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As filed with the Securities and Exchange Commission on December 24, 1997
Registration Statement No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
MEDFORD BANCORP, INC.
(Exact name of Registrant as specified in its charter)
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MASSACHUSETTS 29 HIGH STREET 04-3384928
(State or Other Jurisdiction of MEDFORD, MASSACHUSETTS 02155 (I.R.S. Employer
Incorporation or Organization) (617) 395-7700 Identification No.)
(Address, including zip code, and telephone
number, including area code of Registrant's
principal executive offices)
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SBERA 401(k) PLAN AS ADOPTED BY MEDFORD SAVINGS BANK
(Full title of the Plan)
ARTHUR H. MEEHAN
Chairman, President and Chief Executive Officer
MEDFORD BANCORP, INC.
29 High Street
Medford, Massachusetts 02155
(617) 395-7700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
PAUL W. LEE, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
(617) 570-1590
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CALCULATION OF REGISTRATION FEE
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TITLE OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED(1) REGISTERED(2) OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
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Common Stock, $0.50 15,000 shares $39.63(3) $594,450.00 $175.36
par value
- ---------------------------------------------------------------------------------------------------------------------------
(1) Pursuant to a Shareholder Rights Plan, each share of Common Stock also has an associated preferred stock purchase
right. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as amended (the "Securities Act"), this
registration statement also covers an indeterminate amount of interests (including any associated preferred stock
purchase rights) to be offered or sold pursuant to the 401(k) plan described herein.
(2) Plus such additional number of shares as may be required pursuant to the 401(k) plan described herein in the event of
a stock dividend, reverse stock split, split-up, recapitalization or other similar event.
(3) This estimate is made pursuant to Rule 457(c) and (h) under the Securities Act solely for the purpose of determining
the amount of the registration fee on December 19, 1997, utilizing the average of the high and low sale prices reported
on the Nasdaq National Market System on that date.
===========================================================================================================================
This Registration Statement, including exhibits (See Exhibit Index on Page 10), consists of 72 pages.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in the requirements
of Part I are not required to be filed with the Securities and Exchange
Commission as part of this Registration Statement on Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Medford Bancorp, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents:
(a) and (b) The Registrant's Current Report on Form 8-K as filed with
the Securities and Exchange Commission on November 26, 1997 (the "Form 8-K"),
which includes as exhibits thereto the following: (1) Annual Report of Medford
Savings Bank (the "Bank") on Form F-2 for the year ended December 31, 1996, as
filed with the Federal Deposit Insurance Corporation ("FDIC") (Exhibit 99.1);
Quarterly Report of the Bank on Form F-4 for the quarter ended March 31, 1997,
as filed with the FDIC (Exhibit 99.2); Current Report of the Bank on Form F-3,
as filed with the FDIC on May 7, 1997 (Exhibit 99.3); Quarterly Report of the
Bank on Form F-4 for the quarter ended June 30, 1997, as filed with the FDIC
(Exhibit 99.4); Proxy Statement, dated August 4, 1997, delivered to the Bank's
stockholders in connection with the Bank's September 16, 1997 Special Meeting of
Stockholders, as filed with the FDIC (Exhibit 99.5); Quarterly Report of the
Bank on Form F-4 for the quarter ended September 30, 1997, as filed with the
FDIC (Exhibit 99.6); Current Report of the Bank on Form F-3, as filed with the
FDIC on October 7, 1997 (Exhibit 99.7).
(c) The description of the Registrant's common stock, par value $0.50
per share, contained in Exhibit 3.1 and 99.5 to Form 8-K.
All documents filed by the Registrant or the Plan pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. The Company is a Massachusetts corporation.
Massachusetts General Laws Chapter 156B, Section 67 provides that a corporation
may, subject to certain limitations, indemnify its directors, officers,
employees and other agents, and persons who serve at its request as directors,
officers, employees or other agents of another organization, or who serve at its
request in any capacity with respect to any employee benefit plan, to the extent
specified or authorized by the corporation's articles of organization, a by-law
adopted by the stockholders, or a vote adopted by the holders of a majority of
the shares of stock entitled to vote on the election of directors.
Section 67 also provides that a corporation may purchase and maintain
insurance against liability incurred by an officer or director in his capacity
as officer or director, or arising out of his or her status as such, whether or
not the corporation would have the power to indemnify him against such
liability.
The Company's By-laws provide that directors and officers of the Company
shall, and in the discretion of the Board of Directors, non-officer employees
may, be indemnified by the Company against liabilities and expenses arising out
of service for or on behalf of the Company. The By-laws provide that such
indemnification shall not be provided if it is determined that the action giving
rise to the liability was not taken in good faith in the reasonable belief that
the action was in the best interests of the Company. The By-laws provide that
the indemnification provision in the By-laws does not limit any other right to
indemnification existing independently of the By-laws.
More specifically, Article VI, Section 1, of the Company's By-laws
provides the following definitions relating to the indemnification of directors
and officers:
For purposes of this Article: (a) "Officer" means any person who
serves or has served as a Director of the Company or in any other office
filled by election or appointment by the stockholders or the Board of
Directors and any heirs or personal representatives of such person; (b)
"Non-Officer Employee" means any person who serves or has served as an
employee of the Company, but who is not or was not an Officer, and any
heirs or personal representatives of such person; (c) "Proceeding" means
any action, suit or proceeding, civil or criminal, brought or threatened
in or before any court, tribunal administrative or legislative body or
agency and any claim which could be the subject of a Proceeding; and (d)
"Expenses" means any liability fixed by a judgment, order, decree or
award in a Proceeding, any amount reasonably paid in settlement of a
Proceeding and any professional fees or other disbursements reasonably
incurred in a Proceeding.
Article VI, Section 2, of the Company's By-laws provides that the
Company shall indemnify Officers as follows:
Except as provided in Sections 4 and 5 of this Article VI, each
Officer of the Company shall be indemnified by the Company against all
Expenses incurred by such Officer in connection with any Proceedings in
which such Officer is involved as a result of serving or having served
(a) as an Officer or employee of the Company; (b) as a director, officer
or employee of any wholly owned subsidiary of the Company; or (c) in any
capacity with any other corporation, organization, partnership, joint
venture, trust or other entity at the request or direction of the
Company.
2
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Article VI, Section 3, of the Company's By-laws provides that the
Company shall indemnify Non-Officer Employees as follows:
Except as provided in Sections 4 and 5 of this Article VI, each
Non-Officer Employee of the Company may, in the discretion of the Board
of Directors, be indemnified against any or all Expenses incurred by
such Non-Officer Employee in connection with any Proceeding in which
such Non-Officer Employee is involved as a result of serving or having
served (a) as a Non-Officer Employee of the Company; (b) as a director,
officer or employee of any wholly owned subsidiary of the Company; or
(c) in any capacity with any other corporation, organization,
partnership, joint venture, trust or other entity at the request or
direction of the Company.
Article VI of the Company's By-laws also includes certain provisions
relating to the scope of the indemnification for officers and directors of the
Company and the procedures for determining entitlement to indemnification:
SECTION 4. SERVICE AT THE REQUEST OR DIRECTION OF THE COMPANY. No
indemnification shall be provided to an Officer or Non-Officer Employee
with respect to serving or having served in any of the capacities
described in Section 2(c) or 3(c) above unless the following two
conditions are met: (a) such service was requested or directed in each
specific case by vote of the Board of Directors prior to the occurrence
of the event to which the indemnification relates, and (b) the Company
maintains insurance coverage for the type of indemnification sought. In
no event shall the Company be liable for indemnification under Section
2(c) or 3(c) above for any amount in excess of the proceeds of insurance
received with respect to such coverage as the Company in its discretion
may elect to carry. The Company may but shall not be required to
maintain insurance coverage with respect to indemnification under
Section 2(c) or 3(c) above. Notwithstanding any other provision of this
Section 4, but subject to Section 5 of this Article VI, the Board of
Directors may provide an Officer or Non-Officer Employee with
indemnification under Section 2(c) or 3(c) above as to a specific
Proceeding even if one or both of the two conditions specified in this
Section 4 have not been met and even if the amount of the
indemnification exceeds the amount of the proceeds of any insurance
which the Company may have elected to carry, provided that the Board of
Directors in its discretion determines it to be in the best interests of
the Company to do so.
SECTION 5. GOOD FAITH. No indemnification shall be provided to an
Officer or to a Non-Officer Employee with respect to a matter as to
which such person shall have been adjudicated in any Proceeding not to
have acted in good faith in the reasonable belief that the action of
such person was in the best interests of the Company. In the event that
a Proceeding is compromised or settled so as to impose any liability or
obligation upon an Officer or Non-Officer Employee, no indemnification
shall be provided to said Officer or Non-Officer Employee with respect
to a matter if there be a determination that with respect to such matter
such person did not act in good faith in the reasonable belief that the
action of such person was in the best interests of the Company. The
determination shall be made by a majority vote of those Directors who
are not involved in such Proceeding. However, if more than half of the
Directors are involved in such Proceeding, the determination shall be
made by a majority vote of a committee of three disinterested Directors
chosen by the disinterested Directors at a regular or special meeting.
If there are fewer than three (3) disinterested Directors, the
determination shall be based upon the opinion of the Company's regular
outside counsel.
SECTION 6. PRIOR TO FINAL DISPOSITION. Unless otherwise provided
by the Board of Directors or by the committee pursuant to the procedure
specified in Section 5 of this Article VI, any indemnification provided
for under this Article VI shall include payment by the Company of
Expenses incurred in defending a Proceeding in advance of the final
disposition of such Proceeding upon receipt
3
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of an undertaking by the Officer or Non-Officer Employee seeking
indemnification to repay such payment if such Officer or Non-Officer
Employee shall be adjudicated or determined to be not entitled to
indemnification under this Article VI.
SECTION 7. INSURANCE. The Company may purchase and maintain
insurance to protect itself and any Officer or Non-Officer Employee
against any liability of any character asserted against or incurred by
the Company or any such Officer or Non-Officer Employee, or arising out
of any such status, whether or not the Company would have the power to
indemnify such person against such liability by law or under the
provisions of this Article VI.
SECTION 8. OTHER INDEMNIFICATION RIGHTS. Nothing in this
Article VI shall limit any lawful rights to indemnification existing
independently of this Article VI.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following is a complete list of exhibits filed or incorporated by
reference as part of this Registration Statement.
*4.1 Specimen certificate for shares of Common Stock of Medford
Bancorp, Inc.
*4.2 Articles IV, VI(A), VI(C) and VI(I)-(J) of the Articles of
Organization of Medford Bancorp, Inc.
*4.3 Articles II and V of the By-laws of Medford Bancorp, Inc.
4.4 SBERA 401(k) Plan as adopted by Medford Savings Bank
5.1 Internal Revenue Service Determination Letter
23.1 Consent of Wolf & Company, P.C., as independent public accountants
24.1 Power of attorney (see page 7 of this Registration Statement)
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* Filed as an exhibit to the Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission on November 26, 1997, and
incorporated herein by reference thereto.
4
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ITEM 9. UNDERTAKINGS
This Registration Statement on Form S-8 covers securities underlying a 401(k)
plan adopted by the Registrant as its plans in connection with the
reorganization of Medford Savings Bank (the "Bank") into holding company form
pursuant to a Plan of Reorganization and Acquisition dated as of July 29, 1997
between the Registrant and the Bank (the "Plan of Reorganization"). Pursuant to
the Plan of Reorganization, at the effective date of the Plan of Reorganization,
each issued and outstanding share of the Bank's common stock, par value $0.50
per share (together with associated preferred stock purchase rights) (except
shares held by stockholders exercising dissenters' rights), automatically and
without consideration was converted into and exchanged for one share of the
common stock, par value $0.50 per share of the Company (together with associated
preferred stock purchase rights). Notwithstanding the foregoing, as required by
Item 9 of Form S-8, the Registrant provides the following undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any acts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in "Calculation of Registration Fee"
table in the effective Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein 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 undersigned
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
(2) 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; and
(3) 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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to
5
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Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
6
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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, Commonwealth of Massachusetts, on December
23, 1997.
MEDFORD BANCORP, INC.
By: /s/ Arthur H. Meehan
-----------------------------------------------
Arthur H. Meehan
Chairman, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Medford Bancorp, Inc. hereby severally constitute Arthur H. Meehan
and Phillip W. Wong and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, the Registration Statement filed herewith and
any and all amendments to said Registration Statement, and generally to do all
such things in our names and in our capacities as officers and directors to
enable Medford Bancorp, Inc. to comply with the provisions of the Securities Act
of 1933, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Registration Statement and any and all
amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
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SIGNATURE TITLE DATE
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/s/ Arthur H. Meehan Chairman, President, Chief December 23, 1997
- -------------------------------- Executive Officer and Director
Arthur H. Meehan (principal executive officer)
/s/ Phillip W. Wong Senior Vice President, Treasurer December 23, 1997
- -------------------------------- and Chief Financial Officer
Phillip W. Wong (principal financial and
accounting officer)
/s/ Edward D. Brickley Director December 23, 1997
- --------------------------------
Edward D. Brickley
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SIGNATURE TITLE DATE
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/s/ David L. Burke Director December 23, 1997
- --------------------------------
David L. Burke
/s/ Paul J. Crowley Director December 23, 1997
- --------------------------------
Paul J. Crowley
/s/ Mary L. Doherty Director December 23, 1997
- --------------------------------
Mary L. Doherty
/s/ Edward J. Gaffey Director December 23, 1997
- --------------------------------
Edward J. Gaffey
/s/ Andrew D. Guthrie Jr., M.D. Director December 23, 1997
- --------------------------------
Andrew D. Guthrie Jr., M.D.
- -------------------------------- Director December __, 1997
Robert A. Havern III
/s/ Arthur H. Meehan Director December 23, 1997
- --------------------------------
Arthur H. Meehan
/s/ Eugene R. Murray Director December 23, 1997
- --------------------------------
Eugene R. Murray
/s/ Francis D. Pizzella Director December 23, 1997
- --------------------------------
Francis D. Pizzella
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Pursuant to the requirements of the Securities Act of 1933, the Trustee
of the SBERA 401(k) Plan as adopted by Medford Savings Bank has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Woburn, Commonwealth of Massachusetts, on
December 23, 1997.
SAVINGS BANKS EMPLOYEES RETIREMENT
ASSOCIATION
By: /s/ Thomas Forese, Jr.
---------------------------------------
Name: Thomas Forese, Jr.
Title: President and Plan Administrator
9
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EXHIBIT INDEX
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
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*4.1 Specimen certificate for shares of Common Stock of Medford
Bancorp, Inc.
*4.2 Articles IV, VI(A), VI(C) and VI(I)-(J) of the Articles of
Organization of Medford Bancorp, Inc.
*4.3 Articles II and V of the By-laws of Medford Bancorp, Inc.
4.4 SBERA 401(k) Plan as adopted by Medford Savings Bank
5.1 Internal Revenue Service Determination Letter
23.1 Consent of Wolf & Company, P.C., as independent public accountants
24.1 Power of attorney (see page 7 of this Registration Statement)
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* Filed as an exhibit to the Registrant's Current Report on Form 8-K filed
with the Securities and Exchange Commission on November 26, 1997, and
incorporated herein by reference thereto.
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[LOGO]
SAVINGS BANKS
EMPLOYEES
RETIREMENT
ASSOCIATION
Defined Contribution
Basic Plan Document
<PAGE> 2
BASIC PLAN DOCUMENT
DEFINED CONTRIBUTION
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ARTICLE I
DEFINITIONS
1.1 Account ............................................................... 1
1.2 Age ................................................................... 1
1.3 Allocation Date ....................................................... 1
1.4 Annuity Starting Date ................................................. 1
1.5 Beneficiary ........................................................... 1
1.6 Compensation .......................................................... 1
1.7 Construction of Contract .............................................. 2
1.8 Current Value ......................................................... 2
1.9 Death Benefit ......................................................... 3
1.10 Disabled .............................................................. 3
1.11 Disparity ............................................................. 3
1.12 Earned Income ......................................................... 3
1.13 Election .............................................................. 3
1.14 Eligible Employee ..................................................... 4
1.15 Employee .............................................................. 4
1.16 Employer .............................................................. 4
1.17 Excess Compensation ................................................... 4
1.18 Highly Compensated Employee ........................................... 5
1.19 IRC ................................................................... 6
1.20 Joint and Survivor Annuity ............................................ 6
1.21 Leased Employee ....................................................... 6
1.22 Normal Retirement Age and Mandatory Retirement Age Restrictions ....... 6
1.23 Normal Retirement Benefit ............................................. 6
1.24 Owner-Employer ........................................................ 6
1.25 Participant ........................................................... 7
1.26 Retirement Date ....................................................... 7
1.27 Self-Employed Individual .............................................. 7
1.28 Spouse ................................................................ 7
1.29 Survivor Annuity ...................................................... 7
1.30 Termination Date ...................................................... 7
1.31 Vested Account ........................................................ 7
ARTICLE II
SERVICE COMPUTATION
2.1 Leave of Absence ...................................................... 8
2.2 Break in Service ...................................................... 8
2.3 Computation Period .................................................... 8
2.4 Hour of Service ....................................................... 8
2.5 Minimum Coverage ...................................................... 9
2.6 Predecessor Employer .................................................. 9
2.7 Reemployment .......................................................... 9
2.8 Year of Service ....................................................... 9
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ARTICLE III
ACCUMULATION AND DISTRIBUTION OF BENEFITS
3.1 Automatic Pension ..................................................... 10
3.2 Cash-Outs and Plan Repayment Provisions ............................... 10
3.3 Commencement of Benefits .............................................. 11
3.4 Denial of Benefits .................................................... 12
3.5 Control of Trades or Business by Owner-Employee ....................... 12
3.6 Distribution Mode and Timing Requirements ............................. 13
3.7 Earmarked Investment .................................................. 18
3.8 Forfeiture ............................................................ 18
3.9 Insurance ............................................................. 18
3.10 Notice ................................................................ 18
3.11 Permitted Disparity ................................................... 19
3.12 Restrictions on Amendments ............................................ 20
3.13 Termination Benefit ................................................... 20
3.14 Valuation ............................................................. 20
3.15 Vesting Schedule Change ............................................... 21
ARTICLE IV
ADOPTION, AMENDMENT, MERGER, OR TERMINATION OF PLAN
4.1 Adoption .............................................................. 22
4.2 Alienation Prohibition ................................................ 22
4.3 Amendment ............................................................. 22
4.4 Conflict .............................................................. 22
4.5 Expenses .............................................................. 22
4.6 Fiduciaries ........................................................... 22
4.7 Limitation ............................................................ 22
4.8 Merger ................................................................ 23
4.9 Reversion Prohibition ................................................. 23
4.10 Termination ........................................................... 23
4.11 Termination of a CODA Plan ............................................ 23
ARTICLE V
LIMITATION OF BENEFITS
5.1 Annual Addition ....................................................... 24
5.2 Maximum Permissible Amount ............................................ 24
5.3 Limitation of Allocation .............................................. 24
5.4 Multiple Plan Limitation .............................................. 25
5.5 ....................................................................... 27
5.6 Compensation .......................................................... 28
5.7 Excess Amount ......................................................... 29
5.8 Highest Average Compensation .......................................... 29
5.9 Limitation Year ....................................................... 29
5.10 Projected Annual Benefit .............................................. 29
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ARTICLE VI
TOP HEAVY PROVISIONS
6.1 Conflicting Provisions ................................................ 30
6.2 Determination Date .................................................... 30
6.3 Key Employee .......................................................... 30
6.4 Minimum Allocation .................................................... 30
6.5 Permissive Aggregation Group .......................................... 31
6.6 Present Value ......................................................... 31
6.7 Required Aggregation Group ............................................ 31
6.8 Top Heavy Plan ........................................................ 31
6.9 Top Heavy Ratio ....................................................... 31
6.10 Valuation Date ........................................................ 33
6.11 Minimum Vesting ....................................................... 33
ARTICLE VII
TRANSFER TO OR FROM QUALIFIED PLANS
7.1 ....................................................................... 34
7.2 ....................................................................... 34
7.3 ....................................................................... 34
7.4 Eligible Rollover ..................................................... 34
7.2 Eligible Plan ......................................................... 34
7.3 Distributee ........................................................... 34
ARTICLE VIII
EMPLOYEE CONTRIBUTIONS
8.1 Employee Contributions are Non-Forfeitable ............................ 35
8.2 Deductible Employee Contribution (DEC) ................................ 35
8.3 Mandatory Employee Contribution (MEC) ................................. 35
8.4 Separate Accounts ..................................................... 35
8.5 Voluntary Employee Contribution (VEC) ................................. 35
8.6 Limitations of Employee Contributions and Matching Contributions ...... 36
8.7 Multiple Use .......................................................... 36
8.8 Distribution of Excess Aggregate Contributions ........................ 38
ARTICLE IX
ELECTIVE DEFERRALS
9.1 Actual Deferral Percentage Test ....................................... 40
9.2 Distribution of Excess Contributions .................................. 42
9.3 Distribution of Excess Elective Deferrals ............................. 43
9.4 Elective Deferral Accounts, Qualified Non-Elective Accounts or
Qualified Matching Contribution Accounts ............................. 45
ARTICLE X
HARDSHIP DISTRIBUTION
10.1 Hardship Distribution ................................................. 46
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<TABLE>
<C> <S> <C>
ARTICLE XI
LOANS
11.1 ....................................................................... 47
11.2 ....................................................................... 47
11.3 ....................................................................... 47
11.4 ....................................................................... 47
11.5 ....................................................................... 47
ARTICLE XII
TRUST
12.1 ....................................................................... 48
12.2 ....................................................................... 48
12.3 ....................................................................... 48
12.4 ....................................................................... 48
12.5 ....................................................................... 49
12.6 ....................................................................... 49
12.7 ....................................................................... 49
12.8 ....................................................................... 49
</TABLE>
<PAGE> 6
BASIC PLAN DOCUMENT
DEFINED CONTRIBUTION
ARTICLE I
DEFINITIONS
1.1 ACCOUNT means the sum of all Contributions and Forfeitures allocated to
or for the Participant adjusted for all investment gain or loss to
Current Value. Matching Contributions, Qualified Matching Contributions,
Non-Elective Contributions, Qualified Non-Elective Contributions,
Voluntary Contributions, Deductible Contributions, or Elective Deferrals,
as applicable, shall each be maintained as separate Accounts. The sum of
the Matching Account, Qualified Matching Account, Qualified Non-Elective
Account, Non-Elective Account, Voluntary Contribution Account, Deductible
Contribution Account, Rollover Account, and Elective Deferral Account, as
applicable, is the Participant's Aggregate Account. Allocation of gains
and losses of the Trust shall be allocated to each Account in the ratio
that such Account bears to all Accounts.
1.2 AGE means attained age. NORMAL RETIREMENT AGE is the later of the Age
elected in Section A4. a). EARLY RETIREMENT AGE is the earliest of the
Ages elected in A4. b) or the date that a Participant's claim for Social
Security disability income benefits is approved.
1.3 ALLOCATION DATE means each Valuation Date and such other dates as the
Plan Administrator finds necessary to carry out the intent of the Plan.
Contributions shall be remitted to the Trustee as soon as
administratively feasible and allocated in accordance with the Plan.
1.4 ANNUITY STARTING DATE means the first day of the first period for which
an amount is paid as an annuity or in any other form.
1.5 BENEFICIARY means the Participant's Spouse unless he has made a Qualified
Election designating some other person(s) to receive a benefit payable at
his death. A benefit payable to a designated Beneficiary who is not alive
at the Participant's death will be paid to any living designated
contingent Beneficiary, otherwise to the Participant's Spouse if living,
otherwise to the Participant's estate.
1.6 COMPENSATION As elected by the Employer in the Adoption Agreement,
Compensation will mean all of each Participant's a) W-2 earnings or b)
Compensation as that term is defined in Section 5.6. For any
self-employed individual covered under the Plan, Compensation will mean
Earned Income. Compensation shall include only that Compensation which is
actually paid to the Participant during the applicable period. Except as
provided elsewhere in this Plan, the applicable period shall be the
period elected by the Employer in the Adoption Agreement. If the Employer
makes no election, the applicable period shall be the Plan Year.
<PAGE> 7
Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by
the Employer pursuant to a Salary Reduction Agreement and which is not
inclusive in the gross income of the Employee under IRC 125, 402(a)(8),
402(h) or 403(b).
The Annual Compensation of each Participant taken into account under the
Plan for any year shall not exceed $200,000 as adjusted by the Secretary
at the same time and in the same manner as under IRC 415(d), except that
the base period is 1989 and the first adjustment is effective January 1,
1990. For Plan Years beginning after December 31, 1993, the Annual
Compensation of each Participant taken into account shall not exceed
$150,000 as adjusted for increases in the cost of living in accordance
with IRC 401(a)(17)(B) and shall apply to any determination period
beginning in such Calendar Year. In determining the Compensation of a
Participant for purposes of this limitation, the rules of IRC 414(q)(6)
shall apply, except in applying such rules, the term "family" shall
include only the Spouse of the Participant and any lineal descendants of
the Participant who have not attained Age nineteen (19) before the close
of the Year. If, as a result of the application of such rules the Annual
Compensation limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration level if
this Plan provides for Permitted Disparity) the limitation shall be
prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this Section prior to the
application of this limitation. If the Plan determines Compensation on a
period of time containing less than twelve (12) months, or the Plan Year
contains fewer than twelve (12) months, then the Annual Compensation
limit is an amount equal to the Annual Compensation limit for the
Calendar Year in which the Compensation period begins, multiplied by the
ratio of full months in the period divided by twelve (12).
If Compensation for any prior Determination Period is taken into account
in determining a Participant's allocation for the current Plan Year, the
Compensation for such prior period is the Annual Compensation limit in
effect for that prior period. For Plan Years beginning after December 31,
1988, the Annual Compensation limit for periods before January 1, 1989 is
$200,000. For Plan Years beginning after December 31, 1993, the Annual
Compensation limit for periods before January 1, 1994 is $150,000.
1.7 CONSTRUCTION OF CONTRACT shall be made without regard to the gender or
whether words are used in the singular or plural unless the context
requires such interpretation. A word or term once defined herein has the
same meaning wherever it appears unless the word or term is modified to
have some other meaning when used in a special context.
1.8 CURRENT VALUE means the fair market value of Plan assets, otherwise the
fair value determined in good faith in accordance with regulations of the
Secretary of Labor, assuming an orderly liquidation of assets. The
Current Value of an insurance contract is the amount reported by the
insurance company to the Plan Administrator.
2
<PAGE> 8
1.9 DEATH BENEFIT means a payment to a designated Beneficiary of a Survivor
Annuity in the amount provided by the Participant's aggregate Account.
The Beneficiary may elect any alternative distribution method permitted
by the Article III.
1.10 DISABLED means that the Participant is entitled to receive Social
Security Disability Income. A Disabled Participant may elect to receive
his aggregate Account at any time.
1.11 DISPARITY means the difference between the percentage rate of allocation
of Contribution to total Compensation and the percentage rate of
Contribution to Excess Compensation. Disparity in allocation percentage
cannot be more than the lesser of the percentage allocated to total
Compensation or 5.7% of Excess Compensation.
1.12 EARNED INCOME means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing
factor. Net Earnings will be determined without regard to items not
included in gross income and the deductions allocable to such items. Net
earnings are reduced by Contributions by the Employer to a Qualified Plan
to the extent deductible under IRC 404. Net earnings shall be determined
with regard to the deduction allowed to the Employer by IRC 164(f) for
taxable years beginning after December 31, 1989.
1.13 ELECTION means a written instrument executed by a Participant and filed
with the Plan Administrator on or before its effective date, exercising
one or more rights under this Plan.
DEFINITIONS TO APPLY TO QUALIFIED ELECTIONS
a. ELECTION PERIOD means the period beginning on the first day of the
Plan Year in which the Participant attains Age thirty-five (35) and
ending on the date of his death. If a Participant separates from
service prior to the first day of the Plan Year in which he is
thirty-five (35), the Election Period shall begin on his Termination
Date. A Participant may make a special Qualified Election to waive the
Qualified Pre-Retirement Survivor Annuity for the period beginning on
the date of such Election and ending on the first day of the Plan Year
in which he attains Age thirty-five (35) provided that the Participant
has received a written explanation of the Qualified Pre-Retirement
Survivor Annuity stating that such coverage will be reinstated as of
the first day of the Plan Year in which he attains Age thirty-five
(35). Any new Waiver on or after such date shall be subject to the
full extent of this Article.
b. EARLIEST RETIREMENT AGE means the date on which the Participant can
elect to receive retirement benefits.
3
<PAGE> 9
c. QUALIFIED- ELECTION means a waiver of a Qualified Joint and Survivor
Annuity or a Qualified Pre-Retirement Survivor Annuity neither of
which shall be effective unless: (a) Spouse gives written consent to
the Election; (b) the Election designates a specific Beneficiary or
Beneficiaries or contingent Beneficiaries, which may not be changed
without spousal consent unless the Spouse has permitted the
Participant to change designations without further consent; (c)
Spouse's consent acknowledges the effect of the Election; and (d)
Spouse's consent is witnessed by a Plan Representative or Notary
Public. If it is established to the satisfaction of a Plan
Representative that written consent may not be obtained because there
is no Spouse or the Spouse cannot be located, a waiver will be deemed
a Qualified Election.
Consent, or the deemed consent of a Spouse shall be effective only
with respect to such Spouse. Consent that permits designations by the
Participant without requirement of further consent by such Spouse
shall acknowledge that the Spouse has the right to limit consent to a
specific Beneficiary, and a specific form of benefit, and that the
Spouse voluntarily elects to relinquish either or both such rights. A
Participant may revoke a waiver without Spousal consent at any time
before benefits commence without limit. Consent shall not be valid
unless the Participant has received Notice under Section 3.10.
1.14 ELIGIBLE EMPLOYEE excludes non-resident aliens who receive no Earned
Income from the Employer from sources within the United States and if the
Adoption Agreement so provides an Employee whose pension rights are
subject to good faith collective bargaining between the Employer and
Employee representative. Employee representative does not include any
organization more than half of whose members are employees who are
owners, officers, or executives of the Employer. An Employee who ceases
to be covered under such a collective bargaining agreement will become an
Eligible Employee. Prior service of such Employee will be credited for
all purposes except for benefit accrual during the period in which the
Employee was excluded from participation under this Section.
1.15 EMPLOYEE means all Employees of the Employer adopting this Plan or any
individual who is considered to be an Employee of the Employer, including
any Leased Employee deemed to be an Employee under IRC 414(n) or 414(o).
1.16 EMPLOYER means the entity adopting this Plan and each other Employer who
with the Employer is aggregated as a member of a controlled group of
corporations under IRC 414(b) or of a trade or business under common
control under IRC 414(c), whether or not incorporated, or of an
affiliated service organization under IRC 414(m) or IRC 414(o). All
Employees of an Aggregated Group of Employers will be considered
Employees of a single Employer.
1.17 EXCESS COMPENSATION means the amount of a Participant's Compensation in a
Plan Year which is greater than the Integration Level in effect at the
first day of such Plan Year, as elected in the Adoption Agreement.
4
<PAGE> 10
1.18 HIGHLY COMPENSATED EMP1OYEE means any active Employee who performs
service for the Employer during the Determination Year and who, during
the Look-Back Year: (i) received Compensation from the Employer in excess
of $75,000 (as adjusted by IRC 415(d)) (ii) received Compensation from
the Employer in excess of $50,000 (as adjusted by IRC 415(d)) and was a
member of the top paid group for such year; or (iii) was an officer of
the Employer and received Compensation during such year that is greater
than 50 percent of the dollar limitation in effect under IRC
415(b)(1)(A). Highly Compensated Employee also includes: (a) Employees
who are both described in the preceding sentence if the term
"Determination Year" is substituted for the term "Look-Back Year" and the
Employee is one of the one hundred (100) Employees who received the most
Compensation from the Employer during the determination year; and (b)
Employees who are 5 percent owners at any time during the Look-Back Year
or Determination Year.
If no officer has satisfied the Compensation requirement of (iii) 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.
The Determination Year is the Plan Year. The Look-Back Year is the twelve
month period immediately preceding the Determination Year.
A former Employee who separated from service prior to the Determination
Year and who performs no service for the Employer during the
Determination Year, but who was a Highly Compensated active Employee for
either the Year or separation or any Determination Year ending on or
after the Employee's fifty-fifth (55th) birthday is also a Highly
Compensated Employee.
If an Employee is, during a Determination Year or Look-Back Year, a
family member of either a five (5) percent owner who is an active or
former Employee or a Highly Compensated Employee who is one of the ten
(10) most Highly Compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the family
member and the five (5) percent owner or top ten Highly Compensated
Employees shall be aggregated. In such case, the family member and five
(5) percent owner or top ten Highly Compensated Employees shall be
treated as a single Employee receiving Compensation and plan
contributions or benefits equal to the sum of such compensation and
contributions or benefits of the family member and five (5) percent owner
or top-ten Highly Compensated Employees. For purposes of this Section,
family member includes the spouse, lineal ascendants and descendants of
the Employee or former Employee, and the spouses of such lineal
ascendants and descendants.
Determination of who is a Highly Compensated Employee, the number and
identity of Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and considered Compensation, will
be made in accordance with IRC 414(q) and the regulations thereunder.
5
<PAGE> 11
1.19 IRC means the Internal Revenue Code and the appropriate Section thereof
is designated by the numbers following IRC.
1.20 JOINT AND SURVIVOR ANNUITY means an immediate annuity paid to the
Participant for life and then to his Beneficiary for life. The Survivor
Annuity shall not be more than 100% nor less than 50% of the
Participant's Benefit, as he elects prior to his Retirement Date. A
QUALIFIED JOINT & SURVIVOR ANNUITY is the Actuarial Equivalent of a
straight life annuity paid to the Participant and his Spouse for their
joint lives and reduced by 50% at the first death and paid to the
survivor for life. Failure to waive the Qualified Joint and Survivor
Annuity will not result in either a decrease in any plan benefit or in
increased contributions for the Participant.
1.21 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 IRC 414(n)(6) on a substantially full time basis for a
period of at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient Employer.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient
Employer.
A Leased Employee shall not be considered an Employee of the recipient
if:
(i) such Employee is covered by a money purchase pension plan providing:
(1) a non-integrated Employer contribution rate of at least ten (10)
percent of compensation, as defined in IRC 415(c)(3), but including
amounts contributed pursuant to a Salary Reduction Agreement which
are excludable from the Employee's gross income under IRC 125,
402(e)(3), 402(h)(1)(B), or 403(b), (2) immediate participation, and
(3) immediate 100% vesting; and
(ii) Leased Employees do not constitute more than twenty (20) percent of
the recipient's non-highly compensated.
1.22 NORMAL RETIREMENT AGE AND MANDATORY RETIREMENT AGE RESTRICTIONS means the
Age selected in the Adoption Agreement. If the Employer enforces a
Mandatory Retirement Age, the Normal Retirement Age is the lesser of the
Mandatory Age or the Age specified in the Adoption Agreement.
1.23 NORMAL RETIREMENT BENEFIT means payment of the Participant's Aggregate
Account to purchase an annuity contract to provide the Automatic Pension.
1.24 OWNER-EMPLOYEE means an individual who is a sole proprietor, or who is a
partner owning more than ten (10) percent of either the capital or
profits interest of the partnership.
6
<PAGE> 12
1.25 PARTICIPANT means an Eligible Employee who has satisfied the Age and
Service requirements. Participation will commence on the Eligible
Employee's Entry Date. A former Eligible Employee or a Beneficiary
entitled to benefits of a deceased Participant is an Inactive
Participant.
1.26 RETIREMENT DATE means the date that payment of a Participant's Accrued
Benefit commences.
1.27 SELF-EMPLOYED INDIVIDUAL means an individual who has earned income for
the taxable year from the trade or business for which the Plan is
established; also, an individual who would have had earned income but for
the fact that the trade or business had no net profits for the taxable
year.
1.28 SPOUSE means the person to whom a Participant is legally married at his
Retirement Date or date of death. A former Spouse will be treated as the
Spouse to the extent provided under a Qualified Domestic Relations Order
described in IRC 414(p).
1.29 SURVIVOR ANNUITY means a Life Annuity paid to a Designated Beneficiary.
The Aggregate Account of a deceased Participant will be applied to
purchase a life Annuity for the Beneficiary. A QUALIFIED PRE-RETIREMENT
SURVIVOR ANNUITY is a Life Annuity paid to the Spouse provided by a
deceased Participant's Aggregate Account Balance.
1.30 TERMINATION DATE means the date that a Participant separates from service
with the Employer and ceases to be an Employee of the Employer.
1.31 VESTED ACCOUNT means the portion of an Account which is non-forfeitable.
A Participant's Account will be 100% non-forfeitable at Early Retirement
Age, Normal Retirement Age, or at any earlier mandatory Retirement Date
enforced by the Employer, or if the Participant is Disabled or dies. A
vested Account may not be forfeited for cause.
7
<PAGE> 13
ARTICLE II
SERVICE COMPUTATION
2.1 LEAVE OF ABSENCE A Participant whose absence is caused by her pregnancy,
or by the birth of, or the adoption of, or the placement of, or the
immediate post natal or post adoption or post placement care of, a child
of the Participant, will be credited with up to five hundred one (501)
Hours of Service in the Computation Period in which such absence
commences, or, if the Participant would not incur a Break in Service in
that Computation Period, in the next following Computation Period, at the
greater of the rate at which hours would otherwise be credited or, 8
hours for each day of absence.
2.2 BREAK IN SERVICE If a Participant does not complete more than 500 Hours
of Service with the Employer in a Computation Period he will incur a one
year Break in Service.
2.3 COMPUTATION PERIOD Each consecutive 12 month period commencing with the
Employee's first Hour of Service and each anniversary thereof is a
Computation Period.
2.4 HOUR OF SERVICE means a) each hour for which an Employee is paid or
entitled to payment for the performance of duties for the Employer. Such
hours will be credited to the Computation Period in which the duties are
performed and b) each hour for which an Employee is paid or entitled to
payment on account of a time period in which no duties were performed,
whether or not the Employee is actively employed, due to: vacation,
holiday, illness, disability, incapacity, layoff, jury duty, military
duty, or leave of absence, up to 501 Hours of Service in a single
Computation Period. Said hours will be calculated and credited under
Department of Labor Regulations 2530.200b-2 which are now incorporated
herein by reference and c) each hour for which back pay, irrespective of
mitigation of damages is awarded or agreed to by the Employer except that
hours credited under a) or b) will not also be credited under c) Such
hours will be credited to the Computation Period to which the award or
agreement pertains rather than the Computation Period in which said
payment is made. All such Hours of Service with a member of a controlled
group of corporations under IRC 414(b) or with a group of trades or
businesses under common control under IRC 414(c) or with an affiliated
service group under IRC 414(m) and for any individual considered an
Employee under IRC 414(n) will be credited and any other entity required
to be aggregated with the Employer under IRC 414(o) and regulations
thereunder. If the Employer does not maintain records of actual hours, an
Employee will be credited with one hundred ninety (190) Hours of Service
for each month in which he has one Hour of Service.
8
<PAGE> 14
2.5 MINIMUM COVERAGE If the Plan fails to meet either of the coverage of IRC
410(b)(1) because of Participants who complete less than a Year of
Service but more than 500 Hours of Service then the administrator shall
include in the allocation of the Non-Elective Contribution the minimum
number of Participants required to meet the coverage test under IRC
410(b)(1) based on their number of Hours of Service credited during the
Plan Year ranked in descending order. All Participants that meet the
minimum number of hours determined to satisfy the coverage test shall
share in the allocation of the Non-Elective Contribution.
2.6 PREDECESSOR EMPLOYER All Service with a Predecessor Employer whose Plan
is maintained by the Employer will be credited under this Plan.
2.7 REEMPLOYMENT An Employee who has a Vested Benefit and Break in Service
under the Plan will resume his participation at his first Hour of Service
with the Employer. An Employee who has no Vested Benefit will resume his
participation at his first Hour of Service with the Employer if the
number of consecutive Breaks in Service is not more than the greater of
i) 5 years or, ii) the aggregate number of Years of Service with the
Employer before a period of consecutive Breaks in Service. Such aggregate
number of Years of Service will not include any Years of Service
disregarded under the preceding sentence by reason of prior Breaks in
Service. All of such Employee's prior Service will be credited for
vesting purposes if he completes one additional Year of Service with the
Employer after his Break in Service. If an Employee's Years of Service
are disregarded pursuant to this Section the Employee will be treated as
a new Employee for eligibility purposes.
In the event that a Participant is no longer a member of an eligible
class of Employees and becomes ineligible to participate, but has not
incurred a Break in Service, such Employee will participate immediately
upon returning to an eligible class of Employees. If such Employee incurs
a Break in Service, eligibility will be determined under the Break in
Service rules of the Plan.
2.8 YEAR OF SERVICE Each Computation Period in which an Employee has one
thousand (1,000) hours is a Year of Service.
9
<PAGE> 15
ARTICLE III
ACCUMULATION AND DISTRIBUTION OF BENEFITS
Article III shall apply to any Participant in this Plan.
3.1 AUTOMATIC PENSION The Participant's Aggregate Account will be applied to
purchase a Qualified Joint & Survivor Annuity for a married Participant.
If the Participant is not married, the Participant's Aggregate Account
will be applied to purchase a life annuity. In the 90 day period prior to
his Annuity Starting Date, the Participant may make a Qualified Election
to receive an alternative Distribution. A Participant may elect to have
such Annuity distributed upon attainment of the earliest Retirement Date
under the Plan. A deceased Participant's Aggregate Account will be paid
as a Death Benefit to the surviving Spouse or Beneficiary. Unless an
Optional form of benefit within the Election Period pursuant to a
Qualified Election has been selected the surviving Spouse may elect
distribution of the Automatic Pension within a reasonable period after
the Participant's death.
3.2 CASH-OUTS AND PLAN REPAYMENT PROVISIONS If an Employee terminates
service, and the value of his Vested Account derived from Employer and
Employee Contributions is not greater than $3,500, he will receive a
distribution of the value of the entire vested portion of such Account
and the non-vested portion will be a forfeiture. For purposes of this
Section, if the value of an Employee's Vested Account is zero, he shall
be deemed to have received a distribution of such Vested Account. A
Participant's Vested Account shall not include accumulated Deductible
Employee Contributions within the meaning of IRC 72(o)(5)(B) for Plan
Years beginning prior to January 1, 1989.
If an Employee terminates service, and elects, in accordance with the
requirements of this Section to receive his Vested Account as provided in
the Adoption Agreement, the non-vested portion will be a forfeiture. If
the Employee elects distribution of less than the entire Vested Account
derived from Employer Contributions, the non-vested portion treated as a
forfeiture is the total non-vested portion multiplied by a fraction,
whose numerator is the distribution attributable to Employer
Contributions and whose denominator is the total value of the Employer
derived Vested Account.
If an Employee receives a distribution and thereafter resumes Employment,
his Employer derived Account will be restored to the amount on the date
of distribution if he repays to the Plan the full amount of the
distribution attributable to Employer Contributions before the earlier of
five (5) years after the first date on which he is re-employed by the
Employer, or the date he incurs five (5) consecutive one-year Breaks in
Service following the date of the distribution. If an Employee who is
deemed to receive a distribution
10
<PAGE> 16
resumes employment covered under this Plan before the date that he incurs
five (5) consecutive one-year Breaks in Service, the Employer derived
Account of the Employee will be restored to the amount on the date of
such deemed distribution.
If the value of the Participant's Vested Aggregate Account exceeds or at
the time of any prior distribution exceeded $3,500 and is immediately
distributable, the Participant and Beneficiary must consent to any
distribution of such Account. Consent shall be in writing within the
ninety (90) day period preceding the Annuity Starting Date. The Plan
Administrator shall notify the Participant and Beneficiary of the right
to defer distribution until the Account is no longer immediately
distributable. Notification shall include a general description of
material features, and an explanation of the relative values of, the
optional forms of benefit available under the Plan in a manner that
satisfies the notification requirements of IRC 417(a)(3) and shall be
provided no less than thirty (30) days or more than ninety (90) days
prior to the Annuity Starting Date.
Distribution may commence less than thirty (30) days after the notice
described in the preceding sentence is given, if the distribution is one
to which IRC 401(a)(11) and IRC 417 do not apply, provided the Plan
Administrator clearly informs the Participant of his right to a period of
thirty (30) days after receiving the notice to consider the decision of
whether or not to elect a distribution and the Participant after
receiving the notice affirmatively elects a distribution.
Notwithstanding the foregoing, only the Participant need to consent to
commencement of distribution as a Qualified Joint & Survivor Annuity
while the Account is immediately distributable. Consent is not required
to the extent that a distribution is required to satisfy IRC 401(a)(9) or
IRC 415. In addition, upon termination of the Plan, if the Plan does not
offer an Annuity Option the Participant's Aggregate Account may be
distributed to the Participant or transferred to another Defined
Contribution Plan within the same Controlled Group.
An Account is immediately distributable if any portion of the Account
could be distributed to the Participant or Spouse Beneficiary before the
Participant would have attained or attains the latter of Normal
Retirement Age or Age sixty-two (62).
For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first Plan
Year beginning after December 31, 1988, the Vested Aggregate Account
shall not include amounts attributable to accumulated deductible Employee
Contributions within the meaning of IRC 72(o)(5)(b).
3.3 COMMENCEMENT OF BENEFITS Unless the Participant elects otherwise,
distribution of benefits will begin no later than the sixtieth (60th) day
after the latest of the close of the Plan Year in which:
(1) the Participant attains Age 65 (or Normal Retirement Age, if
earlier);
11
<PAGE> 17
(2) occurs the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan; or,
(3) the Participant terminates service with the Employer.
Failure of a Participant and Spouse to consent to a distribution while a
benefit is immediately distributable under Section 3.2 shall be deemed to
be an election to defer commencement of payment of any benefit sufficient
to satisfy this Section.
3.4 DENIAL OF BENEFITS The Plan Administrator shall give a written
explanation to the Participant, setting forth the specific reasons for
the denial of any benefit. The Participant shall have the right to
request a review of his denied claim. If it is found that the Denial of
Benefits was erroneous or contrary to the Plan, or to the law, the Plan
Administrator shall immediately provide the denied Benefit to the
Participant.
3.5 CONTROL OF TRADES OR BUSINESSES BY OWNER-EMPLOYEE If this Plan provides
contributions or benefits for one or more Owner-Employees who control
both the business for which this Plan is established and one or more
other trades or businesses, this Plan and the Plan established for other
trades or businesses must, when looked at as a single Plan, satisfy IRC
401(a) and (d) for the Employees of this and all other trades or
businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
Employees of the other trades or businesses must be included in a Plan
which satisfies IRC 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-Employees under this
Plan.
If an individual is covered as an Owner-Employee under the Plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the Contributions or benefits of the
Employees under the Plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable
Plan of the trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in a non-incorporated trade or business, or
(2) in the case of a partnership, own more than fifty (50) percent of
either the capital interest or the profits interest in the
partnership.
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For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to
control within the meaning of the preceding sentence.
3.6 DISTRIBUTION MODE AND TIMING REQUIREMENTS Subject to Section 3.1 the
requirements of this Section shall apply to any distribution and take
precedence over any inconsistent provisions of the Plan. Unless otherwise
specified, this Section applies to Calendar Years beginning after
December 31, 1984.
a.) Distributions shall be determined and made in accordance with
proposed regulations under IRC 401(a)(9), including the
distribution of incidental benefit required by IRC 1.401(a)(9)-2 of
proposed regulations.
b.) Distributions may only be made over one of the following periods.
(1) the life of the Participant, or the life of the Participant
and the life of the Designated Beneficiary,
(2) a period certain not greater than the Participant's life
expectancy or the joint and last Survivor life expectancy of
the Participant and Beneficiary,
(3) a single sum.
Distributions based on a life contingency or period certain will be
made by applying the Participant's Account to purchase a
non-transferable Annuity from an Insurance Company to provide the
benefit for the Participant.
c.) Determination of annual distribution amount other than a
single sum, on or after the Required Beginning Date shall be
determined as follows:
(1) i) If distributed from the Participant's Account and if
distributed over a period certain not extending beyond
the Participant's life expectancy or joint and last
survivor expectancy of the Participant and Designated
Beneficiary, the minimum distribution for each Calendar
Year beginning the first distribution Calendar Year is
the quotient of the Participant's Benefit divided by the
Applicable Life Expectancy.
ii) For Calendar Years prior to January 1, 1989, if the
Participant's Spouse is not the Designated Beneficiary,
the distribution method must assure that not less than
fifty percent (50%) of the amount available for
distribution is paid within the Participant's life
expectancy.
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iii For Calendar Years after December 31, 1988, life
expectancy is the lessor of a) the Applicable Life
Expectancy or b) for a Non-Spouse Beneficiary the
applicable divisor from the table in Q&A-4 of IRC
1.401(a)(9)-2 of the proposed regulations. Distributions
after death of the Participant shall be distributed using
the applicable life expectancy in Section 3.6 c)(1)i) as
the relevant divisor without regard to IRC 1.401 (a)(9)-2
of the proposed regulations.
iv) The Minimum Required Distribution for the first
Distribution Calendar Year must be made by the Required
Beginning Date. The Minimum Required Distribution for
other Calendar Years including the Minimum Required
Distribution for the Distribution Year in which the
Required Beginning Date occurs must be made on or before
December 31 of that Distribution Calendar Year.
(2) Benefits distributed in the form of an annuity purchased from
an insurance company shall be made in accordance with the
requirements of IRC 401(a)(9) and proposed regulations
thereunder.
d.) Death Distribution Provisions
1. Distribution beginning before death. If the Participant
dies after his Annuity Starting Date, distribution of his
remaining interest will continue to be distributed at
least as rapidly as under the method of distribution used
prior to the Participant's death.
2. Distribution beginning after death. If the Participant
dies before his Annuity Starting Date, distribution of
his entire interest shall be completed by December 3l of
the fifth year following or coincident with his death
unless an Election is made in accordance with (a) or (b)
below:
(a) if the Participant designates a Non-Spouse
Beneficiary, distributions may be made over the life
or a period certain not greater than the life
expectancy of the Designated Beneficiary commencing
on or before December 31 of the Year following the
Year in which the Participant died;
(b) if the Designated Beneficiary is the surviving
Spouse, distributions are required to begin not
earlier than the later of December 31 of the Year
immediately following the Year in which the
Participant died or December 31 of the Year in which
the Participant would have attained Age 70 1/2.
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<PAGE> 20
The Designated Beneficiary must elect the method of distribution no
later than the earlier of December 31 of the Year in which
distributions would be required to begin or December 31 of the Year
which contains the fifth anniversary of the date of death of the
Participant. If the Participant has no Designated Beneficiary, or
the Designated Beneficiary fails to make an Election, distribution
of the entire interest shall be completed by December 31 of the
Calendar Year containing the fifth anniversary of the Participant's
death.
3. For purposes of Section 3.6 d) (2) above, if the Spouse dies after
the Participant, but before payments begin, the provisions of
Section 3.6 d) (2), with the exception of Paragraph 3.6 d)(2)(b)
therein shall be applied as if the Spouse were the Participant.
4. For purpose of Section 3.6 any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving
Spouse if the amount becomes payable to the surviving Spouse when
the child reaches the age of majority.
5. Distribution of a Participant's interest is considered to begin on
the Participant's Required Beginning Date or if Section 3.6 d) (3)
is applicable, the date distribution is required to begin to the
Spouse. If distribution in the form of an annuity commences before
the Required Beginning Date, the date distribution is considered to
begin is the date distribution actually commences.
e.) Definitions:
1. APPLICABLE LIFE EXPECTANCY means life or joint and last survivor
life expectancy based on the Participant's Age and/or the
Designated Beneficiary Age in the applicable Distribution Calendar
Year reduced by one for each Calendar Year that has elapsed since
the date life expectancy was first calculated. Life Expectancy and
joint and last survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of Section 1.72-9 of
the Income Tax Regulations.
2. DESIGNATED BENEFICIARY means the Beneficiary designated under
Section 1.5 in accordance with IRC 401(a)(9) and proposed
regulations thereunder.
3. DISTRIBUTION CALENDAR YEAR means a Calendar Year for which a
minimum distribution is required. For distributions beginning
before a Participant's death, the first Distribution Calendar Year
is the Calendar Year immediately preceding the Calendar Year which
contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the first
Distribution Calendar Year is the Calendar Year in which
distributions are required to begin.
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<PAGE> 21
4. PARTICIPANT'S BENEFIT means the Participant's Account as of the
last Valuation Date preceding the Distribution Calendar Year
increased by Contributions or Forfeitures allocated and decreased
by distributions made in the Valuation Year following the Valuation
Date. Any portion of the minimum distribution for the first
Distribution Calendar Year made in the second Distribution Calendar
Year on or before the Required Beginning Date shall be treated as
if made in the immediately preceding Distribution Calendar Year.
5. REQUIRED BEGINNING DATE means the first day of April of the
Calendar Year following the Calendar Year in which the Participant
attains Age 70 1/2 except that the Required Beginning Date of a
Participant who is not a five (5) percent owner who attains Age 70
1/2 during 1988 and who has not retired as of January 1, 1989, and
for a Participant who attains Age 70 1/2 before January 1, 1988,
the Required Beginning Date shall be determined in accordance with
(a) or (b) below:
(a) The Required Beginning Date of a Participant who is not a five
(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 of a Participant who is a five (5)
percent owner during any year beginning after December 31,
1979 is the first day of April following the later of:
(i) the Calendar Year in which he attains Age 70 1/2, or
(ii) the earlier of the Calendar Year within the Plan Year in
which he becomes a five (5) percent owner, or the
Calendar Year in which he retires.
6. FIVE (5) PERCENT OWNER means a Participant treated as a five (5)
percent owner under IRC 416(i), at any time during the Plan Year
ending with or within the Calendar Year in which he attains Age 66
1/2 or any subsequent Plan Year. Once distributions have begun to a
five percent owner, they must continue even if the Participant
ceases to be a five (5) percent owner.
f.) Transitional Rule
Notwithstanding the other requirements of Section 3.6 and subject
to the requirements of Section 3.1, distribution on behalf of any
Employee, including a 5-percent owner, may be made in accordance
with all of the following requirements regardless of when such
distribution commences:
1) The distribution by the trust is one which would not have
disqualified such trust under IRC 401(a)(9) as in effect prior to
amendment by the Deficit Reduction Act of 1984.
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<PAGE> 22
2) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the
trust is being distributed or, if the Employee is deceased, by
a Beneficiary of such Employee.
3) Such designation was in writing, was signed by the Employee or
the Beneficiary, and was made before January 1, 1984.
4) The Employee had accrued a benefit under the Plan as of
December 31,1983.
5) The method of distribution designated by the Employee or
Beneficiary specifies the time at which distribution will
commence, the period over which distributions will be made,
and in the case of any distribution upon the Employee's death,
the Beneficiaries of the Employee listed in order of priority.
A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the
required information described above with respect to the
distributions to be made upon the death of the Employee.
For distribution commencing before January 1, 1984 and continuing
after December 31, 1989, a Participant or Beneficiary, to whom such
distribution is being made, will be presumed to have designated the
method of distribution under which the distribution is being made
if' the method of distribution was specified in writing and the
distribution satisfies the requirements in subsections 3.6 f) 1)
and 5).
If a designation is revoked, any subsequent distribution must
satisfy the requirements of IRC 401(a)(9) and the proposed
regulations thereunder. If a designation is revoked subsequent to
the date distributions are required to begin, the trust must
distribute by the end of the Calendar Year following the Calendar
Year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed
to satisfy IRC 401(a)(9) and the proposed regulations thereunder,
but for the Section 242(b)(2) election. For Calendar Years
beginning after December 31, 1988, such distributions must meet the
minimum distribution incidental benefit requirements in IRC
1.401(a)(9)-2 of the proposed regulations. Any changes in the
designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of another
Beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not
alter the period over which distributions are to be made under the
designation, directly or indirectly (for example, by altering the
relevant measuring life).
In the case in which an amount is transferred or rolled over from
one Plan to another Plan, the rules in Q&A J-2 and Q&A J-3 of IRC
1.401(a)(9)-l of the proposed regulations shall apply.
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<PAGE> 23
3.7 EARMARKED INVESTMENT At the request of the Plan Administrator, the
Trustee may in accordance with non-discriminatory rules, establish or
maintain one or more investments or funds into which a Participant may
direct the investment of his Account(s). A Participant's Election to
Earmark any Contribution or Account shall specify the effective date and
the duration of the Election and shall acknowledge that the Trustee or
any designated investment advisor or other Fiduciary is not responsible
for the investment result obtained by the Earmarked Investment. All
investment gain, loss, dividend, or expense of an Earmarked Investment
shall be credited to the respective Account of the Participant.
3.8 FORFEITURE Any Forfeiture occurring will reduce the Employer Contribution
for the next Plan Year or if the Adoption Agreement so provides be
reallocated in accordance with A14. b) of the Adoption Agreement. Any
non-forfeitable Account of a Participant whose whereabouts are unknown
shall be used to reduce the Employer Contribution but will be restored by
the Employer if the Participant or Designated Beneficiary make a claim
for such benefit. A non-forfeitable Account may not be forfeited for
cause. A Forfeiture of an Employee of one adopting Employer may not be
used for the benefit of another adopting Employer or for the Employees of
another adopting Employer. A Contribution made erroneously for any person
who should not be a Participant shall constitute a mistake in fact for
the Plan Year in which the discovery of the error is made.
3.9 INSURANCE will be treated as an Earmarked Investment. Whole Life
Insurance contracts are contracts with both non-decreasing death benefits
and non-increasing premiums. A Participant may not earmark more than
forty-nine (49) percent of the aggregate Employer Contribution to
purchase Whole Life Insurance, or more than twenty-four (24) percent into
Life Insurance which is not Whole Life Insurance reduced by one-half of
the contribution earmarked to purchase Whole Insurance. Such
Participant's insurance contracts shall be 100% nonforfeitable. The
Trustee will apply for, and own, and be Beneficiary of such insurance
contracts. All death proceeds will be paid in accordance with Section
3.1.
3.10 NOTICE
a) In the case of a Qualified Joint & Survivor Annuity notice shall be
provided not less than thirty (30) days or more than ninety (90) days
prior to the Annuity Starting Date and in the case of a Qualified
Pre-retirement Annuity the latter of the following periods that ends
last:
i) the period beginning the first day of the Plan Year the
Participant attains Age thirty-two (32) and ending the last day
of the Plan Year preceding the Plan Year the Participant attains
Age thirty-five (35), or
ii) the period beginning one year prior to and ending one year after
the Employee's Participation Date, or
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<PAGE> 24
iii) the period one year before and ending one year after this Section
first applies to the Participant, or
iv) the period beginning one year prior to and ending one year after
Section 3.10 b) ceased to apply to the Participant. Notice shall
be provided within the period beginning one Year prior to and
ending one Year following the Termination Date of a Participant
who has not attained Age thirty-five (35). If such Participant is
re-employed the applicable period shall be re-determined.
b) Notwithstanding Section 3.10 a), the respective notices prescribed by
this Section need not be given to a Participant if the Plan fully
subsidizes the costs of a Qualified Joint and Survivor Annuity or
Qualified Pre-Retirement Survivor Annuity and the Plan does not allow
the Participant to waive the Qualified Joint and Survivor Annuity or
Qualified Pre-Retirement Survivor Annuity and does not allow a married
Participant to designate a Non-Spouse Beneficiary.
The Notice will be written and will inform the Participant that his
vested Accrued Benefit will be paid as a Qualified Joint & Survivor
Annuity unless an alternate Distribution Method is selected in a
Qualified Election.
Notice will include an explanation of a) the terms and conditions of a
Joint and Survivor Annuity or a Survivor Annuity, b) the effect of an
Election to waive the Joint and Survivor Annuity, c) the Spouse's right
regarding the required consent, d) the right to make and the effect of
revoking an Election, and e) a statement of any benefits which may be
forfeitable for any reason including death.
If a Participant elects to receive distribution in one sum or in a series
of sums which may constitute a lump sum distribution, the Plan
Administrator will furnish Notice using a format provided by the
Secretary of Treasury explaining that the distribution (a) is not taxable
currently to the extent transferred to another Qualified Plan or
Individual Retirement Account or Individual Retirement Annuity within
sixty (60) days after the date of its receipt and that the sixty (60) day
period begins when the last distribution is made, and (b) ten (10) or
five (5) year income averaging and/or capital gains income tax provisions
may apply.
3.11 PERMITTED DISPARITY
If the Adoption Agreement provides for Allocation of Contributions under
this Section the Non-Elective Contributions for the Plan Year plus any
forfeitures if elected in the Adoption Agreement, will be allocated to
Participant's accounts as follows:
First, such amount will be used to provide any minimum allocation for
Non-Key Employees required under Article VI and any amount remaining will
be allocated to each other Participant in the same percentage as provided
to Participating Non-Key Employees under Article VI.
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<PAGE> 25
Second, any remaining amount will be allocated in the ratio that each
Participant's total compensation bears to all Participants' compensation,
except that the total amount allocated under this Paragraph and the
preceding Paragraph shall not exceed three percent (3%) of each
Participants Compensation.
Third, any amount remaining will be allocated in the ratio that each
Participant's Excess Compensation bears to the Excess Compensation of all
Participants, but not in excess of three percent (3%).
Fourth, any amount remaining will be allocated in the ratio that the sum
of each Participant's total Compensation, plus Excess Compensation bears
to the sum of all Participants total Compensation, plus Excess
Compensation, but not in excess of 2.7%.
Fifth, any amount remaining will be allocated in the ratio that each
Participant's total Compensation bears to all Participants' total
Compensation for that Year.
The integration level shall be equal to the taxable wage base or such
lesser amount elected by the Employer in the Adoption Agreement. The
taxable wage base is the maximum amount of earnings which may be
considered wages for a year under IRC 3121(a)(1) in effect as of the
beginning of the Plan Year.
Compensation shall mean compensation as defined in the Adoption
Agreement.
3.12 RESTRICTIONS ON AMENDMENTS No Amendment shall be effective if it has the
effect of decreasing an Accrued Benefit except that an Account may be
reduced only if permitted under IRC 412(c)(8). An Amendment which has the
effect of decreasing an Account or eliminating an optional benefit for
benefits attributable to service before the amendment shall be treated as
reducing an Accrued Benefit. If the Vesting Schedule 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
non-forfeitable percentage of a Participant's right to his
Employer-Derived Accrued Benefit will not be less than his percentage
computed under the Plan without regard to such Amendment.
3.13 TERMINATION BENEFIT No benefit derived from Employer Contributions will
be paid to an Employee prior to a Termination Date or Retirement Date.
3.14 VALUATION Each Account shall be valued to Current Value at the last day
of the Plan Year and at such other date(s) as the Plan Administrator
finds necessary to carry out the intent of the Plan.
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3.15 VESTING SCHEDULE CHANGE If the Vesting Schedule is amended, or the Plan
is amended in any way that directly or indirectly affects the computation
of a Participant's non-forfeitable percentage or by an automatic change
to or from a Top-Heavy Vesting Schedule, each Participant with at least
three (3) Years of Service may elect to have the non-forfeitable
percentage computed without regard to such Amendment or change. The
election period shall commence with the date the Amendment is adopted or
deemed to be made and shall end sixty (60) days after the later of: a)
the date the Amendment is adopted, b) the date the Amendment is
effective, or c) the Participant is issued written notice of the
Amendment by the Employer or Plan Administrator.
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ARTICLE IV
ADOPTION, AMENDMENT, MERGER, OR TERMINATION OF PLAN
4.1 ADOPTION The Employer agrees to take all actions necessary to attain or
retain a favorable qualification of this Plan under Internal Revenue Code
401(a) and 501(a).
4.2 ALIENATION PROHIBITION A Participant may not alienate or assign,
voluntarily or involuntarily, any interest in this Plan. This shall apply
to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a Domestic Relations
Order unless such order is determined to be a QUALIFIED DOMESTIC
RELATIONS ORDER which means a judgment or decree by a court of competent
jurisdiction which creates or recognizes the existence of alternate
payees right(s) to receive all or a portion of the Participant's Benefits
under the Plan. The procedures to be followed by the Plan Administrator
in complying with the QUALIFIED DOMESTIC RELATIONS ORDER shall be in
accordance of IRC 414(p) and regulations issued thereunder, or a Domestic
Relations Order entered before January 1, 1985. The Alienation
Prohibition shall not apply to any indebtedness of the Participant to the
Plan.
4.3 AMENDMENT The Employer may amend the Plan to conform the Plan to changes
in the Internal Revenue Code, or Regulations, or Revenue Rulings or other
statements published by Internal Revenue Service or to correct any prior
approved Plan or in any other way.
4.4 CONFLICT The provisions of any insurance contract providing benefits
under the Plan will be resolved by the terms of the Plan.
4.5 EXPENSES Plan expenses will be paid by the Employer. Trust expenses will
be charged to the Trust Fund unless paid by the Employer.
4.6 FIDUCIARIES The named Fiduciaries are the Employer and the Trustee(s)
designated herein. The Plan Administrator is the Employer who shall
appoint a Plan Representative. A named Fiduciary shall be responsible for
those duties assigned under the terms of this Plan. The Employer is the
agent for service of legal process.
4.7 LIMITATION The establishment of this Plan, or the payment of benefits
shall not give any Participant or Employee any legal or equitable right
against the Employer or the Trustee or the Plan assets, except for rights
provided for in this Agreement, and under the Employee Retirement Income
Security Act of 1974 (ERISA) as it is amended. This Plan shall not give
any Participant or Employee the right to be retained in the service of
the Employer.
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<PAGE> 28
4.8 MERGER If the Plan is merged or consolidated with another plan or if the
Plan assets are transferred to another plan, all Accrued Benefits
immediately thereafter, (if the Plan then terminated), shall not be less
than they were immediately before such merger, consolidation or transfer,
(if the Plan had then terminated).
4.9 REVERSION PROHIBITION No Corpus or income of the Trust or funds created
thereby shall revert to the Employer or be diverted to any purpose other
than the exclusive benefit of Employees or their Beneficiaries, except
that a contribution made because of a mistake in fact shall be returned
to the Employer within one (1) year of the contribution. Contribution
made incident to the initial qualification of the Plan will be returned
to the Employer within one (1) year after the qualification of the Plan
is denied by the Internal Revenue Service only if the application for
qualification is made by the time prescribed by law for filing the
Employer's return or taxable year in which the Plan is adopted, or such
later date prescribed by the Secretary of the Treasury. Employer
Contributions shall be made only if the Contributions are tax deductible
expenses under IRC 404 or other provisions of the Internal Revenue Code.
Any Employer Contribution found not to be a tax deductible expense for
the Plan Year in which made shall be returned to the Employer within one
year of the denial of the deduction.
4.10 TERMINATION of this Plan will occur if the Employer is judicially
declared bankrupt. The Employer may terminate or partially terminate the
Plan at any time. If the Employer terminates or partially terminates the
Plan or on complete discontinuance of Contributions, all Accrued Benefits
and Accounts are non-forfeitable to the extent then funded and shall be
paid to affected Participants in accordance with the provisions of the
Plan. An affected Participant's recourse to the satisfaction of his
rights shall be limited to Plan Assets.
4.11 TERMINATION OF A CODA PLAN If this Plan contained Cash or Deferred
Arrangements and terminates, distribution will not be made to any
Participant on account of Plan Termination if the Employer establishes or
maintains a successor defined contribution plan if two percent (2%) or
more of Participants in this Plan at the time of Termination are or were
eligible under the other defined contribution plan at any time during the
twenty-four (24) months period beginning twelve (12) months before the
time of Termination or within twelve (12) months after distribution of
all assets of this Plan. A Defined Contribution Plan means a Plan defined
in IRC 414(i) but not including a Plan under IRC 4975(a), 409 or 408(k).
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<PAGE> 29
ARTICLE V
LIMITATION OF BENEFITS
5.1 ANNUAL ADDITION is the sum of the following amounts credited to a
Participant's Account for the Limitation Year: i) Employer Contributions,
ii) Forfeitures, and iii) Employee Contributions, and iv) amounts
allocated after March 31, 1984 to an individual medical account, as
defined in IRC 415(l)(2) which is part of a Pension or Annuity Plan
maintained by the Employer and amounts derived from contributions paid or
accrued after December 31, 1985 in taxable years ending after such date
which are attributable to post retirement medical benefits allocated to
the separate account of a Key Employee, defined in IRC 419(A)(d)(3) under
a Welfare Benefit Fund defined in IRC 419(e) maintained by the Employer.
5.2 MAXIMUM PERMISSIBLE AMOUNT means the lesser of $30,000 or if greater one
fourth of the defined benefit dollar limit under IRC 415(b)(1) or 25
percent of the Participant's Compensation for the Limitation Year. If a
short Limitation Year is created by changing to a different twelve (12)
consecutive month period, the Maximum Permissible Amount will not exceed
one twelfth of such dollar limitation multiplied by the number of months
in the short Limitation Year, or 25 percent of such Compensation. The 25
percent compensation limitation shall not apply to contribution for
medical benefits as defined under IRC 401(h) or IRC 419A(f)(2) which is
otherwise treated as an Annual Addition under IRC 415(l)(1) or IRC
419A(d)(2).
5.3 LIMITATION ON ALLOCATION
1) If the Participant does not participate in, and has never participated
in another qualified plan maintained by the Employer or a Welfare
Benefit Fund, as defined in IRC 419(e) maintained by the Employer, or
an individual medical account, as defined in IRC 415(l)(2) maintained
by the Employer which provides an Annual Addition as defined in
Section 5.1, the amount of Annual Additions which may be credited to
the Participant's Account for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount contributed or allocated will
be reduced so that the Annual Additions for the Limitation Year will
equal the Maximum Permissible Amount.
2) Prior to determining the Participant's actual Compensation for the
Limitation Year the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
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<PAGE> 30
3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
4) If pursuant to Paragraph 3) or as a result of the allocation of
forfeitures, there is an excess amount, the excess will be disposed of
as follows:
a) Any non-deductible Voluntary Employee Contributions, to the extent
they would reduce the excess amount, will be returned to the
Participant;
b) If after the application of Paragraph a) an excess amount still
exists, and the Participant is covered by the Plan at the end of
the Limitation Year, the excess amount in the Participant's Account
will be used to reduce Employer Contributions (including any
allocation of forfeitures) for such Participant in the next
Limitation Year, and each succeeding Limitation Year if necessary;
c) If after the application of Paragraph a) an excess amount still
exists, and the Participant is not covered by the Plan by the end
of a Limitation Year, the excess amount will be held unallocated in
a suspense account. The suspense account will be applied to reduce
future Employer Contributions for all remaining Participants in the
next Limitation Year, and each succeeding Limitation Year if
necessary.
d) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not participate
in the allocation of the Trust's investment gains and losses. If a
suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participant's accounts before any
Employer or any Employee Contributions may be made to the Plan for
that Limitation Year. Excess amounts may not be distributed to
Participants or former Participants.
5.4 MULTIPLE PLAN LIMITATION
1) This Section applies if, in addition to this Plan, the Participant
is covered under any a) Qualified Plan, b) Welfare Benefit Fund as
defined in IRC 419(e), or c) individual medical account as defined
in IRC 415(l)(2), that is maintained by the Employer, which provides
an Annual Addition as defined in Section 5.1, during any Limitation
Year. The Annual Additions which may be credited to a Participant's
Account under this Plan for any such Limitation Year will not exceed
the Maximum Permissible Amount reduced by the Annual Additions
credited to a Participant's Account under the other Plans and
Welfare Benefit Funds for the same Limitation Year. If the Annual
Additions with respect to the Participant under other Defined
Contribution Plans and Welfare Benefit Funds maintained by the
Employer are less than the Maximum Permissible Amount and the
Employer Contribution that would otherwise be contributed or
allocated to the Participant's Account under this Plan would cause
the Annual Additions for the Limitation
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<PAGE> 31
Year to exceed this limitation the amount contributed or allocated
will be reduced so that the Annual Additions under all such Plans
and funds for the Limitation Year will equal the Maximum Permissible
Amount. If the other Defined Contribution Plans and Welfare Benefit
Funds in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year.
2) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in
Section 5.3, (2).
3) As soon as administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for
the Limitation Year.
4) If, pursuant to Paragraph 3) or as a result of the allocation or
forfeitures, a Participant's Annual Additions under this Plan and
such other Plans would result in an excess amount for a Limitation
Year, the excess amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions attributable
to a Welfare Benefit Fund or individual medical account will be
deemed to have been allocated first regardless of the actual
Allocation Date.
5) If an Excess Amount was allocated to a Participant on an Allocation
Date of this Plan which coincides with an Allocation Date of another
Plan, the excess amount attributed to this Plan will be the product
of:
a) the total excess amount allocated as of such date, times;
b) the ratio of (i) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (ii) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified plans.
6) Any Excess amount attributed to this Plan will be disposed in the
manner described in Section 5.3, (4).
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5.5 If the Employer maintains or ever maintained i) another Qualified Plan in
which any Participant is or was or could become a Participant, or ii)
maintains a Welfare Benefit Fund as defined in IRC 419(e), or an
individual medical account as defined in IRC 415(l)(2) under which
amounts are treated as Annual Additions with respect to any Participant
in this Plan, then:
a) If the Participant is covered under another Qualified Defined
Contribution Plan maintained by the Employer, Annual Additions which
may be credited to the Participant's Account under this Plan for any
Limitation Year will be limited in accordance with Section 5.4.
b) If any Participant is, or ever was, covered under a Defined Benefit
Plan maintained by the Employer, the sum of the Defined Contribution
Fraction and Defined Benefit Fraction will not exceed 1.0 in any
Limitation Year, and the Annual Additions will be limited to the
extent necessary to satisfy IRC 415(e).
c) DEFINED CONTRIBUTION FRACTION A fraction, the numerator of which is
the sum of the Annual Additions to the Participant's Account under all
the Defined Contribution Plans (whether or not terminated) maintained
by the Employer for the current and all prior Limitation Years
including the Annual Additions attributable to the Participant's
Non-Deductible Employee Contributions to all Defined Benefit Plans,
whether or not terminated, maintained by the Employer, and the Annual
Additions attributable to all Welfare Benefit Funds, as defined in IRC
419(e), and individual medical accounts, as defined in IRC 415(l)(2),
maintained by the Employer. The denominator of the fraction is the sum
of the maximum aggregate amounts for the current and all prior
Limitation Years of Service with the Employer (regardless of whether a
Defined Contribution Plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the lesser of one hundred
twenty-five percent (125%) of the dollar limitation determined under
IRC 415(b) and (d) in effect under IRC 415(c)(1)(A) or thirty-five
percent (35%) of the Participant's Compensation for such Year.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more Defined Contribution Plans maintained by the Employer which were
in existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit Fraction
would otherwise exceed1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of the
sum of the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using the Section
415 limitation applicable to the first Limitation Year beginning on or
after January 1, 1987.
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The Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be re-computed to treat all Employee
Contributions as Annual Additions.
d) DEFINED BENEFIT FRACTION A fraction, the numerator of which is the sum
of the Participant's projected Annual Benefits under all the Defined
Benefit Plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of 125 percent of the
Dollar Limitation determined for the Limitation Year under IRC 415(b)
and (d) or 140 percent of the highest average Compensation, including
any adjustments under IRC 415(b).
Notwithstanding the above, if the Participant was a Participant as of
the first day of the first Limitation Year beginning after
December 31, 1986, in one or more Defined Benefit Plans maintained by
the Employer which were in existence on May 6, 1986, the denominator
of this fraction will not be less than 125 percent of the sum of the
annual benefits under such Plans which the Participant had accrued as
of the close of the last Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and conditions of the Plan
after May 5, 1986. The preceding sentence applies only if the Defined
Benefit Plans individually and in the aggregate satisfied the
requirements of IRC 415 for all Limitation Years beginning before
January 1, 1987.
e) If the Plans in the Required Aggregation Group are Top Heavy, the
adjustment to the dollar limitations in a) or b) shall be 100% unless
the Employer provides for the extra Minimum Allocation or Minimum
Benefit as required by Section 6.4. If the Plans are Super Top Heavy,
the adjustment shall be 100% in any event.
5.6 COMPENSATION means a Participant's earned income, wages, salaries, and
fees for professional services, and other amounts received for personal
services actually rendered in the course of employment with the Employer
maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of
profits, commissions or insurance premiums, tips, bonuses, fringe
benefits, reimbursements and expense allowances) actually paid or
includable in the Participant's gross income for the Limitation Year but
excluding the following:
a) Employer Contributions to a Plan of Deferred Compensation which are
not included in the Employee's gross income for the taxable year in
which contributed or Employer Contributions under a simplified
employee pension plan to the extent such contributions are deductible
by the Employee, or any distributions from a Plan of Deferred
Compensation;
b) Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture; c) Amounts realized from the sale, exchange or
other disposition of stock required under a qualified stock option;
and d) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a Salary
Reduction Agreement) towards the purchase
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of an annuity described in IRC 403(b) (whether or not the amounts are
actually excludable from the gross income of the Employee).
Compensation means the amount actually paid or includable in gross
income to an Employee in a Limitation Year.
5.7 EXCESS AMOUNT means the Participant's Annual Additions for the Limitation
Years that exceed the Maximum Permissible Amount.
5.8 HIGHEST AVERAGE COMPENSATION means the Average Compensation for the three
(3) consecutive Years of Service with the Employer that produces the
Highest Average.
5.9 LIMITATION YEAR is the twelve (12) consecutive month period elected in
the Adoption Agreement. All Qualified Plans maintained by the Employer
shall use the same Limitation Year. If the Limitation Year is amended,
the new Limitation Year must begin within the Limitation Year in which
the Amendment is made.
5.10 PROJECTED ANNUAL BENEFIT means the annual benefit which is the actuarial
equivalent of a Straight Life Annuity or Qualified Joint and Survivor
Annuity which the Participant would be entitled to under the terms of the
Plan assuming the Participant continues employment until Normal
Retirement Age or Attained Age if later and that Compensation for the
current Limitation Year and all other relevant factors remain constant
for all future Limitation Years.
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ARTICLE VI
TOP HEAVY PROVISIONS
6.1 CONFLICTING PROVISIONS The provisions of this Article are effective for
Plan Years beginning after December 31, 1983 and supersede any
conflicting provisions contained in the Plan, if this Plan is or ever
becomes Top Heavy.
6.2 DETERMINATION DATE This is the last day of the preceding Plan Year or for
the first Plan Year the last day of the first Plan Year. The
Determination Period is the 5 year period ending on the Determination
Date.
6.3 KEY EMPLOYEE means any present or former Employee, and the Beneficiaries
of such Employee, who in the five (5) year period ending on the
Determination Date, is or was, a) an officer of the Employer whose
Compensation is fifty percent (50%) or more of the dollar limitation
under IRC 415 (b)(1)(A), b) considered under IRC 318 to be one of the ten
largest owners of the Employer if Compensation exceeds the dollar
limitation of IRC 415(c)(1)(A), or c) a 5 percent owner of the Employer
or d) a one percent owner of the Employer having Compensation exceeding
$150,000. Annual Compensation means Compensation defined in IRC 415(c)(3)
including amounts contributed by the Employer pursuant to a Salary
Reduction Agreement which are excludable from the Employee's gross income
under IRC 125, 402(a)(8), 402(h), or 403(b). All Employees who are not
Key Employees are Non-Key Employees, including former Key Employees.
6.4 MINIMUM ALLOCATION a) Except as provided below, the Employer Contribution
and Forfeitures allocated for any Non-Key Employee Participant shall not
be less than the lesser of three percent of Compensation or in the case
where the Employer has no Defined Benefit Plan which designates this Plan
to satisfy IRC 401, the largest percentage of Compensation as limited by
IRC 401(a)(17) allocated on behalf of any Key Employee for the Plan Year,
including any Contribution for a Key Employee to an IRC 401(k) Plan. The
Minimum Allocation is determined without regard to the Social Security
tax and shall be made even though the Participant would not otherwise
receive an allocation, or would receive a lesser allocation because of
failure to either complete 1,000 Hours of Service or to make a Mandatory
Contribution, or to make a Salary Reduction Agreement under IRC 401(k),
or because Compensation is less than a stated amount, or because of a
withdrawal of a mandatory contribution. b) The provision in a) does not
apply to a Participant who is not an Eligible Employee on the last day of
the Plan Year, or if the Participant is covered under any other Qualified
Plan of the Employer provided that the Minimum Allocation or Minimum
Benefit requirement of IRC 416 is met in such other Plan. If the Employer
maintains a Defined Benefit Plan which with this Plan is part of the
Required Aggregation Group and the Employer has not provided for the
required Minimum Benefit in the Defined Benefit Plan and the adjustment
to the
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dollar limitations of IRC 415(b)(1)(A) and (c)(1)(A) is one hundred
twenty-five percent (125%), the Minimum Allocation in a) is 7.5%, or if
said adjustment is one hundred percent (100%), the Minimum Allocation in
a) is five percent (5%). Elective Deferrals and Matching Contributions
shall not be taken into account for the purpose of satisfying the MINIMUM
Allocation requirements.
6.5 PERMISSIVE AGGREGATION GROUP means each plan in the Required Aggregation
Group, plus any other plan of the Employer which, when considered with
the Required Aggregation Group, continues to satisfy the requirements of
IRC 401(a)(4) and 410.
6.6 PRESENT VALUE of an Accrued Benefit in a Defined Benefit Plan is based on
the interest and mortality rates specified in Section A12, of the
Adoption Agreement. Account Balance is the sum of all Employer and
Employee Contributions and Forfeitures, except Deductible Employee
Contributions, in all Qualified Plans of the Employer, adjusted for
investment gain or loss to Current Value at the last Valuation Date in
the 12 month period ending on the Determination Date.
6.7 REQUIRED AGGREGATION GROUP Each Qualified Plan of the Employer in which
one or more Key Employees participate at any time during the
Determination Period whether or not the Plan is terminated and any other
Qualified Plan of the Employer which enables such Plans to satisfy IRC
401(a)(4) or IRC 410 is part of this group.
6.8 TOP HEAVY PLAN This Plan is Top Heavy if:
(a) the Top Heavy Ratio exceeds sixty percent (60%) and this Plan is not
part of any Required Aggregation Group, Permissive Aggregation Group,
or
(b) this Plan is part of any Required Aggregation Group but not part of
any Permissive Aggregation Group and the Top Heavy Ratio for the
group of plans exceeds sixty percent (60%), or
(c) this Plan is part of any Required Aggregation Group and part of any
Permissive Aggregation Group and the Top Heavy Ratio for the group of
plans exceeds sixty percent (60%).
If the Top Heavy Ratio exceeds ninety percent (90%), this Plan is Super
Top Heavy.
6.9 TOP HEAVY RATIO
(a) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer has
not maintained any Defined Benefit Plan which during the
Determination Period has or has had Accrued Benefits, the Top Heavy
Ratio for this Plan alone or for the Required or Permissive
Aggregation Group as appropriate is a fraction, the numerator of
which is the sum of the Account Balances of all Key Employees as of
the Determination Date(s)
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(including any part of any Account Balance distributed in the
Determination Period, and the denominator of which is the sum of all
Account Balances (including any part of any Account Balance
distributed in the Determination Period), both computed in accordance
with IRC 416 and the regulations thereunder. Both the numerator and
denominator of the Top Heavy Ratio are INCREASED to reflect any
contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under IRC 416
and the regulations thereunder.
(b) If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plans) and the Employer
maintains or has maintained one or more Defined Benefit Plans which
during the Determination Period has or has had any accrued benefits,
the Top Heavy Ratio for any Required or Permissive Aggregation Group
as appropriate is a fraction, the numerator of which is the sum of
Account Balances under the Aggregated Defined Contribution Plan or
Plans for all Key Employees, determined in accordance with (a) above,
and the present value of accrued benefits under the Aggregated
Defined Benefit Plan or Plans for all Key Employees as of the
Determination Date(s), and the denominator of which is the sum of the
Account Balances under the Aggregated Defined Contribution Plan or
Plans for all Participants, determined in accordance with (a) above,
and the present value of accrued benefits under the Defined Benefit
Plan or Plans for all Participants as of the Determination Date(s),
all determined in accordance with IRC 416 and the regulations
thereunder. The accrued benefits under a Defined Benefit Plan in both
the numerator and denominator of the Top Heavy Ratio are INCREASED
for any distribution of an accrued benefit made in the Determination
Period.
(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 IRC 416 and the regulations thereunder for the first and second
Plan Years of a Defined Benefit Plan. The Account Balances and
accrued benefits of a Participant (1) who is not a Key Employee but
who was a Key Employee in a prior year, or (2) who has not been
credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the Determination Period will
be disregarded. The calculation of the Top Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are taken
into account will be made in accordance with IRC 416 and the
regulations thereunder. Deductible Employee Contributions will not be
taken into account for purposes of computing the Top Heavy Ratio.
When aggregating Plans, the value of Account Balances and accrued
benefits will be calculated with reference to the Determination
Date(s) that fall within the same Calendar Year.
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The Accrued Benefit of a Non-Key Employee shall be determined under a)
the method, if any, that uniformly applies for accrual purposes under all
Defined Benefit Plans maintained by the Employer or b) if there is no
such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of IRC 411(b)(1)(c).
6.10 VALUATION DATE This is the most recent Valuation Date within or ending on
the Determination Date except as provided in IRC 416 and regulations
thereunder for the first and second years of a Defined Benefit Plan.
6.11 MINIMUM VESTING All Accrued Benefits of an Employee who has one Hour of
Service after the Plan has initially become Top Heavy will be vested in
accordance with Section A.7 as elected by the Employer in the Adoption
Agreement. This vesting schedule will not be reduced thereafter. This
schedule applies to all benefits defined under IRC 411(a)(7) except those
attributable to Employee Contributions and includes all benefits accrued
before the Plan becomes Top Heavy and before the effective date of
IRC 416.
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ARTICLE VII
TRANSFER TO OR FROM QUALIFIED PLANS
7.1 If elected in the Adoption Agreement and with the consent of the Plan
Administrator, the Participant and the Trustee of another Qualified Plan
in which the Participant has an Accrued Benefit, may direct the transfer
of his Eligible Rollover in such other Qualified Plan to this Plan. The
amount transferred shall be maintained under this Plan and Trust as a
separate non-forfeitable Rollover Account. The Rollover Account shall be
credited with its ratable share of all investment gain or loss earned
under this Plan. Prior to accepting any such transfers the Plan
Administrator may require that the Employee establish that the amount to
be transferred to this Plan meets the requirements of Article VII, and
may require that the Employee provide an opinion of legal counsel that
the amount to be transferred meets the requirements of Section 7.4.
7.2 The Rollover Account may not be withdrawn by the Participant prior to the
Termination Date. The Rollover Account is subject to the requirements of
IRC 401(a)(11) and IRC 417 and Plan Section 3.1.
7.3 Distributees may request the Trustee transfer any portion of his Eligible
Rollover under this Plan to another Eligible Plan. The Plan Administrator
will direct the Trustee to effect such a transfer for the Distributees,
provided that the Distributees has furnished a statement from such other
Plan that is can and will accept the Eligible Rollover.
7.4 ELIGIBLE ROLLOVER means all or a portion of the Participant's Vested
Account Balance excluding; 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 Distributees or the Joint
Life or Joint Life expectancies of the Distributee and Designated
Beneficiary or for a specified period of ten years or more; any
distribution to the extent such distribution is required under IRC
401(a)(9); and the portion of any distribution that is not includable in
gross income determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities.
7.5 ELIGIBLE PLAN means a Plan as described in IRC 408(a), IRC 408(b),
IRC 403(a) or Qualified Trust described in IRC 401(a) that accepts the
Distributee's Eligible Rollover. However, in the case of an Eligible
Rollover to the surviving spouse, an Eligible Plan is an Individual
Retirement Account or Individual Retirement Annuity.
7.6 DISTRIBUTEE includes any employee, former employee, employee's surviving
spouse, or former employee's surviving spouse. The former employees
spouse or former spouse who is the alternative payee under QDRO are
Distributees with regard to the interest of the spouse or former spouse.
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ARTICLE VIII
EMPLOYEE CONTRIBUTIONS
If this Plan allowed Employee Contributions, or requires Matching Contribution
the following Article will apply.
8.1 EMPLOYEE CONTRIBUTIONS ARE NON-FORFEITABLE All values created by Employee
Contributions shall be non-forfeitable at all times and all such
contributions shall provide benefits for the Participant in addition to
benefits provided by Employer Contributions.
8.2 DEDUCTIBLE EMPLOYEE CONTRIBUTION (DEC) A Participant may not make a
Deductible Employee Contribution after December 31, 1986. Any such
contribution made prior to January 1, 1987 shall be maintained as a
separate account for the Participant to be distributed at the
Participant's Retirement Date. No part of the Deductible Employee
Contribution will be used toward the purchase of Insurance. Prior thereto
the Participant may withdraw his Deductible Employee Contribution Account
by written application to the Plan Administrator who will provide written
Notice to the Participant and Spouse of the income tax liability on such
withdrawal and comply with all other requirements for distributions
applicable hereunder.
8.3 MANDATORY EMPLOYEE CONTRIBUTION (MEC) An Employee may not be required to
make a Contribution to this Plan in order to obtain benefits after
October 31, 1989. Any amount that a Participant was required to
contribute in order to obtain benefits from Employer Contributions prior
to the date that the Plan ceases to require such contribution shall be
treated as a Voluntary Employee Contribution.
8.4 SEPARATE ACCOUNTS Deductible Employee Contributions and Voluntary
Employee Contributions shall be maintained as separately identified DEC
Accounts or VEC Accounts for the Participant.
8.5 VOLUNTARY EMPLOYEE CONTRIBUTION (VEC) A Participant may withdraw his
Voluntary Employee Contributions but not the earnings thereon, prior to
his Termination Date. A VEC made after October 31, 1986 is an Addition to
Account and is subject to the requirements of Plan Section 3.1.
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8.6 LIMITATIONS OF EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS
Employee Contributions including VECs and Matching Contributions must
meet the non-discrimination requirements of IRC 401(a)(4), and the
Average Contribution Percentage (hereinafter ACP) test of IRC 401(m). If
Employee Contributions or Matching Contributions are made in conjunction
with a CODA, then the ACP test is in addition to the ADP test under IRC
401(k). Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not be used to satisfy the
ACP test.
a. The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied by
1.25; or
b. The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied by
two (2), provided that the ACP for Participants who are Highly
Compensated Employees does not exceed the ACP for Participants who
are Non-Highly Compensated Employees by more than two (2) percentage
points.
8.7 MULTIPLE USE If one or more Highly Compensated Employees participate in
both a CODA and a Plan subject to the ACP test maintained by the Employer
and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate Limit, then the ACP
of those Highly Compensated Employees who also participate in a CODA will
be reduced (beginning with such Highly Compensated Employee whose ACP is
the highest) so that the limit is not exceeded. The amount by which each
Highly Compensated Employee's Contribution Percentage Amounts is reduced
shall be treated as an Excess Aggregate Contribution. The ADP and ACP of
the Highly Compensated Employees are determined after any corrections
required to meet the ADP and ACP tests. Multiple use does not occur if
both the ADP and ACP of the Highly Compensated Employees does not exceed
1.25 multiplied by the ADP and ACP of the Non-Highly Compensated
Employees.
The Contribution Percentage for any Participant who is a Highly
Compensated Employee and who is eligible to have Contribution Percentage
Amounts allocated to his or her account under two or more Plans described
in IRC 401(a), or arrangements described in IRC 401(k) that are
maintained by the Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same Calendar Year shall be
treated as a single arrangement.
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In the event that this Plan satisfies the requirements of IRC 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 such Sections of
the Code only if aggregated with this Plan, then this Section shall be
applied by determining the Contribution Percentage of Employees as if all
such Plans were a single Plan. For Plan Years beginning after December
31, 1989, Plans may be aggregated in order to satisfy IRC 401(m), only if
they have the same Plan Year.
For purposes of determining the Contribution Percentage of a Participant
who is a five (5) percent owner or one of the ten most Highly-Paid Highly
Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the Contribution
Percentage Amounts and Compensation for the Plan Year of Family Members
(as defined in IRC 414(q)(6). Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who are
Non-Highly Compensated Employees and for Participants who are Highly
Compensated Employees.
For purposes of determining the Contribution Percentage Test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the Trust. Matching Contributions and Qualified
Non-Elective Contributions will be considered made for a Plan Year if
made no later than the end of the twelve month period beginning on the
day after the close of the Plan Year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in such
test.
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.
DEFINITIONS:
"Aggregate Limit" shall mean the sum of (i) 125 percent of the greater of
the ADP of the Non-Highly Compensated Employees for the Plan Year or the
ACP of Non-Highly Compensated Employees under the plan subject to IRC
401(m) for the Plan Year beginning with or within the Plan Year of the
CODA and (ii) the lesser of 200% or two plus the lesser of such ADP or
ACP "lesser" is substituted for "greater" in "(i)" above, and "greater"
is substituted for "lesser" after "two plus the" in "(ii)" if it would
result in a larger aggregate limit.
"Average Contribution Percentage" shall mean the average of the
Contribution Percentages of the Eligible Participants in a group.
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"Contribution Percentage" shall mean the ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts to the
Participant's Compensation for the Plan Year following such Participant's
Entry Date.
"Contribution Percentage Amounts: shall mean the sum of the Employee
Contributions, Matching Contributions, and Qualified Matching
Contributions (to the extent not taken into account for purposes of the
ADP test) made under the Plan on behalf of the Participant for the Plan
Year. Such Contribution Percentage Amounts shall include forfeitures of
Excess Aggregate Contributions or Matching Contributions allocated to the
Participant's account which shall be taken into account in the year in
which such forfeiture is allocated. The Employer may include Qualified
Non-Elective Contributions in the Contribution Percentage Amounts. The
Employer may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective
Deferrals are used in the ACP test and continues to be met following the
exclusion of those Elective Deferrals that are used to meet the ACP test.
"Eligible Participant" shall mean any Employee who is eligible to make an
Employee Contribution, or an Elective Deferral (if the Employer takes
such Contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including
forfeitures) or a Qualified Matching Contribution. If an Employee
Contribution is required as a condition of participation in the Plan, any
Employee who would be a Participant in the Plan if such Employee made
such a contribution shall be treated as an eligible Participant on behalf
of whom no Employee Contributions are made.
"Employee Contribution" shall mean any contribution made to the plan by
or on behalf of a Participant that is included in the Participant's gross
income in the year in which made and that is maintained under a separate
account to which earnings and losses are allocated.
"Matching Contribution" shall mean an Employer contribution made to this
or any other Defined Contribution Plan on behalf of a Participant on
account of an Employee Contribution made by such Participant, or on
account of a Participant's Elective Deferral, under a plan maintained by
the Employer.
8.8. DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
a. Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if forfeitable, or if not forfeitable,
distributed no later than the last day of each Plan Year to
Participants to whose accounts such Excess Aggregate Contributions
were allocated for the preceding Plan Year. Excess Aggregate
Contributions shall be allocated to Participants who are subject to
the family member aggregation rules of IRC 414(q)(6) in the manner
prescribed by the regulations. If such Excess Aggregate Contributions
are distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a ten (10) percent excise
tax will be
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imposed on the Employer maintaining the Plan with respect to those
amounts. Excess Aggregate Contributions shall be treated as annual
additions under the Plan.
b. DETERMINATION OF INCOME OR LOSS Excess Aggregate Contributions shall
be adjusted for any income or loss up to the date of distribution.
The income or loss allocable to Excess Aggregate Contributions is the
income or loss allocable to the Participant's Employee Contribution
Account, Matching Contribution Account (if any, and if all amounts
therein are not used in the ADP test) and, if applicable, Qualified
Non-Elective Contribution Account and Elective Deferral Account for
the Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for the year and
the denominator is the Participant's account balance(s) attributable
to Contribution Percentage Amounts without regard to any income or
loss occurring during such Plan Year.
c. FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS: Forfeitures of Excess
Aggregate Contributions shall be applied to reduce Employer
Contributions but to the extent the excess exceeds the Employer
Contributions or the Employer has already contributed for such Years,
to the Matching Contribution Account of each Non-Highly Compensated
Participant who made Elective Deferrals in the ratio which each such
Participant's Compensation bear to total Compensation of all such
Participants.
d. ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS Excess Aggregate
Contributions shall be forfeited, if forfeitable or distributed on a
pro-rata basis from the Participant's Employee Contribution account,
Matching Contribution account, and Qualified Matching Contribution
account (and, if applicable, the Participant's Qualified Non-Elective
Contribution account or Elective Deferral account, or both).
e. DEFINITIONS:
"Excess Aggregate Contributions" shall mean, with respect to any Plan
Year, the excess of:
The Aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
the maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages
beginning with the highest of such percentages).
Such Determination shall be made after first determining Excess
Elective Deferrals under Section 9.3 and then determining Excess
Contributions pursuant to Section 9.2.
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<PAGE> 45
ARTICLE IX
If this Plan allows for Elective Deferrals the following Article shall apply.
9.1 ACTUAL DEFERRAL PERCENTAGE TEST (IRC 401(a)(4) AND 401(k)(3))
Elective Deferrals must meet the non-discrimination requirements of
IRC 401(a)(4) and 401(k)(3) of the Code.
The Actual Deferral Percentage (hereinafter "ADP") for Participants who
are Highly Compensated Employees for each Plan Year and the ADP for
Participants who are Non-Highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
1. The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied by
1.25; or
2. The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied by
2.0, provided that the ADP for Participants who are Highly
Compensated Employees does not exceed the ADP for Participants who
are Non-Highly Compensated Employees by more than two (2) percentage
points.
The ADP for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test)
allocated to his or her accounts under two or more arrangements described
in IRC 401(k) that are maintained by the Employer, shall be determined as
if such Elective Deferrals (and, if applicable, such Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both)
were made under a single arrangement. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements that have
different Plan Years, all cash or deferred arrangements ending with or
within the same Calendar Year shall be treated as a single arrangement.
In the event that this Plan satisfies the requirements of IRC 401(k),
401(a)(4), or 410(b) only if aggregated with one or more other Plans, or
if one or more other Plans satisfy the requirements of such IRC Sections
only if aggregated with this Plan, then this Section shall be applied by
determining the ADP of Employees as if all such Plans were a single Plan.
For Plan Years beginning after December 31, 1989, Plans may be aggregated
in order to satisfy IRC 401(k) only if they have the same Plan Year.
40
<PAGE> 46
For purposes of determining the ADP of a Participant who is a five (5)
percent owner or one of the ten (10) most highly-paid Highly Compensated
Employees, the Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and Compensation of such
Participant shall include the Elective Deferrals (and, if applicable,
Qualified Non-Elective Contributions and Qualified Matching
Contributions, or both) and Compensation for the Plan Year of Family
Members as defined in IRC 414(q)(6). Family Members, with respect to such
Highly Compensated Employees, shall be disregarded as separate Employees
in determining the ADP both for Participants who are Non-Highly
Compensated Employees and for Participants who are Highly Compensated
Employees.
For purposes of the ADP test, Elective Deferrals, Qualified Non-Elective
Contributions and Qualified Matching Contributions must be made before
the last day of the twelve-month period immediately following the Plan
Year to which Contributions relate.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, used in such
test.
The determination and treatment of the ADP amounts of any Participant
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
3. DEFINITIONS:
Actual Deferral Percentage means for the specified group for any Plan
Year, the average of the ratios (calculated separately for each
Participant in such group) of (1) the amount of Employer
Contributions actually paid over to the Trust on behalf of such
Participant for the Plan Year to (2) the Participant's Compensation
for such Plan Year following such Participant's Entry Date. Employer
Contributions on behalf of any Participant include: (1) Elective
Deferrals made pursuant to the Participant's Deferral Election,
including Excess Elective Deferrals of Highly Compensated Employees,
but excluding Elective Deferrals that are taken into account in the
Contribution Percentage test (provided the ADP test is satisfied both
with and without exclusion of these Elective Deferrals); and (2) at
the election of the Employer, Qualified Non-Elective Contributions
and Qualified Matching Contributions. For purposes of computing
Actual Deferral Percentages, an Employee who would be a Participant
but for the failure to make Elective Deferrals shall be treated as a
Participant on whose behalf no Elective Deferrals are made. Qualified
Matching Contributions and Qualified Non-Elective Contributions may
be taken into account as Elective Deferrals for purposes of
calculating the Actual Deferral Percentages under this Plan or any
other Plan of the Employer, as provided by IRC regulations
1.40(m)-l(b)2 and 1.401k-l(b)(3).
The amount of Qualified Matching Contributions taken into account as
Elective Deferrals for purposes of calculating the Actual Deferral
Percentage, subject to such
41
<PAGE> 47
other requirements as may be prescribed by the Secretary of the
Treasury, shall be such Qualified Matching Contributions that are
needed to meet the Actual Deferral Percentage test.
The amount of Qualified Non-Elective Contributions taken into account
as Elective Deferrals for purposes of calculating the Actual Deferral
Percentages, subject to such other requirements as may be prescribed
by the Secretary of the Treasury, shall be such Qualified
Non-Elective Contributions that are needed to meet the Actual
Deferral Percentage test.
Qualified Matching Contributions means Matching Contributions which
are subject to the distribution and non-forfeit ability requirements
of IRC 401(k) when made.
Qualified Non-Elective Contributions means Employer Contributions
other than Matching Contribution or Qualified Matching Contributions
allocated to Participant Accounts that the Participant may not elect
to receive in cash until distributed from the Plan in accordance with
the distribution provisions applicable to Elective Deferrals and
Qualified Matching Contributions and that are non-forfeitable when
made.
Earnings and losses of the Trust will be allocated to each Account in
the ratio that such account balance bears to all account balances.
9.2 DISTRIBUTION OF EXCESS CONTRIBUTIONS (IRC 401(k)(8) AND 4979)
Notwithstanding any other provision of this Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to Participants
to whose accounts such Excess Contributions were allocated for the
preceding Plan Year. If such excess amounts are distributed more than 2
1/2 months after the last day of the Plan Year in which such excess
amounts arose, a ten (10) percent excise tax will be imposed on the
Employer maintaining the Plan with respect to such amounts. Such
distributions shall be made to Highly Compensated Employees on the basis
of the respective portions of the Excess Contributions attributable to
each of such Employees. Excess Contributions shall be allocated to
Participants who are subject to the Family Member Aggregation Rules of
IRC 414(q)(6) in the manner prescribed by the regulations.
Excess Contributions shall be treated as annual additions under the Plan.
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<PAGE> 48
DETERMINATION OF INCOME OR LOSS Excess Contributions shall be adjusted
for any income or loss up to the date of distribution. The income or loss
allocable to Excess Contributions is the income or loss allocable to the
Participant's Elective Deferral Account (and, if applicable, the
Qualified Non-Elective Contribution Account or the Qualified Matching
Contributions Account or both) for the Plan Year multiplied by a
fraction, the numerator of which is such Participant's Excess
Contributions for the year and the denominator is the Participant's
Account balance attributable to Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both,
if any of such Contributions are included in the ADP test) without regard
to any income or loss occurring during such Plan Year.
ACCOUNTING FOR EXCESS CONTRIBUTIONS Excess Contributions shall be
distributed from the Participant's Elective Deferral Account and
Qualified Matching Contribution Account (if applicable) in proportion to
the Participant's Elective Deferrals and Qualified Matching Contributions
(to the extent used in the ADP test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's Qualified
Non-Elective Contribution Account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective Deferral
Account and Qualified Matching Contribution Account.
DEFINITION:
"Excess Contributions" means with respect to any Plan Year, the excess
of:
The Aggregate Amount of Employer Contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such
Plan Year, over the maximum amount of such Contributions permitted by
the ADP test (determined by reducing Contributions made on behalf of
Highly Compensated Employees in order of the ADPs, beginning with the
highest of such percentages).
9.3 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS (IRC 402(g))
A Participant may assign to this Plan any Excess Elective Deferrals made
during his taxable year by notifying the Plan Administrator on or before
the date specified in the Adoption Agreement of the amount of the Excess
Elective Deferrals to be assigned to the Plan.
Notwithstanding any other provision of the Plan, Excess Elective
Deferrals, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose account
Excess Elective Deferrals were assigned for the preceding year and who
claims Excess Elective Deferrals for such taxable year.
43
<PAGE> 49
The Employer may make a special Non-Elective Contribution to be allocated
in the ratio that each Non-Highly Compensated Participant's Compensation
bears to the total Compensation of all Non-Highly Compensated
Participants that are sufficient to satisfy either the Actual Deferral
Percentage Test or the Average Contribution Percentage Test, or both,
pursuant to regulations under the Code. Such Contribution shall be 100%
vested at all times and be a Qualified Non-Elective Contribution.
DEFINITIONS:
"Elective Deferrals" means any Employer Contributions made to the Plan at
the election of the Participant, in lieu of cash Compensation, and
includes Contributions made pursuant to a Salary Reduction Agreement or
other deferral mechanism. With respect to any taxable year, a
Participant's Elective Deferral is the sum of all Employer Contributions
made on behalf of such Participant pursuant to an Election to defer under
any qualified CODA as described in IRC 401(k), any simplified Employee
pension cash or deferred arrangement as described in IRC 402(h)(1)(B),
any eligible Deferred Compensation Plan under IRC 457, any Plan as
described under IRC 501(c)(18), and any Employer Contributions made on
the behalf of a Participant for the purchase of an Annuity Contract under
IRC 403(b) pursuant to a Salary Reduction Agreement. Elective Deferrals
shall not include any deferrals distributed under 9.3.
"Excess Elective Deferrals" means those Elective Deferrals that are
includible in a Participant's gross income under IRC 402(g) to the extent
such Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code Section. Excess Elective Deferrals
shall be treated as Annual Additions unless distributed no later then the
first April 15, following the Participant's taxable year.
Excess Elective Deferrals distributed after April 15 are includible in
the Participant's gross income in both the taxable year in which deferred
and the taxable year in which distributed.
DETERMINATION OF INCOME OR LOSS: Excess Elective Deferrals shall be
adjusted for any income or loss up to the date of distribution. The
income or loss allocable to Excess Elective Deferrals is the income or
loss allocable to the Participant's Elective Deferral account for the
taxable year multiplied by a fraction, the numerator of which is such
Participant's Excess Elective Deferrals for the year and the denominator
is the Participant's Account Balance attributable to Elective Deferrals
without regard to any income or loss occurring during such taxable year.
Participants who claim Excess Elective Deferrals for the preceding
taxable year must submit their claims in writing to the Plan
Administrator by March 15.
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<PAGE> 50
9.4 ELECTIVE DEFERRAL ACCOUNTS, QUALIFIED NON-ELECTIVE ACCOUNTS OR QUALIFIED
MATCHING CONTRIBUTION ACCOUNTS shall not be distributed prior to the
earlier of a) Termination Date, b) Death, c) Disability, d) Termination
of the Plan without establishment of another Defined Contribution Plan,
e) attainment of Age 59 1/2 or f) disposition by a corporation to, i) an
unrelated corporation of substantially all the assets as defined in IRC
409(d)(2) used in a trade or business of such corporation or ii) an
unrelated subsidiary as defined in IRC 409(d)(3), if such entity
continues to maintain the Plan, but only with respect to Employees who
continue employment with such entity. All distributions that may be made
pursuant to one or more of the foregoing distributable events are subject
to the consent requirements of IRC 401(a)(11) and IRC 417.
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<PAGE> 51
ARTICLE X
HARDSHIP DISTRIBUTION
10.1 HARDSHIP DISTRIBUTION If the Adoption Agreement so provides, Distribution
of Elective Deferrals (and earnings thereon accrued as of December 31,
1988) may be made to a Participant in the event of hardship. For the
purposes of this section, hardship is defined as an immediate and heavy
financial need of the Employee where such Employee lacks other available
resources. Hardship Distributions are subject to the spousal consent
requirements contained in IRC 401(a)(11) and 417.
1. The following are the only financial needs considered immediate and
heavy: funeral expenses of an immediate family member, deductible
medical expenses (within the meaning of IRC 213(d)) of the Employee,
the Employee's spouse, children, or dependents; the purchase
(excluding mortgage payments) of a principal residence for the
Employee; payment of tuition for the next quarter or semester,
post-secondary education for the Employee, the Employee's spouse,
children or dependents; or the need to prevent the eviction of the
Employee from, or a foreclosure on the mortgage of, the Employee's
principal residence, including any federal, state, or local taxes or
penalties reasonably expected to result from the distribution.
2. A distribution will be considered as necessary to satisfy an immediate
and heavy financial need of the Employee only if:
a) The Employee has obtained all distributions, other than Hardship
Distributions, and all non taxable loans under all Plans
maintained by the Employer;
b) All Plans maintained by the Employer provide that the Employee's
Elective Deferrals (and Employee Contributions) will be suspended
for twelve months after the receipt of the Hardship Distribution;
c) The distribution is not in excess of the amount of an immediate
and heavy financial need; and
d) All Plans maintained by the Employer provide that the Employee may
not make Elective Deferrals for the Employee's taxable year
immediately following the taxable year of the Hardship
Distribution in excess of the applicable limit under IRC 402(g)
for such taxable year less the amount of such Employee's Elective
Deferrals for the taxable year of the Hardship Distribution.
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<PAGE> 52
ARTICLE XI
LOANS
11.1 If the Adoption Agreement so provides and subject to a Participant's
Election, the Plan Administrator may direct the Trustee to make a Loan to
the Participant. Loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to other
employees. If the Participant is married, the Loan application must be
made in the form of a Qualified Election in which the Spouse must give
written consent to the Participant's request for the Loan within the
ninety (90) day period before the time that the Participant's vested
interest is used as security for the Loan. A new Qualified Election and
spousal consent shall be obtained if such vested interest is added to
increase the amount of Loan security. Such consent shall be deemed to
meet the consent requirement for any subsequent spouse.
No Loan will be made to any Owner-Employee or Shareholder-Employee who is
an employee or officer of an electing small business corporation who owns
(or is considered as owning within the meaning of IRC 318(a)(1)), on any
day during the taxable year of such corporation, more than five (5)
percent of the outstanding stock of the corporation.
11.2 Loans shall be adequately secured by the Participant's Vested Account
Balance, and shall bear a reasonable rate of interest and shall require
repayment of principal interest in level payments not less frequently
then quarterly over a period not later than five (5) years from the date
the Loan is made. Reasonable interest means the rate that a credit union
or savings bank would charge if it were to make the same Loan to the
Participant.
11.3 The outstanding balance of all Loans to a Participant under all Plans of
the Employer, shall not exceed the lesser of $50,000 reduced by the
highest outstanding balance of all Loans during the twelve (12) month
period preceding the date of the new Loan over the total of all
outstanding loans as of the day the Loan is granted, or the greater of
fifty percent (50%) of the Vested Account Balance, or $10,000.
11.4 A Loan may not be granted to a Participant who has a withdrawable balance
in a Voluntary Employee Contribution Account under any plan of the
Employer, If a Participant fails to repay the Loan as required, the Plan
Administrator shall take action to collect the outstanding principal and
interest due, and if such amount is not recoverable from the Participant
it shall be treated as a distribution described in IRC 71(p)(1)(A).
However, the Plan Administrator will take no action which would
disqualify the Plan under IRC 401(a) or to effect the repayment of a Loan
until a distributable event occurs.
11.5 A Loan shall be an Earmarked Investment of the Participant's Account and
all investment gain or loss or expense of such Earmarked Investment will
be credited or debited to the Participant's Account. Loans are subject to
the approval of the Plan Administrator who may adopt additional rules and
regulations pertaining to Loans.
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<PAGE> 53
ARTICLE XII
TRUST
12.1 The Trustee or Trustees appointed hereunder have the responsibility, duty
and obligation to receive and hold all contributions, manage all assets,
subject to the direction of any Investment Manager appointed as to all or
a portion of such assets, and pay benefits in accordance with the Plan
and written directions of the Plan Administrator. The Trustee may employ
a bank whose duties shall be custodial, clerical, and record-keeping
nature.
12.2 The Trustee shall invest the Trust Fund, without distinction between
principal and income, in such securities or property, real or personal,
wherever situated as it shall deem advisable, including, but not limited
to, stocks, bonds, and other evidences of debt or ownership, and real
estate or any interest therein. The Trustee shall consider, among other
factors, the short and long-term financial needs of the Plan based on
information furnished by the Plan Administrator. The Trustee shall give
due regard to any limitations imposed by the IRC or ERISA so that the
Plan may be a Qualified Plan and Trust. The Trustee may transfer to a
common or pooled Trust Fund maintained by a corporate Trustee all or part
of the Trust assets which shall then be subject to the terms and
provisions of such common or pooled Trust Fund. The Trustee may withdraw
from such common or pooled trust fund any Trust assets as it deems
advisable.
12.3 The Trustee may pool all or part of the assets with any other Trust
exempt under IRC 501(a) and may commingle such assets and make joint or
common investments and carry joint accounts on behalf of this Trust and
such other trust(s), allocating undivided shares or interest in the
pooled assets of the two or more trusts in accordance with their
respective interests. The Trustee may exercise all rights and privileges,
not specifically mentioned herein, as it deems necessary to carry out the
purpose of the Plan. The provisions of any such Trust Agreement shall be
deemed as part of this Trust Agreement with respect to any such
investment or reinvestment.
12.4 If the Plan Administrator has so empowered the Participants, they may
direct the Trustee as to the investment of their Account(s) as defined in
the Plan. Such direction shall be in writing on such forms as the Trustee
shall require and the Trustee shall follow the Participant's direction at
all times, subject to any Plan restrictions on the payment of life
insurance premiums. The Trustee shall not be responsible for the
Participant's Election to Earmark or direct the investment of his
Account(s), nor shall the Trustee be responsible for any loss or expense
incurred as a result of a compliance with a Participant's Election to
Earmark his Account. The Trustee may refuse to comply with a
Participant's directions if it deems the investment improper by virtue of
applicable law. Any costs of complying with the Participant's direction
shall be borne by his Account.
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<PAGE> 54
12.5 The Trustee shall be paid reasonable compensation. Any individual serving
as Trustee who receives full-time pay from the Employer shall not receive
compensation from this Plan. The Trustee shall be reimbursed for
reasonable expenses, including counsel fees incurred as Trustee. Such
compensation and expenses shall be paid from the Trust Fund unless paid
by the Employer. All taxes of any kind that may be levied or assessed
upon, or in respect of the Trust Fund or the income thereof, shall be
paid from the Trust Fund.
12.6 Within sixty (60) days after the end of the Trust Year the Trustee shall
furnish to the Plan Administrator a written statement of account with
respect to such Year setting forth the net income, or loss, and losses
realized upon sales or other disposition of assets, the increase, or
decrease in asset values, distributions made to or for Participants and
such further information as the Trustee or Plan Administrator requires.
12.7 The Trustee may resign at any time by giving thirty (30) days written
notice to the Employer. The Employers may remove the Trustee by written
notice at least thirty (30) days before its effective date. Upon the
death, resignation, incapacity, or removal of any Trustee, a successor
will be appointed by the Employer, and such successor shall be vested
with all the estate, rights, powers, and duties as if he were originally
named as a Trustee. Until such a successor is appointed, the remaining
Trustees shall have full authority to act under the terms of this
Agreement.
12.8 The Trustees may appoint an Investment Manager or Managers to manage part
or all the assets of the Plan. No Trustee shall be under any obligation
to invest or otherwise manage assets of the Plan subject to the
Management of such Investment Manager. An Investment Manager shall mean
any person who:
1) has the power to manage, acquire or dispose of any assets, and
2) has acknowledged in writing that he is a fiduciary with respect to the
Plan, and
3) is either: a) registered as an Investment Advisor under the Investment
Advisors Act of 1940; b) a bank as defined in that act; or c) an
Insurance Company qualified to perform services under item 1) above,
under the laws of more than one State.
49
<PAGE> 55
SAVINGS BANKS EMPLOYEES RETIREMENT ASSOCIATION
401(k) PLAN
WITH CASH OR DEFERRED ARRANGEMENT
ADOPTION AGREEMENT
<TABLE>
<S> <C> <C>
The undersigned Employer adopts this Plan and Trust for the exclusive benefit of its eligible employees
and beneficiaries to provide retirement and pre-retirement benefits.
The Plan shall operate in accordance with the Basic Plan Document and the Adoption Agreement provisions
as elected.
PLAN AND TRUST NAME: SBERA 401(k) PLAN AS ADOPTED BY MEDFORD SAVINGS BANK
---------------------
EMPLOYER NAME: MEDFORD SAVINGS BANK
------------------------------------------------
BUSINESS STARTED: 1869
------------------------------------------------
FEDERAL IDENTIFICATION NUMBER: 04-1609330
------------------------------------------------
PLAN TRUSTEE(S): Savings Banks Employees Retirement Association
------------------------------------------------
PLAN ADMINISTRATOR: Thomas Forese, Jr.
------------------------------------------------
A1. a) INITIAL EFFECTIVE DATE OF PLAN: November 1, 1994
------------------------------------------------
b) RESTATED AS OF: ________________________________________________
A2: The plan Year is a 12 month period ending on October 31
------------------------------------------------
The Limitation Year is The Plan Year.
The Valuation Date is the last day of the Plan Year.
A3. COMPENSATION means:
X a) reported W-2 earnings
----
____b) Compensation as defined in IRC 415(c)(3)
[Elect a) or b)]
____c) Compensation as defined in a) or b) shall exclude bonuses
____d) for a highly Compensated Employee Compensation as defined in a) or b) shall exclude
i) ____ Compensation in excess of $___________________________________
ii)____ Compensation in excess of $___________________________________ which is paid as
commission
e) Amounts contributed pursuant to a Salary Reduction Agreement and which is not included
in the Participant's gross income under IRC 125, 402(a)(8), 401(h) or (403(b) shall be
X included in Compensation
---
--- not included in Compensation
Compensation as elected means Compensation which is actually paid to a Participant during
the Plan Year and earned from the Participant's Entry Date.
K-17 (11-94) -AA1-
</TABLE>
<PAGE> 56
<TABLE>
<S> <C>
A4. DATES:
a) NORMAL RETIREMENT AGE is 65:
b) EARLY RETIREMENT AGE is 59 1/2:
A5: ELIGIBILITY
a) An Employee covered by a collective bargaining agreement for which retirement benefits have been
the subject of good faith bargaining is
i) an Eligible Employee
----
ii) X not an Eligible Employee
---- (Elect i) or ii)]
b) _____ A Commissioned Employee shall not be an Eligible Employee
c) Participation will commence upon attaining
i) X Age 21 [Maximum 21]
---- ----
ii) X and has completed 1 Years of Service
---- [Enter 0 or 1]
A6. ENTRY DATE: shall be the first day of the month that eligibility requirement is satisfied.
A7. VESTING
An Employer provided Account subject to vesting shall be non forfeitable at Normal Retirement Age
and before then
X a) 100% upon the completion of 1 Years of Service [Enter 0, 1, 2 or 3]
----
____b) vest according to the following schedule:
less than 2 Years of Service 0%
2 Years of Service 20%
3 Years of Service 40%
4 Years of Service 60%
5 Years of Service 80%
6 or more Years of Service 100%
[Elect a) or b]
N/A c) Years of Service prior to the Initial Effective Date of this Plan will not be taken into
account for purposes of Vesting. [N/A if all Service credited].
A8. DISTRIBUTION
A terminated Employee may elect to receive his/her Vested Account Value on his/her Termination Date.
Any Distribution shall be subject to the requirements of Article III of the Basic Plan Document and
IRC 417.
A9. FORFEITURES shall
X a) reduce Employer Contribution
----
____b) be reallocated in accordance with A14(b)
[Elect a) or b)]
-AA2-
</TABLE>
<PAGE> 57
<TABLE>
<S> <C>
A10. INTEGRATION LEVEL is not applicable.
A11. ELECTIVE DEFERRALS
A Participant may direct the Employees to make contributions to the Plan pursuant to a Salary
Reduction Agreement effective coincident with or next following the Employee's payroll period.
Elective Deferrals shall be 100% non-forfeitable at all times. The Salary Reduction Agreement
shall not be retroactive. A Participant may change or terminate his Salary Reduction Agreement
at any time.
The maximum Elective Deferral shall not exceed the lessor of the Dollar Limitation under
IRC 402(g) in effect for the Calendar Year in which the Taxable Year begins or 15% of the
Participant's Annual Compensation (maximum 15%).
A12. TOP HEAVY ELECTION
If the Employer maintains a Defined Benefit or another Defined Contribution Plan and the Plans
are or become Top Heavy the minimum benefits required under Article VI. will be provided under
____a) this Plan
X b) the other Plan
---- [Elect a) or b)]
For the purposes of determining the Top Heavy ratio under a Defined Benefit Plan the Present
Value of Benefits shall be based on
X c) 7% interest rate and
---- -----
X d) 1971 1AM 3 year Setback for males Mortality Table.
---- -----------------------------------
A13. EMPLOYER MATCHING CONTRIBUTIONS
a) The Employer Matching Contribution will be allocated to each Participant
i) X who has completed a Year of Service in the Plan Year
-----
ii) _____ who is employed on the Anniversary Date
iii)_____ regardless of Service
b) The Employer Matching Contribution shall be
i) X discretionary each year and allocated proportionate to the Elective Deferral of
----- each Participant.
ii) _____ _______% of the Participants Elective Deferral up to the lessor of
_______1) $___________ or
_______2) ____________% of the Participants Annual Compensation
c) The Employer Matching Contribution will
i) X be 100% vested at all times and be a Qualified Matching Contribution.
-----
iii)_____ Vest in accordance with the vesting schedule elected in A7 and not be a Qualified
Matching Contribution
[Elect i) or ii)]
A14. NON ELECTIVE CONTRIBUTION AND ALLOCATION
a) The Employer _____ may or X may not make a Non Elective Contribution. Any Non Elective
---
Contribution will be allocated to each Participant who
-AA3-
</TABLE>
<PAGE> 58
[Form S-8 for
SBERA 401(k) Plan]
<TABLE>
<S> <C> C
i) X has completed one Year of Service in the Plan Year.
----
ii)____ is employed on the Anniversary Date.
[Elect i) or ii)]
b) The Non Elective Contribution, and if A9.b) is elected, forfeitures will be allocated to provide
any minimum allocation required under Article VI. and any remaining Contribution shall be
allocated to each Participant Key Employee in the same percentage as provided to Participating Non
Key Employees under Article VI. and any remaining contribution shall be allocated in the ratio
that each Participants Compensation bears to the Compensation of all Participants.
The Non Elective Contribution, if any, shall vest in accordance with Section A7. hereof.
A15. ROLLOVER CONTRIBUTIONS
a)____ are not permitted
b) X are permitted as provided in Article VII.
---- [Elect a) or b)]
A16. HARDSHIP DISTRIBUTIONS
a)____ are not permitted
b) X are permitted as provided in Article X.
---- [Elect a) or b)]
A17. LOANS
a)____ are not permitted
b) X are permitted as provided in Article XI.
---- [Elect a) or b)]
CONTROLLING STATE LAW. The laws of Massachusetts shall control this plan, except as preempted by
-------------
Federal Law.
ADOPTION.
A. An employer who adopts this Plan may obtain reliance that this Plan is qualified under
IRC 401 by requesting a determination letter from the appropriate Key District Director of
Internal Revenue.
B. The Employer hereby adopts this Plan and Trust by its execution of this Adoption Agreement
and agrees to be bound by its terms. The Employer agrees to the adoption of the Plan by the
Participating Employers set forth hereof.
C. This Adoption Agreement may only be used in conjunction with the Defined Contribution Basic Plan
document #01.
This Plan is adopted by X MEDFORD SAVINGS BANK on X Nov. 1, 1994 (Date)
------------------------------------------ ---------------------------
BY: X /s/ Jane N. Griffin for the Employer X (Date)
--------------------------------------- ---------------------------
BY: accepted by Trustee (Date)
--------------------------------------- ---------------------------
Employer Address: X 29 High St., Medford, MA 02155
----------------------------------
X
----------------------------------
-AA4-
</TABLE>
<PAGE> 1
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
Employer Identification Number:
DATE: 6 JAN 1996 04-1609330
File Holder Number:
043004235
MEDFORD SAVINGS BANK Person to Contact:
29 HIGH STREET JOHN LILJENULT
MEDFORD, MA 02155 Contact Telephone Number:
(718) 488-2411
Plan Name:
SBERA 401K PLAN AS ADOPTED BY
MEDFORD SAVINGS BANK
Plan Number: 002
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination letter is applicable for the plan adopted on November 1,
1994.
This plan has been mandatorily disaggregated, permissively aggregated, or
restructured to satisfy the nondiscrimination requirements.
This letter is issued under Rev. Proc. 93-39 and considers the amendments
required by the Tax Reform Act of 1986 except as otherwise specified in this
letter.
This plan satisfies the nondiscriminatory current availability requirements
of section 1.401(a) (4)-4(b) of the regulations with respect to those benefits,
rights, and features that are currently available to all employees in the plan's
coverage group. For this purpose, the plan's coverage group consists of those
employees treated as currently benefiting for purposes of demonstrating that the
plan satisfies the minimum coverage requirements of section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan satisfies
qualification requirements as amended by the Uruguay Round
Letter 835 (DO/CG)
<PAGE> 2
-2-
MEDFORD SAVINGS BANK
Agreements Act, Pub. L. 103-465.
We have sent a copy of this letter to your representative as indicated in
the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
/s/ Herbert J. Huff
Herbert J. Huff
District Director
Enclosures:
Publication 794.
letter 835 (DO/CG)
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-8 of Medford Bancorp, Inc. (Holding Company for Medford Savings Bank)
of our report dated January 24, 1997 appearing in the Medford Savings Bank
Annual Report on Form F-2 for the year ended December 31, 1996, which is
included in Medford Bancorp, Inc.'s current report on Form 8-K filed with the
Securities and Exchange Commission on November 26, 1997.
/s/ Wolf & Company, P.C.
Boston, Massachusetts
December 23, 1997
