, real or personal, wherever situated, as the Trustee
shall deem advisable, including, but not limited to, stocks,
common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest
therein. The Trustee shall at all times in making investments
of the Trust Fund consider, among other factors, the short
and long-term financial needs of the Plan on the basis of
information furnished by the Employer. In making such
investments, the Trustee shall not be restricted to
securities or other property of the character expressly
authorized by the applicable law for trust investments;
however, the Trustee shall give due regard to any limitations
imposed by the Code or the Act so that at all times this Plan
may qualify as a qualified Plan and Trust.
(b) The Trustee may employ a bank or trust company
pursuant to the terms of its usual and customary bank agency
agreement, under which the duties of such bank or trust
company shall be of a custodial, clerical and record-keeping
nature.
(c) The Trustee may from time to time transfer to a
common, collective, or pooled trust fund maintained by any
corporate Trustee hereunder pursuant to Revenue Ruling
81-100, all or such part of the Trust Fund as the Trustee may
deem advisable, and such part or all of the Trust Fund so
transferred shall be subject to all the terms and provisions
of the common, collective, or pooled trust fund which
contemplate the commingling for investment purposes of such
trust assets with trust assets of other trusts. The Trustee
may withdraw from such common, collective, or pooled trust
fund all or such part of the Trust Fund as the Trustee may
deem advisable.
(d) The Trustee, at the direction of the
Administrator and pursuant to instructions from the
individual designated in the Adoption Agreement for such
purpose and subject to the conditions set forth in the
Adoption Agreement, shall ratably apply for, own, and pay all
premiums on Contracts on the lives of the Participants. Any
initial or additional Contract purchased on behalf of a
Participant shall have a face amount of not less than $1,000,
the amount set forth in the Adoption Agreement, or the
limitation of the Insurer, whichever is greater. If a life
insurance Contract is to be purchased for a Participant, the
aggregate premium for ordinary life insurance for each
Participant must be less than 50% of the aggregate
contributions and Forfeitures allocated to a Participant's
Combined Account. For purposes of this limitation, ordinary
life insurance Contracts are Contracts with both
non-decreasing death benefits and non-increasing premiums. If
term insurance or universal life insurance is purchased with
such contributions, the aggregate premium must be 25% or less
of the aggregate contributions and Forfeitures allocated to a
Participant's Combined Account. If both term insurance and
ordinary life insurance are purchased with such
contributions, the amount expended for term insurance plus
one-half of the premium for ordinary life insurance may not
in the aggregate exceed 25% of the aggregate Employer
contributions and forfeitures allocated to a Participant's
Combined Account. The Trustee must distribute the Contracts
to the Participant or convert the entire value of the
contracts at or before retirement into cash or provide for a
periodic income so that no portion of such value may be used
to continue life insurance protection beyond retirement.
Notwithstanding the above, the limitations imposed herein
with respect to the purchase of life insurance shall not
apply, in the case of a Profit Sharing Plan, to the portion
of a Participant's Account that has accumulated for at least
two (2) Plan Years.
Notwithstanding anything hereinabove to the
contrary, amounts credited to a Participant's Qualified
Voluntary Employee Contribution Account pursuant to Section
4.10, shall not be applied to the purchase of life insurance
contracts.
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<PAGE> 51
(e) The Trustee will be the owner of any life
insurance Contract purchased under the terms of this Plan.
The Contract must provide that the proceeds will be payable
to the Trustee; however, the Trustee shall be required to pay
over all proceeds of the Contract to the Participant's
designated Beneficiary in accordance with the distribution
provisions of Article VI. A Participant's spouse will be the
designated Beneficiary pursuant to Section 6.2, unless a
qualified election has been made in accordance with Sections
6.5 and 6.6 of the Plan, if applicable. Under no
circumstances shall the Trust retain any part of the
proceeds. However, the Trustee shall not pay the proceeds in
a method that would violate the requirements of the
Retirement Equity Act, as stated in Article VI of the Plan,
or Code Section 401(a)(9) and the Regulations thereunder.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other provisions of
this Plan, shall have the following powers and authorities to be exercised in
the Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or
other property and to retain the same. In conjunction with
the purchase of securities, margin accounts may be opened and
maintained;
(b) To sell, exchange, convey, transfer, grant
options to purchase, or otherwise dispose of any securities
or other property held by the Trustee, by private contract or
at public auction. No person dealing with the Trustee shall
be bound to see to the application of the purchase money or
to inquire into the validity, expediency, or propriety of any
such sale or other disposition, with or without
advertisement;
(c) To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of
attorney with or without power of substitution; to exercise
any conversion privileges, subscription rights or other
options, and to make any payments incidental thereto; to
oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting
corporate securities, and to delegate discretionary powers,
and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities, or other
property;
(d) To cause any securities or other property to be
registered in the Trustee's own name or in the name of one or
more of the Trustee's nominees, and to hold any investments
in bearer form, but the books and records of the Trustee
shall at all times show that all such investments are part of
the Trust Fund;
(e) To borrow or raise money for the purposes of the
Plan in such amount, and upon such germs and conditions, as
the Trustee shall deem advisable; and for any sum so
borrowed, to issue a promissory note as Trustee, and to
secure the repayment thereof by pledging all, or any part, of
the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or
to inquire into the validity, expediency, or propriety of any
borrowing;
(f) To keep such portion of the Trust Fund in cash
or cash balances as the Trustee may, from time to time, deem
to be in the best interests of the Plan, without liability
for interest thereon;
(g) To accept and retain for such time as it may
deem advisable any securities or other property received or
acquired by it as Trustee hereunder, whether or not such
securities or other property would normally be purchased as
investments hereunder;
(h) 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;
(i) 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;
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(j) To employ suitable agents and counsel and to pay
their reasonable expenses and compensation, and such agent or
counsel may or may not be agent or counsel for the Employer;
(k) To apply for and procure from the Insurer as an
investment of the Trust Fund such annuity, or other Contracts
(on the life of any Participant) as the Administrator shall
deem proper; to exercise, at any time or from time to time,
whatever rights and privileges may be granted under such
annuity, or other Contracts; to collect, receive, and settle
for the proceeds of all such annuity, or other Contracts as
and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or
savings accounts bearing a reasonable rate of interest in the
Trustee's bank;
(m) To invest in Treasury Bills and other forms of
United States government obligations;
(n) To sell, purchase and acquire put or call
options if the options are traded on and purchased through a
national securities exchange registered under the Securities
Exchange Act of 1934, as amended, or, if the options are not
traded on a national securities exchange, are guaranteed by a
member firm of the New York Stock Exchange;
(o) To deposit monies in federally insured savings
accounts or certificates of deposit in banks or savings and
loan associations;
(p) To pool all or any of the Trust Fund, from time
to time, with assets belonging to any other qualified
employee pension benefit trust created by the Employer or any
Affiliated Employer, and to commingle such assets and make
joint or common investments and carry joint accounts on
behalf of this Plan and such other trust or trusts,
allocating undivided shares or interests in such investments
or accounts or any pooled assets of the two or more trusts in
accordance with their respective interests;
(q) To do all such acts and exercise all such rights
and privileges, although not specifically mentioned herein,
as the Trustee may deem necessary to carry out the purposes
of the Plan.
(r) Directed Investment Account. The powers granted
to the Trustee shall be exercised in the sole fiduciary
discretion of the Trustee. However, if elected in the
Adoption Agreement, each Participant may direct the Trustee
to separate and keep separate all or a portion of his
interest in the Plan; and further each Participant is
authorized and empowered, in his sole and absolute
discretion, to give directions to the Trustee in such form as
the Trustee may require concerning the investment of the
Participant's Directed Investment Account, which directions
must be followed by the Trustee subject, however, to
restrictions on payment of life insurance premiums. Neither
the Trustee nor any other persons including the Administrator
or otherwise shall be under any duty to question any such
direction of the Participant or to review any securities or
other property, real or personal, or to make any suggestions
to the Participant in connection therewith, and the Trustee
shall comply as promptly as practicable with directions given
by the Participant hereunder. Any such direction may be of a
continuing nature or otherwise and may be revoked by the
Participant at any time in such form as the Trustee may
require. The Trustee may refuse to comply with any direction
from the Participant in the event the Trustee, in its sole
and absolute discretion, deems such directions improper by
virtue of applicable law, and in such event, the Trustee
shall not be responsible or liable for any loss or expense
which may result. Any costs and expenses related to
compliance with the Participant's directions shall be borne
by the Participant's Directed Investment Account.
Notwithstanding anything hereinabove to the
contrary, the Trustee shall not, at any time after December
31, 1981, invest any portion of a Directed Investment Account
in "collectibles" within the meaning of that term as employed
in Code Section 408(m).
7.4 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the
Trustee (or, if loans are treated as Directed Investment
pursuant to the Adoption Agreement, the Administrator) may,
in the Trustee's (or, if applicable, the Administrator's)
sole discretion, make loans to Participants or Beneficiaries
under the following
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<PAGE> 53
circumstances: (l) loans shall be made available to all
Participants and Beneficiaries on a reasonably equivalent
basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount
made available to other Participants; (3) loans shall bear a
reasonable rate of interest; (4) loans shall be adequately
secured; and (5) shall provide for periodic repayment over a
reasonable period of time.
(b) Loans shall not be made to any
Shareholder-Employee or Owner-Employee unless an exemption
for such loan is obtained pursuant to Act Section 408 and
further provided that such loan would not be subject to tax
pursuant to Code Section 4975.
(c) Loans shall not be granted to any Participant
that provide for a repayment period extending beyond such
Participant's Normal Retirement Date.
(d) Loans made pursuant to this Section (when added
to the outstanding balance of all other loans made by the
Plan to the Participant) shall be limited to the lesser of:
(l) $50,000 reduced by the excess (if any) of the
highest outstanding balance of loans from the Plan
to the Participant during the one year period ending
on the day before the date on which such loan is
made, over the outstanding balance of loans from the
Plan to the Participant on the date on which such
loan was made, or
(2) the greater of (A) one-half (1/2) of the present
value of the non-forfeitable accrued benefit of the
Employee under the Plan, or (B), if permitted
pursuant to the Adoption Agreement, $10,000.
For purposes of this limit, all plans of
the Employer shall be considered one plan. Additionally, with
respect to any loan made prior to January l, 1987, the
$50,000 limit specified in (l) above shall be unreduced.
(e) No Participant loan shall take into account the
present value of such Participant's Qualified Voluntary
Employee Contribution Account.
(f) Loans shall provide for level amortization with
payments to be made not less frequently than quarterly over a
period not to exceed five (5) years. However, loans used to
acquire any dwelling unit which, within a reasonable time, is
to be used (determined at the time the loan is made) as a
principal residence of the Participant shall provide for
periodic repayment over a reasonable period of time that may
exceed five (5) years. Notwithstanding the foregoing, loans
made prior to January l, 1987 which are used to acquire,
construct, reconstruct or substantially rehabilitate any
dwelling unit which, within a reasonable period of time is to
be used (determined at the time the loan is made) as a
principal residence of the Participant or a member of his
family (within the meaning of Code Section 267(c)(4)) may
provide for periodic repayment over a reasonable period of
time that may exceed five (5) years. Additionally, loans made
prior to January l, 1987, may provide for periodic payments
which are made less frequently than quarterly and which do
not necessarily result in level amortization.
(g) An assignment or pledge of any portion of a
Participant's interest in the Plan and a loan, pledge, or
assignment with respect to any insurance Contract purchased
under the Plan, shall be treated as a loan under this
Section.
(h) Any loan made pursuant to this Section after
August l8, 1985 where the Vested interest of the Participant
is used to secure such loan shall require the written consent
of the Participant's spouse in a manner consistent with
Section 6.5(a) provided the spousal consent requirements of
such Section apply to the Plan. Such written consent must be
obtained within the 90-day period prior to the date the loan
is made. Any security interest held by the Plan by reason of
an outstanding loan to the Participant shall be taken into
account in determining the amount of the death benefit or
Pre-Retirement Survivor Annuity. However, no spousal consent
shall be required under this paragraph if the total accrued
benefit subject to the security is not in excess of $3,500.
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<PAGE> 54
(i) With regard to any loans granted or renewed on
or after the last day of the first Plan Year beginning after
December 31, 1988, a Participant loan program shall be
established which must include, but need not be limited to,
the following:
(1) the identity of the person or positions
authorized to administer the Participant loan
program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or
denied;
(4) limitations, if any, on the types and amounts of
loans offered, including what constitutes a hardship
or financial need if selected in the Adoption
Agreement;
(5) the procedure under the program for determining
a reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the steps
that will be taken to preserve plan assets.
Such Participant loan program shall be
contained in a separate written document which, when properly
executed, is hereby incorporated by reference and made a part
of this plan. Furthermore, such Participant loan program may
be modified or amended in writing from time to time without
the necessity of amending this Section of the Plan.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall,
from time to time, in accordance with the terms of the Plan, make payments out
of the Trust Fund. The Trustee shall not be responsible in any way for the
application of such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set
forth in the Trustee's fee schedule (if the Trustee has such a schedule) or as
agreed upon in writing by the Employer and the Trustee. An individual serving
as Trustee who already receives full-time pay from the Employer shall not
receive compensation from this Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from
the Trust Fund unless paid or advanced by the Employer. All taxes of any kind
and all kinds whatsoever that may be levied or assessed under existing or
future laws upon, or in respect of, the Trust Fund or the income thereof, shall
be paid from the Trust Fund.
7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer's contribution for each Plan Year,
the Trustee, or its agent, shall furnish to the Employer and Administrator a
written statement of account with respect to the Plan Year for which such
contribution was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund
upon sales or other disposition of the assets;
(c) the increase, or decrease, in the value of the
Trust Fund;
(d) all payments and distributions made from the
Trust Fund; and
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(e) such further information as the Trustee and/or
Administrator deems appropriate. The Employer, forthwith upon
its receipt of each such statement of account, shall
acknowledge receipt thereof in writing and advise the Trustee
and/or Administrator of its approval or disapproval thereof.
Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof
shall be deemed an approval thereof. The approval by the
Employer of any statement of account shall be binding as to
all matters embraced therein as between the Employer and the
Trustee to the same extent as if the account of the Trustee
had been settled by judgment or decree in an action for a
judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were
parties; provided, however, that nothing herein contained
shall deprive the Trustee of its right to have its accounts
judicially settled if the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for any
Plan Year, the Administrator shall direct the Trustee to
engage on behalf of all Participants an independent qualified
public accountant for that purpose. Such accountant shall,
after an audit of the books and records of the Plan in
accordance with generally accepted auditing standards, within
a reasonable period after the close of the Plan Year, furnish
to the Administrator and the Trustee a report of his audit
setting forth his opinion as to whether any statements,
schedules or lists, that are required by Act Section 103 or
the Secretary of Labor to be filed with the Plan's annual
report, are presented fairly in conformity with generally
accepted accounting principles applied consistently.
(b) All auditing and accounting fees shall be an
expense of and may, at the election of the Administrator, be
paid from the Trust Fund.
(c) If some or all of the information necessary to
enable the Administrator to comply with Act Section 103 is
maintained by a bank, insurance company, or similar
institution, regulated and supervised and subject to periodic
examination by a state or federal agency, it shall transmit
and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one
hundred twenty (120) days after the end of the Plan Year or
such other date as may be prescribed under regulations of the
Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering
to the Employer, at least thirty (30) days before its
effective date, a written notice of his resignation.
(b) The Employer may remove the Trustee by mailing
by registered or certified mail, addressed to such Trustee at
his last known address, at least thirty (30) days before its
effective date, a written notice of his removal.
(c) Upon the death, resignation, incapacity, or
removal of any Trustee, a successor may be appointed by the
Employer; and such successor, upon accepting such appointment
in writing and delivering same to the Employer, shall,
without further act, become vested with all the estate,
rights, powers, discretions, and duties of his predecessor
with like respect as if he were originally named as a Trustee
herein. Until such a Successor is appointed, the remaining
Trustee or Trustees shall have full authority to act under
the terms of the Plan.
(d) The Employer may designate one or more
successors prior to the death, resignation, incapacity, or
removal of a Trustee. In the event a Successor is so
designated by the Employer and accepts such designation, the
Successor shall, without further act, become vested with all
the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally
named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve
as such, he shall furnish to the Employer and Administrator a
written statement of account with respect to the portion of
the Plan Year during which he served as Trustee. This
statement shall be either (i) included as part of the annual
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statement of account for the Plan Year required under Section
7.7 or (ii) set forth in a special statement. Any such
special statement of account should be rendered to the
Employer no later than the due date of the annual statement
of account for the Plan Year. The procedures set forth in
Section 7.7 for the approval by the Employer of annual
statements of account shall apply to any special statement of
account rendered hereunder and approval by the Employer of
any such special statement in the manner provided in Section
7.7 shall have the same effect upon the statement as the
Employer's approval of an annual statement of account. No
successor to the Trustee shall have any duty or
responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account
required by Section 7.7 and this subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan,
the Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of such Participant in his account to another trust forming
part of a pension, profit sharing, or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
7.11 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and save harmless the
Trustee against any and all claims, losses, damages, expenses and liabilities
the Trustee may incur in the exercise and performance of the Trustee's powers
and duties hereunder, unless the same are determined to be due to gross
negligence or willful misconduct.
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold
"qualifying Employer securities" and "qualifying employer real property," as
those terms are defined in the Act. However, no more than 100%, in the case of
a profit Sharing Plan or 401(k) Plan or 10%, in the case of a Money Purchase
Plan or Target Benefit Plan of the fair market value of all the assets in the
Trust Fund may be invested in "qualifying Employer securities" and "qualifying
Employer real property".
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to
amend this Plan subject to the limitations of this Section.
However, any amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may only be
made with the Trustee's and Administrator's written consent.
Any such amendment shall become effective as provided therein
upon its execution. The Trustee shall not be required to
execute any such amendment unless the amendment affects the
duties of the Trustee hereunder.
(b) The Employer may (l) change the choice of
options in the Adoption Agreement, (2) add overriding
language in the Adoption Agreement when such language is
necessary to satisfy Code Sections 415 or 416 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 an individually designed plan. An
Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under Code
Section 412(d), will no longer participate in this Regional
Prototype Plan and will be considered to have an individually
designed plan.
(c) The Employer expressly delegates authority to
the sponsoring organization of this Plan, the right to amend
this Plan by submitting a copy of the amendment to each
Employer who has adopted this Plan after first having
received a ruling or favorable determination from the
Internal Revenue Service that the Plan as amended qualifies
under Code Section 401(a) and the Act.
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(d) No amendment to the Plan shall be effective if
it authorizes or permits any part of the Trust Fund (other
than such part as is required to pay taxes and administration
expenses) to be used for or diverted to any purpose other
than for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the
amount credited to the account of any Participant; or causes
or permits any portion of the Trust Fund to revert to or
become property of the Employer.
(e) Except as permitted by Regulations (including
Regulation 1.411(d)-4), no Plan amendment or transaction
having the effect of a Plan amendment (such as a merger, plan
transfer or similar transaction) shall be effective if it
eliminates or reduces any "Section 411(d)(6) protected
benefit" or adds or modifies conditions relating to "Section
411(d)(6) protected benefits" the result of which is a
further restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued as of
the later of the adoption date or effective date of the
amendment. "Section 4l1(d)(6) protected benefits" are
benefits described in Code Section 41l(d)(6)(A), early
retirement benefits and retirement-type subsidies, and
optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon any
full or partial termination all amounts credited to the
affected Participants' Combined Accounts shall become 100%
Vested and shall not thereafter be subject to forfeiture, and
all unallocated amounts shall be allocated to the accounts of
all Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the
Employer shall direct the distribution of the assets to
Participants in a manner which is consistent with and
satisfies the provisions of Section 6.5. Distributions to a
Participant shall be made in cash (or in property if
permitted in the Adoption Agreement) or through the purchase
of irrevocable nontransferable deferred commitments from the
Insurer. Except as permitted by Regulations, the termination
of the Plan shall not result in the reduction of "Section
411(d)(6) protected benefits" as described in Section 8.1.
8.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation and such merger or consolidation does not otherwise result in the
elimination or reduction of any "Section 411(d)(6) protected benefits" as
described in Section 8.1(e).
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer
hereunder by executing the Adoption Agreement in form
satisfactory to the Trustee, and it shall provide such
additional information as the Trustee may require. The
consent of the Trustee to act as such shall be signified by
its execution of the Adoption Agreement.
(b) Except as otherwise provided in this Plan, the
affiliation of the Employer and the participation of its
Participants shall be separate and apart from that of any
other employer and its participants hereunder.
9.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract
between the Employer and any Participant or to be a consideration or an
inducement for the employment of any Participant or Employee. Nothing contained
in this Plan shall be
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deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect
which such discharge shall have upon him as a Participant of this Plan.
9.3 ALIENATION
(a) Subject to the exceptions provided below, no
benefit which shall be payable to any person (including a
Participant or his Beneficiary) shall be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such
benefit shall in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements, or torts of any
such person, nor shall it be subject to attachment or legal
process for or against such person, and the same shall not be
recognized except to such extent as may be required by law.
(b) This provision shall not apply to the extent a
Participant or Beneficiary is indebted to the Plan, for any
reason, under any provision of this Plan. At the time a
distribution is to be made to or for a Participants or
Beneficiary's benefit, such proportion of the amount to be
distributed as shall equal such indebtedness shall be paid to
the Plan, to apply against or discharge such indebtedness.
Prior to making a payment, however, the Participant or
Beneficiary must be given written notice by the Administrator
that such indebtedness is to be so paid in whole or part from
his Participant's Combined Account. If the Participant or
Beneficiary does not agree that the indebtedness is a valid
claim against his Vested Participant's Combined Account, he
shall be entitled to a review of the validity of the claim in
accordance with procedures provided in Sections 2.12 and
2.13.
(c) This provision shall not apply to a "qualified
domestic relations order" defined in Code Section 414(p), and
those other domestic relations orders permitted to be so
treated by the Administrator under the provisions of the
Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified
status of domestic relations orders and to administer
distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order",
a former spouse of a Participant shall be treated as the
spouse or surviving spouse for all purposes under the Plan.
9.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according
to the Act and the laws of the State or Commonwealth in which the Employer's
principal office is located, other than its laws respecting choice of law, to
the extent not pre-empted by the Act.
9.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine
or neuter gender, they shall be construed as though they were also used in
another gender in all cases where they would so apply, and whenever any words
are used herein in the singular or plural form, they shall be construed as
though they were also used in the other form in all cases where they would so
apply.
9.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which the Trustee or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee or Administrator, they shall be entitled to be
reimbursed from the Trust Fund for any and all costs, attorney's fees, and
other expenses pertaining thereto incurred by them for which they shall have
become liable.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible by
operation of the Plan or of the Trust, by termination of
either, by power of revocation or amendment, by the happening
of any contingency, by collateral arrangement or by any other
means, for
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any part of the corpus or income of any Trust Fund maintained
pursuant to the Plan or any funds contributed thereto to be
used for, or diverted to, purposes other than the exclusive
benefit of Participants, Retired Participants, or their
Beneficiaries.
(b) In the event the Employer shall make a
contribution under a mistake of fact pursuant to Section
403(c)(2)(A) of the Act, the Employer may demand repayment of
such contribution at any time within one (l) year following
the time of payment and the Trustees shall return such amount
to the Employer within the one (l) year period. Earnings of
the Plan attributable to the contributions may not be
returned to the Employer but any losses attributable thereto
must reduce the amount so returned.
9.8 BONDING
Every Fiduciary, except a bank or an insurance company,
unless exempted by the Act and regulations thereunder, shall be bonded in an
amount not less than 10% of the amount of the funds such Fiduciary handles;
provided, however, that the minimum bond shall be $1,000 and the maximum bond,
$500,000. The amount of funds handled shall be determined at the beginning of
each Plan Year by the amount of funds handled by such person, group, or class
to be covered and their predecessors, if any, during the preceding Plan Year,
or if there is no preceding Plan Year, then by the amount of the funds to be
handled during the then current year. The bond shall provide protection to the
Plan against any loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Act Section 4l2(a)(2)), and the bond shall be
in a form approved by the Secretary of Labor. Notwithstanding anything in the
Plan to the contrary, the cost of such bonds shall be an expense of and may, at
the election of the Administrator, be paid from the Trust Fund or by the
Employer.
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors,
shall be responsible for the validity of any Contract issued hereunder or for
the failure on the part of the Insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
9.10 INSURER'S PROTECTIVE CLAUSE
The Insurer who shall issue Contracts hereunder shall not
have any responsibility for the validity of this Plan or for the tax or legal
aspects of this Plan. The Insurer shall be protected and held harmless in
acting in accordance with any written direction of the Trustee, and shall have
no duty to see to the application of any funds paid to the Trustee, nor be
required to question any actions directed by the Trustee. Regardless of any
provision of this Plan, the Insurer shall not be required to take or permit any
action or allow any benefit or privilege contrary to the terms of any Contract
which it issues hereunder, or the rules of the Insurer.
9.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such Participant or
Beneficiary in accordance with the provisions of this Plan, shall, to the
extent thereof, be in full satisfaction of all claims hereunder against the
Trustee and the Employer.
9.12 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is
permitted or required to do or perform any act or matter or thing, it shall be
done and performed by a person duly authorized by its legally constituted
authority.
9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer,
(2) the Administrator, (3) the Trustee, and (4) any Investment Manager
appointed hereunder. The named Fiduciaries shall have only those specific
powers, duties, responsibilities, and obligations as are specifically given
them under the Plan. In general, the Employer shall have the sole
responsibility for making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan's "funding policy and method"; and to
amend the elective
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provisions of the Adoption Agreement or terminate, in whole or in part, the
Plan. The Administrator shall have the sole responsibility for the
administration of the Plan, which responsibility is specifically described in
the Plan. The Trustee shall have the sole responsibility of management of the
assets held under the Trust, except those assets, the management of which has
been assigned to an Investment Manager, who shall be solely responsible for the
management of the assets assigned to it, all as specifically provided in the
Plan. Each named Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the provisions of
the Plan, authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction, information
or action of another named Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such direction,
information or action. It is intended under the Plan that each named Fiduciary
shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity.
9.14 HEADINGS
The headings and subheadings of this Plan have been inserted
for convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.15 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
if, pursuant to a timely application filed by or in behalf of
the Plan, the Commissioner of Internal Revenue Service or his
delegate should determine that the Plan does not initially
qualify as a tax-exempt plan under Code Sections 401 and 501,
and such determination is not contested, or if contested, is
finally upheld, then if the Plan is a new plan, it shall be
void ab initio and all amounts contributed to the Plan, by
the Employer, less expenses paid, shall be returned within
one year and the Plan shall terminate, and the Trustee shall
be discharged from all further obligations. If the
disqualification relates to an amended plan, then the Plan
shall operate as if it had not been amended and restated.
(b) Except as specifically stated in the Plan, any
contribution by the Employer to the Trust Fund is conditioned
upon the deductibility of the contribution by the Employer
under the Code and, to the extent any such deduction is
disallowed, the Employer may within one (1) year following a
final determination of the disallowance, whether by agreement
with the Internal Revenue Service or by final decision of a
court of competent jurisdiction, demand repayment of such
disallowed contribution and the Trustee shall return such
contribution within one (l) year following the disallowance.
Earnings of the Plan attributable to the excess contribution
may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
9.16 UNIFORMITY
All provisions of this Plan shall be interpreted and applied
in a uniform, nondiscriminatory manner.
9.17 PAYMENT OF BENEFITS
Benefits under this Plan shall be paid, subject to Section
6.10 and Section 6.11 only upon death, Total and Permanent Disability, normal
or early retirement, termination of employment, or upon Plan Termination.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the
consent of the Employer and Trustee, any Affiliated Employer may adopt this
Plan and all of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said intent
and will of such Participating Employer.
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10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to
select the same Adoption Agreement provisions as those
selected by the Employer other than the Plan Year, the Fiscal
Year, and such other items that must, by necessity, vary
among employers.
(b) Each such Participating Employer shall be
required to use the same Trustee as provided in this Plan.
(c) The Trustee may, but shall not be required to,
commingle, hold and invest as one Trust Fund all
contributions made by Participating Employers, as well as all
increments thereof.
(d) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an
Employee of the Employer or a Participating Employer, shall
not affect such Participant's rights under the Plan, and all
amounts credited to such Participant's Combined Account as
well as his accumulated service time with the transferor or
predecessor, and his length of participation in the Plan,
shall continue to his credit.
(e) Any expenses of the Plan which are to be paid by
the Employer or borne by the Trust Fund shall be paid by each
Participating Employer in the same proportion that the total
amount standing to the credit of all Participants employed by
such Employer bears to the total standing to the credit of
all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of
this Plan; provided, however, that with respect to all of its relations with
the Trustee and Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer as its
agent. Unless the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer as related to
its adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during
each Plan Year shall be allocated among all Participants of all Participating
Employers in accordance with the provisions of this Plan. On the basis of the
information furnished by the Administrator, the Trustee shall keep separate
books and records concerning the affairs of each Participating Employer
hereunder and as to the accounts and credits of the Employees of each
Participating Employer. The Trustee may, but need not, register Contracts so as
to evidence that a particular Participating Employer is the interested Employer
hereunder, but in the event of an Employee transfer from one Participating
Employer to another, the employing Employer shall immediately notify the
Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there
shall be a Participating Employer hereunder shall only be by the written action
of each and every Participating Employer and with the consent of the Trustee
where such consent is necessary in accordance with the terms of this Plan.
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10.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a Standardized Plan, any Participating
Employer shall be permitted to discontinue or revoke its participation in the
Plan at any time. At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall thereafter transfer, deliver and
assign Contracts and other Trust Fund assets allocable to the Participants of
such Participating Employer to such new Trustee as shall have been designated
by such Participating Employer, in the event that it has established a separate
pension plan for its Employees provided, however, that no such transfer shall
be made if the result is the elimination or reduction of any "Section 411(d)(6)
protected benefits" in accordance with Section 8.1(e). If no successor is
designated, the Trustee shall retain such assets for the Employees of said
Participating Employer pursuant to the provisions of Article VII hereof. In no
such event shall any part of the corpus or income of the Trust Fund as it
relates to such Participating Employer be used for or diverted for purposes
other than for the exclusive benefit of the Employees of such Participating
Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all
necessary rules or regulations, binding upon all Participating Employers and
all Participants, to effectuate the purpose of this Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in
part from making a contribution which it would otherwise have made under the
Plan by reason of having no current or accumulated earnings or profits, or
because such earnings or profits are less than the contribution which it would
otherwise have made, then, pursuant to Code Section 404(a)(3)(B), so much of
the contribution which such Participating Employer was so prevented from making
may be made, for the benefit of the participating employees of such
Participating Employer, by other Participating Employers who are members of the
same affiliated group within the meaning of Code Section 1504 to the extent of
their current or accumulated earnings or profits, except that such contribution
by each such other Participating Employer shall be limited to the proportion of
its total current and accumulated earnings or profits remaining after
adjustment for its contribution to the Plan made without regard to this
paragraph which the total prevented contribution bears to the total current and
accumulated earnings or profits of all the Participating Employers remaining
after adjustment for all contributions made to the Plan without regard to this
paragraph.
A Participating Employer on behalf of whose employees a
contribution is made under this paragraph shall not be required to reimburse
the contributing Participating Employers.
ARTICLE XI
CASH OR DEFERRED PROVISIONS
Notwithstanding any provisions in the Plan to the contrary,
the provisions of this Article shall apply with respect to any 401(k) Profit
Sharing Plan.
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the
Plan:
(a) The amount of the total salary reduction
elections of all Participants made pursuant to Section
11.2(a), which amount shall be deemed an Employer's Elective
Contribution, plus
(b) If specified in E3 of the Adoption Agreement, a
matching contribution equal to the percentage specified in
the Adoption Agreement of the Deferred Compensation of each
Participant eligible to share in the allocations of the
matching contribution, which amount shall be deemed an
Employer's Non-Elective or Elective Contribution as selected
in the Adoption Agreement, plus
(c) If specified in E4 of the Adoption Agreement, a
discretionary amount, if any, which shall be deemed an
Employer's Non-Elective Contribution, plus
(d) If specified in E5 of the Adoption Agreement, a
Qualified Non-Elective Contribution.
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(e) Notwithstanding the foregoing, however, the
Employer's contributions for any Fiscal Year shall not exceed
the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404. All contributions
by the Employer shall be made in cash or in such property as
is acceptable to the Trustee.
(f) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer shall
make a contribution even if it exceeds current or accumulated
Net Profit or the amount which is deductible under Code
Section 404.
(g) Employer Elective Contributions accumulated
through payroll deductions shall be paid to the Trustee as of
the earliest date on which such contributions can reasonably
be segregated from the Employer's general assets, but in any
event within ninety (90) days from the date on which such
amounts would otherwise have been payable to the Participant
in cash. The provisions of Department of Labor regulations
2510.3-102 are incorporated herein by reference. Furthermore,
any additional Employer contributions which are allocable to
the Participant's Elective Account for a Plan Year shall be
paid to the Plan no later than the twelve-month period
immediately following the close of such Plan Year.
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) If selected in the Adoption Agreement, each
Participant may elect to defer his Compensation which would
have been received in the Plan Year, but for the deferral
election, subject to the limitations of this Section and the
Adoption Agreement. A deferral election (or modification of
an earlier election) may not be made with respect to
Compensation which is currently available on or before the
date the Participant executed such election, or if later, the
latest of the date the Employer adopts this cash or deferred
arrangement, or the date such arrangement first became
effective. Any elections made pursuant to this Section shall
become effective as soon as is administratively feasible.
Additionally, if elected in the Adoption
Agreement, each Participant may elect to defer and have
allocated for a Plan Year all or a portion of any cash bonus
attributable to services performed by the Participant for the
Employer during such Plan Year and which would have been
received by the Participant on or before two and one-half
months following the end of the Plan Year but for the
deferral. A deferral election may not be made with respect to
cash bonuses which are currently available on or before the
date the Participant executed such election. Notwithstanding
the foregoing, cash bonuses attributable to services
performed by the Participant during a Plan Year but which are
to be paid to the Participant later than two and one-half
months after the close of such Plan Year will be subjected to
whatever deferral election is in effect at the time such cash
bonus would have otherwise been received.
The amount by which Compensation and/or
cash bonuses are reduced shall be that Participant's Deferred
Compensation and be treated as an Employer Elective
Contribution and allocated to that Participant's Elective
Account.
Once made, a Participant's election to
reduce Compensation shall remain in effect until modified or
terminated. Modifications may be made as specified in the
Adoption Agreement, and terminations may be made at any time.
Any modification or termination of an election will become
effective as soon as is administratively feasible.
(b) The balance in each Participant's Elective
Account shall be fully Vested at all times and shall not be
subject to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective
Account and Qualified Non-Elective Account may be
distributable as permitted under the Plan, but in no event
prior to the earlier of:
(1) a Participant's termination of employment, Total
and Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
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(3) the proven financial hardship of a Participant,
subject to the limitations of Section 11.8;
(4) the termination of the Plan without the
existence at the time of Plan termination of another
defined contribution plan (other than an employee
stock ownership plan as defined in Code Section
4975(e)(7)) or the establishment of a successor
defined contribution plan (other than an employee
stock ownership plan as defined in Code Section
4975(e)(7)) by the Employer or an Affiliated
Employer within the period ending twelve months
after distribution of all assets from the Plan
maintained by the Employer;
(5) the date of the sale by the Employer to an
entity that is not an Affiliated Employer of
substantially all of the assets (within the meaning
of Code Section 409(d)(2)) with respect to a
Participant who continues employment with the
corporation acquiring such assets; or
(6) the date of the sale by the Employer or an
Affiliated Employer of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) to an
entity that is not an Affiliated Employer with
respect to a Participant who continues employment
with such subsidiary.
(d) In any Plan Year beginning after December 31,
1987, a Participant's Deferred Compensation made under this
Plan and all other plans, contracts or arrangements of the
Employer maintaining this Plan shall not exceed the
limitation imposed by Code Section 402(g), as in effect for
the calendar year in which such Plan Year began. This dollar
limitation shall be adjusted annually pursuant to the method
provided in Code Section 415(d) in accordance with
Regulations.
(e) In the event a Participant has received a
hardship distribution pursuant to Regulation
1.401(k)-l(d)(2)(iii)(B) from any other plan maintained by
the Employer or from his Participant's Elective Account
pursuant to Section 11.8, then such Participant shall not be
permitted to elect to have Deferred Compensation contributed
to the Plan on his behalf for a period of twelve (12) months
following the receipt of the distribution. Furthermore, the
dollar limitation under Code Section 402(g) shall be reduced,
with respect to the Participant's taxable year following the
taxable year in which the hardship distribution was made, by
the amount of such Participant's Deferred Compensation, if
any, made pursuant to this Plan (and any other plan
maintained by the Employer) for the taxable year of the
hardship distribution.
(f) If a Participant's Deferred Compensation under
this Plan together with any elective deferrals (as defined in
Regulation 1.402(g)-l(b)) under another qualified cash or
deferred arrangement (as defined in Code Section 401(k)), a
simplified employee pension (as defined in Code Section
408(k)), a salary reduction arrangement (within the meaning
of Code Section 3121(a)(5)(D)), a deferred compensation plan
under Code Section 457, or a trust described in Code Section
501(c)(l8) cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the
method provided in Code Section 415(d) pursuant to
Regulations) for such Participant's taxable year, the
Participant may, not later than March 1st following the close
of his taxable year, notify the Administrator in writing of
such excess and request that his Deferred Compensation under
this Plan be reduced by an amount specified by the
Participant. In such event, the Administrator shall direct
the Trustee to distribute such excess amount (and any Income
allocable to such excess amount) to the Participant not later
than the first April 15th following the close of the
Participant's taxable year. Distributions in accordance with
this paragraph may be made for any taxable year of the
Participant which begins after December 3l, 1986. Any
distribution of less than the entire amount of Excess
Deferred Compensation and Income shall be treated as a pro
rata distribution of Excess Deferred Compensation and Income.
The amount distributed shall not exceed the Participant's
Deferred Compensation under the Plan for the taxable year.
Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following
conditions:
(l) the Participant shall designate the distribution
as Excess Deferred Compensation;
(2) the distribution must be made after the date on
which the Plan received the Excess Deferred
Compensation; and
(3) the Plan must designate the distribution as a
distribution of Excess Deferred Compensation.
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For the purpose of this Section, "Income"
means the amount of income or loss allocable to a
Participant's Excess Deferred Compensation and shall be equal
to the sum of the allocable gain or loss for the taxable year
of the Participant and the allocable gain or loss for the
period between the end of the taxable year of the Participant
and the date of distribution ("gap period"). The income or
loss allocable to each such period is calculated separately
and is determined by multiplying the income or loss allocable
to the Participant's Deferred Compensation for the respective
period by a fraction. The numerator of the fraction is the
Participant's Excess Deferred Compensation for the taxable
year of the Participant. The denominator is the balance, as
of the last day of the respective period, of the
Participant's Elective Account that is attributable to the
Participant's Deferred Compensation reduced by the gain
allocable to such total amount for the respective period and
increased by the loss allocable to such total amount for the
respective period.
In lieu of the "fractional method"
described above, a "safe harbor method" may be used to
calculate the allocable income or loss for the "gap period".
Under such "safe harbor method", allocable income or loss for
the "gap period" shall be deemed to equal ten percent (10%)
of the income or loss allocable to a Participant's Excess
Deferred Compensation for the taxable year of the Participant
multiplied by the number of calendar months in the "gap
period". For purposes of determining the number of calendar
months in the "gap period", a distribution occurring on or
before the fifteenth day of the month shall be treated as
having been made on the last day of the preceding month and a
distribution occurring after such fifteenth day shall be
treated as having been made on the first day of the next
subsequent month.
Income or loss allocable to any
distribution of Excess Deferred Compensation on or before the
last day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of the
Participant to the date on which the distribution is made
pursuant to either the "fractional method" or the "safe
harbor method".
Notwithstanding the above, for the 1987
calendar year, Income during the "gap period" shall not be
taken into account.
(g) Notwithstanding the above, a Participant's
Excess Deferred Compensation shall be reduced, but not below
zero, by any distribution and/or recharacterization of Excess
Contributions pursuant to Section 11.5(a) for the Plan Year
beginning with or within the taxable year of the Participant.
(h) At Normal Retirement Date, or such other date
when the Participant shall be entitled to receive benefits,
the fair market value of the Participant's Elective Account
shall be used to provide benefits to the Participant or his
Beneficiary.
(i) Employer Elective Contributions made pursuant to
this Section may be segregated into a separate account for
each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan
association, money market certificate, or other short-term
debt security acceptable to the Trustee until such time as
the allocations pursuant to Section 11.3 have been made.
(j) The Employer and the Administrator shall adopt a
procedure necessary to implement the salary reduction
elections provided for herein.
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain
an account in the name of each Participant to which the
Administrator shall credit as of each Anniversary Date, or
other valuation date, all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the Administrator
with all information required by the Administrator to make a
proper allocation of the Employer's contributions for each
Plan Year. Within a reasonable period of time after the date
of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
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<PAGE> 66
(l) With respect to the Employer's Elective
Contribution made pursuant to Section 11.1(a), to
each Participant's Elective Account in an amount
equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer's Matching
Contribution made pursuant to Section 11.1(b), to
each Participant's Account, or Participant's
Elective Account as selected in E3 of the Adoption
Agreement, in accordance with Section 11.1(b).
Except, however, a Participant who is not credited
with a Year of Service during any Plan Year shall or
shall not share in the Employer's Matching
Contribution for that year as provided in E3 of the
Adoption Agreement. However, for Plan Years
beginning after 1989, if this is a standardized
Plan, a Participant shall share in the Employer's
Matching Contribution regardless of Hours of
Service.
(3) With respect to the Employer's Non-Elective
Contribution made pursuant to section 11.1(c), to
each Participant's Account in accordance with the
provisions of Sections 4.4(b)(2) or 4.4(b)(3),
whichever is applicable, 4.4(k) and 4.4(l).
(4) With respect to the Employer's Qualified
Non-Elective Contribution made pursuant to Section
11.1(d), to each Participant's Qualified
Non-Elective Contribution Account in the same
proportion that each such Participant's Compensation
for the year bears to the total Compensation of all
Participants for such year. However, for any Plan
Year beginning prior to January 1, 1990, and if
elected in the non-standardized Adoption Agreement
for any Plan Year beginning on or after January 1,
1990, a Participant who is not credited with a Year
of Service during any Plan Year shall not share in
the Employer's Qualified Non-Elective Contribution
for that year, unless required pursuant to Section
4.4(h). In addition, the provisions of Sections
4.4(k) and 4.4(l) shall apply with respect to the
allocation of the Employer's Qualified Non-Elective
contribution.
(c) Notwithstanding anything in the Plan to the
contrary, for Plan Years beginning after December 31, 1988,
in determining whether a Non-Key Employee has received the
required minimum allocation pursuant to Section 4.4(f) such
Non-Key Employee's Deferred Compensation and matching
contributions used to satisfy the "Actual Deferral
Percentage" test pursuant to Section 11.4(a) or the "Actual
Contribution Percentage" test of Section 11.6(a) shall not be
taken into account.
(d) Notwithstanding anything herein to the contrary,
participants who terminated employment during the Plan Year
shall share in the salary reduction contributions made by the
Employer for the year of termination without regard to the
Hours of Service credited.
(e) Notwithstanding anything herein to the contrary
(other than Sections 11.3(d) and 11.3(g)), any Participant
who terminated employment during the Plan Year for reasons
other than death, Total and Permanent Disability, or
retirement shall or shall not share in the allocations of the
Employer's Matching Contribution made pursuant to Section
11.1(b), the Employer's Non-Elective Contributions made
pursuant to Section 11.1(c), the Employer's Qualified
Non-Elective Contribution made pursuant to Section 11.1(d),
and Forfeitures as provided in the Adoption Agreement.
Notwithstanding the foregoing, for Plan Years beginning after
1989, if this is a standardized plan, any such terminated
Participant shall share in such allocations provided the
terminated Participant completed more than 500 Hours of
Service.
(f) Notwithstanding anything herein to the contrary,
Participants terminating for reasons of death, Total and
Permanent Disability, or retirement shall share in the
allocation of the Employer's Matching Contribution made
pursuant to Section 11.1(b), the Employer's Non-Elective
Contributions made pursuant to Section 11.1(c), the
Employer's Qualified Non-Elective Contribution made pursuant
to Section 11.1(d), and Forfeitures as provided in this
Section regardless of whether they completed a Year of
Service during the Plan Year.
(g) Notwithstanding any election in the Adoption
Agreement to the contrary, if this is a non-standardized Plan
that would otherwise fail to meet the requirements of Code
Sections 40l(a)(26), 410(b)(l), or 410(b)(2)(A)(i) and the
Regulations thereunder because Employer matching
Contributions
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made pursuant to Section 11.1(b), Employer Non-Elective
Contributions made pursuant to Section 11.1(c) or Employer
Qualified Non-Elective Contributions made pursuant to Section
11.1(d) have not been allocated to a sufficient number or
percentage of Participants for a Plan Year, then the
following rules shall apply:
(l) The group of Participants eligible to share in
the respective contributions for the Plan Year shall
be expanded to include the minimum number of
Participants who would not otherwise be eligible as
are necessary to satisfy the applicable test
specified above. The specific participants who shall
be come eligible under the terms of this paragraph
shall be those who are actively employed on the last
day of the Plan Year and, when compared to similarly
situated Participants, have completed the greatest
number of Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the
applicable test is still not satisfied, then the
group of Participants eligible to share for the Plan
Year shall be further expanded to include the
minimum number of Participants who are not actively
employed on the last day of the Plan Year as are
necessary to satisfy the applicable test. The
specific Participants who shall become eligible to
share shall be those Participants, when compared to
similarly situated Participants, who have completed
the greatest number of Hours of Service in the Plan
Year before terminating employment.
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year
beginning after December 31, 1986, the annual allocation
derived from Employer Elective Contributions and Qualified
Non-Elective Contributions to a Participant's Elective
Account and Qualified Non-Elective Account shall satisfy one
of the following tests:
(1) The "Actual Deferral percentage" for the Highly
compensated Participant group shall not be more than
the "Actual Deferral Percentage" of the Non-Highly
Compensated Participant group multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage"
for the Highly Compensated Participant group over
the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group shall not be more than
two percentage points. Additionally, the "Actual
Deferral percentage" for the Highly Compensated
Participant group shall not exceed the "Actual
Deferral Percentage for the Non-Highly Compensated
Participant group multiplied by 2. The provisions of
Code Section 401(k)(3) and Regulation 1.401(k)-l(b)
are incorporated herein by reference.
However, for Plan Years beginning after December 31,
1988, to prevent the multiple use of the alternative
method described in (2) above and Code Section
401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to
Section 11.2 and to make Employee contributions or
to receive matching contributions under this Plan or
under any other plan maintained by the Employer or
an Affiliated Employer shall have his actual
contribution ratio reduced pursuant to Regulation
l.401(m)-2, the provisions of which are incorporated
herein by reference.
(b) For the purposes of this Section "Actual
Deferral Percentage" means, with respect to the Highly
Compensated Participant group and Non-Highly Compensated
Participant group for a Plan Year, the average of the ratios,
calculated separately for each Participant in such group, of
the amount of Employer Elective Contributions and Qualified
Non-Elective Contributions allocated to each Participant's
Elective Account and Qualified Non-Elective Account for such
Plan Year, to such Participant's "414(s) Compensation" for
such Plan Year. The actual deferral ratio for each
Participant and the "Actual Deferral Percentage" for each
group, for Plan Years beginning after December 31, 1988,
shall be calculated to the nearest one-hundredth of one
percent of the Participant's "414(s) Compensation". Employer
Elective Contributions allocated to each Non-Highly
Compensated Participant's Elective Account shall be reduced
by Excess Deferred Compensation to the extent such excess
amounts are made under this Plan or any other plan maintained
by the Employer.
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(c) For the purpose of determining the actual
deferral ratio of a Highly Compensated Participant who is
subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five
percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(l) The combined actual deferral ratio for the
family group (which shall be treated as one Highly
Compensated Participant) shall be the greater of:
(i) the ratio determined by aggregating Employer
Elective Contributions and "414(s) Compensation" of
all eligible Family Members who are Highly
Compensated Participants without regard to family
aggregation; and (ii) the ratio determined by
aggregating Employer Elective Contributions and
"414(s) Compensation" of all eligible Family Members
(including Highly Compensated Participants).
However, in applying the $200,000 limit to "414(s)
Compensation" for Plan Years beginning after
December 3l, 1988, Family Members shall include only
the affected Employee's spouse and any lineal
descendants who have not attained age 19 before the
close of the Plan Year.
(2) The Employer Elective Contributions and "414(s)
Compensation" of all Family Members shall be
disregarded for purposes of determining the "Actual
Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be aggregated as
a member of more than one family group in a plan,
all Participants who are members of those family
groups that include the Participant are aggregated
as one family group in accordance with paragraphs
(1) and (2) above.
(d) For the purposes of this Section and Code
Sections 40l(a)(4), 410(b) and 401(k), if two or more plans
which include cash or deferred arrangements are considered
one plan for the purposes of Code Section 40l(a)(4) or 410(b)
(other than Code Section 401(b)(2)(A)(ii) as in effect for
Plan Years beginning after December 31, 1988), the cash or
deferred arrangements included in such plans shall be treated
as one arrangement. In addition, two or more cash or deferred
arrangements may be considered as a single arrangement for
purposes of determining whether or not such arrangements
satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such a
case, the cash or deferred arrangements included in such
plans and the plans including such arrangements shall be
treated as one arrangement and as one plan for purposes of
this Section and Code Sections 401(a)(4), 410(b) and 401(k).
For plan years beginning after December 31, 1989, plans may
be aggregated under this paragraph (e) only if they have the
same plan year.
Notwithstanding the above, for Plan Years
beginning after December 31, 1988, an employee stock
ownership plan described in Code Section 4975(e)(7) may not
be combined with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan
satisfies this Section and Code Sections 40l(a)(4), 410(b)
and 401(k).
(e) For the purposes of this Section, if a Highly
Compensated Participant is a Participant under two (2) or
more cash or deferred arrangements (other than a cash or
deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7) for Plan
Years beginning after December 31, 1988) of the Employer or
an Affiliated Employer, all such cash or deferred
arrangements shall be treated as one cash or deferred
arrangement for the purpose of determining the actual
deferral ratio with respect to such Highly Compensated
Participant. However, for Plan Years beginning after December
31, 1988, if the cash or deferred arrangements have different
Plan Years, this paragraph shall be applied by treating all
cash or deferred arrangements ending with or within the same
calendar year as a single arrangement.
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's
Elective Contributions and Qualified Non-Elective Contributions do not satisfy
one of the tests set forth in Section 11.4, for Plan Years beginning after
December 31, 1986, the Administrator shall adjust excess Contributions pursuant
to the options set forth below:
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(a) On or before the fifteenth day of the third
month following the end of each Plan Year, the Highly
Compensated Participant having the highest actual deferral
ratio shall have his portion of Excess Contributions
distributed to him and/or at his election recharacterized as
a voluntary Employee contribution pursuant to Section 4.8
until one of the tests set forth in Section 11.4 is
satisfied, or until his actual deferral ratio equals the
actual deferral ratio of the Highly Compensated Participant
having the second highest actual deferral ratio. This process
shall continue until one of the tests set forth in Section
11.4 is satisfied. For each Highly Compensated Participant,
the amount of Excess Contributions is equal to the Elective
Contributions and Qualified Non-Elective Contributions made
on behalf of such Highly Compensated Participant (determined
prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated
Participant's actual deferral ratio (determined after
application of this paragraph) by his "414(s) Compensation".
However, in determining the amount of Excess Contributions to
be distributed and/or recharacterized with respect to an
affected Highly Compensated Participant as determined herein,
such amount shall be reduced by any Excess Deferred
Compensation previously distributed to such affected Highly
Compensated Participant for his taxable year ending with or
within such Plan Year. Any distribution and/or
recharacterization of Excess Contributions shall be made in
accordance with the following:
(l) With respect to the distribution of Excess
Contributions pursuant to (a) above, such
distribution:
(i) may be postponed but not later than the
close of the Plan Year following the Plan
Year to which they are allocable;
(ii) shall be made first from unmatched
Deferred Compensation and, thereafter,
simultaneously from Deferred Compensation
which is matched and matching contributions
which relate to such Deferred Compensation.
However, any such matching contributions
which are not Vested shall be forfeited in
lieu of being distributed;
(iii) shall be made from Qualified
Non-Elective Contributions only to the
extent that Excess Contributions exceed the
balance in the Participant's Elective
Account attributable to Deferred
Compensation and Employer matching
contributions.
(iv) shall be adjusted for Income; and
(v) shall be designated by the Employer as
a distribution of Excess Contributions (and
Income).
(2) With respect to the recharacterization of Excess
Contributions pursuant to (a) above, such
recharacterized amounts:
(i) shall be deemed to have occurred on the
date on which the last of those Highly
Compensated Participants with Excess
Contributions to be recharacterized is
notified of the recharacterization and the
tax consequences of such
recharacterization;
(ii) for Plan Years ending on or before
August 8, 1988, may be postponed but not
later than October 24, 1988;
(iii) shall not exceed the amount of
Deferred Compensation on behalf of any
Highly Compensated Participant for any Plan
Year;
(iv) shall be treated as voluntary Employee
contributions for purposes of Code Section
401(a)(4) and Regulation l.401(k)-l(b).
However, for purposes of Sections 2.2 and
4.4(f), recharacterized Excess
Contributions continue to be treated as
Employer contributions that are Deferred
Compensation. For Plan Years beginning
after December 31, 1988, Excess
Contributions recharacterized as voluntary
Employee contributions shall continue to be
nonforfeitable and subject to the same
distribution rules provided for in Section
11.2(c);
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(v) which relate to Plan Years ending on or
before October 24, 1988, may be treated as
either Employer contributions or voluntary
Employee contributions and therefore shall
not be subject to the restrictions of
Section 11.2(c);
(vi) are not permitted if the amount
recharacterized plus voluntary Employee
contributions actually made by such Highly
Compensated Participant, exceed the maximum
amount of voluntary Employee contributions
(determined prior to application of Section
11.6) that such Highly Compensated
Participant is permitted to make under the
Plan in the absence of recharacterization;
(vii) shall be adjusted for Income.
(3) Any distribution and/or recharacterization of
less than the entire amount of Excess Contributions
shall be treated as a pro rata distribution and/or
recharacterization of Excess Contributions and
Income.
(4) The determination and correction of Excess
Contributions of a Highly Compensated Participant
whose actual deferral ratio is determined under the
family aggregation rules shall be accomplished as
follows:
(i) If the actual deferral ratio for the
Highly Compensated Participant is
determined in accordance with Section
1l.4(c)(l)(ii), then the actual deferral
ratio shall be reduced as required herein
and the Excess Contributions for the family
unit shall be allocated among the Family
Members in proportion to the Elective
Contributions of each Family Member that
were combined to determine the group actual
deferral ratio.
(ii) If the actual deferral ratio for the
Highly Compensated Participant is
determined under Section 11.4(c)(1)(i),
then the actual deferral ratio shall first
be reduced as required herein, but not
below the actual deferral ratio of the
group of Family Members who are not Highly
Compensated
Participants without regard to family
aggregation. The Excess Contributions
resulting from this initial reduction shall
be allocated (in proportion to Elective
Contributions) among the Highly Compensated
Participants whose Elective Contributions
were combined to determine the actual
deferral ratio. If further reduction is
still required, then Excess Contributions
resulting from this further reduction shall
be determined by taking into account the
contributions of all Family Members and
shall be allocated among them in proportion
to their respective Elective Contributions.
(b) Within twelve (12) months after the end of the
Plan Year, the Employer shall make a special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the
tests set forth in Section 11.4(a). Such contribution shall
be allocated to the Participant's Qualified Non-Elective
Account of each Non-Highly Compensated Participant in the
same proportion that each Non-Highly Compensated
Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants.
(c) For purposes of this Section, "Income" means the
income or loss allocable to Excess Contributions which shall
equal the sum of the allocable gain or loss for the Plan Year
and the allocable gain or loss for the period between the end
of the Plan Year and the date of distribution ("gap period").
The income or loss allocable to Excess Contributions for the
Plan Year and the "gap period" is calculated separately and
is determined by multiplying the income or loss for the Plan
Year or the "gap period" by a fraction. The numerator of the
fraction is the Excess Contributions for the Plan Year. The
denominator of the fraction is the total of the Participant's
Elective Account attributable to Elective Contributions and
the Participant's Qualified Non-Elective Account as of the
end of the Plan Year or the "gap period", reduced by the gain
allocable to such total amount for the Plan Year or the "gap
period" and increased by the loss allocable to such total
amount for the Plan Year or the "gap period".
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In lieu of the "fractional method"
described above, a "safe harbor method" may be used to
calculate the allocable Income for the "gap period". Under
such "safe harbor method", allocable Income for the "gap
period" shall be deemed to equal ten percent (10%) of the
Income allocable to Excess Contributions for the Plan Year of
the Participant multiplied by the number of calendar months
in the "gap period". For purposes of determining the number
of calendar months in the "gap period", a distribution
occurring on or before the fifteenth day of the month shall
be treated as having been made on the last day of the
preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the
first day of the next subsequent month.
Notwithstanding the above, for Plan Years
which began in 1987, Income during the "gap period" shall not
be taken into account.
(d) Any amounts not distributed or recharacterized
within 2 1/2 months after the end of the Plan Year shall be
subject to the 10% Employer excise tax imposed by Code
Section 4979.
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage", for Plan
Years beginning after the later of the Effective Date of this
Plan or December 31, 1986, for the Highly Compensated
Participant group shall not exceed the greater of:
(l) 125 percent of such percentage for the
Non-Highly Compensated Participant group; or
(2) the lesser of 200 percent of such percentage for
the Non-Highly Compensated Participant group, or
such percentage for the Non-Highly Compensated
Participant group plus 2 percentage points. However,
for Plan Years beginning after December 31, 1988, to
prevent the multiple use of the alternative method
described in this paragraph and Code Section
401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to
Section 11.2 or any other cash or deferred
arrangement maintained by the Employer or an
Affiliated Employer and to make Employee
contributions or to receive matching contributions
under any plan maintained by the Employer or an
Affiliated Employer shall have his actual
contribution ratio reduced pursuant to Regulation
l.401(m)-2. The provisions of Code Section 401(m)
and Regulations 1.401(m)-1(b) and l.401(m)-2 are
incorporated herein by reference.
(b) For the purposes of this Section and Section
11.7, "Actual Contribution Percentage" for a Plan Year means,
with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group, the average of the
ratios (calculated separately for each Participant in each
group) of:
(1) the sum of Employer matching contributions made
pursuant to Section 11.1(b) (to the extent such
matching contributions are not used to satisfy the
tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.8 and
Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 11.5 on
behalf of each such Participant for such Plan Year;
to
(2) the Participant's "414(s) Compensation" for such
Plan Year.
(c) For purposes of determining the "Actual
Contribution Percentage" and the amount of Excess Aggregate
Contributions pursuant to Section 11.7(d), only Employer
matching contributions contributed to the Plan prior to the
end of the succeeding Plan Year shall be considered. In
addition, the Administrator may elect to take into account,
with respect to Employees eligible to have Employer matching
contributions made pursuant to Section 11.1(b) or voluntary
Employee contributions made pursuant to Section 4.8 allocated
to their accounts, elective deferrals (as defined in
Regulation l.402(g)-l(b)) and qualified non-elective
contributions (as defined in Code Section 401(m)(4)(C))
contributed to any plan maintained by the Employer. Such
elective deferrals and qualified non-elective contributions
shall be treated as Employer matching contributions subject
to Regulation l.401(m)-l(b)(2) which is incorporated herein
by reference. However, for Plan Years beginning after
December 31, 1988, the Plan Year must be
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the same as the plan year of the plan to which the elective
deferrals and the qualified non-elective contributions are
made.
(d) For the purpose of determining the actual
contribution ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Employee is either a "five
percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(1) The combined actual contribution ratio for the
family group (which shall be treated as one Highly
Compensated Participant) shall be the greater of:
(i) the ratio determined by aggregating Employer
matching contributions made pursuant to Section
11.1(b) (to the extent such matching contributions
are not used to satisfy the tests set forth in
Section 11.4), voluntary Employee contributions made
pursuant to Section 4.8, Excess Contributions
recharacterized as voluntary Employee contributions
pursuant to Section 11.5 and "414(s) Compensation"
of all eligible Family Members who are Highly
Compensated Participants without regard to family
aggregation; and (ii) the ratio determined by
aggregating Employer matching contributions made
pursuant to Section 11.1(b) (to the extent such
matching contributions are not used to satisfy the
tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.8, Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and "414(s)
Compensation" of all eligible Family Members
(including Highly Compensated Participants).
However, in applying the $200,000 limit to "414(s)
Compensation" for Plan Years beginning after
December 31, 1988, Family Members shall include only
the affected Employee's spouse and any lineal
descendants who have not attained age 19 before the
close of the Plan Year.
(2) The Employer matching contributions made
pursuant to Section 11.1(b) (to the extent such
matching contributions are not used to satisfy the
tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.8, Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and "414(s)
Compensation" of all Family Members shall be
disregarded for purposes of determining the "Actual
Contribution Percentage" of the Non-Highly
Compensated Participant group except to the extent
taken into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as
a member of more than one family group in a plan,
all Participants who are members of those family
groups that include the Participant are aggregated
as one family group in accordance with paragraphs
(1) and (2) above.
(e) For purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(m), if two or more plans of the
Employer to which matching contributions, Employee
contributions, or both, are made are treated as one plan for
purposes of Code Sections 401(a)(4) or 410(b) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii) as
in effect for Plan Years beginning after December 31, 1988),
such plans shall be treated as one plan. In addition, two or
more plans of the Employer to which matching contributions,
Employee contributions, or both, are made may be considered
as a single plan for purposes of determining whether or not
such plans satisfy Code Sections 401(a) (4), 410(b) and
401(m). In such a case, the aggregated plans must satisfy
this Section and Code Sections 401(a)(4), 410(b) and 401(m)
as though such aggregated plans were a single plan. For plan
years beginning after December 31, 1989, plans may be
aggregated under this paragraph only if they have the same
plan year.
Notwithstanding the above, for Plan Years
beginning after December 31, 1988, an employee stock
ownership plan described in Code Section 4975(e)(7) may not
be aggregated with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan
satisfies this Section and Code Sections 401(a)(4), 410(b)
and 401(m).
(f) If a Highly Compensated Participant is a
Participant under two or more plans (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)
for Plan Years beginning after December 31, 1988) which are
maintained by the Employer or an Affiliated Employer to which
matching contributions, Employee contributions, or both, are
made, all such contributions on behalf of such Highly
Compensated Participant shall be aggregated for purposes of
determining such Highly Compensated
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<PAGE> 73
Participant's actual contribution ratio. However, for Plan
Years beginning after December 31, 1988, if the plans have
different plan years, this paragraph shall be applied by
treating all plans ending with or within the same calendar
year as a single plan.
(g) For purposes of Section 11.6(a) and 11.7, a
Highly Compensated Participant and a Non-Highly Compensated
Participant shall include any Employee eligible to have
matching contributions made pursuant to Section 11.1(b)
(whether or not a deferred election was made or suspended
pursuant to Section 11.2(e)) allocated to his account for the
Plan Year or to make salary deferrals pursuant to Section
11.2 (if the Employer uses salary deferrals to satisfy the
provisions of this Section) or voluntary Employee
contributions pursuant to Section 4.8 (whether or not
voluntary Employee contributions are made) allocated to his
account for the Plan Year.
(h) For purposes of this Section, "Matching
Contribution" shall mean an Employer contribution made to the
Plan, or to a contract described in Code Section 403(b), on
behalf of a Participant on account of an Employee
contribution made by such Participant, or on account of a
participant's deferred compensation, under a plan maintained
by the Employer.
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that for Plan Years beginning after
December 31, 1986, the "Actual Contribution Percentage" for
the Highly Compensated Participant group exceeds the "Actual
Contribution Percentage" for the Non-Highly Compensated
Participant group pursuant to Section 11.6(a), the
Administrator (on or before the fifteenth day of the third
month following the end of the Plan Year, but in no event
later than the close of the following Plan Year) shall direct
the Trustee to distribute to the Highly Compensated
Participant having the highest actual contribution ratio, his
portion of Excess Aggregate Contributions (and Income
allocable to such contributions) or, if forfeitable, forfeit
such non-Vested Excess Aggregate Contributions attributable
to Employer matching contributions (and Income allocable to
such Forfeitures) until either one of the tests set forth in
Section 11.6(a) is satisfied, or until his actual
contribution ratio equals the actual contribution ratio of
the Highly Compensated Participant having the second highest
actual contribution ratio. This process shall continue until
one of the tests set forth in Section 11.6(a) is satisfied.
The distribution and/or Forfeiture of Excess Aggregate
Contributions shall be made in the following order:
(l) Employer matching contributions distributed
and/or forfeited pursuant to Section 1l.5(a)(l);
(2) Voluntary Employee contributions including
Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 11.5(a)
(2);
(3) Remaining Employer matching contributions.
(b) Any distribution or Forfeiture of less than the
entire amount of Excess Aggregate Contributions (and Income)
shall be treated as a pro rata distribution of Excess
Aggregate Contributions and Income. Distribution of Excess
Aggregate Contributions shall be designated by the Employer
as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall
be treated in accordance with Section 4.4. However, no such
Forfeiture may be allocated to a Highly Compensated
Participant whose contributions are reduced pursuant to this
Section.
(c) Excess Aggregate Contributions attributable to
amounts other than voluntary Employee contributions,
including forfeited matching contributions, shall be treated
as Employer contributions for purposes of Code Sections 404
and 415 even if distributed from the Plan.
(d) For the purposes of this Section and Section
11.6, "Excess Aggregate Contributions" means, with respect to
any Plan Year, the excess of:
(l) the aggregate amount of Employer matching
contributions made pursuant to Section 11.1(a) (to
the extent such contributions are taken into account
pursuant to Section 11.6(a)),
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voluntary Employee contributions made pursuant to
Section 4.8, Excess Contributions recharacterized as
voluntary Employee contributions pursuant to Section
11.5 and any Qualified Non-Elective Contributions or
elective deferrals taken into account pursuant to
Section 11.6(c) actually made on behalf of the
Highly Compensated Participant group for such Plan
Year, over
(2) the maximum amount of such contributions
permitted under the limitations of Section 11.6(a).
(e) For each Highly Compensated Participant, the
amount of Excess Aggregate Contributions is equal to the
total Employer matching contributions made pursuant to
Section 11.1(b) (to the extent taken into account pursuant to
Section 11.6(a)), voluntary Employee contributions made
pursuant to Section 4.8, Excess Contributions recharacterized
as voluntary Employee contributions pursuant to Section 11.5
and any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section 11.6(c) on
behalf of the Highly Compensated Participant (determined
prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated
Participant's actual contribution ratio (determined after
application of this paragraph) by his "414(s) Compensation".
The actual contribution ratio must be rounded to the nearest
one-hundredth of one percent for Plan Years beginning after
December 3l, 1988. In no case shall the amount of Excess
Aggregate Contribution with respect to any Highly Compensated
Participant exceed the amount of Employer matching
contributions made pursuant to Section 11.1(b) (to the extent
taken into account pursuant to Section 11.6(a)), voluntary
Employee contributions made pursuant to Section 4.8, Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified
Non-Elective Contributions or elective deferrals taken into
account pursuant to Section 11.6(c) on behalf of such Highly
Compensated Participant for such Plan Year.
(f) The determination of the amount of Excess
Aggregate Contributions with respect to any Plan Year shall
be made after first determining the Excess Contributions, if
any, to be treated as voluntary Employee contributions due to
recharacterization for the plan year of any other qualified
cash or deferred arrangement (as defined in Code Section
401(k)) maintained by the Employer that ends with or within
the Plan Year or which are treated as voluntary Employee
contributions due to recharacterization pursuant to Section
11.5.
(g) The determination and correction of Excess
Aggregate Contributions of a Highly Compensated Participant
whose actual contribution ratio is determined under the
family aggregation rules shall be accomplished as follows:
(1) If the actual contribution ratio for the Highly
Compensated Participant is determined in accordance
with Section l1.6(d)(l), then the actual
contribution ratio shall be reduced and the Excess
Aggregate Contributions for the family unit shall be
allocated among the Family Members in proportion to
the sum of Employer matching contributions made
pursuant to Section 11.1(b) (to the extent taken
into account pursuant to Section 11.6(a)), voluntary
Employee contributions made pursuant to Section 4.8,
Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 11.5 and
any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section
11.6(c) of each Family Member that were combined to
determine the group actual contribution ratio.
(2) If the actual contribution ratio for the Highly
Compensated Participant is determined under Section
1l.6(d)(2), then the actual contribution ratio shall
first be reduced, as required herein, but not below
the actual contribution ratio of the group of Family
Members who are not Highly Compensated Participants
without regard to family aggregation. The Excess
Aggregate Contributions resulting from this initial
reduction shall be allocated among the Highly
Compensated Participants whose Employer matching
contributions made pursuant to Section 11.1(b) (to
the extent taken into account pursuant to Section
11.6(a)), voluntary Employee contributions made
pursuant to Section 4.8, Excess Contributions
recharacterized as voluntary Employee contributions
pursuant to Section 11.5 and any Qualified
Non-Elective Contributions or elective deferrals
taken into account pursuant to Section 11.6(c) were
combined to determine the actual contribution ratio.
If further reduction is still required, then Excess
Aggregate Contributions
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<PAGE> 75
resulting from this further reduction shall be
determined by taking into account the contributions
of all Family Members and shall be allocated among
them in proportion to their respective Employer
matching contributions made pursuant to Section
11.1(b) (to the extent taken into account pursuant
to Section 11.6(a)), voluntary Employee
contributions made pursuant to Section 4.8, Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any
Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section
11.6(c).
(h) Notwithstanding the above, within twelve (12)
months after the end of the Plan Year, the Employer may make
a special Qualified Non-Elective Contribution on behalf of
Non-Highly Compensated Participants in an amount sufficient
to satisfy one of the tests set forth in Section 11.6. Such
contribution shall be allocated to the Participant's
Qualified Non-Elective Account of each Non-Highly
Compensated Participant in the same proportion that each
Non-Highly Compensated Participant's Compensation for the
year bears to the total Compensation of all Non-Highly
Compensated Participants. A separate accounting shall be
maintained for the purpose of excluding such contributions
from the "Actual Deferral Percentage" tests pursuant to
Section 11.4.
(i) For purposes of this Section, "Income" means the
income or loss allocable to Excess Aggregate Contributions
which shall equal the sum of the allocable gain or loss for
the Plan Year and the allocable gain or loss for the period
between the end of the Plan Year and the date of
distribution ("gap period"). The income or loss allocable to
Excess Aggregate Contributions for the Plan Year and the
"gap period" is calculated separately and is determined by
multiplying the income or loss for the Plan Year or the "gap
period" by a fraction. The numerator of the fraction is the
Excess Aggregate Contributions for the Plan Year. The
denominator of the fraction is the total Participant's
Account and Voluntary Contribution Account attributable to
Employer matching contributions subject to Section 11.6,
voluntary Employee contributions made pursuant to Section
4.8, and any Qualified Non-Elective Contributions and
elective deferrals taken into account pursuant to Section
11.6(c) as of the end of the Plan Year or the "gap period",
reduced by the gain allocable to such total amount for the
Plan Year or the "gap period" and increased by the loss
allocable to such total amount for the Plan Year or the "gap
period".
In lieu of the "fractional method"
described above, a "safe harbor method" may be used to
calculate the allocable Income for the "gap period". Under
such "safe harbor method", allocable Income for the "gap
period" shall be deemed to equal ten percent (10%) of the
Income allocable to Excess Aggregate Contributions for the
Plan Year of the Participant multiplied by the number of
calendar months in the "gap period". For purposes of
determining the number of calendar months in the "gap
period", a distribution occurring on or before the fifteenth
day of the month shall be treated as having been made on the
last day of the preceding month and a distribution occurring
after such fifteenth day shall be treated as having been made
on the first day of the next subsequent month.
The Income allocable to Excess Aggregate
Contributions resulting from recharacterization of Elective
Contributions shall be determined and distributed as if such
recharacterized Elective Contributions had been distributed
as Excess Contributions.
Notwithstanding the above, for Plan Years
which began in 1987, Income during the "gap period" shall not
be taken into account.
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the
Participant, shall direct the Trustee to distribute to any
Participant in any one Plan Year up to the lesser of (l) 100%
of his accounts as specified in the Adoption Agreement valued
as of the last Anniversary Date or other valuation date or
(2) the amount necessary to satisfy the immediate and heavy
financial need of the Participant. Any distribution made
pursuant to this Section shall be deemed to be made as of the
first day of the Plan Year or, if later, the valuation date
immediately preceding the date of distribution, and the
account from which the distribution is made shall be reduced
accordingly. Withdrawal under this Section shall be
authorized only if the distribution is on account of one of
the following or any other items permitted by the Internal
Revenue Service:
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(l) Medical expenses described in Code Section
213(d) incurred by the Participant, his spouse, or
any of his dependents (as defined in Code Section
152);
(2) The purchase (excluding mortgage payments) of a
principal residence for the Participant;
(3) Payment of tuition for the next semester or
quarter of post-secondary education for the
Participant, his spouse, children, or dependents; or
(4) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(b) No such distribution shall be made from the
Participant's Account until such Account has become fully
Vested.
(c) No distribution shall be made pursuant to this
Section unless the Administrator, based upon the
Participant's representation and such other facts as are
known to the Administrator, determines that all of the
following conditions are satisfied:
(l) The distribution is not in excess of the amount
of the immediate and heavy financial need of the
Participant;
(2) The Participant has obtained all distributions,
other than hardship distributions, and all
nontaxable loans currently available under all plans
maintained by the Employer;
(3) The Plan, and all other plans maintained by the
Employer, provide that the Participant's elective
deferrals and voluntary Employee contributions will
be suspended for at least twelve (12) months after
receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the
Employer, provide that the Participant may not make
elective deferrals for the Participant's taxable
year immediately following the taxable year of the
hardship distribution in excess of the applicable
limit under Code Section 402(g) for such next
taxable year less the amount of such Participant's
elective deferrals for the taxable year of the
hardship distribution.
(d) Notwithstanding the above, distributions from
the Participant's Elective Account and Qualified Non-Elective
Account pursuant to this Section shall be limited solely to
the Participant's Deferred Compensation and any income
attributable thereto credited to the Participant's Elective
Account as of December 31, 1988.
(e) Any distribution made pursuant to this Section
shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code
Sections 411(a)(11) and 417 and the Regulations thereunder.
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AMENDMENT NUMBER ONE TO THE
PENCO, INC. REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
PENCO, Inc. Regional Prototype Defined Contribution Plan and Trust is hereby
amended as follows:
1. Section 1.10 is amended by replacing the first paragraph with the following
paragraphs:
"Compensation" with respect to any Participant means one of the following as
elected in the Adoption Agreement. However, compensation for any Self-Employed
Individual shall be equal to his Earned Income.
i. Information required to be reported under Sections 6041, 6051 and 6052
(Wages, Tips and Other Compensation Box on Form W-2). Compensation is
defined as wages as defined in Section 3401(a) and all other payments of
compensation to an employee by the employer (in the course of the
employer's trade or business) for which the Employer is required to furnish
the Employee a written statement under Sections 6041(d) and 6051(a) (3) 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)).
ii. Section 3401(a) Wages. Compensation is defined as wages within the
meaning of Section 3401(a) for the purposes of income tax withholding at
the source but determined without regard to any rules that limit the
remuneration included in wages bases on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Section 3401(a) (2)).
iii. 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 includable 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 includable in the employee's gross income for the taxable year in
which contributed, or employer contributions under a simplified
employee pension plan to the extent such contributions are deductible
by the employee, or any distributions from a plan of deferred
compensation;
b. Amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or property) held by the employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture;
c. Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
d. Other amounts which 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)
If, in connection with the adoption of this or any other amendment, the
definition of Compensation has been modified, then for Plan Years prior to the
Plan Year which includes the adoption date of such amendment, Compensation
means compensation determined pursuant to the Plan then in effect.
2. Section 1.16 is amended in its entirety to read as follows:
"Elective Contribution" means the Employer's contributions to the Plan that are
made pursuant to the Participant's deferral election pursuant to Section 11.2,
excluding any such amounts distributed as "excess annual additions" pursuant to
Section 4.5. In addition, if selected in E3 of the Adoption Agreement, the
Employer's matching contribution shall or shall not be considered an Elective
Contribution for purposes of the Plan, as provided in Section 11.1(b) .
Elective Contributions shall be subject to the
PAGE 1
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requirements of Sections 11.2(b) and 11.2(c) and shall further be required to
satisfy the discrimination requirements of Regulation 1.401(k)-1(b) (3), the
provisions of which are specifically incorporated herein by reference.
3. Section 1.22 is amended in its entirety to read as follows:
"Excess Deferred Compensation" means, with respect to any taxable year of a
Participant, the excess of the aggregate amount of such Participant's Deferred
Compensation and the elective deferrals pursuant to Section 11.2(f) actually
made on behalf of such Participant for such taxable year, over the dollar
limitation provided for in Code Section 402 (g), which is incorporated herein
by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.5 when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year.
4. Section 1.28 is amended in its entirety to read as follows:
"414(s) Compensation" with respect to any Employee means his Compensation as
defined in Section 1.10. However, for purposes of this Section, Compensation
shall be Compensation paid and, if selected in the Adoption Agreement, shall
only be recognized as of an Employee's effective date of participation. If, in
connection with the adoption of this or any other amendment, the definition of
"414(s) Compensation" has been modified, then, for Plan Years prior to the Plan
Year which includes the adoption date of such amendment, "414(s) Compensation"
means compensation determined pursuant to the Plan then in effect.
5. Section 1.29 ("415 Compensation") is amended by the addition of the
following paragraph:
If, in connection with the adoption of this or any other amendment, the
definition of "415 Compensation" has been modified, then, for Plan Years prior
to the Plan Year which includes the adoption date of such amendment, "415
Compensation" means compensation determined pursuant to the Plan then in
effect.
6. Section 4.5(a) (4) and 4.5(a) (4) (i) are amended to read as follows:
(4) If there is an excess amount pursuant to Section 4.5(a) (2), the excess
will be disposed of in one of the following manners, as uniformly determined by
the Plan Administrator for all Participants similarly situated:
(i) Any Deferred Compensation or nondeductible Voluntary Employee
Contributions, to the extent they would reduce the Excess Amount will be
distributed to the Participant;
7. Section 4.5(f) (2) is amended in its entirety to read as follows:
Compensation means a Participant's Compensation as elected in the Adoption
Agreement. However, regardless of any selection made in the Adoption Agreement,
"415 Compensation" shall exclude compensation which is not currently includable
in the Participant's gross income by reason of the application of Code Sections
125, 402(a) (8) , 402(h) (1) (B) , or 403(b)
For limitation years beginning after December 31, 1991, for purposes of
applying the limitations of this article, compensation for a limitation year is
the compensation actually paid or made available during such limitation year.
Notwithstanding the preceding sentence, compensation for a participant in a
defined contribution plan who is permanently and totally disabled (as defined
in Section 22 (e) (3) of the Internal Revenue 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 compensation for the disabled
participant may be taken into account only if the Participant is not a Highly
Compensated Employee and contributions made on behalf of such Participant are
nonforfeitable when made.
8. Section 4.6(a) is amended in its entirety to read as follows:
(a) If as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's annual Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of Code
Section 402(g) (3)) that may be made with respect to any Participant under the
Limits of Section 4.5, or other facts and circumstances to which Regulation
PAGE 2
<PAGE> 79
1.415-6(b) (6) shall be applicable, the "annual additions" under this Plan
would cause the maximum provided in Section 4.5 to be exceeded, the
Administrator shall treat the excess in accordance with Section 4.5(a) (4).
9. Sections 6.11(a) (1) and 6.11(a) (4) are amended in their entirety to read
as follows:
(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, his spouse, or any of his dependents (as defined in Code Section
152) or expenses necessary for these persons to obtain medical care;
(4) Payment of tuition and related educational fees for the next 12 months or
post-secondary education for the Participant, his spouse, children, or
dependents;
10. Section 7.10 is amended by the addition of the following paragraphs:
(a) Notwithstanding any provision of the plan to the contrary, with respect to
distributions made after December 31, 1992, a Participant shall be permitted to
elect to have any "eligible rollover distribution" transferred directly to an
"eligible retirement plan" specified by the Participant. The Plan provisions
otherwise applicable to distributions continue to apply to the direct transfer
option. The Participant shall, in the time and manner prescribed by the
Administrator, specify the amount to be directly transferred and the "eligible
retirement plan" to receive the transfer. Any portion of a distribution which
is not transferred shall be distributed to the Participant.
(b) For purposes of this Section, the term "eligible rollover distribution"
means any distribution other than a distribution of substantially equal
periodic payments over the life or life expectancy of the Participant (or joint
life or joint life expectancies of the Participant and the designated
beneficiary) or a distribution over a period certain of ten years or more.
Amounts required to be distributed under Code Section 401(a) (9) are not
eligible rollover distributions. The direct transfer option described in
subsection (a) applies only to eligible rollover distributions which would
otherwise be includible in gross income if not transferred.
(c) For purposes of this Section, the term "eligible retirement plan" means an
individual retirement account as described in Code Section 408 (a), an
individual retirement annuity as described in Code Section 408 (b), an annuity
plan as described in Code Section 403 (a), or a defined contribution plan as
described in Code Section 401(a) which is exempt from tax under Code Section
501(a) and which accepts rollover distributions.
(d) The election described in subsection (a) also applies to the surviving
spouse after the Participant's death; however, distributions to the surviving
spouse may only be transferred to an individual retirement account or
individual retirement annuity. For purposes of subsection (a), a spouse or
former spouse who is the alternate payee under a qualified domestic relations
order as defined in Code Section 414(p) will be treated as the Participant.
11. Section 11.2(d) is amended in its entirety to read as follows:
(d) In any Plan Year beginning after December 31, 1986, a Participant's
Deferred Compensation made under this Plan and all other plans, contracts or
arrangements of the Employer maintaining this Plan shall not exceed the
limitation imposed by Code Section 402 (g), as in effect for the calendar year
in which such Plan Year began. If such dollar limitation is exceeded solely
from elective deferrals made under this Plan or any other Plan maintained by
the Employer, a Participant will be deemed to have notified the Administrator
of such excess amount which shall be distributed in a manner consistent with
Section 11.2(f). This dollar limitation shall be adjusted annually pursuant to
the method provided in Code Section 415(d) in accordance with Regulations.
12. Section 11.2(f) is amended by the addition of the following paragraph after
paragraph (f) (3) to read as follows:
Any distribution under this Section shall be made first from unmatched Deferred
Compensation and, thereafter, simultaneously from Deferred Compensation which
is matched and matching contributions which relate to such Deferred
Compensation. However, any such matching contributions which are not Vested
shall be forfeited in lieu of being distributed.
13. Section 11.2(f) is amended by the addition of the following paragraph as
the second to the last paragraph of such subsection:
PAGE 3
<PAGE> 80
Notwithstanding the above, for any distribution under this Section which is
made after August 15, 1991, such distribution shall not include any income for
the "gap period". Further provided, for any distribution under this Section
which is made after August 15, 1991, the amount of Income may be computed using
a reasonable method that is consistent with Section 4.4(c), provided such
method is used consistently for all Participants and for all such distributions
for the Plan Year.
14. Section 11.5(c) is amended by the addition of the following paragraph as
the second to the last paragraph of such subsection:
Notwithstanding the above, for any distribution under this Section which is
made after August 15, 1991, such distribution shall not include any income for
the "gap period". Further provided, for any distribution under this Section
which is made after August 15, 1991, the amount of Income may be computed using
a reasonable method that is consistent with Section 4.4(c), provided such
method is used consistently for all Participant and for all such distributions
for the Plan Year.
15. Section 11.6(c) is amended in its entirety to read as follows:
(c) For purposes of determining the "Actual Contribution Percentage" and the
amount of Excess Aggregate Contributions pursuant to Section 11.7(d), only
Employer matching contributions (excluding matching contributions forfeited or
distributed pursuant to Section 11.2(f), 11.5(a), or 11.7(a)) contributed to
the Plan prior to the end of the succeeding Plan Year shall be considered. In
addition, the Administrator may elect to take into account, with respect to
Employees eligible to have Employer matching contributions made pursuant to
Section 11.1(b) or voluntary Employee contributions made pursuant to Section
4.8 allocated to their accounts, elective deferrals (as defined in Regulation
1.402(g) -1(b)) and qualified non-elective contributions (as defined in Code
Section 401(m) (4) (C)) contributed to any Plan maintained by the Employer.
Such elective deferrals and qualified non-elective contributions shall be
treated as Employer matching contributions subject to Regulation 1.401(m)
- -1(b)(2) which is incorporated herein by reference. However, for Plan Years
beginning after December 31, 1988, the Plan Year must be the same as the plan
year of the plan to which the elective deferrals and the qualified non-elective
contributions are made.
16. Section 11.7(i) is amended by the addition of the following paragraph as
the second to the last paragraph of such subsection:
Notwithstanding the above, for any distribution under this Section which is
made after August 15, 1991, such distribution shall not include any Income for
the "gap period". Further provided, for any distribution under this Section
which is made after August 15, 1991, the amount of Income may be computed using
a reasonable method that is consistent with Section 4.4(c), provided such
method is used consistently for all Participants and for all such distributions
for the Plan Year.
17. Sections 11.8(a) (1) and (a) (3) are amended in their entirety to read as
follows:
(1) Medical expense described in Code Section 213(d) incurred by the
Participant, his spouse, or any of his dependents (as defined in Code Section
152) or expenses necessary for these persons to obtain medical care;
(3) Payment of tuition and related educational fees for the next 12 months of
post-secondary education for the Participant, his spouse, children, or
dependents; or
18. Section 11.8(c) (1) is amended in its entirety to read as follows:
(1) The distribution is not in excess of the amount of the immediate and heavy
financial need of the Participant. The amount of the immediate and heavy
financial need may include any amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result from the
distribution.
19. Article XI is amended by the addition of the following:
Notwithstanding anything in this article to the contrary, effective as of the
Plan Year in which this amendment becomes effective, the Actual Deferral
percentage Test and the Actual Contribution percentage Test shall be applied
(and adjusted) by applying the Family Member aggregation rules of Code Section
414(q)(6).
PAGE 4
<PAGE> 81
20. Section E1a. of the Adoption Agreement is amended in its entirety to read
as follows:
Compensation with respect to any Participant means:
1. ( ) Wages, Tips and other Compensation (Box 10 on Form W-2).
2. ( ) Section 3401(a) wages (wages for withholding purposes).
3. (X) 415 Safe-harbor compensation.
AND Compensation
(X) shall
( ) shall not
exclude (even if includible in gross income) reimbursements or other expense
allowances, fringe benefits (cash or noncash), moving expenses, deferred
compensation, and welfare benefits.
21. Section E3 of the 401(k) Adoption Agreement(s) is amended by the addition
of the following:
( ) Notwithstanding anything in the Plan to the contrary, all matching
contributions which relate to distributions of Excess Deferred Compensation,
Excess Contributions and Excess Aggregate Contributions shall be Forfeited.
(Select this option only if it is applicable.)
NOTE: THIS AMENDMENT ONLY NEEDS TO BE EXECUTED BELOW BY THE EMPLOYER IF THE
PLAN IS BEING AMENDED TO UTILIZE THE MODIFICATIONS MADE TO SECTION El OR E3 OF
THE ADOPTION AGREEMENT.
IN WITNESS WHEREOF, the Employer hereby causes this Amendment to be executed on
this 1st day of August, 1996.
EMPLOYER: PARTICIPATING EMPLOYER:
The Potters Savings and Loan Company
By: /s/ ANNE S. MYERS By:
--------------------------- -----------------------------
(Signature of Officer) (Signature of Officer)
PAGE 5
<PAGE> 1
EXHIBIT 5
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P.O. BOX 2508
CINCINNATI, OH 45201
Date: Dec 03 1996 Employer Identification Number:
34-0469820
POTTERS SAVINGS & LOAN CO DLN:
PO BOX 1028 17007281081006
EAST LIVERPOOL, OH 43920 Person to Contact:
Cindy Perry
Contact Telephone Number:
(513) 684-3957
Plan Name:
401K RET SAV PL
Plan Number: 003
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for you plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal
or local statutes.
This determination letter is applicable for the plan adopted on August
1, 1996.
This plan has been mandatorily disaggregated, permissively aggregated,
or restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of
section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect to
those benefits, rights, and features that are currently available to all
employees in the plan's coverage group. For this purpose, the plan's coverage
group consists of those employees treated as currently benefiting for purposes
of demonstrating that the plan satisfies the minimum coverage requirements of
section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act, Pub. L. 103-465.
We have sent a copy of this letter to your representative as indicated
in the power of attorney.
<PAGE> 2
POTTERS SAVINGS & LOAN CO
If you have any questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
/s/ C. ASHLEY BULLARD
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
registration statement on Form S-8 for the Potters Savings and Loan 401(k)
Retirement Savings Plan of our report dated February 6, 1997 on the
consolidated balance sheets of Potters Financial Corporation as of December 31,
1996 and 1995 and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1996, which report is included in Potters Financial Corporation's 1996
Annual Report on Form 10-KSB.
/s/ CROWE, CHIZEK AND COMPANY LLP
Crowe, Chizek and Company LLP
Columbus, Ohio
May 27, 1997
