Filed with the Securities and Exchange Commission on December 30, 1997
Securities Act Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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LITHIA MOTORS, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-0572810
(State of incorporation) (I.R.S. Employer Identification No.)
360 E. Jackson St., Medford, Oregon 97501
(Address of principal executive offices) (Zip Code)
LITHIA MOTORS, INC., SALARY REDUCTION PROFIT SHARING PLAN
(Full title of the plan)
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Sidney B. DeBoer, President
360 E. Jackson St.
Medford, Oregon 97501
(541) 776-6899
(Name, address and telephone number
of agent for service)
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Copies to:
Kenneth E. Roberts, Esq.
Foster Pepper & Shefelman
101 S.W. Main St., 15th Fl.
Portland, Oregon 97204
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Proposed
Number of Maximum Maximum Amount of
Title of Securities Shares Being Offering Price Aggregate Registration
Being Registered Registered(1) Per Share(2) Offering Price(2) Fee
<S> <C> <C> <C> <C>
Class A Common Stock 250,000 $14.25 $3,562,500 $1,051.00
</TABLE>
(1) The shares of Common Stock represent the number of shares which may be
issued pursuant to the Salary Reduction Profit Sharing Plan. In addition,
pursuant to Rule 416, this Registration Statement also covers an
indeterminate number of additional shares which may be issuable as a result
of the anti-dilution provisions of Plan.
(2) The maximum offering price for the shares cannot presently be determined as
the offering price is established at the time shares are issued. Pursuant
to Rule 457(h), the offering price is estimated based on the last sale
price reported for the Common Stock on NASDAQ on December 26, 1997.
Pursuant to Rule 416(c) under the Securities Act of 1933, this registration
statement also covers an indeterminate amount of interests to be offered and
sold pursuant to the Plan. Pursuant to Rule 457(h), no registration fee is
applicable to interests in the Plan.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Lithia Motors, Inc. (the "Company") with
the Securities and Exchange Commission are incorporated by reference in this
registration statement:
1. The Company's annual report on Form 10-K filed with the Commission on
March 31, 1997 (File No. 000-21789).
2. The description of the Class A Common Stock contained in the Company's
registration statement on Form S-1 declared effective by the Commission on
December 18, 1996 (File No. 333-14031).
All documents filed by the Company subsequent to those listed above
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act
of 1934, as amended, prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Under the Oregon Business Corporation Act (Oregon Revised Statutes ("ORS")
Sections 60.387 to 60.414), applicable to the Company, a person who is made a
party to a proceeding because such person is or was an officer or director of a
corporation may be indemnified by the corporation against liability incurred by
such person in connection with the proceeding if (i) the person's conduct was in
good faith and in a manner he or she reasonably believed was in the
corporation's best interest or at least not opposed to its best interests and
(ii) if the proceeding was a criminal proceeding, the Indemnitee had no
reasonable cause to believe his or her conduct was unlawful. Indemnification is
not permitted if the person was adjudged liable to the corporation in a
proceeding by or in the right of the corporation, or if the Indemnitee was
adjudged liable on the basis that he or she improperly received a personal
benefit. Unless the articles of the corporation provide otherwise, such
indemnification is mandatory if the Indemnitee is wholly successful on the
merits or otherwise, or if ordered by a court of competent jurisdiction.
The Oregon Business Corporation Act also provides that a company's Articles
of Incorporation may limit or eliminate the personal liability of a director to
the corporation or its shareholders for monetary damages for conduct as a
director, provided that no such provision shall eliminate the liability of a
director for (i) any breach of the directors' duty of loyalty to the corporation
or its shareholders; (ii) acts or omissions not in good faith or which involve
II-1
<PAGE>
intentional misconduct or a knowing violation of law; (iii) any unlawful
distribution; or (iv) any transaction from which the director derived an
improper personal benefit.
The Company's Articles of Incorporation (the "Articles") provide that the
company will indemnify its directors and officers, to the fullest extent
permissible under the Oregon Business Corporation Act against all expense
liability and loss (including attorney fees) incurred or suffered by reason of
service as a director or officer of the company or is or was serving at the
request of the company as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise.
The effect of these provisions is to limit the liability of directors for
monetary damages, and to indemnify the directors and officers of the Company for
all costs and expenses for liability incurred by them in connection with any
action, suit or proceeding in which they may become involved by reason of their
affiliation with the Company, to the fullest extent permitted by law. These
provisions do not limit the rights of the Company or any shareholder to see
non-monetary relief, and do not affect a director's or officer's
responsibilities under any other laws, such as securities or environmental laws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The exhibits required by Item 601 of Regulation S-K being filed herewith or
incorporated herein by reference are as follows:
Exhibit
4.1 Restated Articles of Incorporation of Lithia Motors, Inc. Incorporated
by reference to Exhibit 3.1 to the Company's registration statement on
Form S-1 as declared effective by the Securities and Exchange
Commission on December 18, 1996 (File No. 333-14031).
4.2 Bylaws of Lithia Motors, Inc. Incorporated by reference to Exhibit 3.2
to the Company's registration statement on Form S-1 as declared
effective by the Securities and Exchange Commission on December 18,
1996 (File No. 333-14031).
5.1 Opinion of Foster Pepper & Shefelman
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Foster Pepper & Shefelman (Included in Exhibit 5.1)
99 Lithia Motors, Inc. Salary Reduction Profit Sharing Plan
II-2
<<PAGE>
Item 9. Undertakings.
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:
(1) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(2) 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;
(3) 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 1 and 2 do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 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.
(D) 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 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 herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(E) 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 provisions described in Item 6, 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 the 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. The foregoing undertaking
shall not apply to indemnification which is covered by insurance.
II-3
<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 Medford, State of Oregon, on the 30th day of
December, 1997.
LITHIA MOTORS, INC.
By: /s/ M.L. Dick Heimann
----------------------------------------
M.L. Dick Heimann,
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
By: /s/ Sidney B. DeBoer Date: 12-30-97
------------------------------------------------ -------------------
Sidney B. DeBoer
President, Chief Executive Officer and
Chairman of the Board of Directors
By: /s/ M.L. Dick Heimann Date: 12-30-97
------------------------------------------------ -------------------
M.L. Dick Heimann
Executive Vice President, Director
By: /s/ R. Bradford Gray Date: 12-30-97
------------------------------------------------ -------------------
R. Bradford Gray
Director
By: /s/ Thomas Becker Date:12-30-97
------------------------------------------------ --------------------
Thomas Becker
Director
By: /s/ William Young Date: 12-30-97
------------------------------------------------ -------------------
William Young
Director
By: /s/ Brian R. Neill Date: 12-30-97
------------------------------------------------ -------------------
Brian R. Neill
Senior Vice President, Chief Financial Officer
(Chief Accounting and Financial Officer)
PAGE>
EXHIBIT INDEX
Exhibit
4.1 Restated Articles of Incorporation of Lithia Motors, Inc. Incorporated
by reference to Exhibit 3.1 to the Company's registration statement on
Form S-1 as declared effective by the Securities and Exchange
Commission on December 18, 1996 (File No. 333-14031).
4.2 Bylaws of Lithia Motors, Inc. Incorporated by reference to Exhibit 3.2
to the Company's registration statement on Form S-1 as declared
effective by the Securities and Exchange Commission on December 18,
1996 (File No. 333-14031).
5.1 Opinion of Foster Pepper & Shefelman
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Foster Pepper & Shefelman (Included in Exhibit 5.1)
99 Lithia Motors, Inc. Salary Reduction Profit Sharing Plan
EXHIBIT 5.1
[FOSTER PEPPER & SHEFELMAN LETTERHEAD]
December 30, 1997
Board of Directors
Lithia Motors, Inc.
360 E. Jackson St.
Medford, Oregon 97501
Re: Form S-8 Registration of Salary Reduction Profit Sharing Plan
Gentlemen:
This firm is special counsel to Lithia Motors, Inc., an Oregon corporation,
(the "Company") and, in that capacity we have assisted in the preparation of
certain documents relating to the issuance of up to 250,000 shares of the
Company's common stock ("Shares") in accordance with the Company's Salary
Reduction Profit Sharing Plan (the "Plan"), in particular the Company's
Registration Statement on Form S-8 (the "Registration Statement").
In the course of our representation as described above, we have examined
the Plan, the Registration Statement as prepared for filing with the Securities
and Exchange Commission and related documents and correspondence. We have
received from officers of the Company having custody thereof, and have reviewed,
the Articles of Incorporation and Bylaws of the Company, and minutes of certain
meetings of the Company's Board of Directors. We have also received from the
officers of the Company certificates and other representations concerning
factual matters. We have received such certificates from, and have had
conversations with, public officials in those jurisdictions in which we have
deemed it appropriate.
We have relied as to matters of fact upon the above certificates, documents
and investigation. We have assumed without investigation the genuineness of all
signatures and the authenticity and completeness of all of the documents
submitted to us as originals and the conformity to authentic and complete
original documents submitted to us as certified or photostatic copies.
Based upon and subject to all of the foregoing, we are of the opinion that:
The Shares have been validly authorized, and (i) when the Registration
Statement has become effective; and (ii) such state securities laws as may be
applicable have been complied with, and (iii) the Shares have been delivered
against payment therefor as contemplated by the Registration Statement, the
Shares will be validly issued, fully paid and non-assessable.
<PAGE>
Board of Directors
Lithia Motors, Inc.
December 30, 1997
Page 2
This opinion is limited to the present laws of the State of Oregon and the
United States of America and to the facts bearing on this opinion as they exist
on the date of this letter. We disclaim any obligation to review or supplement
this opinion or to advise you of any changes in the circumstances, laws or
events that may occur after this date or otherwise update this opinion.
This opinion is provided to you as a legal opinion only, and not as a
guaranty or warranty of the matters discussed herein. Our opinion is limited to
the matters expressly stated herein, and no other opinions may be implied or
inferred.
The opinions expressed herein are for the benefit of and may be relied upon
only by you in connection with the Plan. Neither this opinion nor any extract
therefrom nor reference thereto shall be published or delivered to any other
person or otherwise relied upon without our expressed written consent. We hereby
consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement.
Very truly yours,
FOSTER PEPPER & SHEFELMAN
By: /s/ Kenneth E. Roberts
-----------------------------------
Kenneth E. Roberts
Portland, Oregon
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
The Board of Directors
Lithia Motors, Inc. and Affiliated Companies:
We consent to the use of our reports incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
---------------------------------------------
Portland, Oregon
December 30, 1997
EXHIBIT 99
LITHIA MOTORS, INC.,
SALARY REDUCTION
PROFIT SHARING PLAN
Defined Contribution Plan 7.7
Restated January 1, 1997
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TABLE OF CONTENTS
INTRODUCTION
ARTICLE I FORMAT AND DEFINITIONS
Section 1.01 Format
Section 1.02 Definitions
ARTICLE 11 PARTICIPATION
Section 2.01 Active Participant
Section 2.02 Inactive Participant
Section 2.03 Cessation of Participation
ARTICLE III CONTRIBUTIONS
Section 3.01 Employer Contributions
Section 3.01A Voluntary Contributions by Participants
Section 3.01B Rollover Contributions
Section 3.02 Forfeitures
Section 3.03 Allocation
Section 3.04 Contribution Limitation
Section 3.05 Excess Amounts
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
Section 4.01 Investment of Contributions
Section 4.01A Investment in Qualifying Employer Securities
Section 4.01B Limitation on Investment in Qualifying Employer
Securities by Some Participants
ARTICLE V BENEFITS
Section 5.01 Retirement Benefits
Section 5.02 Death Benefits
Section 5.03 Vested Benefits
Section 5.04 When Benefits Start
Section 5.05 Withdrawal Privileges
Section 5.06 Loans to Participants
ARTICLE VI DISTRIBUTION OF BENEFITS
Section 6.01 Form of Distribution
Section 6.02 Election Procedures
Section 6.03 Notice Requirements
Section 6.04 Distributions Under Qualified Domestic
Relations Orders
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ARTICLE VII TERMINATION OF PLAN
ARTICLE VIII ADMINISTRATION OF PLAN
Section 8.01 Administration
Section 8.02 Records
Section 8.03 Information Available
Section 8.04 Claim and Appeal Procedures
Section 8.05 Unclaimed Vested Account Procedure
Section 8.06 Delegation of Authority
ARTICLE IX GENERAL PROVISIONS
Section 9.01 Amendments
Section 9.02 Direct Rollovers
Section 9.03 Mergers and Direct Transfers
Section 9.04 Provisions Relating to the Insurer
and Other Parties
Section 9.05 Employment Status
Section 9.06 Rights to Plan Assets
Section 9.07 Beneficiary
Section 9.08 Nonalienation of Benefits
Section 9.09 Construction
Section 9.10 Legal Actions
Section 9.11 Small Amounts
Section 9.12 Word Usage
Section 9.13 Transfers Between Plans
Section 9.14 Partnership or Sole Proprietorship
ARTICLE X TOP-HEAVY PLAN REQUIREMENTS
Section 10.01 Application
Section 10.02 Definitions
Section 10.03 Modification of Vesting Requirements
Section 10.04 Modification of Contributions
Section 10.05 Modification of Contribution Limitation
PLAN EXECUTION
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<PAGE>
INTRODUCTION
The Primary Employer previously established a salary reduction profit
sharing plan on January 1, 1980.
The Primary Employer is of the opinion that the plan should be changed. It
believes that the best means to accomplish these changes is to completely
restate the plan's terms, provisions and conditions. The restatement, effective
January 1, 1997, is set forth in this document and is substituted in lieu of the
prior document.
The restated plan continues to be for the exclusive benefit of employees of
the Employer. All persons covered under the plan on December 31, 1996, shall
continue to be covered under the restated plan with no loss of benefits.
It is intended that the plan, as restated, shall qualify as a profit
sharing plan under the Internal Revenue Code of 1986, including any later
amendments to the Code.
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<PAGE>
ARTICLE I
FORMAT AND DEFINITIONS
SECTION 1.01-FORMAT.
Words and phrases defined in the DEFINITIONS SECTION of Article I shall
have that defined meaning when used in this Plan, unless the context clearly
indicates otherwise.
These words and phrases have an initial capital letter to aid in
identifying them as defined terms.
SECTION 1.02-DEFINITIONS.
ACCOUNT means, for a Participant, his share of the Investment Fund.
Separate accounting records are kept for those parts of his Account that result
from:
(a) Voluntary Contributions
(b) Elective Deferral Contributions
(c) Matching Contributions
(d) Other Employer Contributions
If the Employer elects to include any of these Contributions in computing
the percentages in the EXCESS AMOUNTS SECTION of Article Ill, a separate
accounting record shall be kept for any part of his Account resulting from such
Employer Contributions.
(e) Rollover Contributions
If the Participant's Vesting Percentage is less than 100% as to any of the
Employer Contributions, a separate accounting record will be kept for any part
of his Account resulting from such Employer Contributions and, if there has been
a prior Forfeiture Date, from such Contributions made before a prior Forfeiture
Date.
A Participant's Account shall be reduced by any distribution of his Vested
Account and by any Forfeitures. A Participant's Account will participate in the
earnings credited, expenses charged and any appreciation or depreciation of the
Investment Fund. His Account is subject to any minimum guarantees applicable
under the Group Contract or other investment arrangement.
ACCRUAL COMPUTATION PERIOD means a 12-consecutive month period ending on
the last day of each Plan Year, including corresponding 12-consecutive month
periods before January 1, 1980.
ACTIVE PARTICIPANT means an Eligible Employee who is actively participating
in the Plan according to the provisions in the ACTIVE PARTICIPANT SECTION of
Article II.
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<PAGE>
AFFILIATED SERVICE GROUP means any group of corporations, partnerships or
other organizations of which the Employer is a part and which is affiliated
within the meaning of Code Section 414(m) and regulations thereunder. Such a
group includes at least two organizations one of which is either a service
organization (that is, an organization the principal business of which is
performing services), or an organization the principal business of which is
performing management functions on a regular and continuing basis. Such service
is of a type historically performed by employees. In the case of a management
organization, the Affiliated Service Group shall include organizations related,
within the meaning of Code Section 1 "(a)(3), to either the management
organization or the organization for which it performs management functions. The
term Controlled Group, as it is used in this Plan, shall include the term
Affiliated Service Group.
ALTERNATE PAYEE means any spouse, former spouse, child or other dependent
of a Participant who is recognized by a qualified domestic relations order as
having a right to receive all, or a portion of the benefits payable under the
Plan with respect to such Participant.
ANNUAL COMPENSATION means, on any given date, the Employee's Compensation
for the latest Compensation Year ending on or before the given date.
ANNUITY STARTING DATE means, for a Participant, the first day of the first
period for which an amount is payable in a single sum.
BENEFICIARY means the person or persons named by a Participant to receive
any benefits under this Plan upon the Participant's death. Unless a qualified
election has been made, for the purpose of distributing any death benefits
before Annuity Starting Date, the Beneficiary of a married Participant shall be
the Participant's spouse. See the BENEFICIARY SECTION of Article IX.
CLAIMANT means any person who has made a claim for benefits under this
Plan. See the CLAIM AND APPEAL PROCEDURES SECTION of Article VIII.
CODE means the Internal Revenue Code of 1986, as amended.
COMPENSATION means, except as modified in this definition, the total
earnings paid or made available to an Employee by the Employer during any
specified period.
"Earnings" in this definition means Compensation as defined in the
CONTRIBUTION LIMITATION SECTION of Article 111.
Compensation shall exclude reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred compensation and
welfare benefits.
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<PAGE>
Compensation shall also include elective contributions. Elective
contributions are amounts excludable from the Employee's gross income under Code
Sections 125, 402(e)(3), 402(h) or 403(b), and contributed by the Employer, at
the Employee's election, to a Code Section 401 (k) arrangement, a simplified
employee pension, cafeteria plan or tax-sheltered annuity. Elective
contributions also include Compensation deferred under a Code Section 457 plan
maintained by the Employer and Employee contributions "picked up" by a
governmental entity and, pursuant to Code Section 414(h)(2), treated as Employer
contributions.
For purposes of the EXCESS AMOUNTS SECTION of Article Ill, the Employer may
elect to use an alternative nondiscriminatory definition of Compensation in
accordance with the regulations under Code Section 414(s).
Compensation shall exclude earnings paid before the Employee's Entry Date.
For Plan Years beginning after December 31, 1988, and before January 1,
1994, the annual Compensation of each Participant taken into account for
determining all benefits provided under the Plan for any year shall not exceed
$200,000. For Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account for determining all benefits
provided under the Plan for any year shall not exceed $150,000.
The $200,000 limit shall be adjusted by the Secretary at the same time and
in the same manner as under Code Section 415(d). The $150,000 limit shall be
adjusted by the Commissioner for increases in the cost of living in accordance
with Code Section 401 (a)(1 7)(B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 1 2 months, over which pay is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the 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.
In determining the Compensation of a Participant for purposes of the annual
compensation limit, the rules of Code Section 414(q)(6) shall apply, except that
in applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the application of such
rules the adjusted annual compensation limit is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity) the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this definition prior to the application of
this limitation.
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<PAGE>
If Compensation for any prior determination period is taken into account in
determining a Participant's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the annual
compensation limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1989, which are used to determine
benefits in Plan Years beginning after December 31, 1988 and before January 1,
1994, the annual compensation limit is $200,000. For this purpose, for
determination periods beginning before the first day of the first Plan Year
beginning on or after January 1, 1994, which are used to determine benefits in
Plan Years beginning on or after January 1, 1994, the annual compensation limit
is $150,000.
Compensation means, for an Employee who is a Leased Employee, the
Employee's Compensation for the services he performs for the Employer,
determined in the same manner as the Compensation of Employees who are not
Leased Employees, regardless of whether such Compensation would be received
directly from the Employer or from the leasing organization.
COMPENSATION YEAR means each one-year period ending on the last day of the
Plan Year, including corresponding periods before January 1, 1980.
CONTRIBUTIONS means
Elective Deferral Contributions
Matching Contributions
Qualified Nonelective Contributions
Discretionary Contributions
Voluntary Contributions Rollover Contributions
as set out in Article Ill, unless the context clearly indicates
otherwise.
CONTROLLED GROUP means any group of corporations, trades or businesses of
which the Employer is a part that are under common control. A Controlled Group
includes any group of corporations, trades or businesses, whether or not
incorporated, which is either a parent-subsidiary group, a brother-sister group,
or a combined group within the meaning of Code Section 414(b), Code Section
414(c) and regulations thereunder and, for purposes of determining contribution
limitations under the CONTRIBUTION LIMITATION SECTION of Article 111, as
modified by Code Section 415(h) and, for the purpose of identifying Leased
Employees, as modified by Code Section 144(a)(3). The term Controlled Group, as
it is used in this Plan, shall include the term Affiliated Service Group and any
other employer required to be aggregated with the Employer under Code Section
414(o) and the regulations thereunder.
DIRECT ROLLOVER means a payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
DISCRETIONARY CONTRIBUTIONS means discretionary contributions made by the
Employer to fund this Plan. See the EMPLOYER CONTRIBUTIONS
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<PAGE>
SECTION of Article III.
DISTRIBUTEE means an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section 414(p), are Distributees
with regard to the interest of the spouse or former spouse.
EARLY RETIREMENT DATE means the first day of any month before a
Participant's Normal Retirement Date which the Participant selects for the start
of his retirement benefit. This day shall be on or after the date on which he
ceases to be an Employee and the date he meets the following requirement(s):
(a) He has attained age 59 1/2.
(b) He has completed seven years of Vesting Service.
ELECTIVE DEFERRAL CONTRIBUTIONS means Contributions made by the Employer to
fund this Plan in accordance with a qualified cash or deferred arrangement as
described in Code Section 401 (k) - See the EMPLOYER CONTRIBUTIONS SECTION of
Article 111.
ELIGIBILITY BREAK IN SERVICE means an Eligibility Computation Period in
which an Employee is credited with 500 or fewer Hours-of- Service. An Employee
incurs an Eligibility Break in Service on the last day of an Eligibility
Computation Period in which he has an Eligibility Break in Service.
ELIGIBILITY COMPUTATION PERIOD means a 12-consecutive month period. The
first Eligibility Computation Period begins on an Employee's Employment
Commencement Date. Later Eligibility Computation Periods begin on anniversaries
of his Employment Commencement Date.
To determine an Eligibility Computation Period after an Eligibility Break
in Service, the Plan shall use the 12-consecutive month period beginning on an
Employee's Reemployment Commencement Date as if his Reemployment Commencement
Date were his Employment Commencement Date.
ELIGIBILITY SERVICE means one year of service for each Eligibility
Computation Period that has ended and in which an Employee is credited with at
least 1,000 Hours-of-Service.
However, Eligibility Service is modified as follows:
Period of Military Duty included:
A Period of Military Duty shall be included as service with
the Employer to the extent it has not already been credited.
For purposes of crediting Hours-of-Service during the Period
of Military Duty, an Hour-of-Service shall be credited
(without regard to the 501 Hour-of-Service limitation) for
each hour an Employee would normally have been scheduled to
work for the Employer during such period.
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<PAGE>
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group
while both that firm and the Employer were members of the
Controlled Group shall be included as service with the
Employer.
ELIGIBLE EMPLOYEE means any Employee of the Employer.
ELIGIBLE RETIREMENT PLAN means an individual retirement account described
in Code Section 408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section 403(a) or a qualified
trust described in Code Section 401 (a), that accepts the Distributees Eligible
Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the surviving
spouse, an Eligible Retirement Plan is an individual retirement account or
individual retirement annuity.
ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any portion
of the balance to the credit of the Distributee, except that an Eligible
Rollover Distribution does not include:
(a) Any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributees
designated Beneficiary, or for a specified period of ten years or
more.
(b) Any distribution to the extent such distribution is required under
Code Section 401 (a)(9).
(c) The portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
EMPLOYEE means an individual who is employed by the Employer or any other
employer required to be aggregated with the Employer under Code Sections 414(b),
(c), (m) or (o). A Controlled Group member is required to be aggregated with the
Employer.
The term Employee shall also include any Leased Employee deemed to be an
employee of any employer described in the preceding paragraph as provided in
Code Sections 414(n) or 414(o).
EMPLOYER means the Primary Employer. This will also include any successor
corporation or firm of the Employer which shall, by written agreement, assume
the obligations of this Plan or any predecessor corporation or firm of the
Employer (absorbed by the Employer, or of which the Employer was once a part)
which became a predecessor because of a change of name, merger, purchase of
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stock or purchase of assets and which maintained this Plan.
EMPLOYER CONTRIBUTIONS means
Elective Deferral Contributions
Matching Contributions
Qualified Nonelective Contributions
Discretionary Contributions
as set out in Article Ill, unless the context clearly indicates
otherwise.
EMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service.
ENTRY DATE means the date an Employee first enters the Plan as an Active
Participant. See the ACTIVE PARTICIPANT SECTION of Article Ii.
FISCAL YEAR means the Primary Employer's taxable year. The last day of the
Fiscal Year is December 31.
FORFEITURE means the part, if any, of a Participant's Account that is
forfeited. See the FORFEITURES SECTION of Article Ill.
FORFEITURE DATE means, as to a Participant, the last day of five
consecutive one-year Periods of Severance (the date the Participant incurs five
consecutive Vesting Breaks in Service when the hours method is used to determine
Vesting Service). A Participant incurs a Vesting Break in Service on the last
day of the period used to determine the Vesting Break in Service. Before the
first Yearly Date in 1985, the Forfeiture Date is the last day of a one-year
Period of Severance (the date the Participant incurs a Vesting Break in Service
when the hours method is used to determine Vesting Service).
This is the date on which the Participant's Nonvested Account will be
forfeited unless an earlier forfeiture occurs as provided in the FORFEITURES
SECTION of Article 111.
GROUP CONTRACT means the group annuity contract or contracts into which the
Primary Employer enters with the Insurer for the investment of Contributions and
the payment of benefits under this Plan. The term Group Contract as it is used
in this Plan is deemed to include the plural unless the context clearly
indicates otherwise.
HIGHLY COMPENSATED EMPLOYEE means a highly compensated active Employee or a
highly compensated former Employee.
A highly compensated active Employee means any Employee who performs
service for the Employer during the determination year and who, during the
look-back year is:
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(a) An Employee who is a 5% owner, as defined in Section 416(i)(1)(B)(i),
at any time during the determination year or the look-back year.
(b) An Employee who receives compensation in excess of $75,000 (indexed in
accordance with Section 415(d) during the look-back year.
(c) An Employee who receives compensation in excess of $50,000 (indexed in
accordance with Section 415(d) during the look-back year and is a
member of the top-paid group for the look-back year.
(d) An Employee who is an officer, within the meaning of Section 416(i),
during the look-back year and who receives compensation in the
look-back year greater than 50% of the dollar limitation in effect
under Section 415(b)(1)(A) for the calendar year in which the
look-back year begins. The number of officers is limited to 50 (or, if
lesser, the greater of 3 employees or 10% of employees) excluding
those employees who may be excluded in determining the top-paid group.
(e) An Employee who is both described in paragraph b, c or d above when
these paragraphs are modified to substitute the determination year for
the look-back year and one of the 100 Employees who receive the most
compensation from the Employer during the determination year.
If no officer has satisfied the compensation requirement of (c) above
during either a determination year or look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year.
A highly compensated former Employee means any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the Employer during the determination year, and was a
highly compensated active Employee for either the separation year or any
determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5 percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most highly compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten highly
compensated Employee shall be aggregated. In such case, the family member and 5
percent owner or top-ten highly compensated Employee shall be treated as a
single Employee receiving compensation and Plan contributions or benefits equal
to the sum of such compensation and contributions or benefits of the family
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member and 5 percent owner or top-ten highly compensated Employee. For purposes
of this definition, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
Compensation is compensation within the meaning of Code Section 415(c)(3),
including elective or salary reduction contributions to a cafeteria plan, cash
or deferred arrangement or tax-sheltered annuity. The top-paid group consists of
the top 20% of employees ranked on the basis of compensation received during the
year.
Employers aggregated under Section 414(b), (c), (m) or (o) are treated as a
single Employer.
HOUR-OF-SERVICE means, for the elapsed time method of crediting service in
this Plan, each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer. Hour- of-Service means, for the hours method
of crediting service in this Plan, the following:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer during the applicable computation
period.
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer because of a period of time in which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence.
Notwithstanding the preceding provisions of this subparagraph (b), no
credit will be given to the Employee
(1) for more than 501 Hours-of-Service under this subparagraph (b)
because of any single continuous period in which the Employee
performs no duties (whether or not such period occurs in a single
computation period); or
(2) for an Hour-of-Service for which the Employee is directly or
indirectly paid, or entitled to payment, because of a period in
which no duties are performed if such payment is made or due
under a plan maintained solely for the purpose of complying with
applicable worker's or workmen's compensation, or unemployment
compensation or disability insurance laws; or
(3) for an Hour-of-Service for a payment which solely reimburses the
Employee for medical or medically related expenses incurred by
him.
For purposes of this subparagraph (b), 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
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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.
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same
Hours-of-Service shall not be credited both under subparagraph (a) or
subparagraph (b) above (as the case may be) and under this
subparagraph (c). Crediting of
Hours-of-Service for back pay awarded or agreed to with respect to periods
described in subparagraph (b) above will be subject to the limitations set
forth in that subparagraph.
The crediting of Hours-of-Service above shall be applied under the rules of
paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2
(including any interpretations or opinions implementing said rules); which
rules, by this reference, are specifically incorporated in full within this
Plan. The reference to paragraph (b) applies to the special rule for determining
hours of service for reasons other than the performance of duties such as
payments calculated (or not calculated) on the basis of units of time and the
rule against double credit. The reference to paragraph (c) applies to the
crediting of hours of service to computation periods.
Hours-of-Service shall be credited for employment with any other employer
required to be aggregated with the Employer under Code Sections 414(b), (c), (m)
or (o) and the regulations thereunder for purposes of eligibility and vesting.
Hours-of-Service shall also be credited for any individual who is considered an
employee for purposes of this Plan pursuant to Code Section 414(n) or Code
Section 414(o) and the regulations thereunder.
Solely for purposes of determining whether a one-year break in service has
occurred for eligibility or vesting purposes, during a Parental Absence an
Employee shall be credited with the Hours-of- Service which otherwise would
normally have been credited to the Employee but for such absence, or in any case
in which such hours cannot be determined, eight Hours-of-Service per day of such
absence. The Hours-of-Service credited under this paragraph shall be credited in
the computation period in which the absence begins if the crediting is necessary
to prevent a break in service in that period; or in all other cases, in the
following computation period.
INACTIVE PARTICIPANT means a former Active Participant who has an Account.
See the INACTIVE PARTICIPANT SECTION of Article 11.
INSURER means Principal Mutual Life Insurance Company and any other
insurance company or companies named by the Trustee or Primary Employer.
INTEGRATION LEVEL means, for a Participant, the taxable wage base as in
effect on the latest Yearly Date.
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"Taxable wage base" as used in this definition means the contribution and
benefit base in effect under section 230 of the Social Security Act.
If a Participant is also a participant in a plan of a Controlled Group
member which uses an integration level in determining the amount or allocation
of contributions, his Integration Level shall be adjusted based upon the ratio
of the Participant's Compensation from the Employer to his total compensation
from the Employer and the Controlled Group member.
INVESTMENT FUND means the total assets held for the purpose of providing
benefits for Participants. These funds result from Contributions made under the
Plan.
INVESTMENT MANAGER means any fiduciary (other than a trustee or Named
Fiduciary)
(a) who has the power to manage, acquire, or dispose of any assets of the
Plan; and
(b) who (1) is registered as an investment adviser under the Investment
Advisers Act of 1940, or (2) is a bank, as defined in the Investment
Advisers Act of 1940, or (3) is an insurance company qualified to
perform services described in subparagraph (a) above under the laws of
more than one state; and
(c) who has acknowledged in writing being a fiduciary with respect to the
Plan.
LATE RETIREMENT DATE means the first day of any month which is after a
Participant's Normal Retirement Date and on which retirement benefits begin. If
a Participant continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest first day of the month on
or after he ceases to be an Employee. An earlier or a later Retirement Date may
apply if the Participant so elects. An earlier Retirement Date may apply if the
Participant is age 70 1/2. See the WHEN BENEFITS START SECTION of Article V.
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 service
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:
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(a) 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(o)(3), 402(h) or 403(b), (2) immediate participation, and (3) full
and immediate vesting and
(b) Leased Employees do not constitute more than 20 percent of the
recipient's nonhighly compensated workforce.
LOAN ADMINISTRATOR means the person or positions authorized to administer
the Participant loan program.
The Loan Administrator is Larissa McAllister.
MATCHING CONTRIBUTIONS means matching contributions made by the Employer to
fund this Plan. See the EMPLOYER CONTRIBUTIONS SECTION of Article Ill.
MAXIMUM INTEGRATION RATE means the amount determined according to the
following schedule:
MAXIMUM
INTEGRATION INTEGRATION RATE
100% OF TWB 5.7%
Less than 100%, but more than 80% of TWB 5.4%
More than the greater of $10,000 or 20%
of TWB, but not more than 80% of TWB 4.3%
Not more than the greater of $10,000 or
20% of TWB 5.7%
"TWB" as used in this definition means the taxable wage base as in effect on the
latest Yearly Date. "Taxable wage base" as used in this definition means the
maximum amount of earnings which may be considered for wages for a year under
Code Section 3121 (a)(1).
On any date the portion of the rate of tax under Code Section 31 1 1 (a)
(in effect on the latest Yearly Date) which is attributable to old age insurance
exceeds 5.7%, such rate shall be substituted for 5.7% and 5.4% and 4.3% shall be
increased proportionately.
MONTHLY DATE means each Yearly Date and the same day of each following
month during the Plan Year beginning on such Yearly Date.
NAMED FIDUCIARY means the person or persons who have authority to control
and manage the operation and administration of the Plan.
The Named Fiduciary is the Employer.
NONHIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer who is
neither a Highly Compensated Employee nor a Family Member.
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NONVESTED ACCOUNT means the part, if any, of a Participant's Account that
is in excess of his Vested Account.
NORMAL RETIREMENT AGE means the age at which the Participant's normal
retirement benefit becomes nonforfeitable. A Participant's Normal Retirement Age
is 65.
NORMAL RETIREMENT DATE means the earliest first day of the month on or
after the date the Participant reaches his Normal Retirement Age. Unless
otherwise provided in this Plan, a Participant's retirement benefits shall begin
on a Participant's Normal Retirement Date if he has ceased to be an Employee on
such date and has a Vested Account. Even if the Participant is an Employee on
his Normal Retirement Date, he may choose to have his retirement benefit begin
on such date. See the WHEN BENEFITS START SECTION of Article V.
PARENTAL ABSENCE means an Employee's absence from work which begins on or
after the first Yearly Date after December 31, 1984,
(a) by reason of pregnancy of the Employee,
(b) by reason of birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in connection
with adoption of such child by such Employee, or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
PARTICIPANT means either an Active Participant or an Inactive Participant.
PARTICIPANT CONTRIBUTIONS means Voluntary Contributions as set out in
Article 111.
PERIOD OF MILITARY DUTY means, for an Employee
(a) who served as a member of the armed forces of the United States, and
(b) who was reemployed by the Employer at a time when the Employee had a
right to reemployment in accordance with seniority rights as protected
under Section 2021 through 2026 of Title 38 of the U. S. Code,
the period of time from the date the Employee was first absent from active
work for the Employer because of such military duty to the date the
Employee was reemployed.
PERIOD OF SERVICE means a period of time beginning on an Employee's
Employment Commencement Date or Reemployment Commencement Date (whichever
applies) and ending on his Severance from Service Date.
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PERIOD OF SEVERANCE means a period of time beginning on an Employee's
Severance from Service Date and ending on the date he again performs an
Hour-of-Service.
A one-year Period of Severance means a Period of Severance of 12
consecutive months.
Solely for purposes of determining whether a one-year Period of Severance
has occurred for eligibility or vesting purposes, the 12- consecutive month
period beginning on the first anniversary of the first date of a Parental
Absence shall not be a one-year Period of Severance.
PLAN means the salary reduction profit sharing plan of the Employer set
forth in this document, including any later amendments to it.
PLAN ADMINISTRATOR means the person or persons who administer the Plan.
The Plan Administrator is the Employer.
PLAN YEAR means a period beginning on a Yearly Date and ending on the day
before the next Yearly Date.
PRIMARY EMPLOYER means Lithia Motors, Inc.
QUALIFIED NONELECTIVE CONTRIBUTIONS means contributions (other than
Employer Contributions made to the Plan on behalf of a Participant on account of
Elective Deferral Contributions or on account of contributions made by the
Participant) made by the Employer to fund this Plan which an Employee may not
elect to have paid to him in cash instead of being contributed to the Plan and
which are subject to the distribution and nonforfeitability requirements under
Code Section 401 (k). See the EMPLOYER CONTRIBUTIONS SECTION of Article 111.
QUALIFYING EMPLOYER SECURITIES means any instrument issued by the Employer
and meeting the requirements of Section 4975(e)(8) of the Code.
QUALIFYING EMPLOYER SECURITIES ACCOUNT means for a Participant, his share
of Qualifying Employer Securities.
REEMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service following
(a) an Eligibility Break in Service, for the hours method of crediting
service in this Plan, or
(b) a Period of Severance, for the elapsed time method of crediting
service in this Plan.
REENTRY DATE means the date a former Active Participant reenters the Plan.
See the ACTIVE PARTICIPANT SECTION of Article 11.
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RETIREMENT DATE means the date a retirement benefit will begin and is a
Participant's Early, Normal or Late Retirement Date, as the case may be.
ROLLOVER CONTRIBUTIONS means the Rollover Contributions which are made by
or for a Participant according to the provisions of the ROLLOVER CONTRIBUTIONS
SECTION of Article 111.
SEMI-YEARLY DATE means each Yearly Date and the sixth Monthly Date after
each Yearly Date which is within the same Plan Year.
SEVERANCE FROM SERVICE DATE means the earlier of
(a) the date on which an Employee quits, retires, dies or is discharged,
or
(b) the first anniversary of the date an Employee begins a one- year
absence from service (with or without pay). This absence may be the
result of any combination of vacation, holiday, sickness, disability,
leave of absence or layoff.
Solely to determine whether a one-year Period of Severance has occurred for
eligibility or vesting purposes for an Employee who is absent from service
beyond the first anniversary of the first day of a Parental Absence, Severance
from Service Date is the second anniversary of the first day of the Parental
Absence. The period between the first and second anniversaries of the first day
of the Parental Absence is not a Period of Service and is not a Period of
Severance.
TEFRA means the Tax Equity and Fiscal Responsibility Act of 1982.
TEFRA COMPLIANCE DATE means the date a plan is to comply with the
provisions of TEFRA. The TEFRA Compliance Date as used in this Plan is,
(a) for purposes of contribution limitations, Code Section 41 5,
(1) if the plan was in effect on July 1, 1982, the first day of the
first limitation year which begins after December 31, 1982, or
(2) if the plan was not in effect on July 1, 1982, the first day of
the first limitation year which ends after July 1, 1982.
(b) for all other purposes, the first Yearly Date after December 31, 1983.
TOTALLY AND PERMANENTLY DISABLED means that a Participant is disabled, as a
result of sickness or injury, to the extent that he is prevented from engaging
in any substantial gainful activity, and is eligible for and receives a
disability benefit under Title 11 of the Federal Social Security Act.
TRUST means an agreement of trust between the Primary Employer and Trustee
established for the purpose of holding and distributing the Trust Fund under the
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provisions of the Plan. The Trust may provide for the investment of all or any
portion of the Trust Fund in the Group Contract.
TRUST FUND means the total funds held under the Trust for the purpose of
providing benefits for Participants. These funds result from Contributions made
under the Plan which are forwarded to the Trustee to be deposited in the Trust
Fund.
TRUSTEE means the trustee or trustees under the Trust. The term Trustee as
it is used in this Plan is deemed to include the plural unless the context
clearly indicates otherwise.
VALUATION DATE means the date on which the value of the assets of the Trust
is determined. The value of each Account which is maintained under this Plan
shall be determined on the Valuation Date. In each Plan Year, the Valuation Date
shall be the close of each business day.
VESTED ACCOUNT means the vested part of a Participant's Account. The
Participant's Vested Account is determined as follows.
If the Participant's Vesting Percentage is 1 00%, his Vested Account equals
his Account.
If the Participant's Vesting Percentage is less than 100%, his Vested
Account equals the sum of (a) and (b) below:
(a) The part of the Participant's Account that results from Employer
Contributions made before a prior Forfeiture Date and all other
Contributions which were 100% vested when made.
(b) The balance of the Participant's Account in excess of the amount in
(a) above multiplied by his Vesting Percentage.
If the Participant has withdrawn any part of his Account resulting from Employer
Contributions, other than the vested Employer Contributions included in (a)
above, the amount determined under this subparagraph (b) shall be equal to P(AB
+ D) - D as defined below:
P The Participant's Vesting Percentage.
AB The balance of the Participant's Account in excess of the amount in
(a) above.
D The amount of withdrawal resulting from Employer Contributions, other
than the vested Employer Contributions included in (a) above.
The Participant's Vested Account is nonforfeitable.
VESTING BREAK IN SERVICE means a Vesting Computation Period in which an
Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs a
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Vesting Break in Service on the last day of a Vesting Computation Period in
which he has a Vesting Break in Service.
VESTING COMPUTATION PERIOD means a 12-consecutive month period ending on
the last day of each Plan Year, including corresponding 12-consecutive month
periods before January 1, 1980.
VESTING PERCENTAGE means the percentage used to determine the
nonforfeitable portion of a Participant's Account attributable to Employer
Contributions which were not 100% vested when made.
A Participant's Vesting Percentage is shown in the following schedule
opposite the number of whole years of his Vesting Service.
VESTING SERVICE VESTING
(whole years) PERCENTAGE
Less than 2 1
2 20
3 40
4 60
5 80
6 or more 100
However, the Vesting Percentage for a Participant who is an Employee on or after
the earliest of (i) the date he reaches his Normal Retirement Age, (ii) the date
of his death, (iii) the date he meets the requirement(s) for an Early Retirement
Date, or (iv) the date he becomes Totally and Permanently Disabled, shall be
100% on such date.
If the schedule used to determine a Participant's Vesting Percentage is
changed, the new schedule shall not apply to a Participant unless he is credited
with an Hour-of-Service on or after the date of the change and the Participant's
nonforfeitable percentage on the day before the date of the change is not
reduced under this Plan. The amendment provisions of the AMENDMENT SECTION of
Article IX regarding changes in the computation of the Vesting Percentage shall
apply.
VESTING SERVICE means the sum of (a), (b), (c) and (d) below:
(a) One year of service for each Vesting Computation Period ending before
May 1, 1995, in which an Employee is credited with at least 1,000
Hours-of-Service.
(b) For the Vesting Computation Period in which May 1, 1995 falls, the
greater of
(1) the service that would have been credited to the Employee as of
May 1, 1995, using the hours method, or
(2) the service that would have been credited to him for the entire
period using the elapsed time method.
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(c) An Employee's Period of Service on or after May 1, 1995, and before
January 1, 1998. If he has more than one Period of Service or if all
or a part of a Period of Service is not counted, his Vesting Service
shall be determined by adjusting his Employment Commencement Date so
that he has one continuous period of Vesting Service equal to the
aggregate of all his countable Periods of Service. This period of
Vesting Service shall be expressed as whole years and fractional parts
of a year (to two decimal places) on the basis that 365 days equal one
year.
(d) One year of service for each Vesting Computation Period ending on or
after January 1, 1998, in which an Employee is credited with at least
1,000 Hours-of-Service.
However, Vesting Service is modified as follows:
Period of Military Duty included:
A Period of Military Duty shall be included as service with the
Employer to the extent it has not already been credited. For purposes
of crediting Hours-of-Service during the Period of Military Duty, an
Hour-of-Service shall be credited (without regard to the 501
Hour-of-Service limitation) for each hour an Employee would normally
have been scheduled to work for the Employer during such period.
Period of Severance included (service spanning rule):
A Period of Severance shall be deemed to be a Period of Service under
either of the following conditions:
(a) the Period of Severance immediately follows a period during which
an Employee is not absent from work and ends within 12 months; or
(b) the Period of Severance immediately follows a period during which
an Employee is absent from work for any reason other than
quitting, being discharged or retiring (such as a leave of
absence or layoff) and ends within 1 2 months of the date he was
first absent.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while
both that firm and the Employer were members of the Controlled Group
shall be included as service with the Employer.
VOLUNTARY CONTRIBUTIONS means contributions by a Participant that are not
required as a condition of employment or participation or for obtaining
additional benefits from the Employer Contributions. See the VOLUNTARY
CONTRIBUTIONS BY PARTICIPANTS SECTION of Article 111.
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YEARLY DATE means January 1, 1980, and the same day of each following year.
YEARS OF SERVICE means an Employee's Vesting Service disregarding any
modifications which exclude service.
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ARTICLE 11
PARTICIPATION
SECTION 2.01-ACTIVE PARTICIPANT.
(a) An Employee shall first become an Active Participant (begin active
participation in the Plan) on the earliest Semi-yearly Date on or after
January 1, 1997, on which he is an Eligible Employee and has met both of
the eligibility requirements set forth below. This date is his Entry Date.
(1) He has completed one year of Eligibility Service before his Entry
Date.
(2) He is age 21 or older.
Each Employee who was an Active Participant under the Plan on December 31,
1996, shall continue to be an Active Participant if he is still an Eligible
Employee on January 1, 1997, and his Entry Date shall not change.
If a person has been an Eligible Employee who has met all the eligibility
requirements above, but is not an Eligible Employee on the date which would
have been his Entry Date, he shall become an Active Participant on the date
he again becomes an Eligible Employee. This date is his Entry Date.
(b) An Inactive Participant shall again become an Active Participant (resume
active participation in the Plan) on the date he again performs an
Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
Upon again becoming an Active Participant, he shall cease to be an Inactive
Participant.
(c) A former Participant shall again become an Active Participant (resume
active participation in the Plan) on the date he again performs an
Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
There shall be no duplication of benefits for a Participant under this Plan
because of more than one period as an Active Participant.
SECTION 2.02-INACTIVE PARTICIPANT.
An Active Participant shall become an Inactive Participant (stop accruing
benefits under the Plan) on the earlier of the following:
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(a) The date on which he ceases to be an Eligible Employee (on his Retirement
Date if the date he ceases to be an Eligible Employee occurs within one
month of his Retirement Date).
(b) The effective date of complete termination of the Plan.
An Employee or former Employee who was an Inactive Participant under the
Plan on December 31, 1996, shall continue to be an Inactive Participant on
January 1, 1997. Eligibility for any benefits payable to him or on his behalf
and the amount of the benefits shall be determined according to the provisions
of the prior document, unless otherwise stated in this document.
SECTION 2.03--CESSATION OF PARTICIPATION.
A Participant shall cease to be a Participant on the date he is no longer
an Eligible Employee and his Account is zero.
SECTION 2.04-ADOPTING EMPLOYERS - SINGLE PLAN.
Each of the entities referenced in the attached participation agreements is
an Adopting Employer. Each Adopting Employer referenced in the attached
participation agreements participates with the Employer in this Plan. An
Adopting Employer's agreement to participate in this Plan shall be in writing.
If the Adopting Employer did not maintain its plan before its date of
adoption, its date of adoption shall be the Entry Date for any of its employees
who have met the requirements in the ACTIVE PARTICIPANT SECTION of Article 11 as
of that date. Service with and earnings from an Adopting Employer shall be
included as service with and earnings from the Employer. Transfer of employment,
without interruption, between an Adopting Employer and another Adopting Employer
or the Employer shall not be considered an interruption of service.
Contributions made by an Adopting Employer shall be treated as
Contributions made by the Employer. Forfeitures arising from those Contributions
shall be used for the benefit of all Participants.
An employer shall not be an Adopting Employer if it ceases to be controlled
by or affiliated with the Employer. Such an employer may continue a retirement
plan for its employees in the form of a separate document. This Plan shall be
amended to delete a withdrawing Adopting Employer by removing the participation
agreement from those attached.
If an employer ceases to be an Adopting Employer and does not continue a
retirement plan for the benefit of its employees, partial termination may result
and the provisions of Article VII apply.
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ARTICLE Ill
CONTRIBUTIONS
SECTION 3.01 -EMPLOYER CONTRIBUTIONS.
Employer Contributions for Plan Years which end on or after January 1,
1997, may be made without regard to current or accumulated net income, earnings,
or profits of the Employer. Notwithstanding the foregoing, the Plan shall
continue to be designed to qualify as a profit sharing plan for purposes of Code
Sections 401(a), 402, 412, and 417. Such Contributions will be equal to the
Employer Contributions as described below:
(a) The amount of each Elective Deferral Contribution for a Participant shall
be equal to any whole percentage (not more than 15%) of his Compensation as
elected in his elective deferral agreement. An Employee who is eligible to
participate in the Plan may file an elective deferral agreement with the
Employer. The elective deferral agreement to start Elective Deferral
Contributions may be effective on a Participant's Entry Date (Reentry Date,
if applicable) or any following date. The Participant shall make any change
or terminate the elective deferral agreement by filing a new elective
deferral agreement. A Participant's elective deferral agreement making a
change may be effective on any date an elective deferral agreement to start
Elective Deferral Contributions could be effective. A Participant's
elective deferral agreement to stop Elective Defeffal Contributions may be
effective on any date. The elective deferral agreement must be in writing
and effective before the beginning of the pay period in which Elective
Deferral Contributions are to start, change or stop.
Elective Deferral Contributions are fully (100%) vested and nonforfeitable.
(b) The amount of each Matching Contribution for a Participant eligible for an
allocation for the Plan Year shall be equal to a percentage (not more than
100%) as determined by the Employer, of the Elective Defeffal Contributions
made for him, disregarding any Elective Deferral Contributions in excess of
a percentage as determined by the Employer, of his Compensation.
The Employer may, at its discretion, make all or any portion (up to 100%)
of this Matching Contribution to the Trustee in the form of Qualifying
Employer Securities.
Matching Contributions are subject to the Vesting Percentage.
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(c) The amount of each Qualified Nonelective Contribution shall be determined
by the Employer. A Qualified Nonelective Contribution shall be made for a
Participant only if he is a Nonhighly Compensated Employee.
The Employer may, at its discretion, make all or any portion (up to 100%)
of this Qualified Nonelective Contribution to the Trustee in the form of
Qualifying Employer Securities.
Qualified Nonelective Contributions are fully (100%) vested and
nonforfeitable.
(d) The amount of each Discretionary Contribution shall be determined by the
Employer.
The Employer may, at its discretion, make all or any portion (up to 100%)
of this Discretionary Contribution to the Trustee in the form of Qualifying
Employer Securities.
Discretionary Contributions are subject to the Vesting Percentage.
No Participant shall be permitted to have Elective Deferral Contributions,
as defined in the EXCESS AMOUNTS SECTION of Article 111, made under this Plan,
or any other qualified plan maintained by the Employer, during any taxable year,
in excess of the dollar limitation contained in Code Section 402(g) in effect at
the beginning of such taxable year.
The Employer shall pay to the Insurer its Contributions used to determine
the Actual Deferral Percentage, as defined in the EXCESS AMOUNTS SECTION of
Article 111, to the Plan for each Plan Year not later than the end of the
twelve-month period immediately following the Plan Year for which they are
deemed to be paid. Any such Contributions accumulated through payroll deductions
shall be paid within 90 days of the date withheld or the date it is first
reasonably practical for the Employer to do so, if earlier.
A portion of the Plan assets resulting from Employer Contributions (but not
more than the original amount of those Contributions) may be returned if the
Employer Contributions are made because of a mistake of fact or are more than
the amount deductible under Code Section 404 (excluding any amount which is not
deductible because the Plan is disqualified). The amount involved must be
returned to the Employer within one year after the date the Employer
Contributions are made by mistake of fact or the date the deduction is
disallowed, whichever applies. Except as provided under this paragraph and
Article VII, the assets of the Plan shall never be used for the benefit of the
Employer and are held for the exclusive purpose of providing benefits to
Participants and their Beneficiaries and for defraying reasonable expenses of
administering the Plan.
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SECTION 3.01A-VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.
No Voluntary Contributions may be made on or after January 1, 1997.
The part of the Participant's Account resulting from Voluntary
Contributions is fully (100%) vested and nonforfeitable at all times.
SECTION 3.01 B-ROLLOVER CONTRIBUTIONS.
A Rollover Contribution may be made by or for an Eligible Employee if the
following conditions are met:
(a) The Contribution is a rollover contribution which the Code permits to be
transferred to a plan that meets the requirements of Code Section 401 (a).
(b) If the Contribution is made by the Eligible Employee, it is made within
sixty days after he receives the distribution.
(c) The Eligible Employee furnishes evidence satisfactory to the Plan
Administrator that the proposed transfer is in fact a rollover contribution
that meets conditions (a) and (b) above.
The Rollover Contribution may be made by the Eligible Employee or the
Eligible Employee may direct the trustee or named fiduciary of another plan to
transfer the funds which would otherwise be a Rollover Contribution directly to
this Plan. Such transferred funds shall be called a Rollover Contribution. The
Contribution shall be made according to procedures set up by the Plan
Administrator.
If the Eligible Employee is not an Active Participant at the time the
Rollover Contribution is made, he shall be deemed to be a Participant only for
the purposes of investment and distribution of the Rollover Contribution. He
shall not share in the allocation of Employer Contributions until the time he
meets all the requirements to become an Active Participant.
Rollover Contributions made by or for an Eligible Employee shall be
credited to his Account. The part of the Participant's Account resulting from
Rollover Contributions is fully (100%) vested and nonforfeitable at all times. A
separate accounting record shall be maintained for that part of his Rollover
Contribution which consists of voluntary contributions that were deducted from
the Participant's gross income for Federal income tax purposes.
SECTION 3.02-FORFEITURES.
The Nonvested Account of a Participant shall be forfeited as of the earlier
of the following: the date of the Participant's death, if prior to such date he
had ceased to be an Employee; or his Forfeiture Date. All or a part of a
Participant's Nonvested Account will be forfeited if, after he ceases to be an
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Employee, he receives a distribution of his entire Vested Account or a
distribution of his Vested Account derived from Employer Contributions which
were not 100% vested when made according to the provisions of the VESTED
BENEFITS SECTION of Article V or the SMALL AMOUNTS SECTION of Article IX. If a
Participant's Vested Account is zero on the date he ceases to be an Employee, he
shall be deemed to have received a distribution of his entire Vested Account on
such date. The forfeiture will occur as of the date he receives the distribution
or on the date such provision became effective, if later. If he receives a
distribution of his entire Vested Account, his entire Nonvested Account will be
forfeited. If he receives a distribution of his Vested Account from Employer
Contributions which were not 100% vested when made, but less than his entire
Vested Account, the amount to be forfeited will be determined by multiplying his
Nonvested Account by a fraction. The numerator of the fraction is the amount of
the distribution derived from Employer Contributions which were not 100% vested
when made and the denominator of the fraction is his entire Vested Account
derived from such Employer Contributions on the date of distribution.
A Forfeiture shall also occur as described in the EXCESS AMOUNTS SECTION of
Article Ill.
Forfeitures may first be applied to pay expenses under the Plan which would
otherwise be paid by the Employer.
Forfeitures not used to pay expenses shall be applied to reduce the
earliest Employer Contributions made after the Forfeitures are determined.
Forfeitures shall be determined at least once during each taxable year of the
Employer. Upon their application, such Forfeitures shall be deemed to be
Employer Contributions.
Forfeitures of Matching Contributions which relate to excess amounts shall
be applied as provided in the EXCESS AMOUNTS SECTION of Article Ill.
If a Participant again becomes an Eligible Employee after receiving a
distribution which caused his Nonvested Account to be forfeited, he shall have
the right to repay to the Plan the entire amount of the distribution he received
(excluding any amount of such distribution resulting from Contributions which
were 100% vested when made). The repayment must be made before the earlier of
the date five years after the date he again becomes an Eligible Employee or the
end of the first period of five consecutive Vesting Breaks in Service which
begin after the date of the distribution.
If the Participant makes the repayment provided above, the Plan
Administrator shall restore to his Account an amount equal to his Nonvested
Account which was forfeited on the date of distribution, unadjusted for any
investment gains or losses. If the amount of the repayment is zero dollars
because the Participant was deemed to have received a distribution or the plan
did not have repayment provisions in effect on the date the distribution was
made and he again performs an Hour-of-Service as an Eligible Employee within the
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repayment period, the Plan Administrator shall restore the Participant's Account
as if he had made a required repayment on the date he performed such
Hour-of-Service. Restoration of the Participant's Account shall include
restoration of all Code Section 41 1 (d)(6) protected benefits with respect to
that restored Account, according to applicable Treasury regulations. Provided,
however, the Plan Administrator shall not restore the Nonvested Account if a
Forfeiture Date has occurred after the date of the distribution and on or before
the date of repayment and that Forfeiture Date would result in a complete
forfeiture of the amount the Plan Administrator would otherwise restore.
The Plan Administrator shall restore the Participant's Account by the close
of the Plan Year following the Plan Year in which repayment is made. Permissible
sources for restoration are Forfeitures or Employer Contributions. The Employer
shall contribute, without regard to any requirement or condition of the EMPLOYER
CONTRIBUTIONS SECTION of Article 111, such additional amount needed to make the
required restoration. The repaid and restored amounts are not included in the
Participant's Annual Addition, as defined in the CONTRIBUTION LIMITATION SECTION
of Article Ill.
SECTION 3.03-ALLOCATION.
The following Contributions for the Plan Year shall be allocated among all
eligible persons:
Matching Contributions
Qualified Nonelective Contributions
Discretionary Contributions
The eligible persons are all Participants who had 1,000 or more Hours-of-Service
in the Accrual Computation Period that ends in the Plan Year and who are Active
Participants on the last day of the Plan Year. The amount allocated to such a
person shall be determined below and under Article X.
The following Contributions for each Plan Year shall be allocated to each
Participant for whom such Contributions were made under the EMPLOYER
CONTRIBUTIONS SECTION of Article Ill:
Elective Deferral Contributions
These Contributions shall be allocated when made and credited to the
Participant's Account.
The following Contributions are allocated as of the last day of the Plan
Year to each eligible person for whom they are made and credited to his Account:
Matching Contributions
Qualified Nonelective Contributions are allocated as of the last day of
each Plan Year. For purposes of this allocation, only Nonhighly Compensated
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Employees shall be eligible persons. The amount allocated to each eligible
person for the Plan Year shall be equal to Qualified Nonelective Contributions
for the Plan Year, multiplied by the ratio of (a) his Annual Compensation as of
the last day of the Plan Year to (b) the total of such compensation for all
eligible persons. This amount is credited to his Account.
Discretionary Contributions are allocated as of the last day of each Plan
Year. The amount allocated to each eligible person for the Plan Year shall be
equal to the sum of the amounts determined in (a) and (b) below:
(a) First, an amount equal to Discretionary Contributions for the Plan Year,
multiplied by the ratio of
(1) the sum of (A) his Annual Compensation not in excess of his
Integration Level as of the last day of the Plan Year plus (B) 2 times
the amount of such compensation in excess of his Integration Level to
(2) the total of such sums for all eligible persons.
However, the amount allocated in this manner shall not be more than a
percentage (equal to the Maximum Integration Rate) of his Annual
Compensation not in excess of his Integration Level as of the last day of
the Plan Year plus a percentage (equal to 2 times the Maximum Integration
Rate) of the amount of such compensation in excess of his Integration
Level. The effect of this allocation under (a) is such that when the amount
as a percentage of each person's Annual Compensation below the Integration
Level reaches the Maximum Integration Rate any remaining unallocated amount
will be allocated under (b) below.
(b) Second, an amount equal to the product of any unallocated amount still
remaining, multiplied by the ratio of
(1) his Annual Compensation as of the last day of the Plan Year to
(2) the total of such compensation for all eligible persons.
This amount shall be credited to his Account.
In determining the amount of Employer Contributions to be allocated to a
Participant who is a Leased Employee, contributions and benefits provided by the
leasing organization which are attributable to services such Leased Employee
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performs for the Employer shall be treated as provided by the Employer and there
shall be no duplication of those contributions or benefits under this Plan.
SECTION 3.04-CONTRIBUTION LIMITATION.
(a) For the purpose of determining the contribution limitation set forth in
this section, the following terms are defined:
Aggregate Annual Addition means, for a Participant with respect to any
Limitation Year, the sum of his Annual Additions under all defined
contribution plans of the Employer, as defined in this section, for such
Limitation Year. The nondeductible participant contributions which the
Participant makes to a defined benefit plan shall be treated as Annual
Additions to a defined contribution plan. The Contributions the Employer,
as defined in this section, made for the Participant for a Plan Year
beginning on or after March 31, 1984, to an individual medical benefit
account, as defined in Code Section 415(1)(2), under a pension or annuity
plan of the Employer, as defined in this section, shall be treated as
Annual Additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in Fiscal 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, as defined in this section, are
treated as Annual Additions to a defined contribution plan. The 25% of
Compensation limit under Maximum Permissible Amount does not apply to
Annual Additions resulting from contributions made to an individual medical
account, as defined in Code Section 415(1)(2), or to Annual Additions
resulting from contributions for medical benefits, within the meaning of
Code Section 419A, after separation from service.
Annual Addition means the amount added to a Participant's account for any
Limitation Year which may not exceed the Maximum Permissible Amount. The
Annual Addition under any plan for a Participant with respect to any
Limitation Year, shall be equal to the sum of (1) and (2) below:
(1) Employer contributions and forfeitures credited to his account for the
Limitation Year.
(2) Participant contributions made by him for the Limitation Year.
Before the first Limitation Year beginning after December 31, 1986, the
amount under (2) above is the lesser of (i) 1/2 of his nondeductible
participant contributions made for the Limitation Year, or (ii) the amount,
if any, of his nondeductible participant contributions made for the
Limitation Year which is in excess of six percent of his Compensation, as
defined in this section, for such Limitation Year.
Compensation means all wages for Federal income tax withholding purposes,
as defined under Code Section 3401 (a) (for purposes of income tax
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withholding at the source), disregarding any rules limiting the
remuneration included as wages based on the nature or location of the
employment or the services performed. Compensation also includes all other
payments to an Employee in the course of the Employer's trade or business,
for which the Employer must furnish the Employee a written statement under
Code Sections 6041 (d) and 6051 (a)(3). The Wages, Tips and Other
Compensation" box on Form W- 2 satisfies this definition.
For any self-employed individual Compensation will mean earned income.
For purposes of applying the limitations of this section, Compensation for
a Limitation Year is the Compensation actually paid or made available
during such Limitation Year.
Defined Benefit Plan Fraction means, with respect to a limitation Year for
a Participant who is or has been a participant in a defined benefit plan
ever maintained by the Employer, as defined in this section, the quotient,
expressed as a decimal, of
(1) the Participant's Projected Annual Benefit under all such plans as of
the close of such Limitation Year, divided by
(2) on and after the TEFRA Compliance Date, the lesser of (i) or (ii)
below:
(i) 1.25 multiplied by the maximum dollar limitation which applies to
defined benefit plans determined for the Limitation Year under
Code Sections 415(b) or (d) or
(ii) 1.4 multiplied by the Participant's highest average compensation
as defined in the defined benefit plan(s),
including any adjustments under Code Section 415(b).
Before the TEFRA Compliance Date, this denominator is the
Participant's Projected Annual Benefit as of the close of the
Limitation Year if the plan(s) provided the maximum benefit allowable.
The Defined Benefit Plan Fraction shall be modified as follows:
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, as defined in this section, which
were in existence on May 6, 1986, the denominator of this fraction will not
be less than 125 percent of the sum of the annual benefits under such plans
which the Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1 987, disregarding any changes in the
terms and conditions of the plan after May 5, 1986. The preceding sentence
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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.
Defined Contribution Plan Fraction means, for a Participant with
respect to a Limitation Year, the quotient, expressed as a decimal, of
(1) the Participant's Aggregate Annual Additions for such Limitation Year
and all prior Limitation Years, under all defined contribution plans
(including the Aggregate Annual Additions attributable to
nondeductible accounts under defined benefit plans and attributable to
all welfare benefit funds, as defined in Code Section 419(e) and
attributable to individual medical accounts, as defined in Code
Section 415(1)(2)) ever maintained by the Employer, as defined in this
section, divided by
(2) on and after the TEFRA Compliance Date, the sum of the amount
determined for the Limitation Year under (i) or (ii) below, whichever
is less, and the amounts determined in the same manner for all prior
Limitation Years during which he has been an Employee or an employee
of a predecessor employer:
(i) 1.25 multiplied by the maximum permissible dollar amount for each
such Limitation Year, or
(ii) 1.4 multiplied by the maximum permissible percentage of the
Participant's Compensation, as defined in this section, for each
such Limitation Year.
Before the TEFRA Compliance Date, this denominator is the sum of the
maximum allowable amount of Annual Addition to his account(s) under
all the plan(s) of the Employer, as defined in this section, for each
such Limitation Year.
The Defined Contribution Plan Fraction shall be modified as follows:
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
contribution plans maintained by the Employer, as defined in this section,
which were in existence on May 6, 1986, the numerator of this fraction
shall be adjusted if the sum of the Defined Contribution Plan Fraction and
Defined Benefit Plan Fraction would otherwise exceed 1.0 under the terms of
this Plan. Under the adjustment, the dollar amount determined below shall
be permanently subtracted from the numerator of this fraction. The dollar
amount is equal to the excess of the sum of the two fractions, before
adjustment, over 1.0 multiplied by the denominator of his Defined
Contribution Plan Fraction. The adjustment is calculated using his Defined
Contribution Plan Fraction and Defined Benefit Plan Fraction 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
limitations applicable to the first Limitation Year beginning on or after
January 1, 1987.
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The Annual Addition for any Limitation Year beginning before January
1, 1987, shall not be recomputed to treat all employee contributions as
Annual Additions.
For a plan that was in existence on July 1, 1982, for purposes of
determining the Defined Contribution Plan Fraction for any Limitation Year
ending after December 31, 1982, the Plan Administrator may elect, in
accordance with the provisions of Code Section 415, that the denominator
for each Participant for all Limitation Years ending before January 1,
1983, will be equal to
(1) the Defined Contribution Plan Fraction denominator which would apply
for the last Limitation Year ending in 1982 if an election under this
paragraph were not made, multiplied by.
(2) a fraction, equal to (i) over (ii) below:
(i) the lesser of (A) $51,875, or (B) 1.4, multiplied by 25% of the
Participant's Compensation, as defined in this section, for the
Limitation Year ending in 1981;
(ii) the lesser of (A) $41,500, or (B) 25% of the Participant's
Compensation, as defined in this section, for the Limitation Year
ending in 1981.
The election described above is applicable only if the plan administrators
under all defined contribution plans of the Employer, as defined in this
section, also elect to use the modified fraction.
Employer means any employer that adopts this Plan and all Controlled Group
members and any other entity required to be aggregated with the employer
pursuant to regulations under Code Section 414(o).
Limitation Year means the 12-consecutive month period within which it is
determined whether or not the limitations of Code Section 415 are exceeded.
Limitation Year means each 12-consecutive month period ending on the last
day of each Plan Year, including corresponding 12-consecutive month periods
before January 1, 1980. If the limitation Year is other than the calendar
year, execution of this Plan (or any amendment to this Plan changing the
limitation Year) constitutes the Employer's adoption of a written
resolution electing the Limitation Year. If the Limitation Year is changed,
the new Limitation Year shall begin within the current Limitation Year,
creating a short Limitation Year.
Maximum Permissible Amount means, for a Participant with respect to any
Limitation Year, the lesser of (1) or (2) below:
(1) The greater of $30,000 or one-fourth of the maximum dollar limitation
which applies to defined benefit plans set forth in Code Section
415(b)(1)(A) as in effect for the Limitation Year. (Before the TEFRA
Compliance Date, $25,000 multiplied by the cost of living adjustment
factor permitted by Federal regulations.)
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(2) 25% of his Compensation, as defined in this section, for such
Limitation Year.
The compensation limitation referred to in (2) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401
(h) or Code Section 419A(f)(2)) which is otherwise treated as an annual
addition under Code Section 415(1)(1) or Code Section 419A(d)(2)-
If there is a short Limitation Year because of a change in Limitation Year,
the Maximum Permissible Amount will not exceed the maximum dollar
limitation which would otherwise apply multiplied by the following
fraction:
Number of months in the short Limitation Year
12
Projected Annual Benefit means a Participant's expected annual benefit
under all defined benefit plan(s) ever maintained by the Employer, as
defined in this section. The Projected Annual Benefit shall be determined
assuming that the Participant will continue employment until the later of
current age or normal retirement age under such plan(s), and that the
Participant's compensation for the current Limitation Year and all other
relevant factors used to determine benefits under such plan(s) will remain
constant for all future limitation Years. Such expected annual benefit
shall be adjusted to the actuarial equivalent of a straight life annuity if
expressed in a form other than a straight life or qualified joint and
survivor annuity.
(b) The Annual Addition under this Plan for a Participant during a Limitation
Year shall not be more than the Maximum Permissible Amount.
(c) Contributions which would otherwise be credited to the Participant's
Account shall be limited or reallocated to the extent necessary to meet the
restrictions of subparagraph (b) above for any Limitation Year in the
following order. Discretionary Contributions shall be reallocated in the
same manner as described in the ALLOCATION SECTION of Article Ill to the
remaining Participants to whom the limitations do not apply for the
Limitation Year. The Discretionary Contributions shall be limited if there
are no such remaining Participants. Qualified Nonelective Contributions
shall be reallocated in the same manner as described in the ALLOCATION
SECTION of Article Ill to the remaining Participants to whom the
limitations do not apply for the Limitation Year. The Qualified Nonelective
Contributions shall be limited if there are no such remaining Participants.
Elective Deferral Contributions that are not the basis for Matching
Contributions shall be limited. Matching Contributions shall be limited to
the extent necessary to limit the Participant's Annual Addition under this
Plan to his maximum amount. If Matching
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Contributions are limited because of this limit, Elective Deferral
Contributions that are the basis for Matching Contributions shall be
reduced in proportion.
If, due to (i) an error in estimating a Participant's Compensation as
defined in this section, (ii) because the amount of the Forfeitures to be
used to offset Employer Contributions is more than the amount of the
Employer Contributions due for the remaining Participants, (iii) as a
result of 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 individual under the limits of Code Section 415, or
(iv) other limited facts and circumstances, a Participant's Annual Addition
is greater than the amount permitted in (b) above, such excess amount shall
be applied as follows. Elective Deferral Contributions which are not the
basis for Matching Contributions will be returned to the Participant. If an
excess still exists, Elective Deferral Contributions that are the basis for
Matching Contributions will be returned to the Participant. Matching
Contributions based on Elective Deferral Contributions which are returned
shall be forfeited. If after the return of Elective Deferral Contributions,
an excess amount still exists, and the Participant is an Active Participant
as of the end of the Limitation Year, the excess amount shall be used to
offset Employer Contributions for him in the next Limitation Year. If after
the return of Elective Deferral Contributions, an excess amount still
exists, and the Participant is not an Active Participant as of the end of
the Limitation Year, the excess amount will be held in a suspense account
which will be used to offset Employer Contributions for all Participants in
the next Limitation Year. No Employer Contributions that would be included
in the next Limitation Year's Annual Addition may be made before the total
suspense account has been used.
(d) A Participant's Aggregate Annual Addition for a Limitation Year shall not
exceed the Maximum Permissible Amount.
If, for the Limitation Year, the Participant ha@ an Annual Addition under
more than one defined contribution plan or a welfare benefit fund, as
defined in Code Section 419(e), or an individual medical account, as
defined in Code Section 415(1)(2), maintained by the Employer, as defined
in this section, and such plans and welfare benefit funds and individual
medical accounts do not otherwise limit the Aggregate Annual Addition to
the Maximum Permissible Amount, any reduction necessary shall be made first
to the profit sharing plans, then to all other such plans and welfare
benefit funds and individual medical accounts and, if necessary, by
reducing first those that were most recently allocated. Welfare benefit
funds and individual medical accounts shall be deemed to be allocated
first. However, elective deferral contributions shall be the last
contributions reduced before the welfare benefit fund or individual medical
account is reduced.
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If some of the Employer's defined contribution plans were not in existence
on July 1, 1982, and some were in existence on that date, the Maximum
Permissible Amount which is based on a dollar amount may differ for a
Limitation Year. The Aggregate Annual Addition for the Limitation Year in
which the dollar limit differs shall not exceed the lesser of (1) 25% of
Compensation as defined in this section, (2) $45,475, or (3) the greater of
$30,000 or the sum of the Annual Additions for such Limitation Year under
all the plan(s) to which the $45,475 amount applies. 75 amount applies. (e)
If a Participant is or has been a participant in both (e) If a Participant
is or has been a participant in both defined benefit and defined
contribution plans (including a welfare benefit fund or individual medical
account) ever maintained by the Employer, as defined in this section, the
sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction for any Limitation Year shall not exceed 1.0 (1.4 before the TEFRA
Compliance Date).
After all other limitations set out in the plans and funds have been
applied, the following limitations shall apply so that the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction shall not exceed 1.0 (1.4 before the TEFRA Compliance Date).
Annual Additions to the defined contribution plan(s) shall be limited to
the extent needed to reduce the sum to 1.0 (1.4). First, the voluntary
contributions the Participant may make for the Limitation Year shall be
limited. Next, in the case of a profit sharing plan, any forfeitures
allocated to the Participant shall be reallocated to remaining participants
to the extent necessary to reduce the decimal to 1.0 (1.4). Last, to the
extent necessary, employer contributions for the Limitation Year shall be
reallocated or limited, and any required and optional employee
contributions to which such employer contributions were geared shall be
reduced in proportion.
If, for the Limitation Year, the Participant has an Annual Addition under
more than one defined contribution plan or welfare benefit fund or
individual medical account maintained by the Employer, as defined in this
section, any reduction above shall be made first to the profit sharing
plans, then to all other such plans and welfare benefit plans and
individual medical accounts and, if necessary, by reducing first those that
were most recently allocated. However, elective deferral contributions
shall be the last contributions reduced before the welfare benefit fund or
individual medical account is reduced. The annual addition to the welfare
benefit fund and individual medical account shall be limited last.
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SECTION 3.05-EXCESS AMOUNTS.
(a) For the purposes of this section, the following terms are defined:
Actual Deferral Percentage means the ratio (expressed as a percentage) of
Elective Deferral Contributions under this Plan on behalf of the Eligible
Participant for the Plan Year to the Eligible Participant's Compensation
for the Plan Year. In modification of the foregoing, Compensation shall be
limited to the Compensation received while an Active Participant. The
Elective Deferral Contributions used to determine the Actual Deferral
Percentage shall include Excess Elective Deferrals (other than Excess
Elective Deferrals of Nonhighly Compensated Employees that arise solely
from Elective Deferral Contributions made under this Plan or any other
plans of the Employer or a Controlled Group member), but shall exclude
Elective Deferral Contributions that are used in computing the Contribution
Percentage (provided the Average Actual Deferral Percentage test is
satisfied both with and without exclusion of these Elective Deferral
Contributions). Under such rules as the Secretary of the Treasury shall
prescribe in Code Section 401 (k)(3)(D), the Employer may elect to include
Qualified Nonelective Contributions and Qualified Matching Contributions
under this Plan in computing the Actual Deferral Percentage. For an
Eligible Participant for whom such Contributions on his behalf for the Plan
Year are zero, the percentage is zero.
Aggregate Limit means the greater of (1) or (2) below:
(1) The sum of
(i) 125 percent of the greater of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan
Year or the Average Contribution Percentage of Nonhighly
Compensated Employees under the Plan subject to Code Section 401
(m) for the Plan Year beginning with or within the Plan Year of
the cash or deferred arrangement and
(ii) the lesser of 200% or two plus the lesser of such Average Actual
Deferral Percentage or Average Contribution Percentage.
(2) The sum of
(i) 125 percent of the lesser of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan
Year or the Average Contribution Percentage of Nonhighly
Compensated Employees under the Plan subject to Code Section
401(m) for the Plan Year beginning with or within the Plan Year
of the cash or deferred arrangement and
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(ii) the lesser of 200% or two plus the greater of such Average Actual
Deferral Percentage or Average Contribution Percentage.
Average Actual Deferral Percentage means the average (expressed as a
percentage) of the Actual Deferral Percentages of the Eligible Participants
in a group.
Average Contribution Percentage means the average (expressed as a
percentage) of the Contribution Percentages of the Eligible Participants in
a group.
Contribution Percentage means the ratio (expressed as a percentage) of the
Eligible Participant's Contribution Percentage Amounts to the Eligible
Participant's Compensation for the Plan Year. In modification of the
foregoing, Compensation shall be limited to the Compensation received while
an Active Participant. For an Eligible Participant for whom such
Contribution Percentage Amounts for the Plan Year are zero, the percentage
is zero.
Contribution Percentage Amounts means the sum of the Participant
Contributions and Matching Contributions (that are not Qualified Matching
Contributions) under this Plan on behalf of the Eligible Participant for
the Plan Year. Such Contribution Percentage Amounts shall not include
Matching Contributions that are forfeited either to correct Excess
Aggregate Contributions or because the Contributions to which they relate
are Excess Elective Deferrals, Excess Contributions or Excess Aggregate
Contributions. Under such rules as the Secretary of the Treasury shall
prescribe in Code Section 401(k)(3)(D), the Employer may elect to include
Qualified Nonelective Contributions and Qualified Matching Contributions
under this Plan which were not used in computing the Actual Deferral
Percentage in computing the Contribution Percentage. The Employer may also
elect to use Elective Deferral Contributions in computing the Contribution
Percentage so long as the Average Actual Deferral Percentage test is met
before the Elective Deferral Contributions are used in the Average
Contribution Percentage test and continues to be met following the
exclusion of those Elective Deferral Contributions that are used to meet
the Average Contribution Percentage test.
Elective Deferral Contributions means employer contributions made on behalf
of a participant pursuant to an election to defer under any qualified cash
or deferred arrangement as described in Code Section 401(k), any simplified
employee pension cash or deferred arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation plan under Code Section
457, any plan as described under Code Section 501(c)(18), and any employer
contributions made on behalf of a participant for the purchase of an
annuity contract under Code Section 403(b) pursuant to a salary reduction
agreement. Elective Deferral Contributions shall not include any deferrals
properly distributed as excess Annual Additions.
Eligible Participant means, for purposes of the Actual Deferral Percentage,
any Employee who is eligible to make an Elective Deferral Contribution, and
shall include the following: any Employee who would be a plan participant
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if he chose to make required contributions; any Employee who can make
Elective Deferral Contributions but who has changed the amount of his
Elective Deferral Contribution to 0%, or whose eligibility to make an
Elective Deferral Contribution is suspended because of a loan, distribution
or hardship withdrawal; and, any Employee who is not able to make an
Elective Deferral Contribution because of Code Section 415(c)(1) - Annual
Additions limits. The Actual Deferral Percentage for any such included
Employee is zero.
Eligible Participant means, for purposes of the Average Contribution
Percentage, any Employee who is eligible to make a Participant Contribution
or to receive a Matching Contribution, and shall include the following: any
Employee who would be a plan participant if he chose to make required
contributions; any Employee who can make a Participant Contribution or
receive a matching contribution but who has made an election not to
participate in the Plan; and any Employee who is not able to make a
Participant Contribution or receive a matching contribution because of Code
Section 415(c)(1) or 415(e) limits. The Average Contribution Percentage for
any such included Employee is zero.
Excess Aggregate Contributions means, with respect to any Plan Year, the
excess of:
(1) The aggregate Contributions taken into account in computing the
numerator of the Contribution Percentage actually made on behalf of
Highly Compensated Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Average
Contribution Percentage test (determined by reducing Contributions
made on behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess Elective
Deferrals and then determining Excess Contributions.
Excess Contributions means, with respect to any Plan Year, the excess of:
(1) The aggregate amount of Contributions actually taken into account in
computing the Actual Deferral Percentage of Highly Compensated
Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Actual
Deferral Percentage test (determined by reducing Contributions made on
behalf of Highly Compensated Employees in order of the Actual Deferral
Percentages, beginning with the highest of such percentages).
A Participant's Excess Contributions for a Plan Year will be reduced by the
amount of Excess Elective Deferrals, if any, previously distributed to the
Participant for the taxable year ending in that Plan Year.
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Excess Elective Deferrals means those Elective Deferral Contributions that
are includible in a Participant's gross income under Code Section 402(g) to
the extent such Participant's Elective Deferral Contributions for a taxable
year exceed the dollar limitation under such Code section. Excess Elective
Deferrals shall be treated as Annual Additions, as defined in the
CONTRIBUTION LIMITATION SECTION of Article Ill, under the Plan, unless such
amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
Matching Contributions means employer contributions made to this or any
other defined contribution plan, or to a contract described in Code Section
403(b), on behalf of a participant on account of a Participant Contribution
made by such participant, or on account of a participant's Elective
Deferral Contributions, under a plan maintained by the employer.
Participant Contributions means contributions made to any plan by or on
behalf of a participant that are included in the participant's gross income
in the year in which made and that are maintained under a separate account
to which earnings and losses are allocated.
Qualified Matching Contributions means Matching Contributions which are
subject to the distribution and nonforfeitability requirements under Code
Section 401 (k) when made.
Qualified Nonelective Contributions means any employer contributions (other
then Matching Contributions) which an employee may not elect to have paid
to him in cash instead of being contributed to the plan and which are
subject to the distribution and nonforfeitability requirements under Code
Section 401 (k).
(b) A Participant may assign to this Plan any Excess Elective Deferrals made
during a taxable year by notifying the Plan Administrator in writing on or
before the first following March 1 of the amount of the Excess Elective
Deferrals to be assigned to the Plan. A Participant is deemed to notify the
Plan Administrator of any Excess Elective Deferrals that arise by taking
into account only those Elective Deferral Contributions made to this Plan
and any other plans of the Employer or a Controlled Group member and
reducing such Excess Elective Deferrals by the amount of Excess
Contributions, if any, previously distributed for the Plan Year beginning
in that taxable year. The Participant's claim for Excess Elective Deferrals
shall be accompanied by the Participant's written statement that if such
amounts are not distributed, such Excess Elective Deferrals, when added to
amounts deferred under other plans or arrangements described in Code
Sections 401 (k), 408(k) or 403(b), will exceed the limit imposed on the
Participant by Code Section 402(g) for the year in which the deferral
occurred. The Excess Elective Deferrals assigned to this Plan can not
exceed the Elective Deferral Contributions allocated under this Plan for
such taxable year.
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Notwithstanding any other provisions of the Plan, Elective Deferral
Contributions in an amount equal to the Excess Elective Deferrals assigned
to this Plan, plus any income and minus any loss allocable thereto, shall
be distributed no later than April 15 to any Participant to whose Account
Excess Elective Deferrals were assigned for the preceding year and who
claims Excess Elective Deferrals for such taxable year.
The income or loss allocable to such Excess Elective Deferrals shall be
equal to the income or loss allocable to the Participant's Elective
Deferral Contributions for the taxable year in which the excess occurred
multiplied by a fraction. The numerator of the fraction is the Excess
Elective Deferrals. The denominator of the fraction is the closing balance
without regard to any income or loss occurring during such taxable year (as
of the end of such taxable year) of the Participant's Account resulting
from Elective Deferral Contributions.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Elective Deferrals, plus any
income and minus any loss allocable thereto, shall be forfeited. These
Forfeitures shall be used to offset the earliest Employer Contribution due
after the Forfeiture arises.
(c) As of the end of each Plan Year after Excess Elective Deferrals have been
determined, one of the following tests must be met:
(1) The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year is not more than
the Average Actual Deferral Percentage for Eligible Participants who
are Nonhighly Compensated Employees for the Plan Year multiplied by
1.25.
(2) The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year is not more than
the Average Actual Deferral Percentage for Eligible Participants who
are Nonhighly Compensated Employees for the Plan Year multiplied by 2
and the difference between the Average Actual Deferral Percentages is
not more than 2.
The Actual Deferral Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Deferral Contributions (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if used in computing the Actual
Deferral Percentage) allocated to his account under two or more plans or
arrangements described in Code Section 401 (k) that are maintained by the
Employer or a Controlled Group member shall be determined as if all such
Elective Deferral Contributions (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions, or both)
were made under a single arrangement. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate
if mandatorily disaggregated under the regulations under Code Section
401(k).
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In the event that this Plan satisfies the requirements of Code Sections 401
(k), 401 (a)(4), or 41 0(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such Code
sections only if aggregated with this Plan, then this section shall be
applied by determining the Actual Deferral Percentage of employees as if
all such plans were a single plan. Plans may be aggregated in order to
satisfy Code Section 401 (k) only if they have the same Plan Year.
For purposes of determining the Actual Deferral Percentage of an Eligible
Participant who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Elective Deferral Contributions (and
Qualified Nonelective Contributions or Qualified Matching Contributions, or
both, if used in computing the Actual Deferral Percentage) and Compensation
of such Eligible Participant include the Elective Deferral Contributions
(and, if applicable, Qualified Nonelective Contributions or Qualified
Matching Contributions, or both) and Compensation for the Plan Year of
Family Members. Family Members, with respect to such Highly Compensated
Employees, shall be disregarded as separate employees in determining the
Actual Deferral Percentage both for Participants who are Nonhighly
Compensated Employees and for Participants who are Highly Compensated
Employees.
For purposes of determining the Actual Deferral Percentage, Elective
Deferral Contributions, Qualified Nonelective Contributions and Qualified
Matching Contributions must be made before the last day of the 1 2-month
period immediately following the Plan Year to which contributions relate.
The Employer shall maintain records sufficient to demonstrate satisfaction
of the Average Actual Deferral Percentage test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions, or both,
used in such test.
The determination and treatment of the Contributions used in computing the
Actual Deferral Percentage shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
If the Plan Administrator should determine during the Plan Year that
neither of the above tests is being met, the Plan Administrator may adjust
the amount of future Elective Deferral Contributions of the Highly
Compensated Employees.
Notwithstanding any other provisions of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be distributed
no later than the last day of each Plan Year to Participants to whose
Accounts such Excess Contributions were allocated for the preceding Plan
Year. If such excess amounts are distributed more than 2 1/2 months after
the last day of the Plan Year in which such excess amounts arose, a ten
(10) percent excise tax will be imposed on the employer maintaining the
plan with respect to such amounts. Such distributions shall be made
beginning with the Highly Compensated Employee(s) who has the greatest
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Actual Deferral Percentage, reducing his Actual Deferral Percentage to the
next highest Actual Deferral Percentage level. Then, if necessary, reducing
the Actual Deferral Percentage of the Highly Compensated Employees at the
next highest level, and continuing in this manner until the average Actual
Deferral Percentage of the Highly Compensated Group satisfies the Actual
Deferral Percentage test. Excess Contributions of Participants who are
subject to the family member aggregation rules shall be allocated among the
Family Members in proportion to the Elective Deferral Contributions (and
amounts treated as Elective Deferral Contributions) of each Family Member
that is combined to determine the combined Actual Deferral Percentage.
Excess Contributions shall be treated as Annual Additions, as defined in
the CONTRIBUTION LIMITATION SECTION of Article 111, under the Plan.
The Excess Contributions shall be adjusted for income or loss. The income
or loss allocable to such Excess Contributions shall be equal to the income
or loss allocable to the Participant's Elective Deferral Contributions
(and, if applicable, Qualified Nonelective Contributions or Qualified
Matching Contributions, or both) for the Plan Year in which the excess
occurred multiplied by a fraction. The numerator of the fraction is the
Excess Contributions. The denominator of the fraction is the closing
balance without regard to any income or loss occurring during such Plan
Year (as of the end of such Plan Year) of the Participant's Account
resulting from Elective Deferral Contributions (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if used in
computing the Actual Deferral Percentage).
Excess Contributions shall be distributed from the Participant's Account
resulting from Elective Deferral Contributions. If such Excess
Contributions exceed the balance in the Participant's Account resulting
from Elective Deferral Contributions, the balance shall be distributed from
the Participant's Account resulting from Qualified Matching Contributions
(if applicable) and Qualified Nonelective Contributions, respectively.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Contributions, plus any
income and minus any loss allocable thereto, shall be forfeited. These
Forfeitures shall be used to offset the earliest Employer Contribution due
after the Forfeiture arises.
(d) As of the end of each Plan Year, one of the following tests must be met:
(1) The Average Contribution Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year is not more than the
Average Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Average Contribution Percentage for Eligible Participants
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who are Highly Compensated Employees for the Plan Year is not more
than the Average Contribution Percentage for Eligible Participants who
are Nonhighly (compensated Employees for the Plan Year multiplied by 2
and the difference between the Average Contribution Percentages is not
more than 2.
If one or more Highly Compensated Employees participate in both a cash or
deferred arrangement and a plan subject to the Average Contribution
Percentage test maintained by the Employer or a Controlled Group member and
the sum of the Average Actual Deferral Percentage and Average Contribution
Percentage of those Highly Compensated Employees subject to either or both
tests exceeds the Aggregate Limit, then the Contribution Percentage of
those Highly Compensated Employees who also participate in a cash or
deferred arrangement will be reduced (beginning with such Highly
Compensated Employees whose Contribution Percentage is the highest) so that
the limit is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage is reduced shall be treated as an Excess
Aggregate Contribution. The Average Actual Deferral Percentage and Average
Contribution Percentage of the Highly Compensated Employees are determined
after any corrections required to meet the Average Actual Deferral
Percentage and Average Contribution Percentage tests. Multiple use does not
occur if either the Average Actual
Deferral Percentage or Average Contribution Percentage of the Highly
Compensated Employees does not exceed 1.25 multiplied by the Average Actual
Deferral Percentage and Average Contribution Percentage of the Nonhighly
Compensated Employees.
The Contribution Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have
Contribution Percentage Amounts allocated to his account under two or more
plans described in Code Section 401 (a) or arrangements described in Code
Section 401 (k) that are maintained by the Employer or a Controlled Group
member shall be determined as if the total of such Contribution Percentage
Amounts was made under each plan. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate
if mandatorily disaggregated under the regulations under Code Section 401
(m) or permissibly disaggregated as provided.
In the event that this Plan satisfies the requirements of Code Sections
401(m), 401(a)(4), or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of Code
sections only if aggregated with this Plan, then this section shall be
applied by determining the Contribution Percentages of Eligible
Participants as if all such plans were a single plan. Plans may be
aggregated in order to satisfy Code Section 401 (m) only if they have the
same Plan Year.
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For purposes of determining the Contribution Percentage of an Eligible
Participant who is a five-percent owner or one of the ten most highly- paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include Contribution Percentage
Amounts and Compensation for the Plan Year of Family Members. Family
Members, with respect to Highly Compensated Employees, shall be disregarded
as separate employees in determining the Contribution Percentage both for
employees who are Nonhighly Compensated Employees and for employees who are
Highly Compensated Employees.
For purposes of determining the Contribution Percentage, Participant
Contributions are considered to have been made in the Plan Year in which
contributed to the Plan. Matching Contributions and Qualified Nonelective
Contributions will be considered made for a Plan Year if made no later than
the end of the 12-month period beginning on the day after the close of the
Plan Year.
The Employer shall maintain records sufficient to demonstrate satisfaction
of the Average Contribution Percentage test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions, or both,
used in such test.
The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall
be forfeited, if not vested, or distributed, if vested, no later than the
last day of each Plan Year to Participants to whose Accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. If such
Excess Aggregate Contributions are distributed more than 2 1/2 months after
the last day of the Plan Year in which such excess amounts arose, a ten
(10) percent excise tax will be imposed on the employer maintaining the
plan with respect to those amounts. Excess Aggregate Contributions will be
distributed beginning with the Highly Compensated Employee(s) who has the
greatest Contribution Percentage, reducing his contribution percentage to
the next highest level. Then, if necessary, reducing the Contribution
Percentage of the Highly Compensated Employee at the next highest level,
and continuing in this manner until the Actual Contribution Percentage of
the Highly Compensated Group satisfies the Actual Contribution Percentage
Test. Excess Aggregate Contributions of Participants who are subject to the
family member aggregation rules shall be allocated among the Family Members
in proportion to the Employee and Matching Contributions (or amounts
treated as Matching Contributions) of each Family Member that is combined
to determine the combined Contribution Percentage. Excess Aggregate
Contributions shall be treated as Annual Additions, as defined in the
CONTRIBUTION LIMITATION SECTION of Article Ill, under the Plan.
The Excess Aggregate Contributions shall be adjusted for income or loss.
The income or loss allocable to such Excess Aggregate Contributions shall
be equal to the income or loss allocable to the Participant's Contribution
Percentage Amounts for the Plan Year in which the excess occurred
multiplied by a fraction. The numerator of the fraction is the Excess
Aggregate Contributions. The denominator of the fraction is the
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closing balance without regard to any income or loss occurring during such
Plan Year (as of the end of such Plan Year) of the Participant's Account
resulting from Contribution Percentage Amounts.
Excess Aggregate Contributions shall be distributed from the Participant's
Account resulting from Participant Contributions that are not required as a
condition of employment or participation or for obtaining additional
benefits from Employer Contributions. If such Excess Aggregate
Contributions exceed the balance in the Participant's Account resulting
from such Participant Contributions, the balance shall be forfeited, if not
vested, or distributed, if vested, on a pro-rata basis from the
Participant's Account resulting from Contribution Percentage Amounts. These
Forfeitures shall be used to offset the earliest Employer Contribution due
after the Forfeiture arises.
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ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION 4.01 --INVESTMENT OF CONTRIBUTIONS.
All Contributions are forwarded by the Employer to the Insurer to be
deposited under the Group Contract or forwarded to the Trustee to be
deposited in the Trust Fund.
Investment of Contributions is governed by the provisions of the
Trust, the Group Contract and any other funding arrangement in which the
Trust Fund is or may be invested. To the extent permitted by the Trust,
Group Contract or other funding arrangement, the parties named below shall
direct the Contributions to any of the accounts available under the Trust
or Group Contract and may request the transfer of assets resulting from
those Contributions between such accounts. A Participant may not direct
the Trustee to invest the Participant's Account in collectibles.
Collectibles means any work of art, rug or antique, metal or gem, stamp or
coin, alcoholic beverage or other tangible personal property specified by
the Secretary of Treasury. To the extent that a Participant does not
direct the investment of his Account, such Account shall be invested
ratably in the accounts available under the Trust or Group Contract in the
same manner as the undirected Accounts of all other Participants. The
Vested Accounts of all Inactive Participants may be segregated and invested
separately from the Accounts of all other Participants.
The Trust Fund shall be valued at current fair market value as of the
last day of the last calendar month ending in the Plan Year and, at the
discretion of the Trustee, may be valued more frequently. The valuation
shall take into consideration investment earnings credited, expenses
charged, payments made and changes in the value of the assets held in the
Trust Fund. The Account of a Participant shall be credited with its share
of the gains and losses of the Trust Fund. That part of a Participant's
Account invested in a funding arrangement which establishes an account or
accounts for such Participant thereunder shall be credited with the gain
or loss from such account or accounts. That part of a Participant's
Account which is invested in other funding arrangements shall be credited
with a proportionate share of the gain or loss of such investments. The
share shall be determined by multiplying the gain or loss of the investment
by the ratio of the part of the Participant's Account invested in such
funding arrangement to the total of the Trust Fund invested in such funding
arrangement.
At least annually, the Named Fiduciary shall review all pertinent
Employee information and Plan data in order to establish the funding policy
of the Plan and to determine appropriate methods of carrying out the Plan's
objectives. The Named Fiduciary shall inform the Trustee and any
Investment Manager of the Plan's short-term and long-term financial needs
so the investment policy can be coordinated with the Plan's financial
requirements.
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(a) Employer Contributions other than Elective Deferral Contributions: The
Primary Employer shall direct the initial investment of such Employer
Contributions to the extent such Contributions are made in the form of
Qualifying Employer Securities. Any such Employer Contributions not made in
the form of Qualifying Employer Securities and subsequent investment of
such Employer Contributions and transfer of assets resulting from those
Contributions shall be subject to the investment direction of the
Participant.
(b) Elective Deferral Contributions: The Participant shall direct the
investment of Elective Deferral Contributions and transfer of assets
resulting from those Contributions.
(c) Participant Contributions: The Participant shall direct the investment of
Participant Contributions and transfer of assets resulting from those
Contributions.
(d) Rollover Contributions: The Participant shall direct the investment of
Rollover Contributions and transfer of assets resulting from those
Contributions.
However, the Named Fiduciary may delegate to the Investment Manager
investment discretion for Contributions and Plan assets which are not
subject to Participant direction.
SECTION 4.O1A-INVESTMENT IN QUALIFYING EMPLOYER SECURITIES.
All or any portion (up to 100%) of Employer Contributions other than
Elective Deferral Contributions may be made in the form of Qualifying Employer
Securities as long as the Plan Administrator so directs. The portion of the
Participant's Account resulting from Employer Contributions other than Elective
Deferral Contributions that are initially invested in Qualifying Employer
Securities shall remain invested in Qualifying Employer Securities until the
Participant directs such investment elsewhere.
Participants in the Plan shall be entitled to invest all or any portion of
their Account in Qualifying Employer Securities.
Once investment in Qualifying Employer Securities is made available to
Eligible Employees, then it shall continue to be available unless the Plan and
Trust is amended to disallow such available investment. In the absence of such
election, such Eligible Employees shall be deemed to have elected to have their
Accounts invested wholly in other investment options of the Investment Funds.
Once an election is made, it shall be considered to continue until a new
election is made.
Any dividends payable on the Qualifying Employer Securities shall, unless
otherwise directed by the Participant, be invested in additional shares of
Qualifying Employer Securities hereunder.
If the securities of the Employer are not publicly traded and if no market
or an extremely thin market exists for the Qualifying Employer Securities, so
that a reasonable valuation may not be obtained from the market place, then such
Qualifying Employer Securities must be valued at least annually by an
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independent appraiser who is not associated with the Employer, the Plan
Administrator, the Trustee, or any person related to any fiduciary under the
Plan. The independent appraiser may be associated with a person who is merely a
contract administrator with respect to the Plan, but who exercises no
discretionary authority and is not a Plan fiduciary.
If there is a public market for Qualifying Employer Securities of the type
held by the Plan, then the Plan Administrator may use as the value of the shares
the price at which such shares traded in such market, or an average of the bid
and asked prices for such shares in such market, provided that such value is
representative of the fair market value of such shares in the opinion of the
Plan Administrator. If the Qualifying Employer Securities do not trade on the
annual valuation date or if the market is very thin on such date, then the Plan
Administrator may use the average of trade prices for a period of time ending on
such date, provided that such value is representative of the fair market value
of such shares in the opinion of the Plan Administrator. The value of a
Participant's Qualifying Employer Securities Account may be expressed in units.
For purposes of determining the annual valuation of the Plan and for
reporting to Participants and regulatory authorities, the assets of the Plan
shall be valued at least annually on the Valuation Date which corresponds to the
last day of the Plan Year. The fair market value of Qualifying Employer
Securities shall be determined on such a Valuation Date. The average of the bid
and asked prices of Qualifying Employer Securities as of the date of the
transaction shall apply for purposes of valuing distributions and other
transactions of the Plan to the extent such value is representative of the fair
market value of such shares in the opinion of the Plan Administrator.
All purchases of Qualifying Employer Securities shall be made at a price,
or prices, which, in the judgment of the Plan Administrator, do not exceed the
fair market value of such Qualifying Employer Securities.
In the event that the Trustee acquires shares of Qualifying Employer
Securities by purchase from a "disqualified person" as defined in Code Section
4975(e)(2), in exchange for cash or other assets of the Trust, the terms of such
purchase shall contain the provision that in the event that there is a final
determination by the Internal Revenue Service or court of competent jurisdiction
that a fair market value of such shares of Qualifying Employer Securities, as of
the date of purchase was less than the purchase price paid by the Trustee, then
the seller shall pay or transfer, as the case may be, to the Trustee, an amount
of cash, shares of Qualifying Employer Securities, or any combination thereof
equal in value to the difference between the purchase price and said fair market
value for all such shares. In the event that cash and/or shares of Qualifying
Employer Securities are paid and/or transferred to the Trustee under this
provision, shares of Qualifying Employer Securities shall be valued at their
fair market value as of the date of said purchase, and interest at a reasonable
rate from the date of purchase to the date of payment shall be paid by the
seller on the amount of cash paid.
The Plan Administrator may direct the Trustee to sell, resell or otherwise
dispose of Qualifying Employer Securities to any person, including the Employer,
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provided that any such sales to any disqualified person, including the Employer,
will be made at not less than the fair market value and no commission is
charged. Any such sale shall be made in conformance with Section 408(e) of
ERISA-
In the event the Plan Administrator directs the Trustee to dispose of any
Qualifying Employer Securities held as Trust Assets under circumstances which
require registration and/or qualification of the securities under applicable
Federal or state securities laws, then the Employer, at its own expense, will
take or cause to be taken any and all such action as may be necessary or
appropriate to effect such registration and/or qualification.
If SEC filing is required, the Qualifying Employer Securities provisions
set forth in this Plan restatement will not be made available to Participants
until the later of the effective date of the Plan restatement or the date the
Plan and any other necessary documentation has been filed for registration with
the SEC by the Employer.
SECTION 4.01 B-LIMITATION OF INVESTMENT IN QUALIFYING EMPLOYER SECURITIES BY
SOME PARTICIPANTS.
Participants who are directors, officers, or beneficial owners of 10% or
more of the outstanding securities of the Employer, and other persons subject to
Section 16 of the Securities Exchange Act of 1934, as amended ("Exchange Act")
shall not be permitted to increase AND decrease or decrease AND increase the
level of investment in the Qualifying Employer Securities Account in any six
month period, but shall be permitted to increase such level one or more times OR
decrease such level one or more times during any six month period. Additionally,
such Participants who cease Participation in the Qualifying Employer Securities
Account, or who reduce their participation in such account to a nominal level,
may not participate (e.g., direct that investments be made on their behalf)
under the Qualifying Employer Securities Account again for at least six months.
Any transfers of funds by such Participants into or from the Qualifying Employer
Securities Account may oniv be made during time periods permitted by securities
regulations and only after approval by the Employer- in general, any transfer
into the Qualifying Employer Securities Account shall not be permitted within
six months of any transfer or distribution from the Qualifying Employer
Securities Account, and vice versa, but multiple transfers into OR multiple
transfers or distributions from the Qualifying Employer Securities Account may
be permissible. Subject to certain limited exceptions, Participants who are
directors, officers, beneficial owners of 10% or more of the outstanding
securities of the Employer, and other persons subject to Section 16 of the
Exchange Act making withdrawals of investments under the Qualifying Employer
Securities Account must cease further purchases/investment under the Qualifying
Employer Securities Account for six months.
With respect to Participants who are directors, officers, beneficial owners
of 10% or more of the outstanding securities of the Employer, and other persons
subject to the Exchange Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provisions of the Plan or action by the Plan
Administrator fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Plan Administrator.
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ARTICLE V
BENEFITS
SECTION 6.01-RETIREMENT BENEFITS.
On a Participant's Retirement Date, his Vested Account shall be distributed
to him according to the distribution of benefits provisions of Article Vi and
the provisions of the SMALL AMOUNTS SECTION of Article IX.
SECTION 5.02-DEATH BENEFITS.
If a Participant dies before his Annuity Starting Date, his Vested Account
shall be distributed according to the distribution of benefits provisions of
Article VI and the provisions of the SMALL AMOUNTS SECTION of Article IX.
SECTION 5.03-VESTED BENEFITS.
A Participant may receive a distribution of his Vested Account at any time
after he ceases to be an Employee, provided he has not again become an Employee.
If such amount is not payable under the provisions of the SMALL AMOUNTS SECTION
of Article IX, it will be distributed only if the Participant so elects.
If a Participant does not receive an earlier distribution according to the
provisions of this section or the SMALL AMOUNTS SECTION of Article IX, upon his
Retirement Date or death, his Vested Account shall be applied according to the
provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS SECTION of
Article V.
The Nonvested Account of a Participant who has ceased to be an Employee
shall remain a part of his Account until it becomes a Forfeiture; provided,
however, if the Participant again becomes an Employee so that his Vesting
Percentage can increase, the Nonvested Account may become a part of his Vested
Account.
SECTION 5.04-WHEN BENEFITS START.
Benefits under the Plan begin when a Participant retires, dies or ceases to
be an Employee, whichever applies, as provided in the preceding sections of this
article. Benefits which begin before Normal Retirement Date for a Participant
who became Totally and Permanently Disabled when he was an Employee shall be
deemed to begin because he is Totally and Permanently Disabled. The start of
benefits is subject to the qualified election procedures of Article Vi.
Unless otherwise elected, benefits shall begin before the sixtieth day
following the close of the Plan Year in which the latest date below occurs:
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(a) The date the Participant attains age 65 (Normal Retirement Age, if
earlier).
(b) The tenth anniversary of the Participant's Entry Date.
(c) The date the Participant ceases to be an Employee.
Notwithstanding the foregoing, the failure of a Participant and spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of the ELECTION PROCEDURES SECTION of Article Vi, shall be deemed to
be an election to defer commencement of payment of any benefit sufficient to
satisfy this section.
The Participant may elect to have his benefits begin after the latest date
for beginning benefits described above, subject to the provisions of this
section. The Participant shall make the election in writing and deliver the
signed statement of election to the Plan Administrator before Normal Retirement
Date or the date he ceases to be an Employee, if later. The election must
describe the form of distribution and the date the benefits will begin. The
Participant shall not elect a date for beginning benefits or a form of
distribution that would result in a benefit payable when he dies which would be
more than incidental within the meaning of governmental regulations.
Benefits shall begin by the Participant's required beginning date, as
defined in the FORM OF DISTRIBUTION SECTION of Article VI.
Contributions which are used to compute the Actual Deferral Percentage, as
defined in the EXCESS AMOUNTS SECTION of Article 111, may be distributed upon
disposition by the Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) used by the Employer in a trade or business
or disposition by the Employer of the Employer's interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) if the transferee corporation is
not a Controlled Group member, the Employee continues employment
with the transferee corporation and the transferor corporation continues to
maintain the Plan. Such distributions made after March 31, 1988, must be made in
a single sum.
SECTION 5.05-WITHDRAWAL PRIVILEGES.
A Participant may withdraw that part of his Vested Account resulting from
his Voluntary Contributions. A Participant may make only one such withdrawal in
any 12-month period.
A Participant who has attained age 59 1/2 may withdraw all or any portion
of his Vested Account which results from the following Contributions:
Elective Deferral Contributions
Matching Contributions
Qualified Nonelective Contributions
Discretionary Contributions
Rollover Contributions
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A Participant may make such a withdrawal at any time.
A Participant may withdraw all or any portion of his Vested Account which
results from the following Contributions
Elective Deferral Contributions
Rollover Contributions
in the event of hardship due to an immediate and heavy financial need.
Withdrawals from the Participant's Account resulting from Elective Deferral
Contributions shall be limited to the amount of the Participant's Elective
Deferral Contributions plus income allocable thereto credited to his Account as
of December 31, 1988.
Immediate and heavy financial need shall be limited to: (i) expenses
incurred or necessary for medical care, described in Code Section 213(d), of the
Participant, the Participant's spouse, or any dependents of the Participant (as
defined in Code Section 152); (ii) purchase (excluding mortgage payments) of a
principal residence for the Participant; (iii) payment of tuition and related
educational fees for the next 12 months of post-secondary education for the
Participant, his spouse, children or dependents; (iv) the need to prevent the
eviction of the Participant from his principal residence or foreclosure on the
mortgage of the Participant's principal residence; or (v) any other distribution
which is deemed by the Commissioner of Internal Revenue to be made on account of
immediate and heavy financial need as provided in Treasury regulations. The
Participant's request for a withdrawal shall include his written statement that
an immediate and heavy financial need exists and explain its nature.
No withdrawal shall be allowed which is not necessary to satisfy such
immediate and heavy financial need. Such withdrawal shall be deemed necessary
only if all of the following requirements are met: (i) the distribution is not
in excess of the amount of the immediate and heavy financial need of the
Participant (including amounts necessary to pay any Federal, state or local
income taxes or penalties reasonably anticipated to result from the
distribution); (ii) the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available under all
plans maintained by the Employer; (iii) the Plan, and all other plans maintained
by the Employer, provide that the Participant's elective contributions and
employee contributions will be suspended for at least 12 months after receipt of
the hardship distribution; and (iv) the Plan, and all other plans maintained by
the Employer, provide that the Participant may not make elective contributions
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
contributions for the taxable year of the hardship distribution. The Plan will
suspend elective contributions and employee contributions for 12 months and
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limit elective deferrals as provided in the preceding sentence. A Participant
shall not cease to be an Eligible Participant, as defined in the EXCESS AMOUNTS
SECTION of Article Ill, merely because his elective contributions or employee
contributions are suspended.
A request for withdrawal shall be in writing on a form furnished for t hat
purpose and delivered to the Plan Administrator before the withdrawal is to
occur.
A forfeiture shall not occur solely as a resoft of a withdrawal.
SECTION 5.06-LOANS TO PARTICIPANTS.
Loans shall be made available to all Participants on a reasonably
equivalent basis. For purposes of this section, Participant means any
Participant or Beneficiary who is a party-in- interest, within the meaning of
Section 3(14) of the Employee Retirement Income Security Act of 1974. Loans
shall not be made to highly compensated employees, as defined in Code Section
414(q), in an amount greater than the amount made available to other
Participants.
No loans will be made to any shareholder-employee or owner- employee. For
purposes of this requirement, a shareholder-employee means an employee or
officer of an electing small business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of Code Section 318(a)(1)), on any day
during the taxable year of such corporation, more than 5% of the outstanding
stock of the corporation.
A loan to a Participant shall be a Participant-directed investment of his
Account. No Account other than the borrowing Participant's Account shall share
in the interest paid on the loan or bear any expense or loss incurred because of
the loan. Qualifying Employer Securities held in a Participant's Qualifying
Employer Securities Account may be redeemed for purposes of a loan only after
the amount held in the Participant's other investment options have been
depleted; provided however, that if the Participant is a "reporting person"
under the terms of Rule 16(b)-3 of the Securities and Exchange Commission, then
any such loan will conform to the provision of Rule 16(b)-3.
The number of outstanding loans shall be limited to one, however, loans may
be consolidated. No more than one loan will be approved for any Participant in
any 12-month period. The minimum amount of any loan shall be $1,000.
Loans must be adequately secured and bear a reasonable rate of interest.
The amount of the loan shall not exceed the maximum amount that may be
treated as a loan under Code Section 72(p) (rather than a distribution) to the
Participant and shall be equal to the lesser of (a) or (b) below:
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(a) $50,000 reduced by the highest outstanding loan balance of loans during the
one-year period ending on the day before the new loan is made.
(b) The greater of (1) or (2), reduced by (3) below:
(1) One-half of the Participant's Vested Account.
(2) $10,000.
(3) Any outstanding loan balance on the date the new loan is made.
For purposes of this maximum, a Participant's Vested Account does not include
any accumulated deductible employee contributions, as defined in Code Section
72(o)(5)(B), and all qualified employer plans, as defined in Code Section
72(p)(4), of the Employer and any Controlled Group member shall be treated as
one plan.
The foregoing notwithstanding, the amount of such loan shall not exceed 50%
of the amount of the Participant's Vested Account. For purposes of this maximum,
a Participant's Vested Account does not include any accumulated deductible
employee contributions, as defined in Code Section 72(o)(5)(B). No collateral
other than a portion of the Participant's Vested Account (as limited above)
shall be accepted. The Loan Administrator shall determine if the collateral is
adequate for the amount of the loan requested.
Notwithstanding any other provision of this Plan, the portion of the
Participant's Vested Account used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be taken into account for
purposes of determining the amount of the Vested Account payable at the time of
death or distribution, but only if the reduction is used as repayment of the
loan.
Each loan shall bear a reasonable fixed rate of interest to be determined
by the Loan Administrator. In determining the interest rate, the Loan
Administrator shall take into consideration fixed interest rates currently being
charged by commercial lenders for loans of comparable risk on similar terms and
for similar durations, so that the interest will provide for a return
commensurate with rates currently charged by commercial lenders for loans made
under similar circumstances. The Loan Administrator shall not discriminate among
Participants in the matter of interest rates; but loans granted at different
times may bear different interest rates in accordance with the current
appropriate standards.
The loan shall by its terms require that repayment (principal and interest)
be amortized in level payments, not less frequently than quarterly, over a
period not extending beyond five years from the date of the loan. A loan is not
subject to this five-year repayment requirement if it is used to buy any
dwelling unit, which within a reasonable time, is to be used as the principal
residence of the Participant. The "reasonable time" will be determined at the
time the loan is made. The period of repayment for any loan shall be arrived at
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by mutual agreement between the Loan Administrator and the Participant, however,
in no circumstance shall the period of repayment exceed fifteen years.
The Participant shall make a written application for a loan from the Plan
on forms provided by the Loan Administrator. The application must specify the
amount and duration requested. No loan will be approved unless the Participant
is creditworthy. The Participant must grant authority to the Loan Administrator
to investigate the Participant's creditworthiness so that the loan application
may be properly considered.
Information contained in the application for the loan concerning the
income, liabilities, and assets of the Participant will be evaluated to
determine whether there is a reasonable expectation that the Participant will be
able to @satisfy payments on the loan as due. Additionally, the Loan
Administrator will pursue any appropriate further investigations concerning the
creditworthiness and/or credit history of the Participant to determine whether a
loan should be approved.
Each loan shall be fully documented in the form of a promissory note signed
by the Participant for the face amount of the loan, together with interest
determined as specified above.
There will be an assignment of collateral to the Plan executed at the time
the loan is made.
In those cases where repayment through payroll deduction by the Employer is
available, installments are so payable, and a payroll deduction agreement will
be executed by the Participant at the time of making the loan.
Where payroll deduction is not available, payments are to be timely made.
Any payment that is not by payroll deduction shall be made payable to the
Employer or Trustee, as specified in the promissory note, and delivered to the
Loan Administrator, including prepayments, service fees and penalties, if any,
and other amounts due under the note.
The promissory note may provide for reasonable late payment penalties
and/or service fees. Any penalties or service fees shall be applied to all
Participants in a nondiscriminatory manner. If the promissory
note so provides, such amounts may be assessed and collected from the
Account of the Participant as part of the loan balance.
Each loan may be paid prior to maturity, in part or in full, without
penalty or service fee, except as may be set out in the promissory note.
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If any amount remains unpaid for more than 31 days after due, a default is
deemed to occur.
Upon default, the Plan has the right to pursue any remedy available by law
to satisfy the amount due, along with accrued interest, including the right to
enforce its claim against the security pledged and execute upon the collateral
as allowed by law.
If any payment of principal or interest or any other amount due under the
promissory note, or any portion thereof, is not made for a period of 90 days
after due, the entire principal balance whether or not otherwise then due, shall
become immediately due and payable without demand or notice, and subject to
collection or satisfaction by any lawful means, including specifically but not
limited to the right to enforce the claim against the security pledged and to
execute upon the collateral as allowed by law.
In the event of default, foreclosure on the note and attachment of security
or use of amounts pledged to satisfy the amount then due, will not occur until a
distributable event occurs in accordance with the Plan, and will not occur to an
extent greater than the amount then available upon any distributable event which
has occurred under the Plan.
All reasonable costs and expenses, including but not limited to attorney's
fees, incurred by the Plan in connection with any default or in any proceeding
to enforce any provision of a promissory note or instrument by which a
promissory note for a Participant loan is secured, shall be assessed and
collected from the Account of the Participant as part of the loan balance.
If payroll deduction is being utilized, in the event that a Participant's
available payroll deduction amounts in any given month are insufficient to
satisfy the total amount due, there will be an increase in the amount taken
subsequently, sufficient to make up the amount that is then due. If the
subsequent deduction is also insufficient to satisfy the amount due within 31
days, a default is deemed to occur as above. If any amount remains past due more
than 90 days, the entire principal amount, whether or not otherwise then due,
along with interest then accrued and any other amount then due under the
promissory note, shall become due and payable, as above.
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ARTICLE VI
DISTRIBUTION OF BENEFITS
SECTION 6.01 -FORM OF DISTRIBUTION.
The form of benefit payable to or on behalf of a Participant is a single
sum payment. The entire interest of a Participant must be distributed no later
than the Participant's required beginning date. The Participant's required
beginning date is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2, unless otherwise
provided in (a), (b) or (c) below:
(a) The required beginning date for a Participant who attains age 70 1/2 before
January 1, 1988, and who is not a 5-percent owner is the first day of April
of the calendar year following the calendar year in which the later of
retirement or attainment of age 70 1/2 occurs.
(b) The required beginning date for a Participant who attains age 70 1/2 before
January 1, 1988, and who is a 5-percent owner is the first day of April of
the calendar year following the later of
(1) the calendar year in which the Participant attains age 70 1/2, or
(2) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a 5- percent owner, or the
calendar year in which the Participant retires.
(c) The required beginning date of a Participant who is not a 5- percent owner
and who attains age 70 1/2 during 1988 and who has not retired as of
January 1, 1989, is April 1. 1990.
A Participant is treated as a 5-percent owner for purposes of this section if
such Participant is a 5-percent owner as defined in Code Section 416(i)
(determined in accordance with Code Section 416 but without regard to whether
the Plan is top-heavy) at any time during the Plan Year ending with or within
the calendar year in which such owner attains age 66 1/2 or any subsequent Plan
Year.
The portion of the Participant's Vested Account held in Qualifying Employer
Securities shall be distributed in cash, according to the form of benefit
outlined above. Fractional shares shall be paid in cash valued as of the most
recent Valuation Date; the distribution shall include any dividends (cash or
stock) on such whole shares or any additional shares received as of a stock
split or any other adjustment to such whole shares since the Valuation Date
preceding the date of distribution.
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SECTION 6.02-ELECTION PROCEDURES.
The Participant shall make any election under this section in writing. The
Plan Administrator may require such individual to complete and sign any
necessary documents as to the provisions to be made. Any election permitted
under (a) below shall be subject to the qualified election provisions of (b)
below.
(a) Death Benefits. A Participant may elect his Beneficiary.
(b) Qualified Election. The Participant may make an election at any time during
the election period. The Participant revoke the election made (or make a
new election) at any time and any number of times during the election
period. An election is effective only if it meets the consent requirements
below.
If the Participant's Vested Account has at any time exceeded $3,500, any benefit
which is immediately distributable requires the consent of the Participant. The
consent of the Participant to a benefit which is immediately distributable must
not be made before the date the Participant is provided with the notice of the
ability to defer the distribution. Such consent shall be made in writing. The
consent shall not be made more than 90 days before the Annuity Starting Date.
The consent of the Participant shall not be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or Code Section 415.
In addition, upon termination of this Plan if the Plan does not offer an annuity
option (purchased from a commercial provider), the Participant's Account balance
may, without the Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)) within the same Controlled
Group. A benefit is immediately distributable if any part of the benefit could
be distributed to the Participant before the Participant attains the older of
Normal Retirement Age or age 62. Spousal consent is needed to name a Beneficiary
other than the spouse. If the Participant names a Beneficiary other than his
spouse, the spouse has the right to limit consent only to a specific
Beneficiary. The spouse can relinquish such right. Such consent shall be made in
writing. The spouse's consent shall be witnessed by a plan representative or
notary public. The spouse's consent must acknowledge the effect of the election,
including that the spouse had the right to limit consent only to a specific
Beneficiary and that the relinquishment of such right was voluntary. Unless the
consent of the spouse expressly permits designations by the Participant without
a requirement of further consent by the spouse, the spouse's consent must be
limited to the Beneficiary, class of Beneficiaries, or contingent Beneficiary
named in the election. Spousal consent is not required, however, if the
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Participant establishes to the satisfaction of the plan representative that the
consent of the spouse cannot be obtained because there is no spouse or the
spouse cannot be located. A spouse's consent under this paragraph shall not be
valid with respect to any other spouse. A Participant may revoke a prior
election without the consent of the spouse. Any new election will require a new
spousal consent, unless the consent of the spouse expressly permits such
election by the Participant without further consent by the spouse. A spouse's
consent may be revoked at any time within the Participant's election period.
SECTION 6.03-NOTICE REQUIREMENTS.
The Plan Administrator shall furnish to the Participant a written
explanation of the right of the Participant to defer distribution until the
benefit is no longer immediately distributable. The Plan Administrator shall
furnish the written explanation by a method reasonably calculated to reach the
attention of the Participant no less than 30 days and no more than 90 days
before the Annuity Starting Date.
SECTION 6.04-DISTRIBUTIONS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS.
The Plan specifically permits distributions to an Alternate Payee under a
qualified domestic relations order as defined in Code Section 414(p), at any
time, irrespective of whether the Participant has attained his earliest
retirement age as defined in Code Section 414(p), under the Plan. A distribution
to an Alternate Payee before the Participant's attainment of earliest retirement
age, as defined in Code Section 414(p), is available only if:
(a) the order specifies distributions at that time or permits an agreement
between the Plan and the Alternate Payee to authorize an earlier
distribution; and
(b) if the present value of the Alternate Payee's benefits under the Plan
exceeds $3,500, and the order requires, the Alternate Payee consents to any
distribution occurring before the Participant's attainment of earliest
retirement age, as defined in Code Section 414(p).
Nothing in this section shall permit a Participant a right to receive a
distribution at a time otherwise not permitted under the Plan nor shall it
permit the Alternate Payee to receive a form of payment not permitted under the
Plan.
The Plan Administrator shall establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Plan Administrator promptly shall notify the Participant
and an Alternate Payee named in the order, in writing, of the receipt of the
order and the Plan's procedures for determining the qualified status of the
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order. Within a reasonable period of time after receiving the domestic relations
order, the Plan Administrator shall determine the qualified status of the order
and shall notify the Participant and each Alternate Payee, in writing, of its
determination. The Plan Administrator shall provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations. The Plan
Administrator may treat as qualified any domestic relations order entered before
January 1, 1985, irrespective of whether it satisfies all the requirements
described in Code Section 414(p).
If any portion of the Participant's Vested Account is payable during the
period the Plan Administrator is making its determination of the qualified
status of the domestic relations order, a separate accounting shall be made of
the amount payable. If the Plan Administrator determines the order is a
qualified domestic relations order within 18 months of the date amounts are
first payable following receipt of the order, the payable amount shall be
distributed in accordance with the order. If the Plan Administrator does not
make its determination of the qualified status of the order within the 18 month
determination period, the payable amounts shall be distributed in the manner the
Plan would distribute if the order did not exist and the order shall apply
prospectively if the Plan Administrator later determines the order is a
qualified domestic relations order.
The Plan shall make payments or distributions required under this section
by separate benefit checks or other separate distribution to the Alternate
Payee(s).
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ARTICLE VII
TERMINATION OF PLAN
The Employer expects to continue the Plan indefinitely but reserves the
right to terminate the Plan in whole or in part at any time upon giving written
notice to all parties concerned. Complete discontinuance of Contributions under
the Plan constitutes complete termination of Plan.
The Account of each Participant shall be fully (100%) vested and
nonforfeitable as of the effective date of complete termination of Plan. The
Account of each Participant who is included in the group of Participants deemed
to be affected by the partial termination of the Plan shall be fully (100%)
vested and nonforfeitable as of the effective date of the partial Plan
termination. The Participant's Account shall continue to participate in the
earnings credited, expenses charged and any appreciation or depreciation of the
Investment Fund until the Vested Account is distributed. A distribution under
this article will be a retirement benefit and shall be distributed to the
Participant according to the provisions of Article VI.
A Participant's Account which does not result from Contributions which are
used to compute the Actual Deferral Percentage, as defined in the EXCESS AMOUNTS
SECTION of Article 111, may be distributed to the Participant after the
effective date of the complete or partial Plan termination. A Participant's
Account resulting from Contributions which are used to compute such percentage
may be distributed upon termination of the Plan without the establishment or
maintenance of another defined contribution plan, other than an employee stock
ownership plan (as defined in Code Section 4975(e) or Code Section 409) or a
simplified employee pension plan (as defined in Code Section 408(k)). Such a
distribution made after March 31, 1988, must be in a single sum.
Upon complete termination of Plan, no more Employees shall become
Participants and no more Contributions shall be made.
The assets of this Plan shall not be paid to the Employer at any time,
except that, after the satisfaction of all liabilities under the F4an, any
assets remaining may be paid to the Employer. The payment may not be made if it
would contravene any provision of law.
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ARTICLE VIII
ADMINISTRATION OF PLAN
SECTION 8.01-ADMINISTRATION.
Subject to the provisions of this article, the Plan Administrator has
complete control of the administration of the Plan. The Plan Administrator has
all the powers necessary for it to properly carry out its administrative duties.
Not in limitation, but in amplification of the foregoing, the Plan Administrator
has the power to construe the Plan, including ambiguous provisions, and to
determine all questions that may arise under the Plan, including all questions
relating to the eligibility of Employees to participate in the Plan and the
amount of benefit to which any Participant or Beneficiary may become entitled.
The Plan Administrator's decisions upon all matters within the scope of its
authority shall be final.
Unless otherwise set out in the Plan or Group Contract, the Plan
Administrator may delegate recordkeeping and other duties which are necessary
for the administration of the Plan to any person or firm which agrees to accept
such duties. The Plan Administrator shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the consultant or actuary
appointed by the Plan Administrator and upon all opinions given by any counsel
selected or approved by the Plan Administrator.
The Plan Administrator shall receive all claims for benefits by
Participants, former Participants and Beneficiaries. The Plan Administrator
shall determine all facts necessary to establish the right of any Claimant to
benefits and the amount of those benefits under the provisions of the Plan. The
Plan Administrator may establish rules and procedures to be followed by
Claimants in filing claims for benefits, in furnishing and verifying proofs
necessary to determine age, and in any other matters required to administer the
Plan.
Each Participant shall be entitled to direct the Trustee as to the exercise
of all voting powers over shares allocated to his Account with respect to any
corporate matter which involves the voting of such shares allocated to the
Participant's Account with respect to the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such similar transaction as may be prescribed in the Treasury
Regulations. The Trustee shall vote all Qualifying Employer Securities allocated
to a Participant's Qualifying Employer Securities Account which are not voted by
the Participant, because the Participant has not directed (or not timely
directed) the Trustee as to the manner in which such Qualifying Employer
Securities are to be voted, in the same proportion as those shares of Qualifying
Employer Securities for which the Trustee has received proper direction on such
matter.
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In the event that a tender offer is made for some or all of the shares of
the Employer, each Participant shall have the right to direct whether those
shares allocated to his Account, whether or not vested, shall be tendered. This
right shall be exercised in the manner set forth herein. In the absence of a
written directive from or election by a Participant to the Plan Administrator,
the Plan Administrator shall direct the Trustee not to tender such shares.
Because the choice is to be given to the Participants, the Plan Administrator
and the Trustee shall not have fiduciary responsibility with respect to the
decision to tender or not or whether to tender all such shares or only a portion
thereof.
In order to facilitate the decision of Participants whether to tender their
shares in a tender offer (or how many shares to tender), the Plan Administrator
shall provide election forms for the Participants, whereby they may elect to
tender or not and whereby they may elect to tender all or a portion of such
shares. Unless otherwise limited by Federal securities law, such election may be
made or changed at any time prior to the date before the expiration date of the
tender offer (with extensions); any election or change in election must be
received by the Plan Administrator, or designated representative of the Plan
Administrator, on or before the day preceding the expiration date of the tender
offer (with extensions, if any). The Plan Administrator may develop procedures
to facilitate Participants' choices, such as the use of facsimile transmissions
for the Employees located in areas physically remote from the Plan
Administrator. The election shall be binding on the Plan Administrator and the
Trustee. The Plan Administrator shall make every effort to distribute the notice
of the tender, election forms and other communications related to the tender
offer to all Participants as soon as practicable following the announcement of
the tender offer, including mailing such notice and form to Participants and
posting such notice in places designed to be reviewed by Participants.
As to shares which are not allocated to the Account of any Participant, all
such shares (in the aggregate) shall be tendered or not as the majority of the
shares held by Participants and directed by Participants are tendered or not.
The Plan Administrator shall direct the Trustee to tender all such unallocated
shares or not, in accordance with the elections of the Participants having an
allocation of the majority of the shares under the Plan.
SECTION 8.02-RECORDS.
All acts and determinations of the Plan Administrator shall be duly
recorded. All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator's
custody.
Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording or other
forms of data compilation shall be acceptable means of keeping records.
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SECTION 8.03-INFORMATION AVAILABLE.
Any Participant in the Plan or any Beneficiary may examine copies of the
Plan description, latest annual report, any bargaining agreement, this Plan, the
Group Contract or any other instrument under which the Plan was established or
is operated. The Plan Administrator shall maintain all of the items listed in
this section in its office, or in such other place or places as it may designate
in order to comply with governmental regulations. These items may be examined
during reasonable business hours. Upon the written request of a Participant or
Beneficiary receiving benefits under the Plan, the Plan Administrator will
furnish him with a copy of any of these items. The Plan Administrator may make a
reasonable charge to the requesting person for the copy.
SECTION 8.04-CLAIM AND APPEAL PROCEDURES.
A Claimant must submit any required forms and pertinent information when
making a claim for benefits under the Plan.
If a claim for benefits under the Plan is denied, the Plan Administrator
shall provide adequate written notice to the Claimant whose claim for benefits
under the Plan has been denied. The notice must be furnished within 90 days of
the date that the claim is received by the Plan Administrator. The Claimant
shall be notified in writing within this initial 90-day period if special
circumstances require an extension of time needed to process t-ne claim and the
date by which the Plan Administrator's decision is expected to be rendered. The
written notice shall be furnished no later than 180 days after the date the
claim was received by the Plan Administrator.
The Plan Administrator's notice to the Claimant shall specify the reason
for the denial; specify references to pertinent Plan provisions on which denial
is based; describe any additional material and information needed for the
Claimant to perfect his claim for benefits; explain why the material and
information is needed; inform the Claimant that any appeal he wishes to make
must be in writing to the Plan Administrator within 60 days after receipt of the
Plan Administrator's notice of denial of benefits and that failure to make the
written appeal within such 60-day period shall render the Plan Administrator's
determination of such denial final, binding and conclusive.
If the Claimant appeals to the Plan Administrator, the Claimant, or his
authorized representative, may submit in writing whatever issues and comments
the Claimant, or his representative, feels are pertinent. The Claimant, or his
authorized representative may review pertinent Plan documents. The Plan
Administrator shall reexamine all facts related to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances. The Plan Administrator shall advise the Claimant of its decision
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within 60 days of his written request for review, unless special circumstances
(such as a hearing) would make rendering a decision within the 60-day limit
unfeasible. The Claimant must be notified within the 60-day limit if an
extension is necessary. The Plan Administrator shall render a decision on a
claim for benefits no later than 1 20 days after the request for review is
received.
SECTION 8.05-UNCLAIMED VESTED ACCOUNT PROCEDURE.
At the time the Participant's Vested Account is distributable to the
Participant, spouse or Beneficiary without his consent according to the
provisions of Article VI or Article IX, the Plan Administrator, by certified or
registered mail addressed to his last known address and in accordance with the
notice requirements of Article Vi, will notify him of his entitlement to a
benefit. If the Participant, spouse or Beneficiary fails to claim the Vested
Account or make his whereabouts known in writing within six months from the date
of mailing the notice, the Plan Administrator may treat such unclaimed Vested
Account as a forfeiture and apply it according to the forfeiture provisions of
Article 111. If Article Ill contains no forfeiture provisions, such amount will
be applied to reduce the earliest Employer Contributions due after the
forfeiture arises.
If a Participant's Vested Account is forfeited according to the provisions
of the above paragraph and the Participant, his spouse or his Beneficiary at any
time make a claim for benefits, the forfeited Vested Account shall be
reinstated, unadjusted for any gains or losses occurring after the date it was
forfeited. The reinstated Vested Account shall then be distributed to the
Participant, spouse or Beneficiary according to the preceding provisions of the
Plan.
SECTION 8.06-DELEGATION OF AUTHORITY.
All or any part of the administrative duties and responsibilities under
this article may be delegated by the Plan Administrator to a retirement
committee. The duties and responsibilities of the retirement committee shall be
set out in a separate written agreement.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 -AMENDMENTS.
The Employer may amend this Plan at any time, including any remedial
retroactive changes (within the specified period of time as may be determined by
Internal Revenue Service regulations) to comply with the requirements of any law
or regulation issued by any governmental agency to which the Employer is
subject. An amendment may not diminish or adversely affect any accrued interest
or benefit of Participants or their Beneficiaries or eliminate an optional form
of distribution with respect to benefits attributable to service before the
amendment nor allow reversion or diversion of Plan assets to the Employer at any
time, except as may be necessary to comply with the requirements of any law or
regulation issued by any governmental agency to which the Employer is subject.
No amendment to this Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. However, a Participant's
Account may be reduced to the extent permitted under Code Section 412(c)(8). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account or eliminating an optional form of benefit, with respect
to benefits attributable to service before the amendment shall be treated as
reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of the later of the
date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such Employee's
employer-derived accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
An amendment shall not decrease a Participant's vested interest in the
Plan. If an amendment to the Plan, or a deemed amendment in the case of a change
in top-heavy status of the Plan as provided in the MODIFICATION OF VESTING
REQUIREMENTS SECTION of Article X, changes the computation of the percentage
used to determine that portion of a Participant's Account attributable to
Employer Contributions which is nonforfeitable (whether directly or indirectly),
each Participant or former Participant
(a) who has completed at least three Years of Service on the date the election
period described below ends (five Years of Service if the Participant does
not have at least one Hour-of-Service in a Plan Year beginning after
December 31, 1988) and
(b) whose nonforfeitable percentage will be determined on any date after the
date of the change
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may elect, during the election period, to have the nonforfeitable percentage of
his Account that results from Employer Contributions determined without regard
to the amendment. This election may not be revoked. An election does not need to
be provided for any Participant or former Participant whose nonforfeitable
percentage, determined according to the Plan provisions as changed, cannot at
any time be less than the percentage determined without regard to such change.
The election period shall begin no later than the date the Plan amendment is
adopted, or deemed adopted in the case of a change in the top-heavy status of
the Plan, and end no earlier than the sixtieth day after the latest of the date
the amendment is adopted (deemed adopted) or becomes effective, or the date the
Participant is issued written notice of the amendment (deemed amendment) by the
Employer or the Plan Administrator.
SECTION 9.02-DIRECT ROLLOVERS.
This section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributees election under this section, a Distributee may elect, at
the time and in the manner prescribed by the F4an Administrator, to have any
portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan, specified by the Distributee, in a Direct Rollover.
SECTION 9.03-MERGERS AND DIRECT TRANSFERS.
The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Participant
in the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit the Participant would have been entitled to receive immediately
before the merger, consolidation or transfer (if this Plan had then terminated).
The Employer may enter into merger agreements or direct transfer of assets
agreements with the employers under other retirement plans which are qualifiable
under Code Section 401 (a), .including an elective transfer, and may accept the
direct transfer of plan assets, or may transfer plan assets, as a party to any
such agreement. The Employer shall not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan if such action
would result in a defined benefit feature being maintained under this Plan. The
Employer shall not consent to, or be a party to a merger, consolidation or
transfer of assets with a plan which is subject tot he survivor annuity
requirements of Code Section 401 (a)(1 1) if such action would result in a
survivor annuity feature being maintained under the Plan.
The Plan may accept a direct transfer of plan assets on behalf of an
Eligible Employee. If the Eligible Employee is not an Active Participant when
the transfer is made, the Eligible Employee shall be deemed to be an Active
Participant only for the purpose of investment and distribution of the
transferred assets. Employer Contributions shall not be made for or allocated to
the Eligible Employee, until the time he meets all of the requirements to become
an Active Participant.
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The Plan shall hold, administer and distribute the transferred assets as a
part of the Plan. The Plan shall maintain a separate account for the benefit of
the Employee on whose behalf the Plan accepted the transfer in order to reflect
the value of the transferred assets. Unless a transfer of assets to the Plan is
an elective transfer, the Plan shall apply the optional forms of benefit
protections described in the AMENDMENTS SECTION of Article IX to all transferred
assets. A transfer is elective if: (1) the transfer is voluntary, under a fully
informed election by the Participant; (2) the Participant has an alternative
that retains his Code Section 41 1 (d)(6) protected benefits (including an
option to leave his benefit in the transferor plan, if that plan is not
terminating); (3) if the transferor plan is subject to Code Sections 401 (a) (1
1) and 41 7, the transfer satisfies the applicable spousal consent requirements
of the Code; (4) the notice requirements under Code Section 417, requiring a
written explanation with respect to an election not to receive benefits in the
form of a qualified joint and survivor annuity, are met with respect to the
Participant and spousal transfer election; (5) the Participant has a right to
immediate distribution from the transferor plan under provisions in the plan not
inconsistent with Code Section 401 (a); (6) the transferred benefit is equal to
the Participant's entire nonforfeitable accrued benefit under the transferor
plan, calculated to be at least the greater of the single sum distribution
provided by the transferor plan (if any) or the present value of the
Participant's accrued benefit under the transferor plan payable at the plan's
normal retirement age and calculated using an interest rate subject to the
restrictions of Code Section 417(e) and subject to the overall limitations of
Code Section 415; (7) the Participant has a 100% nonforfeitable interest in the
transferred benefit; and (8) the transfer otherwise satisfies applicable
Treasury regulations.
SECTION 9.04-PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES.
The obligations of an Insurer shall be governed solely by the provisions of
the Group Contract. The Insurer shall not be required to perform any act not
provided in or contrary to the provisions of the Group Contract. See the
CONSTRUCTION SECTION of this article.
Any issuer or distributor of investment contracts or securities is governed
solely by the terms of its policies, written investment contract, prospectuses,
security instruments, and any other written agreements entered into with the
Trustee.
Such Insurer, issuer or distributor is not a party to the Plan, nor bound
in any way by the Plan provisions. Such parties shall not be required to look to
the terms of this Plan, nor to determine whether the Employer, the Plan
Administrator, the Trustee, or the Named Fiduciary have the authority to act in
any particular manner or to make any contract or agreement.
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Until notice of any amendment or termination of this Plan or a change in
Trustee has been received by the Insurer at its home office or an issuer or
distributor at their principal address, they are and shall be fully protected in
assuming that the Plan has not been amended or terminated and in dealing with
any party acting as Trustee according to the latest information which they have
received at their home office or principal address.
SECTION 9.05-EMPLOYMENT STATUS.
Nothing contained in this Plan gives an Employee the right to be retained
in the Employer's employ or to interfere with the Employer's right to discharge
any Employee.
SECTION 9.06-RIGHTS TO PLAN ASSETS.
No Employee shall have any right to or interest in any assets of the Plan
upon termination of his employment or otherwise except as specifically provided
under this Plan, and then only to the extent of the benefits payable to such
Employee in accordance with Plan provisions.
Any final payment or distribution to a Participant or his legal
representative or to any Beneficiaries, of such Participant under the Plan
provisions shall be in full satisfaction of all claims against the Plan, the
Named Fiduciary, the Plan Administrator, the Trustee, the Insurer, and the
Employer arising under or by virtue of the Plan.
SECTION 9.07-BENEFICIARY.
Each Participant may name a Beneficiary to receive any death benefit that
may arise out of his participation in the Plan. The Participant may change his
Beneficiary from time to time. Unless a qualified election has been made, for
purposes of distributing any death benefits before Retirement Date, the
Beneficiary of a Participant who has a spouse shall be the Participant's spouse.
The Participant's Beneficiary designation and any change of Beneficiary shall be
subject to the provisions of the ELECTION PROCEDURES SECTION of Article VI. It
is the responsibility of the Participant to give written notice to the Insurer
of the name of the Beneficiary on a form furnished for that purpose.
With the Employer's consent, the Plan Administrator may maintain records of
Beneficiary designations for Participants before their Retirement Dates. In that
event, the written designations made by Participants shall be filed with the
Plan Administrator. If a Participant dies before his Retirement Date, the Plan
Administrator shall certify to the Insurer the Beneficiary designation on its
records for the Participant.
If, at the death of a Participant, there is no Beneficiary named or
surviving, any death benefit under the Group Contract shall be paid under the
applicable provisions of the Group Contract.
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SECTION 9.08-NONALIENATION OF BENEFITS.
Benefits payable under the Plan are not subject to the claims of any
creditor of any Participant, Beneficiary, or spouse. A Participant, Beneficiary
or spouse does not have any rights to alienate, anticipate, commute, pledge,
encumber or assign any of such benefits, except in the case of a loan as
provided in the LOANS TO PARTICIPANTS SECTION of Article V. The preceding
sentences shall also apply to the creation, assignment, or recognition of a
right to any benefit payable with respect to a Participant according to a
domestic relations order, unless such order is determined by the Plan
Administrator to be a qualified domestic relations order, as defined in Code
Section 414(p), or any domestic relations order entered before January 1, 1985.
SECTION 9.09-CONSTRUCTION.
The validity of the Plan or any of its provisions is determined under and
construed according to Federal law and, to the extent permissible, according to
the laws of the state in which the Employer has its principal office. In case
any provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included.
In the event of any conflict between the provisions of the Plan and the
terms of any contract or policy issued hereunder, the provisions of the Plan
control the operation and administration of the Plan.
SECTION 9.10-LEGAL ACTIONS.
The Plan, the Plan Administrator, the Trustee and the Named Fiduciary are
the necessary parties to any action or proceeding involving the assets held with
respect to the Plan or administration of the Plan or Trust. No person employed
by the Employer, no Participant, former Participant or their Beneficiaries or
any other person having or claiming to have an interest in the Plan is entitled
to any notice of process. A final judgment entered in any such action or
proceeding shall be binding and conclusive on all persons having or claiming to
have an interest in the Plan.
SECTION 9.11 -SMALL AMOUNTS.
If the Vested Account of a Participant has never exceeded $3,500, the
entire Vested Account shall be payable in a single sum as of the earliest of his
Retirement Date, the date he dies, or the date he ceases to be an Employee for
any other reason. This is a small amounts payment. If a small amount is payable
as of the date the Participant dies, the small amounts payment shall be made to
the Participant's Beneficiary. If a small amount is payable while the
Participant is living, the small amounts payment shall be made to the
Participant. The small amounts payment is in full settlement of all benefits
otherwise payable.
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No other small amounts payments shall be made.
SECTION 9.12-WORD USAGE.
The masculine gender, where used in this Plan, shall include the feminine
gender and the singular words as used in this Plan may include the plural,
unless the context indicates otherwise.
SECTION 9.13-TRANSFERS BE@ANNE PLANS.
If an Employee previously participated in another plan of the Employer
which credited service under the elapsed time method for any purpose which under
this Plan is determined using the hours method, then the Employee's service
shall be equal to the sum of (a), (b) and (c) below:
(a) The number of whole years of service credited to him under the other plan
as of the date he became an Eligible Employee under this Plan.
(b) One year or a part of a year of service for the applicable service period
in which he became an Eligible Employee if he is credited with the required
number of Hours-of- Service. If the Employer does not have sufficient
records to determine the Employee's actual Hours-of-Service in that part of
the service period before the date he became an Eligible Employee, the
Hours-of-Service shall be determined using an equivalency. For any month in
which he would be required to be credited with one Hour-of- Service, the
Employee shall be deemed for purposes of this section to be credited with
190 Hours-of-Service.
(c) The Employee's service determined under this Plan using the hours method
after the end of the applicable service period in which he became an
Eligible Employee.
If an Employee previously participated in another plan of the Employer
which credited service under the hours method for any purpose which under this
Plan is determined using the elapsed time method, then the Employee's service
shall be equal to the sum of (d), (e) and (f) below:
(d) The number of whole years of service credited to him under the other plan
as of the beginning of the applicable service period under that plan in
which he became an Eligible Employee under this Plan.
(e) The greater of (1) the service that would be credited to him for that
entire service period using the elapsed time method or (2) the service
credited to him under the other plan as of the date he became an Eligible
Employee under this Plan.
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(f) The Employee's service determined under this Plan using the elapsed time
method after the end of the applicable service period under the other plan
in which he became an Eligible Employee.
Any modification of service contained in this Plan shall be applicable to
the service determined pursuant to this section.
If the Employee previously participated in the plan of a Controlled Group
member which credited service under a different method than is used in this
Plan, for purposes of determining eligibility and vesting the provisions above
shall apply as though the plan of the Controlled Group member were a plan of the
Employer.
SECTION 9.14-PARTNERSHIP OR SOLE PROPRIETORSHIP.
(a) For the purpose of applying the provisions of this Plan as to any Plan Year
in which the Employer is a partnership or sole proprietorship, the
following terms are defined:
Control(s) means, with regard to a trade or business, one owner-employee
owns or a group of owner-employees together own (1) the entire interest in
such trade or business or (2) in the case of a partnership, more than fifty
percent of either the capital interest or the profits interest in the
partnership. An owner-employee, or a group of 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 group of owner-
employees, are considered to control within the meaning of the preceding
sentence.
Earned Income means, for a Self-Employed Individual, net earnings from
self-employment in the trade or business for which this Plan is established
if such Self-Employed Individual's personal services are a material income
producing factor for that trade or business. Earned Income shall be
determined without regard to items not included in gross income and the
deductions properly allocable to or chargeable against such items. Earned
Income shall be reduced for the employer contributions to the Employer's
qualified retirement plan(s) to the extent deductible under Code Section
404.
Net earnings shall be determined with regard to the deduction allowed to
the Employer by Code Section 164(f) for taxable years beginning after
December 31, 1989.
In applying the provisions of this Plan, the Self-Employed Individual's
Earned Income shall be deemed to be his Compensation. For purposes of the
CONTRIBUTION LIMITATION SECTION of Article 111, Earned Income shall include
earned income within the meaning of Code Section 911 from sources outside
the United States and shall be deemed to be his Compensation. If any
exclusions are used for Compensation, Earned Income shall be adjusted by
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multiplying the SelfEmployed Individual's Earned Income by a fraction. The
numerator of the fraction is the total Compensation for all Nonhighly
Compensated Employees after such exclusions are applied. The denominator of
the fraction is the total Compensation for all Nonhighly Compensated
Employees before such exclusions are applied. Self-Employed Individuals who
are Nonhighly Compensated Employees are not included for purposes of
calculating this fraction. If the Plan includes elective contributions in
the definition of Compensation, Earned Income also must include a
Self-Employed Individual's elective contributions.
Owner-Employee means a Self-Employed Individual who, in the case of a sole
proprietorship, owns the entire interest in the unincorporated trade or
business for which this Plan is established. If this Plan is established
for a partnership, an Owner-Employee means a Self-Employed Individual who
owns more than ten percent of either the capital interest or profits
interest in such partnership.
In applying the provisions of this Plan, an Owner-Employee shall be deemed
to be an Employee.
Self-Employed Individual means, with respect to any Fiscal Year, an
individual who has Earned Income for the Fiscal Year (or who would have
Earned Income but for the fact the trade or business for which this Plan is
established did not have net profits for such Fiscal Year).
In applying the provisions of this Plan, a Self-Employed Individual shall
be deemed to be an Employee.
(b) If contributions are made for or allocated to or benefits accrue to an
Owner-Employee who Controls, or a group of Owner- Employees who together
Control, both the trade or business for which this Plan is established and
one or more other trades or businesses, then this Plan and the plans
established for such other trade(s) or business(es) must, if they were
combined as a single plan, satisfy the requirements of Code Sections 401
(a) and 401 (d) and regulations thereunder.
If this Plan provides Contributions for an Owner-Employee who Controls, or
a group of Owner-Employees who Control, one or more other trades or
businesses, the employees of each such other trade or business must be
included in a plan which satisfies Code Sections 401 (a) and 401 (d) and
regulations thereunder. Each such plan must provide contributions and
benefits which are not less favorable than the Contributions and benefits
provided for the Owner-Employee(s) under this Plan.
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If an Owner-Employee is covered under another qualifiable retirement plan
as an owner-employee of a trade or business he does not Control, then the
plan(s) of the trade(s) or business(es) the Owner-Employee does Control
(including this Plan, if applicable) must provide contributions or benefits
as favorable as those provided under the most favorable plan of the trade
or business the Owner-Employee does not Control.
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ARTICLE X
TOP-HEAVY PLAN REQUIREMENTS
SECTION 10.01 -APPLICATION.
The provisions of this article shall supersede all other provisions in the
Plan to the contrary.
For the purpose of applying the Top-heavy Plan requirements of this
article, all members of the Controlled Group shall be treated as one Employer.
The term Employer as used in this article shall be deemed to include all members
of the Controlled Group unless the term as used clearly indicates only the
Employer is meant.
The accrued benefit or account of a participant which results from
deductible voluntary contributions shall not be included for any purpose under
this article.
The minimum vesting and contribution provisions of the MODIFICATION OF
VESTING REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of Article X
shall not apply to any Employee who is included in a group of Employees covered
by a collective bargaining agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers, including the Employer, if there is evidence that retirement benefits
were the subject of good faith bargaining between such representatives. 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.
SECTION 10.02-DEFINITIONS.
The following terms are defined for purposes of this article.
Aggregation Group means:
(a) each of the Employer's retirement plans in which a Key Employee is a
participant during the Year containing the Determination Date or one
of the four preceding Years,
(b) each of the Employer's other retirement plans which allows the plan(s)
described in (a) above to meet the nondiscrimination requirement of
Code Section 401(a)(4) or the minimum coverage requirement of Code
Section 410, and
(c) any of the Employer's other retirement plans not included in (a) or
(b) above which the Employer desires to include as part of the
Aggregation Group. Such a retirement plan shall be included only if
the Aggregation Group would continue to satisfy the requirements of
Code Section 401 (a)(4) and Code Section 41 0.
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The plans in (a) and (b) above constitute the "required" Aggregation Group.
The plans in (a), (b) and (c) above constitute the "permissive" Aggregation
Group.
Compensation means, as to an Employee for any period, compensation as
defined in the CONTRIBUTION LIMITATION SECTION of Article Ill. For purposes
of determining who is a Key Employee, Compensation shall include, in
addition to compensation as defined in the CONTRIBUTION LIMITATION SECTION
of Article 111, elective contributions. Elective contributions are amounts
excludable from the Employee's gross income under Code Sections 125,
402(e)(3), 402(h) or 403(b), and contributed by the Employer, at the
Employee's election, to a Code Section 401(k) arrangement, a simplified
employee pension, cafeteria plan or tax-sheltered annuity.
For purposes of Compensation as defined in this section, Compensation shall
be limited in the same manner and in the same time as the Compensation
defined in the DEFINITION SECTION of Article 1.
Determination Date means as to this Plan for any Year, the last day of the
preceding Year. However, if there is no preceding Year, the Determination
Date is the last day of such Year.
Key Employee means any Employee or former Employee (including Beneficiaries
of deceased Employees) who at any time during the determination period was
(a) one of the Employer's officers (subject to the maximum below) whose
Compensation (as defined in this section) for the Year exceeds 50
percent of the dollar limitation under Code Section 41 5 (b) (1 ) (A),
(b) one of the ten Employees who owns (or is considered to own, under Code
Section 318) more than a half percent ownership interest and one of
the largest interests in the Employer during any Year of the
determination period if such person's Compensation (as defined in this
section) for the Year exceeds the dollar limitation under Code Section
415(c)(1)(A),
(c) a five-percent owner of the Employer, or
(d) a one-percent owner of the Employer whose Compensation (as defined in
this section) for the Year is more than $150,000.
Each member of the Controlled Group shall be treated as a separate employer
for purposes of determining ownership in the Employer.
The determination period is the Year containing the Determination Date and
the four preceding Years. If the Employer has fewer than 30 Employees, no
more than three Employees shall be treated as Key Employees because they
are officers. If the Employer has between 30 and 500 Employees, no more
than ten percent of the Employer's Employees (if not an integer, increased
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to the next integer) shall be treated as Key Employees because they are
officers. In no event will more than 50 Employees be treated as Key
Employees because they are officers if the Employer has 500 or more
Employees. The number of Employees for any Plan Year is the greatest number
of Employees during the determination period. Officers who are employees
described in Code Section 414(q)(8) shall be excluded. If the Employer has
more than the maximum number of officers to be treated as Key Employees,
the officers shall be ranked by amount of annual Compensation (as defined
in this section), and those with the greater amount of annual Compensation
during the determination period shall be treated as Key Employees. To
determine the ten Employees owning the largest interests in the Employer,
if more than one Employee has the same ownership interest, the Employee(s)
having the greater annual Compensation shall be treated as owning the
larger interest(s). The determination of who is a Key Employee shall be
made according to Code Section 416(i)(1) and the regulations thereunder.
Non-key Employee means a person who is a non-key employee within the
meaning of Code Section 416 and regulations thereunder.
Present Value means the present value of a participant's accrued benefit
under a defined benefit plan as of his normal retirement age (attained age
if later) or, if the plan provides non-proportional subsidies, the age at
which the benefit is most valuable. The accrued benefit of any Employee
(other than a Key Employee) shall be determined under the method which is
used for accrual purposes for all plans of the Employer or if there is no
one method which is used for accrual purposes for all plans of the
Employer, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under Code Section 41 1 (b)(1)(C). For purposes of
establishing Present Value, any benefit shall be discounted onIV for 7.5%
interest and mortality according to the 1971 Group Annuity Table (Male)
without the 7% margin but with projection by Scale E from 1971 to the later
of (a) 1974, or (b) the Vear determined by adding the age to 1920, and
wherein for females the male age six Vears Vounger is used. If the Present
Value of accrued benefits is determined for a participant under more than
one defined benefit plan included in the Aggregation Group, all such plans
shall use the same actuarial assumptions to determine the Present Value.
Top-heavy Plan means a plan which is a top-heavy plan for any plan year
beginning after December 31, 1983. This Plan shall be a Top- heavy Plan if
(a) the Top-heavy Ratio for this Plan alone exceeds 60 percent and this
Plan is not part of any required Aggregation Group or permissive
Aggregation Group.
(b) this Plan is a part of a required Aggregation Group, but not part of a
permissive Aggregation Group, and the Top-heavy Ratio for the required
Aggregation Group exceeds 60 percent.
(c) this Plan is a part of a required Aggregation Group and part of a
permissive Aggregation Group and the Top-heavy Ratio for the
permissive Aggregation Group exceeds 60 percent.
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Top-heavy Ratio means the ratio calculated below for this Plan or for the
Aggregation Group.
(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer has
not maintained any defined benefit plan which during the five-year
period ending on the determination date has or has had accrued
benefits, the Top-heavy Ratio for this Plan alone or for the required
or permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of the account balances of all Key
Employees as of the determination date and the denominator of which is
the sum of all account balances of all employees as of the
determination date. Both the numerator and denominator of the
Top-heavy Ratio are adjusted for any distribution of an account
balance (including those made from terminated plan(s) of the Employer
which would have been part of the required Aggregation Group had such
plan(s) not been terminated) made in the five-year period ending on
the determination date. Both the numerator and denominator of the
Top-heavy Ratio are increased to reflect any contribution not actually
made as of the Determination Date, but which is required to be taken
into account on that date under Code Section 416 and the regulations
thereunder.
(b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which
during the five-year period ending on the determination date has or
has had accrued benefits, the Top- heavy Ratio for any required or
permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of the account balances under the
defined contribution plan(s) of all Key Employees and the Present
Value of accrued benefits under the defined benefit plan(s) for all
Key Employees, and the denominator of which is the sum of the account
balances under the defined contribution plan(s) for all employees and
the Present Value of accrued benefits under the defined benefit plans
for all employees. Both the numerator and denominator of the Top-heavy
Ratio are adjusted for any distribution of an account balance or an
accrued benefit (including those made from terminated plan(s) of the
Employer which would have been part of the required Aggregation Group
had such plan(s) not been terminated) made in the five-year period
ending on the determination date.
(c) For purposes of (a) and (b) above, the value of account balances and
the Present Value of accrued benefits will be determined as of the
most recent valuation date that falls within or ends with the 12-month
period ending on the determination date, except as provided in Code
Section 416 and the regulations thereunder for the first and second
plan years of a defined benefit plan. The account balances and accrued
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benefits of an employee who is not a Key Employee but who was a Key
Employee in a prior year will be disregarded. The calculation of the
Top-heavy Ratio and the extent to which distributions, rollovers and
transfers during the five-year period ending on the determination date
are to be taken into account, shall be determined according to the
provisions of Code Section 416 and regulations thereunder. The account
balances and accrued benefits of an individual who has performed no
service for the Employer during the five-year period ending on the
determination date shall be excluded from the Top-heavy Ratio until
the time the individual again performs service for the Employer.
Deductible employee contributions will not be taken into account for
purposes of computing the Top-heavy Ratio. When aggregating plans, the
value of account balances and accrued benefits will be calculated with
reference to the determination dates that fall within the same
calendar year.
Account, as used in this definition, means the value of an employee's
account under one of the Employer's retirement plans on the latest
valuation date. In the case of a money purchase plan or target benefit
plan, such value shall be adjusted to include any contributions made for or
by the employee after the valuation date and on or before such
determination date or due to be made as of such determination date but not
yet forwarded to the insurer or trustee. In the case of a profit sharing
plan, such value shall be.adjusted to include any contributions made for
or by the employee after the valuation date and on or before such
determination date. During the first Year of any profit sharing plan such
adjustment in value shall include contributions made after such
determination date that are allocated as of a date in such Year. The
nondeductible employee contributions which an employee makes under a
defined benefit plan of the Employer shall be treated as if they were
contributions under a separate defined contribution plan.
Valuation Date means, as to this Plan, the last day of the last calendar
month ending in a Year.
Year means the Plan Year unless another year is specified by the Employer
in a separate written resolution in accordance with regulations issued by
the Secretary of the Treasury or his delegate.
SECTION 10.03-MODIFICATION OF VESTING REQUIREMENTS.
If a Participant's Vesting Percentage determined under Article I is not at
least as great as his Vesting Percentage would be if it were determined under a
schedule permitted in Code Section 416, the following shall apply. During any
Year in which the Plan is a Top-heavy Plan, the Participant's Vesting Percentage
shall be the greater of the Vesting Percentage determined under Article I or the
schedule below.
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VESTING SERVICE NONFORFEITABLE
(whole years) PERCENTAGE
------------- ----------
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
The schedule above shall not apply to Participants who are not credited
with an Hour-of-Service after the Plan first becomes a Top- heavy Plan. The
Vesting Percentage determined above applies to all of the Participant's Account
resulting from Employer Contributions, including Contributions the Employer
makes before the TEFRA Compliance Date or when the Plan is not a Top-heavy Plan.
If, in a later Year, this Plan is not a Top-heavy Plan, a Participant's
Vesting Percentage shall be determined under Article 1. A Participant's Vesting
Percentage determined under either Article I or the schedule above shall never
be reduced and the election procedures of the AMENDMENTS SECTION of Article IX
shall apply when changing to or from the schedule as though the automatic change
were the result of an amendment.
The part of the Participant's Vested Account resulting from the minimum
contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of
Article X shall not be forfeited because of a period of reemployment after
benefit payments have begun.
SECTION 10.04--MODIFICATION OF CONTRIBUTIONS.
During any Year in which this Plan is a Top-heavy Plan, the Employer shall
make a minimum contribution or allocation on the last day of the Year for each
person who is a Non-key Employee on that day and who either was or could have
been an Active Participant during the Year. A Non-key Employee is not required
to have a minimum number of hours-of-service or minimum amount of Compensation,
or to have had any Elective Deferral Contributions made for him in order to be
entitled to this minimum. The minimum contribution or allocation for such person
shall be equal to the lesser of (a) or (b) below:
(a) Three percent of such person's Compensation (as defined in this
article).
(b) The "highest percentage" of Compensation (as defined in this article)
for such Year at which the Employer's contributions are made for or
allocated to any Key Employee. The highest percentage shall be
determined by dividing the Employer Contributions made for or
allocated to each Key Employee during such Year by the amount of his
Compensation (as defined in this article), which is not more than the
maximum set out above, and selecting the greatest quotient (expressed
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as a percentage). To determine the highest percentage, all of the
Employer's defined contribution plans within the Aggregation Group
shall be treated as one plan. The provisions of this paragraph shall
not apply if this Plan and a defined benefit plan of the Employer are
required to be included in the Aggregation Group and this Plan enables
the defined benefit plan to meet the requirements of Code Section 401
(a) (4) or Code Section 41 0.
If the Employer's contributions and allocations otherwise required under
the defined contribution plan(s) are at least equal to the minimum above, no
additional contribution or reallocation shall be required. If the Employer's
contributions and allocations are less than the minimum above and Employer
Contributions under this Plan are allocated to Participants, any Employer
Contributions (other than those which are allocated on the basis of the amount
made for such person) shall be reallocated to provide the minimum. The remaining
Contributions shall be allocated as provided in the preceding articles of this
Plan taking into account any amount which was reallocated to provide the
minimum. If the Employer's total contributions and allocations are less than the
minimum above after any reallocation provided above, the Employer shall
contribute the difference for the Year.
The minimum contribution or allocation applies to all of the Employer's
defined contribution plans in the aggregate which are Top-heavy Plans. If an
additional contribution or allocation is required to meet the minimum above, it
shall be provided in this Plan.
A minimum allocation under a profit sharing plan shall be made without
regard to whether or not the Employer has profits.
If a person who is otherwise entitled to a minimum contribution or
allocation above is also covered under a defined benefit plan of the Employer's
which is a Top-heavy Plan during that same Year, the minimum benefits for him
shall not be duplicated. The defined benefit plan shall provide an annual
benefit for him on, or adjusted to, a straight life basis of the lesser of (c)
two percent of his average pay multiplied by his years of service or (d) twenty
percent of his average pay. Average pay and years of service shall have the
meaning set forth in such defined benefit plan for this purpose.
For purposes of this section, any employer contribution made according to a
salary reduction or similar arrangement shall not apply before the first Yearly
Date in 1985. On and after the first Yearly Date in 1989, any such employer
contributions and employer contributions which are matching contributions, as
defined in Code Section 401 (m), shall not apply in determining if the minimum
contribution requirement has been met, but shall apply in determining the
minimum contribution required. Forfeitures credited to a Participant's Account
are treated as employer contributions.
The requirements of this section shall be met without regard to
contributions under Chapter 2 of the Code (relating to tax on self-employment),
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Chapter 21 of the Code (relating to Federal Insurance Contributions Act), Title
11 of the Social Security Act or any other Federal or state law.
SECTION 10.05-MODIFICATION OF CONTRIBUTION LIMITATION.
If the provisions of subsection (e) of the CONTRIBUTION LIMITATION SECTION
of Article Ill are applicable for any Limitation Year during which the Plan is a
Top-heavy Plan, the benefit limitations shall be modified. The definitions of
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction in the
CONTRIBUTION LIMITATION SECTION of Article Ill shall be modified by substituting
"1.0" in lieu of "1.25." The optional denominator for determining the Defined
Contribution Plan Fraction shall be modified by substituting "$41,500" in lieu
of "$51,875." In addition, an adjustment shall be made to the numerator of the
Defined Contribution Plan Fraction. The adjustment is a reduction of that
numerator similar to the modification of the Defined Contribution Plan Fraction
described in the CONTRIBUTION LIMITATION SECTION of Article 111, and shall be
made with respect to the last Plan Year beginning before January 1, 1984.
The modifications in the paragraph above shall not apply with respect to a
Participant so long as employer contributions, forfeitures or nondeductible
employee contributions are not credited to his account under this or any of the
Employer's other defined contribution plans and benefits do not accrue for such
Participant under the Employer's defined benefit plan(s), until the sum of his
Defined Contribution and Defined Benefit Plan Fractions is less than 1.0.
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