CARBON ENERGY CORPORATION
401(k) PROFIT SHARING PLAN
By: /s/ Kevin Struzeski
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(Signature)
/s/ Kevin Struzeski
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(Name Printed or Typed)
Title: Chief Financial Officer
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Date Adopted: 11/15/99
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TABLE OF CONTENTS
Page
ARTICLE I STATEMENT OF PURPOSE AND INTENTIONS
1.1 Purpose..........................................................1
1.2 Intent to Qualify................................................1
ARTICLE II DEFINITIONS
2.1 Anniversary Date.................................................2
2.2 Annuity Starting Date............................................2
2.3 Beneficiary......................................................2
2.4 Break in Service Year............................................2
2.5 Code.............................................................2
2.6 Company..........................................................2
2.7 Compensation.....................................................2
2.8 Date of Employment...............................................3
2.9 Date of Re-employment............................................3
2.10 Earned Income....................................................3
2.11 Effective Date...................................................3
2.12 Elective Compensation............................................3
2.13 Eligible Compensation............................................3
2.14 Employee.........................................................4
2.15 Employer.........................................................5
2.16 Hour of Service..................................................6
2.17 Individual Accounts..............................................7
2.18 Insurance Company................................................7
2.19 Limitation Year..................................................7
2.20 Normal Retirement Age and Normal Retirement Date.................7
2.21 Owner-Employee...................................................7
2.22 Participant......................................................7
2.23 Plan.............................................................7
2.24 Plan Administrator...............................................8
2.25 Plan Year........................................................8
2.26 Preliminary Service..............................................8
2.27 Qualified Matching Contributions ("QMAC")........................8
Qualified Nonelective Contributions ("QNC")......................8
2.28 Required Beginning Date..........................................8
2.29 Retirement and Retirement Date...................................8
2.30 Self-Employed Individual.........................................8
2.31 Service..........................................................8
2.32 Total and Permanent Disability...................................9
2.33 Trustees.........................................................9
2.34 Vested Benefit...................................................9
2.35 Years of Service.................................................9
ARTICLE III PARTICIPATION
3.1 Commencement of Participation...................................10
3.2 Minimum Participation Standards.................................10
3.3 Preliminary Service.............................................10
3.4 Active Participation; Inactive Participation....................11
3.5 Cessation of Participation......................................11
3.6 Participation on Resumption of Employment.......................11
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ARTICLE IV CONTRIBUTIONS
4.1.1 Basic Contributions: Amount....................................12
4.1.2 Basic Contribution Accounts.....................................13
4.1.3 Basic Contributions: Allocations...............................13
4.1.4 Basic Contributions: Vesting...................................14
4.1.5 Forfeitures.....................................................15
4.1.6 Basic Contributions: Withdrawals...............................15
4.2.1 Elective Contributions: Amount.................................15
4.2.2 Elective Contribution Account...................................18
4.2.3 Elective Contributions: Allocations............................18
4.2.4 Elective Contributions: Vesting................................18
4.2.5 Elective Contributions: Withdrawals............................18
4.3.1 Supplemental Contributions: Amount.............................20
4.3.2 Supplemental Contribution Accounts..............................20
4.3.3 Supplemental Contributions: Allocations........................20
4.3.4 Supplemental Contributions: Vesting............................20
4.4.1 Rollover Contribution: Amount..................................20
4.4.2 Rollover Contribution Account...................................21
4.4.3 Rollover Contributions: Allocation.............................21
4.4.4 Rollover Contributions: Vesting................................21
4.5.1 Plan-to-Plan Transfers: Amount.................................21
4.5.2 Plan-to-Plan Transfer Account...................................21
4.5.3 Plan-to-Plan Transfer: Allocation..............................22
4.5.4 Plan-to-Plan Transfers: Vesting................................22
ARTICLE V REQUIRED NON-DISCRIMINATION TESTING
5.1.1 Limitation on Additions.........................................23
5.1.2 Suspense Account................................................26
5.2.1 Top-Heavy Provisions: Application..............................26
5.2.2 Top-Heavy Determination.........................................26
5.2.3 Special Rules for Top-Heavy Plans...............................28
5.3 Actual Deferral Percentage Test.................................29
5.4 Average Contribution Percentage Test............................32
5.5 Multiple Use of Alternative Limitation..........................35
ARTICLE VI ADMINISTRATION OF PLAN ASSETS
6.1.1 The Investment Fund.............................................37
6.1.2 Employee Directed Investments...................................37
6.2 Account Adjustments.............................................37
6.3 Distribution Adjustments........................................38
6.4 Expenses........................................................38
ARTICLE VII DISTRIBUTIONS
7.1 Termination of Employment (Including Disability)
Before Retirement.............................................39
7.2 Death Benefits..................................................39
7.3 Retirement......................................................41
7.4 Form of Retirement Benefit......................................42
7.5 Retirement Benefits: Election of Forms and Commencement
of Payments...................................................42
7.6 Loans to Participants...........................................45
ARTICLE VIII GENERAL PROVISONS
8.1.1 Plan Modification: Authority...................................49
8.1.2 Plan Modification: Merger......................................49
8.1.3 Plan Modification: Termination.................................49
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8.2.1 Duties: Plan Administrator.....................................49
8.2.2 Duties: Employer...............................................49
8.3 Benefit Claims Procedure........................................50
8.4 Review Procedure................................................50
8.5 Qualification of the Plan and Conditions of Contributions.......51
8.6 Beneficiaries...................................................51
8.7 Spendthrift Clause..............................................51
8.8 Owner-Employees: Other Trades or Businesses....................52
8.9 Limitations of the Employer's Liability.........................52
8.10 Non-Guarantee of Employment.....................................52
8.11 Applicable Law..................................................52
ARTICLE IX DIRECT ROLLOVERS
9.1 General Rule....................................................53
9.2 Definitions.....................................................53
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OUTLINE OF KEY PLAN PROVISIONS
1. Definition of Compensation (See Plan Section 2.7):
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Generally, "Compensation" means wages that are reportable as income on
IRS Form W-2 for federal income tax withholding purposes.
In addition, Compensation means elective deferrals (including, for
example, Elective Contributions under this Plan) and any amounts
deferred under a "cafeteria plan".
2. Definition of Eligible Employee (See Plan Section 2.14):
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Effective July 1, 1999 through October 31, 1999, "Eligible Employee"
means, at any time, any Employee of the Employer.
Effective November 1, 1999, Eligible Employee means, at any time, any
Employee of the Employer who is not a union member.
Eligible Employees are those Employees who are potentially eligible to
participate in this Plan.
3. Minimum Participation Standards (See Plan Section 3.2):
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An Employee may participate in the Plan as of any Entry Date when he or
she:
(a) is an Eligible Employee
(b) Effective July 1, 1999 through October 31, 1999, has been an
Employee for at least three months, EXCEPT this requirement is
waived for Employees on the Effective Date. Effective November
1, 1999, there is no Preliminary Service requirement.
4. Basic Contributions (See Plan Sections 4.1.1 - 4.1.5):
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(a) Amount: From July 1, 1999 through December 31, 1999, Basic ADP
Safe Harbor Matching Contributions shall be made equal to 100%
of the Participant's Elective Contributions not exceeding 4%
of the Participant's Eligible Compensation, plus 50% of the
Participant's Elective Contributions exceeding 4% but not
exceeding 6% of the Participant's Eligible Compensation.
Effective January 1, 2000, Basic Matching Contributions may be
made in an amount to be determined by the Employer.
Also, an additional Basic Profit-Sharing Contribution may be
contributed in an amount to be determined by the Employer.
(b) Allocation: From July 1, 1999 through December 31, 1999, Basic
ADP Safe Harbor Matching Contributions shall be allocated to
those Participants who make Elective Contributions according
to the Basic ADP Safe Harbor Matching Contributions formula
described above.
Effective January 1, 2000, Basic Matching Contributions shall
be allocated to those Participants who make Elective
Contributions as a uniform percentage of the Participant's
Elective Contributions EXCEPT that a Participant's Elective
Contributions in excess of 10% of the Participant's Elective
Compensation shall not be taken into account. Basic
Profit-Sharing Contributions shall be allocated to
Participants on a pro rata basis according to Compensation.
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(c) Vesting: Basic ADP Safe Harbor Matching and Basic
Profit-Sharing Contributions are 100% vested at all times.
Basic Matching Contributions become vested according to the
following schedule:
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Years of Service Vested Percentage
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Less than 1 0%
1 33%
2 66%
3 or more 100%
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5. Elective Contributions (See Plan Sections 4.2.1 - 4.2.5):
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Elective deferrals may be contributed to the Plan by Participants in
amounts equal to not more than the maximum percentage legally
permissible of their Elective Compensation.
Elective Contributions are 100% vested at all times.
6. Expenses (See Plan Section 6.4):
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The Expenses of maintaining this Plan which are not paid by the
Employer shall be satisfied directly out of the Plan's assets, except
for certain transactional charges which shall be paid by the particular
Participants involved.
7. Investments (See Plan Section 6.1.2):
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Participants are permitted to direct the investment of amounts held by
the Plan on their behalf.
8. Loans (See Plan Section 7.6):
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Participant loans are permitted under this Plan.
9. Form of Retirement Benefit (See Plan Section 7.4):
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Distributions are in the form of lump sums unless an optional form of
benefit is selected.
Married Participants can designate a non-spouse beneficiary of the
death benefit with proper spousal consent.
10. Withdrawals (See Plan Sections 4.1.6, 4.2.5):
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The Plan allows withdrawals (subject to conditions) prior to
termination of employment.
PLEASE NOTE
THE FOREGOING STATEMENTS ARE MERELY SUMMARIES OF SPECIFIC PLAN PROVISIONS,
PROVIDED FOR QUICK REFERENCE. THE PLAN TEXT ITSELF CONTROLS AND MUST BE REFERRED
TO FOR THE ACTUAL AND COMPLETE PLAN PROVISIONS.
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ARTICLE I
STATEMENT OF PURPOSE AND INTENTIONS
1.1 Purpose
The Employer adopts this Plan as a defined contribution retirement
plan of the profit sharing type with a cash or deferred arrangement
to provide retirement benefits and incidental benefits to certain
Employees who qualify for such benefits as more particularly provided
herein.
1.2 Intent to Qualify
It is the Employer's intent that this Plan be a qualified plan in the
meaning of sec. 401 of the Internal Revenue Code of 1986, as amended,
that any trust that may become part hereof be exempt from tax under
sec. 501(a) of the Code, and that contributions made by the Employer
be deductible under sec. 404 of the Code. This Plan shall be
interpreted, applied and administered in a manner consistent with
this intent to qualify. All amounts contributed to, accumulated
and/or held pursuant to this Plan shall not be diverted to or used
for other than the exclusive benefit of the Participants or their
beneficiaries until after such amounts have been distributed from
this Plan. In the event that the portion of this Plan comprising the
qualified cash or deferred arrangement fails to qualify under the
provision of sec. 401(k) of the Code, the Plan as a whole shall
nonetheless be interpreted so as to qualify under sec. 401(a) of the
Code.
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ARTICLE II
DEFINITIONS
For the purpose of this Plan, when the following terms appear in this Plan in
boldface type, they shall have the meanings indicated in this Article unless a
different meaning is clearly required by the context.
Whenever required by the context, masculine pronouns shall include the feminine,
and singular the plural.
2.1 Anniversary Date means each January 1.
2.2 Annuity Starting Date means the first day of the first period for which
an amount is payable as a Lump Sum or any other form.
2.3 Beneficiary is defined in Section 8.6, except as specifically provided
to the contrary elsewhere in this Plan.
2.4 Break in Service Year means a twelve-consecutive-month period
commencing on an Anniversary Date (or, for the purposes of determining
an Employee's Preliminary Service, each Preliminary Computation Period,
as described in Article III) and during which an Employee (or former
Employee) is credited with not more than 500 Hours of Service.
2.5 Code means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder. 2.6 Company means, on July 1, 1999,
CEC Resources Ltd. Effective November 1, 1999, Company shall mean
Carbon Energy Corporation, the successor sponsor of the Plan.
2.7 Compensation means wages, salary, and/or other remuneration that is
receivable by an individual during a Plan Year in exchange for Service
while an Eligible Employee and that is required to be reported as
income on the individual's Form W-2 for federal income tax withholding
purposes under Code sec. 3401(a). Compensation also means an
individual's Earned Income, if any, attributable to Service performed
during the Plan Year.
In addition, Compensation shall include the following amounts:
(a) all elective deferrals (as defined by Code sec. 402(g)(3))
made by the Participant during the Plan Year pursuant to a
salary reduction agreement with the Employer, including those
described by Section 4.2.1 of this Plan; and
(b) all Compensation accrued by the Participant during the Plan
Year but which is not then included as taxable income of the
Participant pursuant to a "cafeteria" or other such plan
maintained by the Employer according to Code sec. 125.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with sec. 401(a)(17)(B)
of the Internal Revenue Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months,
over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than
12 months, the OBRA '93 annual compensation limit will be multiplied by
a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
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For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under sec. 401(a)(17) of the Code shall
mean the OBRA '93 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current
Plan Year, the Compensation for the prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
In applying this limit, the family aggregation rules of Code sec.
414(q)(6) shall apply, except that in applying such rules, the term
"family" shall include only the spouse of the Employee and any lineal
descendants of the Employee who have not attained age 19 before the
close of the Plan Year. In addition, if this limit applies to a family
unit, then for the purposes of this Plan, each affected family member
shall be credited with an amount of Compensation on a pro rata basis,
so that such credited amount, when compared to the adjusted
compensation limit, shall have the same direct proportion that exists
in comparing that person's actual Compensation to the sum of all that
family's affected members' Compensation.
2.8 Date of Employment means the date on which an Employee has his first
Hour of Service.
2.9 Date of Re-employment means the first date as of which an Employee has
an Hour of Service after his most recent termination of Service, EXCEPT
that for the purposes of determining Preliminary Service, Date of
Re-employment means the first date as of which an Employee is credited
with an Hour of Service after he most recently has accrued a Break in
Service Year which permits his prior Preliminary Service to be
disregarded.
2.10 Earned Income means the net earnings from self-employment in the trade
or business with respect to which the Plan is established, and for
which the personal services of the individual are a material
income-producing factor. For the purposes of defining Earned Income,
net earnings will be determined without regard to items not included in
gross income and the deductions allocable to such items, and net
earnings will be reduced by contributions by the Employer to a
qualified Plan to the extent that such contributions are deductible
under Code sec. 404. In addition, net earnings shall be determined with
regard to the deduction allowed to the Employer by Code sec. 164(f) for
taxable years beginning after December 31, 1989.
2.11 Effective Date means July 1, 1999.
2.12 Elective Compensation means that portion of a Participant's
Compensation that is attributable to Service performed while the
Participant had in effect an election to have Elective Contributions
made on his behalf, pursuant to Article IV.
2.13 Eligible Compensation means that portion of a Participant's
Compensation that is attributable to Service performed while the
Participant could have had in effect an election to have Elective
Contributions made on his behalf, pursuant to Article IV, regardless of
whether the Participant made such an election or not.
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2.14 Employee means a natural person who performs Service for the Employer
in exchange for Compensation, including any Leased Employee (as
described below) but excluding any independent contractor who is not a
Leased Employee. For the purposes of this Plan, Employee shall be
further described as follows.
(a) Eligible Employee means:
Effective July 1, 1999, through October 31, 1999, Eligible
Employee means an Employee of the Employer.
Effective November 1, 1999, Eligible Employee means an
Employee of the Employer who is not included in a unit of
employees covered by a collective bargaining agreement with
the Employer pursuant to which retirement benefits were the
subject of good faith bargaining, except to the extent that
such agreement expressly permits or requires participation in
this Plan.
(b) Highly Compensated Employee ("HCE") means:
(1) The group of HCEs includes any Employee who during
the Plan Year performs services for the Employer and
who (i) is a 5-percent owner, (ii) receives
compensation for the Plan Year in excess of the sec.
414(q)(1)(B) amount for the Plan Year, (iii) receives
compensation for the Plan Year in excess of the sec.
414(q)(1)(C) amount for the Plan Year and is a member
of the top paid group of Employees within the meaning
of sec. 414(q)(4), or (iv) is an officer and receives
compensation during the Plan Year that is greater
than 50 percent of the dollar limitation in effect
under sec. 415(b)(1)(A). If no officer satisfies the
compensation requirement during the Plan Year, the
highest paid officer for such year shall be treated
as an HCE.
For purposes of determining who is an HCE,
compensation means wages, salary, and/or other
remuneration that is required to be reported as
income on the individual's W-2 for federal income tax
withholding purposes under Code sec. 3401(a), plus
all elective deferrals as defined in Code sec.
402(g)(3) and benefits pursuant to a Plan under Code
sec. 125 that are not currently taxable.
(2) If an Employee is a family member of either a
5-percent owner (whether active or former) or an HCE
who is one of the 10 most HCEs ranked on the basis of
compensation paid by the Employer during such year,
then the family member and the 5-percent owner or
top-ten HCE shall be aggregated. In such case, the
family member and 5-percent owner or top-ten HCE
shall be treated as a single Employee receiving
compensation and plan contributions or benefits equal
to the sum of the compensation and benefits of the
family member and 5-percent owner or top-ten HCE. 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.
(3) The determination of who is an HCE, including the
determination of the number and identity of Employees
in the top paid group, the number of Employees
treated as officers and the compensation that is
taken into account, shall be made in accordance with
the sec. 414(q) and sec. 1.414(q)-1T of the temporary
Income Tax Regulations to the extent they are not
inconsistent with the method established above.
(c) Key Employee means (solely for the purposes of Section 5.2) an
Employee who, at any time during the Plan Year or four
preceding Plan Years, was:
4
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(1) an officer of the Employer having an annual
"compensation" greater than 50% of the amount in
effect under Code sec. 415(b)(1)(A) for any such Plan
Year; or
(2) one of the ten Employees having annual "compensation"
greater than the limitation in effect under Code sec.
415(c)(1)(A) and owning (or considered as owning
within the meaning of Code sec. 318) the largest
interest of the Employer; or
(3) a 5 percent owner of the Employer; or
(4) a 1 percent owner of the Employer having an annual
"compensation" of more than $150,000.
For the purposes of this Plan, Key Employee shall be described
more particularly by Code sec. 416(i)(1). "Compensation" is
defined under Highly Compensated Employee, above.
(d) Leased Employee means a person who is employed (either as a
common law employee or an independent contractor) by a leasing
organization (but not by the Employer) and who performs
services for the Employer on a substantially full-time basis
for a period of at least one year, where such services are of
a type historically performed by Employees within the business
field of the Employer, and where such services are provided
pursuant to a contract between the leasing organization and
the Employer, EXCEPT that if such person is covered under a
money purchase pension plan maintained by the leasing
organization and which provides (1) a nonintegrated employer
contribution rate of at least 7 1/2% of compensation for
services performed prior to January 1, 1987, and at least 10%
of compensation for services performed after December 31,
1986, with compensation being determined according to Code
sec. 415(c)(3), but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code sec.
125, 402(e)(3), 402(h), or 403(b); (2) immediate
participation; and (3) full and immediate vesting, AND if the
sum of all such persons is not more than 20% of the Employer's
"nonhighly compensated workforce" (as defined in 26 CFR sec.
1.414(n)-2(f)(3)(ii)), then for the purposes of this Plan such
person is not a Leased Employee, and is at that time
ineligible for a benefit or any vested interest in this Plan.
Any provisions of this Section and this Plan to the contrary
notwithstanding, the term "Leased Employee" shall be more
specifically defined by, and Leased Employees shall be treated
under this Plan consistent with, Code sec. 414(n) and 26 CFR
sec. 1.414(n)-2.
2.15 Employer means the Company, and any other person or business
organization which has adopted and maintains this Plan on behalf of its
employees with the consent of the Company.
In addition, to the extent required for this Plan's qualification for
special tax treatment under the Code, and to the extent otherwise
required by applicable law, including for example the determination of
a Participant's Preliminary Service and Years of Service, Employer also
means any predecessor organization which previously maintained this
Plan on behalf of its employees (but only with regard to that period of
time during which the Plan was maintained by such organization(s)), and
any employer which, together with the Employer (as otherwise defined in
this Section), is a member of a controlled group of corporations in the
meaning of Code sec. 414(b), or is a member of a group of trades or
business (whether or not incorporated) under common control in the
meaning of Code sec. 414(c), or is a member of an affiliated service
group in the meaning of Code sec. 414(m), or is otherwise required to
be aggregated by Code sec. 414(o).
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2.16 Hour of Service means:
(a) each hour for which an Employee is paid, or entitled to
payment, by the Employer for the performance of duties;
(b) each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by the Employer on account of a
period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or
leave of absence except with respect to payments made or due
under a plan maintained solely for the purpose of complying
with applicable workers' compensation or unemployment
compensation or disability insurance laws or which are solely
in reimbursement to the Employee for medical or
medically-related expenses incurred by the Employee; however,
no more than 501 Hours of Service shall be credited pursuant
to this paragraph to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Plan Year); and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer;
however, an Hour of Service shall not be credited under both
this paragraph and paragraph (a) or (b), above.
Hours of Service credited under paragraphs (b) and (c), above, shall be
credited in accordance with Department of Labor Regulations found at 29
CFR sec. 2530.200b-2(b). Hours of Service shall be credited to the
appropriate Plan Year in accordance with 29 CFR sec. 2530.200b-2(c).
Hours of Service included pursuant to paragraph (a) shall be determined
according to records of employment maintained by the Employer. If such
records do not provide an adequate basis for determining the actual
number of Hours of Service accrued by a particular Employee (e.g. a
salaried Employee), then Hours of Service under paragraph (a) shall be
credited to the Employee on a weekly basis and the Employee shall be
credited with 45 Hours of Service for every week in which he has
accrued at least one Hour of Service as otherwise described in
paragraph (a).
Special Rule for Maternity or Paternity Absences
If an Employee is absent from work due to
(a) the pregnancy of the Employee,
(b) the birth of a child to the Employee,
(c) the placement of a child with the Employee pursuant to the
Employee's adoption of the child, or
(d) the care of such child described in (b) or (c) above
immediately following its birth or placement,
the Employee shall nonetheless be credited with the number of Hours of
Services which normally would have been credited to the Employee but
for said absence (or, if the Plan Administrator is unable to determine
said number, with eight (8) Hours of Service for each regularly
scheduled workday the Employee is absent), to a maximum of 501 Hours of
Service.
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PROVIDED that this special crediting of Hours of Service occurs during
only one Plan Year, and
PROVIDED that the Plan Year in which such Hours of Service are credited
in the Plan Year in which the absence begins, unless such crediting
would not be necessary to avoid a Break in Service Year in said Plan
Year, in which case such Hours of Service shall be credited as they
accrue in the Plan Year immediately following the Plan Year in which
the absence begins, and
PROVIDED that the crediting of such Hours of Service shall be solely
for the purpose of avoiding a Break in Service Year, and shall not
operate to increase any Employee's or former Employee's vested
percentage or retirement benefit, nor shall the crediting have any
other operative effect regarding this Plan, and
PROVIDED that, under rules established by the Plan Administrator, the
Employee may be required to provide to the Plan Administrator written
certification from the Employee's attending doctor or other
professional attendant at birth or representative of the relevant
adoption agency to establish that the absence from work is for the
reasons referred to above.
2.17 Individual Accounts means, for any Participant, those accounts which
are both listed below and maintained pursuant to this Plan on his
behalf.
(a) Basic ADP Safe Harbor Matching Contribution Account
(b) Basic Matching Contribution Account
(c) Basic Profit-Sharing Contribution Account
(d) Elective Contribution Account
(e) Rollover Contribution Account
(f) Plan-to-Plan Transfer Account
2.18 Insurance Company means a legal reserve life insurance company,
licensed to do business in the state of Colorado, with which the
Trustees have entered into a contract to provide benefits under the
Plan.
2.19 Limitation Year, for purposes of determining the limitation on certain
additions to the Plan for the benefit of an Employee as described in
Section 5.1.1, means a twelve-consecutive-month period beginning on an
Anniversary Date.
2.20 Normal Retirement Age and Normal Retirement Date are defined in Article
VII under "Retirement".
2.21 Owner-Employee means an Employee who is the sole proprietor of the
business employing the Employees, or who is a partner owning more than
10% of the capital interest and/or the profits interest in the
partnership employing the Employees.
2.22 Participant means an Employee or former Employee who has become a
Participant or resumed participation pursuant to Section 3.1 or 3.6 and
who has not subsequently ceased to participate as provided in Section
3.5. A Participant may be Active or Inactive as provided in Section
3.4.
2.23 Plan means this CEC Resources Ltd. 401(k) Profit Sharing Plan.
Effective November 1, 1999, the Plan shall be known as the Carbon
Energy Corporation 401(k) Profit Sharing Plan.
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2.24 Plan Administrator means one or more persons appointed by the Trustees
to control and manage the operation and administration of the Plan. The
person or persons so appointed shall constitute a named fiduciary or
fiduciaries for purposes of the Employee Retirement Income Security Act
of 1974. If no Plan Administrator is appointed, then the Trustees shall
be the Plan Administrator.
2.25 Plan Year means a period of time commencing on an Anniversary Date and
ending with the day immediately preceding the next Anniversary Date.
2.26 Preliminary Service is defined in Article III.
2.27 Qualified Matching Contributions ("QMAC") means employer contributions
(other than Elective Contributions) made to a plan for a Participant on
account of any employee contributions or Elective Contributions made to
a plan by or on behalf of the Participant, PROVIDED that the amounts of
the employer contributions are subject to the nonforfeitability and
distribution limitations of Income Tax Reg. 26 CFR secs. 1.401(k)-1(c)
& (d) the same as elective contributions.
Qualified Nonelective Contributions ("QNC") means employer
contributions made to a plan which are not matching contributions (i.e.
not made on account of any employee or elective contribution) or
Elective Contributions, but which are subject to the nonforfeitability
and distribution limitations of Income Tax Reg. 26 CFR secs.
1.40(k)-1(c) & (d) the same as elective contributions.
2.28 Required Beginning Date means for any Participant except a five-percent
owner, the April 1 of the calendar year following the later of:
(a) the calendar year in which the Participant attained age 70
1/2, or
(b) the calendar year in which the Participant retires.
The Required Beginning Date of a Participant who is a five-percent
owner shall be the April 1 of the calendar year following the calendar
year the five-percent owner attains age 70 1/2. A five-percent owner,
for purposes of this Section, means a Participant who is a five-percent
owner within the meaning of Code sec. 416(i) (EXCEPT without regard to
whether the Plan is actually top heavy) at any time during the Plan
Year ending with or within the calendar year in which the Participant
attains age 66 1/2, or any subsequent Plan Year. Once a Participant
becomes a five-percent owner, distributions must continue to that
Participant even if that Participant ceases to be a five-percent owner
in a subsequent year.
Any Participant receiving distributions required by Code sec. 401(a)(9)
who attained age 70 1/2 but who did not retire before January 1, 1997
may elect to stop distributions and recommence them by April 1st of the
calendar year following the calendar year in which the Participant
retires. There is no new Annuity Starting Date upon recommencement of
distributions.
2.29 Retirement and Retirement Date are defined in Article VII under
"Retirement".
2.30 Self-Employed Individual means, with respect to any taxable year, an
individual who has Earned Income attributable to Service performed
during that taxable year, and also means an individual who would have
had such Earned Income but for the fact that the trade or business of
the Employer and with regard to which the Plan is maintained had no net
profits for the taxable year.
2.31 Service means employment of the Employee by the Employer for the
performance of labor or duties by the Employee on behalf of the
Employer and for which the Employee is to be compensated by the
Employer.
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2.32 Total and Permanent Disability means a physical or mental condition
that in the opinion of the Plan Administrator precludes a person from
employment for which he is qualified because of his experience,
training, and education, and that is expected to continue for not less
than 12 months. The Plan Administrator's opinion regarding the degree
and permanence of the disability shall be supported by medical
evidence.
2.33 Trustees means those persons or the organization with which the
Employer has entered into a trust agreement to provide benefits under
the Plan.
However, at any time that the Plan is not trusteed, "Trustees" shall
mean the Company.
2.34 Vested Benefit means, at any time, the sum of the Participant's vested
Individual Account balances.
2.35 Years of Service
(a) General Rule
A Participant's period of employment taken into account to
determine his Years of Service for the purposes of this Plan
shall be measured as follows.
A Participant shall be credited with one Year of Service for
each twelve-consecutive-month period which commenced on an
Anniversary Date on or after the Effective Date and during
which the Participant accrued at least 1,000 Hours of Service.
Effective November 1, 1999, an Employee shall also be credited
with Years of Service as described for employment with
Bonneville Pacific Corporation.
In addition, if the Participant was an Employee on the
Effective Date, he shall also be credited with one Year of
Service for each twelve-consecutive-month period which
commenced on an Anniversary Date prior to the Effective Date
and during which the Participant accrued at least 1,000 Hours
of Service.
(b) Exclusions
If a Participant or former Participant accrues a Break in
Service Year, all Years of Service attributable to his
employment prior to that Break in Service Year shall
thereafter be disregarded unless either
(1) his Vested Percentage is greater than zero at the
time the Break in Service Year has accrued, or
(2) the number of his consecutive Break in Service Years
is less than (A) or (B), whichever is greater, where
(A) equals 5, and
(B) equals the aggregate number of his Years of
Service before the Break in Service Years,
not taking into account Years of Service
previously disregarded because of prior
Break in Service Years.
In addition, if a Participant or former Participant
has at least five consecutive Break in Service Years,
all Years of Service attributable to his employment
subsequent to said five consecutive Break in Service
Years shall thereafter be disregarded for purposes of
determining his vested interest in the amount which
had been allocated to his Basic Contribution Account
(pursuant to Section 4.1.3) prior to the period of
such five consecutive Break in Service Years.
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ARTICLE III
PARTICIPATION
3.1 Commencement of Participation
An Employee shall commence participation in the Plan on the first Entry
Date on which he meets the Plan's Minimum Participation Standards.
The Entry Dates shall be the Effective Date, and thereafter the first
day of each calendar quarter (i.e. each January 1, April 1, July 1, and
October 1).
3.2 Minimum Participation Standards
An Employee meets the Plan's Minimum Participation Standards at any
time when he satisfies the following conditions:
(a) He is an Eligible Employee.
(b) Effective July 1, 1999 through October 31, 1999, he is
credited with at least three months of Preliminary Service,
EXCEPT this requirement is waived for Employees on the
Effective Date. Effective November 1, 1999, there is no
Preliminary Service requirement.
3.3 Preliminary Service
An Employee shall be credited with at least three months of Preliminary
Service for any three-consecutive-month period during which he was
continuously employed as an Employee. However, in any event, an
Employee shall be credited with a year of Preliminary Service for each
complete Preliminary Computation Period in which he has not less than
1,000 Hours of Service, whether or not he was continuously employed
during the Preliminary Computation Period. Effective November 1, 1999,
an Employee shall also be credited with Preliminary Service as
described for employment with Bonneville Pacific Corporation.
Preliminary Computation Periods shall have a duration of twelve
consecutive months. Each Employee's initial Preliminary Computation
Period shall commence as of his Date of Employment (or, after a Break
in Service Year that permits his prior Preliminary Service to be
disregarded, his Date of Re-employment). Thereafter, the Preliminary
Computation Periods shall commence as of each Anniversary Date,
beginning with the first Anniversary Date following the Employee's Date
of Employment (or Date of Re-employment , if applicable).
If an Employee accrues a Break in Service Year, then his Preliminary
Service attributable to his employment prior to that Break in Service
Year shall thereafter be disregarded unless either
(a) his Vested Percentage is greater than zero at the time the
Break in Service Year accrues, or
(b) the number of his consecutive Break in Service Years is less
than (1) or (2), whichever is greater, where
(1) equals 5, and
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(2) equals the aggregate number of his Years of
Preliminary Service before the Break in Service
Years, not taking into account Years of Preliminary
Service previously disregarded because of prior Break
in Service Years.
3.4 Active Participation; Inactive Participation
Once an Employee has commenced participation (or if he subsequently
ceased to participate, once he has resumed participation), he shall be
an Active Participant with respect to each Hour of Service accrued
while he is an Eligible Employee. At any time thereafter at which he is
not an Eligible Employee, but before his participation has ceased, he
shall be an Inactive Participant.
3.5 Cessation of Participation
A Participant shall cease to participate in this Plan (without regard
to his status as an Employee) as of the first date on which he has most
recently terminated his employment as an Employee and also has no
rights (present or contingent) to any benefit under this Plan.
3.6 Participation on Resumption of Employment
A former Employee who participated during the period of his prior
employment and who does not have Break in Service Years which permit
his Preliminary Service earned during his prior employment to be
disregarded shall resume participation as of his first Hour of Service
upon resumption of employment as an Eligible Employee.
Any other former Employee shall commence participation as of the first
Entry Date which occurs on or after the date of his resumption of
employment as an Eligible Employee and as of which he has satisfied the
Minimum Participation Standards described in Section 3.2.
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ARTICLE IV
CONTRIBUTIONS
4.1.1 Basic Contributions: Amount
For each Plan Year, the Employer may contribute amounts to the Plan.
These amounts shall be called Basic Contributions, and shall be
determined according to the following provisions.
(a) Basic ADP Safe Harbor Matching Contribution
Effective July 1, 1999 through December 31, 1999, the Employer
shall contribute amounts as a match of Elective Contributions
for each payroll period. The amount of the matching
contribution will equal one hundred percent (100%) of each
Participant's Elective Contributions not exceeding four
percent (4%) of the Participant's Eligible Compensation for
the payroll period, plus fifty percent (50%) of the
Participant's Elective Contributions exceeding four percent
(4%) but not exceeding six percent (6%) of the Participant's
Eligible Compensation for the payroll period.
For the purposes of this Section, the amount of Elective
Contributions to be matched shall be determined without regard
to any withdrawals of Elective Contributions that were made
during that Plan Year (see Section 4.2.5).
(b) Basic Matching Contribution
Effective January 1, 2000, the Employer may contribute amounts
as a match of Elective Contributions for the Plan Year. The
amount of each matching contribution will equal fifty percent
(50%) of each Participant's Elective Contribution (if any) for
the payroll period EXCEPT that a Participant's Elective
Contributions in excess of ten percent (10%) of the
Participant's Elective Compensation for the payroll period
shall not be taken into account.
For the purposes of this Section, the amount of Elective
Contributions to be matched shall be determined without regard
to any withdrawals of Elective Contributions that were made
during that Plan Year (see Section 4.2.5).
(c) Basic Profit-Sharing Contribution
The Employer may also contribute as a Basic Contribution such
additional amount as the Employer deems appropriate.
(d) Basic Top-Heavy Contribution
If a Participant is to be credited with some additional
amount pursuant to the "top-heavy" provisions of Section 5.2
of this Plan, such additional amount shall be contributed
and credited as an additional portion of the Basic
Contribution for that Plan Year.
Any of the provisions of this Section to the contrary
notwithstanding, no amounts may be contributed to the Plan as Basic
Contributions in excess of the maximum amount that the Employer may
deduct from its net income subject to federal income taxation for the
Employer's taxable year on account of which such contributions have
been made plus any amount which may be currently contributed and
"carried over" for succeeding taxable years pursuant to Code sec.
404(a)(3)(A)(ii) (assuming that the Employer is subject to federal
income taxation), nor shall such amounts exceed the maximum amount
which may be allocated consistently with the limitations stated in
Section 5.1.1
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Basic Contributions shall be allocated among the Plan's Participants
pursuant to Section 4.1.3 in a uniform and nondiscriminatory manner.
4.1.2 Basic Contribution Accounts
Each Participant shall have maintained on his behalf a Basic ADP Safe
Harbor Matching Contribution Account, a Basic Matching Contribution
Account and a Basic Profit-Sharing Contribution Account, which shall
be adjusted as provided in Article VI and which shall be closed when
the Participant is entitled to no further benefits under the terms of
the Plan.
4.1.3 Basic Contributions: Allocations
(a) Basic ADP Safe Harbor Matching Contributions: Allocations
Effective July 1, 1999 through December 31, 1999, as of the
date it is received by the Plan and all necessary information
to complete the allocation is available, a portion of the
Basic ADP Safe Harbor Matching Contribution for the payroll
period, if any, shall be allocated to the Basic ADP Safe
Harbor Matching Contribution Account of each Participant who
is allocated an Elective Contribution for that payroll period.
Each such Participant shall be allocated a portion of that
Basic ADP Safe Harbor Matching Contribution according to the
Basic Contribution match described in Section 4.1.1(a).
(b) Basic Matching Contributions: Allocations
Effective as of January 1, 2000, as of the date it is received
by the Plan and all necessary information to complete the
allocation is available, a portion of the Basic Matching
Contribution for the payroll period, if any, shall be
allocated to the Basic Matching Contribution Account of each
Participant who is allocated an Elective Contribution for that
payroll period.
Each such Participant shall be allocated a portion of that
Basic Matching Contribution, which portion shall equal a
uniform percentage (for example, 10%) of his Elective
Contributions for the payroll period, EXCEPT that a
Participant's Elective Contributions in excess of ten percent
(10%) of the Participant's Elective Compensation for the
payroll period.
(c) Basic Profit-Sharing Contributions: Allocations
As of the date it is received by the Plan and all necessary
information to complete the allocation is available, a portion
of the Basic Profit-Sharing Contribution for the Plan Year, if
any, shall be allocated to the Basic Profit-Sharing
Contribution Account of each Participant.
Each such Participant shall be allocated a portion of that
Basic Profit-Sharing Contribution so that such portion, when
compared with the entire amount of Basic Profit-Sharing
Contribution that is allocated to all such Participants
pursuant to this subsection, shall bear the same direct
proportion that the Participant's Eligible Compensation for
that Plan Year bears to the aggregate Eligible Compensation of
all such Participants for that Plan Year.
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<PAGE>
(d) Basic Top-Heavy Contributions: Allocations
Also, as of the date the contribution is received by the Plan,
each Participant who is entitled to be credited with an
additional amount of Basic Contribution pursuant to Section
5.2 of this Plan shall have such amount credited to his Basic
Contribution Account.
4.1.4 Basic Contributions: Vesting
(a) At any time, each Participant's interest in his Basic ADP Safe
Harbor Matching and Basic Profit-Sharing Contribution Account
balances shall be fully vested in the Participant and not
subject to forfeiture prior to the withdrawal or distribution
of such balance pursuant to this Plan.
At any time, each Participant's interest in his Basic Matching
Contribution Account balance (EXCEPT in Basic Matching
Contributions that are forfeited because they relate to excess
deferrals, excess contributions, or excess aggregate
contributions) shall be stated in terms of his Vested
Percentage, which shall be determined from the following
schedule according to his Years of Service:
Years of Service Vested Percentage
------------------------- -------------------
Less than 1 0%
1 33%
2 66%
3 or more 100%
(b) Subsection (a) above notwithstanding, any Participant's Vested
Percentage automatically shall be 100% upon the occurrence of
any of the following events:
(1) his death while an Employee;
(2) his termination of employment as an Employee due to
his having incurred Total and Permanent Disability
while an Employee; or
(3) his attainment of Normal Retirement Age.
(c) Under no circumstances shall any amendment of this Plan reduce
any Participant's Vested Percentage regarding any benefits
accrued under this Plan as of the adoption date (or effective
date, if later) of such amendment. With regard to the effect
of such an amendment on subsequently accrued benefits, for
each Participant whose Vested Percentage under the Plan as
amended would at any future time be less than it would be if
determined without regard to such amendment, then provided
that the Participant had completed at least three Years of
Service as of the adoption date (or effective date, if later)
of the amendment, such Participant may irrevocably elect in a
writing delivered to the Plan Administrator during the
election period described below to have his Vested Percentage
in his subsequently accrued benefits under this Plan
determined without regard to such amendment.
For the purpose of this Section, the election period within
which such election may be delivered to the Plan Administrator
shall begin as of the adoption date of the amendment, and
shall end on the sixtieth day after the latest of:
(1) the adoption date of the amendment;
(2) the effective date of the amendment; or
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<PAGE>
(3) the date on which the Participant received written
notice of the amendment from the Employer or Plan
Administrator.
4.1.5 Forfeitures
(a) On the date as of which a Participant accrues the
fifth of five (5) consecutive Break in Service Years,
if the balance credited to his Basic Matching
Contribution Account exceeds his vested interest in
that Account, then his rights (under this Plan) to
such excess shall be immediately forfeited, with the
amount of such excess becoming a Forfeiture.
Basic Matching Contributions that relate to excess
deferrals, excess contributions, or excess aggregate
contributions shall be treated as Forfeitures.
Forfeitures may also result from the distribution of
a Participant's entire Vested Benefit due to his
termination of employment as an Employee, as further
described in Section 7.1.
(b) All Forfeitures which occur pursuant to this Plan
shall be applied to offset expenses and Basic
Contributions as such obligations accrue.
4.1.6 Basic Contributions: Withdrawals
A Participant may withdraw an amount against the vested balance, if
any, then credited to his Basic Contribution Account, if the
Participant has completed five Years of Service. The amount of the
withdrawal may not exceed the balance attributable to Basic
Contributions and earnings thereon. Such a withdrawal may be made at
any time during a Plan Year.
If a distribution is made pursuant to this Section to a Participant
whose Vested Percentage is less than 100%, the Plan Administrator
shall establish a Termination Account for the Participant's benefit.
The Termination Account shall initially be credited with the excess
(if any) of the amount credited to the Participant's Basic
Contribution Account over his Vested Portion therein at the time of
the distribution. At any time after the distribution the
Participant's Vested Portion of the Termination Account shall be an
amount, "x", determined from the formula, x = P(AB+D)-D, where P is
the Participant's Vested Percentage at the time of computation; AB is
the amount credited to the Participant's Termination Account at the
time of computation, and D is the amount distributed pursuant to this
Section.
The amount of any withdrawal from a Basic Contribution Account
pursuant to this Section shall be charged against that Account as of
the date that the withdrawal is distributed from the Plan.
4.2.1 Elective Contributions: Amount
(a) Elective Deferral
Each Participant may elect to defer his receipt of
Compensation that has not yet become available to him. For
each Plan Year, the total amount of Compensation that may be
deferred may equal not more than the maximum amount of his
Elective Compensation for the Plan Year permissible consistent
with Section 5.1.1 and all other limiting provisions of this
Plan, the Code, and all other applicable legal limits.
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<PAGE>
For each Plan Year, on behalf of each Participant who has made
such an elective deferral, the Employer shall contribute an
amount to the Plan equal to the amount of the Participant's
elective deferral of Compensation for the Plan Year. This
contribution shall be called an Elective Contribution.
Each Elective Contribution shall be paid to the Plan by the
Employer as soon as reasonably practicable (in no event later
than 90 days) after it is withheld by or otherwise paid to the
Employer. In addition, each Elective Contribution shall be
paid to the Plan by the Employer no later than the last day of
the twelve-month period immediately following the Plan Year
with respect to which the contribution is made.
(b) Election
A Participant may elect to change the amount of his elective
deferrals, and therefore the amount of the Elective
Contributions made on his behalf, within the limits prescribed
in subsection (a) above. A Participant may also elect to cease
his elective deferrals and Elective Contributions altogether,
or, having done so, may elect to recommence them.
A Participant's election to commence or recommence or to
change the amount of his elective deferrals may become
effective only as of the first day of any prospective calendar
quarter.
A Participant's election to cease his elective deferrals
altogether may become effective only as of the first day of
any prospective payroll period.
Any of the provisions of this subparagraph (b) to the contrary
notwithstanding, any election described by this subparagraph
(b) regarding elective deferrals may become effective only
after written notice delivered to the Plan Administrator
within a reasonable time prior to the effective date of the
election.
(c) Limit on Amount
The total sum of any Participant's elective deferrals for any
taxable year of the Participant may not exceed the limit
prescribed by IRC Reg. 1.402(g)-1(c). (Generally, for taxable
years beginning in 1999, that limit equals $10,000, except for
adjustments made to take into account elective deferrals made
to annuity contracts under Code sec. 403(b)).
For the purposes of this subsection (c), "elective deferrals"
has the meaning defined in IRC Reg. 1.402(g)-1(b), including
(but not limited to) Elective Contributions received by this
Plan on the Participant's behalf.
For any Participant, if this limit on elective deferrals is
exceeded, then the following corrective measures are
permitted.
(1) The Participant may notify the Plan Administrator of
the excess deferral, and may request that the Plan
Administrator distribute to the Participant an amount
not exceeding the lesser of:
(A) the amount of the excess deferral, plus all
income allocable to the excess deferral;
(B) the sum of all amounts deferred by the
Participant and contributed to the Plan as
Elective Contributions on behalf of the
Participant with regard to the affected
taxable year, net of any allocable earnings,
gains or losses attributable to such
amounts; or
16
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(C) the balance of the Participant's Elective
Contribution Account as of the date of
distribution, minus any amounts of
withholding that are legally required.
In addition, the amount that may be included in a
corrective distribution shall be reduced by any
excess contributions previously distributed to the
Participant for the Plan Year that began with or
within the affected taxable year of the Participant.
To be effective for the purposes of this Plan, the
Participant's notice and request must be in writing
and delivered to the Plan Administrator prior to the
first April 15 following the close of the affected
taxable year of the Participant.
To the extent that the Participant has excess
deferrals for the taxable year calculated by taking
into account only elective deferrals under this Plan
and other plans of the Employer, and absent actual
notification by the Participant, the Participant
shall be deemed to have provided the notice described
above in this subsection.
(2) A corrective distribution of excess deferrals and
allocable income may be made during the affected
taxable year of the Participant only if all of the
following conditions are satisfied.
(A) The Participant has designated the amount of
the distribution as being attributable to an
excess deferral. (Because subsection (1)
above limits the amount of the corrective
distribution to not more than the amount of
excess deferrals calculated by taking into
account only elective deferrals under this
Plan and other plans of the Employer, and
absent an actual designation by the
Participant, the Participant shall be deemed
to have provided the designation described
above in this subsection.)
(B) The corrective distribution is made after
the date on which the Plan received the
excess deferral.
(C) The Plan has designated the amount of the
distribution as being attributable to an
excess deferral.
(3) Not later than the first April 15 following the close
of the affected taxable year of the Participant, and
after receipt of the Participant's written notice and
request, the Plan Administrator may make the
appropriate corrective distribution, consistent with
the provisions of this subparagraph (c).
The Plan Administrator may require that before the
corrective distribution is made, the Participant must
provide to the Plan Administrator additional
documentation evidencing the Participant's
representations regarding the excess deferrals.
The income allocable to excess deferrals for the
affected taxable year of the Participant shall be
determined according to the IRC Reg.
1.402(g)-1(c)(5).
In the event of a corrective distribution of excess
deferrals and allocable income, the balance of the
Participant's Elective Contribution Account shall be
reduced accordingly.
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4.2.2 Elective Contribution Account
On behalf of each Participant who has elected to defer some portion
of his Compensation pursuant to this Article IV, there shall be
maintained an Elective Contribution Account, which shall be adjusted
as provided in Article VI and which shall be closed when the
Participant is entitled to no further benefits under the terms of
this Plan.
4.2.3 Elective Contributions: Allocations
Any Elective Contribution received by the Plan on behalf of a
Participant shall be credited to the Elective Contribution Account of
that Participant as of the date on which the contribution was
received by the Plan.
4.2.4 Elective Contributions: Vesting
The Elective Contributions received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject
to forfeiture prior to the time they are withdrawn or distributed
pursuant to this Plan.
4.2.5 Elective Contributions: Withdrawals
(a) At any time before his Retirement Date, a Participant may
apply to withdraw an amount from his Elective Contribution
Account. The application must be in writing and received by
the Plan Administrator. If the Participant has attained age 59
1/2 or is not an Employee as of the date of distribution, the
Participant may withdraw up to the entire balance of his
Elective Contribution Account, including interest or other
earnings. Subject to the additional restrictions of this
Section, any other Participant may withdraw an amount that
does not exceed the balance of the account attributable to
Elective Contributions made on his behalf, excluding any
interest or other earnings.
(b) If the Participant is an Employee on the date as of which the
withdrawal is to be distributed, and if the Participant has
not yet attained age 59 1/2 as of the date of distribution,
the Plan Administrator may permit the distribution only to the
extent that the Plan Administrator reasonably believes that
the distribution is necessary to satisfy an immediate and
heavy financial need of the Participant, taking into account
all relevant facts and circumstances.
(1) Any of the following facts and circumstances shall
automatically be deemed by the Plan Administrator to
constitute an immediate and heavy financial need of
the Participant:
(A) expenses for medical care (as defined in
Code sec. 213(d)) that were either
previously incurred by the Participant, the
Participant's spouse, or any dependents of
the Participant (with "dependents" being as
defined by Code sec. 152) or that are
necessary for these persons to obtain such
medical care;
(B) costs directly related to the purchase of a
principal residence for the Participant
(excluding mortgage payments);
(C) payment of tuition and related educational
fees for the next 12 months of
post-secondary education for the
Participant, or the Participant's spouse,
children, or dependents (as defined in Code
sec. 152);
(D) payments necessary to prevent the eviction
of the Participant from the Participant's
principal residence, or foreclosure on the
mortgage on that residence; or
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<PAGE>
(E) any other facts and circumstances that the
Commissioner of the Internal Revenue Service
has included through the publication of
revenue rulings, notices, or other documents
of general applicability.
A financial need shall not fail to qualify as
immediate and heavy merely because such need was
reasonably foreseeable or voluntarily incurred by the
Participant.
(2) In requesting a withdrawal due to financial need, the
Participant shall specifically identify the facts and
circumstances which have caused the financial need
and shall state the amount needed to satisfy the
need, which may include amounts necessary to pay any
income taxes or penalties reasonably anticipated to
result from the distribution. The Participant shall
further state that, to the extent of the amount
requested, the financial need cannot otherwise be
satisfied by:
(A) reimbursement or compensation by insurance
or otherwise;
(B) reasonable liquidation of the Participant's
assets, but only to the extent that such
liquidation would not in itself cause an
immediate and heavy financial need;
(C) cessation of elective deferrals or any
Participant contributions permitted by the
Plan;
(D) other distributions or nontaxable (at the
time of the loan) loans from this Plan or
any other plan maintained by the Employer or
any other employer; and/or
(E) borrowing from commercial sources on
reasonable commercial terms.
For the purposes of this subsection, the
Participant's resources shall be deemed to include
those assets of the Participant's spouse and minor
children to the extent that such assets are
reasonably available to the Participant.
(3) Before the withdrawal may be permitted, the Plan
Administrator shall receive from the Participant any
documentation that the Plan Administrator requires in
the performance of his fiduciary duty to substantiate
that the withdrawal is necessary to satisfy the
financial need identified by the Participant. Under
no circumstances shall the Plan Administrator
distribute more than the Plan Administrator
reasonably believes is necessary to satisfy the
financial need identified by the Participant.
(c) The Plan Administrator shall approve or deny the Participant's
application for such a withdrawal within a reasonable amount
of time after receipt of such application. If approved,
payment shall be made by the Plan Administrator as soon as
administratively practicable, but in any event within ninety
(90) days after the Plan Administrator's receipt of the
Participant's application.
The Plan Administrator shall also issue any denial of such an
application as soon as administratively practicable. Such a
denial shall be delivered in writing and shall state
specifically the reasons for such denial.
(d) The Plan Administrator may limit the frequency of withdrawals.
Such limit shall apply uniformly to all Participants.
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(e) The amount of any withdrawal from an Elective Contribution
Account pursuant to this Section shall be charged against that
Account as of the date that the withdrawal is distributed from
the Plan.
4.3.1 Supplemental Contributions: Amount
For any Plan Year in which the Plan Administrator determines that the
average of the actual deferral ratios and/or the actual contribution
ratios of Participants who are HCEs exceeds the limit determined
pursuant to Section 5.3(b) or 5.4(b), as applicable, the Employer may
make Supplemental Contributions that meet the requirements for
Qualified Nonelective Contributions or Qualified Matching
Contributions described in Article II. Supplemental Contributions
shall be made solely for the purpose of complying with the
limitations of the applicable Section, and shall not exceed the
amount necessary to satisfy the test described therein, subject to
the limits of Section 5.1.1.
4.3.2 Supplemental Contribution Accounts
A Supplemental Contribution Account shall be maintained on behalf of
each Participant who will be allocated a portion of the Supplemental
Contribution. The account shall be adjusted as provided in Article VI
and shall be closed when the Participant is entitled to no further
benefits under the terms of the Plan.
4.3.3 Supplemental Contributions: Allocations
As of the date on which it is received by the Plan and all necessary
information to complete the allocation is available, a portion of the
Supplemental Contribution for the Plan Year, if any, shall be
allocated to the Supplemental Contribution Account of each
Participant who is not an HCE and who (1) has not less than 1,000
Hours of Service in the Plan Year and (2) is an Employee on the last
day of the Plan Year.
Each such Participant shall be allocated a portion of that
Supplemental Contribution so that such portion, when compared with
the entire amount of Supplemental Contribution that is allocated to
all such Participants for the Plan Year, shall bear the same direct
proportion that the Participant's Compensation for that Plan Year
bears to the aggregate Compensation of all such Participants for that
Plan Year.
4.3.4 Supplemental Contributions: Vesting
At any time, a Participant's interest in his Supplemental
Contribution Account shall be fully vested and not subject to
forfeiture prior to the withdrawal or distribution of such balance
pursuant to this Plan.
4.4.1 Rollover Contribution: Amount
The Plan Administrator may accept Rollover Contributions from or on
behalf of a Participant, and also from or on behalf of any Eligible
Employee who is not a Participant solely because he has not yet
accrued the required amount of Preliminary Service (pursuant to
Sections 3.2 and 3.3). An Employee who makes such an early Rollover
Contribution shall be treated as a Participant for all purposes,
except that he shall not receive an allocation or share of any
Employer contribution, including Elective Contributions, until he
satisfies the requirements of Article III.
As used herein, Rollover Contribution means all or a portion of an
"eligible rollover distribution" described in Code sec. 402(c), or
an amount paid or distributed out of an individual retirement
account or individual retirement annuity described in Code sec.
408(d)(3)(A)(ii).
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The Plan Administrator may require such assurance and proofs of fact
from the Participant as may be necessary to determine whether an
amount the Participant desires to contribute is a Rollover
Contribution as defined herein. He may further require the
Participant to agree to indemnify the Plan for any adverse
consequences which may follow if a contribution proves not to have
been a Rollover Contribution. An Employee on whose behalf a transfer
described in this Section is made shall agree to cooperate fully with
the Plan Administrator in effecting any and all corrective measures
which may be required by an agency of the federal government to
prevent the Plan's disqualification as a result of the transfer.
4.4.2 Rollover Contribution Account
For the benefit of any Participant on whose behalf the Plan has
accepted any Rollover Contribution, there shall be maintained a
Rollover Account. Rollover Accounts shall be adjusted as provided in
Article VI, and shall be closed when the balances of such accounts,
including allocable earnings, gains and losses, have been distributed
pursuant to this Plan.
4.4.3 Rollover Contributions: Allocation
Any Rollover Contribution received by the Plan pursuant to this
Article IV shall be credited as it is received to the Rollover
Account(s) of the Participant on whose behalf it was received.
4.4.4 Rollover Contributions: Vesting
The Rollover Contributions received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject
to forfeiture prior to the time they are distributed pursuant to this
Plan.
4.5.1 Plan-to-Plan Transfers: Amount
For any Plan Year, the Plan may make or accept the direct transfer of
assets to or from an appropriate funding agency, fiduciary or plan
administrator of another qualified retirement plan in which the
Participant requesting such transfer is participating, PROVIDED that
the amount transferred or received by the Plan includes at least the
entire present value of the accrued benefit or at least the entire
balance of all accounts derived from employer contributions
(whichever is appropriate) which is due to the Participant under the
terms of this Plan or said other qualified retirement plan, as
applicable, as of the proposed date of transfer.
The Plan Administrator may, in his discretion, make or accept a
transfer of assets described in the preceding paragraph provided that
such transfer is consistent with the requirements of Code secs.
411(d)(6) and 414(l). The Plan Administrator may elect not to make or
receive a transfer pursuant to this Section if he has any doubt as to
the qualified status of the other plan that is to receive or transfer
the assets, and the Plan Administrator shall assume no liability
resulting from any adverse consequences resulting from such a
transfer. An Employee who directs a transfer described in this
Section shall cooperate fully with the Plan Administrator in
effecting any and all corrective measures which may be required to
prevent the Plan's disqualification as a result of the transfer.
4.5.2 Plan-to-Plan Transfer Account
For the benefit of any Participant on whose behalf the Plan has
received a Plan-to-Plan Transfer, there shall be maintained a
Transfer Account, which shall be adjusted as provided in Article VI,
and shall be closed when the balance of such account, including
allocable earnings, gains and losses, has been distributed pursuant
to this Plan.
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4.5.3 Plan-to-Plan Transfers: Allocation
Any Plan-to-Plan Transfer received by the Plan pursuant to this
Article IV shall be credited, as it is received, to the Transfer
Account of the Participant on whose behalf it was received.
4.5.4 Plan-to-Plan Transfers: Vesting
The Plan-to-Plan Transfers received by the Plan on behalf of any
Participant shall be fully vested in such Participant and not subject
to forfeiture prior to the time they are distributed pursuant to this
Plan.
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ARTICLE V
REQUIRED NON-DISCRIMINATION TESTING
5.1.1 Limitation on Additions
(a) The Annual Additions to this Plan for the benefit of a
Participant in a Limitation Year are the sum of:
(1) Allocations to his Elective Contribution Account for
the Limitation Year, directly or indirectly, of the
Elective Contributions to the Plan; and
(2) Allocations to his Basic ADP Safe Harbor Matching
Contribution Account for the Limitation Year,
directly or indirectly, of the Basic ADP Safe Harbor
Matching Contributions to the Plan; and
(3) Allocations to his Basic Matching Contribution
Account for the Limitation Year, directly or
indirectly, of the Basic Matching Contributions to
the Plan; and
(4) Allocations to his Basic Profit-Sharing Account for
the Limitation Year, directly or indirectly, of the
Basic Profit-Sharing Contributions to the Plan; and
(5) Allocations to any individual medical account
maintained on behalf of the Participant by the
Employer pursuant to a pension or annuity plan, as
described in secs. 415(l)(1) and 419A(d)(2) of the
Code.
Contributions shall not fail to be Annual Additions to this
Plan merely because such contributions are excess
contributions or excess aggregate contributions, or merely
because such excess contributions or excess aggregate
contributions are distributed. Excess deferrals are Annual
Additions only if they are not distributed as provided in
Article IV.
(b) A Participant's Maximum Annual Addition for a Limitation Year
is the lesser of:
(1) 25% of the Participant's compensation for the
Limitation Year; or
(2) the greater of:
(A) $30,000; or
(B) 25% of the defined benefit dollar limitation set forth in sec.
415(b)(1)(A) of the Code as in effect for the Limitation Year
or such other amount as the Secretary of the Treasury or his
delegate may from time to time authorize pursuant to sec.
415(d) of the Code.
(c) Any provisions of this Plan to the contrary notwithstanding,
the Annual Additions to this Plan for the benefit of a
Participant in a Limitation Year shall in no event exceed the
Participant's Maximum Annual Addition for that Limitation
Year.
If allocations pursuant to Article IV would otherwise result
in the limitation in the preceding sentence being exceeded for
a Participant in a Limitation Year because of the allocation
of Forfeitures, if any, or because of a reasonable error in
estimating a Participant's annual compensation, or because of
a reasonable error in determining the amount of elective
deferrals (within the meaning of Code sec. 402(g)(3)), or
because of any other facts and circumstances which the
Internal Revenue Service finds to be appropriate consistent
with sec. 415 of the Code and regulations promulgated
thereunder, then the Plan Administrator shall reduce that
Participant's Annual Additions, but only to the extent that
the sum of such Additions no longer exceeds his Maximum Annual
Additions.
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This reduction of the Participant's Annual Additions shall be
accomplished by reducing the allocation (if any) to the
Participant's Individual Accounts of each of the allocated
amounts described below according to the order in which they
are listed. Each such amount shall be completely exhausted
before the next listed allocation is reduced.
The allocations to be reduced (and the order in which they
shall be reduced) shall be as follows:
(1) Elective Contributions and, if the Participant is an
HCE, related Basic Matching Contributions
(2) Basic Profit-Sharing Contributions
(3) Basic ADP Safe Harbor Matching Contributions
(4) Basic Matching Contributions not described above
The amount by which an Elective Contribution is reduced shall
be distributed to the Participant on whose behalf it was
received as soon as administratively practicable, and shall
include any earnings and gains that have been allocated and
which are attributable to that returned amount.
The remaining surplus amounts created by the reductions
described above shall be held in a Suspense Account
established and administered pursuant to Section 5.1.2.
(d) For purposes of this Section, compensation means a
Participant's wages, salary, and/or other remuneration that is
required to be reported as income on the individual's Form W-2
for federal income tax withholding purposes under Code sec.
3401(a).
For any Self-Employed Individual, compensation means Earned
Income.
For the purposes of this Section, the total amount of
compensation that is actually paid or made available to a
Participant within a Limitation Year shall be the amount of
that Participant's compensation taken into account regarding
that Limitation Year.
(e) Additional Limitation in the Case of Defined Benefit Plan and
Defined Contribution Plan for Same Employee:
(1) In any case where a Participant has at any time
participated in a defined benefit plan maintained by
the Employer, the limitation imposed by this Section
(without regard to this Additional Limitation) shall
be reduced to the extent necessary to prevent the
Participant's Combination Ratio from exceeding 1.0 in
any Limitation Year. A Participant's Combination
Ratio is the sum of his Defined Benefit Fraction and
his Defined Contribution Fraction.
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<PAGE>
(2) A Participant's Defined Benefit Fraction for a
Limitation Year is a fraction -
(A) the numerator of which is his projected
annual benefit (as defined in sec. 415(e) of
the Code and regulations thereunder) to
which the Participant would be entitled
under the defined benefit plan as of the
close of the Limitation Year;
(B) the denominator of which is the lesser of:
(i) the product of 1.25 (or, if the
Plan is top-heavy as determined
under the provisions of Section
5.2, 1.0) multiplied by the dollar
limitation in effect under sec.
415(b)(1)(A) of the Code for such
Limitation Year, or
(ii) the product of 1.4 multiplied by
the amount which may be taken into
account under sec. 415(b)(1)(B) of
the Code with respect to such
Participant for such Limitation
Year.
(3) A Participant's Defined Contribution Fraction for a
Limitation Year is a fraction -
(A) the numerator of which is the sum of the
Annual Additions (as defined in this
Section) to the Participant's account for
the Participant's benefit as of the close of
the Limitation Year and for all prior
Limitation Years; and
(B) the denominator of which is the sum of the
lesser of the following amounts determined
for such Limitation Year and for each prior
Limitation Year of service with the
Employer:
(i) the product of 1.25 (or, if the
Plan is top-heavy as determined
under the provisions of Section
5.2, 1.0) multiplied by the dollar
limitation in effect under sec.
415(c)(1)(A) of the Code for such
Limitation Year (determined without
regard to sec. 415(c)(6) of the
Code), or
(ii) the product of 1.4 multiplied by
the amount which may be taken into
account under sec. 415(c)(1)(B) of
the Code (or subsection (c)(7) or
(8), if applicable) with respect to
such Participant for such
Limitation Year.
(4) For purposes of this Additional Limitation, Employee
contributions to any defined benefit plan maintained
by the Employer, whether mandatory or voluntary,
shall be treated as a separate defined contribution
plan maintained by the Employer.
(5) If an additional limitation is applicable, it shall
be imposed in this Plan before any reduction in the
limitation on benefits payable under any defined
benefit plan, unless the applicable defined benefit
plan provides expressly to the contrary.
(f) Aggregation of Plans
For purposes of this Section, all qualified defined
contribution plans (without regard to whether a plan has been
terminated) ever maintained by the Employer will be treated as
part of this Plan, and all qualified defined benefit plans
(without regard to whether a plan has been terminated) ever
maintained by the Employer will be treated as one defined
benefit plan.
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Employee contributions (whether mandatory or voluntary) to a
qualified defined benefit plan maintained by the Employer
shall be treated as a defined contribution plan maintained by
the Employer.
Any qualified defined benefit or defined contribution plan
maintained by any member of a controlled group of corporations
or group of trades or businesses (whether or not incorporated)
under common control (within the meaning of sec. 414(b) and
(c) of the Code as modified by sec. 415(h)) of which the
Employer is a member shall be treated as a plan maintained by
the Employer.
5.1.2 Suspense Account
For any Plan Year, any surplus amounts created by reductions described
in Section 5.1.1(c) and not returned to a Participant shall be held
unallocated in a Suspense Account.
Any provisions of this Plan to the contrary notwithstanding, any
amounts held in a Suspense Account shall be applied toward Employer
contributions and Plan expenses as such obligations accrue, with the
Employer making no further contributions to the Plan until such time as
the Suspense Account balance has been exhausted.
No amounts held in a Suspense Account may be distributed to any
Participant at any time prior to termination of the Plan. If there are
amounts held in a Suspense Account at a time when the Plan is
terminated, such amounts shall be reallocated to Participants in
proportion to their Compensation for that Plan Year but not in excess
of each Participant's Maximum Annual Addition for the Plan Year. Any
amounts that cannot be reallocated may revert to the Employer according
to Section 8.1.3.
5.2.1 Top-Heavy Provisions: Application
The provisions of Sections 5.2.1 - 5.2.3 shall become effective only
if, as of the first day of the applicable Plan Year, the Plan is
top-heavy pursuant to the Test described in Section 5.2.2.
5.2.2 Top-Heavy Determination
(a) Definitions
(1) Aggregation Group
(A) Required Aggregation Group means
(i) each and every plan of the Employer
in which a Key Employee is a
Participant during the Plan Year
containing the Determination Date
or any of the four preceding Plan
Years, including any plan that has
subsequently terminated, and
(ii) each other plan of the Employer
which enables any plan described in
subsection (i) above to meet the
participation or nondiscrimination
requirements of the Code, including
(but not limited to) the
requirements of Code secs.
401(a)(4) and 410.
(B) Permissive Aggregation Group means a
Required Aggregation Group or a plan
described in subsection (A)(i) above
together with any other plan of the Employer
which is not required to be included in an
Aggregation Group under subsection (A)(ii)
above but which may be so included if such
group would continue to meet the
participation and nondiscrimination
requirements of the Internal Revenue Code.
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<PAGE>
(C) Top-Heavy Group means any Required
Aggregation Group found to be top-heavy
pursuant to subsection (b) of this Section
5.2.2.
(2) Compensation means compensation as defined in Section
5.1.1(d).
(3) Determination Date means
(A) in the case of the first Plan Year, the last day of
such Plan Year;
(B) in all other cases, the last day of the preceding
Plan Year.
(4) Non-Key Employee means any Employee who is not a Key Employee.
(5) Present Value of Accrued Benefits means, for this Plan, the
sum of
(A) the account balances attributable to Basic and
Elective Contributions as of the most recent
Valuation Date occurring within a twelve-month period
ending on the Determination Date, and
(B) an adjustment for certain contributions due as of the
Determination Date, as required by Code sec. 416.
If this Plan is a member of an Aggregation Group,
Present Value of Accrued Benefits shall mean the sum
of the account balances of all Employer and
non-deductible Employee Contribution Accounts
maintained for the Participant pursuant to all
defined contribution plans that belong to the group
and of which he is a member and also the sum of the
present values of the vested accrued benefits due the
Participant pursuant to all defined benefit plans
that belong to the group and of which the Participant
is a member.
(6) Valuation Date means the last date in each Plan Year on which
account balances are valued.
(b) Top-Heavy Test
The Plan (or Aggregation Group) shall be top-heavy
for each Plan Year if, as of the Determination Date,
the Plan's (or Aggregation Group's) top-heavy ratio
for the Plan Year exceeds sixty percent (60%). The
top-heavy ratio is the Present Value of Accrued
Benefits of all Key Employees over the Present Value
of Accrued Benefits of all Employees, excluding
former Key Employees. Calculation of the top-heavy
ratio shall be made in accordance with sec. 416 of
the Code (with specific reference to Code sec.
416(g)(3)) and shall take into account the following
amounts:
(1) Present Value of Accrued Benefits as
described in subsection (a)(5) above; and
(2) The amount of all distributions to
Participants or their Beneficiaries during
the Plan Year that includes the
Determination Date and also during the four
preceding Plan Years pursuant to this Plan
or pursuant to a terminated plan which if it
had not been terminated would have been
required to be included in an Aggregation
Group, EXCEPT
(A) any rollover to this Plan initiated
by the Employee and
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<PAGE>
(B) any transfer to this Plan from a
qualified plan maintained by an
unrelated employer; and
(C) any distribution which occurred
after the Valuation Date but prior
to the Determination Date to the
extent that such a distribution has
been included in the calculation of
the Present Value of Accrued
Benefits.
However, calculation of the top-heavy ratio for any Plan
Year shall not take into account the Present Value of
Accrued Benefits or the amount of all distributions made to
any individual who has not performed services for the
Employer at any time during the 5-year period ending on such
Plan Year's Determination Date.
For an Aggregation Group, each plan shall initially be
tested separately, and then the plans shall be aggregated by
adding together the results for each plan as of the
Determination Dates that fall within the same calendar year.
If the Aggregation Group includes two or more defined
benefit plans, the same actuarial assumptions will be
specified within and used by such plans for the purposes of
this Section 5.2. Also, in such defined benefit plans
proportional subsidies shall be ignored and non-proportional
subsidies considered for the purposes of this Section
5.2.2(b).
For a Required Aggregation Group, each Plan shall be tested
by determining the Present Value of Accrued Benefits for
non-Key Employees (1) pursuant to the method, if any, that
uniformly applies for accrual purposes under all plans
maintained by the affiliated Employers; or (2) if there is
no such method, as if such Accrued Benefits accrued not more
rapidly than the slowest accrual rate permitted under the
fractional accrual rates of sec. 411(b)(1)(C) of the Code.
5.2.3 Special Rules for Top-Heavy Plans
(a) Application of Special Rules
(1) If, after application of the top-heavy test described
in Section 5.2.2(b), this Plan is found not to be
top-heavy, then the special rules set forth below
shall not apply to this Plan. In that event, the
other applicable provisions in this Plan will govern.
(2) If, after application of the top-heavy test in
Section 5.2.2(b), this Plan is found to be top-heavy,
then the following special rules shall govern.
(b) Minimum Contribution
(1) For each Plan Year in which the Plan is top-heavy,
each non-Key Employee who is a Participant and who
has not separated from Service at the end of the Plan
Year, including any Participant who failed to
complete 1,000 Hours of Service, and any who did not
make an Elective Contribution pursuant to Section
4.2.1, shall accrue not less than the minimum
contribution described below.
(2) The sum of the Employer's contributions and any
forfeitures allocated to the Individual Accounts of
each such Participant for each Plan Year in which the
Plan is top-heavy must equal not less than
(A) at least three percent (3%) of each such
Participant's compensation for that Plan
Year; or
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(B) if the highest percentage of compensation
provided on behalf of Key Employees who are
Participants for that Plan Year is less than
three percent (3%), then not less than the
same percentage of such compensation for
that Plan Year for each non-Key Employee
Participant as the largest percentage of
such compensation provided on behalf of Key
Employee Participants for that Plan Year.
(3) Any provisions of subsection (2) above to the
contrary notwithstanding, for each Plan Year in which
the Employer maintains both a defined benefit plan
and a defined contribution plan and both plans are
top-heavy, each non-Key Employee who is a Participant
in both such Plans shall be credited with not less
than a portion of the sum of the Employer's
contributions and forfeitures made under the terms of
this Plan for that Plan Year equal to five percent
(5%) of his compensation.
In determining the minimum contribution or benefit
that is required for non-Key Employees by this
Section, Elective Contributions and matching
contributions, if any, that are allocated to Key
Employees shall be taken into account. However, to
the extent that matching contributions made on behalf
of non-Key Employees are taken into account in
meeting the Actual Deferral Percentage Test and/or
the Actual Contribution Percentage Test described in
Article V, such contributions may not additionally be
credited as part of any minimum contribution or
benefit required by this Section. Elective
Contributions made on behalf of non-Key Employees may
not be credited as part of any minimum contribution
or benefit required by this Section.
If the Employer is required to contribute an
additional amount to the Plan on behalf of a
Participant as a result of the operation of this
Article, that amount shall be credited to a Basic
Contribution Account established and maintained on
his behalf.
5.3 Actual Deferral Percentage Test
(a) Effective July 1, 1999 through December 31, 1999, this Plan
shall satisfy the ADP Test of Code sec. 401(k)(3) by complying
with Code sec. 401(k)(12).
Effective January 1, 2000, for each Plan Year, the Plan
Administrator shall perform (or have performed) an Actual
Deferral Percentage Test in order to ensure that the Plan's
cash or deferred arrangement satisfies the requirements of
Code sec. 401(k)(3) and does not impermissibly discriminate in
favor of Participants who are Highly Compensated Employees
("HCEs").
The Actual Deferral Percentage ("ADP") Test shall compare the
ADP of those Participants who are HCEs with the ADP of those
Participants who are not HCEs.
For any group of Participants, the group's ADP equals the
average (expressed as a percentage) of the actual deferral
ratios of that group's Participants, with each Participant's
actual deferral ratio calculated separately.
For any Plan Year, a Participant's actual deferral ratio
consists of the amount of the Participant's Elective
Contribution for the Plan Year (subject to the limitations of
the following paragraph) plus, at the discretion of the Plan
Administrator, the amount of any Qualified Matching
Contributions ("QMACs") and Qualified Nonelective
Contributions ("QNCs") that are treated as Elective
Contributions and included in the ADP testing by the Plan
Administrator, with such sum expressed as a percentage of his
Compensation.
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For purposes of this Section 5.3, in any Plan Year, the Plan
Administrator may elect to use compensation as described in
Section 5.1.1(d) or "compensation" as described in the
definition of HCE in Article II, instead of Compensation, for
every Participant. Also, the Plan Administrator may elect to
limit Compensation (or the applicable alternative) for every
Participant to Compensation received while participating in
the Plan.
However, the Plan Administrator's discretion in choosing to
include any QMACs or QNCs is limited to the extent that such
inclusion satisfies the conditions and requirements set forth
in 26 CFR sec. 1.401(k)-1(b)(5).
In determining a Participant's actual deferral ratio, the
Participant's Elective Contributions may be taken into account
only to the extent that they satisfy the following conditions.
(1) The Elective Contribution must be allocated to an
account maintained on behalf of the Participant as of
a day within the plan year being considered. For the
purpose of this provision, an Elective Contribution
shall be considered allocated as of a date within a
plan year only if both:
(A) the allocation is not contingent upon the
Participant's participation in a plan or
performance of service on any date
subsequent to the date of allocation; and
(B) the amount of the Elective Contribution is
actually paid to the plan pursuant to which
the Elective Contribution is made no later
than the end of the twelve-consecutive-month
period immediately following the plan year
to which the contribution relates.
(2) The Elective Contribution relates to Compensation
that either:
(A) would have been received by the Participant
in the plan year but for the Participant's
election to defer that Compensation, or
(B) is attributable to service performed by the
Participant in the plan year and, but for
the Participant's election to defer, would
have been received by the Participant within
two and one-half months after the close of
the plan year.
In addition, if with reference to a Plan Year the Participant
was an HCE and also participated in more than one cash or
deferred arrangement sponsored by the Employer, then all such
cash or deferred arrangements shall be aggregated and treated
as one arrangement for the purposes of determining the
Participant's actual deferral ratio for that Plan Year. If
these arrangements have different plan years, these
arrangements' plan years that end with or within the same
calendar year shall be aggregated and treated for ADP purposes
as a single arrangement and single plan year. However, the
preceding provisions to the contrary notwithstanding,
contributions and allocations under plans described by Code
sec. 4975(e)(7) (i.e. "ESOPs") shall not be aggregated.
(b) For each Plan Year, the ADP for the group of Eligible
Participants who are HCEs for that Plan Year shall not exceed
the greater of (1) or (2), where
(1) equals 125% of the ADP for the group of Eligible Participants
who are non-HCEs for that Plan Year; and
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(2) equals the lesser of (A) and (B), where
(A) equals 200% of the ADP for the group of Eligible
Participants who are non-HCEs for that Plan Year; and
(B) equals the ADP for the group of Eligible Participants
who are non-HCEs for that Plan Year, plus 2
percentage points (or such other amount as may be
prescribed by the Secretary of the Treasury).
For the purposes of this subsection, "Eligible Participants"
means those Participants who during the Plan Year were
eligible to have elected to defer some portion of their
Compensation for that Plan Year so as to receive an Elective
Contribution, regardless of whether such an election was
actually made.
(c) If for a Plan Year the ADP limits of subsection (b) above are
exceeded, the amount of excess contributions to be attributed
to each HCE shall be determined by the following leveling
method.
The Plan Administrator shall reduce the amount of Elective
Contributions that are allocated pursuant to the Plan for that
Plan Year on behalf of the HCE with the highest actual
deferral ratio. This reduction shall be made only to the
extent required to (1) enable the Plan to meet the ADP limits,
or (2) cause the HCE's actual deferral ratio to equal the
actual deferral ratio of the HCE with the next highest actual
deferral ratio, whichever occurs first.
This process shall be repeated by the Plan Administrator until
the ADP test limits of subsection (b) above have been met.
For each Plan Year, the amount of excess contributions, if
any, for each HCE shall equal the sum of the HCE's Elective
Contributions, plus any Qualified Nonelective Contributions
and Qualified Matching Contributions that are treated as
Elective Contributions (determined prior to the application of
this subsection) in determining the HCE's actual deferral
ratio, minus the product of the HCE's actual deferral ratio
(determined after application of this subsection) multiplied
by the HCE's Compensation.
(d) After the close of the Plan Year to which the excess
contributions are attributable, but within twelve months after
such Plan Year's close, the Plan Administrator shall designate
as such and distribute to each HCE the amount (if any) of
excess contributions (plus any earnings, gains or losses
described in Section 6.2 attributable to such contributions)
that were made on that HCE's behalf, minus the sum of any
excess deferrals previously distributed to the HCE for the
HCE's taxable year ending with or within that Plan Year.
(e) Any of the provisions of this Section to the contrary
notwithstanding, in determining the actual deferral ratio of a
Participant who is an HCE, the family aggregation rules
described in paragraph (4) of the definition in Article II of
Highly Compensated Employee shall apply, and the actual
deferral ratio of any such family aggregate shall equal the
actual deferral ratio determined by combining the
contributions received by the Plan on behalf of and
Compensation paid to all eligible family members.
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After the actual deferral ratio of such a family aggregate has
been determined, the amount of excess contributions (if any)
that were allocated on behalf of the family aggregate shall be
determined and corrected according to the "leveling" method
described in subsection (c) above. The resulting excess
contributions shall be reallocated among those family members
whose contributions were combined to determine the actual
deferral ratio of the family aggregate, with each such member
being allocated an amount of excess contribution in proportion
to the contributions of each such member that have been
combined.
(f) For the purposes of satisfying the limits specified in this
Section and in Code secs. 401(a)(4), 410(b), and 401(k), two
or more cash or deferred arrangements may be aggregated,
provided that such aggregation is consistent with the
provisions of IRC Regs. 1.401(k)-1(b)(3) and
1.401(k)-1(g)(1)(ii); for example, cash or deferred
arrangements may be aggregated pursuant to this subsection
only if the respective plans of which they are part have the
same plan years. All elective contributions that are made
under any plan that are aggregated with this Plan for the
purposes of Code sec. 401(a)(4) or sec. 410(b) (other than
sec. 410(b)(2)(A)(ii)) are to be treated as if they were made
under a single plan. In addition, if any plans are
permissively aggregated with this Plan for the purposes of
Code sec. 401(k), the aggregated plans must also satisfy Code
secs. 401(a)(4) and 410(b) as though they were a single plan.
5.4 Average Contribution Percentage Test
(a) Effective July 1, 1999 through December 31, 1999, this Plan
shall satisfy the ACP Test of Code sec. 401(m)(2) by complying
with Code sec. 401(m)(11).
Effective January 1, 2000, for each Plan Year, the Plan
Administrator shall perform (or have performed) an Average
Contribution Percentage Test in order to ensure that the
Plan's receipt and allocation of matching contributions and/or
employee contributions, if any, satisfy the requirements of
Code sec. 401(m) and do not impermissibly discriminate in
favor of Participants who are Highly Compensated Employees
("HCEs").
The Average Contribution Percentage ("ACP") Test shall compare
the ACP of those Participants who are HCEs with the ACP of
those Participants who are not HCEs.
For any group of Participants, the group's ACP equals the
average (expressed as a percentage) of the actual contribution
ratios of that group's Participants, with each Participant's
actual contribution ratio calculated separately.
For any Plan Year, a Participant's actual contribution ratio
consists of the sum of the following contributions (if any)
which have been received by the Plan on the Participant's
behalf for that Plan Year:
(1) "matching" employer contributions (within the meaning
of Code sec. 401(m)(4)(A));
(2) employee contributions; and
(3) any Elective Contributions and Qualified Nonelective
Contributions ("QNCs") that the Plan Administrator,
in the exercise of his sole discretion, chooses to
take into account for the purposes of ACP testing
(except that the Plan Administrator's discretion in
choosing to include any Elective Contributions and
QNCs is limited to the extent that such inclusion
satisfies the conditions and requirements set forth
in 26 CFR sec. 1.401(m)-1(b)(5));
with such sum expressed as a percentage of the Participant's
Compensation.
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For purposes of this Section 5.4, in any Plan Year, the Plan
Administrator may elect to use compensation as described in
Section 5.1.1.(d) or "compensation" as described in the
definition of HCE in Article II instead of Compensation, for
every Participant. Also the Plan Administrator may elect to
limit Compensation (or the applicable alternative) for every
Participant to Compensation received while participating in
the Plan.
In determining a Participant's actual contribution ratio,
matching contributions made on behalf of the Participant may
be taken into account only to the extent that they satisfy the
following conditions.
(1) The matching contribution must be allocated to an
account maintained on behalf of the Participant as of
a day within the Plan Year being considered.
(2) The amount of the matching contribution is actually
paid to the Plan pursuant to which the matching
contribution is made no later than the end of the
twelve-consecutive-month period immediately following
the Plan Year to which the contribution relates.
(3) The matching contribution is made on behalf of the
Participant on account of the Participant's elective
contributions or Employee contributions (if any) for
the Plan Year to which the matching contribution
relates. Matching contributions that are forfeited
because they relate to excess deferrals, excess
contributions or excess aggregate contributions shall
not be taken into account.
(b) For each Plan Year, the ACP for the group of Eligible
Participants who are HCEs for that Plan Year shall not exceed
the greater of (1) or (2), where
(1) equals 125% of the ACP for the group of Eligible
Participants who are non-HCEs for that Plan Year; and
(2) equals the lesser of (A) and (B), where
(A) equals 200% of the ACP for the group of
Eligible Participants who are non-HCEs for
that Plan Year; and
(B) equals the ACP for the group of Eligible
Participants who are non-HCEs for that Plan
Year; plus 2 percentage points (or such
other amount as may be prescribed by the
Secretary of the Treasury).
For the purposes of this subsection, "Eligible Participants"
means those Participants who are directly or indirectly
eligible to make an employee contribution or to receive an
allocation of matching contributions (including matching
contributions derived from Forfeitures, if any) under the
terms of this Plan for the Plan Year being reviewed.
If a Participant has "excess deferrals" according to Section
4.2.1(c) or "excess contributions" for the Plan Year according
to Section 5.3, then such excess deferrals and/or excess
contributions shall be calculated and distributed prior to
determining the Participant's excess aggregate contributions
for the Plan Year.
(c) If for a Plan Year the ACP limits of
subsection (b) above are exceeded, the
amount of excess aggregate contributions to
be attributed to each HCE shall be
determined by the following leveling method.
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The Plan Administrator shall reduce the employee contributions
and, if necessary, the matching contributions that had been
allocated pursuant to the Plan Year for that Plan Year on
behalf of the HCE with the highest actual contribution ratio.
This reduction shall be made only to the extent required to
(1) enable the Plan to meet the ACP limits, or (2) cause the
HCE's actual contribution ratio to equal the next highest
actual contribution ratio, whichever occurs first.
This process shall be repeated by the Plan Administrator until
the ACP test limits of subsection (b) above have been met.
For each Plan Year, the amount of excess aggregate
contributions, if any, for each HCE shall equal the sum of the
HCE's employee contributions and matching contributions, if
any, plus any Qualified Nonelective Contributions and Elective
Contributions that are treated as matching contributions
(determined prior to the application of this subsection) in
determining the HCE's actual contribution ratio, minus the
product of the HCE's actual contribution ratio (determined
after application of this subsection) multiplied by the HCE's
Compensation.
Determinations of actual contribution ratios shall be rounded
to the nearest one-hundredth of one percent of the
Participant's Compensation.
(d) After the close of the Plan Year to which the excess aggregate
contributions are attributable, but within twelve months after
such Plan Year's close, the Plan Administrator shall designate
the amount (if any) of the excess aggregate contributions
(plus any earnings, gains, or losses described in Section 6.2
on such contributions) that are attributable to amounts
received and accumulated under the Plan on each HCE's behalf.
Such excess aggregate contributions shall be forfeited, if
forfeitable. These forfeited amounts shall be reallocated to
Participants who are non-HCEs for the Plan Year. Each such
Participant shall be allocated a portion of the total
forfeited amounts so that such portion, when compared to the
total of the forfeited amounts, shall bear the same direct
proportion that the amount of Basic Matching Contribution
being allocated to the Participant pursuant to Section 4.1.1,
subsection (a), bears to the entire amount of Basic Matching
Contribution that is allocated to all such non-HCE
Participants pursuant to Section 4.1.1(a).
If not forfeitable, the amount of the excess aggregate
contribution and any earnings, gains, or losses shall be
distributed to the HCE on whose behalf the excess aggregate
contribution was received. 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 10% excise tax will be imposed on the Employer with respect
to these amounts.
(e) Any of the provisions of this Section to the contrary
notwithstanding, in determining the actual contribution ratio
of a Participant who is an HCE, the family aggregation rules
described in paragraph (4) of the definition in Article II of
Highly Compensated Employee shall apply, and the actual
contribution ratio of any such family aggregate shall equal
the actual contribution ratio determined by combining the
contributions received by the Plan on behalf of and
Compensation paid to all eligible family members.
After the actual contribution ratio of such a family aggregate
has been determined, the amount of excess aggregate
contributions (if any) that were allocated on behalf of the
family aggregate shall be determined and corrected according
to the "leveling" method described in subsection (c) above.
The resulting excess aggregate contributions shall be
reallocated among those family members whose contributions
were combined to determine the actual contribution ratio of
the family aggregate, with each such member being allocated an
amount of excess aggregate contribution in proportion to the
contributions of each such member that have been combined.
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(f) Any provisions of this Section to the contrary
notwithstanding, for the purposes of determining whether this
Plan satisfies the ACP test, all employee and matching
contributions that are made under any plans that are
aggregated with this Plan for the purposes of Code sec.
401(a)(4) and/or 410(b) (other than Code sec.
410(b)(2)(A)(ii)) shall be aggregated and treated as if made
under a single plan. In addition, if any plans are
permissively aggregated with this Plan for the purposes of ACP
testing, then the aggregated plans must also satisfy Code
secs. 401(a)(4) and 410(b) as though they were a single plan.
Also, if a Participant who is a Highly Compensated Employee
also participates in other retirement plans sponsored by the
Employer to which employer matching contributions (as defined
in Code sec. 401(m)(4)(A)) or employee contributions are made,
then all such contributions made on the Participant's behalf
shall be aggregated for the purposes of this Section.
However, plans may be aggregated pursuant to this subsection
(f) only if they have the same plan year.
5.5 Multiple Use of Alternative Limitation
(a) Any provisions of this Plan to the contrary notwithstanding,
if for any Plan Year a multiple use of the alternative
limitation occurs with respect to two or more cash or deferred
arrangements ("CODA's") and/or plans maintained by the
Employer, such multiple use shall be corrected by reducing the
actual deferral percentage ("ADP") of HCEs who are eligible to
participate in such CODA's and/or plans.
(b) Multiple use of the alternative limitation occurs if the
following conditions are met:
(1) one or more HCEs are eligible to defer compensation
pursuant to a CODA subject to Code sec. 401(k) and
sponsored by the Employer, and also are allocated
contributions pursuant to a plan subject to Code sec.
401(m) and sponsored by the Employer; and
(2) the ADP for the group of HCEs eligible to defer
compensation pursuant to the CODA exceeds 125% of the
ADP for the group of non-HCEs and the ACP for the
group of HCEs allocated contributions pursuant to the
Plan subject to Code sec. 401(m) exceeds 125% of the
ACP for the group of non-HCEs; and
(3) the sum of the ADP for the group of HCEs eligible to
defer compensation pursuant to the CODA and the ACP
for the group of HCEs allocated contributions
pursuant to the Plan subject to Code sec. 401(m)
exceeds the "Aggregate Limit".
The "Aggregate Limit" is the greater of (A) and (B),
where:
(A) Equals the sum of:
(i) 125% of the greater of the ADP or
the ACP for the group of non-HCEs
and
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<PAGE>
(ii) 2 plus the lesser of the ADP or the
ACP for the group of non-HCEs, but
not more than 200% of the lesser of
the ADP or the ACP for the group of
non-HCEs; and
(B) equals the sum of:
(i) 125% of the lesser of the ADP or
the ACP for the group of non-HCEs,
and
(ii) 2 plus the greater of the ADP or
the ACP for the group of non-HCEs,
but no more than 200% of the
greater of the ADP or the ACP for
the group of non-HCEs.
(c) So that there is no multiple use of the alternative
limitation, all HCEs who were eligible to have deferred
compensation under the CODA and who were also allocated
contributions under an Employer-sponsored plan subject to Code
sec. 401(m) testing shall have their ADP reduced in the manner
described in 26 CFR sec. 1.401(k)-1(f)(2).
36
<PAGE>
ARTICLE VI
ADMINISTRATION OF PLAN ASSETS
6.1.1 The Investment Fund
All funds received by the Plan pursuant to Article IV, including
amounts deposited with the Insurance Company under an annuity or
insurance contract, shall be credited to the trust fund. The trust
fund shall be of a suitable nature to hold the funds and to provide
the benefits payable under this Plan.
The Plan Administrator shall create and maintain adequate records to
disclose the interest in the trust fund of each Participant or, where
appropriate, his Beneficiary. Such records shall be in the form of
Individual Accounts, and credits and charges shall be made to such
accounts in the manner herein described. These amounts shall be
maintained for accounting purposes only and shall not represent any
segregated or identifiable portion of the trust fund.
All deposits to the trust fund shall be applied for the exclusive
benefit of Participants and their Beneficiaries, except for such
reasonable expenses as may be incurred in the establishment or
operation of the Plan and which are not otherwise paid. Except as
provided in Sections 8.1.3 and 8.5, no amounts in the trust fund nor
any earnings attributable thereto, may ever revert to the Employer
prior to full satisfaction of all liabilities under the Plan.
6.1.2 Employee Directed Investments
Amounts held in the trust fund shall be allocated among a variety of
investment options made available and selected by the Trustees
pursuant to the contract with the Insurance Company. Each Participant
and Beneficiary may direct the allocation of the amounts held in the
trust fund on his behalf among these investment options.
To the extent that the Participant or Beneficiary does not direct the
investment of such amounts received on his behalf, the remainder will
automatically be allocated to and invested in one of the investment
options available under the Insurance Company contract and pursuant
to the Trustees' direction.
Each Participant and Beneficiary may elect to redirect the investment
of amounts held in the trust fund on his behalf.
Any of the above-specified directives to allocate, re-allocate,
transfer or remove funds from or among the various investment options
shall be effective for the purposes of this Plan only prospectively
after reasonable notice to the Insurance Company and subject to any
restrictions on the amount or timing of transfers to or from
particular investment options, according to the terms of the
Insurance Company contract or procedures established and uniformly
applied by the Plan Administrator.
6.2 Account Adjustments
Individual Accounts shall be valued as of the last day of each
calendar quarter and every other day on which earnings, gains, and
losses are credited. Each Active Account shall be credited with
earnings, gains, and losses according to the terms of its underlying
investments. Plan expenses described in Section 6.4 shall be
allocated at least once in every calendar quarter to Individual
Accounts existing on that allocation date. Each Individual Account
shall receive an allocation of such expenses in the same proportion
that the balance of the Individual Account bears to the sum of the
balances of all Individual Accounts. The allocation dates shall be
determined according to a uniform, consistent, and nondiscriminatory
procedure approved by the Plan Administrator.
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For purposes of this Section, Active Account means each Individual
Account, any Suspense Account, and each other account that can accrue
earnings, gains, and losses, such as an account used for holding
Forfeitures until they can be applied as provided in Article IV.
6.3 Distribution Adjustments
The amount of any distribution from an Individual Account maintained
on behalf of a Participant pursuant to the terms of this Plan shall
be charged against that Individual Account as of the date such
distribution is made.
6.4 Expenses
For any Plan Year, the Employer may pay the expenses of operating and
maintaining the Plan. Such payment shall be in addition to and
independent of any contributions to the Plan or assets held by the
Plan.
Absent prompt and timely payment by the Employer, the expenses of
operating and maintaining the Plan for the Plan Year shall be paid
from Forfeitures available for allocation pursuant to Article IV, and
then any unpaid remainder shall be allocated to Individual Accounts
pursuant to Section 6.2, EXCEPT that any expenses attributable to the
single sum benefit payment fee for a distribution other than a death,
Total and Permanent Disability or Retirement shall be directly
charged against that Participant's Individual Accounts.
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ARTICLE VII
DISTRIBUTIONS
7.1 Termination of Employment (Including Disability) Before Retirement
(a) If a Participant's employment as an Employee is terminated due
to his Total and Permanent Disability, or due to any other
reason except his death or Retirement, he may elect to receive
his Vested Benefit. To be effective for the purposes of this
Plan, such an election must be delivered in writing to the
Plan Administrator before the Annuity Starting Date that he
has selected. No distribution under this Section shall be made
or commence before the Participant's date of termination as an
Employee, nor later than the date which would be the
Participant's Normal Retirement Date had he not terminated
such employment until then.
(b) In any event, the Plan Administrator (or Trustee, as
applicable) shall distribute to the Participant his entire
Vested Benefit in a lump sum as soon as administratively
practicable after the time of his termination, provided that
the Participant's Vested Benefit has not ever exceeded $5,000
as of the date of any prior distribution to the Participant or
the date the Participant terminated Service. If the
Participant's entire Vested Benefit equals zero as of the date
his Service terminates, then the Participant shall be deemed
to have received a distribution of his entire Vested Benefit
as of that date of termination.
(c) Any distribution that is made to a Participant pursuant to
this Section shall be in lieu of any and all other benefits,
present or contingent, to which the Participant may be
entitled under the terms of this Plan.
However, if a distribution is made pursuant to this Section to
a Participant whose Vested Percentage is less than 100%, the
Participant shall have until the end of a period of five
consecutive Break in Service Years, or five years after the
first date as of which the Participant is subsequently
reemployed by the Employer, if earlier, to resume employment
as an Eligible Employee and repay to the Plan the amount
previously distributed, whereupon his Individual Account
balances shall be restored to the extent of the amounts
repaid, plus any amounts forfeited pursuant to Section 4.1.5,
provided that in any event such balances shall be restored to
not less than the amounts that existed immediately prior to
the distribution.
7.2 Death Benefits
(a) If a Participant who is credited with a Vested Benefit dies
prior to the Annuity Starting Date of his Vested Benefit, then
the Plan shall distribute a death benefit on his behalf.
The amount of the death benefit shall be the actuarial
equivalent of his Vested Benefit (after having taken into
account any security interest in his Vested Benefit that the
Plan has as a result of any currently outstanding loan to the
Participant).
(b) Unless the Participant elects otherwise as provided in
subsection (d) below, if the Participant has a "surviving
spouse" (as such term is defined in this Section below) as of
his date of death, the death benefit shall be payable to such
surviving spouse. If the Participant has no surviving spouse,
the death benefit will be paid to the Participant's designated
Beneficiary.
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<PAGE>
If the Participant's Vested Benefit has always had a lump sum
value of $5,000 or less as of the date of any prior
distribution or the date of the Participant's death, then that
benefit shall be distributed in the form of a lump sum, and
the Annuity Starting Date of that benefit shall be as soon as
administratively practicable (in any event, within one year)
following the Participant's date of death.
(c) "Surviving spouse" means a spouse to whom the Participant was
married throughout the one-year period ending on the earlier
of:
(1) the date the Participant's death benefit payments
commence under the terms of this Plan PROVIDED that
if the Participant was married within one year of the
date his benefit payments began and he and his spouse
from such marriage were married for at least a
one-year period ending on the date of the
Participant's death, such Participant and such spouse
shall be treated as having been married throughout
the one-year period ending on the date the
Participant's benefit payments began, or
(2) the date of the Participant's death.
(d) (1) Subject to paragraph (2) below, at any time a
Participant may elect a specifically designated
non-spouse Beneficiary to replace his surviving
spouse as the Beneficiary. He may also at any time
revoke such election and make another election. Any
such election or revocation shall be in writing and
shall be effective upon receipt by the Plan
Administrator.
(2) An election by a Participant pursuant to paragraph
(1) shall not take effect unless:
(A) the Participant's spouse, in a writing
received by the Plan Administrator and
witnessed by the Plan Administrator or a
notary public, acknowledges the effect of
and consents to the Participant's election;
or
(B) it is established to the Plan
Administrator's satisfaction that the
spousal consent described in (A) above
cannot be obtained because there is no
spouse, because the spouse cannot be
located, or because of other circumstances
which render obtaining such spousal
impossible.
(e) The Participant's death benefit shall be distributed to the
surviving spouse or other designated Beneficiary in the form
of a lump sum, and the Annuity Starting Date of that benefit
shall be as soon as administratively practicable (in any
event, within one year) following the Participant's date of
death.
In any event, any death benefit payable pursuant to this
Section shall commence or be distributed not later than the
time period described in (1) or (2) below, as appropriate:
(1) if payable to a surviving spouse (or child of the
Participant, as provided below), not later than
December 31 of the calendar year in which the
Participant would have attained 70 1/2; or
(2) if payable to any other Beneficiary, not later than
the first anniversary of the Participant's death;
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<PAGE>
PROVIDED that, if said spouse or Beneficiary cannot be located
within the applicable time period specified above, the Plan
Administrator may delay commencement or distribution of
payments for a period ending not later than the first day of
the first month beginning after the sixtieth day following the
date on which such spouse or Beneficiary has been identified
and located by the Plan Administrator and the Plan
Administrator has received any necessary documentation of
death.
A death benefit payable to any surviving child of the
Participant shall be treated as if payable to the surviving
spouse for purposes of (1) above in this subsection PROVIDED
that such benefit will become payable to the surviving spouse
as of the date such child reaches age 21 or as of such other
time as prescribed by the Secretary of the Treasury under
regulations.
If a surviving spouse is eligible to receive death benefits
under this Plan, and if that surviving spouse dies prior to
the Annuity Starting Date of those death benefits, then the
death benefits to which the deceased spouse had been entitled
shall be payable on his or her behalf within such a time-frame
as would be appropriate if the deceased spouse had been the
Participant, with the date of death of the surviving spouse
being substituted for the Participant's. However, the
exceptions provided in Code sec. 401(a)(9)(B)(iv) shall not be
available regarding any surviving spouse of the Participant's
surviving spouse.
(f) If a Participant dies after his Vested Benefit has been
distributed in the form of a lump sum, there shall be no
benefit payable from the Plan as a result of his death.
If a Participant dies while receiving the Payments from
Account described in Section 7.4 before his entire Vested
Benefit has been distributed, his surviving spouse or
Beneficiary may elect in writing to the Plan Administrator to
receive the previously undistributed portion of such Vested
Benefit in the form of a lump sum; in any event, the remaining
portion of such benefit, if any, shall be distributed at least
as rapidly as under the terms of said Payments from Account in
effect for the Participant at death.
7.3 Retirement
A Participant, regardless of his status as an Employee, shall have
attained Retirement Age when he has attained age 65, which shall be his
Normal Retirement Age.
A Participant who has attained Retirement Age may retire by designating
in writing to the Plan Administrator a Retirement Date, which shall be
his Retirement benefit's Annuity Starting Date, and which may be the
first day of any month after he has attained Normal Retirement Age, but
not later than the latest date permitted by the provisions of Section
7.5 regarding Commencement of Payments. This latter date shall be the
Retirement Date of any Participant who has not, prior thereto,
designated a Retirement Date.
If the date on which the Participant attains Normal Retirement Age is
the first day of a month, that date shall be his Normal Retirement
Date. Otherwise, the Participant's Normal Retirement Date shall be the
first day of the first month following his attainment of Normal
Retirement Age.
Upon Retirement, a Participant shall commence to receive his Vested
Benefit as provided in Section 7.5.
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<PAGE>
7.4 Form of Retirement Benefit
(a) The Retirement benefit payable to a Participant at the time of
his Retirement shall be the actuarial value of his Vested
Benefit distributed in the form of a Lump Sum, which is a
single payment in an amount equal to the Participant's Vested
Benefit.
(b) Solely for the purposes of distributing to a Participant his
Vested Benefit where such distribution has not occurred prior
to his Required Beginning Date (see Section 7.5(d)(2) below),
the Participant may elect to receive the distribution to
commence as of his Required Beginning Date in the form of
Payments from Account, rather than in the form of a Lump Sum.
Payments from Account shall mean periodic payments in an
amount specified by the Participant or his surviving spouse or
other Beneficiary designated according to Section 7.5(b)
continuing until such time as the Participant's Vested Benefit
(adjusted for subsequent Net Adjustments) is exhausted,
PROVIDED however that the period over which said payments are
to be made shall not extent beyond (1) the life expectancy of
the Participant, (2) the life expectancies of the Participant
and his surviving spouse or other designated Beneficiary, (3)
if payable pursuant to Section 7.2, the life expectancy of the
surviving spouse or other designated Beneficiary, or (4) 60
months, if by operation of Section 8.6 the Participant's
Beneficiary is his estate.
7.5 Retirement Benefits: Election of Forms and Commencement of Payments
(a) Applicability of this Section
In the case of a Participant who will receive a distribution
pursuant to Section 7.1 due to his termination of employment
before his attainment of Retirement Age, the form of the
distribution and the time of commencement of payments will be
as provided in that Section. The form and time of commencement
of death benefits payable to Beneficiaries shall be governed
according to Section 7.2. The form and time of commencement of
any other benefits payable pursuant to this Plan will be
determined according to this Section and Section 7.4.
In any event, all distributions required under this Section
shall be determined and made in accordance with the Income Tax
Regulations under Code sec. 401(a)(9), including the minimum
distribution incidental benefit requirement of sec.
1.401(a)(9)-2 of the regulations.
(b) Election
A Participant may elect to name a person as Beneficiary or to
replace the person currently designated by him or this Plan to
be his Beneficiary. Such an election may be revoked and
replaced with another such election. However, to be effective
for the purposes of this Plan, any such an election or
revocation must be made in writing and received by the Plan
Administrator within ninety (90) days before the Participant's
Annuity Starting Date, and must satisfy the spousal consent
requirements described in subsection (c) below, and must
specifically designate the form in which the benefits shall be
paid. In addition, if the election is to replace the person
currently designated by the Participant pursuant to this Plan
(or if there is no such designation by the Participant, then
the person (if any) designated by this Plan) to be his
Beneficiary, then the election must specifically designate the
person who is to become the Beneficiary.
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<PAGE>
(c) Spousal Consent
An election by a Participant to name a Beneficiary other than
his spouse or to change his Beneficiary shall not have any
effect for the purposes of this Plan unless:
(1) the Participant's spouse, in a writing received by
the Plan Administrator, acknowledges the effect of
and consents to the Participant's election within 90
days before the Annuity Starting Date, and the
writing is witnessed by the Plan Administrator or a
notary public; or
(2) it can be established to the Plan Administrator's
satisfaction that spousal consent cannot be obtained
because there is no spouse, or because the spouse
cannot be located, or because of other circumstances
which render obtaining such spousal consent
impossible.
Any consent by a spouse (or establishment that the consent
of the spouse cannot be obtained) pursuant to this
subsection shall be effective only with respect to such
spouse.
(d) Commencement of Payments
(1) Unless a Participant otherwise elects in a writing
received by the Plan Administrator prior to the
Participant's Annuity Starting Date, payment of the
Participant's Vested Benefit shall begin not later
than the 60th day after the close of the Plan Year in
which occurs the latest of:
(A) the Participant's attainment of Normal
Retirement Age;
(B) the 10th anniversary of the date on which
the Participant commenced participation in
this Plan; or
(C) the Participant's termination of employment
as an Employee,
provided that if the Participant has failed to
provide the Plan Administrator with sufficient
information as to age and marital status or any other
relevant information, so that the amounts of payment
may not be determined, or if the Participant cannot
be located, then the Plan Administrator may delay
commencement of payments for not more than 60 days
after the earliest date on which the amount and form
of payment may be determined under the terms of this
Plan, or the Participant is located. The amount of
payment in the event of such a delay shall be
retroactive to the Participant's Retirement Date.
Notwithstanding any provisions of this paragraph (1)
to the contrary, the failure of a Participant and the
Participant's spouse to consent to the distribution
of a benefit while that benefit is immediately
distributable pursuant to this Section shall be
deemed to be an election to defer commencement of
payment of that benefit.
(2) Any provisions of this Plan to the contrary
notwithstanding, the entire vested interest of the
Participant in benefits under this Plan:
(A) will be distributed to the Participant not
later than the Participant's Required
Beginning Date, or
(B) will be distributed, beginning not later
than the Participant's Required Beginning
Date, over the life of the Participant or
over the lives of the Participant and a
designated beneficiary (or over a period not
extending beyond the life expectancy of the
Participant or the life expectancy of the
Participant and a designated beneficiary).
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For the purpose of determining the amount to be
distributed as of the Participant's Required
Beginning Date, his Vested Benefit shall be valued as
of December 31 of the calendar year immediately
preceding his Required Beginning Date.
The Participant may elect for these required
distributions to be paid in any of the forms of
benefit described in Section 7.4, subject to any
spousal consent requirements that may apply pursuant
to this Plan. Absent such an election, these
distributions automatically shall be payable in the
form described in Section 7.4(a).
(3) If a Participant's interest is to be distributed in a
form other than a Lump Sum, the following minimum
distribution rules shall apply on or after the
Participant's Required Beginning Date.
(A) If the Participant's benefit is to be
distributed over (1) a period not extending
beyond the life expectancy of the
Participant or the joint life and last
survivor expectancy of the Participant and
the Participant's Beneficiary, or (2) a
period not extending beyond the life
expectancy of the Beneficiary, then the
amount required to be distributed for each
calendar year, beginning with distributions
for the first distribution calendar year,
must at least equal the quotient obtained by
dividing the Participant's benefit by the
applicable life expectancy.
(B) For calendar years beginning before January
1, 1989, if the Participant's spouse (if
any) is not the Beneficiary, the method of
distribution selected must assure that at
least 50% of the present value of the amount
available for distribution is paid within
the life expectancy of the Participant.
(C) For calendar years beginning after December
31, 1988, the amount to be distributed each
year, beginning with distributions for the
first distribution calendar year, shall not
be less than the quotient obtained by
dividing the Participant's benefit by the
lesser of (1) the applicable life
expectancy, or (2) if the Participant's
spouse (if any) is not the Beneficiary, the
applicable divisor determined from the table
set forth in Q&A-4 of sec. 1.401(a)(9)-2 of
the Income Tax Regulations. Distributions
after the death of the Participant shall be
distributed using the applicable life
expectancy referenced in subsection (3)(A)
above as the relevant divisor without regard
to Regulations sec. 1.401(a)(9)-2.
(D) The minimum distribution required for the
Participant's first distribution calendar
year must be made on or before the
Participant's Required Beginning Date. The
minimum distribution for other calendar
years, including the minimum distribution
for the distribution calendar year in which
the Participant's Required Beginning Date
occurs, must be made on or before December
31 of that distribution calendar year.
(4) Any additional amounts of Vested Benefit accrued by
the Participant after his Required Beginning Date
shall be distributed annually in the form of a lump
sum consistent with the requirements of Code sec.
401(a)(9) and applicable regulations.
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(5) Once distributions have begun to a 5% owner under
this subsection, they must continue to be distributed
even if the Participant ceases to be a 5% owner in a
subsequent year.
(6) For the purposes of this subsection, "applicable life
expectancy" means the life expectancy (or joint and
last survivor expectancy) calculated using the
attained age of the Participant (or designated
Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar
year reduced by one for each calendar year which has
elapsed since the date the life expectancy was first
calculated.
If the life expectancy is being recalculated, the
applicable life expectancy shall be the life
expectancy as so recalculated.
The applicable calendar year shall be the first
distribution calendar year, and if the life
expectancy is being recalculated, each such
succeeding calendar year.
If annuity payments commence before the Required
Beginning Date, the applicable calendar year is the
year such payments commence. If the distribution is
in the form of an immediate annuity purchased after
the Participant's death with the Participant's
remaining Vested Benefit, the applicable calendar
year is the year of purchase.
(7) Unless otherwise elected by the Participant (or
spouse, as applicable) by the time distributions are
required to begin, life expectancies shall be
recalculated annually. If such an election has been
made by the Participant (or spouse, as applicable),
it shall be irrevocable as to the Participant (or
spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may
not be recalculated.
7.6 Loans to Participants
Each Employee and former Employee who is a party in interest, within
the meaning of Section 3(14) of the Employee Retirement Income Security
Act of 1974, as amended, may apply to obtain loans from the Plan
according to the procedures and limits described below.
(a) Any application for a loan may only be made in writing, and
will become effective only upon receipt by the Plan
Administrator. The principal amount of the loan requested may
not be less than one thousand dollars ($1,000.00).
The written loan application must demonstrate the applicant's
"immediate and heavy financial need" as that term is described
in Section 4.2.5(b)(1)(A) through (D). Subject to the
additional limitations of Section 7.6(f), the principal amount
of the loan may not exceed the amount of the immediate and
heavy financial need.
(b) The Plan Administrator may choose to grant or deny the request
in a reasonably equivalent and nondiscriminatory manner,
consistent with the requirements of sec. 401 (and all other
relevant provisions) of the Internal Revenue Code, as amended.
However, under no circumstances shall a loan be made by this
Plan to any person who is or is deemed to be (or has as a
member of his immediate family) an "owner-employee" (as
defined in Code sec. 4975(d)) or a "shareholder-employee" of
an S Corporation (as defined in Code secs. 4975(d) and
1379(d)).
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(c) If the request is granted and an amount is loaned to the
Employee or former Employee as described above (hereinafter
"the Borrower"), the resulting liability of the Borrower for
repayment of the loan to the Plan shall be accounted through
the establishment of a Segregated Investment Fund into which
the principal amount of the loan shall be entered as of the
date on which the amount of the loan is provided to the
Borrower.
Any such loan shall be treated as a directed investment by the
Borrower of Plan assets separate and apart from the Investment
Fund of the Insurance Company or any other assets of the Plan.
As such, any earnings, gains or losses attributable to the
loan shall be credited only to the Segregated Investment Fund
representing that loan, and shall in turn be allocated solely
to the Borrower's Individual Accounts.
(d) Each loan shall bear interest at a reasonable fixed rate
established by the Plan Administrator with reference to the
economic conditions and interest rates being charged by local
financial institutions for similar loans with similar
collateral as of the time when the loan request is being
processed. In addition, the Plan Administrator may require the
Borrower to pay any administrative fees that are deemed to be
necessary to establish or maintain the Segregated Investment
Fund, provided that all such fees or fee schedules shall be
disclosed to the Borrower at the time the loan is made and
again prior to any modification of such fees or schedules by
the Plan Administrator (which may be enacted by the Plan
Administrator at any time that the Plan Administrator
determines that such modification is appropriate, in the
exercise of his or fiduciary duty), and further provided that
the ability to obtain loans from the Plan shall remain
available to all Borrowers on a reasonably equivalent basis.
Loans shall not be made available to HCEs in an amount greater
than the amount made available to non-HCEs; however, maximum
loan amounts may vary directly according to the size of each
Participant's vested accrued benefit under this Plan.
Each amount received in repayment of the loan shall be
credited to the Borrower's Segregated Investment Fund as of
the day on which it was received by the Plan Administrator,
after its having first been reduced by any administrative fees
charged by the Plan Administrator pursuant to the preceding
paragraph.
(e) Each loan shall be evidenced by a negotiable promissory note
signed by the Borrower within 90 days before the loan is made,
and secured by a portion of the Borrower's Vested Benefit,
with such portion equal to the amount that is loaned to the
Borrower at the time of the loan's origination. The note shall
state that in the event of the Borrower's default on the loan,
the Borrower agrees to be bound by the provisions of this
Plan, and particularly of this Section.
The Plan Administrator, in the exercise of his sole
discretion, may require that additional security or
documentation be provided by the Borrower.
(f) Immediately after the origination of any Plan loan to the
Borrower, the total amount of the outstanding balances of all
loans made to the Borrower from this Plan may not exceed the
lesser of:
(1) 50% of the present value of the Borrower's vested
interest in amounts held under the Plan on the
Borrower's behalf (determined immediately after the
loan's origination); or
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<PAGE>
(2) $50,000, reduced by the excess (if any) of:
(A) the highest outstanding balance of all loans
to the Borrower, under all qualified
retirement plans maintained by the Employer,
during the one-year period ending on the day
before the date as of which the most recent
loan was made, over
(B) the outstanding balance of all loans to the
Borrower, under all qualified retirement
plans maintained by the Employer, on the
date as of which the most recent loan was
made.
For the purposes of this subsection (f), "Employer" shall be
as defined in Article II, and in addition shall mean any
other employers which when taken together with the
Employer(s) sponsoring this Plan are treated as a single
employer under sec. 414(b), (c) or (m) of the Internal
Revenue Code, as amended.
For the purposes of this subsection (f), simplified employee
pension plans shall not be regarded as qualified retirement
plans.
(g) Each loan shall be subject to substantially level amortization
with payments at least quarterly.
(h) Each loan shall be distributed (if at all) as soon as
reasonably practicable, but in any event not later than 90
days after the date on which the Plan Administrator receives
the prescribed loan request.
(i) Whenever possible, loans shall be repaid to the Plan through
periodic payroll deductions from the Borrower's Compensation
(if any).
(j) With the consent of the Plan Administrator, the Borrower may
at any time prepay an amount against the outstanding balance
of the loan; however, unless the entire outstanding balance is
prepaid, repayment installments must continue to be made
periodically according to the pre-arranged repayment schedule.
(k) At any time before it has been completely repaid (including
principal and interest), a loan under this Plan shall be in
default as of the earlier of:
(1) the date an Employee (other than an Employee who is a
party in interest within the meaning of Section 3(14)
of the Employee Retirement Income Security Act of
1974, as amended) terminates Service;
(2) the day immediately following the date on which any
periodic installment payment required under the
Promissory Note is not received by the holder of the
Note when due;
(3) the date as of which any amount becomes distributable
to a Borrower from the Plan, including for example
the Borrower's date of Retirement, but only to the
extent that such distribution would result in the
loan balance equaling more than the Borrower's vested
interest in the Plan's assets after such
distribution; or
(4) the fifth anniversary of the date on which the amount
of the loan was paid from the Plan to the Borrower,
EXCEPT, that loan proceeds used to acquire any
dwelling unit which within a reasonable time is to be
used (determined at the time the loan is made) as the
principal residence of the Participant shall be in
default not later than the tenth anniversary of the
date on which the amount of the loan was paid from
the Plan to the Borrower.
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<PAGE>
(l) If a default occurs due to an Employee's termination of
Service, the entire loan balance including accrued interest
shall be due upon such termination of Service. If the Plan
Administrator as holder of the Promissory Note determines that
a loan under this Plan is in default, then at the option of
the Plan Administrator, the Borrower may be given a reasonable
amount of time (in any event not exceeding 60 days) to cure
the default by repaying all amounts that have become due as of
that date.
If the default results from a distribution of excess elective
deferrals (pursuant to Code sec. 402(g)(2)), excess
contributions (pursuant to Code sec. 401(k)(8)), or excess
aggregate contributions (pursuant to Code sec. 401(m)(6)), if
any, then the Borrower may cure the default by repaying to the
Plan an amount sufficient to reduce the outstanding balance of
the loan to an amount equal to not more than the Borrower's
vested interest in Plan assets remaining after such
distribution.
(m) If there is security for the loan available in addition to or
instead of the Borrower's vested interest in Plan assets, then
upon default, the holder of the Promissory Note may (but is
not required to) look to that other security for liquidation
and repayment of the loan.
(n) To the extent that a default of a loan is not cured or is not
repaid through security other than the Borrower's vested
interest in the Plan's assets, then the Plan Administrator
shall reduce the Borrower's vested interest in the Plan's
assets. The amount of such reduction shall equal the
outstanding balance of the loan, including any interest that
has accrued as of that date of determination, except that if
the default has resulted from a distribution of Plan assets
that has been made to bring the Plan into compliance with any
of the nondiscrimination limits and tests of the Code (as
specified e.g. in Code secs. 401(k), 401(m), or 415), then the
amount of the reduction shall equal only that amount which is
necessary to cure the default by reducing the outstanding
balance of the loan to an amount equal to the Borrower's
vested interest in the Plan's assets as of that date of
determination and after the distribution has been made.
Any reduction in a Borrower's vested interest in Plan assets
accomplished pursuant to this paragraph shall immediately
result in a corresponding reduction and offset of the
outstanding balance of the loan as of that date of
determination.
However, under any circumstances, a Borrower's vested interest
in the Plan's assets may not be reduced pursuant to this
subsection (n) sooner or to a greater extent than such amounts
become distributable consistent with the provisions of Code
sec. 401(k), all other relevant Code sections, and regulations
promulgated thereunder.
(o) In the event that a loan from this Plan to a Borrower is
treated as a distribution under Code sec. 72, and/or under
applicable Department of Labor regulations, the Borrower's
obligation to repay the loan shall remain unchanged by such
distribution treatment.
(p) When the Borrower is no longer indebted under the Promissory
Note (e.g. due to the complete repayment of the loan, or due
to recovery of the loan's security upon default), the
Borrower's Segregated Investment Fund shall then be closed.
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ARTICLE VIII
GENERAL PROVISIONS
8.1.1 Plan Modification: Authority
The Company reserves the right to amend, modify, or terminate the Plan
at any time, provided that no amendment or modification shall act to
reduce the balances of the Individual Accounts of any Participant
accrued to the time of such amendment or modification.
8.1.2 Plan Modification: Merger
No merger, consolidation, or transfer of the assets or liabilities of
this Plan with or to any other qualified plan shall be undertaken
unless, after such merger, consolidation, or transfer, each Participant
would, if the Plan then terminated, receive a benefit not less than the
benefit he would have received had the Plan terminated immediately
prior to such merger, consolidation, or transfer.
8.1.3 Plan Modification: Termination
Upon termination or partial termination of this Plan, or the complete
discontinuance of contributions by the Employer (as defined in IRC Reg.
1.401-6(c) and 1.411(d)-2(d)), the rights of each affected Participant
to benefits accrued to the date of termination or partial termination,
or the complete cessation of contributions by the Employer, shall be
fully vested to the extent funded. Distributions due to termination
shall be made in a form provided for in this Plan and shall meet any
applicable requirements of Code sec. 401(a)(11), 411, and 417. However,
Elective Contributions shall be distributed because of Plan termination
only if the Employer does not establish or maintain a successor plan
within the meaning of IRC Reg. 1.401(k)-(1)(d)(3) or because of other
events described in IRC Reg. 1.401(k)-(1)(d)(1)(iii), (iv), and (v).
If, after the allocation of the Plan's assets pursuant to the Plan's
termination, all liabilities of the Plan have been satisfied in full
and there remain surplus Plan assets not necessary to satisfy the
liabilities of the Plan, such surplus shall revert to the Employer,
consistent with the provisions of the termination amendment of this
Plan.
8.2.1 Duties: Plan Administrator
The Plan Administrator has the discretionary authority to control and
manage the operation and administration of the Plan, including the
specific duties outlined below. The Plan Administrator in his sole
discretion shall make such rules, regulations, interpretations, and
computations and shall take such other actions to administer the Plan
as he may deem appropriate. Such rules, regulations, computations, and
other actions shall be conclusive and binding upon all persons.
Duties of the Plan Administrator include, but are not limited to,
determination of benefits and eligibility to participate, payment of
funds to the Insurance Company or Trustee, authorization of benefit
payments and payment of any expenses incurred in the administration of
the Plan. The Plan Administrator may employ such consultants and
advisors as he deems necessary or desirable for carrying out his duties
under the Plan.
8.2.2 Duties: Employer
Duties of the Employer include, but are not limited to, payment of
funds to the Insurance Company or Trustee, in addition to payment of
any expenses incurred in the administration of the Plan. The Employer
shall indemnify and hold harmless any fiduciary who is an employee of
the Employer from any and all claims, loss, damages, expense (including
counsel fees), and liability (including amounts paid in settlement with
the Employer's written consent) arising from any act or omission of the
fiduciary, except when the same is judicially determined to be done due
to the gross negligence or willful misconduct of the fiduciary.
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<PAGE>
8.3 Benefit Claims Procedure
Any Participant in this Plan, or his Beneficiary, may make a claim for
benefits due to him under this Plan by delivering a written application
to the Plan Administrator. If a claim is wholly or partially denied,
notice of the decision shall be furnished to the claimant by the Plan
Administrator within 90 days after receipt of the claim by the Plan
Administrator unless special circumstances require an extension of time
for processing the claim. If an extension of time is required the Plan
Administrator shall furnish the claimant with written notice of that
fact, including the reason why an extension is required and an
estimated date upon which a final decision is expected, which shall be
not later than 180 days after the claim was made. In that event, if the
claim is denied in whole or part, written notice of denial shall be
given as soon as practicable, but not later than 180 days after the
claim was made.
A notice of denial of a claim shall state:
(a) the specific reason or reasons for the denial;
(b) reference to the specific Plan provisions upon which the
denial was based; and
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such additional material or information is
required.
If this notice is not furnished with the time period provided in this
Section, the claim shall be deemed wholly denied.
8.4 Review Procedure
In the event that a claim is denied under this Plan, the claimant or
his authorized representative may apply in writing to the Plan
Administrator within 60 days of receiving notice of the denial or, if
no written notice of denial is received within the 180-day period
prescribed in Section 8.3, within 60 days after the expiration of said
180-day period, asking that the denial be reviewed. This time limit may
be extended by the Plan Administrator if an extension appears to be
reasonable in view of the nature of the claim and the pertinent
circumstances. Upon receipt of such application, the Plan Administrator
shall afford the claimant an opportunity to review pertinent documents
and to submit issues and comments in writing. A decision on review
shall be rendered by the Plan Administrator not later than 60 days
after the claimant's application for review unless an extension of time
for processing is required, in which case a decision will be made. If
an extension of time is required, the Plan Administrator shall give the
claimant written notice of that fact before the extension period
begins. A decision on review shall be in writing and shall include
specific reasons for the decision and specific references to the Plan
provisions on which the decision is based.
If the claimant has not received written decision on review within 60
days after the request for review was received, or within 120 days if
an extension of time was required, the claim will be considered wholly
denied on review.
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8.5 Qualification of the Plan and Conditions of Contributions
This Plan, together with any insurance or annuity contracts or trust
agreement used in conjunction with it, is intended to meet the
requirements of the Internal Revenue Service for approval as a
tax-exempt plan or trust under sec. 401 of the Code. Any amendments
which may be necessary to meet these requirements shall be made
retroactive to the date upon which the Plan failed to meet these
requirements.
This Plan is adopted with the intent and on the conditions that the
Internal Revenue Service shall by ruling or determination letter
establish that the Plan is "qualified" within the meaning of sec. 401
of the Code, that any trust which is part of this Plan at its adoption
is exempt from taxation pursuant to sec. 501 of the Code and that
contributions to the Plan by the Employer are deductible pursuant to
sec. 404 of the Code. If any of these conditions are determined
initially by the Internal Revenue Service not to be the case, all
contributions to this Plan made prior to such determination by the
Internal Revenue Service shall be returned to the person or persons who
made them within one year after the date of denial of qualification of
the Plan and the Plan shall terminate unless the Employer amends the
Plan to meet these conditions and such amendment is determined by the
Internal Revenue Service to meet these conditions, PROVIDED that the
application for such determination was made by the time prescribed by
law for filing the Employer's return for the taxable year in which the
Plan was adopted, or such later date as the Secretary of the Treasury
may prescribe.
Contributions to this Plan are made with the intent and on the
condition that such contributions are deductible under sec. 404 of the
Code. If any contribution by the Employer is disallowed as a deduction
by the Internal Revenue Service then, to the extent the deduction is
disallowed, the contribution shall be refunded to the Employer within
one year after the disallowance of the deduction. If any contribution
by the Employer is made by a mistake of fact, such contribution shall
be refunded to the Employer within one year after the payment of the
contribution.
If a refund occurs pursuant to this Section, the amount which shall be
returned to the Employer shall be the excess of the amount which was
contributed over the amount (1) which was deductible, or (2) which
would have been contributed absent the mistake of fact (as the case may
be), without any earnings but net of any losses attributable to such
excess.
8.6 Beneficiaries
Any payments due under the Plan to a Participant's Beneficiary shall be
paid according to the Beneficiary designation last filed in writing
with the Plan Administrator by the Participant. If no such designation
is made, payments shall be made in the following order of priority:
(a) to the surviving spouse of the Participant;
(b) if no spouse survives the Participant, then to the children of
the Participant in equal shares, with a share by right of
representation to the then surviving children of any deceased
child; or
(c) if neither a spouse, children nor grandchildren survive the
Participant, then to the Participant's estate.
8.7 Spendthrift Clause
(a) General Rule
Subject to the exception specified in subsection (b) below,
benefits payable under this Plan shall not be subject in any
manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment,
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execution, or levy of any kind, either voluntary or
involuntary, including any such liability which is for alimony
or other payments for the support of a spouse or former
spouse, or for any other relative of the Employee, prior to
actually being received by the person entitled to the benefit
under the terms of the Plan except as provided below, and any
attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to
benefits payable hereunder shall be void; also, the Plan shall
not in any manner be liable for, nor subject to, the debts,
contracts, liabilities, engagements or torts of any person
entitled to benefits hereunder.
(b) Exception
The provisions of subsection (a) above to the contrary shall
not withstand a right to a benefit payable under this Plan
that has been created, assigned or recognized pursuant to a
"qualified domestic relations order", as defined in Code sec.
414(p). Administration of the Plan with respect to qualified
domestic relations orders shall at all times be consistent
with Code sec. 414, regulations promulgated thereunder, and
any other provisions of state and federal law that may be
applicable. Payment of a benefit to an alternate payee
pursuant to a qualified domestic relations order may be made
prior to the time such payment could be made to the
Participant, provided that such payment is consistent with the
provisions of this Plan in all respects except for the time of
payment.
8.8 Owner-Employees: Other Trades or Businesses
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 the other trades or businesses must, when
looked at as a single plan, satisfy Code secs. 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 Code secs. 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
8.9 Limitations of the Employer's Liability
To the extent permitted by law, the liability of the Employer with
respect to any and all obligations arising from or in any way connected
with this Plan shall be limited to amounts already contributed.
8.10 Non-Guarantee of Employment
This Plan shall not be considered to constitute a contract of
employment and nothing contained in the Plan shall give any Employee
the right to be retained in employment, nor shall anything contained in
the Plan interfere with the Employer's right to discharge or retire any
Employee at any time. Participation in the Plan shall not give any
Employee any right or claim in any benefits except as specifically
provided in this Plan.
8.11 Applicable Law
The provisions of this Plan shall be governed, construed, and
administered in accordance with federal law, and to the extent that
state law is not preempted by federal law, the law of the state of
Colorado.
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ARTICLE IX
DIRECT ROLLOVERS
9.1 General Rule
This Article applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article, a
distributee may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
9.2 Definitions
(a) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is require under sec. 401(a)(9) of the Code;
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).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in sec. 408(a) of the
Code, an individual retirement annuity described in sec.
408(b) of the Code, an annuity plan described in sec. 403(a)
of the Code, or a qualified trust described in sec. 401(a) of
the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(c) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in sec. 414(p)
of the Code, are distributees with regard to the interest of
the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
