<PAGE>
As filed with the Securities and Exchange Commission on November 15, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WESTBOROUGH FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Massachusetts Application Pending
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 E. Main Street
Westborough, MA 01581
(508)366-4111
(Address of Principal Executive Offices)
--------------
WESTBOROUGH BANK 401(K) PLAN
(Full title of the Plan)
---------------
Mr. Joseph F. MacDonough
President and Chief Executive Officer
Westborough Savings Bank
100 E. Main Street
Westborough, MA 01581
(508) 366-4111
Copy to:
Richard A. Schaberg, Esq.
Thacher Proffitt & Wood
1700 Pennsylvania Avenue, N.W. Suite 800
Washington, D.C. 20006
(202) 347-8400
(Name and address, telephone number including area code, of agent for service)
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to be Registered Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Registered(1) Price Per Share (2) Aggregate Offering Price (2) Registration Fee
- ------------------------------------ ------------- ------------------------- ---------------------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 50,000 shares $10.00 $500,000 $139.00
Plan Participation Interests(3) -- -- -- --
===================================== ============= ========================== ============================ =================
</TABLE>
(1) Based on the estimated number of shares of common stock of Westborough
Financial Services, Inc. under the SBERA 401(k) Plan as adopted by
Westborough Bank ("Plan") that may be purchased with the current assets
of the Plan and the projected contributions to the Plan.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h) of the Securities Act of 1933, as amended
(the "Securities Act"), pursuant to which shares of common stock of
Westborough Financial Services, Inc. (the "Company") offered pursuant
to the Plan are deemed to be offered at $10 per share, the price at
which shares of Company common stock are being offered to the public
pursuant to the Registration Statement on Form SB-2 (Registration No.
333-80075).
(3) In addition, pursuant to Rule 416(c) under the Securities Act, this
registration statement also covers an indeterminate amount of interests
to be offered pursuant to the employee benefit plan described herein.
- --------------------------------------------------------------------------------
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be filed with the Securities and Exchange
Commission (the "Commission").
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with the Commission.
Note: The document containing the information specified in
this Part I will be sent or given to employees as specified by Rule 428(b)(1).
Such document need not be filed with the Commission either as part of this
registration statement or as prospectuses or prospectus supplements pursuant to
Rule 424. These documents and the documents incorporated by reference in this
registration statement pursuant to Item 3 of Part II of this form, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended ("Securities Act").
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents and information heretofore filed with
the Commission by the Registrant are incorporated by reference
in this registration statement:
(1) the Registrant's Registration Statement on Form SB-2 dated
September 23, 1999, Registration No. 333- 80075, as amended by
Amendment No. 1 to Form SB-2 dated October 1, 1999, and any
amendments thereto; and
(2) the description of the Registrant's common stock (the "Common
Stock") contained in the Registrant's Registration Statement
on Form SB-2 dated September 23, 1999, Registration No.
333-80075, as amended by Amendment No. 1 to Form SB-2 dated
October 1, 1999, and any amendments thereto.
All documents filed by the Registrant pursuant to Sections 13,
14, or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
subsequent to the date hereof and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold are incorporated herein by
reference, and such documents shall be deemed to be a part hereof from the date
of filing of such 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 of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VI, Section 6.7 of the Articles of Organization of Westborough
Financial Services, Inc. (the "Company") provides that any person involved in a
proceeding by reason of his or her position as a director, officer, employee or
agent of the Company or another corporation, partnership, joint venture, trust
or other enterprise, will be indemnified and held harmless to the fullest extent
allowed by the Massachusetts Business Corporation Law. Such persons are
indemnified against all expense, liability and loss caused by acts in good faith
and reasonably believed to be in the best interests of the Company. Proceedings
initiated by the indemnitee himself must be authorized by the Board of Directors
of the Company, except for suits brought to enforce a right to indemnification.
Section 6.7 further provides that the Company may maintain insurance to protect
itself and any director, officer, employee or agent against any expense, whether
or not the Company would have the power under the Massachusetts Business
Corporation Law to indemnify such person for the expense. Section 6.7
additionally grants the Company the right to execute independent indemnification
contracts on any terms not prohibited by law.
Article VI, Section 6.8 of the Company's Articles of Organization
relieves directors from personal liability for breaches of their fiduciary
duties. However, Section 6.8 does not eliminate or limit such liability (i) for
any breach of a director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Sections 61 or 62 of
Chapter 156B of the General Laws of the Commonwealth of Massachusetts, or (iv)
with respect to any transaction from which the director derived an improper
personal benefit.
Article XI of The Westborough Bank's (the "Bank") Bylaws provide that it
shall indemnify any person against whom an action is brought or threatened
because that person is or was a legal representative, director, officer,
employee or agent of the Bank, provided that such person acted in good faith in
the reasonable belief that such action was in, or not opposed to, the best
interest of the Bank.
Article VI of the Bylaws of Westborough, MHC (the "Mutual Company")
provides for indemnification of officers, corporators, trustees and employees
for actions taken in good faith and reasonably believed to be in the best
interests of the Mutual Company. Article VI also contains provisions on
insurance and independent indemnification contracts that are similar to the
provisions of Section 6.7 of the Company's Articles of Organization.
The Company is party to an Employment Agreement with each of Messrs.
Joseph F. MacDonough and John L. Casagrande (the "Senior Executives"). These
Employment Agreements provide for the Company to indemnify and insure the Senior
Executives against personal liability for acts or omissions in connection with
service to the Company or the Bank. The insurance coverage provided to the
Senior Executives is required to be of the same scope and on the same terms and
conditions as the coverage (if any) provided to other current or former officers
or directors of the Company and the Bank. The Company must also indemnify the
Senior Executives to the fullest extent and on the most favorable terms and
conditions that similar indemnification is offered to any current or former
director or officer of the Company, the Bank, or any subsidiary or affiliate
thereof.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
<PAGE>
ITEM 8. EXHIBITS.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
4.1 Articles of Organization of Westborough Financial Services, Inc., incorporated by reference to the
Registrant's Registration Statement on Form SB-2, dated October 1, 1999, Registration No. 333-80075,
and any amendments thereto.
4.2 Bylaws of Westborough Financial Services, Inc., incorporated by reference to the Registrant's Registration
Statement on Form SB-2, dated October 1, 1999, Registration No. 333-80075, and any amendments
thereto.
4.3 Form of Stock Certificate of Westborough Financial Services, Inc., incorporated by reference to the
Registrant's Registration Statement on Form SB-2, dated October 1, 1999, Registration No. 333-80075,
and any amendments thereto.
5.1 Opinion of Thacher Proffitt & Wood, counsel for Registrant, as to the legality of the securities being
registered.
23.1 Consent of Thacher Proffitt & Wood (included in Exhibit 5.1 hereof).
23.2 Consent of Wolf & Company, P.C.
99.3 SBERA 401(k) Plan as adopted by Westborough Bank.
</TABLE>
ITEM 9. UNDERTAKINGS.
A. QUALIFICATION OF PLAN. The undersigned Registrant hereby undertakes
to submit the Plan and any amendment thereto to the Internal Revenue Service
("IRS") in a timely manner and has made or will make all changes required by the
IRS in order to qualify the Plan under section 401(a) of the Internal Revenue
Code of 1986, as amended.
B. RULE 415 OFFERING. 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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining 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.
(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.
C. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's
<PAGE>
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
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.
D. INCORPORATED ANNUAL AND QUARTERLY REPORTS. The undersigned
registrant hereby undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the latest
annual report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation S-X
are not set forth in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to provide such
interim financial information.
E. FILING OF REGISTRATION ON FORM S-8. 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 Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant for 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 Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Westborough, Commonwealth of Massachusetts on the
15th day of November, 1999.
WESTBOROUGH FINANCIAL SERVICES, INC.
(Registrant)
By:/s/Joseph F. MacDonough
-----------------------------------
Joseph F. MacDonough
President, Chief Executive Officer
and Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Joseph F. MacDonough President, Chief Executive Officer November 15, 1999
- ------------------------------------ (Principal Executive Officer) and
Joseph F. MacDonough Director
/s/ John L. Casagrande Vice President and Treasurer November 15, 1999
- ------------------------------------ (Principal Financial and Accounting
John L. Casagrande Officer)
/s/ Nelson P. Ball Director November 12, 1999
- -------------------------------------
Nelson P. Ball
/s/ Edward S. Bilzerian Director November 15, 1999
- -------------------------------------
Edward S. Bilzerian
/s/ David E. Carlstrom Director November 15, 1999
- -------------------------------------
David E. Carlstrom
/s/ William W. Cotting, Jr. Director November 13, 1999
- -------------------------------------
William W. Cotting, Jr.
/s/ Robert G. Daniel Director November 15, 1999
- -------------------------------------
Robert G. Daniel
/s/ Earl H. Hutt Director November 12, 1999
- -------------------------------------
Earl H. Hutt
/s/ Walter A. Kinell, Jr. Director November 12, 1999
- -------------------------------------
Walter A. Kinell, Jr.
/s/ Robert A. Klugman Director November 15, 1999
- -------------------------------------
Robert A. Klugman
/s/ Roger B. Leland Director November 15, 1999
- -------------------------------------
Roger B. Leland
/s/ Paul F. McGrath Director November 18, 1999
- -------------------------------------
Paul F. McGrath
/s/ Charlotte C. Spinney Director November 15, 1999
- -------------------------------------
Charlotte C. Spinney
/s/ Phyllis A. Stone Director November 12, 1999
- -------------------------------------
Phyllis A. Stone
/s/ James E. Tashjian Director November 15, 1999
- -------------------------------------
James E. Tashjian
<PAGE>
/s/ Daniel G. Tear Director November 10, 1999
- -------------------------------------
Daniel G. Tear
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1933, the directors (or other persons who administer the employee benefit plan)
have duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Westborough, Commonwealth
of Massachusetts, on November 15, 1999.
Westborough Bank 401(k) Plan
/s/ Joseph F. MacDonough
-------------------------------------------
By: Joseph F. MacDonough
President, Chief Executive Officer and
Director of Westborough Bank
<PAGE>
Exhibit 5.1
[Letterhead of Thacher Proffitt & Wood]
November 12, 1999
Westborough Financial Services, Inc.
100 E. Main Street
Westborough, Massachusetts 01581
Re: SBERA 401(k) PLAN AS ADOPTED BY WESTBOROUGH BANK
Ladies and Gentlemen:
We have acted as counsel for Westborough Financial Services,
Inc., a corporation organized and existing under the laws of the Commonwealth of
Massachusetts (the "Corporation"), in connection with the filing of a
registration statement on Form S-8 under the Securities Act of 1933, as amended
("Registration Statement") with respect to 50,000 shares of its common stock,
par value $0.01 per share ("Shares"), to be issued to participants in the SBERA
401(k) Plan as adopted by Westborough Bank ("Plan") and with respect to an
indeterminable amount of participation interests in the Plan ("Plan Interests").
In rendering the opinion set forth below, we do not express any opinion
concerning law other than the laws of the Commonwealth of Massachusetts and the
federal securities laws.
We have examined originals or copies, certified or otherwise
identified, of such documents, corporate records and other instruments as we
have deemed necessary or advisable for purposes of this opinion. As to matters
of fact, we have examined and relied upon the Plan and, where we have deemed
appropriate, representations or certificates of officers of the Corporation or
public officials. We have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents submitted
to us as copies.
Based on the foregoing, we are of the opinion that the Shares
and Plan Interests which are being registered pursuant to the Registration
Statement have been duly authorized and, when
<PAGE>
Westborough Financial Services, Inc.
November 12, 1999 Page 2.
issued and paid for in accordance with the terms of the Plan, such Plan
Interests will be validly issued, and such Shares will be validly issued, fully
paid and non-assessable.
In rendering the opinion set forth above, we have not passed
upon and do not purport to pass upon the application of "doing business" or
securities or "blue-sky" laws of any jurisdiction (except federal securities
laws).
This opinion is given solely for the benefit of the
Corporation and purchasers of Shares and interests under the Plan, and no other
person or entity is entitled to rely hereon without express written consent.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
THACHER PROFFITT & WOOD
By: /s/ Richard A. Schaberg
------------------------------
Richard A. Schaberg
\<PAGE>
Exhibit 23.2
[Letterhead of Wolf & Co., P.C.]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Registration Statement on Form S-8, of our report dated
November 9, 1998, except for Note 15 as to which the date is March 15, 1999, on
the consolidated balance sheets of Westborough Savings Bank and subsidiaries as
of September 30, 1998 and 1997, and the related consolidated statements of
income, changes in surplus and cash flows for each of the years in the
three-year period ended September 30, 1998, and to the use of our name and the
statements with respect to us, as appearing under the headings "Experts" and
"Legal and Tax Opinions" in the Prospectus. The above-mentioned reports are
included in the Registration Statement on Form SB-2 filed by Westborough
Financial Services, Inc. (Registration No. 333-80075) and incorporated herein.
/s/ Wolf & Company, P.C.
- ------------------------
Wolf & Company, P.C.
Boston, Massachusetts
November 12, 1999
<PAGE>
Exhibit 99.3
SAVINGS BANKS EMPLOYEES RETIREMENT ASSOCIATION
401(k) PLAN
WITH CASH OR DEFERRED ARRANGEMENT
ADOPTION AGREEMENT
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.
<TABLE>
<S> <C>
PLAN AND TRUST NAME: SBERA 401(k) PLAN AS ADOPTED BY
----------------------
WESTBOROUGH SAVINGS BANK
------------------------------------------------------
EMPLOYER NAME: WESTBOROUGH SAVINGS BANK
------------------------------------------------------
BUSINESS STARTED: February 9, 1869
------------------------------------------------------
FEDERAL IDENTIFICATION NUMBER: 04-1960690
------------------------------------------------------
PLAN TRUSTEE(S): Savings Banks Employees Retirement Association
------------------------------------------------------
PLAN ADMINISTRATOR: Thomas Forese, Jr.
------------------------------------------------------
A1. a) INITIAL EFFECTIVE DATE OF PLAN: November 1, 1995
-------------------------------------------------
b) RESTATED AS OF: -------------------------------------------------
A2. The plan Year is a 12 month period ending on October 31
-------------------------------------------------
</TABLE>
The Limitation Year is The Plan Year.
The Valuation Date is the last day of the Plan Year.
A3. COMPENSATION means:
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
<PAGE>
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.
A4. DATES:
a) NORMAL RETIREMENT AGE IS 65:
b) EARLY RETIREMENT AGE is Age 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:
-----
<TABLE>
<S> <C>
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)]
</TABLE>
<PAGE>
NA 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)]
A10. INTEGRATION LEVEL is not applicable.
A11. ELECTIVE DEFERRALS
A Participant may direct the Employer 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 beings 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.
----- ---------------------------------
<PAGE>
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 Annual Compensation
----
c) The Employer Matching Contribution will
i) x be 100% vested at all times and be a Qualified Matching
----- Contribution.
ii) 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
i) x as 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 Participating 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
-----
<PAGE>
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 Westborough Savings Bank on X 11/1/95 (Date)
------------------------------ ----------------
BY: X /s/ John L. Casagrande for the Employer X 9/8/95 (Date)
--------------------------- --------------------------
BY: accepted by Trustee (Date)
----------------------- -------------------------
Employer Address: X 100 East Main Street
-----------------------------
X Westborough, MA 01511
-----------------------------
<PAGE>
STATEMENT OF OPERATIONS
The Company did not generate any revenues for the fiscal year ended
March 31, 1999 or the three months ended June 30, 1999, as it was in the
process of establishing the necessary infrastructure that will enable it to
meet its acquisition goals over the next 24 months. During the period ended
September 30, 1999, the Company completed its acquisition of DSA Computers,
Inc. and TEAM, Inc., and therefore it did generate revenues for the first
time during the current period. For the period, the Company generated
$496,134 in revenues. The cost of sales was $283,993. Gross profit for the
period was $212,141. Gross profit margins were 43%. Total expenses for the
period were $464,624 of which $224,170 was non-cash expenses relating to the
issuance of common stock and common stock options issued to consultants.
Loss from operations for the three months ended September 30, 1999 was
$252,483. The Company achieved a $40,700 one-time gain associated with
cancellation and the subsequent renegotiations of a telephone switching
equipment lease. Consequently, the net loss for the period was $212,236 or
$0.08 per share.
<PAGE>
---------------------------------------------------------
SAVINGS BANKS EMPLOYEES
RETIREMENT ASSOCIATION
Defined Contribution
Basic Plan Document
---------------------------------------------------------
<PAGE>
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.
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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 3 1,
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.
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.
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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.
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
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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.
1.18 HIGHLY COMPENSATED EMPLOYEE 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 "LookBack Year" and
the Employee is one of the one
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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.
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.
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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
a. such Employee is covered by a money purchase pension plan
providing: (1) a nonintegrated 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
b. 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.
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.
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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.
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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.
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.
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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.
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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 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
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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);
(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.
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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.
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.
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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.
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
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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 31 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.
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
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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 l.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.
(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:
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(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.
(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).
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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.
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
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<PAGE>
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
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
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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.
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
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<PAGE>
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.
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.
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
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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 Defer-red
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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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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(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
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the Annual Additions for the Limitation Year to exceed this
limitation the amount contributed or allocated will be reduced
so that the Annual Additions under all such Plans and funds
for the Limitation Year will equal the Maximum Permissible
Amount. If the 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).
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
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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
exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the numerator of
this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the
Plan made after May 5, 1986, but using the Section 415
limitation applicable to the first Limitation Year beginning
on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be 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).
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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 Participants 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 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.
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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 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.
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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)
(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
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<PAGE>
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.
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.
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a) 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)(I 1) 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, fori-ner 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.
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.
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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.
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
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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.
"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.
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"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 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
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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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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.
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
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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 twelvemonth 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)-1(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 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.
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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.
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.
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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.
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
includable 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
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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 includable 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.
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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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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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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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.
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
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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.
47
