As filed with the Securities and Exchange Commission on August 17, 1999
Registration No. 001-_________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
PINNACLE BANCSHARES, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
ALABAMA 72-1370314
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1811 SECOND AVENUE
JASPER, ALABAMA 35502-1388
---------------------------------------
(Address of Principal Executive Office)
PINNACLE BANK PROFIT SHARING RETIREMENT PLAN
--------------------------------------------
(Full title of the Plan)
ROBERT B. NOLEN, JR., PRESIDENT
PINNACLE BANCSHARES, INC.
1811 SECOND AVENUE
JASPER, ALABAMA 35502-1388
--------------------------------------
(Name and Address of Agent for Service)
(205) 221-4111
-------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent for Service)
COPIES TO:
EDWARD B. CROSLAND, JR., ESQUIRE
J. MARK POERIO, ESQUIRE
KUTAK ROCK
1101 CONNECTICUT AVENUE, N.W., SUITE 1000
WASHINGTON, D.C. 20036-4374
(202) 828-2400
------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================
Title Of Amount Proposed Maximum Proposed Maximum Amount of
Securities To Be Offering Price Aggregate Offering Registration
To Be Registered (1) Registered (2) Per Share (3) Price (4) Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 100,000 $9.875 $987,500.00 $275.00
=====================================================================================================
<FN>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this Registration
Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the Pinnacle
Bank Profit Sharing Retirement Plan (the "Plan"), as described herein.
(2) Estimates the maximum number of shares expected to be issued under the Plan assuming that all employer
and employee contributions to the Plan are used to purchase shares of Common Stock, together with an
indeterminate number of shares which may be necessary to adjust the number of additional shares of
Common Stock reserved for issuance pursuant to the Plan and being registered hereby, as the result of a
stock split, stock dividend, reclassification, recapitalization or similar adjustment(s) of the Common
Stock of Pinnacle Bancshares, Inc.
(3) Under Rule 457(c), the shares are being registered based upon the average of the high and low selling
prices of the common stock of the Registrant as reported on the American Stock Exchange ("AMEX") on
August 11, 1999 of $9.875 per share ($987,500 in the aggregate).
(4) Estimated based on (2) and (3) above.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION
10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
*This Registration Statement relates to the registration of 100,000 shares
of Common Stock, $.01 par value per share, of Pinnacle Bancshares, Inc. (the
"Company") reserved for issuance and delivery under the Pinnacle Bank Profit
Sharing Retirement Plan (the "Plan"). Documents containing the information
required by Part I of this Registration Statement will be sent or given to
participants in the Plan as specified by Rule 428(b)(1). Such documents are not
filed with the Securities and Exchange Commission (the "Commission") either as
part of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424, in reliance on Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Pinnacle Bancshares, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
and, accordingly, files periodic reports and other information with the
Commission. Reports, proxy statements and other information concerning the
Company filed with the Commission may be inspected and copies may be obtained
(at prescribed rates) at the Commission's Public Reference Section, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company. The address for the Commission's Web site is
"http://www.sec.gov".
The following documents filed by the Company are incorporated in this
Registration Statement by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998 (Commission File No. 001-12707);
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1999 (Commission File No. 001-12707);
(c) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1999 (Commission File No. 001-12707);
(d) The description of the Company's securities contained in this Company's
Registration Statement on Form 8-A as filed with the Commission on January 29,
1997.
ALL DOCUMENTS FILED BY THE COMPANY PURSUANT TO SECTIONS 13(A), 13(C), 14
AND 15(D) OF THE 1934 ACT AFTER 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 BE DEEMED
TO BE INCORPORATED BY REFERENCE IN THIS REGISTRATION STATEMENT, AND TO BE A PART
HEREOF FROM THE DATE OF FILING OF SUCH DOCUMENTS.
<PAGE>
ITEM 4. DESCRIPTIONS OF SECURITIES
Not applicable, as the Common Stock is registered under Section 12 of the
Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Directors, officers and employees of the Company may be entitled to benefit
from the indemnification provisions contained in the Delaware General
Corporation Law (The "DGCL") and the Company's Certificate of Incorporation. The
general effect of these provisions is summarized below:
Delaware General Corporation Law
Section 145 of the DGCL permits a Delaware corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding of any type (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, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' 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, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, may not, of itself, create a presumption that these standards
have not been met.
A Delaware corporation may also indemnify any person who was or is a party
or is threatened to be made a party to any proceeding 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, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' 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. However, no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought
determines upon application that such person is fairly and reasonably entitled
to be indemnified.
To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any proceeding
described above, indemnification against expenses (including attorneys' fees)
actually and reasonably incurred by him is mandatory.
Any determination that indemnification of the director, officer, employee
or agent is proper in the circumstances because he or she has met the applicable
standard of conduct noted above must be made by a majority of the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or if such a quorum is not
obtainable, or, even if obtainable and a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or by the
stockholders.
Expenses (including attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
or proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation.
2
<PAGE>
The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section is not exclusive.
In addition, a corporation shall have power to purchase and maintain
insurance against any liability of individuals whom the corporation is required
to indemnify.
Certificate of Incorporation of the Company
The Company's Certificate of Incorporation provides for indemnification of
any individual who is or was a director, officer, employee or agent of the
Company in any proceeding in which the individual is made a party as a result of
his service in such capacity, if the individual acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Company and, with respect to any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful, unless such indemnification would be
prohibited by law. This provision does not apply to conduct prior to the
incorporation of the Company or to conduct not as a director, officer, employee
or agent of the Company. In accordance with Delaware law, an individual may not
be indemnified (i) in connection with a proceeding by or in the right of the
Company in which the individual was adjudged liable to the Company or (ii) in
connection with any other proceeding charging improper personal benefit to him
in which he was adjudged liable on the basis that personal benefit was
improperly received by him, unless a court of competent jurisdiction determines
he is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances.
The Company's Certificate of Incorporation also provides that a director
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of his fiduciary duty as a director, except (i) for breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions that are not in good faith or that involve gross negligence,
intentional misconduct or a knowing violation of law, (iii) for certain unlawful
distributions, or (iv) for any transaction from which the director derived an
improper personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
The exhibits scheduled to be filed as part of this Registration Statement
are as follows:
4.1 Pension & Benefit Financial Services, Inc. Standardized 401(k) Profit
Sharing Plan and Trust and Adoption Agreement (the "Plan")
4.2 Summary Plan Description of the Plan
23 Consent of Arthur Andersen LLP
24 Power of Attorney of directors and officers of the Company (included
in the signature page to this Registration Statement)
3
<PAGE>
ITEM 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. 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 volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
4
<PAGE>
4. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
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 Jasper, State of Alabama, on this 21st day of July,
1999.
PINNACLE BANCSHARES, INC.
By: /s/ Robert B. Nolen, Jr.
-----------------------------------------------
Robert B. Nolen, Jr.
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed by the following persons (including a
majority of the Board of Directors of the Registrant) in the capacities and on
the dates indicated.
We, the undersigned directors and officers of the Registrant, hereby
severally constitute and appoint Robert B. Nolen, Jr. our true and lawful
attorney and agent, to do any and all things in our names in the capacities
indicated below which said person may deem necessary or advisable to enable the
Registrant to comply with the Securities Act of 1933, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission, in
connection with the registration statement on Form S-8 relating to the offering
of the Registrant's Common Stock, including specifically, but not limited to,
power and authority to sign for us, in our names in the capacities indicated
below, the registration statement and any and all amendments (including
post-effective amendments) thereto; and we hereby approve, ratify and confirm
all that said person shall do or cause to be done by virtue thereof.
Signatures Title Date
- ---------- ----- ----
/s/ Robert B. Nolen, Jr. Director, President and July 21, 1999
- --------------------------
Robert B. Nolen, Jr. Chief Executive Officer
(Principal Executive Officer
and Principal Financial Officer)
/s/ Marie T. Guthrie Controller July 21, 1999
- --------------------------
Marie T. Guthrie
/s/ Albert H. Simmons Chairman of the Board July 21, 1999
- --------------------------
Albert H. Simmons
/s/ Greg Batchelor Director July 21, 1999
- --------------------------
Greg Batchelor
/s/ O. H. Brown Director July 21, 1999
- --------------------------
O. H. Brown
6
<PAGE>
/s/ James W. Cannon Director July 21, 1999
- --------------------------
James W. Cannon
/s/ Melvin R. Kacharos Director July 21, 1999
- --------------------------
Melvin R. Kacharos
/s/ Sam W. Murphy Director July 21, 1999
- --------------------------
Sam W. Murphy
/s/ Max W. Perdue Director July 21, 1999
- --------------------------
Max W. Perdue
/s/ J. T. Waggoner Director July 21, 1999
- --------------------------
J. T. Waggoner
7
<PAGE>
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 the City of Jasper, State of Alabama,
on August 12, 1999.
PINNACLE BANK PROFIT SHARING RETIREMENT PLAN
By /s/ Al H. Simmons
-----------------------------------------
Al H. Simmons, Trustee
By /s/ Thomas L. Sherer
-----------------------------------------
Thomas L. Sherer, Trustee
By /s/ Robert B. Nolen, Jr.
-----------------------------------------
Robert B. Nolen, Jr., Trustee
By /s/ Mary Jo Gunter
-----------------------------------------
Mary Jo Gunter, Trustee
8
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
4.1 Pension & Benefit Financial Services, Inc. Standardized 401(k) Profit
Sharing Plan and Trust and Adoption Agreement (the "Plan")
4.2 Summary Plan Description of the Plan
23 Consent of Arthur Andersen LLP
24 Power of Attorney of directors and officers of the Company (included
in the signature page to this Registration Statement)
9
EXHIBIT 4.1
<PAGE>
PENSION & BENEFIT FINANCIAL SERVICES, INC.
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context:
1.1 "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 "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.
1.8 "CODE" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.9 "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.
(a) 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 Code Section 3401(a), and all other
payments of Compensation to an Employee by the Employer (in the course of
the Employer's trade or business) for which the Employer is required to
furnish the Employee a written statement under Code Sections 6041(d) and
6051(a)(3). Compensation must be determined without regard to any rules
under Code Section 3401(a) that limit the remuneration included in wages
<PAGE>
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)).
(b) Section 3401(a) wages Compensation is defined as wages within the
meaning of Code Section 3401(a) for the purposes of income tax withholding
at the source but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
(c) 415 safe-harbor compensation. Compensation is defined as wages,
salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in gross
income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements, or other expense allowances under a nonaccountable plan (as
described in Regulation Section 1.62-2(c)), and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for the
taxable year in which contributed, or Employer contributions under a
simplified employee pension plan to the extent such contributions are
deductible by the Employee, or any distributions from a plan of
deferred compensation;
(2) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the Employee
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(4) Other amounts which 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 Internal Revenue Code (whether or
not the contributions are actually excludable from the gross income of
the Employee).
If, in connection with the adoption of any 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.
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).
2
<PAGE>
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.
For Plan Years beginning prior to January 1, 1989, the $200,000 limit
(without regard to Family Member aggregation) shall apply only for Top Heavy
Plan Years and shall not be adjusted.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation for each Employee
taken into account under the Plan shall not exceed the OBRA '93 annual
Compensation limit. The OBRA '93 annual Compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual Compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA
'93 annual Compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
Compensation limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the Plan
Year beginning on or after January 1, 1994, the OBRA '93 annual Compensation
limit is $150,000.
1.10 "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.
3
<PAGE>
1.11 "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.
1.12 "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.
1.13 "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).
1.14 "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 4.4. In addition, if selected in E3 of the
Adoption Agreement, the Employer's matching contribution made pursuant to
Section 11.1(b) 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 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)-l(b)(3), the provisions of which are specifically incorporated herein
by reference.
1.15 "ELIGIBLE EMPLOYEE" means any Employee specified in D1 of the Adoption
Agreement.
1.16 "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.
1.17 "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.
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1.18 "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.
1.19 "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).
1.20 "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 4.4 when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year.
1.21 "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 414(q)(6)(B).
1.22 "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.
1.23 "FISCAL YEAR" means the Employer's accounting year as specified in the
Adoption Agreement.
1.24 "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.
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1.25 "FORMER PARTICIPANT" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.26 "414(S) COMPENSATION" with respect to any Employee means his
Compensation as defined in Section 1.9. 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 any 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 Year in
effect.
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)(1)(B), or 403(b), plus Elective Contributions attributable to
Deferred Compensation recharacterized as voluntary Employee contributions
pursuant to 11.5(a).
1.27 "415 COMPENSATION" means compensation as defined in Section 4.4(f)(2).
If, in connection with the adoption of any amendment, the definition of
"415 Compensation" has been modified, then, for Plan Years prior to the Plan
Year which includes the adoption date of such amendment, "415 Compensation"
means compensation determined pursuant to the Plan then in effect.
1.28 "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 1.35(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 415(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 415(b)(1)(A) limit, then the highest paid
officer of the Employer will be treated as a Highly Compensated Employee.
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(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 414(n)(5) and are not covered in any
qualified plan maintained by the Employer. The exclusion of Leased Employees for
this purpose shall be applied on a uniform and consistent basis for all of the
Employer's retirement plans. In addition, Highly Compensated Former Employees
shall be treated as Highly Compensated Employees without regard to whether they
performed services during the "determination year."
1.29 "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 1.28. 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
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<PAGE>
Former Employee" shall be applied on a uniform and consistent basis for all
purposes for which the Code Section 414(q) definition is applicable.
1.30 "HIGHLY COMPENSATED PARTICIPANT" means any Highly Compensated Employee
who is eligible to participate in the Plan.
1.31 "HOUR OF SERVICE" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (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 arc
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.
1.32 "INSURER" means any legal reserve insurance company which shall issue
one or more policies under the Plan.
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1.33 "INVESTMENT MANAGER" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
1.34 "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.
1.35 "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 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from the
Employer for a Plan Year greater than the dollar limitation in effect under
Code Section 415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning of Code Section
318) both more than one-half percent 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
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<PAGE>
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 414(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)(1)(B) and, in the case of Employer contributions made pursuant
to a salary reduction agreement, Code Section 403(b).
1.36 "LATE RETIREMENT DATE" means the date of, or the first day of the
inonth 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.
1.37 "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 10 percent of 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.
1.38 "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.
1.39 "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 4.3(b) shall be considered a Non-Elective
Contribution for purposes of the Plan.
1.40 "NON-HIGHLY COMPENSATED PARTICIPANT" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.41 "NON-KEY EMPLOYEE" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
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1.42 "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.
1.43 "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.
1.44 "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.
1.45 "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.
1.46 "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.
1.47 "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 or Money Purchase Plan, and (b) the Employer's Non-Elective
Contributions in the case of a 401(k) Profit Sharing Plan.
1.48 "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.
1.49 "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
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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.
1.50 "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 4.6.
1.51 "PLAN" means this instrument (hereinafter referred to as Pension &
Benefit Financial Services, 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.
1.52 "PLAN YEAR" means the Plan's accounting year as specified in C2 of the
Adoption Agreement.
1.53 "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.
1.54 "QUALIFIED NON-ELECTIVE ACCOUNT" means the account established
hereunder to which Qualified Non-Elective Contributions are allocated.
1.55 "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.
1.56 "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 4.9.
1.57 "REGULATION" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.58 "RETIRED PARTICIPANT" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.59 "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).
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1.60 "SELF-EMPLOYED INDIVIDUAL" means an individual who has earned income
for the taxable year from the trade or business for which the Plan is
established and, also, an individual who would have had earned income but for
the fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.61 "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.
1.62 "SHORT PLAN YEAR" means, if specified in the Adoption Agreement, that
the Plan Year shall be less than a 12-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.
1.63 "SUPER TOP HEAVY PLAN" means a plan described in Section 2.2(b).
1.64 "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 3121(a)(1).
1.65 "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.
1.66 "TOP HEAVY PLAN" means a plan described in Section 2.2(a).
1.67 "TOP HEAVY PLAN YEAR" means a Plan Year commencing after December 31,
1983 during which the Plan is a Top Heavy Plan.
1.68 "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 1.28) 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 911 (d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. 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;
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(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.
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.
1.69 "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 12 months. The
disability of a Participant shall be determined by a licensed physician chosen
by the Administrator. However, if the condition constitutes total disability
under the federal Social Security Acts, the Administrator may rely upon such
determination that the Participant is Totally and Permanently Disabled for the
purposes of this Plan.
The determination shall be applied uniformly to all Participants.
1.70 "TRUSTEE" means the person or entity named in B6 of the Adoption
Agreement and any successors.
1.71 "TRUST FUND" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.72 "VESTED" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.73 "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 4.7.
1.74 "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
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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.
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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 4.3(i) of the Plan.
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, (1) 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, (1) 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 (12) 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;
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(3) for a Money Purchase 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.
(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 31, 1983 as part of the
Participant's Aggregate Account balance. However, rollovers or plan-to-plan
transfers accepted prior to January 1, 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.
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(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 401 (a)(4) or 410, 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 401(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.
(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 411 (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
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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:
(1) 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 Iof 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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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 receive benefits under the Plan;
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(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;
(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
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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.
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
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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 the 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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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 4.3(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.
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(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:
(1) 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.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan -
(1) 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 1, 1990, and if
elected in the non-standardized Adoption Agreement for any Plan Year
beginning on or after January 1, 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 4.3(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
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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 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.
4.3 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:
(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 4.3(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.
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.
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(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 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 4.3(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 4.3(h).
(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 the 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
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defined in Section 4.4) to any Participant's Account to exceed the amount
allowable by the Code, the excess shall be reallocated in accordance with
Section 4.5. 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 Plan Forfeitures
for that year, unless there is a Short Plan Year or a contribution required
pursuant to Section 4.3(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 401(a)(4) or
410, the sum of the Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall be equal to the
largest percentage allocated to the Participant's Combined Account of any Key
Employee.
However, for each Non-Key Employee who is a Participant in a paired Profit
Sharing Plan or 401(k) Profit Sharing Plan and a paired Money Purchase Plan, the
minimum 3% allocation specified above shall be provided in the Money Purchase
Plan.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows:
(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 (1) 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
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<PAGE>
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.
(g) For purposes of the minimum allocations set forth above, the percentage
allocated to the Participant's Combined Account of any Key Employee shall be
equal to the ratio of the sum of the Employer's contributions and Forfeitures
allocated on behalf of such Key Employee divided by the "415 Compensation" for
such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set forth in this
Section shall be allocated to the Participant's Combined Account of all Non-Key
Employees who are Participants and who are employed by the Employer on the last
day of the Plan Year, including Non-Key Employees who have (1) failed to
complete a Year of Service; or (2) declined to make mandatory contributions (if
required) or, in the case of a cash or deferred arrangement, elective
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 F1b 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 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
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<PAGE>
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 F1c of the Adoption Agreement is Selected -
(i) The minimum allocation specified in Section 4.3(i)(1)(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 4.3(i)(1)(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 4.3(i)(1)(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 1, 1989, the
$200,000 limit shall apply only for Top Heavy Plan Years and shall not be
adjusted.
(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:
(1) 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.
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<PAGE>
(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 401(a)(26), 410(b)(1), 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:
(1) 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 (1) 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.
4.4 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 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
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<PAGE>
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 there is an excess amount pursuant to Section 4.4(a)(2) or Section
4.5, 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;
(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;
(iii) If, after the application of subparagraph (i), an Excess Amount
still exists, and the Participant is not covered by the Plan at the end of
a Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future Employer
contributions (including allocation of any Forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation
Year if necessary;
(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)(1) 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
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<PAGE>
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.
(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 4.4(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 4.4(b)(2) or Section 4.5, a Participant's
Annual Additions under this Plan and such other plans would result in an Excess
Amount for a Limitation Year, the Excess Amount will be deemed to consist of the
Annual Additions last allocated, except that Annual Additions attributable to a
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 (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this Plan to (2)
the total Annual Additions allocated to the Participant for the Limitation
Year as of such date under this and all the other qualified defined
contribution plans.
(6) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 4.4(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
4.4(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.
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<PAGE>
(e) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an "annual
addition." In addition, the following are not Employee contributions for the
purposes of Section 4.4(f)(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:
(1) 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
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare 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: (1) any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
"annual addition," or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(l)(1). Notwithstanding the foregoing, for
"limitation years" beginning prior to January 1, 1987, only that portion of
Employee contributions equal to the lesser of Employee contributions in
excess of six percent (6%) of "415 Compensation" or one-half of Employee
contributions shall be considered an "annual addition."
For this purpose, any Excess Amount applied under Sections 4.4(a)(4) and
4.4(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 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 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).
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
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<PAGE>
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.
(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) 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 31, 1986,
in one or more defined benefit plans maintained by the Employer which were
in existence on May 6, 1986, the denominator of this fraction will not be
less than 125 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 1, 1987, disregarding any changes
in the terms and conditions of the plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Code Section 415 for all Limitation
Years beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 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 415(b)(1) 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
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<PAGE>
year. For Limitation Years beginning prior to January 1, 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 (1) the excess of the sum of the fractions
over 1.0 times (2) the denominator of this fraction, will be permanently
subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end of
the last Limitation Year beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the plan made after May 5, 1986,
but using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
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).
(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.
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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:
(i) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(ii) 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.
4.5 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, a reasonable error in
determining the amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any Participant under the limits of
Section 4.4, or other facts and circumstances to which Regulation 1.415-6(b)(6)
shall be applicable, the "annual additions" under this Plan would cause the
maximum provided in Section 4.4 to be exceeded, the Administrator shall treat
the excess in accordance with Section 4.4(a)(4).
4.6 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
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<PAGE>
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)- 1(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.
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(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 not result in the
elimination or reduction of any "Section 41l(d)(6) protected benefit" as
described in Section 8.1.
4.7 VOLUNTARY CONTRIBUTIONS
(a) If this is an amendment to a Plan that had previously allowed voluntary
Employee contributions, then, except as provided in 4.7(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 Agreement, 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
411(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
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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.
4.8 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 changes between investments may be made,
and any other limitations that the Administrator shall impose on a Participant's
right to direct investments.
4.9 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 219(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.
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4.10 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.
4.11 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
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.
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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 4.3, 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
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(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 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 4.3 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
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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 41l(a)(11) and 417 and the
Regulations thereunder.
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 1, 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
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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 1, 1989, or with respect to Employees who fail to
complete at least one (1) Hour of Service in a Plan Year beginning after
December 31, 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.
(g)(1) 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
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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 I-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
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Survivor 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
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(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:
(1) One lump-sum payment in cash or in property;
(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:
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(1) No consent shall be valid unless the Participant has received a
general description of the material features and an explanation of the
relative values of the optional forms of benefit available under the Plan
that would satisfy the notice requirements of Code Section 417.
(2) The Participant must be informed of 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 uinder 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 1, 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 1.401(a)(9)-2), the provisions of which are incorporated herein by
reference:
(1) A Participant's benefits shall be distributed to him not later
than April lst 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) 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 lst 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 lst 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 1, 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.
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(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 1, 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 (RxD)) - (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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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)(4). For the purposes of this paragraph, the term "applicable
period" means, with respect to a Participant, whichever of the following periods
ends last:
(1) The period beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;
(2) A reasonable period after the individual becomes a Participant.
For this purpose, in the case of an individual who becomes a Participant
after age 32, the explanation must be provided by the end of the three-year
period beginning with the first day of the first Plan Year for which the
individual is a Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity with respect to
the Participant;
(4) A reasonable period ending after Code Section 401(a)(11) applies
to the Participant; or
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(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.
(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.
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(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant made or or after January 1, 1985,
shall be made in accordance with the following requirements and shall otherwise
comply with Code Section 401(a)(9) and the Regulations thereunder.
(1) If it is determined, pursuant to Regulations, that the
distribution of a Participant's interest has begun and the Participant dies
before 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 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.
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(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 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;
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(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
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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:
(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;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
(4) Payment of tuition and related educational fees for the next 12
months 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 31, 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):
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(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;
(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.
(d) If a distribution is one to which Sections 401(a)(11) and 417 of
the Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under Section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(1) the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after the
notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option),
and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
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;
(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
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(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
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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 4.9, shall not be applied to the purchase of life insurance contracts.
(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
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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 terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any part,
of the Trust Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing;
(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;
(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;
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(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
circumstances: (1) loans shall be made available to all Participants and
Beneficiaries on a reasonably equivalent basis; (2) loans shall not be made
available to Highly Compensated Employees in an amount greater than the amount
made
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available to other Participants; (3) loans shall bear a reasonable rate of
interest; (4) loans shall be adequately secured; and (5) loans shall provide for
periodic repayment over a reasonable period of time.
(b) Loans shall not be made to any Shareholder-Employee or Owner-Employee
unless an exemption for such loan is obtained pursuant to Act Section 408 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:
(1) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Participant during the one-year
period ending on the day before the date on which such loan is made, over
the outstanding balance of loans from the Plan to the Participant on the
date on which such loan was made, or
(2) 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 1, 1987,
the $50,000 limit specified in (1) 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 1, 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 1, 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.
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(h) Any loan made pursuant to this Section after August 18, 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.
(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
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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
(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.
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(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 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.
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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.
(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.
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.
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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 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 (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement when such
language is necessary to satisfy 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.
(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)W 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
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of the amendment. "Section 41l(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 41l(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
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Employee. Nothing contained in this Plan shall be deemed to give any Participant
or Employee the right to be retained in the service of the Employer or to
interfere with the right of the Employer to discharge any Participant or
Employee at any time regardless of the effect which such discharge shall have
upon 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 Participant's 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.
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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 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 (1) year following the
time of payment and the Trustees shall return such amount to the Employer within
the one (1) year period. Earnings of the Plan attributable to the contributions
may not be returned to the Employer but any losses attributable thereto must
reduce the amount so returned.
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 412(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.
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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 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.
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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 (1) 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
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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.
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
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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.
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).
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.
(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
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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;
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(2) a Participant's attainment of age 59 1/2;
(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(c)(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 assess; 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, 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.
(e) In the event a Participant has received a hardship distribution
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other plan maintained
by the Employer or from 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)-1(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
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Section 3121(a)(5)(D)), a deferred compensation plan under Code Section 457, or
a trust described in Code Section 501(c)(18) 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 lst
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 31, 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:
(1) 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.
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.
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
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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 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 4.3(c), provided such method
is used consistently for all Participants and for all such distributions for the
Plan Year.
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
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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) 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 4.3(b)(2) or 4.3(b)(3), whichever is
applicable, 4.3(k) and 4.3(l).
(4) With respect to the Employer's Qualified Non-Elective Contribution
made pursuant to Section 11.l(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 4.3(h). In addition, the
provisions of Sections 4.3(k) and 4.3(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 4.3(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
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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 401(a)(26),410(b)(1), or 4l0(b)(2)(A)(1) and the
Regulations thereunder because Employer matching Contributions 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:
(1) 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 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 (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
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(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)-1(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
1.401(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.
(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:
(1) 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 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.
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(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 401(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 401(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(c)(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
401(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:
(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
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shall have his portion of Excess Contributions distributed to him and/or at
his election recharacterized as a voluntary Employee contribution pursuant
to Section 4.7 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:
(1) 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;
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(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
401(k)-1(b). However, for purposes of Sections 2.2 and 4.3(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);
(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
11.4(c)(1)(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
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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."
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.
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
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4.3(c), provided such method is used consistently for all Participants and for
all such distributions for the Plan Year.
(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:
(1) 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 1.401(m)-2. The
provisions of Code Section 401(m) and Regulations 1.401(m)-1(b) and
1.401(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 4.7 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 (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 4.7
allocated to their accounts, elective deferrals (as defined in Regulation
1.402(g)-1(b)) and qualified non-elective
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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.
(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 4.7, 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 4.7, 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 31st, 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 4.7, 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
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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(c)(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 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 4.7 (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
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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) as 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:
(1) Employer matching contributions distributed and/or forfeited
pursuant to Section 11.5(a)(1);
(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 4.3. 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:
(1) the aggregate amount of Employer matching contributions made
pursuant to Section 11.1(b) (to the extent such contributions are taken
into account pursuant to Section 11.6(a)), voluntary Employee contributions
made pursuant to Section 4.7, 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 4.7,
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
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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 31, 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 4.7, 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 11.6(d)(1), 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
4.7, 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 11.6(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 4.7, 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
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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 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 4.7, 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 4.7, 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.
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<PAGE>
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 4.3(c), provided such method
is used consistently for all Participants and for all such distributions for the
Plan Year.
Notwithstanding the above, for Plan Years which began in 1987, Income
during the "gap period" shall not be taken into account.
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 4.3(c), provided such method
is used consistently for all Participants and for all such distributions for the
Plan Year.
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 (1) 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:
(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;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(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
(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:
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<PAGE>
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant (including any amounts
necessary to pay any federal, state, or local taxes or penalties reasonably
anticipated to result from the distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available under
all plans maintained by the Employer;
(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.
<PAGE>
ADOPTION AGREEMENT FOR
PENSION & BENEFIT FINANCIAL SERVICES, INC.
STANDARDIZED 401(K) PROFIT SHARING
PLAN AND TRUST
(WITH PAIRING PROVISIONS)
The undersigned Employer adopts the PENSION & BENEFIT FINANCIAL SERVICES,
INC. Standardized 401(k) Profit Sharing Plan and Trust for those Employees who
shall qualify as Participants hereunder, to be known as the
A1 Pinnacle Bank Profit Sharing Retirement Plan
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(Enter Plan Name)
It shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION
B1 Name of Employer Pinnacle Bank
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B2 Address 1811 Second Avenue, Post Office Box 1388
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Jasper, AL 35502-1388
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City State Zip
Telephone (205) 221-4111
-----------------------
B3 Employer Identification Number 63-0110181
-------------------------------------
B4 Date Business Commenced December 1935
-----------------------------
B5 TYPE OF ENTITY
a ( ) S Corporation
b ( ) Professional Service Corporation
c. (X) Corporation
d. ( ) Sole Proprietorship
e. ( ) Partnership
f. ( ) Other ___________________________________
AND, is the Employer a member of ...
g. a controlled group? ( ) Yes (X) No
h. an affiliated service group? ( ) Yes (X) No
Copyright 1997-R PENSION & BENEFIT FINANCIAL SERVICES, INC.
<PAGE>
B6 NAME(S) OF TRUSTEE(S)
a. Al H. Simmons
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b. Thomas L. Sherer
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c. Robert B. Nolen, Jr.
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d. Ann Davis
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e.
-----------------------------------------------------------------------
B7 TRUSTEES' ADDRESS
a. (X) Use Employer Address
b. ( )
----------------------------------------------------------------
Street
______________________________ ______________________________
City State Zip
B8 LOCATION OF EMPLOYER'S PRINCIPAL OFFICE:
a. (X) State b. ( ) Commonwealth of c. Alabama and this Plan
-------
and Trust shall be governed under the same.
B9 EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Commencing on a. January 1st (e.g., January 1st) and
-------------------------------
month day
ending on b. December 31st .
-----------------------------------
month day
2
<PAGE>
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement of the PENSION & BENEFIT FINANCIAL SERVICES, INC.
Standardized 401(k) Profit Sharing Plan and Trust shall:
a. ( ) establish a new Plan and Trust effective as of __________
(hereinafter called the "Effective Date").
b. (X) constitute an amendment and restatement in its entirety of a
previously established qualified Plan and Trust of the Employer
which was effective July 1, 1984 (hereinafter called the
"Effective Date"). Except as specifically provided in the Plan,
the effective date of this amendment and restatement is January
1, 1998 (For TRA '86 amendments, enter the first day of the first
Plan Year beginning in 1989).
C2 PLAN YEAR means the 12 consecutive month period:
Commencing on a. January 1st (e.g., January 1st) and
-------------------------------
ending on b. December 31st .
-----------------------------------
IS THERE A SHORT PLAN YEAR?
c. (X) No
d. ( ) Yes, beginning _____________________________
and ending _____________________________
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date)
a. December 31st
______________________________________
month day
C4 PLAN NUMBER assigned by the Employer (select one)
a. ( ) 001 b. (X) 002 c. ( ) 003 d. ( ) Other -------------
3
<PAGE>
C5 NAME OF PLAN ADMINISTRATOR (Document provides for the Employer to appoint
an Administrator. If none is named, the Employer will become the
Administrator.)
a. (X) Employer (Use Employer Address)
b. ( ) Name ____________________________________________________________
Address ( ) Use Employer Address
---------------- ---------------------- ---------------
City State Zip
Telephone _____________________________________
Administrator's I.D. Number _________________________
C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS
a. (X) Employer (Use Employer Address)
b. ( ) Name _______________________________________________________
Address ____________________________________________________
____________________________________________________
4
<PAGE>
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean all Employees who have
satisfied the eligibility requirements except those checked below:
a. (X) N/A. No exclusions.
b. ( ) Employees whose employment is governed by a collective bargaining
agreement between the Employer and "employee representatives"
under which retirement benefits were the subject of good faith
bargaining. For this purpose, the term "employee representatives"
does not include any organization more than half of whose members
are employees who are owners, officers, or executives of the
Employer.
c. ( ) Employees who are nonresident aliens who received no earned
income (within the meaning of Code Section 911(d)(2) from the
Employer which constitutes income from sources within the United
States (within the meaning of Code Section 861(a)(3)).
NOTE: For purposes of this section, the term Employee shall include all
Employees of this Employer, any Affiliated Employer, and any
leased employees deemed to be Employees under Code Section 414(n)
or 414(o).
D2 HOURS OF SERVICE (Plan Section 1.31) will be determined on the basis of
the method selected below. Only one method may be selected.
The method selected will be applied to all Employees covered
under the Plan.
a. (X) On the basis of actual hours for which an Employee is paid or
entitled to payment.
b. ( ) On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under the Plan such Employee would
be credited with at least one (1) Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be credited
forty-five (45) Hours of Service if under the Plan such Employee
would be credited with at least one (1) Hour of Service during
the week.
d. ( ) On the basis of semi-monthly payroll periods. An Employee will
be credited with ninety-five (95) Hours of Service if under the
Plan such Employee would be credited with at least one (1) Hour
of Service during the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be credited with
one hundred ninety (190) Hours of Service if under the Plan such
Employee would be credited with at least one (1) Hour of Service
during the month.
5
<PAGE>
D3 CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
(Check either a OR b and c, and if applicable, d)
Any Eligible Employee will be eligible to participate in the Plan if such
Eligible Employee has satisfied the service and age requirements, if any,
specified below:
a. ( ) NO AGE OR SERVICE REQUIRED.
b. (X) SERVICE REQUIREMENT. (may not exceed 1 year)
1. ( )None
2. ( )1/2 Year of Service
3. (X) 1 Year of Service
4. ( )Other ____
NOTE: If the Year(s) of Service selected is or includes a fractional
year, an Employee will not be required to complete any specified
number of Hours of Service to receive credit for such fractional
year. If expressed in Months of Service, an Employee will not be
required to complete any specified number of Hours of Service in
a particular month.
c. (X) AGE REQUIREMENT. (may not exceed 21)
1. ( )N/A - No Age Requirement.
2. (X) 20 1/2
3. ( )21
4. ( )Other ____
d. ( ) FOR NEW PLANS ONLY - Regardless of any of the above age or
service requirements, any Eligible Employee who was employed on
the Effective Date of the Plan shall be eligible to participate
hereunder and shall enter the Plan as of such date.
D4 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee shall become a Participant as of:
a. ( ) the first day of the Plan Year in which he met the requirements.
b. ( ) the first day of the Plan Year in which he met the requirements,
if he met the requirements in the first 6 months of the Plan
Year, or as of the first day of the next succeeding Plan Year if
he met the requirements in the last 6 months of the Plan Year.
c. (X) the earlier of the first day of the seventh month or the first
day of the Plan Year coinciding with or next following the date
on which he met the requirements.
d. ( ) the first day of the Plan Year next following the date on
which he met the requirements. (Eligibility must be 1/2 Year of
Service or less and age 20 1/2 or less.)
e. ( ) the first day of the month coinciding with or next following the
date on which he met the requirements.
f. ( ) Other: _______________, provided that an Employee who has
satisfied the maximum age and service requirements that are
permissible in Section D3 above and who is otherwise entitled to
participate, shall commence participation no later than the
earlier of (a) 6 months after such requirements are satisfied, or
(b) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such participation date.
6
<PAGE>
D5 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
The vesting schedule, based on number of Years of Service, shall be as
follows:
a. ( ) 100% upon entering Plan. (Required if eligibility requirement is
greater than one (1) Year of Service.)
b. ( ) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. (X) 0-1 year 0% e. ( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. ( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. ( ) Other - Must be at least as liberal as either c or g above.
Years of Service Percentage
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
7
<PAGE>
D6 FOR AMENDED PLANS (Plan Section 6.4(f)) If the vesting schedule has been
amended to a less favorable schedule, enter the pre-amended schedule below:
a. (X) Vesting schedule has not been amended or amended schedule is more
favorable in all years.
b. ( ) Years of Service Percentage
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
--------------------- --------------------
D7 TOP HEAVY VESTING (Plan Section 6.4(c)) If this Plan becomes a Top Heavy
Plan, the following vesting schedule, based on number of Years of Service,
for such Plan Year and each succeeding Plan Year, whether or not the Plan
is a Top Heavy Plan, shall apply and shall be treated as a Plan amendment
pursuant to this Plan. Once effective, this schedule shall also apply to
any contributions made prior to the effective date of Code Section 416
and/or before the Plan became a Top Heavy Plan.
a. (X) N/A (D5a, b, d, e or f was selected)
b. ( ) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
NOTE: This section does not apply to the Account balances of any
Participant who does not have an Hour of Service after the Plan
has initially become top heavy. Such Participant's Account
balance attributable to Employer contributions and Forfeitures
will be determined without regard to this section.
8
<PAGE>
D8 VESTING (Plan Section 6.4(h)) In determining Years of Service for vesting
purposes, Years of Service attributable to the following shall be EXCLUDED:
a. ( ) Service prior to the Effective Date of the b. (X) N/A.
Plan or a predecessor plan.
c. ( ) Service prior to the time an Employee d. (X) N/A.
attained age 18.
D9 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER
a. ( ) No.
b. (X) Yes: Years of Service with First Federal of Alabama, F.S.B.
and with First General Lending Corporation shall be recognized
for the purpose of this Plan.
NOTE: If the predecessor Employer maintained this qualified Plan, then
Years of Service with such predecessor Employer shall be
recognized pursuant to Section 1.74, and b. must be marked.
D10 NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.42) means:
a. (X) the date a Participant attains his 65th birthday (not to exceed
65th)
b. ( ) the later of the date a Participant attains his ____ birthday
(not to exceed 65th) or the c. ___ (not to exceed 5th)
anniversary of the first day of the Plan Year in which
participation in the Plan commenced.
D11 NORMAL RETIREMENT DATE (Plan Section 1.43) shall commence:
a. ( ) as of the Participant's "NRA."
OR (must select b. or c. AND 1. or 2.)
b. ( ) as of the first day of the month...
c. (X) as of the Anniversary Date...
1. (X) coinciding with or next following the Participant's "NRA."
2. ( ) nearest the Participant's "NRA."
D12 EARLY RETIREMENT DATE (Plan Section 1.12) means the:
a. ( ) No Early Retirement provision provided.
b. ( ) date on which a Participant...
c. ( ) first day of the month coinciding with or next following the date
on which a Participant...
d. (X) Anniversary Date coinciding with or next following the date on
which a Participant...
AND, if b, c or d was selected...
1. (X) attains his 55 birthday and has
2. (X) completed at least 10 Years of Service.
9
<PAGE>
CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.9) with respect to any Participant means:
1. ( ) Wages, tips and other Compensation on Form W-2.
2. (X) Section 3401(a) wages (wages for withholding purposes).
3. ( ) 415 safe-harbor compensation.
AND COMPENSATION
1. ( ) shall
2. (X) 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.
b. COMPENSATION shall be
1. (X) actually paid (must be selected if Plan is integrated)
2. ( ) accrued
c. FOR PURPOSES OF THIS SECTION E1, Compensation shall be based on:
1. (X) the Plan Year.
2. ( ) the Fiscal Year coinciding with or ending within the Plan Year.
3. ( ) the Calendar Year coinciding with or ending within the Plan
Year.
NOTE: The Limitation Year shall be the same as the year on which
Compensation is based.
d. However, for an Employee's first year of participation, Compensation
shall be recognized as of:
1. (X) the first day of the Plan Year.
2. ( ) the date the Participant entered the Plan.
e. IN ADDITION, COMPENSATION and "414(s) Compensation"
1. ( ) shall 2. (X) shall not 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).
E2 SALARY REDUCTION ARRANGEMENT - ELECTIVE CONTRIBUTION
(Plan Section 11.2) Each Employee may elect to have his Compensation
reduced by:
a. ( ) __%
b. ( ) up to __%
c. ( ) from __% to __%
d. (X) up to the maximum percentage allowable not to exceed the limits of
Code Sections 401(k), 404 and 415.
AND...
10
<PAGE>
e. (X) A Participant may elect to commence salary reductions as of
January 1st & July 1st (ENTER AT LEAST ONE DATE OR PERIOD). A
Participant may modify the amount of salary reductions as of
January 1st & July 1st (ENTER AT LEAST ONE DATE OR PERIOD).
AND...
Shall cash bonuses paid within 2 1/2 months after the end of the Plan Year
be subject to the salary reduction election?
f. ( ) Yes
g. (X) No
11
<PAGE>
E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION
(Plan Section 11.1(b))
a. ( ) N/A. There shall be no matching contributions.
b. ( ) The Employer shall make matching contributions equal to ___% (e.g.
50%) of the Participant's salary reductions.
c. (X) The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of the
Participant's salary reductions.
d. ( ) The Employer shall make matching contributions equal to the sum of
____% of the portion of the Participant's salary reduction which
does not exceed ____% of the Participant's Compensation plus ____%
of the portion of the Participant's salary reduction which exceeds
____% of the Participant's Compensation, but does not exceed ____%
of the Participant's Compensation.
e. ( ) The Employer shall make matching contributions equal to the
percentage determined under the following schedule:
Participant's Total Matching
Years of Service Percentage
------------- ---------
------------- ---------
------------- ---------
FOR PLANS WITH MATCHING CONTRIBUTIONS
f. (X) Matching contributions g. ( ) shall h. (X) shall not be used in
satisfying the deferral percentage tests. (If used, full vesting
and restrictions on withdrawals will apply and the match will be
deemed to be an Elective Contribution).
i. (X) For Plan Years beginning prior to 1990, a Year of Service i. ( )
shall j. (X) shall not be required in order to share in the
matching contributions. For Plan Years beginning after 1989, a
Year of Service shall not be required in order to share in the
matching contributions.
k. (X) In determining matching contributions, only salary reductions up
to 6% of a Participant's Compensation will be matched. l. ( ) N/A
m. ( ) The matching contribution made on behalf of a Participant for any
Plan Year shall not exceed $___. n. (X) N/A
o. (X) Matching contributions shall be made on behalf of
1. (X) all Participants.
2. ( ) only Non-Highly Compensated Employees.
p. ( ) 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.)
12
<PAGE>
E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED (OTHER THAN A
DISCRETIONARY MATCHING OR QUALIFIED NON-ELECTIVE CONTRIBUTION) (Plan
Section 11.1(c))?
a. ( ) No.
b. ( ) Yes, the Employer may make a discretionary contribution out of
its current or accumulated Net Profit.
c. (X) Yes, the Employer may make a discretionary contribution which is
not limited to its current or accumulated Net Profit.
IF YES (b. or c. is selected above), the Employer's discretionary
contribution shall be allocated as follows:
d. ( ) FOR A NON-INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year shall be
allocated in the same ratio as each Participant's Compensation bears to the
total of such Compensation of all Participants.
e. (X) FOR AN INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year shall be
allocated in accordance with Plan Section 4.3(b)(2) based on a
Participant's Compensation in excess of:
f. ( ) The Taxable Wage Base.
g. ( ) The greater of $10,000 or 20% of the Taxable Wage Base.
h. ( ) ____% of the Taxable Wage Base. (See Note below)
i. (X) $ 22,000 . (See Note below)
-----------
NOTE: The integration percentage of 5.7% shall be reduced to:
1. 4.3% if h. or i. above is more than 20% and less than or equal to
80% of the Taxable Wage Base.
2. 5.4% if h. or i. above is less than 100% and more than 80% of the
Taxable Wage Base.
13
<PAGE>
E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1(d))
a. (X) N/A. There shall be no Qualified Non-Elective Contributions
except as provided in Section 11.5(b) and 11.7(h).
b. ( ) The Employer shall make a Qualified Non-Elective Contribution
equal to ____% of the total Compensation of all Participants
eligible to share in the allocations.
c. ( ) The Employer may make a Qualified Non-Elective Contribution in an
amount to be determined by the Employer.
E6 FORFEITURES (Plan Section 4.3(e))
a. Forfeitures of contributions other than matching contributions shall
be...
1. ( ) added to the Employer's contribution under the Plan.
2. (X) allocated to all Participants eligible to share in the
allocations in the same proportion that each Participant's
Compensation for the year bears to the Compensation of all
Participants for such year.
b. Forfeitures of matching contributions shall be...
1. ( ) N/A. No matching contributions or match is fully vested.
2. (X) used to reduce the Employer's matching contribution.
3. ( ) allocated to all Participants eligible to share in the
allocations in proportion to each such Participant's
Compensation for the year.
4. ( ) allocated to all Non-Highly Compensated Employee's eligible to
share in the allocations in proportion to each such
Participant's Compensation for the year.
14
<PAGE>
E7 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4.3(k))
Any Participant who terminated employment during the Plan Year for reasons
other than death, Total and Permanent Disability or retirement:
a. With respect to the allocation of Employer Non-Elective Contributions
(other than matching), Qualified Non-Elective Contributions, and
Forfeitures for Plan Years beginning prior to 1990:
1. ( ) N/A
2. ( ) shall share in such allocations provided such Participant
completed a Year of Service.
3. (X) shall not share in such allocations regardless of Hours of
Service.
NOTE: The Plan provides that for Plan Years beginning after 1989, a
terminated Participant shall share in such allocations provided
such Participant completed more than 500 Hours of Service.
b. With respect to the allocation of Employer Matching Contributions, a
Participant:
1. For Plan Years beginning after 1989,
i. ( ) N/A, Plan does not provide for matching contributions.
ii. (X) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in the allocations provided such Participant
completed more than 500 Hours of Service.
2. For Plan Years beginning before 1990,
i. ( ) N/A, new Plan, or same as Plan Years beginning after
1989.
ii. (X) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in the allocations provided such Participant
completed a Year of Service.
E8 ALLOCATIONS OF EARNINGS (Plan Section 4.3(c))
Allocations of earnings with respect to amounts contributed to the Plan
after the previous Anniversary Date or other valuation date shall be
determined...
a. ( ) by using a weighted average.
b. ( ) by treating one-half of all such contributions as being a part of
the Participant's nonsegregated account balance as of the previous
Anniversary Date or valuation date.
c. (X) by using the method specified in Section 4.3(c).
d. ( ) other ____.
15
<PAGE>
E9 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Participant is or was covered under another qualified defined
contribution plan maintained by the Employer, or if the Employer
maintains a welfare benefit fund, as defined in Code Section 419(e), or
an individual medical account, as defined in Code Section 415(1)(2),
under which amounts are treated as Annual Additions with respect to any
Participant in this Plan:
1. (X) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan will apply.
3. ( ) Provide the method under which the Plans will limit total
Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that precludes
Employer discretion.
NOTE: If a.3 above is selected, an Employer may not rely on the opinion
letter issued by the Internal Revenue Service that this Plan is
qualified under Code Section 401.
b. If any Participant is or ever has been a Participant in a defined
benefit plan maintained by the Employer:
1. (X) N/A.
2. ( ) In any Limitation Year, the Annual Additions credited to the
Participant under this Plan may not cause the sum of the Defined
Benefit Plan Fraction and the Defined Contribution Fraction to
exceed 1.0. If the Employer's contribution that would otherwise
be made on the Participant's behalf during the limitation year
would cause the 1.0 limitation to be exceeded, the rate of
contribution under this Plan will be reduced so that the sum of
the fractions equals 1.0. If the 1.0 limitation is exceeded
because of an Excess Amount, such Excess Amount will be reduced
in accordance with Section 4.4(a)(4) of the Plan.
3. ( ) Provide the method under which the Plans involved will
satisfy the 1.0 limitation in a manner that precludes Employer
discretion.
16
<PAGE>
E10 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h))
Distributions upon the death of a Participant prior to receiving any
benefits shall...
a. (X) be made pursuant to the election of the Participant or beneficiary.
b. ( ) begin within 1 year of death for a designated beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such beneficiary, except that if the beneficiary
is the Participant's spouse, begin within the time the
Participant would have attained age 70 1/2.
c. ( ) be made within 5 years of death for all beneficiaries.
d. ( ) other _____.
E11 LIFE EXPECTANCIES (Plan Section 6.5(f)) for minimum distributions
required pursuant to Code Section 401(a)(9) shall...
a. ( ) be calculated at the Participant's election.
b. ( ) be recalculated.
c. (X) not be recalculated.
E12 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION
Distributions upon termination of employment pursuant to Section 6.4(a)
of the Plan shall not be made unless the following conditions have been
satisfied:
a. (X) N/A. Immediate distributions may be made at Participant's election.
b. ( ) The Participant has incurred ___ 1-Year Break(s) in Service.
c. ( ) The Participant has reached his or her Early or Normal Retirement
Age.
d. ( ) Distributions may be made at the Participant's election on or after
the Anniversary Date following termination of employment.
e. ( ) Other _____.
E13 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6)
Distributions under the Plan may be made...
a. 1. (X) in lump sums.
2. ( ) in lump sums or installments.
b. AND, pursuant to Plan Section 6.13,
1. (X) no annuities are allowed (avoids Joint and Survivor rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall not apply).
NOTE:b.1. above may not be elected if this is an amendment to a plan
which permitted annuities as a form of distribution or if this
Plan has accepted a plan to plan transfer of assets from a plan
which permitted annuities as a form of distribution.
c. AND may be made in...
1. (X) cash only (except for insurance or annuity contracts).
2. ( ) cash or property.
17
<PAGE>
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS (Plan Section 4.3(i)): When a Non-Key Employee is a
Participant in this Plan and a Defined Benefit Plan maintained by the
Employer, indicate which method shall be utilized to avoid duplication of
top heavy minimum benefits.
a. (X) The Employer does not maintain a Defined Benefit Plan.
b. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (The Defined Benefit and Defined
Contribution Fractions will be computed using 100% if this choice
is selected.)
c. ( ) A minimum, non-integrated contribution of 7 1/2% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (If this choice is selected, the
Defined Benefit and Defined Contribution Fractions will be computed
using 125% for all Plan Years in which the Plan is Top Heavy, but
not Super Top Heavy.)
d. ( ) Specify the method under which the Plans will provide top
heavy minimum benefits for Non-Key Employees that will preclude
Employer discretion and avoid inadvertent omissions, including
any adjustments required under Code Section 415(e).
18
<PAGE>
F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for Top Heavy purposes
where the Employer maintains a Defined Benefit Plan in addition to this
Plan, shall be based on...
a. (X) N/A. The Employer does not maintain a defined benefit plan.
b. ( ) Interest Rate: ___
Mortality Table: ___
F3 TOP HEAVY DUPLICATIONS: Employer maintaining two (2) or more Defined
Contribution Plans (other than paired plans).
a. (X) N/A.
b. ( ) A minimum, non-integrated contribution of 3% of each Non-Key
Employee's total Compensation shall be provided in the Money
Purchase Plan (or other plan subject to Code Section 412), where
the Employer maintains two (2) or more non-paired Defined
Contribution Plans.
c. ( ) Specify the method under which the Plans will provide top
heavy minimum benefits for Non-Key Employees that will preclude
Employer discretion and avoid inadvertent omissions, including
any adjustments required under Code Section 415(e).
F4 IS THIS A PAIRED PLAN?
a. ( ) Yes. Name the Plan(s) with which this is paired.
-----------------------------------------------------------------
b. (X) No or N/A.
19
<PAGE>
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.4)
a. (X) Yes, loans may be made up to $50,000 or1/2Vested interest.
b. ( ) No, loans may not be made.
If YES, (check all that apply)...
c. (X) loans shall be treated as a Directed Investment.
d. ( ) loans shall only be made for hardship or financial necessity.
e. (X) the minimum loan shall be $1,000.
f. ( ) $10,000 de minimis loans may be made regardless of Vested interest.
(If selected, Plan may need security in addition to Vested
interest.)
NOTE:Department of Labor Regulations require the adoption of a SEPARATE
written loan program setting forth the requirements outlined in Plan
Section 7.4.
G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are permitted for the
interest in any one or more accounts.
a. (X) Yes, regardless of the Participant's Vested interest in the Plan.
b. ( ) Yes, but only with respect to the Participant's Vested interest in
the Plan.
c. ( ) Yes, but only with respect to those accounts which are 100% Vested.
d. ( ) No directed investments are permitted.
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6)
a. (X) Yes, transfers from qualified plans (and rollovers) will be allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not be
allowed.
AND, transfers shall be permitted...
c. (X) from any Employee, even if not a Participant.
d. ( ) from Participants only.
20
<PAGE>
G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7)
a. ( ) Yes, Voluntary Contributions are allowed subject to the limits of
Section 4.10.
b. (X) No, Voluntary Contributions will not be allowed.
NOTE: TRA '86 subjects voluntary contributions to strict discrimination rules.
G5 HARDSHIP DISTRIBUTIONS (Plan Sections 6.11 and 11.8)
a. ( ) Yes, from any accounts which are 100% Vested.
b. ( ) Yes, from Participant's Elective Account only.
c. ( ) Yes, but limited to the Participant's Account only.
d. (X) No.
NOTE: Distributions from a Participant's Elective Account are limited
to the portion of such account attributable to such Participant's
Deferred Compensation and earnings attributable thereto up to
December 31, 1998. Also hardship distributions are not permitted
from a Participant's Qualified Non-Elective Account.
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
a. ( ) If a Participant has reached the age of ___, distributions may be
made, at the Participant's election, from any accounts which are
100% Vested without requiring the Participant to terminate
employment.
b. (X) No pre-retirement distribution may be made.
NOTE:Distributions from a Participant's Elective Account and Qualified
Non-Elective Account are not permitted prior to age 59 1/2.
21
<PAGE>
G7 LIFE INSURANCE (Plan Section 7.2(d)) may be purchased with Plan
contributions.
a. ( ) No life insurance may be purchased.
b. ( ) Yes, at the option of the Administrator.
c. (X) Yes, at the option of the Participant.
AND, the purchase of initial or additional life insurance shall be subject
to the following limitations: (select all that apply)
d. (X) N/A, no limitations.
e. ( ) each initial Contract shall have a minimum face amount of $_____.
f. ( ) each additional Contract shall have a minimum face amount of $_____.
g. ( ) the Participant has completed ____ Years of Service.
h. ( ) the Participant has completed ____ Years of Service while a
Participant in the Plan.
i. ( ) the Participant is under age ___ on the Contract issue date.
j. ( ) the maximum amount of all Contracts on behalf of a Participant shall
not exceed $____.
k. ( ) the maximum face amount of life insurance shall be $____.
22
<PAGE>
An Employer who has ever maintained or who later adopts any plan in addition to
this Plan (including a welfare benefit fund, as defined in Code Section 419(e),
which provides post-retirement medical benefits allocated to separate accounts
for Key Employees, as defined in Code Section 419A(d)(3) or an individual
medical account, as defined in Code Section 415(1)(2)) (other than paired plan
#01-002, #01-004) may not rely on the opinion letter issued by the National
Office of the Internal Revenue Service as evidence that this Plan is qualified
under Code Section 401. If the Employer who adopts or maintains multiple plans
wishes to obtain reliance that the Employer's plan(s) are qualified, application
for a determination letter should be made to the appropriate key district
director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with basic Plan document
#01. This Adoption Agreement and the basic Plan document shall together be known
as PENSION & BENEFIT FINANCIAL SERVICES, INC. Standardized 401(k) Profit Sharing
Plan and Trust #01-006.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
PENSION & BENEFIT FINANCIAL SERVICES, INC. will notify the Employer of any
amendments made to the Plan or of the discontinuance or abandonment of the Plan
provided this Plan has been acknowledged by PENSION & BENEFIT FINANCIAL
SERVICES, INC. or its authorized representative. Furthermore, in order to be
eligible to receive such notification, we agree to notify PENSION & BENEFIT
FINANCIAL SERVICES, INC. of any change in address.
23
<PAGE>
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on __________________. Furthermore, this Plan may not be used unless
acknowledged by PENSION & BENEFIT FINANCIAL SERVICES, INC. or its authorized
representative.
EMPLOYER:
Pinnacle Bank
By:____________________________________
____________________________________ ___________________________________
TRUSTEE, Al H. Simmons TRUSTEE, Thomas L. Sherer
____________________________________ ___________________________________
TRUSTEE, Robert B. Nolan, Jr. TRUSTEE, Ann Davis
____________________________________
TRUSTEE
PARTICIPATING EMPLOYER:
____________________________________
(enter name)
By:____________________________________
This Plan may not be used, and shall not be deemed to be a Regional Prototype
Plan, unless an authorized representative of PENSION & BENEFIT FINANCIAL
SERVICES, INC. has acknowledged the use of the Plan. Such acknowledgement is for
administerial purposes only. It acknowledges that the Employer is using the Plan
but does not represent that this Plan, including the choices selected on the
Adoption Agreement, has been reviewed by a representative of the sponsor or
constitutes a qualified retirement plan.
PENSION & BENEFIT FINANCIAL SERVICES, INC.
By:____________________________________
24
EXHIBIT 4.2
<PAGE>
PINNACLE BANK PROFIT SHARING RETIREMENT PLAN
SUMMARY PLAN DESCRIPTION
<PAGE>
TABLE OF CONTENTS
Page
I INTRODUCTION TO YOUR PLAN................................................1
II GENERAL INFORMATION ABOUT YOUR PLAN......................................1
1. General Plan Information........................................2
2. Employer Information............................................2
3. Plan Administrator Information..................................2
4. Plan Trustee Information........................................3
5. Service of Legal Process........................................3
III PARTICIPATION IN YOUR PLAN...............................................3
1. Eligibility Requirements........................................3
2. Participation Requirements......................................3
IV CONTRIBUTIONS TO YOUR PLAN...............................................4
1. Employer Contributions to the Plan..............................4
2. Participant Salary Reduction Election...........................5
3. Your Share of Employer Contributions............................6
4. Compensation....................................................7
5. Forfeitures.....................................................7
6. Transfers From Qualified Plans (Rollovers)......................8
7. Directed Investments............................................8
V BENEFITS UNDER YOUR PLAN.................................................8
1. Distribution of Benefits Upon Normal Retirement.................8
2. Distribution of Benefits Upon Early Retirement..................8
3. Distribution of Benefits Upon Late Retirement...................9
4. Distribution of Benefits Upon Death.............................9
5. Distribution of Benefits Upon Disability.......................10
6. Distribution of Benefits Upon Termination of Employment........10
7. Vesting in Your Plan...........................................11
8. Benefit Payment Options........................................11
9. Treatment of Distributions From Your Plan......................12
10. Domestic Relations Order.......................................12
11. Pension Benefit Guaranty Corporation...........................13
VI YEAR OF SERVICE RULES...................................................13
1. Year of Service and Hour of Service............................13
2. 1-Year Break in Service........................................14
VII YOUR PLAN'S "TOP HEAVY RULES"...........................................15
1. Explanation of "Top Heavy Rules"...............................15
VIII LOANS...................................................................15
1. Loan Requirements..............................................15
IX CLAIMS BY PARTICIPANTS AND BENEFICIARIES................................17
1. The Claims Review Procedure....................................17
X STATEMENT OF ERISA RIGHTS...............................................18
1. Explanation of Your ERISA Rights...............................18
XI AMENDMENT AND TERMINATION OF YOUR PLAN..................................20
1. Amendment......................................................20
2. Termination....................................................20
i
<PAGE>
PINNACLE BANK PROFIT SHARING RETIREMENT PLAN
SUMMARY PLAN DESCRIPTION
I
INTRODUCTION TO YOUR PLAN
Pinnacle Bank has amended your 401(k) Profit Sharing Plan and Trust as of
January 1, 1998. Pinnacle Bank continues to recognize the efforts you have made
to its success. This amended 401(k) Profit Sharing Plan and Trust is for the
exclusive benefit of eligible employees and their beneficiaries.
Your Plan is a "salary reduction plan." It is also called a "401(k) plan."
Under this type of plan, you may choose to reduce your compensation and have
these amounts contributed to this Plan on your behalf.
The purpose of this Plan is to reward eligible employees for long and loyal
service by providing them with retirement benefits.
Between now and your retirement, your Employer intends to make
contributions for you and other eligible employees. When you retire, you will be
eligible to receive the value of the amounts which have accumulated in your
account.
This Summary Plan Description is a brief description of your Plan and your
rights, obligations, and benefits under that Plan. Some of the statements made
in this Summary Plan Description are dependent upon this Plan being "qualified"
under the provisions of the Internal Revenue Code. This Summary Plan Description
is not meant to interpret, extend, or change the provisions of your Plan in any
way. The provisions of your Plan may only be determined accurately by reading
the actual Plan document, including the Adoption Agreement.
A copy of your Plan and the Adoption Agreement are on file at your
Employer's office and may be read by you, your beneficiaries, or your legal
representatives at any reasonable time. If you have any questions regarding
either your Plan, the Adoption Agreement or this Summary Plan Description, you
should ask your Plan's Administrator. In the event of any discrepancy between
this Summary Plan Description and the actual provisions of the Plan, the Plan
will govern.
II
GENERAL INFORMATION ABOUT YOUR PLAN
There is certain general information which you may need to know about your
Plan. This information has been summarized for you in this Section.
<PAGE>
1. General Plan Information
Pinnacle Bank Profit Sharing Retirement Plan is the name of your Plan.
Your Employer has assigned Plan Number 002 to your Plan.
The amended and restated provisions of your Plan become effective on
January 1, 1998.
Your Plan's records are maintained on a twelve-month period of time.
This is known as the Plan Year. The Plan Year begins on January lst and ends on
December 31st.
Certain valuations and distributions are made on the Anniversary Date
of your Plan. This date is December 31st.
The contributions made to your Plan will be held and invested by the
Trustee of your Plan.
Your Plan and Trust will be governed by the laws of the State of
Alabama.
2. Employer Information
Your Employer's name, address and identification number are:
Pinnacle Bank
1811 Second Avenue, Post Office Box 1388
Jasper, Alabama 35502-1388
63-0110181
Your Plan allows other employers to adopt its provisions. You or your
beneficiaries may examine or obtain a complete list of employers, if any, who
have adopted your Plan by making a written request to the Administrator.
3. Plan Administrator Information
The name, address and business telephone number of your Plan's
Administrator are:
Pinnacle Bank
1811 Second Avenue, Post Office Box 1388
Jasper, Alabama 35502-1388
(205) 221-4111
Your Plan's Administrator keeps the records for the Plan and is
responsible for the administration of the Plan. The Administrator has
discretionary authority to construe the terms of the Plan and make
determinations on questions which may affect your eligibility for benefits. Your
Plan's Administrator will also answer any questions you may have about your
Plan.
2
<PAGE>
4. Plan Trustee Information
The names of your Plan's Trustees are:
Al H. Simmons
Thomas L. Sherer
Robert B. Nolan, Jr.
Ann Davis
The Trustees will collectively be referred to as Trustee throughout
this Summary Plan Description.
The principal place of business of your Plan's Trustee is:
1811 Second Avenue, Post Office Box 1388
Jasper, Alabama 35502-1388
Your Plan's Trustee has been designated to hold and invest Plan assets
for the benefit of you and other Plan participants. The trust fund established
by the Plan's Trustee will be the funding medium used for the accumulation of
assets from which benefits will be distributed.
5. Service of Legal Process
The name and address of your Plan's agent for service of legal process
are:
Pinnacle Bank
1811 Second Avenue, Post Office Box 1388
Jasper, Alabama 35502-1388
Service of legal process may also be made upon the Trustee or
Administrator.
III
PARTICIPATION IN YOUR PLAN
Before you become a member or a "participant" in the Plan, there are
certain eligibility and participation rules which you must meet. These rules are
explained in this Section.
1. Eligibility Requirements
You will be eligible to participate in the Plan if you have completed
one (1) Year of Service and have attained age twenty and one-half.
You should review the Article in this Summary entitled "YEAR OF SERVICE
RULES" for a further explanation of these eligibility requirements.
3
<PAGE>
2. Participation Requirements
Once you have satisfied your Plan's eligibility requirements, your next
step will be to actually become a member or a "participant" in the Plan. You
will become a participant on a specified day of the Plan Year. This day is
called the Effective Date of Participation.
You will become a participant on the earlier of the first day of the
Plan Year or the first day of the seventh month of the Plan Year coinciding with
or next following the date you satisfy your Plan's eligibility requirements.
IV
CONTRIBUTIONS TO YOUR PLAN
1. Employer Contributions to the Plan
Each year, your Employer will contribute to your Plan the following
amounts:
(a) The total amount of the salary reduction you elected to defer. (See
the Section in this Article entitled "Participant Salary Reduction Election.")
(b) A discretionary matching contribution equal to a percentage of the
amount of the salary reduction you elected to defer, which percentage will be
determined each year by the Employer.
However, in applying this matching percentage, only salary reductions
up to 6% of your compensation will be considered.
For a participant to qualify for a matching contribution, the following
conditions apply:
- If you are actively employed on the last day of the Plan Year,
you will share regardless of the number of Hours of Service
credited during the Plan Year.
- If you terminate employment (not actively employed on the last
day of the Plan Year), you will receive a matching
contribution regardless of the number of Hours of Service
credited for the Plan Year.
- You will share in the matching contribution for the year
regardless of the number of Hours of Service credited in the
year of your death, disability or retirement.
These rules may have been different for Plan Years beginning prior to
the date your Employer actually adopted this amendment. You should refer to any
prior Summary Plan Description or your Administrator if you have any questions.
(c) A discretionary amount determined each year by your Employer.
4
<PAGE>
For a participant to qualify for the discretionary contribution, the
following conditions apply:
- If you are actively employed on the last day of the Plan Year,
you will share regardless of the number of Hours of Service
credited during the Plan Year.
- If you terminate employment (not actively employed on the last
day of the Plan Year), you must be credited with more than 500
Hours of Service.
- You will share for the year regardless of the number of Hours
of Service credited in the year of your death, disability or
retirement.
These rules may have been different for Plan Years beginning prior to
the date your Employer actually adopted this amendment. You should refer to any
prior Summary Plan Description or your Administrator if you have any questions.
2. Participant Salary Reduction Election
As a participant, you may elect to defer a percentage of your
compensation each year instead of receiving that amount in cash. However, your
total deferrals in any taxable year may not exceed a dollar limit which is set
by law. The limit for 1997 is $9,500. This limit will be increased in future
years for cost of living changes. The Administrator will notify you of the
maximum percentage you may defer.
You may elect to defer your salary as of January lst & July lst. Such
election will become effective as soon as administratively feasible. Your
election will remain in effect until you modify or terminate it. You may modify
your election as of January lst & July lst of any year. The modification will
become effective as soon as administratively feasible.
The amount you elect to defer, and any earnings on that amount, will
not be subject to income tax until it is actually distributed to you. This money
will, however, be subject to Social Security taxes at all times.
You should also be aware that the annual dollar limit is an aggregate
limit which applies to all deferrals you may make under this plan or other cash
or deferred arrangements (including tax-sheltered 403(b) annuity contracts,
simplified employee pensions or other 401(k) plans in which you may be
participating). Generally, if your total deferrals under all cash or deferred
arrangements for a calendar year exceed the annual dollar limit, the excess must
be included in your income for the year. For this reason, it is desirable to
request in writing that these excess deferrals be returned to you. If you fail
to request such a return, you may be taxed a second time when the excess
deferral is ultimately distributed from the Plan.
You must decide which plan or arrangement you would like to have return
the excess. If you decide that the excess should be distributed from this Plan,
you should communicate this in writing to the Administrator no later than the
March lst following the close of the calendar year
5
<PAGE>
in which such excess deferrals were made. The Administrator may then return the
excess deferral and any earnings to you by April 15th.
In the event you receive a hardship distribution from your deferrals to
any other plan maintained by your Employer, you will not be allowed to make
additional salary reductions for a period of twelve (12) months after you
receive the distribution. Furthermore, the dollar limitation set by law with
respect to your taxable year following the year in which you received the
distribution, will be reduced by your salary reductions, if any, for the taxable
year of the distribution.
You will always be 100% vested in the amount you deferred. This means
that you will always be entitled to all of the deferred amount. This money win,
however, be affected by any investment gains or losses. If the Trustee invested
this money and there was a gain, the balance in your account would increase. Of
course, if there was a loss, the balance in your account would decrease.
Distributions from your deferred account are not permitted before age
59 1/2 EXCEPT in the event of:
(a) death;
(b) disability; or
(c) termination of employment.
In addition, if you are a highly compensated employee (generally
owners, officers or individuals receiving wages in excess of certain amounts
established by law), a distribution from your deferred account of certain excess
contributions may be required to comply with the law. The Administrator will
notify you when a distribution is required.
3. Your Share of Employer Contributions
Your Employer will allocate the amount you elect to defer to an account
maintained on your behalf.
If you are eligible, your Employer will also allocate the matching
contribution made to the Plan on your behalf. (See the Section in this Article
entitled "Employer Contributions to the Plan.")
Your Employer's discretionary contribution will be "allocated" or
divided among participants eligible to share in the contribution for the Plan
Year. Your share of the contribution will depend upon how much compensation you
received during the year and the compensation received by other eligible
participants.
The contribution will be allocated to your account in the same
proportion that your compensation plus your compensation in excess of
$22,000 (also called "excess
6
<PAGE>
compensation") bears to the total compensation plus "excess
compensation" of all eligible participants. However, the maximum
amount which can be allocated to you in this first step is 4.3 % of
your compensation plus your "excess compensation."
If the dollar amount in the immediately preceding paragraph is less
than 20% or more than 80% of the Social Security Taxable Wage Base, the
percentage in the immediately preceding paragraph will be adjusted to
5.7% or 5.4%, respectively. Your Administrator will inform you of any
change in the percentage.
If after the first step of the allocation process there still remains a
portion of your Employer's contribution which has not yet been
allocated, then the remainder will be allocated to you in the same
proportion that your compensation bears to the total compensation of
all participants.
In addition to the Employer's contributions made to your account, your
account will be credited annually with a share of the investment earnings or
losses of the trust fund.
You should also be aware that the law imposes certain limits on how
much money may be allocated to your account for a year. These limits are
extremely complex, but generally no more than the lesser of $30,000 or 25% of
your compensation may be allocated to you (excluding earnings) in any year. The
Administrator will inform you if these limits have affected you.
4. Compensation
For the purposes of your Plan, compensation has a special meaning.
Compensation is defined as your total salary, wages and other amounts which are
includible in your income for purposes of income tax withholding that is paid
during the Plan Year.
In addition, salary reduction contributions to any cafeteria plan, tax
sheltered annuity, SEP or 401(k) plan will not be included as compensation for
Plan purposes.
For the first year of your participation in the Plan, your compensation
will be recognized for benefit purposes for the entire Plan Year.
For the Plan Year beginning in 1997 and for Plan Years thereafter, the
Plan, by law, cannot recognize compensation in excess of $160,000. This amount
will be adjusted in future years for cost of living increases. It will also be
applied to certain highly compensated employees and their family members as if
they were a single participant. If you or a member of your family may be
affected by this rule, ask your Administrator for further details.
5. Forfeitures
Forfeitures are created when participants terminate employment before
becoming entitled to their full benefits under the Plan. Your account may grow
from the forfeitures of other participants. Forfeitures will be "allocated" or
divided among participants eligible to share for a
7
<PAGE>
Plan Year. However, a portion of forfeited amounts will be used to reduce your
Employer's contributions to the Plan.
6. Transfers From Qualified Plans (Rollovers)
At the discretion of the Administrator, you may be permitted to deposit
into your Plan distributions you have received from other plans. Such a deposit
is called a "rollover" and may result in tax savings to you. You should consult
qualified counsel to determine if a rollover is in your best interest.
Your rollover will be placed in a separate account called a
"participant's rollover account." The Administrator may establish rules for
investment.
You will always be 100% vested in your "rollover account." This means
that you will always be entitled to all of your rollover contributions. Rollover
contributions will be affected by any investment gains or losses. If the Trustee
invested this money and there was a gain, the balance in your account would
increase. Of course, if there was a loss from an investment, the balance in your
account would decrease.
7. Directed Investments
The Administrator may establish rules for investment of your account
balance. If the Administrator approves, you may direct the investment of your
account balance.
V
BENEFITS UNDER YOUR PLAN
1. Distribution of Benefits Upon Normal Retirement
Your Normal Retirement Date is the Anniversary Date coinciding with or
next following your 65th birthday (Normal Retirement Age).
At your Normal Retirement Age, you will be entitled to 100% of your
account balance. Payment of your benefits will begin as soon as practicable
following your Normal Retirement Date.
2. Distribution of Benefits Upon Early Retirement
Your Early Retirement Date is any Anniversary Date coinciding with or
next following the date on which you have reached your 55th birthday and
completed 10 Years of Service with your Employer. You will have completed a Year
of Service if you are credited with 1000 Hours of Service during a Plan Year,
even if you were not employed on the first or last day of the Plan Year. You may
elect to retire when you reach your Early Retirement Date.
8
<PAGE>
On your Early Retirement Date, you will be entitled to 100% of your
account balance. Payment of your Early Retirement benefits will begin, at your
election, as soon as practicable following your Early Retirement Date.
3. Distribution of Benefits Upon Late Retirement
You may remain employed past your Plan's Normal Retirement Date and
retire instead on your Late Retirement Date. Your Late Retirement Date is the
Anniversary Date coinciding with or next following the date you choose to retire
after first having reached your Normal Retirement Date. On your Late Retirement
Date, you will be entitled to 100% of your account balance. Actual benefit
payments will begin as soon as practicable following your Late Retirement Date.
4. Distribution of Benefits Upon Death
Your beneficiary will be entitled to a single lump-sum distribution of
100% of your account balance upon your death.
You may elect to have life insurance purchased on your behalf by the
Administrator with a portion of your Employer's contribution. There are various
rules and limitations which may be placed on the purchase of insurance such as
minimum face amounts and whether you are insurable.
If you elect to have a life insurance policy purchased on your behalf
with a portion of your Employer's contribution made to your account, your
account will be reduced by the amount of the premiums and credited with any
policy dividends.
If you are married at the time of your death, your spouse will be the
beneficiary of the death benefit, unless you otherwise elect in writing on a
form to be furnished to you by the Administrator. IF YOU WISH TO DESIGNATE A
BENEFICIARY OTHER THAN YOUR SPOUSE, HOWEVER, YOUR SPOUSE MUST IRREVOCABLY
CONSENT TO WAIVE ANY RIGHT TO THE DEATH BENEFIT. YOUR SPOUSE'S CONSENT MUST BE
IN WRITING, BE WITNESSED BY A NOTARY OR A PLAN REPRESENTATIVE AND ACKNOWLEDGE
THE SPECIFIC NONSPOUSE BENEFICIARY.
If, however,
(a) your spouse has validly waived any right to the death
benefit in the manner outlined above,
(b) your spouse cannot be located; or
(c) you are not married at the time of your death,
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then your death benefit will be paid to the beneficiary of your own choosing in
a single lump sum. You may designate the beneficiary on a form to be supplied to
you by the Administrator. If you change your designation, your spouse must again
consent to the change.
Regardless of the method of distribution selected, your entire death
benefit must generally be paid to your beneficiaries within five years after
your death (the "5-year rule"). However, if your designated beneficiary is a
person (instead of your estate or most trusts), then you or your beneficiary may
elect to have minimum distributions begin within one year of your death and it
may be paid over the designated beneficiary's life expectancy (the "1-year
rule"). If your spouse is the beneficiary, then under the "1 -year rule" the
start of payments may be delayed until the year in which you would have attained
age 70 1/2. The election to have death benefits distributed under the "1-year
rule" instead of the "5-year rule must be made no later than the time at which
minimum distributions must commence under the "1-year rule" (or, in the case of
a surviving spouse, the "5-year rule," if earlier).
Since your spouse participates in these elections and has certain
rights in the death benefit, you should immediately report any change in your
marital status to the Administrator.
5. Distribution of Benefits Upon Disability
Under your Plan, disability is defined as a physical or mental
condition resulting from bodily injury, disease, or mental disorder which
renders you incapable of continuing any gainful occupation with your Employer.
Your disability will be determined by a licensed physician chosen by the
Administrator. However, if your condition constitutes total disability under the
federal Social Security Act, then the Administrator may deem that you are
disabled for purposes of the Plan.
If you become disabled while a participant, you will be entitled to
100% of your account balance. Payment of your disability benefits will be made
to you as if you had retired. (See the Section in this Article entitled "Benefit
Payment Options.")
6. Distribution of Benefits Upon Termination of Employment
Your Plan is designed to encourage you to stay with your Employer until
retirement. Payment of your account balance under your Plan is generally only
available upon your death, disability or retirement.
If your employment terminates for reasons other than those listed
above, you will be entitled to receive only your "vested percentage" of your
account balance and the remainder of your account will be forfeited. Only
contributions made by your Employer are subject to forfeiture. (See the Section
in this Article entitled "Vesting in Your Plan.")
If you so elect, the Administrator will direct the Trustee to
distribute your vested benefit to you before the date it would normally be
distributed (upon your death, disability or retirement). If your vested benefit
under the Plan at the time of any prior distribution exceeded
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$3,500 or currently exceeds $3,500, you must give written consent before the
distribution may be made. Amounts of $3,500 or less will be distributed without
the need for consent.
Under the Plan's administrative procedures, if the value of your vested
account is zero, any non-vested account balance will be forfeited immediately.
7. Vesting in Your Plan
Your "vested percentage" in your account is determined under the
following schedule and is based on vesting Years of Service. You will always,
however, be 100% vested upon your Early or Normal Retirement Age.
(See the Section in this Article entitled "Distribution
of Benefits Upon Normal Retirement.")
Vesting Schedule
Years of Service Percentage
2 20%
3 40%
4 60%
5 80%
6 100%
Regardless of this vesting schedule, you are always 100% vested in your
salary reduction amounts contributed to the Plan.
Your vested percentage will not be less than your vested percentage
under the Plan before this amendment and restatement.
8. Benefit Payment Options
At the time you are entitled to receive a distribution under the Plan,
the Administrator will direct the distribution of your benefits to you in one
lump-sum cash payment.
GENERALLY, WHENEVER A DISTRIBUTION IS TO BE MADE TO YOU ON OR BEFORE AN
ANNIVERSARY DATE, IT MAY BE POSTPONED BY THE PLAN FOR A PERIOD OF UP TO 180
DAYS, FOR ADMINISTRATIVE CONVENIENCE. HOWEVER, UNLESS YOU ELECT IN WRITING TO
DEFER THE RECEIPT OF BENEFITS, NO DISTRIBUTION MAY BEGIN LATER THAN THE 60TH DAY
AFTER THE CLOSE OF THE PLAN YEAR IN WHICH THE LATEST OF THE FOLLOWING EVENTS
OCCURS:
(a) the date on which you reach the age of 65 or your Normal
Retirement Age;
(b) the 10th anniversary of the year in which you became a
participant in the Plan;
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(c) the date you terminated employment with your Employer.
Regardless of whether you elect to delay the receipt of benefits, there
are other rules which generally require minimum payments to begin no later than
the April lst following the year in which you reach age 70 1/2.
You should see the Administrator if you feel you may be affected by this rule.
9. Treatment of Distributions From Your Plan
Whenever you receive a distribution from your Plan, it will normally be
subject to income taxes. You may, however, reduce, or defer entirely, the tax
due on your distribution through use of one of the following methods:
(a) The rollover of all or a portion of the distribution to an
Individual Retirement Account (IRA) or another qualified employer plan.
This will result in no tax being due until you begin withdrawing funds
from the IRA or other qualified employer plan. The rollover of the
distribution, however, MUST be made within strict time frames
(normally, within 60 days after you receive your distribution). Under
certain circumstances all or a portion of a distribution may not
qualify for this rollover treatment. In addition, most distributions
will be subject to mandatory federal income tax withholding at a rate
of 20%. This will reduce the amount you actually receive. For this
reason, if you wish to roll over all or a portion of your distribution
amount, the direct transfer option described in paragraph (b) below
would be the better choice.
(b) You may request that a direct transfer of all or a portion
of your distribution amount be made to either an Individual Retirement
Account (IRA) or another qualified employer plan willing to accept the
transfer. A direct transfer will result in no tax being due until you
withdraw funds from the IRA or other qualified employer plan. Like the
rollover, under certain circumstances all or a portion of the amount to
be distributed may not qualify for this direct transfer. If you elect
to actually receive the distribution rather than request a direct
transfer, then in most cases 20% of the distribution amount will be
withheld for federal income tax purposes.
The election of favorable income tax treatment under "10-year forward
averaging," "5-year forward averaging" or, if you qualify, "capital gains"
method of taxation.
WHENEVER YOU RECEIVE A DISTRIBUTION, THE ADMINISTRATOR WILL DELIVER TO
YOU A MORE DETAILED EXPLANATION OF THESE OPTIONS. HOWEVER, THE RULES WHICH
DETERMINE WHETHER YOU QUALIFY FOR FAVORABLE TAX TREATMENT ARE VERY COMPLEX. YOU
SHOULD CONSULT WITH QUALIFIED TAX COUNSEL BEFORE MAKING A CHOICE.
10. Domestic Relations Order
As a general rule, your interest in your account, including your
"vested interest," may not be alienated. This means that your interest may not
be sold, used as collateral for a loan, given
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away or otherwise transferred. In addition, your creditors may not attach,
garnish or otherwise interfere with your account.
There is an exception, however, to this general rule. The Administrator
may be required by law to recognize obligations you incur as a result of court
ordered child support or alimony payments. The Administrator must honor a
"qualified domestic relations order." A "qualified domestic relations order" is
defined as a decree or order issued by a court that obligates you to pay child
support or alimony, or otherwise allocates a portion of your assets in the Plan
to your spouse, former spouse, child or other dependent. If a qualified domestic
relations order is received by the Administrator, all or a portion of your
benefits may be used to satisfy the obligation. The Administrator will determine
the validity of any domestic relations order received.
11. Pension Benefit Guaranty Corporation
Benefits provided by your Plan are NOT insured by the Pension Benefit
Guaranty Corporation (PBGC) under Title IV of the Employee Retirement Income
Security Act of 1974 because the insurance provisions under ERISA are not
applicable to your Plan.
VI
YEAR OF SERVICE RULES
1. Year of Service and Hour of Service
The term "Year of Service" is used throughout this Summary Plan
Description and throughout your Plan. A Year of Service for eligibility purposes
is defined as follows:
You will have completed a Year of Service if, at the end of your first
twelve consecutive months of employment with your Employer, you have
been credited with 1000 Hours of Service.
If you have not been credited with 1000 Hours of Service by the end of
your first twelve consecutive months of employment, you will have
completed a Year of Service at the end of any following Plan Year
during which you were credited with 1000 Hours of Service.
You will have completed a Year of Service for vesting purposes if you
are credited with 1000 Hours of Service during a Plan Year, even if you were not
employed on the first or last day of the Plan Year.
Also, for the purposes of the Plan, your Years of Service with First
Federal of Alabama, F.S.B. and with First General Lending Corporation will be
recognized.
An "Hour of Service" has a special meaning for Plan purposes. You will
be credited with an Hour of Service for:
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(a) each hour for which you are directly or indirectly
compensated by your Employer for the performance of duties during the
Plan Year;
(b) each hour for which you are directly or indirectly
compensated by your Employer for reasons other than performance of
duties (such as vacation, holidays, sickness, disability, lay-off,
military duty, jury duty or leave of absence during the Plan Year); and
(c) each hour for back pay awarded or agreed to by your
Employer.
You will not be credited for the same Hours of Service both under (a)
or (b), as the case may be, and under (c).
2. 1-Year Break in Service
A 1-Year Break in Service is a computation period during which you have
not completed more than 500 Hours of Service with your Employer.
A 1-Year Break in Service does NOT occur, however, in the computation
period in which you enter or leave the Plan for reasons of:
(a) an authorized leave of absence;
(b) certain maternity or paternity absences.
The Administrator will be required to credit you with Hours of Service
for a maternity or paternity absence. These are absences taken on account of
pregnancy, birth, or adoption of your child. No more than 501 Hours of Service
will be credited for this purpose and these Hours of Service will be credited
solely to avoid your incurring a 1-Year Break in Service. The Administrator may
require you to furnish proof that your absence qualifies as a maternity or
paternity absence.
These break in service rules may be illustrated by the following
examples:
Employee A works 300 hours in a Plan Year. At the end of the Plan Year,
Employee A will have a 1-Year Break in Service because she has worked
less than 501 hours in a Plan Year. Employee B works 300 hours in a
Plan Year and takes an authorized leave of absence for which he is
credited with an additional 250 hours. Employee B will NOT have a
1-Year Break in Service because he is credited with more than 500 hours
in a Plan Year.
If you are reemployed after a 1-Year Break in Service and were vested
in any portion of your account derived from Employer contributions, you will
receive credit for all Years of Service credited to you before your 1-Year Break
in Service.
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If you do not have a "vested interest" in the Employer contributions
allocated to your account when you terminate your employment, you will lose
credit for your pre-break Years of Service when your consecutive 1-Year Breaks
in Service equal or exceed the greater of 5 years, or your pre-break Years of
Service. For example:
Employee B terminated employment on January 1, 2000 with 2 Years of
Service. Employee B was not vested at the time of his termination of
employment. Employee B returns to work on January 1, 2003. Employee B
will be credited with his 2 pre-break Years of Service because his
period of termination (3-years) did not exceed 5 years.
VII
YOUR PLAN'S "TOP HEAVY RULES"
1. Explanation of "Top Heavy Rules"
A 401(k) Profit Sharing Plan that primarily benefits "key employees" is
called a "top heavy plan." Key employees are certain owners or officers of your
Employer. A Plan is a "top heavy plan" when more than 60% of the contributions
or benefits have been allocated to key employees.
Each year, the Administrator is responsible for determining whether
your Plan is a "top heavy plan."
If your Plan becomes top heavy in any Plan Year, then non-key employees
will be entitled to certain "top heavy minimum benefits," and other special
rules will apply. Among these top heavy rules are the following:
(a) Your Employer may be required to make a contribution equal to
3% of your compensation to your account;
(b) If you are a participant in more than one Plan, you may not
be entitled to minimum benefits under both Plans.
VIII
LOANS
You may apply to the Administrator for a loan from the Plan. Your
application must be in writing on forms which the Administrator will provide to
you. The Administrator may also request that you provide additional information,
such as financial statements, tax returns and credit reports. After considering
your application, the Administrator may, in its discretion, determine that you
qualify for the loan. The Administrator will inform the Trustee that you
qualify. The Trustee may then review the Administrator's determination and make
a loan to you if it is a prudent investment for the Plan.
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1. Loan Requirements
There are various rules and requirements that apply for any loan. These
rules are outlined in this Section. In addition, your Employer has established a
written loan program which explains these requirements in more detail. You can
request a copy of the loan program from the Administrator. Generally, the rules
for loans include the following:
(a) Loans must be made available to all participants and their
beneficiaries on a uniform and non-discriminatory basis.
(b) All loans must be adequately secured. You may use up to
one-half (1/2) of your vested account balance under the Plan as
security for the loan. If more security is required, your principal
residence may be used, if permitted by State law. The Plan may also
require that repayments on the loan obligation be by payroll deduction.
(c) All loans must bear a reasonable rate of interest. The
interest rate must be one a bank or other professional lender would
charge for making a loan in a similar circumstance.
(d) All loans must have a definite repayment period which
provides for payments to be made not less frequently than quarterly,
and for the loan to be amortized on a level basis over a reasonable
period of time, not to exceed five (5) years. However, if you use the
loan to acquire your principal residence, you may repay the loan over a
reasonable period of time that may be longer than five (5) years.
(e) All loans will be considered a directed investment from
your account under the Plan. All payments of principal and interest by
you on a loan will be credited to your account.
(f) The amount the Plan may loan to you is limited by rules
under the Internal Revenue Code. All loans, when added to the
outstanding balance of all other loans from the Plan, will be limited
to the lesser of:
(1) $50,000 reduced by the excess, if any, of your
highest outstanding balance of loans from the Plan during the
one-year period prior to the date of the loan over your
current outstanding balance of loans; or
(2) 1/2 of your vested account balance.
The $50,000 limit stated in (1) above will not be reduced for
loans made on or before December 31, 1986.
Also, no loan in an amount less than $1,000 will be made.
(g) If you fail to make payments when they are due under the
loan, you will be considered to be "in default." The Trustee would then
have authority to take all
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reasonable actions to collect the balance owing on the loan. This
could include filing a lawsuit or foreclosing on the security for the
loan. Under certain circumstances, a loan that is in default may be
considered a distribution from the Plan, and could result in taxable
income to you. In any event, your failure to repay a loan will reduce
the benefit you would otherwise be entitled to from the Plan.
IX
CLAIMS BY PARTICIPANTS AND BENEFICIARIES
Benefits will be paid to participants and their beneficiaries without
the necessity of formal claims. You or your beneficiaries, however, may make a
request for any Plan benefits to which you may be entitled. Any such request
must be made in writing, and it should be made to the Administrator. (See the
Article in this Summary entitled "GENERAL INFORMATION ABOUT YOUR PLAN.")
Your request for Plan benefits will be considered a claim for Plan
benefits, and it will be subject to a full and fair review. If your claim is
wholly or partially denied, the Administrator will furnish you with a written
notice of this denial. This written notice must be provided to you within a
reasonable period of time (generally 90 days) after the receipt of your claim by
the Administrator. The written notice must contain the following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to those Plan provisions on which the
denial is based;
(c) a description of any additional information or material
necessary to correct your claim and an explanation of why such
material or information is necessary; and
(d) appropriate information as to the steps to be taken if you or
your beneficiary wishes to submit your claim for review.
If notice of the denial of a claim is not furnished to you in
accordance with the above within a reasonable period of time, your claim will be
deemed denied. You will then be permitted to proceed to the review stage
described in the following paragraphs.
If your claim has been denied, and you wish to submit your claim for
review, you must follow the Claims Review Procedure.
1. The Claims Review Procedure
(a) Upon the denial of your claim for benefits, you may file
your claim for review, in writing, with the Administrator.
(b) YOU MUST FILE THE CLAIM FOR REVIEW NO LATER THAN 60 DAYS
AFTER YOU HAVE RECEIVED WRITTEN NOTIFICATION OF THE DENIAL OF YOUR
CLAIM FOR BENEFITS OR, IF NO WRITTEN DENIAL OF
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YOUR CLAIM WAS PROVIDED, NO LATER THAN 60 DAYS AFTER THE DEEMED DENIAL
OF YOUR CLAIM.
(c) You may review all pertinent documents relating to the
denial of your claim and submit any issues and comments, in writing, to
the Administrator.
(d) Your claim for review must be given a full and fair
review. If your claim is denied, the Administrator must provide you
with written notice of this denial within 60 days after the
Administrator's receipt of your written claim for review. There may be
times when this 60-day period may be extended. This extension may only
be made, however, where there are special circumstances which are
communicated to you in writing within the 60-day period. If there is an
extension, a decision will be made as soon as possible, but not later
than 120 days after receipt by the Administrator of your claim for
review.
(e) The Administrator's decision on your claim for review will
be communicated to you in writing and will include specific references
to the pertinent Plan provisions on which the decision was based.
(f) If the Administrator's decision on review is not furnished
to you within the time limitations described above, your claim will be
deemed denied on review.
(g) If benefits are provided or administered by an insurance
company, insurance service, or other similar organization which is
subject to regulation under the insurance laws, the claims procedure
relating to these benefits may provide for review. If so, that company,
service, or organization will be the entity to which claims are
addressed. If you have any questions regarding the proper person or
entity to address claims, you should ask the Administrator.
X
STATEMENT OF ERISA RIGHTS
1. Explanation of Your ERISA Rights
As a participant in this Plan you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974, also
called ERISA. ERISA provides that all Plan participants are entitled to:
(a) examine, without charge, all Plan documents, including:
(1) insurance contracts;
(2) collective bargaining agreements; and
(3) copies of all documents filed by the Plan with the U.S.
Department of Labor, such as detailed annual reports and Plan
descriptions.
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This examination may take place at the Administrator's office and at
other specified employment locations of the Employer. (See the Article in this
Summary entitled "GENERAL INFORMATION ABOUT YOUR PLAN");
(b) obtain copies of all Plan documents and other Plan
information upon written request to the Plan Administrator. The
Administrator may make a reasonable charge for the copies;
(c) receive a summary of the Plan's annual financial report.
The Administrator is required by law to furnish each participant with a
copy of this summary annual report;
(d) obtain a statement telling you whether you have a right to
receive a retirement benefit at Normal Retirement Age and, if so, what
your benefits would be at Normal Retirement Age if you stop working
under the Plan now. If you do not have a right to a retirement benefit,
the statement will tell you how many years you have to work to get a
right to a retirement benefit. THIS STATEMENT MUST BE REQUESTED IN
WRITING AND IS NOT REQUIRED TO BE GIVEN MORE THAN ONCE A YEAR. The Plan
must provide the statement free of charge.
In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including your employer or any other person, may fire you
or otherwise discriminate against you in any way to prevent you from obtaining a
pension benefit or exercising your rights under ERISA.
If your claim for a retirement benefit is denied in whole or in part,
you must receive a written explanation of the reason for the denial. You have
the right to have the Administrator review and reconsider your claim. (See the
Article in this Summary entitled "CLAIMS BY PARTICIPANTS AND BENEFICIARIES.")
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the court
may require the Administrator to provide the materials and pay you up to $100.00
a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Administrator.
If you have a claim for benefits which is denied or ignored, in whole
or in part, you may file suit in a state or federal court.
If the Plan's fiduciaries misuse the Plan's money, or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a federal court. The court
will decide who should pay court costs and legal fees. If you are successful,
the court may order the person you have sued to pay these costs and fees. If
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you lose, the court may order you to pay these costs and fees if, for example,
it finds your claim is frivolous.
If you have any questions about this statement, or about your rights
under ERISA, you should contact the nearest Regional Office of the U.S.
Department of Labor's Pension and Welfare Benefits Administration.
XI
AMENDMENT AND TERMINATION OF YOUR PLAN
1. Amendment
Your Employer has the right to amend your Plan at any time. In no
event, however, will any amendment:
(a) authorize or permit any part of the Plan assets to be used
for purposes other than the exclusive benefit of participants or their
beneficiaries; or
(b) cause any reduction in the amount credited to your
account; or
(c) cause any part of your Plan assets to revert to the
Employer.
2. Termination
Your Employer has the right to terminate the Plan at any time. Upon
termination, all amounts credited to your accounts will become 100% vested.
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Company's registration statement filed on Form S-8 of our
report dated February 12, 1999 included in Pinnacle Bancshares, Inc.'s Form
10-KSB for the year ended and to all references to our Firm included in the
registration statement.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
August 16, 1999
