U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20349
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CHYRON CORPORATION
(Exact Name of Registrant as Specified in its Charter)
New York
(State of Incorporation or Organization)
11-2117385
(IRS Employer Identification No.)
5 Hub Drive
Melville, New York
(Address of Principal Executive Offices)
11747
(Zip Code)
CHYRON CORPORATION 401(K) Plan
(Full title of the Plan)
Edward Grebow
President and
Chief Executive Officer
Chyron Corporation
5 Hub Drive
Melville, New York 11747
(Name and address of agent for service)
(516) 845-2000
(Telephone number, including area code, of agent for service)
Copy to:
Robert S. Matlin, Esq.
Andrea Strong, Esq.
Camhy Karlinsky & Stein LLP
1740 Broadway
New York, New York 10019
(212) 977-6600
Approximate date of proposed commencement of sales pursuant to the
Plan: From time to time after the effective date of this
Registration Statement.
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate Amount of
To Be Amount To Be Price Offering Registration
Registered Registered(1) Per Share(2) Price(2) Fee
Common Stock $700,000 $3.4375 $2,406,250 $709.84
(1) In addition, pursuant to Rule 416(c) under the Securities Act
of 1933, this registration statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the employee
benefit plan described herein.
(2) Estimated solely for the purpose of calculating the regulation
fee; computed pursuant to Rule 457(c), upon the basis of the average
of the high and low prices of the Company's Common Stock as reported
by the New York State Exchange on April 7, 1998.
The Exhibit Index required by Item 601 of Regulation S-K is located
at page 11 of the sequential numbering system appearing in the
manually signed copy of this registration statement totaling 11
pages, filed with the Securities and Exchange Commission.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
Chyron Corporation (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the
"Commission"). The following documents, which are on file with the
Commission, are incorporated herein by reference and made a part
hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997; and
(b) the Company's Form 8-A, filed on March 24, 1992, which contains
a description of the class of common stock registered pursuant to
the filing of this Registration Statement.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all
securities offered have been sold or which registers all securities
then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof
from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent
that a statement contained herein, or in any other subsequently
filed document that also is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the Common Stock offered hereby and certain legal
matters relating to the offering will be passed upon for the Company
by Camhy Karlinsky & Stein LLP, New York, New York. Certain
Partners in the firm have an interest in the Company. One holds
currently exercisable options to purchase 6,666 shares of Common
Stock of the Company, another owns 4,235 shares of Common Stock and
another partner holds currently exercisable options to purchase
6,666 shares of Common Stock and may be deemed to have beneficial
ownership (although such beneficial ownership is disclaimed) of an
additional 20,471 shares of Common Stock.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's certificate of incorporation, as restated (the
"Certificate of Incorporation"), provides that the personal
liability of a director be eliminated to the fullest extent
permitted by the provisions of paragraph (b) of Section 402 of the
Business Corporation Law of the State of New York, as the same may
be amended and supplemented.
Article VII of the Company's by-laws (the "By-Laws") provides for
the indemnification by the Company of any person to the full extent
permitted, and in the manner provided, by the New York Business
Corporation Law, as the same now exists or may hereafter be amended.
Section 402(b) of the New York Business Corporation Law provides
that a certificate of incorporation may set forth a provision
eliminating or limiting the personal liability of a director to the
corporation or its shareholders for damages for any breach of duty
in such capacity, provided that no such provision shall eliminate or
limit:
(1) the liability of any director if a judgment or other final
adjudication adverse to him establishes that his acts or omissions
were in bad faith or involved intentional misconduct or a knowing
violation of law or that her personal gained in fact a financial
profit or other advantage to which he was not legally entitled or
that his acts violated Section 719, or
(2)the liability of any director for any or omission prior to the
adoption of a provision authorized by this paragraph.
Section 721 through 725 of the New York Business Corporation Law
provide that New York corporations shall have the power, under
specific circumstances, to indemnify their directors, officers,
employees and agents in connection with actions, suits or
proceedings brought against them by a third party or in the right of
the corporation by reason of the fact that they were or are such
directors, officers, employees or agents, against expenses incurred
in such actions, suits or proceedings.
Section 721 of t he New York Business Corporation Law permits a
corporation to enter into agreements with its directors and officers
providing for indemnification for actions, suits or proceedings
brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such
directors or officers, against expenses incurred in such actions,
suits or proceedings, provided, however, that no such
indemnification may be made to or on behalf of any director or
officer if a judgement or other final adjudication adverse to the
director or officer establishes that his acts were committed in bad
faith or were the result of active and deliberate dishonesty and
were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to
which he was not legally entitled.
Under Section 722(a), the corporation may indemnify any person made,
or threatened to be made, a party to an action or proceeding (other
than an action by or in the right of the corporation to procure a
judgement in its favor) whether civil or criminal, including an
action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which any director or
officer of the corporation served in any capacity at the request of
the corporation, by reason of the fact that he, his testator or
intestate was a director or officer of the corporation, or served
such other corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity. Indemnification
may be given for judgements, fines, amounts paid in settlement and
reasonable expenses, including attorney's fees actually and
necessarily incurred as a result of such action or proceeding, or
any appeal therein, if such director or officer is shown to have
acted in good faith, for a purpose which he reasonably believed to
be in the best interests of the corporation, and, in criminal
actions or proceedings, in addition, had no reasonable cause to
believe such conduct was unlawful.
Under Section 722(c), the corporation may indemnify any person made,
or threatened to be made, a party to an action by or in the right of
the corporation to procure a judgement in its favor by reason of the
fact that he, his testator or intestate, is or was a director or
officer of the corporation, or is or was serving at the request of
the corporation as a director or officer of any other corporation of
any type or kind, domestic or foreign, of any partnership, joint
venture, trust employee benefit plan or other enterprise, against
amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him in
connection with the defense or settlement of such action, or in
connection with an appeal therein, if such director or officer
acted, in good faith, for a purpose which he reasonably believed to
be in, or in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, not opposed to, the best interests of the corporation,
except that no indemnification under this paragraph shall be made in
respect of (1) a threatened action, or a pending action which is
settled or otherwise disposed of, or (2) any claim, issue or matter
as to which such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which
the action was brought, or if no action was brought, any court of
competent jurisdiction, determines upon application that, in view of
all the circumstances of the case, the person is fairly and
reasonably entitled to indemnify for such portion of the settlement
amount and expenses as the court deems proper.
Indemnification may be by court order under Section 724 or by
approval of the corporation in the manner set forth in the statue.
Under Section 723(a), success on the merits or otherwise in the
defense of a civil or criminal action or proceeding of the character
described in Section 722 entitles the director or officer to
indemnification as authorized in Section 722. If not wholly
successful, indemnification shall be made by the corporation, unless
ordered by a court order under Section 724, only if a quorum of the
board, not including parties to the action, finds that the standard
of conduct set forth in Section 722 or established pursuant to
Section 721 has been met. If a quorum cannot be obtained, or even
if obtainable, a quorum of disinterested directors so direct,
approval may be by the board upon (i) the option of independent
legal counsel that indemnification is proper in the circumstances
or (i) a determination by the shareholders that the applicable
standard of conduct set forth in such sections has been met by the
director or officer. Under Section 723(c), expenses incurred in
defending a civil or criminal action or proceeding may be paid by
the corporation in advance of the final disposition of an action
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amounts as, and to the extent, required by
Section 725(a).
Under Section 724, if the corporation fails to provide
indemnification, the director or officer may apply to the court, and
may receive indemnification to the extent authorized under Section
722 and paragraph (a) of Section 723. Where indemnification is
sought by judicial action, the court may allow a person such
reasonable expense, including attorneys' fees, during the pendency
of the litigation as are necessary in connection with that person's
defense, if the court finds that the defendant has by their
pleadings or during the course of the litigation raised grave issues
of fact or law. All expenses incurred in defending an action or
proceeding which are advanced by the corporation under Section 723
or allowed by a court under Section 724 shall be repaid in case the
person receiving such advancement is ultimately found not to be
entitled to indemnification, or whose indemnification is granted, to
the extent the expenses so advanced by the corporation or allowed by
the court exceed the indemnification to which he is entitled.
Indemnification may not be made if it is inconsistent with the
corporation's certificate of incorporation, by-laws, board
resolutions, shareholder resolutions, an agreement or other
corporation action, in effect at the time of the accrual of the
alleged cause of action in which the expenses were incurred, which
prohibits or otherwise limits indemnification; or the
indemnification would be inconsistent with a condition imposed by
the court in approving a settlement.
The Company has entered into indemnity agreements with each of its
directors and executive officers. The indemnity agreements provide
that directors and executive officers (the "Indemnitees") will be
indemnified and held harmless to the fullest possible extent
permitted by law including against all expenses (including
attorneys' fees), judgments, fines, penalties and settlement amounts
paid or incurred by them in any action, suit or proceeding on
account of their services as director, officer, employee, agent or
fiduciary of the Company or as directors, officers, employees or
agents of any other company or entity at the request of the Company.
The Company will not however, be obligated pursuant to the
agreements to indemnify or advance expenses to an indemnified party
with respect to any action (1) in which a judgement adverse to the
Indemnitee establishes (a) that the Indemnitee's acts were committed
in bad faith or were the result of active and deliberate dishonesty
and, in either case, were material, or (b) that the Indemnitee
personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled, or (2) which the
Indemnitee initiated, prior to a change in control of the company,
against the Company or any director or officer of the Company unless
the Company consented to the initiation of such claim.
The indemnity agreements require an Indemnitee to reimburse the
Company for expenses advanced only to the extent that it is
ultimately determined that the director or executive officer is not
entitled, under Section 723(a) of the New York Business Corporation
Laws and the indemnity agreement, to indemnification for such
expenses.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
The following is a complete list of exhibits filed as a part of this
Registration Statement:
Exhibit
No. Document
4.1 Prototype Defined Contribution Plan of the Company.
4.2 Prototype Defined Contribution Adoption Agreement of the
Company 401(k) Plan.
4.3 Restated Certificate of Incorporation of the Company.
4.4 Amended and Restated By-Laws of the Company, adopted
February 17, 1995.
4.5 Amendment of Certificate of Incorporation of the Company,
adopted January 24, 1997.
5.1 Opinion of Camhy Karlinsky & Stein LLP regarding the
legality of shares of Common Stock being registered.
5.2 IRS Determination Letter Regarding Qualified Status of the
Company 401(k) Plan.
23.1 Consent of Price Waterhouse LLP
23.3 Consent of Camhy Karlinsky & Stein LLP (included in
Exhibit 5.1)
<PAGE>
Item 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes.
(1) other than as provided in the proviso to item 512(a) of
Regulation S-K, to file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act,
(b) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement, and
(c) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(a) and (1)(b) of this section
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement;
(2) that for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
B. Incorporation of Subsequent Securities Exchange Act of 1934
Documents by Reference
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona find offering thereof.
C. Indemnification of Officers and Directors
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question as to whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act
of 1933, as amended, the Registrant certifies that it has reasonable
grounds to believe that it meets all the requirements for filing on
Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the County of Suffolk, State of New York on the 23rd day of
April, 1998.
CHYRON CORPORATION
By: /s/Edward Grebow
Edward Grebow
President and
Chief Executive Officer
By: /s/Patricia Lampe
Patricia Lampe
Chief Financial Officer
Chief Accounting Officer
and Treasurer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Edward Grebow and Patricia
Lampe, separately, as his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him
including post-effective amendments and related registration
statements, to this Registration Statement, and to file same, with
exhibits thereto an other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do
separately and perform each and every act and this requisite and
necessary to be done, as fully to all intents and purposes as he
might or could so in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signature
Title
Date
/s/Edward Grebow
Edward Grebow
President and Chief Executive Officer and Director
April 22, 1998
/s/Patricia Lampe
Patricia Lampe
Chief Financial Officer
Chief Accounting Officer and Treasurer
April 22, 1998
/s/Michael I. Wellesley-Wesley
Chairman of the Board of Directors
April 22, 1998
/s/Charles M. Diker
Charles M. Diker
Director
April 22, 1998
/s/Donald P. Greenberg
Donald P. Greenberg
Director
April 22, 1998
/s/Alan J. Hirschfield
Alan J. Hirschfield
Director
April 22, 1998
/s/Wesley W. Lang
Wesley W. Lang
Director
April 22, 1998
/s/Eugene M. Weber
Eugene M. Weber
Director
April 22, 1998
/s/Ray Hartman
Ray Hartman
Director
April 22, 1998
The Plan. Pursuant to the requirements of the Securities Act of
1933, the trustees (or other persons who administer the employee
benefit plan) have duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
in the County of Suffolk, State of New York, on this 23 day of
April, 1998.
Chyron 401(k) Plan
Edward Grebow
Investment Committee Member
Patricia Lampe
Investment Committee Member
INDEX TO EXHIBITS
Exhibit
No. Description of Exhibits
4.1 Prototype Defined Contribution Plan of the Company.
4.2 Prototype Defined Contribution Adoption Agreement
of the Company 401(k) Plan.
4.3 Restated Certificate of Incorporation of the Company. *
4.4 Amended and Restated By-Laws of the Company, adopted
February 17, 1995. **
4.5 Amendment of Certificate of Incorporation of the
Company, adopted January 24, 1997. ***
5.1 Opinion of Camhy Karlinsky & Stein LLP
5.2 IRS Determination Letter Regarding Qualified Status of
the Company 401(k) Plan.
23.1 Consent of Price Waterhouse LLP.
23.3 Consent of Camhy Karlinsky & Stein LLP
(included in Exhibit 5.1).
* Incorporated herein in its entirety by reference to the Annual
Report for the fiscal year ended June 30, 1991, on Form 10-K
reported January 31, 1992.
** Incorporated herein in its entirety by reference to the Annual
Report for the fiscal year ended December 31, 1994, on Form 10-K
dated March 24, 1995.
*** Incorporated herein in its entirety by reference to the Annual
Report for the fiscal year ended December 31, 1996, on Form 10-K
dated March 20, 1997.
EXHIBIT 4.1
MERRILL LYNCH
----------
SPECIAL
----------
PROTOTYPE
DEFINED CONTRIBUTION PLAN
-----------------------------------------------
Base Plan Document #03 used in conjunction with:
Non-standardized Profit Sharing Plan with CODA
Letter Serial Number: D359287b
National Office Letter Date: 6/29/98
Non-standardized Money Purchase Pension Plan
Letter Serial Number: D359288b
National Office Letter Date: 6/29/93
Non-standardized Profit Sharing Plan
Letter Serial Number: D359289b
National Office Letter Date: 6/29/93
Non-standardized Target Benefit Plan
Letter Serial Number: D361009a
National Office Letter Date: 6/29/93
This Prototype Plan and Adoption Agreement are important legal
instruments with legal and tax implications for which the Sponsor,
Merrill Lynch, Pierce, Fenner & Smith, Incorporated, does not assume
responsibility. The Employer is urged to consult with its own
attorney with regard to the adoption of this Plan and its
suitability to its circumstances.
Internal Revenue Service, Department of the Treasury
Washington C 20224
Person to Contact: Mr. Wolf
Telephone Number: (202) 622-8380
Refer Reply to: E:EP:Q:1
Date: 6/29/93
Plan Description: Prototype Non-standardized Profit Sharing Plan
FFN: 50339816103-002
Case: 9201918
EIN: 13-5674085
BPD: 03
Plan: 002
Letter Serial No. D359289b
Merrill Lynch Pierce Fenner & Smith Inc.
PO Box 9038
Princeton, NJ 08543
Dear Applicant:
In our opinion, the amendment to the form on the plan identified
above does not in and of itself adversely affect the plan's
acceptability under section 401 of the Internal Revenue code. This
opinion relates only to the amendment to the form of the plan. It
is not an opinion as to the acceptability of any other amendment or
of the form of the plan as a whole, or as to the effect of other
federal or local statutes.
You must furnish a copy of this letter to each employer who adopts
this plan. You are also required to send a copy of the approved
form of the plan, any approved amendments and related documents to
each key District Director or Internal Revenue Service in whose
jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date
of the amendment should apply for a determination letter by filing
an application with the key District Director of Internal Revenue on
Form 5307, Short Form Application for Determination for Employee
Benefit Plan.
This letter with respect to the amendment to the form of the plan
does not affect the applicability to the plan of the continued,
interim and extended reliance provisions of sections 13 and 17.03 of
Rev. Proc. 89-9, 1989-1 C.B. 780. The applicability of such
provisions may be determine by reference to the initial opinion
letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning
the IRS processing of this case, please call the above telephone
number. This number is only for use of the sponsoring organization.
Individual participants and/or adopting employers with questions
concerning the plan should contact the sponsoring organization. The
plan's adoption agreement must include the sponsoring organization's
address and telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number an the most convenient time for us to call in case
we need more information. Whether you call or write, please refer
to the Letter Serial Number and File Folder Number shown in the
heading of this letter.
You should keep this letter as a permanent record. Please notify us
if you modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief Employee Plans Qualifications Branch
TABLE OF CONTENTS
ARTICLE I Definitions
1.1 "Account" 1
1.2 "Account Balance" 1
1.3 "ACP Test" 1
1.4 "Actual Deferral Percentage" 1
1.5 "Adjustment Factor" 1
1.6 "Administrator" 1
1.7 "Adoption Agreement" 1
1.8 "ADP Test" 1
1.9 "Affiliate" 1
1.10 "Annuity Contract" 1
1.11 "Average Actual Deferral Percentage" 1
1.12 "Average Contribution Percentage" 1
1.13 "Beneficiary" 1
1.14 "Benefit Commencement Date" 2
1.15 "CODA" 2
1.16 "CODA Compensation" 2
1.17 "Code" 2
1.18 "Compensation" 2
1.19 "Contribution Percentage" 3
1.20 "Contribution Percentage Amounts" 3
1.21 "Defined Benefit Plan" 3
1.22 "Defined Contribution Plan 3
1.23 "Disability" 3
1.24 "Early Retirement" 3
1.25 "Early Retirement Date" 3
1.26 "Earned Income" 3
1.27 "Elective Deferrals" 3
1.28 "Elective Deferrals Account" 4
1.29 "Eligible Employee" 4
1.30 "Eligible Participant" 4
1.31 "Employee" 4
1.32 "Employee Thrift Contributions" 4
1.33 "Employee Thrift Contributions Account" 4
1.34 "Employer" 4
1.35 "Employer Account" 4
1.36 "Employer Contributions" 4
1.37 "Employer Contributions Account" 4
1.38 "Employment" 4
1.39 "Entry Date" 4
1.40 "ERISA" 5
1.41 "Excess Aggregate Contributions" 5
1.42 "Excess Contributions" 5
1.43 "Excess Elective Deferrals" 5
1.44 "Family Member" 5
1.45 "401(k) Contributions Accounts" 5
1.46 "401(k) Election" 5
1.47 "Fully Vested Separation" 5
1.48 "Group Trust" 5
1.49 "Highly Compensated Employee" 5
1.50 "Hour of Service" 6
1.51 "Immediately Distributable" 6
1.52 "Investment Manager" 6
1.53 "Key Employee" 6
1.54 "Leased Employee" 7
1.55 "Limitation Year" 7
1.56 "Master of Prototype Plan" 7
1.57 "Matching 401(k) Contribution" 7
1.58 "Matching 401(k) Contribution Account" 7
1.59 "Matching Thrift Contributions" 7
1.60 "Matching Thrift Contributions Account" 7
1.61 "Net Profits" 7
1.62 "Nonhighly Compensated Employee" 7
1.63 "Nonvested Separation" 7
1.64 "Normal Retirement Age" 7
1.65 "Owner-Employee" 7
1.66 "Partially Vested Separation" 8
1.67 "Participant" 8
1.68 "Participant Contributions Account" 8
1.69 "Participant-Directed Assets" 8
1.70 "Participant Voluntary Nondeductible
Contributions" 8
1.71 "Participant Voluntary Nondeductible
Contributions Account" 8
1.72 "Participating Affiliate" 8
1.73 "Period of Severance" 8
1.74 "Plan" 8
1.75 "Plan Year" 8
1.76 "Prototype Plan" 9
1.77 "Qualified Joint and Survivor Annuity" 9
1.78 "Qualified Matching Contributions" 9
1.79 "Qualified Matching Contributions
Account" 9
1.80 "Qualified Nonelective Contributions" 9
1.81 "Qualified Nonelective Contributions
Account" 9
1.82 "Qualified Plan" 9
1.83 "Qualifying Employer Securities" 9
1.84 "Rollover Contribution" 9
1.85 "Rollover Contributions Account" 9
1.86 "Self-Employed Individual" 9
1.87 "Social Security Retirement Age" 9
1.88 "Sponsor" 9
1.89 "Spouse" 9
1.90 "Survivng Spouse" 10
1.91 "Taxable Wage Base" 10
1.92 "Transferred Account" 10
1.93 "Trust" 10
1.94 "Trust Fund" 10
1.95 "Trustee" 10
1.96 "Valuation Date" 10
1.97 "Vesting Service" 10
1.98 "Years of Service" 10
ARTICLE II Participation
2.1 Admission as a Participant 10
2.2 Rollover Membership Trust to Trust
Transfer 11
2.3 Crediting of Service for Eligibility
Purposes 11
2.4 Termination of Participation 11
2.5 Limitation for Owner-Employee 11
2.6 Corrections with Regard to Participation 12
2.7 Provision of Information 12
ARTICLE III Contributions and Accounts Allocations
3.1 Employer Contributions and Allocations 12
3.2 Participant Voluntary Nondeductible
Contributions 13
3.3 Rollover Contributions and Trust to
Trust Transfers 13
3.4 Section 401(k) - Contributions
and Account Allocations 13
3.5 Matching 401(k) Contributions 16
3.6 Thrift Contributions 18
3.7 Treatment of Forfeitures 19
3.8 Establishing of Accounts 19
3.9 Limitation on Amount of Allocations 19
3.10 Return of Employer Contributions
Under Special Circumstances 24
ARTICLE IV Vesting
4.1 Determination of Vesting 24
4.2 Rules for Crediting Vesting Service 24
4.3 Employer Accounts Forfeitures 24
4.4 Top-Heavy Provisions 25
ARTICLE V Amount and Distribution of Benefits, Withdrawals and
Loans
5.1 Distribution Upon Termination of
Employment 27
5.2 Amount of Benefits Upon a Fully Vested
Separation 27
5.3 Amount of Benefits Upon a Partially
Vested Separation 27
5.4 Amount of Benefits Upon a Nonvested
Separation 27
5.5 Amount of Benefits Upon a
Separation Due to Disability 27
5.6 Distribution and Restoration 27
5.7 Withdrawals During Employment 28
5.8 Loans 28
5.9 Hardship Distributions 30
5.10 Limitation on Commencement of Benefits 30
5.11 Distribution Requirements 30
ARTICLE VI Forms of Payment of Retirement Benefits
6.1 Method of Distribution 34
6.2 Election of Optional Forms 35
6.3 Change in Form of Benefit Payments 36
6.4 Direct Rollovers 36
ARTICLE VII Death Benefits
7.1 Payment of Account Balances 37
7.2 Beneficiaries 37
7.3 Life Insurance 39
ARTICLE VIII Fiduciaries
8.1 Named Fiduciaries 40
8.2 Employment of Advisers 41
8.3 Multiple Fiduciary Capacities 41
8.4 Indemnification 41
8.5 Payment of Expenses 41
ARTICLE IX Plan Administration
9.1 The Administrator 41
9.2 Powers and Duties of the Administrator 41
9.3 Delegation of Responsibility 42
ARTICLE X Trustee and Investment Committee
10.1 Appointment of Trustee and Investment
Committee 42
10.2 The Trust Fund 42
10.3 Relationship with Administrator 42
10.4 Investment of Assets 43
10.5 Investment Direction, Participant-
Directed Assets and
Qualified Employer Investments 44
10.6 Valuation of Accounts 45
10.7 Insurance Contracts 46
10.8 The Investment Manager 46
10.9 Powers of Trustee 47
10.10 Accounting and Records 48
10.11 Judicial Settlement of Accounts 48
10.12 Resignation and Removal of Trustee 48
10.13 Group Trust 49
ARTICLE XI Plan Amendment or Termination
11.1 Prototype Plan Amendment 49
11.2 Plan Amendment 49
11.3 Right of the Employer to Terminate Plan 50
11.4 Effect of partial or Complete
Termination or Complete
Discontinuance of Contributions 50
11.5 Bankruptcy 51
ARTICLE XII Miscellaneous Provisions
12.1 Exclusive Benefit of Participants 51
12.2 Plan Not a Contract of Employment 51
12.3 Action by Employer 51
12.4 Source of Benefits 51
12.5 Benefits Not Assignable 51
12.6 Domestic Relations Orders 52
12.7 Claims Procedure 52
12.8 Records and Documents; Errors 52
12.9 Benefits Payable to Minors;
Incompetents and Others 52
12.10 Plan Merger or Transfer of Assets 52
12.11 Participating Affiliates 52
12.12 Controlling Law 53
12.13 Singular and Plural and Article
and Section References 53
ARTICLE I DEFINITIONS
As used in this Prototype Plan and in each Adoption Agreement, each
of the following terms shall have the meaning for that term set
forth in this Article I:
1.1 Account: A separate Elective Deferrals Account, Employee
Thrift Contributions Account, Employer Contributions Account,
Matching 401(k) Contributions Account, Matching Thrift Contributions
Account, Participant Voluntary Nondeductible contributions Account,
Qualified Matching Contributions Account, Qualified Nonelective
Contributions Account, Rollover Contribution Account, and
Transferred Account, as the case may be.
1.2 Account Balance: The value of an Account determined as of the
applicable Valuation Date.
1.3 ACP Test: The Contribution Percentage test that is set forth
in Section 3.5.2 of the Plan.
1.4 Actual Deferral Percentage: The ratio (expressed as a
percentage), of (A) Elective Deferrals made on behalf of an
Eligible Participant for the Plan Year (including Excess Elective
Deferrals of Highly Compensated Employees and, at the election of
the Employer Qualified Nonelective Contributions and/or Qualified
Matching Contributions), but excluding (1) Excess Elective
Deferrals of Nonhighly Compensated Employees that arise solely from
Elective Deferrals made under the Plan or plans of the Employer or
an Affiliate and (2) Elective Deferrals that are taken into account
in the ACP Test (provided the AD Test is satisfied with or without
the exclusion of such Elective Deferrals) to (B) the Participant's
CODA Compensation for the Plan Year (whether or not the Eligible
Employee was a Participant for the entire Plan Year). The Actual
Deferral Percentage of an Eligible Participant who would be a
participant but for the failure to make an Elective Deferral is
Zero.
1.5 Adjustment Factor: The cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d)
for years beginning after December 31, 1987, as applied to such
items and in such manner as the Secretary shall provide.
1.6 Administrator: The document so designated with respect to
this Prototype Plan that is executed by the Employer, as amended
from time to time.
1.8 ADP Test: The Average Actual Deferral Percentage test set
forth in Section 3.4.2(B) of the Plan.
1.9 Affiliate: Any corporation or unincorporated trade or
business (other than the Employer) while it is:
A) a member of a "controlled group of corporations" within the
meaning of Code Section 414(b)) of which the Employer is a member;
B) a member of any trade or business under "common control" (within
the meaning of Code Section 414(c)) with the Employer;
C) a member of an "affiliated service group" (as that term is
defined in Code Section 414(m)) which includes the Employer; or
D) any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o). With respect to Section 3.9,
"Affiliate" status shall be determined in accordance with Code
Section 415(h).
1.10 Annuity Contract: An individual or group annuity contract
issued by an insurance company providing periodic benefits, whether
fixed, variable or both, the benefits or value of which a
Participant or Beneficiary cannot transfer, sell, assign, discount,
or pledge as collateral for a loan or as security for the
performance of an obligation, or for any other purpose, to any
person other than the issuer thereof. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or
Spouse shall comply with the requirements of this Plan.
1.11 Average Actual Deferral Percentage: For any group of Eligible
Participants, the average (expressed as a parentage) of the Actual
Deferral Percentages for each of the Eligible Participants in that
group, including those not making Elective Deferrals.
1.12 Average Contribution Percentage: For any group of Eligible
Participants, the average (expressed as a percentage) of the
Contribution Percentages for each of the Participants in that group,
including those on whose behalf Matching 401(k) Contributions and/or
Matching Thrift Contributions, if applicable, are not being made.
1.13 Beneficiary: A person or persons entitled to receive any
payment of benefits pursuant to Article VII.
1.14 Benefit Commencement Date: The first day, determined pursuant
to Article V, for which a Participant or Beneficiary receives or
begins to receive payment in any form of distribution as a result of
death, Disability, termination of Employment, Early Retirement, Plan
termination or upon or after Normal Retirement Age or age 70 1/2.
1.15 CODA: A cash or deferred arrangement pursuant to Code Section
401(k) which is part of a profit sharing plan and under which an
Eligible Participant may elect to make Elective Deferrals in
accordance with Section 3.4.1.
1.16 CODA Compensation: Solely for purposes of determining the
Actual Deferral Percentage and the Contribution Percentage, CODA
Compensation shall be Compensation excluding or including "elective
contributions" as specified in the Adoption Agreement. The
preceding sentence shall be effective for Plan Years beginning on or
after January 1, 1989.
1.17 Code: The Internal Revenue Code of 1986, as now in effect or
as amended from time to time. A reference to a specific provision
of the Code shall include such provision and any applicable
regulation pertaining thereto.
1.18 Compensation: For purposes of contributions, Compensation
shall be defined in the Adoption Agreement and Section 3.9.1(H),
subject to any exclusions elected under Section I.A(d) of the
Adoption Agreement, Section 3.1.4 and the following modifications:
A) For a Self-Employed Individual, Compensation means his or her
Earned Income, provided that if the Self-Employed Individual is not
a Participant for an entire Plan Year, his or her Compensation for
that Plan Year shall be his or her Earned Income for that Plan Year
multiplied by a fraction the numerator of which is the number of
days he or she is a Participant during the Plan Year and the
denominator of which is the number of days in the Plan Year.
B) Compensation of each Participant taken into account under this
Plan for any Plan Year beginning after December 21, 1988 shall be
limited to the first $200,000 as adjusted by the Adjustment Factor.
In determining the Compensation of a Participant for purposes of
this limitation, the rule of Code Section 414(q)(6) shall apply,
except in applying such rules, the term "family" shall include only
the Spouse of the Participant and any lineal descendants of the
Participant who have not attained the age of 19 before the close of
the year.
If, as a result of the application of such rules, the adjustment
$200,000 limitation is exceeded, (except for purposes of determining
the portion of Compensation up to the Integration Level if the Plan
is integrated with Social Security), the limitation shall be
prorated among the affected Participants in proportion to each such
Participant's Compensation as determined under this Section 1.18
prior to the application of this limitation. In a manner applied
uniformly to all Eligible Employees, only Compensation during the
period in which the Employee is an Eligible Employee may be taken
into account for purposes of the nondiscrimination tests described
in Code Section 401(k) and 401(m).
C) If Compensation for any prior Plan year is taken into account in
determining an Employee's contributions or benefits for the current
year, the Compensation for such prior year is subject to the
applicable annual compensation limit in effect for that prior year.
For this purpose, for years beginning before January 1, 1990, the
applicable annual compensation limit is $200,000.
D) 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
Section 401(a)(17)(B) of the Internal Revenue Code.
The cost of living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the OBRA
'93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination
period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitations under Section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the
current Plan Year, the Compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit in
effect for that prior determination period. For this purpose, for
prior determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93
Compensation limit is $150,000.
1.19 Contribution Percentage: The ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts to
the Participant's CODA Compensation for the Plan Year, whether or
not the Eligible Employee was a Participant for the entire Plan
Year.
1.20 Contribution Percentage Amounts: Shall mean the sum of the :
(A) Matching 401(k) Contributions; (B) Matching Thrift
Contributions; (C) Qualified Matching Contributions (to the extent
not taken into account for purposes of the ADP Test); (D) Employee
Thrift Contributions; and (E) Participant Voluntary Nondeductible
Contributions, as applicable, made on behalf of the Participant for
the Plan Year. Such Contribution Percentage Amounts shall not
include Matching 401(k) Contributions that are forfeited either to
correct Excess Aggregate Contributions or because the contributions
to which they relate are Excess Elective Deferrals, Excess
contributions or Excess Aggregate Contributions. The Employer may
include qualified Nonelective Contributions in the Contribution
Percentage.
Amounts, as specified in the Adoption Agreement. Elective Deferrals
may also be used in the Contribution Percentage Amounts so long as
the ADP Test is met before the Elective Deferrals are used in the
ACP Test and continues to be met following the exclusion of those
Elective Deferrals that are used to meet the ACP Test, as specified
in the Adoption Agreement. An Eligible Participant who does not
direct an Elective Deferral or an Employee Thrift Contribution shall
be treated as an Eligible Participant on behalf of whom no such
contributions are made.
1.21 Defined Benefit Plan: A plan of the type defined in Code
Section 414(j) maintained by the Employer or Affiliate, as
applicable.
1.22 Defined Contribution Plan: A plan of the type defined in Code
Section 414(i) maintained by the Employer or Affiliate, as
applicable.
1.23 Disability: Disability as defined in the Adoption Agreement.
The permanence and degree of such impairment shall be supported by
medical evidence.
1.24 Early Retirement: An actively employed Participant is
eligible for Early Retirement upon satisfying the requirements set
forth in the Adoption Agreement.
1.25 Early Retirement Date: The Participant's Benefit Commencement
Date following his or her termination of Employment on or after
satisfying the requirements for Early Retirement and prior to Normal
Retirement Age.
1.26 Earned Income: The "net earnings from self-employment" within
the meaning of Code Section 401(c)(2) of a Self-Employed Individual
from the trade or business with respect to which the Plan is
established, but only if the personal services of the Self-Employed
Individual are a material income-producing factor in that trade or
business. Net earnings will be determined without regard to items
not included in gross income and the deductions properly allocable
to or chargeable against such items and are to be reduced by
contributions by the Employer or Affiliate to a Qualified Plan to
the extent deductible under Code Section 404. Where this Plan
refers to Earned Income in the context of a trade or business other
than that with respect to which the Plan is adopted, the term Earned
Income means such net earnings as would be Earned Income as defined
above if that trade or business was the trade or business with
respect to which the Plan is adopted.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Code Section 164(f) for taxable years
beginning after December 31, 1989.
1.27 Elective Deferrals: Contributions made to the Plan during the
Plan Year by the Employer, at the election of the Participant, in
lieu of cash compensation and shall include contributions that are
made pursuant to a 401(k) Election.
A Participant's Elective Deferral in any taxable year is the sum of
all Employer and Affiliate contributions pursuant to an election to
defer under any qualified cash or deferred arrangement, any
simplified employee pension plan or deferred arrangement as
described in Code Section 402(h)(1)(B), any eligible deferred
compensation plan under Code Section 457, any plan as described
under Code Section 401(c)(18), and any Employer contributions made
on behalf of a Participant for the purchase of an annuity under Code
Section 403(b) pursuant to a salary reduction agreement. Such
contributions are nonforfeitable when made and are not distributable
under the terms of the Plan to Participants or their Beneficiaries
earlier than the earlier of:
A) termination from Employment, death or Disability of the
Participant;
B) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
C) disposition by the Employer or Affiliate to an unrelated
corporation of substantially all of its assets used in a trade or
business if such unrelated corporation continues to maintain this
Plan after the disposition but only with respect to Employees who
continue employment with the acquiring unrelated entity. The sale
of 85% of the assets used in a trade or business will be deemed a
sale of "substantially all" the assets used in a trade or business;
D) sale by the Employer or Affiliate to an unrelated entity of its
interest in an Affiliate if such unrelated entity continues to
maintain the Plan but only with respect to Employees who continue
employment with such unrelated entity; or
E) the events specified in Part B, Article VIII of the Adoption
Agreement.
Elective Deferrals shall not include any deferrals properly
distributed as an "Excess Amount" pursuant to Section 3.9.2.
1.28 Elective Deferrals Account: The Account established for a
Participant pursuant to Section 3.8.1
1.29 Eligible Employee: Those Employees specified in the Adoption
Agreement.
1.30 Eligible Participant: An Eligible Employee who has met the
eligibility requirements set forth in the Adoption Agreement whether
or not he or she makes Elective Deferrals and/or Employee Thrift
Contributions.
1.31 Employee: A Self-Employed Individual, or any individual who
is employed by the Employer in the trade or business with respect to
which the Plan is adopted and any individual who is employed by an
Affiliate. Each Leased Employee shall also be treated as an
Employee of the recipient Employer. The preceding sentence shall
not apply, however, to any Leased Employee who is (A) covered by a
money purchase pension plan maintained by the "leasing organization"
referred to in Section 1.54 which provides, with respect to such
Leased Employee, a nonintegrated Employer contribution rate of at
least 10% of Limitation Compensation, but including amounts
contributed pursuant to a salary reduction agreement which are
excluded from the Employees gross income under Code Section
402(a)(8), Code Section 402(h) or Code Section 403(b), immediate
participation, and full and immediate vesting and (B) such Leased
Employees do not constitute more than 20% of the Employer's and
Affiliates' nonhighly compensated workforce. For purposes of the
Plan, all Employees will be treated as employed by a single
employer.
1.32 Employer Thrift Contributions: Employee nondeductible
contributions which are required to be eligible for a matching,
Thrift Contribution. Employee Thrift Contributions do not include
participant Voluntary Nondeductible Contributions.
1.33 Employee Thrift Contributions Account: The Account
established for a Participant pursuant to Section 3.8.3.
1.34 Employer: The sole proprietorship, partnership or corporation
that adopts the Plan by executing the Adoption Agreement. For all
purposes relating to eligibility, participation, contributions,
vesting and allocations, Employer includes all Participating
Affiliates.
1.35 Employer Account: The Participant's Matching 401(k)
Contribution Account, Matching Thrift Contributions Account,
Employer Contributions Account, Qualified Matching Contributions
Account and Qualified Nonelective Contributions Account, as the case
may be.
1.36 Employer Contributions: Any contributions made by the
Employer for the Plan Year on behalf of a Participant in accordance
with Section 3.1 of the Plan.
1.37 Employer Contributions Account: The Account established for
a Participant pursuant to Section 3.8.2.
1.38 Employment: An Employee's employment or self-employment with
the Employer, Affiliate or a "leasing organization" referred to in
Section 1.54 or, to the extent required under Code Section 414(a)(2)
or as otherwise specified by the Administrator on a uniform and
nondiscriminatory basis, any predecessor of any of them. If any of
them maintains a plan of a "predecessor employer" (within the
meaning of Code Section 414(a)(1)) employment or self-employment
with the "predecessor employer" will be treated as Employment.
Additionally, if the trade or business conducted by a Self-Employed
Individual becomes incorporated, all employment with that trade or
business or with any Affiliate shall be treated as Employment with
the Employer.
1.39 Entry Date: The date on which an Eligible Employee becomes a
Participant, as specified in the Adoption Agreement.
1.40 ERISA: The Employee Retirement Income Security Act of 1974,
as amended from time to time. Reference to a specific provision of
ERISA shall include such provision and any applicable regulation
pertaining thereto.
1.41 Excess Aggregate Contributions: With respect to any Plan
year, the excess of:
A) The aggregate Contribution Percentage Amounts, taken into
account in computing the numerator of the Contribution Percentage
actually made on behalf of Highly Compensated Employees for such
Plan Year, over (B) The maximum Contribution Percentage Amounts
permitted by the ACP Test (determined by reducing contributions made
on behalf of Highly Compensated Employees in the order of their
Contribution Percentage beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess
Elective Deferrals and then determining Excess Contributions.
1.42 Excess Contributions: With respect to any Plan Year, the
aggregate amount of Elective Deferrals, Qualified Nonelective
Contributions and Qualified Matching Contributions, if applicable,
actually paid over to the Trust Fund on behalf of Highly Compensated
Employees for such Plan Year, over the maximum amount of such
contributions permitted by the ADP Test (determined by reducing
contributions made on behalf of Highly Compensated Employees in
order of the Actual Deferral Percentages, beginning with the highs
of such percentages).
1.43 Excess Elective Deferrals: The amount of Elective Deferrals
for a Participant's taxable year that are includible in the gross
income of the Participant to the extent that such Elective Deferrals
exceed the Code Section 402(g) dollar limitation and which the
Participants allocates to this Plan pursuant to the procedure set
forth in Section 3.4.2. Excess Elective Deferrals shall be treated
as an Annual Addition pursuant to Section 3.9, unless such amounts
are distributed no later than the first April 15th following the
close of the Participant's taxable year.
1.44 Family Member: An individual described in Code Section
414(q)(6)(B).
1.45 401(k) Contributions Accounts: The Participant's Elective
Deferral Account, Qualified Nonelective Contributions Account,
and/or Qualified Matching Contributions Account, as the case may be.
1.46 401(k) Election: The election by a Participant to make
Elective Deferrals in accordance with Section 3.4.1.
1.47 Fully Vested Separation: Termination of Employment, by reason
other than death, of a Participant whose vested parentage in each
Employer Account is 100%.
1.48 Group Trust: A Trust Fund consisting of assets of any Plan
maintained and established by the Employer or an Affiliate pursuant
to Section 10.14.
1.49 Highly Compensated Employee: The term Highly Compensated
Employee includes highly compensated active Employees and highly
compensated former employees.
(A) A highly compensated active Employee includes any Employee who
performs service for the Employer or Affiliate during the Plan Year
and who, during the look-back year (the twelve-month period
immediately preceding the Plan Year):
(i) received Compensation from the Employer or Affiliate in excess
of $75,000 (as adjusted by the Adjustment Factor);
(ii) received Compensation from the Employer or Affiliate in excess
of $50,000 (as adjusted by the Adjustment Factor) and was a member
of the top-paid group for such year; or
(iii) was an officer of the Employer or Affiliate and received
Compensation during such year that is greater than 50% of the
Defined Benefit Dollar Limitation.
(B) The term Highly Compensated Employee also includes:
(i) Employees who are both described in the preceding sentence if
the term "Plan Year" is substituted for the term "Look-back" and the
Employee is one of the 100 Employees who received the most
Compensation from the Employer or Affiliate during the Plan Year;
and
(ii) Employees who are 5% owners at any time during the look-back
year or Plan Year.
(C) If no officer has received Compensation that is greater than
50% of the Defined Benefit Dollar Limitation in effect during either
the Plan Year or look-back year, the highest paid officer of such
year shall be treated as a Highly Compensated Employee.
(D) A highly compensated former employee includes any Employee who
terminated Employment (or was deemed to have terminated) prior to
the Plan Year, performs no service for the Employer or Affiliate
during the Plan Year, and was a highly compensated active employee
for either the separation year or any Plan Year ending on or after
the Employee's 55th birthday.
(E) If an Employee is, during a Plan Year or look-back year, a
Family member of either (i) a 5% owner who is an active or former
Employee or (ii) a Highly Compensated Employee who is one of the ten
most highly compensated employees ranked on the basis of
Compensation paid by the Employer or Affiliate during such year,
then the Family Member and the 5% owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the Family
Member and 5% owner or top-ten Highly Compensated Employee shall be
treated as a single Employee receiving Compensation and plan
contributions or benefits equal to the sum of such Compensation and
contributions or benefits of the Family Member and 5% owner or top-
ten Highly Compensated Employee. For purposes of this section,
Family member includes the Spouse, lineal ascendant and descendants
of the Employee or former employee and the spouses of such lineal
ascendant and descendants.
(F) The determination of who is a Highly Compensated Employee,
including the determinations f the number and identity of Employees
in the top-paid group; the top 100 Employees; the number of
Employees treated as officers; and the Compensation that is
considered will be made in accordance with Code Section 414(q).
1.52 Investment Manager: Any person appointed by the Trustee or,
with respect to Participant-Directed Assets, by the Participant or
Beneficiary having the power to direct the investment of such
assets, to serve as such in accordance with Section 10.8.
1.53 Key Employee: Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the
"determination period" was (A) an officer of the Employer or
Affiliate, having an annual Compensation greater than 50% of the
Defined Benefit Dollar Limitation for any Plan Year within the
"determination period"; (B) an owner (or considered an owner under
Code Section 318) of one of the ten largest interests in the
Employer or Affiliate if such individual's Compensation exceeds 100%
of the dollar limitation under Code Section 415(c)(1)(A); (C) a "5%
owner" (as defined in Code Section 416(i)) of the Employer or
Affiliate; or (D) a "1% owner" (as defined in Code Section 416(i))
of the Employer or Affiliate who has an annual Compensation of more
than $150,0000. Annual compensation means compensation as defined
in Code Section 415(c)(3), but including amounts contributed by the
Employer pursuant to a salary reduction agreement which are
excludible from the Employee's gross income under Code Section 125
Code Section 402(a)(8), Code Section 402(h) or Code Section 403(b).
The "determination period" is the Plan Year containing the
"determination date" and the four preceding Plan Years. The
"determination date" for the first Plan Year is the last day of the
Plan Year, and for any subsequent Plan Year is the last day of the
preceding Plan Year. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i).
1.54 Leased Employee: Any individual (other than an Employee of
the recipient Employer or Affiliate) who, pursuant to an agreement
between the Employer or Affiliate and any other person (the "leasing
organization") has performed services for the Employer (or for the
Employer or Affiliate and "related persons" determined in accordance
with Code Section 414(n)(6)) on a substantially full-time basis for
a period of at least one year, which services are of a type
historically performed, in the business field of the recipient
Employer or Affiliate, by employees. Contributions or benefits
provided a Leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer or
Affiliate shall be treated as provided by the recipient Employer.
1.55 Limitation Year: The Limitation Year as specified in the
Adoption Agreement. All Qualified Plans maintained by the Employer
must use the same Limitation Year. If the Limitation Year is amended
to a different 12-consecutive month period, the new Limitation Year
must begin on a date within the Limitation Year in which the
amendment is made.
1.56 Master or Prototype Plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
1.57 Matching 401(k) Contribution: Any contribution made by the
Employer to this and/or any other Defined Contribution Plan for the
Plan Year, by reason of the Participant's 401(k) Election, and
allocated to a Participant's Matching 401(k) Contributions Account
or to a comparable account in another Defined Contribution Plan.
Matching 401(k) contributions are subject to the distribution
provisions applicable to Employer Accounts in the Plan.
1.58 Matching 401(k) Contributions Account: The Account
established for a Participant pursuant to Section 3.8.4.
1.59 Matching Thrift Contributions: Any contribution made by the
Employer for the Plan Year by reason of Employee Thrift
Contributions. Matching Thrift Contributions shall be subject to
the distribution provisions applicable to Employer Accounts in the
Plan.
1.60 Matching Thrift Contributions Account: The Account
established for a Participant pursuant to Section 3.8.5.
1.61 Net Profits: The current and accumulated profits of the
Employer from the trade or business of the Employer with respect to
which the Plan is established, as determined by the Employer before
deductions for federal, state and local taxes on income and before
contributions under the Plan or any other Qualified Plan.
1.62 Nonhighly Compensated Employee: An Employee of the Employer
who is neither a Highly Compensated Employee nor a Family Member.
1.63 Nonvested Separation: Termination of Employment of a
Participant whose vested percentage in each Employer Account is 0%.
1.64 Normal Retirement Age: The age specified in the Adoption
Agreement. Notwithstanding the Employer's election in the Adoption
Agreement, if, for Plan Years beginning before January 1, 1988,
Normal Retirement Age was determined with reference to the
anniversary of the participation commencement date (more than 5 but
not to exceed 10 years), the anniversary date for Participants who
first commenced participation under the Plan before the first Plan
Year beginning on or after January 1, 1988, shall be the earlier of
(A) the tent anniversary of the date the Participant commenced
participation in the Plan (or such anniversary as had been elected
by the Employer, if less than 10) or (B) the fifth anniversary of
the first day of the first Plan Year beginning on or after January
1, 1988.
1.65 Owner-Employee: An individual who is a sole proprietor, if the
Employer is a sole proprietorship, or if the Employer is a
partnership, a partner owning more than 10% of either the capital
interest or the profits interest in the Employer; provided that
where this Plan refers to an Owner-Employee in the context of a
trade or business other than the trade or business with respect to
which the Plan is adopted, the term Owner-Employee means a person
who would be an Owner-Employer as defined above if that other trade
or business was the Employer.
1.66 Partially Vested Separation: Termination of Employment of a
Participant whose vested percentage in any Employer Account is less
than 100% but greater than 0%.
1.67 Participant: An Employee who has commenced, but not
terminated, participation in the Plan as provided in Article II.
1.68 Participant Contributions Account: The Participant's
Participant Voluntary Nondeductible Contributions Account and/or
Employee Thrift Contributions Account, as the case may be.
1.69 Participant-Directed Assets: The assets of an Account which
are invested, as described in Section 10.5.1, according to the
direction of the Participant or the Participant's Beneficiary, as
the case may be, in either individually selected investment or in
commingled funds or in shares of regulated investment companies.
1.70 Participant Voluntary Nondeductible Contributions: Any
voluntary nondeductible contributions made in cash by a participant
to this Plan other than Employee Thrift Contributions.
1.71 Participant Voluntary Nondeductible Contributions Account:
The Account established for a Participant pursuant to Section 3.8.6.
1.72 Participating Affiliate: Any Affiliate or any other employer
designated as such by the Employer, and, by duly authorized action,
that has adopted the Plan with the consent of the Employer and has
not withdrawn therefrom.
1.73 Period of Severance: For purposes of the hourly records
method, a Period of Severance is a period equal to the number of
consecutive Plan Years or, with respect to eligibility, the
applicable computation period under the definition of Year of
Service, in which an Employee has 500 Hours of Service or less. The
Period of Severance shall be determined on the basis of Hours of
Service and shall commence with the first Plan Year in which the
Employee has 500 Hours of Service or less. With respect to any
period of absence during which a Period of Severance does not
commence, the Participant shall be credited with the Hours of
Service (up to a maximum of 501 Hours of Service in a Plan Year)
which would otherwise have been credited to him or her but for such
absence, or if such Hours of Service cannot be determined, 8 Hours
of Service for each day of absence.
For purposes of the elapsed time method, a Period of Severance is a
continuous period of at least 12-consecutive months during which an
individual's Employment is not continuing, beginning on the date an
Employee retires, quits or is discharged or, if earlier, the first
12-month anniversary of the date that the individual is otherwise
first absent from service (with or without pay) for any other
reason, and ending on the date the individual again performs an Hour
of Service.
Anything in the definition thereof to the contrary notwithstanding,
a Period of Severance shall not commence if the Participant is:
(A) On an authorized leave of absence in accordance with standard
personnel policies applied in a nondiscriminatory manner to all
Employees similarly situated and returns to active Employment by the
Employer or Affiliate immediately upon the expiration of such leave
of absence;
(B) On a miliary leave while such Employee's re-employment rights
are protected by law and returns to active Employment within ninety
days after his or her discharge or release (or such longer period as
may be prescribed by law); or
(C) Absent from work by reason of (i) the pregnancy of the Employee,
(ii) the birth of a child of the Employee, or (iii) the placement of
a child with the Employment in connection with the adoption of such
child by such Employee, or (iv) the care of such child for a period
beginning immediately following such birth or placement. In
determining when such a Participant's Period of Severance begins,
the Participant will be credited with (i) for purposes of the
elapsed time method, the 12-consecutive month period beginning on
the first anniversary of the first date of such absence; or (ii) for
purposes of the hourly records method, the Hours of Service he or
she would normally have had but for such absence, or if such Hours
cannot be determined, eight Hours of Service for each day of such
absence; provided, however, that such Hours of Service shall not
exceed 501 and shall be credited only in the year in which such
absence began if such crediting would prevent the Participant from
incurring a Period of Severance in that year, or in any other case,
shall be credited in the immediately following year.
1.74 Plan: The plan established by the Employer in the form of
this Prototype Plan and the applicable Adoption Agreement executed
by the Employer. The Plan shall have the name specified in the
Adoption Agreement.
1.75 Plan Year: Each 12-consecutive month period ending on the
date specified in the Adoption Agreement, during any part of which
the Plan is in effect.
1.76 Prototype Plan: The Merrill Lynch Special Prototype Defined
Contribution Plan set forth in this document, as amended or restated
from time to time.
1.77 Qualified Joint and Survivor Annuity: An immediate annuity
for the life of Participant with a survivor annuity continuing after
the Participant's death to the Participant's Surviving Spouse for
the Surviving Spouse's life in an amount equal to 50% of the amount
of the annuity payable during the joint lives of the Participant and
such Surviving Spouse and which is the actuarial equivalent of a
single life annuity which could be provided for the Participant
under an Annuity Contract purchased with the aggregate vested
Account Balances of the Participant's Accounts at the Benefit
Commencement Date.
1.78 Qualified Matching Contributions: Matching Contribution
which, pursuant to the election made by the Employer, and in
accordance with Code Section 401(m), are nonforfeitable when made
and subject to the limitation on distribution set forth in the
definition of Qualified Nonelective Contributions.
1.79 Qualified Matching Contributions Account: The Account
established for a Participant pursuant to Section 3.8.7.
1.80 Qualified Nonelective Contributions: Contributions (other
than Matching 401(k) Contributions, Qualified Matching 401(k)
Contributions or Elective Deferrals), if any, made by the Employer
which the Participant may not elect to receive in cash until
distributed from the Plan, which are nonforfeitable when made, and
which are not distributable under the terms of the Plan to
Participants or their Beneficiaries earlier than the earlier of:
(A)termination of Employment, death, or Disability of the
Participant;
(B) attainment of the age 59-1/2 by the Participant;
(C) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(D) disposition by the Employer or Participating Affiliate to an
unrelated corporation of substantially all of its assets used in a
trade or business if such unrelated corporation continues to
maintain this Plan after the disposition but only with respect to
Employees who continue employment with the acquiring unrelated
entity. The sale of 85% of the assets used in a trade or business
will be deemed a sale of "substantially all" the assets used in a
trade or business;
(E) sale by the Employer to an unrelated entity of its interest in
an Affiliate if such unrelated entity continues to maintain the Plan
but only with respect to Employees who continue employment with such
unrelated entity; and
(F) effective for Plan Years beginning before January 1, 1989, upon
the hardship of the Participant.
1.81 Qualified Nonelective Contributions Account: The Account
established for a Participant pursuant to Section 3.8.7.
1.82 Qualified Plan: A Defined Benefit Plan or Defined
Contribution Plan.
1.83 Qualifying Employer Securities: Employer securities, as that
term is defined in ERISA Section 407(d)(5).
1.84 Rollover Contribution: A contribution described in Section
3.3.
1.85 Rollover Contributions Account: The Account established for
a Participant pursuant to Section 3.8.9.
1.86 Self-Employed Individual: An individual who has Earned Income
for the Plan Year involved from the trade or business for which the
Plan is established, or who would have had such Earned Income but
for the fact that the trade or business with respect to which the
Plan is established had no Net Profits for that Plan Year.
1.87 Social Security Retirement Age: Age 65 in the case of a
Participant attaining age 62 before January 1, 2000 (i.e., born
before January 1, 1938), age 66 for a Participant attaining age 62
after December 31, 1999, and before January 1, 2017 (i.e., born
after December 31, 1937, but before January 1, 1955), and age 67 for
a Participant attaining, age 62 after December 31, 2016 (i.e., born
after December 31, 1954).
1.88 Sponsor: The mass submitter, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and any successor thereto, and any other
qualifying sponsoring organization who sponsors with the consent of
the mass submitter, the Prototype Plan and makes the Prototype Plan
available for adoption by Employers.
1.89 Spouse: The person married to a Participant, provided that a
former spouse will be treated as the Spouse to the extent provided
under a "qualified domestic relations order" (or a "domestic
relations order" treated as such) as referred to in Section 12.6.
1.90 Surviving Spouse: The person married to a Participant on the
earliest of:
(A) the date of the Participant's death;
(B) the Participant's Benefit Commencement Date; or
(C) the date on which an Annuity contract is purchased for the
Participant providing benefits under the Plan;
Anything contained herein to the contrary notwithstanding, a former
spouse will be treated as the Surviving Spouse to the extent
provided under a "qualified domestic relations order" (or a
"domestic relations order" treated as such) as referred to in
Section 12.6.
1.91 Taxable Wage Base: The maximum amount of earnings which may
be considered "wages" for the Plan year involved under Code Section
3121(a)(1).
1.92 Transferred Account: The Account established for a
Participant pursuant to Section 3.8.10.
1.93 Trust: The trust established under the Plan to which Plan
contributions are made and in which Plan assets are held.
1.94 Trust Fund: The assets of the Trust held by or in the name of
the Trustee.
1.95 Trustee: The person appointed as Trustee pursuant to Article
X and any successor Trustee.
1.96 Valuation Date: The last business day of each Plan Year, the
date specified in the Adoption Agreement or determined pursuant to
Section 10.6, if applicable, and each other date as may be
determined by the Administrator.
1.97 Vesting Service: The Years of Service credited to a
Participant under Article IV for purposes of determining the
Participant's vested percentage in any Employer Account established
for the Participant.
1.98 Years of Service: If the Employer elects the hourly records
method in the Adoption Agreement, an Employee shall be credited with
one Year of Service for each Plan year in which he or she has 1,000
Hours of Service. Solely for purposes of eligibility to
participate, an Employee shall be credited with a Year of Service on
the last day of the 12-consecutive month period which begins on the
first day on which he or she has an Hour of Service, if he or she
has at least 1,000 Hours of Service in that period.
If an Employee fails to be credited with a Year of Service on such
date, he or she shall be credited with a Year of Service on the last
day of each succeeding 12-consecutive month period in which he or
she is credited with at least 1,000 Hours of Service.
If the Employer elects the elapsed time method in the Adoption
Agreement, the Employee's Years of Service shall be a span of
service equal to the sum of:
(A) the period commencing on the date the Employee first performs
an Hour of Service and ending on the date he or she quits, retires,
is discharged, dies, or if earlier, the 12-month anniversary of the
date on which the Employee was otherwise first absent from service
(with or without pay)for any other reason; and
(B)(i) if the Employee quits, retires, or is discharged, the period
commencing on the date the Employee terminated his or her Employment
and ending on the first date on which he or she again performs an
Hour of Service, if such date is within 12 months of the date on
which he or she last performs an Hour of Service; or
(ii) if the Employee is absent from work for any other reason and,
within 12 months of the first day of such absence, the Employee
quits, retires or is discharged , the period commencing on the first
day of such absence and ending on the first day he or she again
performs an Hour of Service if such day is within 12 months of the
date his or her absence began.
With respect to both the elapsed time method and the hourly record
method, service with a predecessor employer, determined in the
manner in which the rules of this Plan would have credited such
service had the Participant earned such service under the terms of
this Plan, may be included in years of Service, as specified in the
Adoption Agreement.
ARTICLE II PARTICIPATION
2.1 Admission as a Participant
2.1.1 An Eligible Employee shall become a Participant on the Entry
Date coincident with or next following the date on which he or she
meets the eligibility requirements specified in the Adoption
Agreement; provided, however that:
(A) an Eligible Employee who has met the eligibility requirements
a of the first day of the Plan Year in which the Plan is adopted as
a new Plan shall become a Participant as of such date;
(B) an Eligible Employee who had met the eligibility requirements
of a plan that is restated and /or amended to become this Plan shall
become a Participant as of the date this Plan is adopted; and
(C) if selected in the Adoption Agreement, an Eligible Employee
shall become a Participant on the effective date of the Plan
providing he or she is an Eligible Employee on such date.
2.1.2 An Employee who did not become a Participant on the Entry Date
coincident with or next following the day on which he or she met the
eligibility requirements because he or she was not then an Eligible
Employee shall become a Participant on the first day on which he or
she again becomes an Eligible Employee unless determined otherwise
in accordance with Section 2.3.1. of the Plan.
2.1.3 If the Plan includes a CODA or thrift feature, in addition to
the participation requirements set forth in Section 2.1.1., an
Eligible Employee shall become a Participant upon filing his or her
401(k) Election or election to make Employee Thrift Contributions
with the Administrator. An election shall not e required if the
Employer has elected to make contributions to an Employer Account
and/or Qualified Nonelective Contributions with respect to all
Eligible Participants.
2.1.4 An individual who has ceased to be a Participant and who again
becomes an Eligible Employee shall become a Participant immediately
upon reemployment as an Eligible Employee unless determined
otherwise in accordance with Section 2.3.1. of the Plan.
2.2. Rollover Membership and Trust to Trust Transfer
An Eligible Employee who makes a Rollover Contribution or a trust to
trust transfer shall become a Participant as of the date of such
contribution or transfer even if he or she had not previously become
a Participant. Such an Eligible Employee shall be a Participant
only for the purposes of such Rollover Contribution or transfer and
shall not be eligible to share in contributions made by the Employer
until he or she has become a Participant in accordance with Section
2.1.
2.3. Crediting of Service for Eligibility Purposes
2.3.1 For purposes of eligibility to participate, an Eligible
Employee or Participant without any vested interest in any Employer
Account and without an Elective Deferrals Account who terminates
Employment shall lose credit for his or her Years of Service prior
to such termination of Employment if his or her Period of Severance
equals or exceeds five years or, if greater, the aggregate number of
Years of Service.
2.3.2 For purposes of eligibility to participate, a Participant who
has a vested interest in any Employer Account and who terminates
Employment shall retain credit for his or her Years of Service prior
to such termination of Employment without regard to the length of
his or her Period of Severance. In the event such Participant
returns to Employment, he or she shall participate immediately.
2.3.3 A former Eligible Employee who was not a Participant who again
becomes an Eligible Employee with no Years of Service to his or her
credit shall be treat as a new Employee.
2.4 Termination of Participation
A Participant shall cease to e a Participant:
(A) upon his or her death;
(B) upon the repayment to him or her of all nonforfeitable
benefits due to him or her under the Plan, whether directly or by
the purchase of an Annuity contract; or
(C) upon his or her Nonvested Separation.
2.5 Limitation for Owner-Employee
2.5.1 If the Plan provides contributions or benefits for one or more
Owner-Employees who control the trade or business for which this
Plan is established and who also control as an Owner-Employee or as
Owner-Employees one or more other trade or businesses, this Plan and
the plan established for each such other trade or business must,
when looked at as a single plan, satisfy the requirements of Code
Sections 401(a) and (d) with respect to the employees of this and
all of such other trades or businesses.
2.5.2 If the Plan provides contribution or benefits for one or more
Owner-Employees who control as an Owner-Employee or as Owner-
Employees one or more other trades or businesses, the employees of
the other trade or businesses must be included in a plan which
satisfies the requirements of Code Sections 401(a) and (d) and which
provides contributions and benefits for the employees of such other
trades or businesses not less favorable than the contributions and
benefits provided for Owner-Employees under this Plan.
2.5.3 If an individual is covered as an Owner-Employee under the
plan of two or more trades or businesses which are not controlled
and the individual controls a trade or business, then the
contributions or benefits of the employee under the plan of the
trades or businesses which are controlled must be as favorable as
those provided for such individual under the most favorable plan of
the trade or business which is not controlled.
2.5.4 For purposes of the preceding three subsections, an Owner-
Employee, or two or more Owner-Employees, will be considered to
control a trade or business if the Owner-Employee, or two or more
Owner-Employees together.
(A) owns the entire interest in an unincorporated trade or business,
or
(B)in the case of a partnership, own more than 50% of either the
capital interest or the profits interest n the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two
ore more Owner-Employees, shall be treated as owning any interest in
a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-
Employees, are considered to control within the meaning of the
preceding sentence.
2.6 Corrections with Regard to Participation
2.6.1 If in any Plan Year an Eligible Employee who should be
included as a Participant in the Plan is erroneously omitted and
discovery of such omissions is not made until after a contribution
by the Employer for the year has been made, the Employer shall make
a subsequent contribution with respect to the omitted Eligible
Employee in the amount which would have contributed with respect to
such Eligible Employee had he or she not be omitted. Such
contribution shall be made whether or not it is deductible in whole
or in part in any taxable year under applicable provisions of the
code. It shall be the responsibility of the Employer and
Administrator to take any and all actions as required by this
Section 2.6.1.
2.6.2 If in any Plan Year any person who should not have been
included as a Participant in the Plan is erroneously included and
discovery of such incorrect inclusion is not made until after a
contribution for the year has been made, the amount contributed on
behalf of such ineligible person shall constitute a forfeiture for
the Plan Year in which the discovery is made. It shall be the
responsibility of the Employer and Administrator to take any and all
actions as required by this Section 2.6.2.
2.7 Provision of Information
Each Employee shall execute such forms as may reasonably be required
by the Administrator, and shall make available to the Administrator
any information the Administrator may reasonably request in this
regard. By virtue of his or her participation in this Plan, an
Employee agrees, on his or her own behalf and on behalf of al
persons who may have or claim any right by reason of the Employee's
participation in the Plan, to be bound by all provisions of the
Plan.
ARTICLE III
CONTRIBUTIONS AND ACCOUNT
ALLOCATIONS
3.1 Employer Contributions and Allocations
3.1.1 If the Plan is a profit-sharing plan, the Employer will
contribute cash and/or Qualifying Employer Securities to the Trust
Fund, in such amount, if any, as specified in the Adoption Agreement
and with respect to Qualifying Employer Securities as is consistent
with Sections 10.4.2 and 10.4.3. If the Plan is a profit-sharing
plan, Net Profits may be necessary for an Employer to make
contributions, as specified in the Adoption Agreement. Employer
Contributions for a Plan Year will be allocated no later than the
last day of the Plan Year to the Employer Contributions Account of
Participants eligible for an allocation in the manner specified in
the Adoption Agreement. A not-for-profit corporation may adopt a
profit-sharing plan as an incentive plan; provided, however, that
such a plan may not contain a CODA feature unless otherwise
permitted by law.
3.1.2 If the Plan is a money purchase pension plan, the Employer
will contribute cash to the Trust Fund in an amount equal to that
percentage of the Compensation of each Participant eligible for an
allocation of Employer contributions for that Plan Year as specified
in the Adoption Agreement. Employer Contributions for the Plan Year
will be allocated as of the last day of the Plan year to the
Employer contributions Accounts of Participants eligible for an
allocation and entitled to share in such contributions in the manner
specified in the Adoption Agreement.
3.1.3 If the Plan is a target benefit plan, the Employer will
contribute cash to the Trust Fund in an amount specified in the
Adoption Agreement. The amount contributed with respect to the
targeted benefit of each Participant eligible for an allocation for
that Plan Year will be allocated as of the last day of the Plan Year
to the Participant's Employer Contributions Account in the manner
specified in the Adoption Agreement.
3.1.4 If the Employer elects in the Adoption Agreement to make
contributions on behalf of a Participant whose Employment terminated
due to Disability, "Compensation" shall mean, with respect to such
Participant, the Compensation he or she would have received for the
entire calendar year in which the Disability occurred if he or she
had ben paid for such year at the rate at which he or she had been
paid for such year at the rate at which he or she was being paid
immediately prior to such Disability. Employer Contributions may be
taken into account only if the Participant is a Nonhighly
Compensated Employee and contributions made on his or her behalf are
nonforfeitable.
3.1.5 If an Employer has adopted more than one Adoption Agreement,
or has adopted a plan pursuant to the Merrill Lynch Special
Prototype Defined Benefit Plan and Trust, only one Adoption
Agreement may be integrated with Social Security.
3.1.6 For purposes of the Plan contributions provided by the
"leasing organization" referred to in Section 1.37 of a Leased
Employee which are attributable to services performed for the
Employer shall be treated as provided by the Employer.
3.2. Participant Voluntary Nondeductible Contributions
3.2.1 If elected by the Employer in the Adoption Agreement, each
Participant while actively employed may make Participant Voluntary
Nondeductible Contributions in cash in a dollar amount or a
percentage of Compensation which does not, when included in the
Contribution Percentage Amount, exceed the limitations set forth in
Code Section 401(m).
3.2.2 Participant Voluntary Nondeductible Contributions shall be
made in accordance with rules and procedures adopted by the
Administrator.
3.3 Rollover Contributions and Trust to Trust Transfers
3.3.1 Any Eligible Employee or Participant may make a Rollover
Contribution under the Plan. A Rollover Contribution shall be in
cash or in other property acceptable to the Trustee and shall be a
contribution attributable to (a) a "qualified total distribution"
(as defined in Code Section 402(a)(5)), distributed to the
contributing Employee under Code Section 402(a)(5) from a Qualified
Plan or distributed to the Employee under code Section 403(a)(4)
from an "employee annuity" or referred to in that section, or (b) a
payout or distribution to the Employee referred to in Code Section
403(d)(3) from an "individual retirement account" or an "individual
retirement annuity" described, respectively, in Code Section 408(a)
or Section 408(b) consisting exclusively of amounts attributable to
"qualified total distributions" (as defined in Code Section
402(a)(5)) from a Qualified Plan.
The Plan shall not accept a Rollover contribution attributable to
any accumulated deductible employee contributions as defined by Code
Section 72(o)(5)(B). The Trustee may condition acceptance of a
Rollover Contribution upon receipt of such documents as it may
require. In the event that an Employee makes a contribution
pursuant to this Section 3.3. intended to be a Rollover Contribution
but which did not qualify as a Rollover Contribution, the Trustee
shall distribute to the Employee as soon as practicable after that
conclusion is reached the entire Account balance in his or her
Rollover Contributions Account deriving from such contributions
determined as of the valuation date coincident with or immediately
preceding such discovery.
3.3.2 Any Eligible Employee or Participant may direct the
Administrator to direct the Trustee to accept a transfer to the
Trust Fund from another trust established pursuant to another
Qualified Plan of all or any part of the assets held in such other
trust. The Plan shall not accept a direct transfer attributable to
accumulated deductible employee contributions as defined by Code
Section 72(o)(5)(B). The Trustee may condition acceptance of such
a trust to trust transfer upon receipt of such documents as it may
require.
3.4. Section 401(k) Contributions and Account Allocations
(A) Amount of Elective Deferrals
Subject to the limitations contained in Section 3.4.2, the Employer
will contribute cash to the Trust Fund in an amount equal to:
(i) as specified on the Participant's 401(k) Election form, the
specific dollar amount, or the deferral percentage multiplied by
each such Participant's Compensation; or
(ii) a bonus contribution made pursuant to Section 3.4.1.(C).
(B) The amount elected by a Participant pursuant to a 401(k)
Election shall be determined within the limits specified in the
Adoption Agreement. The 401(k) Election shall be made on a form
provided by the Administrator but no election shall be effective
prior to approval by the Administrator. The Administrator may
reduce the amount of any 401(k) Election, or make such other
modifications as necessary, so that the Plan complies with the
provisions of the Code. A Participant's 401(k) Election shall
remain in effect until modified or terminated. Modification or
termination of a 401(k) Election shall be made at such time as
specified in the Adoption Agreement.
(C) If elected by the Employer in the Adoption Agreement, an
Eligible Employee may make a 401(k) Election to have an amount
withheld up to the amount of any bonus payable for such Plan Year
and direct the Employer to contribute the amount so withheld to his
or her Elective Deferrals Account.
3.4.2. Limitation on Elective Deferrals
(A) Maximum Amount of Elective Deferrals and Distribution of Excess
Elective Deferrals
(i) No Participant shall be permitted to have Elective Deferrals
made under this Plan, or any other Qualified Plan maintained by the
Employer, during any Plan Year in excess of the dollar limitation
contained in Code Section 402(g) in effect at the beginning of the
Participant's taxable year.
(ii) Notwithstanding any other provision of the Plan, Excess
Elective Deferrals made to this Plan or assigned to this Plan, plus
any income and minus any loss allocable thereto, shall be
distributed no later than April 15, 1988, and each April 15
thereafter to, Participants to whose accounts Excess Elective
Deferrals were designated for the preceding Plan Year and who claim
Excess Elective Deferrals for such taxable year. Excess Elective
Deferrals shall be treated as Annual Additions.
(iii) Claims. A Participant may designate to this Plan any amount
of his or her Elective Deferrals as Excess Elective Deferrals during
his or her taxable year. A Participant's claim shall be in writing,
shall be submitted to the Administrator no later than March 1, shall
specify the Participant's Excess Elective Deferral for the preceding
Plan Year, and shall be accompanied by the Participant's written
statement that if such amounts are not distributed, such Excess
Elective Deferral, when added to amounts deferred under other plans
or arrangements described in Code Section 401(k), Code Section
408(k), Code Section 403(b) or Code Section 457, exceeds the limit
imposed on the Participant by Code Section 402(g) for the year in
which the deferral occurred. A Participant is deemed to notify the
Administrator of any Excess Elective Deferrals that arise by taking
into account only those Elective Deferrals made to this Plan and any
other plans of the Employer or an Affiliate.
(iv) Determination of Income or Loss. Excess Elective Deferrals
shall be adjusted for income or loss up to the date of distribution.
THE income or loss allocable to Participant's Excess Elective
Deferrals is the sum of: (1) the income or loss allocable to the
Participant's Elective Deferrals Account for the Participant's
taxable year multiplied by a fraction, the numerator of which is the
Participant's Excess Elective Deferrals for the Participant's
taxable year and the denominator of which is the Account Balance of
the Participant's Elective Deferrals Account without regard to any
income or loss occurring during such taxable year; and (2) ten
percent of the amount determined under (1) multiplied by the number
of whole calendar months between the end of the Participant's
taxable year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
Anything in the preceding paragraph of this Section 3.4.2.(A)(iv) to
the contrary notwithstanding, any reasonable method for computing
the income or loss allocable to Excess Elective Deferrals may be
used, provided that such method is used consistently for all
Participants and for all corrective distributions under the Plan,
and is used by the Plan for allocating income or loss to
participants' Accounts. Income or loss allocable to the period
between the end of the taxable year an the date of distribution may
be disregarded in determining income or loss.
(B) ADP Test
The Average Actual Deferral Percentage for Highly Compensated
Employees for each Plan Year and the Average Actual Deferral
Percentage for Nonhighly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(i) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage for Eligible
Participants who are Nonhighly Compensated Employees for the Plan
Year multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Actual Deferral Percentage for Eligible
Participants who are Nonhighly Compensated Employees for the Plan
Year multiplied by 2.0; provided that the Average Actual Deferral
Percentage for Eligible Participants who are Highly Compensated
Employees does not exceed the Average Actual Deferral Percentage for
Participants who are Nonhighly Compensated Employees by more than
two percentage points.
(C) Special Actual Deferral Percentage Rules
(i) The Actual Deferral Percentage for any Eligible Participant who
is a Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals and Qualified Matching
Contributions or Qualified Nonelective Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP Tests,
allocated to his or her accounts under two or more plans or
arrangements described in Code Section 401(k) that are maintained by
the Employer shall be determined as if all such Elective Deferrals
Qualified Matching Contributions and Qualified Nonelective
Contributions were made under a single arrangement. If a Highly
Compensated Employee participates in two ore more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangement sending with or within the same calendar year shall be
treated as a single arrangement.
(ii) In the event that this Plan satisfies the requirements of Code
Section 401(k), Code Section 401(a)(4) or Code Section 410(b) only
if aggregated with one or more other qualified plans, or if one or
more other qualified plans satisfy the requirements of such Code
Sections only if aggregated with this Plan, then this Section shall
be applied by determining the Actual Deferral Percentage of
Employees as if all such qualified plans were a single qualified
plan. For Plan Years beginning after December 31, 1989, plans may
be aggregated in order to satisfy Code Section 401(k) only if they
have the same plan year.
(iii) For purposes of determining the Actual Deferral Percentage of
an Eligible Participant who is a 5% owner or one of the ten most
highly paid Highly Compensated Employees, the Elective Deferrals
(and Qualified Matching Contributions or Qualified Nonelective
Contributions, or both, if treated as Elective Deferrals for
purposes of one of the tests referred to in Section 3.4.2(B)) and
CODA Compensation of such Participant shall include the Elective
Deferrals (and if applicable, Qualified Matching Contributions,
Qualified Nonelective Contributions) and CODA Compensation for the
Plan Year of Family Members. Family Members with respect to such
Highly Compensated Employees shall be disregarded as separate
employees in determining the Actual Deferral Percentage both for
Eligible Participants who are nonhighly compensated Employees and
for Eligible Participants who are Highly Compensated Employees.
(iv) For purposes of determining the ADP Test, Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective must be
made before the last day of the 12-month period immediately
following the Plan Year to which such contributions relate.
(v) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP Test and the amount of Qualified Nonelective
Contributions and/or Qualified Matching Contribution used in such
test.
(vi) The determination and treatment of the Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective
Contributions, used in the ADP Test shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(D) Distribution of Excess Contributions
(i) In General. Notwithstanding any other provision of the Plan
except Section 3.4.2(E), Excess Contributions, plus any income and
minus any loss allocable thereto, shall be distributed no later than
the last day of each Plan Year beginning after December 31, 1987, to
Participants to whose Accounts Elective Deferrals, Qualified
Matching Contributions, and Qualified Nonelective Contributions were
allocated for the preceding Plan Year.1 Excess Contributions of
Participants who are subject to the Family Member aggregation rules
shall be allocated among the Family Members in proportion to the
Elective Deferrals (and amounts treated as Elective Deferrals) of
each Family Member that is combined to determine the combined Actual
Deferral Percentage. Excess Contributions shall be treated as
Annual Additions.
(ii) Determination of Income or Loss. Excess Contributions shall
be adjusted for any income or loss up to the date of distribution.
The income or loss allocable to Excess Contributions is the sum of:
(1) the income or loss allocable to the Participant's Elective
Deferrals Account (and, if applicable, the Qualified Nonelective
Contributions Account for the Qualified Matching Contributions
Account or both) for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Contributions for
the year and the denominator of which is the Account Balances of
Participant's Elective Deferrals Account, Qualified Nonelective
Contributions Account and Qualified Matching Contributions Account
if any of such contributions are included in the ADP Test, without
regard to any income or loss occurring during such Plan Year; and
(2) 10% of the amount determined under (1) multiplied by the number
of whole calendar months between the end of the Plan Year and the
date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
Distribution of Excess Contributions on or before the last day of
the Plan Year after the Plan Year in which such Excess amounts arose
is required under Code Section 401(k)(8) if the Plan is to maintain
its tax-qualified status. However, if such excess amounts, plus any
income and minus any loss allocable thereto, are distributed more
than 2-1/2 months after the last day of the Plan Year in which such
excess amounts arose, then Code Section 4979 imposes a 10% excise
tax on the employer maintaining the plan with respect to such
amounts.
Anything in the preceding paragraph of this Section 3.4.2(D)(ii) to
the contrary notwithstanding, any reasonable method for computing
the income or loss allocable to Excess Contributions may be used,
provided that such method is used consistently for all Participants
and for all corrective distributions under the Plan for the Plan
Year, and is used by the Plan for allocating income or loss to
Participant's Accounts. Income or loss allocable to the period
between the end of the Plan Year and the date of distribution may be
disregarded in determining income or loss.
(iii) Accounting for Excess Contributions. Amounts distributed
under this Section 3.4.2(D) shall first be distributed from the
Participant's Elective Deferrals Account and Qualified Matching
Contributions Account in proportion to the Participant's Elective
Deferrals and Qualified Matching Contributions (to the extent used
in the ADP Test) for the Plan Year. Excess Contributions shall be
distributed from the Participant's Qualified Nonelective
Contributions Account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective
Deferrals Account and Qualified Matching Contributions Account.
(E) In lieu of distributing Excess Contributions pursuant to the
preceding Section 3.4.2(D), and as specified in the Adoption
Agreement, the Employer may make special Qualified Nonelective
Contributions on behalf of Nonhighly Compensated Employees that are
sufficient to satisfy the ADP Test.
(F) In lieu of distributing Excess Contributions, the Participant
may treat his or her Excess Contributions as an amount distributed
and then re-contributed by such Participant. Recharacterized
amounts are 100% nonforfeitable and subject to the same distribution
requirements as Elective Deferrals. Amounts may not be re-
characterized by a Highly Compensated Employee to the extent that
such amount in combination with other amounts made to the
Participant's Participant Contributions Account would exceed any
stated limit on such contributions, as specified in the Adoption
Agreement. If Excess Contributions are re-characterized, they must
be so no later than two and one half months after the last day of
the Plan Year in which such Excess Contributions arose and they are
deemed to occur no earlier than the date the last Highly Compensated
Employee is informed in writing of the amount re-characterized and
the consequences thereof. Recharacterized amounts are taxable to
the Participant for the tax year in which he or she would have
received such contributions in cash.
(G) Under no circumstances may Elective Deferrals, Qualified
Matching Contributions and Qualified Nonelective Contributions be
contributed and allocated to the Trust later than the last day of
the 12-month period immediately following the Plan Year to which
such contributions relate.
3.5 Matching 401(k) Contributions
3.5.1 Amount of Matching Contributions Subject to the limitations
contained in Section 3.9 and 3.5.2, for each Plan Year the Employer
will contribute in cash and/or Qualified Employer Securities,
Matching 401(k) Contributions to the Trust Fund in an amount, if
any, calculated by reference to the Participants' Elective Deferrals
as specified in the Adoption.
3.5.2 Limitation on Contribution Percentage
(A) ACP Test
The Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year and the Average
Contributions Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the same Plan Year must satisfy one of the
following tests:
(i) the Average Contribution Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Contribution Percentage for Eligible Participants
who are Nonhighly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(ii) the Average Contribution Percentage for Eligible Participants
who are Highly Compensated Employees shall not exceed the Average
Contribution Percentage for Eligible Participants who are Nonhighly
Compensated Employees by more than two percentage points or such
lesser amount as the Secretary of the Treasury shall prescribe to
prevent the multiple use of this alternative limitation with respect
to any Highly Compensated Employee.
(B) Special Average Contribution Percentage Rules
(i) For purposes of this Section 3.5.2, the Contribution Percentage
for any Eligible Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have Matching 401(k)
Contributions or Matching Thrift Contributions, as the case may be
(other than Qualified Matching Contributions), allocated to his or
her account under two or more qualified plans described in Code
Section 401(a), or arrangements described in Code Section 401(k)
shall be determined as if the total of such Contribution Percentage
Amounts was made under each plan.
If a Highly Compensated Employee participates in 2 or more cash or
deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
(ii) In the event that this Plan satisfies the requirements of Code
Section 410(b) only if aggregated with one or more other plans, or
if one or more other plans satisfy the requirements of Code Section
410(b) only if aggregated with this Plan, then this Section 3.5.2
shall be applied by determining the Contribution Percentages of
Employees as if all such plans were single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in order
to satisfy Code Section 401(m) only if they have the same plan year.
(iii) For purposes of determining the Contribution Percentage of an
Eligible Participant who is a 5% owner or one of the 10 most highly-
paid Highly Compensated Employees, the Contribution Percentage
Amounts and the CODA Compensation of such Participant shall include
the Contribution Percentage Amounts and CODA Compensation for the
Plan Year of Family Members. Family Members with respect to Highly
Compensated
Employees shall be disregarded as separate employees in determining
the Contribution Percentage both for Participants who are Nonhighly
Compensated Employees and for Participants who are Highly
Compensated Employees.
(iv) For purposes of determining the ACP Test, Matching 401(k)
Contributions, Matching Thrift Contributions and Qualified
Nonelective Contributions will be considered made for a Plan Year if
made no later than the end of the 12-month period beginning on the
day after the close of the Plan Year.
(v) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP Test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in
such test.
(C) Multiple Use
If one or more Highly Compensated Employees participate in both a
cash or deferred arrangement and a plan subject to the ACP Test and
the sum of the Actual Deferral Percentage and the Actual
Contribution Percentage of those Highly Compensated Employees exceed
the "aggregate limit", then the Actual Contribution Percentage of
those Highly Compensated Employee will be reduced, beginning with
such Highly Compensated Employee whose Actual Contribution
Percentage is the highest, so that the limit is not exceeded.
The amount by which each Highly Compensated Employee's Contribution
Percentage is reduced shall be treated as an Excess Aggregate
Contribution. The Actual Deferral Percentage and Actual
Contribution Percentage of the Highly Compensated Employees are
determined after any corrections required to meet the ADP Test and
the ACP Test. Multiple use does not occur if either the Average
Deferral Percentage or Actual Contribution Percentage of the Highly
Compensated Employees does not exceed 1.25 multiplied by the Actual
Deferral Percentage and the Actual Contribution Percentage of the
Nonhighly Compensated Employees. (i) The "aggregate limit" is the
sum of (1) 125% of the greater of the Actual Deferral Percentage for
Participants who are Nonhighly compensated Employees for the Plan
Year or the Actual Deferral Percentage for Participants who are
Nonhighly Compensated Employee for the Plan Year beginning with or
within the Plan Year and (2) the lesser of 200% or two plus the
lesser of such Actual Deferral Percentage or Actual Contribution
Percentage. "Lesser" is substituted for "greater"in "(1)," above,
and "greater" is substituted for "lesser" after "two plus the" in
"(2)" if it would result in a larger aggregate limit.
(D) In General. Notwithstanding any other provision of this Plan,
Excess Aggregate Contributions, plus any income and minus any loss
allocable thereto, shall be forfeited and applied to reduce
subsequent Matching 401(k) Contributions or Matching Thrift
Contributions, as the case may be. No forfeitures arising under
this Section 3.6.2(D) shall be allocated to the account of any
Highly compensated Employee. If not forfeitable, Excess Aggregate
Contributions shall be distribute no later than the last day of each
Plan Year beginning after December 31, 1987, to Participants to
whose Accounts such Excess Aggregate Contributions were allocated
for the preceding Plan Year. Excess Aggregate Contributions of
Participants who are subject to the Family Member aggregation rules
shall be allocated a month the Family Members in proportion to the
amounts constituting Contribution Percentage Amounts of each Family
Member that is combined to determine the combined Actual
Contribution Percentage. Excess Aggregate Contributions shall be
treated as Annual Additions. Anything above to the contrary
notwithstanding, any forfeiture or distribution under this Section
3.5.2(D)(i) shall occur only if sufficient Employee Thrift
Contributions and/or Participant Voluntary Nondeductible
Contributions, as the case may be, are not distributed from the
qualified plan holding such Employee Thrift contributions and/or
Participant Voluntary Nondeductible Contributions, as the case may
be.2
(ii) Determination of Income or Loss. Excess Aggregate
Contributions shall be adjusted for any income or loss up to the
date of distribution. The income or loss allocable to Excess
Aggregate Contributions is the sum of: (1) the income or loss
allocable to the Participant's Matching 401(k) Contribution Account
or Matching Thrift Contribution Account (if any, and if all amounts
therein are not used in the ADP Test) and, if applicable, Qualified
Nonelective Contribution Account and Elective Deferrals Account for
the Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for the year an
the denominator of which is the Participant's Account Balance(s)
attributable to Contribution Percentage Amounts without regard to
any income or loss occurring during such Plan Year; and (2) 10% of
the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution
occurs after the 15th of such month.
Anything in the preceding paragraph f this Section 3.5.2(D)(ii) to
the contrary notwithstanding, any reasonable method for computing,
the income or loss allocable to Excess Aggregate Contributions may
be used, provided that such method is used consistently for all
Participants an for all corrective distributions under the Plan for
the Plan Year, and is used by the Plan for allocating income or loss
to Participants' Accounts. Income or loss allocable to the period
between the end of the Plan Year and the date of distribution may be
disregarded in determining income or loss.
(iii) The determination of the Excess Aggregate Contributions shall
be made after first determining the Excess Elective Deferrals, and
then determining the Excess Contributions.
3.5.3 For purposes of determining the ACP Test, Qualified
Nonelective Contributions, Matching 401(k) Contributions and
Matching Thrift Contributions will be considered made for a Plan
Year if paid to the Trustee no later than the end of the 12-month
period beginning on n the day after the close of the Plan Year.
3.6 Thrift Contributions
3.6.1 Employee Thrift Contributions. If elected by the Employer in
the Adoption Agreement to provide for Employee Thrift Contributions,
the Employer will contribute cash to the Trust Fund in an amount
equal to (A) the Employee Thrift contribution percentage of each
Participant on his or her Employee Thrift Contribution election form
multiplied by each such Participant's Compensation or (B) the
specific dollar amount set forth on the Participant's election form.
The amount elected by a Participant pursuant to a Participant's
Employee Thrift Contribution election shall be determined within the
limits specified in the Adoption Agreement. Such election shall be
made on a form provided by the Administrator but no election shall
be effective prior to approval by the Administrator.
The Administrator may reduce the amount of any Employee Thrift
Contribution, or make such other modifications as necessary, so that
the Plan complies with the provisions of the code. A Participant's
election shall remain in effect until modified or terminated at such
times as specified in the Adoption Agreement.
3.6.2 Matching Thrift Contributions. Subject to the limitations
contained in Sections 3.9 and 3.5.2, for each Plan Year the Employer
will contribute in cash and/or Qualifying Employer Securities,
Matching Thrift contributions to the Trust Fund in an amount, if
any, calculated by reference to the Participants' Employee Thrift
contributions, as specified in the Adoption Agreement.
Matching Thrift Contributions made by the Employer will be allocated
to the Matching Thrift Contributions Account of those Participants
who have contributed Employee Thrift contributions to the Plan, as
specified in the Adoption Agreement.
Distribution or forfeiture of Excess Aggregate Contributions on or
before the last day of the Plan Year after the Plan Year in which
such excess amounts arose is require under Code Section 401(m)(6) if
the Plan is to maintain its tax-qualified status. However, if such
excess amounts, plus any income and minus any loss allocable
thereto, are distributed more than 2-1/2 months after the last day
of the Plan Year in which such excess amounts arose, then Code
Section 4979 imposes a 10% excise tax on the employer maintaining
the plan with respect to such amounts.
3.7 Treatment of Forfeitures
3.7.1 If the Employer has elected in the Adoption Agreement to
reallocate forfeitures for a Plan Year among Participants, then such
forfeitures, if any, shall be allocated as of the last day of the
Plan Year to the Employer Accounts of those Participants who are
eligible to share in the allocation of contributions to that
particular
Employer Account (whether or not a contribution was made for that
Plan Year) for that Plan Year in that particular Employer Account
category with respect to which such forfeitures are attributable.
If the Plan is a Target Benefit Plan, forfeitures may only be used
to reduce Employer Contributions, in accordance with Section 3.7.2.
3.7.2 If the Employer has elected in the Adoption Agreement to use
forfeiture to reduce contributions, then forfeitures shall be
applied in the succeeding Plan Year to reduce Employer contributions
in that particular Employer Account category to which such
forfeitures were attributable.
3.8 Establishing of Accounts
3.8.1 An Elective Deferrals Account shall be established for each
Eligible Participant who makes a 401(k) Election to which the
Administrator shall credit, or cause to be credited, Elective
Deferrals allocable to each such Participant, plus earnings or
losses thereon.
3.8.2 An Employer Contributions Account shall be established for
each Participant to which the Administrator shall credit or cause to
be credited Employer contributions pursuant to Section 3.1, and
forfeitures attributable to such contributions, if any, plus
earnings or losses thereon.
3.8.3 An Employee Thrift Contributions Account shall be established
for each Participant who makes Employee Thrift contributions to the
Plan, to which the Administrator shall credit, or cause to be
credited, all amounts allocable to each such Participant, plus
earnings or losses thereon.
3.8.4 A Matching 401(k) Contributions Account shall be established
for each Participant for whom Matching 401(k) Contributions are
made, to which the Administrator shall credit, or cause to be
credited, all such amounts allocable to each such Participant, plus
earnings or losses thereon.
3.8.5 A Matching Thrift Contributions Account shall be established
for each Participant for whom Matching Thrift contributions are
made, to which the Administrator shall credit, or cause to be
credited, all amounts allocable to each such Participant, plus
earnings or losses thereon.
3.8.6 A Participant Voluntary Nondeductible Contributions Account
shall be established for each Participant who makes Participant
Voluntary Nondeductible Contributions to the Plan, plus earnings or
losses thereon.
3.8.7 A Qualified Matching Contributions Account shall be
established for each Eligible Participant for whom Qualified
Matching contributions are made, to which the Administrator shall
credit, or cause to be credited, all amounts allocable to each such
Participant, plus earnings or losses thereon.
3.8.8 A Qualified Nonelective Contributions Account shall be
established for each Participant for whom Qualified Nonelective
Contributions are made, to which the Administrator shall credit, or
cause to be credited, all amounts allocable to each such
Participant, plus earnings or losses thereon.
3.8.9 Rollover Contributions Account shall be established for each
Participant who contributes to the Plan pursuant to Section 3.3 to
which the Administrator shall credit, or cause to be credited,
Rollover Contributions made by the Participant, plus earnings or
losses thereon.
3.8.10 A Transferred Contributions Account shall be established for
each Participant for whom assets are transferred from another
Qualified Plan, to which the Administrator shall credit, or cause to
be credited, transferred assets, plus earnings or losses thereon.
3.9 Limitation on Amount of Allocations
3.9.1 As used in this Section 3.9, each of the following terms
shall have the meaning for that term set forth in this Section
3.9.1:
(A) Annual Additions means, for each Participant, the sum of the
following amounts credited to the Participant's Accounts for the
Limitation Year:
(i) Employer Contributions within the meaning of IRS regulation
1.415-6(b);
(ii) Employee Contributions;
(iii) forfeitures;
(iv) allocation under a simplified employee pension; and
(v) any Excess Amount applied under a Defined Contribution Plan in
the Limitation Year to reduce Employer Contributions will also be
considered as part of the Annual Additions for such Limitation Year.
Amounts allocated after March 31, 1984, to an "individual medical
benefit account" as defined in Code Section 415(1)(2) ("Individual
Medical Benefit Account") which is part of a pension or annuity plan
maintained by the Employer or Affiliate are treated as Annual
Additions to a Defined Contribution Plan. Also, amounts derived
from contributions paid or accrued after December 31, 1985, in
taxable years ending after that date, which are attributable to
post-retirement medical benefits allocated to the separate account
of a "key employee" as defined in Code Section 419A(d)(3) under a
"welfare benefit fund" as defined in Code Section 419(e) ("Welfare
Benefit Fund") maintained by the Employer or Affiliate, are treated
as Annual Additions to a Defined Contribution Plan.
(B) Defined Benefit Dollar Limitations means $90,000 multiplied by
the Adjustment Factor or such other limitation set forth in Code
Section 415(b)(1) as in effect for the Limitation Year.
(C) Defined Benefit Fraction means a fraction, the numerator of
which is the sum of the Projected Annual Benefits of the Participant
involved under all Defined Benefit Plans (whether or not terminated)
maintained by the Employer or Affiliate, and the denominator of
which is the lesser of 125% of the Defined Benefit Dollar Limitation
determined for the Limitation Year or 140% of the Participant's
Highest Average Limitation Compensation, including any adjustments
under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more Defined Benefit Plans maintained
by the Employer or Affiliate which were in existence on May 5, 1986,
the denominator of this fraction will not be less than 125% of the
sum of the annual benefits under such Plans which the Participant
had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and
conditions of the plans after May 5, 1986. The preceding sentence
applies only if the Defined Benefit Plans individually and in the
aggregate satisfied the requirements of Code Section 415 for all
Limitation Years beginning before January 1, 1987.
(D) Defined Contribution Dollar Limitation means $30,000 or if
greater, one-fourth of the Defined Benefit Dollar Limitation as in
effect for the Limitation Year.
(E) Defined Contribution Fraction means a fraction, the numerator
of which is the sum of the Annual Additions to the Participant's
Account or Accounts under all the Defined Contribution Plans
(whether or not terminated) maintained by the Employer or Affiliate
for the current and all prior Limitation Years (including the Annual
Additions attributable to the Participant's nondeductible
contributions to all Defined Benefit Plans, whether or not
terminated, maintained by the Employer or Affiliate and the Annual
Additions attributable to all Welfare Benefit Funds, Individual
medical Benefit Accounts, and simplified employee pensions
maintained by the Employer or Affiliate), and the denominator of
which is the sum of the "maximum aggregate amounts" (as define in
the following sentence) for the current and all prior Limitation
Years of service with the Employer or Affiliate (regardless of
whether a Defined Contribution Plan was maintained by the Employer
or Affiliate). The "maximum aggregate amount" in any Limitation
Year is the lesser of (i) 125% of the Defined Benefit Dollar
Limitation in effect under Code Section 415(c)(1)(A) or (ii) 35% of
the Participant's Compensation for such year.
If the Employee was a Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more
Defined Contribution Plans maintained by the Employer or Affiliate
in existence on May 5, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit
Fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (A) the
excess of the sum of the fractions over 1.0 times (B) the
denominator of this fraction will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the later of the end of
the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plans
made after May 6, 1986, but using the Code Section 415 limitation
applicable to the first Limitation Year beginning on or after
January 1, 1987. The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to treat
all Participant contributions as Annual Additions.
(F) Excess Amounts means the excess of the Participant's Annual
Additions for the Limitation Year involved over the Maximum
Permissible Amount for that Limitation Year.
(G) Highest Average Limitation Compensation means the average
Compensation as defined in Code Section 415(c)(3) of the Participant
involved for that period of three consecutive Years of Service with
the Employer or Affiliate for if the Participant has less than three
such Years of Service, the actual number thereof) that produces the
highest average.
(H) Limitation Compensation means Compensation, as defined in
either (i), (ii) or (iii) below, as specified in the Adoption
Agreement:
(i) Code Section 415 Safe-Harbor Compensation
For an Employee other than a Self-Employed Individual, the
Employee's earned income, wages, salaries, and fees for professional
services and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually
rendered in the course of Employment (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of
a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursement or other expense
allowances under a non-accountable plan (as described in Reg. 1.62-
2(c)) and excluding the following:
(1) Employer contributions to a plan of deferred compensation which
are not includible in the Employee's gross income for the taxable
year in which contributed, or contributions under a "simplified
employee pension" plan (within the meaning of Code Section 409(k))
to the extent such contributions are deductible by the Employee, or
any distributions from a plan of deferred compensation;
(2) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or other property) held by the
Employee either becomes freely "transferable" or is no longer
subject to a "substantial risk of forfeiture" (both quoted terms
within the meaning of Code Section 83(a));
(3) amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(4) other amounts which received special tax benefits, or
contributions made (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Code
Section 403(b) (whether or not the amounts are actually excludable
from the gross income of the Employee).
For Limitation Years beginning after December 31, 1991, Limitation
Compensation shall include only that compensation which is actually
paid or made available during the Limitation Year.
(ii) Information required to be reported under Section 6041 and
6051. ("Wages, Tips and other Compensation Box" Form W-2).
Limitation compensation is defined as wages as defined in Code
Section 3401(a) and all other payments of compensation to an
Employee by the Employer (n the course of the Employer's trade or
business) for which the Employer is required to furnish the Employee
a written statement under Section 6041(d) and 6051(a)(3) of the
Code. Compensation must be determined without regard to any rules
under Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Section
3401(a)(2)).
(iii) Code Section 3401(a) wages
Limitation Compensation is defined as wages within the meaning of
Code Section 3401(a) for the purposes of income tax withholding at
the source but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
Without regard to the definition of Limitation Compensation elected
by the Employer, for a Self-Employed Individual, Limitation
Compensation means his or her Earned Income, provided that if the
Self-Employed Individual is not a Participant for an entire Plan
Year, his or her Limitation Compensation for that Plan Year shall be
his or her Earned Income for that Plan Year multiplied by a fraction
the numerator of which is the number of the days he or she is a
Participant during the Plan Year and the denominator of which is the
number of days in the Plan Year. Additionally, Limitation
compensation for a Participant in a Defined Contribution Plan who is
permanently and totally disabled (as defined in Code Section 22(e))
is the compensation such Participant would have received for the
Limitation Year if the Participant had been paid at the rate of
compensation paid immediately before becoming disabled; such imputed
compensation may be taken into account only if the Participant is
not a Highly Compensated Employee and contributions made on behalf
of such Participant are nonforfeitable when made.
(1) Maximum Permissible Amount means the maximum Annual Addition
which may be contributed or allocated to a Participant's Account
under the Plan for any Limitation Year. The maximum Annual Addition
shall not exceed the lesser of: (a) the Defined Contribution Dollar
Limitation, or (b) 25% of the Participant's Compensation for the
Limitation Year.
The Compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of Code
Sections 401(h) or 419A(f)(2)) which is otherwise treated as an
Annual Addition under Code Section 415(1)(1) or 419A(d)(2). If a
short Limitation Year is created because of an amendment changing
the Limitation Year to a different 12-consecutive month period, the
Maximum Permissible Amount will not exceed the Defined Contribution
Dollar Limitation multiplied by the following fraction:
Number of months in the short Limitation Year-12
(J) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
Qualified Joint and Survivor Annuity) to which the Participant would
be entitled under the terms of a Defined Benefit Plan assuming:
(i) the Participant continues in employment with the Employer or
Affiliate until the Participant's "normal retirement age" under the
Plan within the meaning of Code Section 411(a)(8) (or the
Participant's current age, if later); and
(ii) the Participant's Limitation Compensation for the current
Limitation Year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future
Limitation Years.
3.9.2 The provisions of this subsection 3.9.2 apply with respect to
a Participant who does not participate in, and has never
participated in, another Qualified Plan, a Welfare Benefit Fund or
an Individual Medical Benefit Account or a simplified employee
pension, as defined in Code Section 401(k) maintained by the
Employer or an Affiliate, which provides an Annual Addition as
defined in Section 3.9.1(A) of the Plan, other than this Plan:
(A) The amount of Annual Additions which may be credited to the
Participant's Account for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions on behalf of the Participant for
the Limitation Year to exceed the Maximum Permissible Amount with
respect to that Participant for the Limitation Year, the amount
contributed or allocated will be reduced so that the Annual
Additions on behalf of the Participant for the Limitation Year will
equal such Maximum Permissible Amount.
(B) Prior to determining the Participant's actual Limitation
Compensation for a Limitation Year, the Employer may determine the
Maximum Permissible Amount for the Participant for the Limitation
Year on the basis of a reasonable estimation of the Participant's
Compensation for that Limitation Year. Such estimated Compensation
shall be uniformly determined for all Participants similarly
situated.
(C) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participants actual
compensation for the Limitation Year.
(D) If pursuant to Section 3.9.2(C) or as a result of the
allocation of forfeitures, there is an Excess Amount with respect to
the Participant for a Limitation Year, the Excess Amount shall be
disposed of as follows:
(i) First, any contribution to the Participant's Elective Deferrals
Account, Participant Voluntary Nondeductible contributions Account
or Employee Thrift contributions Account, if applicable and any
earnings allocable thereto will be distributed to the Participant to
the extent that the return thereof would reduce the Excess Amount in
such Participant's Accounts;
(ii) If after the application of Section 3.9.2(D)(i) an Excess
Amount still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the remaining Excess Amount in the
Participant's Account will be used to reduce Employer contributions
(including allocation of any forfeitures)under this Plan for such
Participant in the next Limitation Year, and in each succeeding
Limitation Year, if necessary. (iii) If after the application of
Section 3.9.2(D)(i) an Excess Amount still exists, and the
Participant is not covered by the Plan at the end of the Limitation
Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future
Employer contributions under this Plan for all remaining
Participants in the next Limitation Year, and in each succeeding
Limitation Year, if necessary; provided, however, that if all or any
part of the Excess Amount held in a suspense account is attributable
to a Participant's Elective Deferrals, such Excess Amount shall be
held unallocated in a suspense account to be used for such
Participant in the next Limitation year and each succeeding
Limitation Year as an Elective Deferral if such Participant is
covered by the Plan in the next and each succeeding Limitation Year,
if necessary.
(iv) If a suspense account is in existence at any time during a
Limitation Year pursuant to Section 3.9.2(d)(iii), the suspense
account will not participate in the allocation of the Trust Fund's
investment gains or losses to or from any other Account. If a
suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Accounts before any
Employer or Participant contributions may be made to the Plan for
the Limitation Year. Excess Amounts, other than those Excess
Amounts referred to in Section 3.9.2(d)(i), may not be distributed
to Participants or Former Participants.
3.9.3 The provisions of this subsection 3.9.3 apply with respect to
a Participant who, in addition to this Plan, is covered or has been
covered under one or more Defined Contribution Plans which are
Master or Prototype Plans, Welfare Benefit Funds an Individual
Medical Benefit Account or a simplified employee pension will be
deemed to have been allocated first, followed by Annual Additions to
a Welfare Benefit Fund or Individual Medical Benefit Account
regardless of the actual allocation date.
(E) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date
of another such plan, the Excess Amount attributed to this Plan will
be the product of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (A) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this Plan
to (B) the total Annual Additions allocated to the Participant for
the Limitation Year as of such date under this Plan and all of the
other plans referred to in the first sentence of this Section 3.9.3.
(F) Any Excess Amount attributed to this Plan will be disposed in
the manner described in Section 3.9.2(D).
3.9.4 If a Participant is covered under one or more Defined
Contribution Plans, other that this Plan, maintained by the Employer
or an Affiliate which are not Master or Prototype Plans, or Welfare
Benefit Funds or an Individual medical Benefit Account maintained by
the Employer, Annual Additions which may be credited to the
Participant's Account under this Plan for any Limitation Year shall
be limited in accordance with the provisions of subsections 3.9.3(A)
- (F) above as though each such other plan was a Master or Prototype
Plan.
3.9.5 If the Employer maintains, or at any time maintained, a
Defined Benefit Plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Fraction and Defined
Contribution Fraction will not exceed 1.0 in any Limitation Year.
If such sum would otherwise exceed 1.9 and if such Defined Benefit
Plan does not provide for a reduction in benefits thereunder, Annual
Additions which may be credited to a Participant's Account under
this Plan for any Limitation Year shall be limited in accordance
with the provisions of Section 3.9.2.
3.9.6 If required pursuant to Section 4.4.4, "100%" shall be
substituted for "125%" wherever the latter percentage appears in
this Section 3.9.
3.10 Return of Employer Contributions Under Special Circumstances
Notwithstanding any provision of this Plan to the contrary, upon
timely written demand by the Employer or the Administrator to the
Trustee:
(A) Any contribution by the Employer to the Plan under a mistake of
fact shall be returned to the Employer by the Trustee within one
year after the payment of the contribution.
(B) Any contribution made by the Employer incident to the
determination by the commissioner of Internal Revenue that the Plan
is initially a Qualified Plan shall be returned to the Employer by
the Trustee within one year after notification from the Internal
Revenue Service that the Plan is not initially a Qualified Plan but
only if the application for the qualification is made by the time
prescribed by law for filing the Employer's return for the taxable
year in which the Plan is adopted, or such later date as the
Secretary of the Treasury may prescribe.
(C) In the event the deduction of a contribution made by the
Employer is disallowed under Code Section 404, such contribution (to
the extent disallowed) must be returned to the Employer within one
year of the disallowance of the deduction.
ARTICLE IV VESTING
4.1 Determination of Vesting
4.1.1 A Participant shall at all times have a vested percentage of
100% in the Account Balance of each of his or her Participant
Contributions Accounts, 401(k) Contributions Accounts, Rollover
contributions Account and Transferred Account.
4.1.2 A Participant shall have a vested percentage of 100% in his
or her Account Balance of each of his or her employer Accounts if he
or she terminates Employment due to the attainment of Normal
Retirement Age, Early Retirement specified in the Adoption
Agreement, if elected by the Employer in the Adoption Agreement, or
upon Disability or death.
4.1.3 The vested percentage of a Participant in the Account Balance
of each of his or her Employer Accounts not vested pursuant to
Section 4.1.1 or 4.1.2 shall be determined in accordance with the
vesting rule or schedule specified in the Adoption Agreement.
4.2 Rules for Crediting Vesting Service
4.2.1 Subject to Section 4.2.2, Years of Service shall be credited
for purposes of determining a Participant's Vesting Service as
specified in the Adoption Agreement. If the Employer maintains the
plan of a predecessor employer, service with such predecessor
employer shall be treated as service with the Employer for purposes
of Vesting Service.
4.2.2 An Employee who terminates Employment with no vested
percentage in an Employer Account shall, if he or she returns to
Employment, have no credit for Vesting Service prior to such
termination of Employment if his or her Period of Severance equals
or exceeds five years.
4.2.3 Vesting Service of an Employee following a Period of
Severance of five years or more shall not be counted for the purpose
of computing his or her vested percentage in his or her Employer
Accounts derived from contributions accrued prior to the Period of
Severance. If applicable, separate records shall be maintained
reflecting the Participant's vested rights in his or her Account
Balance attributable to service prior to the Period of Severance and
reflecting the Participant's vested percentage in his or her Account
Balance attributable to service after the Period of Severance.
Vesting Service prior to and following an Employee's Period of
Severance shall be counted for purposes of computing his or her
vested percentage in an Employer Account derived from contributions
made after the Period of Severance.
4.3 Employer Accounts Forfeitures
4.3.1 Subject to Section 5.6, upon the Nonvested Separation of a
Participant, the nonvested portion of each Employer Account of such
Participant will be forfeited as of the date of termination of
Employment.
Upon the Partially Vested Separation of a Participant, the nonvested
portion of each Employer Account of such Participant will be
forfeited as of the date of termination of Employment; provided,
however, that such Participant receives a distribution in accordance
with Section 5.6. If a Participant does not receive a distribution
following his or her termination of Employment, the nonvested
portion of each Employer Account of the Participant shall be
forfeited following a Period of Severance of five years.
4.3.2 If the Employer elects in the Adoption Agreement to
reallocate forfeitures, forfeitures for a Plan Year shall be
allocated n accordance with Section 3.7.1. If the Employer elects
in the Adoption Agreement to use forfeitures to reduce Employer
contributions, forfeitures shall be applied in accordance with
Section 3.7.2.
4.4 Top Heavy Provisions
4.4.1 As used in this Section 4.4, each of the following terms
shall have the meaning for that term set forth in this Section
4.4.1:
(A) Determination Date means, for any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan year. For the
first Plan Year of the Plan, the last day of that year.
(B) Permissive Aggregation Group means the Required Aggregation
Group of plans plus any other plan or plans of the Employer or
Affiliate which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of
Code Sections 401(a)(4) and 410.
(C) Required Aggregation Group means (i) each Qualified Plan of the
Employer or Affiliate in which at least one key Employee
participates or participated at any time during the determination
period (regardless of whether the Plan has terminated), and (ii) any
other qualified plan of the Employer or Affiliate which enables a
plan describe in (i) to meet the requirements of Code Sections
401(a)(4) or 410.
(D) Super Top-Heavy means, for any Plan Year beginning after
December 31, 1983, the Plan if any Top-Heavy Ratio as determined
under the definition of Top-Heavy Plan exceeds 90%.
(E) Top-Heavy Plan means, for any Plan Year beginning after
December 31, 1983, the Plan if any of the following conditions
exists:
(i) If the Top-Heavy Ratio for the Plan exceeds 60% and the Plan is
not part of any Required Aggregation Group or Permissive Aggregation
Group of Plans.
(ii) If the Plan is a part of a Required Aggregation Group of plans
but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%.
(iii) If the Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds 60%.
(F) Top-Heavy Ratio means
(i) If the Employer or Affiliate maintains one or more Defined
Contribution Plans (including any Simplified Employee Pension Plan)
and the Employer or Affiliate has never maintained any Defined
Benefit Plan which during the five-year period ending on the
Determination Date has or has had accrued benefits, the Top-Heavy
Ratio for this Plan alone or for the Required or Permissive
Aggregation Group as appropriate is a fraction, the numerator of
which is the sum of the Account A BALANCES of all key Employees as
of the Determination Date (including any part of any Account Balance
distributed in the five-year period ending on the Determination
Date), and the denominator of which is the sum of all Account
Balances (including any pat of any Account Balance distributed in
the five-year period ending on the Determination Date), both compute
in accordance with Code Section 416. Both the numerator and
denominator of the Top-Heavy Ratio are increased to reflect any
contribution not actually made as of the Determination Date, but
which is required to be taken into account on that date under Code
Section 416.
(ii) If the Employer or an Affiliate maintains one or more Defined
Contribution Plans (including any Simplified Employee Pension Plan)
an the Employer or an Affiliate maintains or has maintained one or
more Defined Benefit Plans which during the five-year period ending
on the Determination Date has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of
Account Balances under the aggregated Defined Contribution Plans for
all key Employees, determined n accordance with (i) above, and the
present value of accrued benefits under the aggregated Defined
Benefit Plans for all key Employees as of the Determination Date,
and the denominator of which is the sum of the Account Balance under
the aggregated Defined Contribution Plans for all Participants,
determined in accordance with (i) above, and the present value of
accrued benefits under the Defined Benefit Plans for all
Participants as of the Determination Date, all determine in
accordance with Code Section 416. The accrued benefit under a
Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distribution of an accrued
benefit made in the five-year period ending on the Determination
Date.
(iii) For purposes of (i) and (ii) above, the value of Account
Balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within or
ends with the 12-month period ending on the Determination Date,
except as provided in Code Section 416 for the first and second Plan
Years of a Defined Benefit Plan. The Account Balances and accrued
benefits of a Participant (1) who is not a key Employee but who was
a key Employee in a prior year, or (2) who has not been credited
with at least one Hour of Service with the Employer or an Affiliate
at any time during the five-year period ending on the Determination
Date, will be disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code Section 416.
Elective Deferrals will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of
Account Balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same
calendar year.
The accrued benefit of a Participant who is not a key Employee shall
be determined under (A) the method, if any, that uniformly applies
for accrual purposes under all Defined Benefit Plans or (B) if there
is s no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional rule of
Code Section 411(b)(1)(C).
4.4.2 If the Plan is determined to be a Top-Heavy Plan or a Super
Top Heavy Plan as of any Determination Date after December 31, 1983,
then the Top-Heavy vesting schedule specified in the Adoption
Agreement, beginning with the first Plan Year commencing after such
Determination Date, shall apply on for those Plan Years in which the
Plan continues to be a Top-Heavy Plan or Super Top-Heavy Plan, as
the case may be.
4.4.3 (A) Except as provided in Sections 4.4.3(C) and (D), for any
Plan Year in which the Plan is a Top-Heavy Plan, contributions and
forfeitures allocated to the Employer Contributions Account of any
Participant who is not a key employee in respect of that Plan Year
shall not be less than the lesser of:
(i) 3% of such Participant's Limitation Compensation, or
(ii) if the Employer has no Defined Benefit Plan which designates
this Plan to satisfy code Section 401, the largest percentage of
contributions and forfeitures, as a percentage of the key Employee's
Limitation Compensation, allocated to the Employer Contributions
Account of any key Employee for that year. The minimum allocation
is determined without regard to any Social Security contribution.
This minimum allocation shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation
for the Plan Year because of (a) the Participant's failure to
complete a Year of Service, (b) the Participant's failure to make
mandatory Participant contributions to the Plan or (c) compensation
less than a stated amount.
(B) For purposes of computing the minimum allocation, a
Participant's Limitation compensation will be applied.
(C) The provision in (A) above shall not apply to any Participant
who was not employed by the Employer or an Affiliate on the last day
of the Plan Year.
(D) If the Employer or an Affiliate has executed Adoption
Agreements covering Participants by a plan which is a profit-sharing
plan and by another plan which is a money purchase pension plan or
a target benefit plan, the minimum allocation specified in the
preceding Section 4.4.3(A) shall be provided by the money purchase
pension plan or by the target benefit plan, as the case may be. If
a Participant is covered under this Plan and a Defined Benefit Plan
maintained pursuant to Adoption Agreements offered by the Sponsor,
the minimum allocation specified in the preceding Section 4.4.3(A)
shall not be applicable and the Participant shall receive the
minimum benefit specified in the Defined Benefit Plan.
(E) With respect to any profit-sharing or money purchase pension
plan which becomes Top-Heavy and is integrated with Social Security,
prior to making, the allocations specified in the Adoption
Agreement, anything contained therein to the contrary
notwithstanding, there shall be an allocation of the Employer
Contribution to each eligible Participant's Employer Contribution
Account in the ratio that each such Participant's Limitation
Compensation for the Plan Year bears to the Limitation Compensation
of all such Participants for the Plan Year, but not in excess of 3%
of such Limitation Compensation.
4.4.4 If the Plan becomes a Top-Heavy Plan, then the maximum
benefit which can be provided under Section 3.9 shall continue to be
determined by applying "125%" wherever it appears in that Section
and by substituting "4%" for "3%" wherever that appears in Section
4.4.3. However, if the Plan becomes a Super Top-Heavy Plan, the
maximum benefit which can be provided under Section 3.9 shall be
determined by substituting "100%" for "125%" wherever the latter
percentage appears and the 3% minimum contribution provided for in
Section 4.4.4 shall remain unchanged.
4.4.5 Beginning with the Plan Year in which this Plan is Top-Heavy,
one of the minimum Top-Heavy vesting schedules as specified in the
Adoption Agreement will apply. The minimum vesting schedules
applies to all benefits within the meaning of Code Section 411(a)(7)
except those attributable to Employee contributions, including
benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. However, this
Section 4.4 does not apply to the Account Balances of any Employee
who does not have an Hour of Service after the Plan has initially
become Top-Heavy and such Employee's vesting in his or her Employer
contributions Account will be determined without regard to this
Section 4.4. The minimum allocation pursuant to Section 4.4.3 (to
the extent required to be nonforfeitable under Code Section 416(b))
may not be forfeited under Code Section 411(a)(3)(B) or Code Section
411(a)(3)(D).
ARTICLE V
AMOUNT AND DISTRIBUTION OF BENEFITS,
WITHDRAWALS AND LOANS
5.1 Distribution Upon Termination of Employment
5.1.1 Subject to Section 5.1.2, a Participant's Benefit Commencement
Date shall be as soon as practicable following his or her Fully
Vested Separation, Partially Vested Separation or Nonvested
Separation, if applicable, and in accordance with Section 5.6. If
the Plan includes a CODA feature, each 401(k) Contributions Account
of a Participant shall be payable in accordance with the events
specified in Section 1.27 of the Plan.
5.1.2 If specified in the Adoption Agreement, a Participant's
Benefit Commencement Date shall be deferred until the earliest of
his or her Normal Retirement Age, Disability, or if elected by the
Employer in the Adoption Agreement, Early Retirement. If a
Participant terminates Employment after satisfying any service
requirement for Early Retirement specified in the Adoption
Agreement, he or she shall be entitled to elect to receive a
distribution of his or her vested Employer Accounts upon
satisfaction of any age requirement for Early Retirement.
5.2 Amount of Benefits Upon a Fully Vested Separation
A Participant's benefit upon his or her Fully Vested Separation for
any reason other than Disability shall be the Account Balance of all
of his or her Accounts determined in accordance with Section 10.6.2.
5.3 Amount of Benefits Upon a Partially Vested Separation
A Participant's benefits upon his or her Partially Vested Separation
for any reason other than Disability shall be: (A) the Account
Balance of his or her Employer Accounts determined in accordance
with Section 10.6.2 multiplied by his or her vested percentage
determined pursuant to Section 4.1.3, or, if applicable, Section
4.4.2., plus (B) the Account Balance of his or her other Accounts
determined in accordance with Section 10.6.2.
5.4 Amount of Benefits Upon a Nonvested Separation
A Participant's benefits upon his or her Nonvested Separation shall
be the Account Balance of his or her Accounts other than Employer
Accounts, if any, determined in accordance with Section 10.6.2.
5.5 Amount of Benefits Upon a Separation Due to Disability
If a Participant terminates Employment do to a Disability, his or
her benefit shall be the Account Balance of all of his or her
Accounts determined as a Fully Vested Separation in accordance with
Section 5.2 and Section 10.6.2. The Benefit Commencement Date of
any such Participant on whose behalf contributions are being made
pursuant to Section 3.1.4 shall be soon as practicable after the
date such contributions cease.
5.6 Distribution and Restoration
5.6.1 If, upon a Participant's termination of Employment, the
vested Account Balance of his or her Accounts as of the applicable
Valuation Date is equal to or less than $3,500, such Participant
will receive a distribution of his or her entire vested benefit and
the nonvested portion will be treated as forfeiture. If the value
of a Participant's vested Account is zero, the Participant shall be
deemed to have received a distribution of such vested Account.
5.6.2 If, upon a Participant's termination of Employment, the
vested Account Balance of his or her Accounts has of the applicable
Valuation Date exceeds $3,500, the Participant may elect, in
accordance with Article VI, to receive a distribution of the entire
vested portion of such Accounts and the nonvested portion, if any,
will be treated as a forfeiture.
5.6.3 If the vested Account Balance of a Participant's Account as
of the applicable Valuation Date has an aggregate value exceeding
(or at the time of any prior distribution exceeded) $3,500, and the
Participant's benefit is Immediately Distributable, the Participant
and the Participant's Spouse (or where either the Participant or the
Spouse has died, the survivor) must consent to any distribution of
such benefit. The consent of the Participant and the Participant's
Spouse shall be obtained in writing within the 90-day period ending
on the Participant's Benefit Commencement Date; provided, however,
that if the Plan is a profit-sharing plan and Section 6.1.2 applies,
the consent of the Participant's Spouse will not be required. The
Administrator shall notify the Participant and the Participant's
Spouse of the right to defer any distribution until the
Participant's benefit is no longer Immediately Distributable. Such
notification shall include a general description of the material
features, and an explanation of the relative values of, the optional
forms of benefit available under the Plan in a manner that would
satisfy the notice requirements of Code Section 417(a)(3), and shall
be provided no less than 30 days and no more than 90 days prior to
the Benefit Commencement Date.
5.6.4 Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the Participant's benefit
is Immediately Distributable. Neither the consent of the
Participant nor the Participant's Spouse shall be required to the
extent that a distribution is required to satisfy Code Section
401(a)(9) or Code Section 415.
5.6.5 For purposes of determining the applicability of the
foregoing consent requirements to distributions made before the
first day of the first Plan Year beginning after December 31, 1988,
the Participant's vested benefit shall not include amounts
attributable to accumulated deductible Participant contributions
within the meaning of Code Section 72(o)(5)(B).
5.6.6 If a Participant, who after termination of Employment
received a distribution and forfeited any portion of an Employer
Account or is deemed to have received a distribution in accordance
with Section 5.6.1, resumes Employment, he or she shall have the
right, while an Employee, to repay the full amount previously
distributed from such Employer Account. Such repayment must occur
before the earlier of (i) the date of which he or she would have
incurred a Period of Severance of five years commencing after the
distribution of (ii) five years after the first date on which the
Participant is subsequently reemployed. If the Participant makes a
repayment, the Account Balance of his or her relevant Employer
Account shall be restored to its value as of the date of
distribution. The restored amount shall be derived from forfeitures
during the Plan Year and, if such forfeitures are not sufficient,
from a contribution by the Employer made as of that date (determined
without reference to Net Profits). If an employee who had a
Nonvested Separation and was deemed to receive a distribution
resumes Employment before a Period of Severance of five years, his
or her Employer Account will be restored, upon reemployment, to the
amount on the date of such deemed distribution.
5.7 Withdrawals During Employment
5.7.1 If the Plan is a profit-sharing plan, and if the Employer has
elected in the Adoption Agreement to permit withdrawals during
Employment, prior to termination of Employment, each Participant
upon attainment of age 59-1/2 may elect to withdraw, as of the
Valuation Date next following the receipt of an election by the
Administrator, and upon such notice as the Administrator may
require, all or any part of the vested Account Balance of all of his
or her Accounts, as of such Valuation Date.
5.7.2 Notwithstanding Section 5.7.1, prior to termination of
Employment, each Participant with a Rollover Contributions Account
and/or a Participant Voluntary Nondeductible Contributions Account
may elect to withdraw, as of the Valuation Date next following the
receipt of an election by the Administrator, and upon such notice as
the Administrator may require, all or any of such Account, as of
such Valuation Date.
5.7.3 The Administrator may establish from time to time rules and
procedures with respect to any withdraws including the order of
Accounts from which such withdrawals shall be made.
5.7.4 No forfeitures shall occur as a result of a withdrawal
pursuant to this Section 5.7.
5.7.5 If a Participant is married at the time of such election, the
Participant's Spouse must consent to such a withdrawal in the same
manner as provided in Section 6.2.4; provided, however, that if the
Plan is a profit sharing plan and Section 6.1.2 applies, the consent
of the Participant's Spouse will not be required.
5.8 Loans
5.8.1 If the Employer has elected in the Adoption Agreement to make
loans available, a Participant may submit an application to the
Administrator to borrow from any Account maintained for the
Participant (on such terms and conditions as the Administrator shall
prescribe) an amount which when added to the outstanding balance of
all other loans to the Participant would not exceed the lesser of
(a) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans during the one year period ending on
the day before the loan is made, over the outstanding balance of
loans from the Plan on the date the loan is made, or (b) 50% of the
vested portion of his or her Account from which the borrowing is to
be made as of the Valuation Date next following the receipt of his
or her loan application by the Administrator and the expiration of
such notice period as the Administrator may require. For this
purpose, all loans from Qualified Plans of the Employer or an
Affiliate shall be aggregated, and an assignment or pledge of any
portion of the Participant's interest in the Plan, and a loan,
pledge or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this
Section 5.8.1.
5.8.2 If approved, each such loan shall comply with the following
conditions:
(A) it shall be evidenced by a negotiable promissory note;
(B) the rate of interest payable on the unpaid balance of such loan
shall be a reasonable rate determined by the Administrator;
(C) the Participant must obtain the consent of his or her Spouse,
if any, within 90-day period before the time an Account is used as
security for the loan; provided, however, that if the Plan is a
profit-sharing plan that meets the requirements in Section 6.1.2 of
the Plan, the consent of the Participant's Spouse will not be
required. A new consent is required if an Account is sued for any
increase in the amount of security. The consent shall comply with
the requirements of Section 6.2.4, but shall be deemed to meet any
requirements contained in section 6.2.4 relating to the consent of
any subsequent Spouse. A new consent shall be required if an
Account is used for renegotiation, extension, renewal, or other
revision of the loan;
(D) the loan, by its terms, must require repayment (principal and
interest) be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond five years from the
date of the loan; provided, however, that if the proceeds of the
loan are used to acquire a dwelling unit which within a reasonable
time (determined at the time the loan is made) will be used as the
principal residence of the Participant, the repayment schedule may
be for a term in excess of five years; and
(E) the loan shall be adequately secured and may be secured by no
more than 50% of the Participant's vested interest in the Account
Balance of his or her Accounts.
5.8.3 If a Participant or Beneficiary requests and is granted a
loan, and the loan is made from Participant-Directed Assets,
principal and interest payments with respect to the loan shall be
credited solely to the Account of the borrowing Participant from
which the loan was made. Any loss caused by nonpayment or other
default on a Participant's loan obligations shall be charged solely
to that Account. Any other loan shall be treated as an investment
of the Trust Fund and interest and principal payments on account
thereof shall be credited to the Trust Fund. The Administrator
shall determine the order of Accounts from which a loan may be made.
5.8.4 Anything herein to the contrary notwithstanding:
(A) in the event of a default, foreclosure on the promissory note
will not occur until a distributable event occurs under this Article
V;
(B) no loan will be made to any Owner-Employee or to any
"shareholder-employee" of the Employer or a Participant Affiliate or
with respect to any amounts attributable to a Rollover Contribution
or a trust to trust transfer and relating to prior participation by
such an individual in a Qualified Plan. For this purpose, a
"shareholder-employee" means an employee or officer of an electing
small business, 8.e.,on "S corporation" as defined in Code Section
1361, who owns (or is considered as owning within the meaning of
Code Section 318(a)(1) on any day during the taxable year of such
corporation, more than 5% of the outstanding stock of the
corporation; and
(C) loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to
other Employees.
5.8.5 If valid spousal consent has been obtained in accordance with
Section 5.8.2(C), then, notwithstanding any other provisions of this
Plan, the portion of the Participant's vested Account used as a
security interest held by the Plan by reason of a loan outstanding
to the Participant shall be taken into account for purposes of
determining the amount of the Participant's benefit payable at the
time of death or distribution; but only if the reduction is sued as
repayment of the loan. If less than 100% of the Participant's
vested benefit (determined without regard to the preceding sentence)
is payable to the Surviving Spouse then the Participant's benefit
shall be adjusted b y first reducing the Participant's vested
benefit by the amount of the security used as repayment of the loan,
and then determining the benefit payable to the Surviving Spouse.
5.9 Hardship Distributions
5.9.1 Effective January 1, 1989, if available and elected by the
Employer in the Adoption Agreement, a Participant may request a
distribution due to hardship from the vested portion of his or her
Accounts, (other than from his or her Qualified Nonelective
Contributions Account, Qualified Matching Contributions Account or
earnings accrued after December 31, 1988, on the Participant's
Elective Deferrals) only if the distribution is made both due to an
immediate and heavy financial need of the Participant and is
necessary to satisfy such financial need.
5.9.2 A hardship distribution shall be permitted only if the
distribution is due to:
(A) expenses incurred or necessary for medical care described in
Code Section 213(d) incurred by the Participant, the Participant's
Spouse, or any dependents of the Participant (as defined in Code
Section 152);
(B) purchase (excluding mortgage payments) of a principal residence
for the Participant;
(C) payment of tuition and related educational fees for the next 12
months of post secondary education for the Participant, his or her
Spouse, children or dependents;
(D) the need to prevent the eviction of the Participant from his or
her principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(E) any other condition or event which the Commission of the
Internal Revenue Service determines is a deemed immediate and
financial need.
5.9.3 A distribution will be considered necessary to satisfy an
immediate and heavy financial need of a Participant if all of the
following requirements are satisfied:
(A) the distribution will not be in excess of the amount of the
immediate and heavy financial need of the Participant (including
amounts necessary to pay any Federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution);
(B) the Participant obtains all distributions, other than hardship
distributions, and all nontaxable loans currently available under
all plans maintained by the Employer or an Affiliate;
(C) the Participant's Elective Deferrals, Employee Thrift
Contributions and participant Voluntary Nondeductible Contributions
will be suspended for at least 12 months after receipt of the
hardship distribution in this Plan and in all other plans maintained
by the Employer or an Affiliate; and
(D) the Participant may not make Elective Deferrals for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under
Code Section 402(g) for such next taxable year less the amount of
such Participant's Elective Deferrals for the taxable year of the
distribution in this Plan and in all other plans maintained by the
Employer or an Affiliate.
5.9.4 If the distribution is made from any Account other than a
401(k) Contribution Account, a distribution due to hardship may be
made without application of Section 5.9.3(B), 5.9.3(C), or 5.9.3
(D).
5.10 Limitation on Commencement of Benefits
5.10.1 Anything in this Article V to the contrary notwithstanding,
a Participant's Benefit Commencement Date shall in no event be later
than the 60th day after the close of the Plan Year in which the
latest of the following events occur:
(A) the attainment by the Participant of his or her Normal
Retirement Age;
(B) the tenth anniversary of the ear in which the Participant
commenced participation in the Plan; or
(C) the Participant's termination of Employment. Notwithstanding
the foregoing, the failure of a Participant and Spouse to consent to
a distribution while a benefit is Immediately Distributable, shall
be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this Section.
5.10.2 If it is not possible to distribute a Participant's Account
because the Administrator has been unable to locate the Participant
after making reasonable efforts to do so, then a distribution of the
Participant's Accounts shall be made when the Participant can be
located.
5.11 Distribution Requirements
5.11.1 Subject to the Joint and Survivor Annuity rules set forth
in Article VI, the requirements of this Article shall apply to any
distribution of a Participant's interest and will take precedence
over any inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this article apply to calendar years
beginning after December 31, 1984. As used in this Section 5.11,
each of the following terms shall have the meaning for that term set
forth in this Section 5.11.1:
(A) Applicable Life Expectancy. 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 Life Expectancy was first calculated. If 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 Life Expectancy is
being recalculated such succeeding calendar year.
(B) Designated Beneficiary. The individual who is designated as
the Beneficiary under the Plan in accordance with Code Section
401(a)(9). In the event that a Participant names a trust to be a
designated Beneficiary, such designation shall provide that, as of
the later of the date on which the trust is named as a Beneficiary
or the Participant's Required Beginning Date, and as of all
subsequent periods during which the trust is named as a Beneficiary,
the following requirements are met:
(i) the trust is a valid trust under state law, or would be but for
the fact that there is no corpus; (ii) the trust is irrevocable;
(iii) the Beneficiaries of the trust who are Beneficiaries with
respect to the trust's interest in the Participant's benefits are
identifiable from the trust instrument within the meaning of Code
Section 401(a)(9); and (iv) a copy of the trust is provided to the
Plan.
(C) Distribution Calendar Year. A calendar year for which a
minimum distribution is required. For distributions beginning
before the Participant's death, the first Distribution Calendar Year
is the calendar year immediately preceding the calendar year which
contains the Participant's Required Beginning Date. For
distributions beginning after the Participant's death, the first
Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to Section 7.2.
(D) Life Expectancy. Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the regulations issued under
the Code.
Unless otherwise elected by the Participant (or Spouse, in the case
of distributions described in Section 7.2) by the time distributions
are required to begin, Life Expectancies shall not be recalculated
annually. Such election shall be irrevocable as to the Participant
or Spouse and shall apply to all subsequent years. The Life
Expectancy of nonspouse Beneficiary may not be recalculated.
(E) Required Beginning Date.
(i) General rule. The Required Beginning Date of a Participant is
the first day of April of the calendar year following the calendar
year in which the Participant attains age 70-1/2.
(ii) Transitional rule. The Required Beginning Date of a
Participant who attains age 70-1/2 before January 1, 1988, shall be
determined in accordance with (1) or (2) below:
(1) Non-5% owners. The Required Beginning Date of a Participant
who is not a "5% owner" as defined in (iii) below is the first day
of April of the calendar year following the calendar year in which
the later of retirement or attainment of age 70-1/2 occurs.
(2) 5% owners. The Required Beginning Date of a Participant who is
a 5% owner during any year beginning after December 31, 1979, is the
first day of April following the later of:
(a) the calendar year in which the Participant attains age 70-1/2;
or
(b) the earlier of the calendar year with or within which ends the
Plan Year in which the Participant becomes a 5% owner, or the
calendar year in which the Participant retires. The Required
Beginning Date of a Participant who is not a 5% owner who attains
age 70-1/2 during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(iii) 5% owner. A Participant is treated as a 5% owner for
purposes of this Section 5.11 if such Participant is a 5% owner as
defined in Code Section 416(i) (determined in accordance with
section 416 but without regard to whether the plan is top-heavy)at
any time during the Plan Year ending with or within the calendar
year in which such owner attains age 66-1/2 or any subsequent Plan
Year.
(iv) Once distributions have begun to a 5% owner under this Section
5.11, they must continue to be distributed, even if the Participant
ceases to be a 5%owner in the subsequent year.
5.11.2 All distributions required under this Section 5.11 shall be
determined and made in accordance with the Income Tax Regulations
under Code Section 401(a)(9), including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the
regulations issued under the Code . The entire interest of a
Participant must be distributed or begin to be distributed no later
than the Participant's Required Beginning Date.
5.11.3 Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions, if not made in a lump
sum, may only be made over one of the following periods (or a
combination thereof):
(A) the life of the Participant;
(B) the life of the Participant and a Designated Beneficiary;
(C) a period certain not extending beyond the Life Expectancy of
the Participant; or
(D) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the Designated 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.
5.11.4 Determination of Amount to be Distributed Each Year. (A)
If the Participant's interest is to be paid in the form of annuity
distribution under the Plan (whether directly or in the form of an
annuity purchased from an insurance company), payments under the
annuity shall satisfy the following requirements:
(i) the annuity distributions must be paid in periodic payments
made at intervals not longer than one year;
(ii) the distribution period must be over a life (or lives) or over
a period certain not longer than a Life Expectancy (or joint life
and last survivor expectancy) described in Code Section
401(a)(9)(A)(ii) or Code Section 401(a)(9)(B)(iii), whichever is
applicable;
(iii) the Life Expectancy (or joint life and last survivor
expectancy) for purposes of determining the period certain shall be
determined without recalculation of Life Expectancy;
(iv) once payments have begun over a period certain, the period
certain may not be lengthened even if the period certain is shorter
than the maximum permitted;
(v) payments must either be nonincreasing or increase only as
follows:
(1) with any percentage increase in a specified and generally
recognized cost-of-living index;
(2) to the extent of the reduction to the amount of the
Participant's payment to provide for a survivor benefit upon death,
but only if the Beneficiary whose life was being used to determine
the distribution period descried in Section 5.11.4(A)(iii) dies and
the payments continue otherwise in accordance with that section over
the life of the Participant;
(3) to provide cash refunds of Employee contributions upon the
Participant's death; or
(4) because of an increase in benefits under the Plan.
(vi) If the annuity is a life annuity (or a life annuity with a
period certain not exceeding 20 years), the amount which must be
distributed on or before the Participant's Required Beginning Date
(or, in the case of distributions after the death of the
Participant, the date distributions are required to begin pursuant
to Section 7.2) shall be the payment which is required for one
payment interval. The second payment need not be made until the end
of the next payment interval even if that payment interval ends in
the next calendar year. Payment intervals are the periods for which
payments are received, e.g., bimonthly, monthly, semi-annually, or
annually. If the annuity is a period certain annuity without a life
contingency (or is a life annuity with a period certain exceeding 20
years) periodic payments for each distribution calendar year shall
be combined and treated as an annual amount.
The amount which must be distributed by the Participant's Required
Beginning Date (or, in the case of distributions after the death of
the Participant, the date distributions are required to begin
pursuant to Section 7.2) is the annual amount for the first
Distribution Calendar Year. The annual amount for other
Distribution Calendar Years, including the annual amount for the
calendar year in which the Participant's Required Beginning Date
(or the date distributions are required to begin pursuant to Section
7.2) occurs, must be distributed on or before December 31 of the
calendar year for which the distribution is required.
(B) Annuities purchased after December 1, 1988, are subject to the
following additional conditions:
(i) Unless the Participant's Spouse is the Designated Beneficiary,
if the Participant's interest is being distributed in the form of a
period certain annuity without a life contingency, the period
certain as of the beginning of the first Distribution Calendar Year
may not exceed the applicable period determined using the table set
forth in Q&A A-5 of section 1.401(a)(9)-2 of the regulations issued
under the Code.
(ii) If the Participant's interest is being distributed in the form
of a joint and survivor annuity for the joint lives of the
Participant and a nonspouse Beneficiary, annuity payments to be made
on or after the Participant's Required Beginning Date to the
Designated Beneficiary after the Participant's death must not at any
time exceed the applicable percentage of the annuity payment for
such period that would have been payable to the Participant using
the table set forth in Q&A A-6 of section 1.401(a)(9)-2 of the
regulations under the Code.
(C) Transitional Rule. If payments under an annuity which complies
with Section 5.11.4(A)begin prior to January 1, 1989, the minimum
distribution requirements in effect as of July 27, 1987, shall apply
to distributions from this Plan, regardless of whether the annuity
form of payment is irrevocable. This transitional rule also applies
to deferred annuity contracts distributed to or owned by the
Participant prior to January 1, 1989, unless additional
contributions are made under the Plan by the Employer or Affiliate
with respect to such contract.
(D) If the form of distribution is an annuity made in accordance
with Section 5.11.4, any additional benefits accruing to the
Participant after his or her Required Beginning Date shall be
distributed as a separate and identifiable component of at the
annuity beginning with the first payment interval ending in the
calendar year immediately following the calendar year in which such
amount accrues.
(E) Any part of the Participant's interest which is in the form of
an individual account shall be distributed in a manner satisfying
the requirements of Code Section 41(a)(9).
5.11.5 Transitional Rule: Section 242 Election. Notwithstanding
the other requirements of this Article and subject to the Joint and
Survivor Annuity rules set forth in Article VI, distribution on
behalf of any Employee, including a 5% owner, may be made in
accordance with all of the following requirements (regardless of
when such distribution commences):
(A) the distribution by the trust is one which would not have
disqualified such trust under Code Section 401(a)(9) as in effect
prior to amendment by the Deficit Reduction Act of 1984;
(B) the distribution is in accordance with a method of distribution
designated by the Employee whose interest in the trust is being
distributed or, if the Employee is deceased, by a Beneficiary of
such Employee;
(C) such designation was in writing, was signed by the Employee or
the Beneficiary, and was made before January 1, 1984;
(D) the Employee had accrued a benefit under the Plan as of
December 31, 1983; and
(E) the method of distribution designated by the Employee or the
Beneficiary specifies the time at which distribution will commence,
the period over which distributions will be made, and in the case of
any distribution upon the Employees' death, the Beneficiaries of the
Employee listed in order of priority.
A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
in formation described above with respect to the distributions to be
made upon the death of the Employee.
For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary,
to whom such distribution is being made, will be presumed to have
designate the method of distribution under which the distribution is
being made if the method of distribution was specified in writing
and the distribution satisfies the requirements in subsections
5.11.5(A) and (E).
If a designation is revoked any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9). If a designation is
revoked subsequent to the date distributions are required to begin,
the trust must distribute by the end of the calendar year following
the calendar year in which the revocation occurs the total amount
not yet distributed to satisfy Code Section 401(a)(9) but for the
Section 2442(b)(2) election.
For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in section 1.401(a)(9)-2 of the regulations issued
under the Code. Any changes in the designation will be considered
to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary
(one not named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or
indirectly (for example, by altering the relevant measuring life).
n the case in which an amount is transferred or rolled over from one
plan to another plan, the rules in Q&A J-2 and Q&A J-3 of section
1.401(a)(9)-1 of the regulations issued under the Code.
ARTICLE VI
FORMS OF PAYMENT OF RETIREMENT BENEFITS
6.1 Methods of Distribution
6.1.1 If the Plan is a money purchase pension plan or a target
benefit plan, a Participant's benefit shall be payable in the normal
form of a Qualified Joint and Survivor Annuity if the Participant is
married on his or her Benefit Commencement Date and in the normal
form of an immediate annuity for the life of the Participant if the
Participant is not married on that date. A Participant who
terminated Employment on or after satisfying the requirements for
Early Retirement may elect to have his or her Qualified Joint and
Survivor Annuity distributed upon attainment of such Early
Retirement. If the Plan is a profit-sharing plan that satisfies the
requirements set forth in Section 6.1.2., a Participant's Account
shall only be payable in the normal form of a lump-sum distribution
in accordance with Section 6.1.1.(B) below. A Participant in a
money purchase pension plan, a target benefit plan, or a profit-
sharing plan that does not satisfy the requirements set forth in
Section 6.1.2, may at any time after attaining age 35 and prior to
his or her Benefit Commencement Date elect, in accordance with
Section 6.2., any of the following optional forms of payment instead
of the normal form:
(A) An Annuity contract payable as:
(i) a single life annuity;
(ii) a joint and 50% survivor annuity with a contingent annuitant;
(iii) a joint and 100% survivor annuity with a contingent
annuitant;
(iv) an annuity for the life of the Participant with 120 monthly
payments certain;
(B) A lump-sum distribution in cash or in kind, or part in cash and
part in kind; or
(C) In installments payable in cash or in kind, or part in cash and
part in kind over a period not in excess of the required to comply
with Section 5.11.4.
Anything in this Section 6.1.1 to the contrary notwithstanding, if
the value of a Participant vested Account as of the applicable
Valuation Date is $3,500 or less, his or her benefit shall be paid
in the form of a lump-sum distribution and no optional form of
benefit payment shall be available.
6.1.2 If the Plan is a profit-sharing plan then: (A) the
Participant cannot elect payment in the form of a Life annuity (this
Section 6.1.2 shall not apply if a life annuity form is an optional
form preserved under Code Section 411(d)(6); (B) on the death of the
Participant, the Participant's benefit will be paid to his or her
Surviving Spouse, if any, or, if his or her Surviving Spouse has
already consented in a manner conforming to an election under
Section 6.2.4, then to the Participant's Beneficiary; and (C) the
normal form a benefit shall be a lump-sum and Section 6.2.1, 6.2.2
and 6.2.4 shall not be applied by the Administrator. A Participant
in such a profit-sharing plan may also elect to receive his or her
benefit in the form of installments in accordance with Section
6.1.1(c) of the Plan. The Section 6.1.2 shall not apply, however,
with respect to the Participant if it is determined that the Plan is
a direct or indirect transferee of a defined benefit plan, a money
purchase pension plan (including a target benefit plan) or a stock
bonus or profit-sharing plan which is subject to the survivor
annuity requirement of Code Sections 401(a)(11) and 417. In
addition, this Section 6.1.2 shall not apply unless the
Participant's Surviving Spouse, if any, is the Beneficiary of (i)
the proceeds of any insurance on the Participant's life purchased
Employer contributions or (ii) forfeitures allocated to the
Participant's Employer Account or unless the Participant's Surviving
Spouse has consented to the Participant's designation of another
Beneficiary as referred to in subsection (C) of this Section 6.1.2.
6.1.3 The following transitional rules shall apply for those
Participants entitled to but not receiving benefits as of August 23,
1984:
(A) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by
Section 6.1 must be given the opportunity to elect to have Section
6.1 apply if such Participant is credited with at least one Hour of
Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at
least 10 Years of Service when he or she terminated from Employment.
(B) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under this
Plan or a predecessor plan on or after September 2, 1974, and who is
not otherwise credited with an Hour of Service in a Plan Year
beginning on or after January 1, 1976, must be given the opportunity
to have his or her benefits paid in accordance with this Section
6.1.3(D).
(C) The respective opportunities to elect (as described in these
Sections 6.1.3(A) and (B)) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and
ending on such Participant's Benefit Commencement Date.
(D) Any Participant who has elected pursuant to this Section
6.1.3(B) and any Participant who does not elect under this Section
6.1.3(A) or whom meets the requirements of this Section 6.1.3(A)
except that such Participant does not have at least ten Years of
Service when he or she terminates from Employment, shall have his or
her benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a
single life annuity:
(1) Automatic Qualified Joint and Survivor Annuity
If benefits in the form of a single life annuity become payable to
a married Participant who:
(a) begins to receive payments on or after Normal Retirement Age;
or
(b) dies on or after Normal Retirement Age while in active
Employment; or
(c) begins to receive payment on or after the "Qualified Early
Retirement Age", as that term is defined in Section 6.1.3(D)(a); or
(d) terminates from Employment on or after attaining Normal
Retirement Age (or Qualified Early Retirement Age) and after
satisfying the eligibility requirement for the payment of benefits
under the Plan and thereafter dies before his or her Benefit
Commencement Date; then such benefits will be received in the form
of a Qualified Joint and Survivor Annuity, unless the Participant
has elected otherwise during the election period which begins at
least six months before the Participant attains Qualified Early
Retirement Age and ends no earlier than 90 days before his or her
Benefit Commencement Date. Any election hereunder will be in
writing and may be changed by the Participant at any time.
(2) Election of early survivor annuity
A Participant who is employed after attaining the Qualified Early
Retirement Age will be given the opportunity to elect, beginning on
the later of (1) the 90th day before he or she attains his or her
Qualified Early Retirement Age, or (2) the date on which
participation begins, and ending on the date he or she terminates
Employment, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payable under such annuity
must not be less than the payments which would have been made to the
spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any
election under this provision will be in writing and may be changed
by the Participant ant any time.
(3) Qualified Early Retirement Age
(a) For purposes of this section 6.1.3, Qualfiied Early Retirement
Age is the latest of:
(i) the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(iii) the date the Participant begins participation.
(b) Qualified Joint and Survivor Annuity is an annuity for the life
of the Participant with a survivor annuity for the life of the
Spouse as described in Section 1.77.
6.2 Election of Optional Forms
6.2.1 By notice to the Administrator at any time prior to a
Participant's date of death and beginning on the first day of the
Plan Year in which the Participant attains age 35, the Participant
may elect, in writing, not to receive the normal form of benefit
payment otherwise applicable an to receive instead an optional form
of benefit payment provided for in Section 6.1.1. If the
Participant separates from Employment prior to the first day of the
Plan Year in which the Participant attains age 35, the Participant
may make such election beginning on the date he or she separates
from Employment. This Section 6.2.1 shall not be applicable if
Section 6.1.2 applies to a Participant.
6.2.2 Within a reasonable period, but in any event no less than 30
and no more than 90 days prior to each Participant's Benefit
Commencement Date, the Administrator shall provide to each
Participant a written explanation of the terms and conditions of a
Qualified Joint and Survivor Annuity. Such written explanation
shall consist of:
(A) the terms and conditions of the Qualified Joint and Survivor
Annuity;
(B) the Participant's right to make, and the effect of, an election
to waive the Qualified Joint and Survivor Annuity;
(C) the rights of the Participant's Spouse under Section 6.2.4;
(D) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor Annuity;
and
(E) the relative values of the various optional forms of benefit
under the Plan.
(F) If the distribution is one to which Sections 401(a)(11) and 417
of the Internal Revenue Code do not apply, such distribution may
commence less than 30 days after the notice required under Section
1.411(a)-11(c) of the Income Tax Regulations is given, provided
that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
(2) the Participant, after receiving the notice affirmatively elect
a distribution.
The Administrator may, on a uniform and nondiscriminatory basis,
provide for such other notices, information or election periods or
take such other action as the Administrator considers necessary or
appropriate to implement the provisions of this Section 6.2.2.
6.2.3 A Participant may revoke his or her election to take an
optional form of benefit, and elect a different form of benefit, at
any time prior to the Participant's Benefit Commencement Date.
6.2.4 The election of an optional benefit by a Participant after
December 1, 1984, must also be a waiver of a Qualified Joint and
Survivor Annuity by the Participant. Any waiver of a Qualified
Joint and Survivor Annuity shall not be effective unless (A) the
Participant's Spouse consents in writing; (B) the election
designates a specific alternate Beneficiary, including any class of
Beneficiaries or any contingent Beneficiaries which may not be
changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal
consent); (C) the Spouse's consent to the waiver is witnessed by a
Plan representative or notary public; and (D) the Spouse's consent
acknowledges the effect of the election. Additionally, a
Participant's waiver of the Qualified Joint and Survivor Annuity
will not be effective unless the election designates a form of
benefit payment which may not be changed without spousal consent or
the Spouse expressly permits designations without any further
spousal consent. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of a Plan representative
that such written consent may not be obtained because there is no
Spouse or the Spouse cannot be located, the election will be deemed
effective. Any consent necessary under this provision will not be
valid with respect to any other Spouse. A consent that permits
designation by the Participant without any requirement of further
consent by such Spouse must acknowledge that the Spouse has the
right to limit consent to a specific Beneficiary, and a specific
form of benefit, where applicable, and that the Spouse voluntarily
elects to relinquish either or both of such rights. Additionally,
a revocation of a prior waiver may be made by a Participant without
the consent of the Spouse at any time before his or her Benefit
Commencement Date. The number of revocations shall not be limited.
Any new waiver will require a new consent by the electing
Participant's Spouse. No consent obtained under this provision
shall be valid unless the Participant has received notice as
provided in this Section.
6.2.5 The election of an optional form of benefit which
contemplates t he payment of an annuity shall not be given effect if
any person who would receive benefits under the annuity dies before
the Benefit Commencement Date.
6.3 Change in Form of Benefit Payments
Any former Employer whose payments are being deferred or who is
receiving installment payments may request acceleration or other
modification of the form of benefit distribution, subject to Code
Section 401(a)(9), provided that any necessary consent to such
change required pursuant to Section 6.2.4 is obtained from the
Employee's Spouse. This Section 6.3 shall not apply to any Employee
who becomes a Participant on or after January 1, 1989 or to Plans
adopted after that date.
6.4 Direct Rollovers
6.4.1 The provisions of this Section 6.4 apply only to distributions
made on or after January 1, 1993.
6.4.2 Notwithstanding any provisions of the Plan to the contrary
that would otherwise limit a Distributee's election under this
Section 6.4, a Distributee may elect, at the time and in the manner
prescribed by the 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.
6.4.3 Definitions - All terms used in this Section 6.4 shall have
the meaning set forth below:
(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 required under Code Section 401(a)(9);
and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(B) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a) that accepts the 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 Code Section 414(p), are Distributee
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.
ARTICLE VII
DEATH BENEFITS
7.1 Payment of Account Balances
7.1.1 The benefits payable to the Beneficiary of a Participant who
dies while an Employee shall be the Account Balance of all of his or
her Accounts including, if applicable, the proceeds of any life
insurance contract in effect on t he Participant's life in
accordance with Section 7.3. The benefits payable to the
Beneficiary of a Participant who dies after terminating Employment
shall be the vested Account Balance of all of his or Accounts.
Except as otherwise provided in this Article VII, a Beneficiary may
request that he or she be paid his or her benefits as soon as
practicable after the Participant's death.
7.1.2 If a Participant does before distribution of his or her entire
interest in the Plan has been completed, the remaining interest
shall, subject to Section 7.2.5, be distributed to the Participant's
Beneficiary in the form, at the time and from among the methods
specified in Section 6.1.1 as elected by the Beneficiary in writing
file with the Administrator. If an election is not received by the
Administrator within 90 days following the date the Administrator is
notified of the Participant's death, the distribution shall be made,
if to a Surviving Spouse, in accordance with Section 7.2.5(B), and,
if to some other Beneficiary, to the Beneficiary in a lump-sum.
7.1.3 The value of the benefits payable to a Beneficiary shall be
determined in accordance with Section 10.6.2. If the value of such
death benefit is $3,500 or less, distribution of such benefit shall
b e made in a lump-sum as soon as practicable following the death of
the Participant.
7.2 Beneficiaries
7.2.1 The Administrator shall provide each Participant, within the
period described in Section 7.2.1(A) for such Participant, a written
explanation of the death benefit in such terms and in such a manner
as would be comparable to the explanation provided for meeting the
requirements applicable to a Qualified Joint and Survivor Annuity.
This Section 7.2.1 shall not be applicable if Section 6.1.2 applies
to a Participant.
(A) The period for providing a written explanation of the death
benefit for a Participant ends on the latest of the following to
occur:
(i) the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the Participant
attains age 35;
(ii) a reasonable period ending after the Employee becomes a
Participant; or
(iii) a reasonable period ending after Code Section 417 first
applies to the Participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after termination of Employment in case of
a Participant who terminates Employment before attaining age 35 and
who has a vested interest in his or her Account.
(B) For purposes of the preceding paragraph, a reasonable period
ending after the enumerated events described in (ii) and (iii) is
the end of the two-year period beginning on year prior to the date
the applicable event occurs and ending one year after that date. A
Participant who has a vested interest in his or her Account and who
terminates Employment before the Plan in which age 35 is attained
shall be provided such notice within the two-year period beginning
one year prior to and ending one year after termination. If such a
Participant returns to Employment, the applicable period for such
Participant shall be redetermined.
7.2.2 A Participant shall designate one or more Beneficiaries to
whom amounts due after his or her death, other than under the
Qualified Joint and Survivor Annuity, shall be paid. In the event
a Participant fails to make a proper designation or in the event
that no designated Beneficiary survives the Participant, the
Participant's Beneficiary shall be the Participant's Surviving
Spouse, or if the Participant has no Survivng Spouse, the legal
representative of the Participant's estate, as an asset of that
estate. A Participant's Beneficiary shall not have any right to
benefit under the Plan unless he or she shall survive the
Participant.
7.2.3 Any designation of a Beneficiary incorporated into an Annuity
Contract or insurance contract shall be governed by the terms of
such Annuity Contract or insurance contract. Any other designation
of a Beneficiary must be filed with the Administrator, in a time and
manner designated by such Administrator, in order to be effective.
Any such designation of a Beneficiary may be revoked by filing a
later designation or an instrument of revocation with the
Administrator, in a time and manner designated by the Administrator.
7.2.4 Effective after December 31, 1984, a married Participant whose
designation of a Beneficiary is someone other than his or her
Spouse, including a Beneficiary referred to in the first sentence of
Section 7.2.3, or the change of any such Beneficiary to a new
Beneficiary other than the Participant's Spouse, shall not be valid
unless made in writing and consented to by the Participant's Spouse
in such term and in such a manner as would be comparable to the
consent provided for a waiver of the Qualified Joint and Survivor
Annuity. The Spouse's consent to such designation must be made in
the manner described in Section 6.2.4.
7.2.5 Notwithstanding any other provision of the Plan to the
contrary:
(A) If the Participant dies after his or her Benefit Commencement
Date, but before distribution of his or her benefit has been
completed, the remaining portion of such benefit may continue in the
form and over the period in which the distributions were being made,
but in any event must continue to be made at least as rapidly as
under the method of distribution being used prior to the
Participant's death.
(B) If the Participant dies leaving a Surviving Spouse before his or
her Benefit Commencement Date, the Participant benefit shall be
payable to the Participant's Surviving Spouse in the form of an
annuity for the life of the Surviving Souse. The preceding sentence
shall not apply if, within 90 days following the date the
Administrator is notified of the Participant's death, his or her
Surviving Spouse elects, by written notice to the Administrator, any
other form of benefit payment specified in Section 6.1.1, or the
such Surviving Spouse has already consented in a manner described in
Section 6.2.4 to a distribution to an alternative Beneficiary
designated by the Participant. If the Plan is a profit-sharing
plan which meets the requirements of Section 6.1.2, the Surviving
Spouse shall receive his or her distribution in the form of a lump-
sum unless she or he elects within 90 days following the date the
Administrator is notified of the Participant's death any other form
of benefit payment specified in Section 6.1.1, or the Participant's
Surviving Spouse has already consented in a manner described in
Section 6.2.4 to a distribution to an alternate Beneficiary
designated by the Participant. If the Participant's benefit is
$3,500 or less, distribution shall be made in the form of a lump-sum
comprised of the assets in the Account immediately prior to the
distribution if the Account consists of Participant-Directed Assets.
If the Account does not consist of Participant-Directed Assets, the
distribution shall be in cash. If the Participant's benefit is
distributable in the form Of an annuity for the life of the
Surviving Spouse, the Surviving Spouse may elect to have such
annuity distributed immediately.
(C) If the Participant dies before his or her Benefit Commencement
Date, the distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made by the designated Beneficiary involved to receive
distributions in accordance with (i) or (ii) of this subsection (C)
below:
(i) if any portion of the Participant's interest is payable to a
designated Beneficiary who is an individual, distributions may be
made in substantially equal installments over the life or Life
Expectancy, as defined in Section 5.11.1(D), of the designated
Beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year of the Participant's death;
(ii) if the designated Beneficiary is the Participant's Surviving
Spouse, the date distributions are required to begin in accordance
with (i) of this subsection (C) shall not be earlier than the later
of December 31 of the calendar year in which the Participant died
and December 31 of the calendar year in which the Participant would
have attained age 65; and
(iii) if the Surviving Spouse dies before payments begin subsequent
distributions shall be made as if the Surviving Spouse had been the
Participant.
(D) For purposes of this Section 7.2.5, distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date, as defined in Section 5.11.1(E). If
distribution in the form of an annuity irrevocable commences to the
Participant before such Required Beginning Date, the date
distribution is considered to begin is the date distribution
actually commences.
(E) For purposes of this Section 7.2.5, any amount paid to a child
of the Participant will be treated as if it had been paid to the
Participant's Surviving Spouse if the amount becomes payable to such
Surviving Spouse when the child reaches the age of majority.
(F) If the Participant has not made an election pursuant to this
Section 7.2.5 by the time of his or her death, the Participant's
designated Beneficiary must elect the method of distribution no
later than the earlier of (i) December 1 of the calendar year in
which distributions would be required to begin under this Section or
(ii) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the
Participant has no designated Beneficiary, or if the designated
Beneficiary does not elect a method of distribution, distribution of
the Participant's entire interest must be completed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death.
7.3 Life Insurance
7.3.1 With the consent of the Administrator and upon such notice as
the Administrator may require, a Participant may direct that a
portion of his or her Account be used to pay premiums of life
insurance on the Participant's life; provided, however, that (a) the
aggregate premiums paid on ordinary life insurance must be less than
50% of the aggregate contributions allocated to the Participant's
Employer Accounts, (b) the aggregate premiums paid on term life
insurance contracts, universal life insurance contracts and all
other life insurance contracts which are not ordinary life insurance
may not exceed 25% of the aggregate contributions allocated to the
Participant's Employer Account, and (c) the sum of one-half of the
premiums paid on ordinary life insurance and the total of all other
life insurance premiums may not exceed 25% of the aggregate
contributions allocated to the Employer Account of the Participant.
For purposes of these limitations, ordinary life insurance contracts
are contracts with both non-decreasing death benefits and non-
increasing premiums.
7.3.2 The Trustee shall be the owner of each life insurance contract
purchased under this Section 7.3 and the proceeds of each such
contract shall be payable to the Trustee, provided that all
benefits, rights and privileges under each contract on the life of
a Participant which are available while the Participant is living
shall be exercised by the Trustee only upon and in accordance with
the written instructions of the Participant. The proceeds of all
such insurance on the life of a Participant shall be paid over by
the Trustee to the Participant's Beneficiary in accordance with this
Article VII. Under no circumstances shall the Trustee retain any
part of the proceeds.
7.3.3 Any dividends or credits earned on a life insurance contract
shall be applied when received in reduction of any premium thereon,
or, if no premiums are due, applied to increase the proceeds of the
insurance contract.
7.3.4 If a Participant is found by the Administrator to be insurable
only at a substandard premium rate, the policy shall provide a
reduced death benefit using the same premium as would be required if
the Participant were a standard risk, the amount of the death
benefit being determined in accordance with the amount of the
rating.
7.3.5 The cash surrender value of an insurance contract to the
extent deriving from Employer or Participant contributions, if any,
shall be included, respectively, in the Account Balance of the
Account from which the premiums were paid. Any death benefits under
an insurance contract payable before the Participant's termination
of Employment will be paid to the Trustee for addition to the
relevant Account of the Participant for distribution in accordance
with Section 7.1.
7.3.6 Any other provisions herein to the contrary notwithstanding,
the purchase of life insurance for any Participant shall be subject
to such minimum premium requirements as the Trustee may determine
from time to time.
7.3.7 Premiums on life insurance contracts on a Participant's life
shall be paid by the Trustee, unless directed otherwise by the
Participant, first from cash in the Participant's Employer Accounts
to the extent thereof, and then from cash in the Participant's
Participant Contributions Accounts, if any, to the extent thereof.
If there is insufficient cash in either Account to pay premiums due,
the Trustee shall notify the Participant of this fact. If the
Participant does not thereafter instruct the Trustee to sell
sufficient assets in an Account of the Participant to pay premiums
due on a timely basis, the Trustee shall not be obligated to take
any further action with respect to any life insurance contract on
the Participant's life, whether as regards continuing insurance on
a paid-up basis, effecting a reduction of the insurance in force, or
otherwise, except at the direction of the Participant.
7.3.8 Prior to such time as a Participant becomes entitled to
receive a distribution of any benefits under this Plan for any
reason other than the Participant's death, the Trustee shall,
pursuant to the written direction of the Participant delivered to
the Administrator within such period of time as is acceptable to the
Administrator, either convert all life insurance contracts on the
Participant's life into cash or an annuity to provide current or
future retirement income to the Participant or distribute the
contracts to the Participant as a part of a benefit distribution;
provided, however, that:
(A) the contracts shall not be distributed unless, if the
Participant is married at the time the distribution of the contracts
is to be made, and the Plan is a money purchase pension plan, a
target benefit plan or a profit-sharing plan to which Section 6.1.2
does not apply, the Participant's Spouse at that time consents to a
distribution in the manner prescribed by Section 6.2.4; and
(B) if the cash value of any contracts at the time they become
distributable to a Participant exceeds a Participant's vested
interest in his or her Employer Accounts at that time, the
Participant shall be entitled to receive a distribution of such
contracts only if the Participant promptly pays such excess in cash
to the Trust Fund.
Life insurance contracts on a Participant's life shall not continue
to be maintained under the Plan following the Participant's
termination of Employment or after Employer contributions have
ceased.
If a Participant on whose life an insurance contract is held does
not make a timely and proper direction regarding the contract under
this Section 7.3.8, the Participant shall be deemed to have directed
that the contract be converted into cash to be distributed in the
manner in which the Participant's benefit is to be distributed.
7.3.9 Anything contained herein to the contrary notwithstanding, in
the event of any conflict between the terms of the Plan and the
terms of any insurance contract purchased under this Section 7.3,
the provisions of the Plan shall control.
ARTICLE VIII
FIDUCIARIES
8.1 Named Fiduciaries
8.1.1 The Administrator shall be a "named fiduciary" of the Plan, as
that term is defined in ERISA Section 402(a)(2), with authority to
control and manage the operation and administration of the Plan,
other than authority to managee and control Plan assets.
The Administrator shall also be the "administrator" and "plan
administrator" with respect to the Plan, as those terms are defined
in ERISA Section 3(16)(A) and in Code Section 414(g), respectively.
8.1.2 The Trustee, or Investment Committee if appointed by the
Employer, shall be a "named fiduciary" of the Plan, as that term is
defined in ERISA Section 402(a)(2), with authority to manage and
control all Trust Fund assets and to select an Investment Manager of
Investment Managers. If Merrill Lynch Trust Company is the
Trustee, it shall be a nondiscretionary trustee; an Investment
Committee shall be appointed and shall be the Employer, who may also
remove such Investment Committee; and the Investment Committee shall
be the "named fiduciary" with respect to Trust Fund assets.
Anything in this Section 8.1.2 to the contrary notwithstanding, with
respect to Participant-Directed Assets, the Participant or
Beneficiary having the power to direct the investment of such assets
shall be the"named fiduciary" with respect thereto.
8.1.3 The Trustee, or Investment Committee if appointed by the
Employer, shall have the power to make and deal with any investment
of the Trust Fund permitted in Section 10.4, except Participant-
Directed Assets or assets for which an Investment Manager has such
power, in any manner which it deems advisable and shall also:
(A) establish and carry out a funding policy and method consistent
with the objectives of the Plan and the requirements of ERISA;
(B) have the power to select Annuity Contracts, if applicable;
(C) have the power to determine, if applicable, what investments
specified in Section 10.4, including, without limitation, Qualified
Employer Securities and regulated investment company shares, are
available as Participant-Directed Assets; and
(D) have all rights, powers, duties and obligations granted or
imposed upon it elsewhere in the Plan.
8.2 Employment of Advisers
A "named fiduciary", with respect to the Plan (as defined in ERISA
Section 402(a)(2) and any "fiduciary" (as defined in ERISA Section
3(4)) appointed by such a "named fiduciary", may employ one or more
persons to render advise with regard to any responsibility of such
"named fiduciary" or "fiduciary" under the Plan.
8.3 Multiple Fiduciary Capacities
Any "named fiduciary" with respect to the Plan (as defined in ERISA
Section 402(a)(2)) and any other "fiduciary" (as defined in ERISA
Section 3(4)) with respect to the Plan may serve in more than one
fiduciary capacity.
8.4 Indemnification
To the extent not prohibited by state or federal law, the Employer
agrees to, and shall indemnify and save harmless, as the case may
be, each Administrator (if a person other than the Employer),
Trustee, Investment Committee and/or any Employee, officer or
director of the Employer, or an Affiliate, from all claims for
liability, loss, damage or expense (including payment of reasonable
expenses in connection with the defense against any such claim)
which result from any exercise or failure to exercise any of the
indemnified person's responsibilities with respect to the Plan,
other than by reason of gross negligence.
8.5 Payment of Expenses
8.5.1 All Plan expenses, including without limitation, expenses an
fees (including fees for legal services rendered and fees to the
Trustee) of the Sponsor, Administrator, Investment Manager, Trustee,
and any insurance company, shall be charged against and withdrawn
from the Trust Fund; provided however, the Employer may pay any of
such expenses or reimburse the Trust Fund for any payment.
8.5.2 All transactional costs or charges imposed or incurred (if
any) for Participant-Directed Assets shall be charged to the Account
of the directing Participant or Beneficiary. Transactional costs
and charges shall include, but shall not be limited to, charges for
the acquisition or sale or exchange of Participant-Directed Assets,
brokerage commissions, service charges and professional fees.
8.5.3 Any taxes which may be imposed upon the Trust Fund or the
income therefrom shall be deduced from and charged against the Trust
Fund.
ARTICLE IX
PLAN ADMINISTRATION
9.1 The Administrator
9.1.1 The Employer may appoint one or more persons as Administrator,
who may also be removed by the Employer. If any individual is
appointed as Administrator, and the individual is an Employee, the
individual will be considered to have resigned as Administrator if
he or she terminates Employment and at least one other person
continues to serve as Administrator. Employees shall receive no
compensation for their services rendered to or as Administrator.
9.1.2 If more than one person is designated as Administrator, the
Administrator shall act by a majority of its members at the time in
office and such action may be taken either by a vote at a meeting or
in writing without a meeting. However, if less than three members
are appointed, the Administrators shall act only upon the unanimous
consent of its members. An Administrator who is also a Participant
shall not vote or act upon any matter relating to himself or
herself, unless such person is the sole Administrator.
9.1.3 The Administrator may authorize in writing any person to
execute any document or documents on the Administrator's behalf, and
any interested person, upon receipt of notice of such authorization
directed to it, may thereafter accept and rely upon any document
executed by such authorized person until the Administrator shall
deliver to such interested person a written revocation of such
authorization.
9.2. Powers and Duties of the Administrator
9.2.1 The Administrator shall have the power to construe the Plan
and to determine all questions of fact or interpretation tht may
arise thereunder, and any such construction or determination shall
be conclusively binding upon all persons interested in the Plan.
9.2.2 The Administrator shall have the power to promulgate such
rules and procedures, to maintain or cause to be maintained such
records and to issue such forms as it shall deem necessary and
proper for the administration of the Plan.
9.2.3 Subject to the terms of the Plan, the Administrator shall
determine the time and manner in which all elections authorized by
the Plan shall be made or revoked.
9.2.4 The Administrator shall have all the rights, powers, duties
and obligations granted to or imposed upon it elsewhere in the Plan.
9.2.5 The Administrator shall exercise all of its responsibilities
in a uniform and nondiscriminatory manner.
9.3 Delegation of Responsibility
The Administrator may designate persons, including persons other
than "named fiduciaries" (as defined in ERISA Section 402(a)(2)) to
carry out the specified responsibilities of the Administrator and
shall not be liable for any ct or omission of a person so
designated.
ARTICLE X
TRUSTEE AND INVESTMENT COMMITTEE
10.1 Appointment of Trustee and Investment Committee
10.1.1 The Employer shall appoint one or more persons as a Trustee
who shall serve as such for all or a portion of the Trust Fund. By
executing the Adoption Agreement: (i) the Employer represents that
all necessary action has been taken for the appointment of the
Trustee; (ii) the Trustee acknowledges that it accepts such
appointment; and (iii) both the Employer an the Trustee agree to act
in accordance with the Trust provisions contained in this Article X.
10.1.2 An Employee appointed as Trustee or to the Investment
Committee shall receive no compensation for services rendered in
such capacity an will be considered to have resigned if he or she
terminates Employment and at least one other person continues to act
as Trustee or as the Investment Committee, as the case may be. If
Merrill Lynch Trust Company is the Trustee, the Employer shall
appoint an Investment Committee and Merrill Lynch Trust Company
shall be nondiscretionary trustee.
10.1.3 If more than one person is acting as the Trustee, or as an
Investment Committee, such Trustee, or Investment Committee, shall
act by a majority of the persons at the time so acting and such
action may be taken either by a vote at a meeting or in writing
without a meeting. If less than three members are serving, the
Trustee, or Investment Committee, shall act only upon the unanimous
consent of those serving. The Trustee, or Investment Committee, may
authorize in writing any person to execute any document or documents
on its behalf, and any interested person, upon receipt of notice of
such authorization directed to it, may thereafter accept and rely
upon any document executed by such authorized person until the
Trustee, or Investment Committee, shall deliver to such interested
person a written revocation of such authorization.
10.2 The Trust Fund
The Trustee shall receive such sums of money or other property
acceptable to the Trustee which shall from time to time be paid or
delivered to the Trustee under the Plan. The Trustee shall hold in
the Trust Fund all such assets, without distinction between
principal and income, together with all property purchased therewith
and the proceeds thereof an the earnings and income thereon. The
Trustee shall not be responsible for, or have any duty to enforce,
the collection of any contributions or assets to be paid or
transferred to it, or for verifying whether contributions or
transfers to it are allowable under the Plan, nor shall the Trustee
be responsible for the adequacy of the Trust Fund to meet or
discharge liabilities under the Plan.
10.2.1 The Trustee shall receive in cash or other assets acceptable
to the Trustee, so long as such assets received do not constitute a
prohibited transaction, all contributions paid or delivered to it
which are allocable under the Plan and to the Trust Fund and all
transfers paid or delivered under the Plan to the Trust Fund from a
predecessor trustee or another trust (including a trust forming part
of another plan qualified under Code Section 401(a); provided,
however, that the Trustee shall not be obligated to receive any
contributions or transfer unless prior thereto or coincident
therewith, as the Trustee may specify, the Trustee has received such
reconciliation, allocation, investment or other information
concerning, or such direction, contribution or representation with
respect to, the contribution or transfer or the source thereof as
the Trustee may require. The Trustee shall have no duty or
authority to (a) require any contributions or transfers to be made
under the Plan or to the Trustee, (b) compute any amount to be
contributed or transferred under the Plan to the Trustee, or (c)
determine whether amounts received by the Trustee comply with the
Plan.
10.2.2 The Trust Fund shall consist of all money and other property
received by the Trustee pursuant to Section 10.2, increased by any
income or gains on or increment in such assets and decreased by any
investment loss or expense, benefit or disbursement paid pursuant to
the Plan.
10.3 Relationship with Administrator
10.3.1 Neither the Trustee, nor the Investment Committee, if any,
shall be responsible in any respect for the administration of the
Plan. Payments of money or property from the Trust Fund shall be
made by the Trustee upon direction from the Administrator or its
designee. Payments by the Trustee shall be transmitted to the
Administrator or its designee for delivery to the proper payees or
to payee addresses supplied by the Administrator or its designee,
and the Trustee's obligation to make such payments shall be
satisfied upon such transmittal. The Trustee shall have no
obligation to determine the identity of persons entitled to payments
under the Plan or their addresses.
10.3.2 Direction from or on behalf of the Administrator or its
designee shall be communicated to the Trustee or the Trustee's
designee for that purpose only in a manner and in accordance with
procedures acceptable to the Trustee. The Trustee's designee shall
not, however, be empowered to implement any such direction except in
accordance with procedures acceptable to the Trustee. The Trustee
shall have no liability for following any such direction or failing
to act in the absence of any such directions. The Trustee shall
have no liability for the acts or omissions of any person making or
failing to make any direction under the Plan or the provisions of
this Article X nor any duty or obligation to review any such
direction, act or omission.
10.3.3 If a dispute arises over the propriety of the Trustee making
any payment from the Trust Fund, the Trustee may withhold the
payment until the dispute has been resolved by a court of competent
jurisdiction or settled by the parties to the dispute. The Trustee
may consult legal counsel an shall be fully protected in acting upon
the advise of counsel.
10.4 Investment of Assets
10.4.1 Except as provided in Section 10.4.2, investments of the
Trust Fund shall be made in the following, but only if compatible
with the Sponsor's administrative and operational requirement and
framework:
(A) shares of any regulate investment company managed in whole or
in part by the Sponsor or any affiliate of the Sponsor;
(B) any property purchased through the Sponsor or any affiliate of
the Sponsor, whether or not productive of income or consisting of
wasting assets, including without limitation by specification,
governmental, corporate or personal obligations, trust and
participation certificates, leaseholds, fees titles, mortgages and
other interests in realty, preferred and common stocks, convertible
stocks and securities, shares of regulated investment companies,
certificates of deposit, put and call options and other option
contracts of any type, foreign or domestic, whether or not traded on
any exchange, futures contracts and options on futures contracts
traded on or subject to the rules of an exchange which has been
designated as a contact market by the Commodity Futures Trading
Commission, an independent U.S. government agency, contracts
relating to the lending of property, evidences of indebtedness or
ownership in foreign corporations or other enterprises, or
indebtedness of foreign governments, group trust participation,
limited or general partnership interests, insurance contracts,
annuity contracts, any other evidence of indebtedness or ownership
including oil, mineral or gas properties, royalty interests or
rights (including equipment pertaining thereto); and
(C) Qualifying Employer Securities or "qualifying employer real
properties" (as that term is defined in ERISA Section 407(d) to the
extent permitted in Section 10.4.3).
10.4.2 (A) Up to 25% or with the written consent of the Sponsor or
its representative, an additional percentage of each Plan year's
contributions may be invested in property as specified in Section
10.4.1(B) acquired through a person other than the Sponsor or an
affiliate of the Sponsor.
(B) Except as permitted by Section 10.4.2 an except as may result
from a Rollover Contribution or a trust to trust transfer, without
the written consent of the Sponsor or its representative, property
may not be acquired through a person other than the Sponsor or an
affiliate of the Sponsor if following such acquisitions the value of
the property so acquired would exceed 25% of the value of the Trust
Fund.
10.4.3 In its sole discretion, the Investment Committee, or Trustee
if there is no Investment Committee:
(A) may permit the investment of up to 10% of the Trust Fund in
Qualifying Employer Securities or "qualifying employer real
property" (as that term is defined in ERISA Section 407(d)), to the
extent such investment is compatible with the Sponsor's
administrative and operational requirements and framework; and
(B) may determine, subject to Section 10.4.2, that a percentage of
assets in excess of 10% of the Trust Fund may be invested in
Qualifying Employer Securities or "qualifying employer real
property" by a profit-sharing plan.
10.4.4 This Plan will be recognized as a prototype Plan by the
Sponsor only by complying with the provisions of this Section 10.4.
10.5 Investment Direction, Participant-Directed Assets and
Qualifying Employer Investments
10.5.1 The Trustee, or Investment Committee if appointed, shall
manage the investment of the Trust Fund except insofar as (a) an
Investment Manager has authority to manage Trust assets, or (b)
Participant-Directed Assets are permitted as specified in the
Adoption Agreement. Except as required by ERISA, if an Investment
Committee is acting, the Trustee shall invest the Trust Fund as
directed by the Investment Committee, an Investment manager or a
Participant or Beneficiary, as the case may be, and the Trustee
shall have no discretionary control over, nor any other discretion
regarding, the investment or reinvestment of any asset of the Trust.
Participant-Directed Assets shall be invested in accordance with the
direction of the Participant or, in the event of the Participant's
death before an Account is fully paid out, the Participant's
Beneficiary with respect to the assets involved; provided, however,
that Participant-Directed Assets may not be invested in
"collectibles" (as defined in Code Section 408(m)(2)). If there are
Participant-Directed Assets, the investment of these assets shall be
made in accordance with such rules and procedures established by the
Administrator which must be consistent with the rules and procedures
of the Sponsor or its affiliate, as the case may be.
10.5.2 With respect to Participant-Directed Assets, neither the
Administrator, the Investment Committee nor the Trustee shall:
(A) make any investments or dispose of any investments without the
direction of the Participant or Beneficiary for whom the
Participant-Directed Assets are maintained, except as provided in
Section 8.5 so as to pay fees for expenses of the Plan;
(B) be responsible for reviewing any investment direction with
respect to Participant-Directed Assets or for making recommendations
on acquiring, retaining or disposing of any assets or otherwise
regarding any assets;
(C) have any duty to determine whether any investment is an
authorized or proper one; or
(D) be liable for following any investment direction or for any
losses, taxes or other consequences incurred as a consequence of
investments selected by any Participant or Beneficiary or for
holding assets uninvested until it receives proper instructions.
10.5.3 If Participant-Directed Assets are permitted, a list of the
Participant and Beneficiaries and such information concerning them
as they Trustee may specify shall be provided by the Employer or the
Administrator to the Trustee and/or such person as are necessary for
the implementation of the directions in accordance with the
procedure acceptable to the Trustee.
10.5.4 It is understood that the Trustee may, from time to time,
have on hand funds which are received as contributions or transfers
to the Trust Fund which are awaiting investment or funds from the
sale of Trust Fund assets which are awaiting reinvestment. Absent
receipt by the Trustee of a direction from the proper person for the
investment or reinvestment of such funds or otherwise prior to the
application of funds in implementation of such a direction, the
Trustee shall cause such funds to be invested in shares of such
money market fund or other short term investment vehicle as the
Trustee, or Investment Committee if appointed, may specify for this
purpose from time to time. Any such investment fund may be
sponsored, managed or distributed by the Sponsor or an affiliate of
the Sponsor.
10.5.5 Directions for the investment or reinvestment of Trust
assets of a type referred to in Section 10.4 from the Investment
Committee, an Investment Manager or Participant or Beneficiary, as
the case may be, shall, in a manner and in accordance with procedure
acceptable to the Trustee, be communicated to and implemented by, as
the case may be, the Trustee, the Trustee's designee or, with the
Trustee's consent and if an Investment Committee is operating, a
broker/dealer designated for the purpose by the Investment
Committee. Communication of any such direction to such a designee
or broker/dealer shall conclusively be deemed an authorization to
the designee or broker/dealer to implement the direction even
through coming from a person other than the Trustee. The Trustee
shall have no liability for its or any other person's following such
directions or failing to act in the absence of any such directions.
The Trustee shall have no liability for the acts or omissions of any
person directing the investment or reinvestment of Trust Fund assets
or making or failing to make any direction referred to in Section
10.5.6.
10.5.6 The voting and other rights in securities or other assets
held in the Trust shall be exercised by the Trustee provided,
however, that if an Investment Committee is appointed, the Trustee
shall act as directed by such person who at the he time has the
right to direct the investment or reinvestment of the security or
other asset involved.
10.5.7 With respect to any Qualifying Employer Securities allocated
to an Account, each Participant shall be entitled to direct the
Trustee in writing as to the manner in which Qualifying Employer
Securities are to be voted.
10.5.8 With respect to any Qualifying Employer Securities allocated
to an Account each Participant shall be entitled to direct the
Trustee in writing as to the manner in which to respond to a tender
or exchange offer or other decisions with respect to the Qualifying
Employer Securities.
The Administrator shall utilize its best efforts to timely
distribute or cause to be distributed to each Participant such
information received from the Trustee as will be distributed to
shareholders of the Employer in connection with any such tender or
exchange offer or other similar matter or any vote referred to in
Section 10.5.7.
10.5.9 If an Investment Committee is appointed, notwithstanding any
provision hereof to the contrary, in the event the person with the
right to direct a voting or other decision with respect to any
security, Qualifying Employer Securities, or other assets held in
the Trust does not communicate any decision on the matter to the
Trustee or the Trustee's designee by the time prescribed by the
Trustee or the Trustee's designee for that purpose or if the Trustee
notifies the Investment Committee, if applicable, either that it
does not have precise information as to the securities, Qualifying
Employer Securities, or other assets involved allocated on the
applicable record date to the accounts of all Participants and
Beneficiaries or that time constraints make it unlikely that
Participant, Beneficiary or Investment Manager direction, as the
case may be, can be receive on a timely basis, the decision shall be
the responsibility of the Investment Committee and shall be
communicated to the Trustee on a timely basis. In the event an
Investment Committee with any right under the Plan to direct a
voting or other decision with respect to any security, Qualifying
Employer Securities, or other asset held in the Trust, does not
communicate any decision on the matter to the Trustee or the
Trustee's designee by the time prescribed by the Trustee for that
purpose, the Trustee may, at the cost of f the Employer, retain an
Investment Manager with full discretion to make the decision.
Except as required by ERISA, the Trustee shall (a) follow all
directions above referred to in this Section and (b) shall have no
duty to exercise voting or other rights relating to any such
security, Qualifying Employer Securities or other asset.
10.5.10 The Administrator shall establish, or cause to be
established, a procedure acceptable to the Trustee for the timely
dissemination to each person entitled to direct the Trustee or its
designee as to a voting or other decision called for thereby or
referred to therein of all proxy and other materials bearing on the
decision.
10.5.11 Any person authorized to direct the investment of Trust
assets may, if the Trustee and the Investment Committee, if
applicable, so permit, direct the Trustee to invest such assets in
a common or collective trust maintained by the Trustee for the
investment of assets of qualified trusts under section 401(a) of the
Code, individual retirement accounts under section 408(a) of the
code and plans or governmental units described in section 818(a)(6)
of the Code. The documents governing any such common or collective
trust fund maintained by the Trustee, and in which Trust assets have
been invested, are hereby incorporated into this Article X by
reference.
10.6 Valuation of Accounts
10.6.1 A Participant's Accounts shall be valued at fair market
value on each Valuation Date. Subject to Section 10.6.2(A) as of
each Valuation Date, the earnings and losses and expenses of the
Trust Fund shall be allocated to each Participant Account in the
ratio that such Account Balance in that category of Accounts bears
to all Account Balances in that category. With respect to
Participant-Directed Assets, the earnings and losses and expenses
(including transitional expenses pursuant to Section 8.5.2) of such
Participant-Directed Assets shall be allocated to the Account of the
Participant or Beneficiary having authority to direct the investment
of the assets in his or her Account.
10.6.2 The Valuation Date with respect to any distribution
(including, without limitation, loan distributions and purchase of
annuities) from any Account upon the occurrence of a Benefit
Commencement Date or otherwise, shall be:
(A) with respect to Participant-Directed Assets, the date as of
which the Account Distribution is made; and
(B) with respect to other assets, the Valuation Date immediately
preceding the Benefit Commencement Date, if applicable, or
immediately preceding the proposed date of any other distribution
from any Account.
With respect to any contribution allocable to an Account which has
been made as of a Valuation Date determined pursuant to this Section
10.6.2, the principal amount of such contribution distributable
because of the occurrence of a Benefit Commencement Date shall be
distributed as soon as practicable after the date paid to the Trust
Fund.
10.6.3 The assets of the Trust shall be valued at fair market value
as deterred by the Trustee based upon such sources of information as
it may deem reliable, including, but not limited to, stock market
quotations, statistical evaluation services, newspapers of general
circulation, financial publications, advice from investment
counselors or brokerage firms, or any combination of sources. The
reasonable costs incurred in establishing values of the Trust Fund
shall be charged against the Trust Fund, unless paid by the
Employer. When the Trustee is unable to arrive at the value based
upon information from independent sources, it may rely upon
information from the Employer, Administrator, Investment Committee,
appraisers or other sources, and shall not incur any liability for
inaccurate valuation based in good faith upon such information.
10.7 Insurance Contracts
The Trustee, if an Investment Committee is not appointed, Investment
Committee, or Participant or Beneficiary with respect to
Participant-Directed Assets, may appoint one or more insurance
companies to hold assets of the Plan, and may direct, subject to
Section 7.3, the purchase of insurance contracts or policies from
one or more insurance companies with assets of the Plan. Neither
the Investment Committee, Trustee nor the Administrator shall be
liable for the validity of any such contract or policy, the failure
of any insurance company to make any payments or for any act or
omission of an insurance company with respect to any duties
delegated to any insurance company.
10.8 The Investment Manager
10.8.1 The Trustee, if an Investment Committee is not appointed,
Investment Committee, or the Participant or Beneficiary with respect
to Participant-Directed Assets, may, by an instrument in writing,
appoint one or more Investment Mangers, who may be an affiliate of
the Merrill Lynch Trust Company, to direct the Trustee in the
investment of all or a specified portion of the assets of the Trust
in property specified in Section 10.4. Any such Investment Manager
shall be directed by the Trustee, if an Investment Committee is not
appointed, Investment Committee, Participant r Beneficiary, as the
case may be, to act in accordance with the procedures referred to in
Section 10.5.5. If appointed, the Investment Committee shall notify
the Trustee in writing before the effectiveness of the appointment
or removal of any Investment Manager. If there is more than one
Investment Manager whose appointment is effective under the Plan at
any one time, the Trustee shall, upon written instructions from the
Investment Committee, Participant or Beneficiary establish separate
funds for control by each such Investment Manager. The funds shall
consist of those Trust Fund assets designated by the Investment
Committee, Participant or Beneficiary.
10.8.2 Each person appointed as an Investment Manager shall be:
(A) an investment adviser registered under the Investment Adviser
Act of 1940,
(B) a bank as defined in that Act, or
(C) an insurance company qualified to manage, acquire or dispose of
any asset of the Plan under the laws of more than one state.
10.8.3 Each Investment Manager shall acknowledge in writing that it
is a "fiduciary" (as defined in ERSIA Section 3(21)) with respect to
the Plan. The Trustee, or the Investment Committee if appointed,
shall enter into an agreement with each Investment Manager
specifying the duties and compensation of such Investment Manager
and the other terms and conditions under which such Investment
Manager shall be retained. Neither the Trustee nor the Investment
Committee, if appointed, shall be liable for any act or omission of
any Investment Manager and shall not be liable for following the
advice of any Investment Manager with respect to any duties
delegated to any Investment Manager.
10.8.4 The Trustee, or Investment Committee if appointed, or the
Participant or Beneficiary, if applicable with respect to
Participant-Directed Assets, shall have the power to determine the
amount of Trust Fund assets to be invested pursuant to the direction
of a designated Investment Manager and to set investment objectives
and guidelines for the Investment Manager.
10.8.5 Second Trust Fund. The Employer may appoint a second
trustee under the Plan with respect to assets which the Employer
desires to contribute or have transferred to the Trust Fund, but
which the other Trustee does not choose to accept: provided,
however, that if a Merrill Lynch Trust company is a Trustee, its
consent (which consent maybe evidenced by its acceptance of its
appointment as Trustee) shall be required. In the event and upon
the effectiveness of the acceptance of the second Trustee's
appointment, the Employer shall be deemed to have created two trust
funds under the Plan, each with its own Trustee, each governed
separately by this Article X. Each Trustee under such an agreement
shall, however, discharge its duties and responsibilities solely
with respect to those assets of the Trust delivered into its
possession and except pursuant to ERISA, shall have no duties,
responsibilities or obligations with respect to property of the
other Trust nor any liability for the acts or omissions of the other
Trustee. As a condition to its consent to the appointment of the
second trustee, the Merrill Lynch Trust Company shall assure that
record keeping, distribution and reporting procedures are
established on a coordinated basis between it and the second trustee
as considered necessary or appropriate with respect to the Trusts.
10.9 Powers of Trustee
10.9.1 At the direction of the person authorized to direct such
action as referred to in Section 10.5.1, but limited to those assets
or categories of assets acceptable to the Trustee as referred to in
Section 10.4, or at its own discretion if no such person is so
authorized, the Trustee, or the Trustee's designee or a
broker/dealer as referred to in Section 10.5.5, is authorized and
empowered:
(A) To invest and reinvest the Trust Fund, together with the income
therefrom, in assets specified in Section 10.4;
(B) To deposit or invest all or any part of the assets of the Trust
in savings accounts or certificates of deposit or other deposits in
a bank or savings and loan association or other depository
institution, including the Trustee or any of its affiliates,
provided with respect to such deposits with the Trustee or an
affiliate the deposits bear a reasonable interest rate;
(C) To hold, manage, improve, repair and control all property, real
or personal, forming part of the Trust Fund: to sell, convey,
transfer, exchange, partition, lease for any term, even extending
beyond the duration of this Trust, and otherwise dispose of the same
from time to time;
(D) To have, respecting securities, all the rights, powers and
privileges of an owner, including the power to give proxies, pay
assessments and other sums deemed by the Trustee necessary for the
protection of the Trust Fund; to vote any corporate stock either in
person or by proxy, with or without power of substitution, for any
purpose; to participate in voting trusts, pooling agreements, fore
closure, reorganizations, consolidations, mergers and liquidations,
and in connection therewith to deposit securities with or transfer
title to any protective or other committee; to exercise or sell
stock subscriptions or conversion rights; and, regardless of any
limitations elsewhere in this instrument relative to investments by
the Trustee, to accept and retain as an investment any securities or
other property received through the exercise of any of the foregoing
powers;
(E) Subject to Section 10.5.4 hereof, to hold in cash, without
liability for interest, such portion of the Trust Fund which it is
directed to sold hold pending investments, or payment of expenses,
or the distribution of benefits;
(F) To take such actions as may be necessary or desirable to
protect the Trust from loss due to the default on mortgages held in
the Trust including the appointment of agents or trustees in such
other jurisdictions as may seem desirable, to transfer property to
such agents or trustees, to grant to such agents such powers as are
necessary or desirable to protect the Trust Fund, to direct such
agent or trustee, or to delegate such power to direct, and to remove
such agent or trustee;
(G) To settle, compromise or abandon all claims and demands in
favor of or against the Trust Fund;
(H) To invest in any common or collective trust fund of the type
referred in Section 10.5.8 hereof maintained by the Trustee;
(I) To exercise all of the further rights, powers, options and
privileges granted, provided for, or vested in trustees generally
under the laws of the State of New Jersey, so that the powers
conferred upon the Trustee herein shall not be in limitation of any
authority conferred by law, but shall be in addition thereto;
(J) To borrow money from any source and to execute promissory
notes, mortgages or other obligations and to pledge or mortgage any
trust assets as security, subject to applicable requirements of the
Code and ERISA; and
(K) To maintain accounts at, execute transactions through, and lend
on an adequately secured basis stocks, bonds or other securities to,
any brokerage or other firm, including any firm which is an
affiliate of the Trustee.
10.9.2 To the extent necessary or which it deems appropriate to
implement its powers under Section 10.9.1 or otherwise to fulfill
any of its duties and responsibilities as trustee of the Trust Fund,
the Trustee shall have the following additional powers and
authority:
(A) to register securities, or any other property, in its name or
in the name of any nominee, including the name of any affiliate or
the nominee name designated by any affiliate with or without
indication of the capacity in which property shall be held, or to
hold securities in bearer form and to deposit any securities or
other property in a depository or clearing corporation;
(B) to designate and engage the services of, and to delegate powers
and responsibilities to, such agents, representatives, advisers,
counsel and accountants as the Trustee considers necessary or
appropriate, any of whom may be an affiliate of the Trustee or a
person who renders services to such an affiliate, and, as a part of
its expenses under this Trust Agreement, to pay their reasonable
expenses and compensation;
(C) to make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers releases or other
instruments in writing necessary or appropriate for the
accomplishment of any of the powers listed in this Trust Agreement;
and
(D) generally to do all other acts which the Trustee deems
necessary or appropriate for the protection of the Trust Fund.
10.9.3 The Trustee shall have no duties or responsibilities other
than those specified in the Plan.
10.10 Accounting and Records
10.10.1 The Trustee shall maintain or cause to be maintained
accurate records and accounts of all Trust transactions and assets.
The records and accounts shall be available at reasonable times
during normal business hours for inspection or audit by the
Administrator, Investment Committee, if appointed, or any person
designated for the purpose by either of them.
10.10.2 Within 90 days following the close of each fiscal year of
the Plan or the effective date of the removal or resignation of the
Trustee, the Trustee shall file with the Administrator a written
accounting setting forth all transactions since the end of the
period covered by the last previous accounting. The accounting
shall include a listing of the assets of the Trust showing the value
of such assets at the close of the period covered by the accounting.
On direction of the Administrator, and if previously agreed to by
the Trustee, the Trustee shall submit to the Administrator interim
valuations, reports or other information pertaining to the Trust.
The Administrator may approve the accounting by written approval
delivered to the Trustee or by failure to deliver written objectives
to the Trustee within 60 days after receipt of the accounting. Any
such approval shall be binding on the Employer, the Administrator,
the Investment Committee and, to the extent permitted by ERISA, all
other persons.
10.11 Judicial Settlement of Accounts
The Trustee can apply to a court of competent jurisdiction at any
time for judicial settlement of any matter involving the Plan
including judicial settlement of the Group Trustee's account. If it
does so, the Trustee must give the Administrator the opportunity to
participate in the court proceedings, but the Trustee can also
involve other persons. Any expenses the Trustee incurs in legal
proceedings involving the Plan, including attorney's fees, are
chargeable to the Trust Fund as an administrative expense. Any
judgement or decree which may be entered in such a proceeding,
shall, subject to the provision of ERISA, be conclusive upon all
persons having or claiming to have any interest in the Trust Fund or
under any Plan.
10.12 Resignation and Removal of Trustee
10.12.1 The Trustee may resign at any time upon at least 30 days'
written notice to the Employer.
10.12.2 The Employer may remove the Trustee upon at least 30 days'
written notice to the Trustee.
10.12.3 Upon resignation or removal of the Trustee, the Employer
shall appoint a successor trustee. Upon failure of the Employer to
appoint, or the failure of the effectiveness of the appointment by
the Employer of, a successor trustee by the effective date of the
resignation or removal, the Trustee may apply to any court of
competent jurisdiction for the appointment of a successor.
Promptly after receipt by the Trustee of notice of the effectiveness
of the appointment of the successor trustee: (a) the Trustee shall
deliver to the successor trustee such records as may be reasonably
requested to enable the successor trustee to properly administer the
Trust Fund and all property of the Trust Fund and all property of
the Trust after deducting therefrom such amounts as the Trustee
deems necessary to provide for expenses, taxes, compensation or
other amounts due to or by the Trustee not paid by the Employer
prior to the delivery; and (b) except if the second Trustee is
removed or resigns, the Plan will no longer be considered a
prototype plan.
10.12.4 Upon resignation or removal of the Trustee, the Trustee
shall have the right to a settlement of its account, which
settlement shall be made, at the Trustee's option, either by an
agreement of settlement between the Trustee and the Employer or by
a judicial settlement in an action instituted by the Trustee. The
Employer shall bear the cost of any such judicial settlement,
including reasonable attorney fees.
10.12.5 The Trustee shall not be obligated to transfer Trust assets
until the Trustee is provided assurance by the Employer satisfactory
to the Trustee that all fees and expenses reasonably anticipated
will be paid.
10.12.6 Upon settlement of the account and transfer of the Trust
Fund to the successor trustee, all rights and privileges under the
Trust Agreement shall vest in the successor trustee and all
responsibility and liability of the Trustee with respect to the
Trust and assets thereof shall, except as otherwise required by
ERISA, terminate subject only to the requirement that the Trustee
execute all necessary documents to transfer the Trust assets to the
successor trustee.
10.13 Group Trust
10.13.1 If elected by the Employer in the Adoption Agreement, the
Trustee shall be the Trustee for this Plan and for each other
qualified plan specified in the Adoption Agreement; provided,
however, that such other qualified plan is in effect pursuant to an
Adoption Agreement under this Prototype Plan. Any reference to
Trustee and to the Trust Fund in this Plan shall mean the Trustee as
the trustee of a Group Trust consisting of the assets of each such
plan. The Plan and each other qualified plan specified in the
Adoption Agreement shall be deemed to join in and adopt the Trust as
the trust for each such plan. By executing the Adoption Agreement,
the Trustee accepts designation as Trustee of this Group Trust.
10.13.2 The Trustee shall establish and maintain such accounting
records for each of the Plans as shall be necessary to reflect the
interest in the Group Trust applicable at any time or from time to
time to each Plan. No part of the corpus or income of the Group
Trust allocable to an individual Plan may be used for or diverted to
any purposes other than for the exclusive benefit of Participants
and their Beneficiaries entitled to benefits under that Plan. The
allocable interest of a Plan in the Group Trust may not be assigned.
ARTICLE XI
PLAN AMENDMENT OR TERMINATION
11.1 Prototype Plan Amendment
11.1.1 The mass submitter, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and any successor thereto, may amend any part of the
Prototype Plan. For purposes of sponsoring organization amendments,
the mass submitter shall be recognized as the agent of the
sponsoring organization. If the sponsoring organization does not
adopt the amendments made by the mass submitter, it will not longer
be identical to or a minor modifier of the mass submitter plan.
11.1.2 An Employer shall have the right at any time, by an
instrument in writing, effective retroactively or other wise, to (A)
change the choice of options in the Adoption Agreement, in whole or
in part; (B) add overriding language in the Adoption Agreement when
such language is needed to satisfy Code Section 415 or Code Section
416 because of the required aggregation of multiple plans; and (C)
add certain model amendments published by the Internal Revenue
Service Which specifically provided that their adoption will not
cause the Plan to be treated as individually designed. No such
amendment, however, shall have any of the effects specified in
Section 11.2.. If the adopting Employer amends the Plan or
nonelective portions of the Adoption Agreement excepts as previously
provided, it will no longer participate in the Prototype Plan, but
will be considered to have an individually designed plan for
purposes of qualification under Code Section 401(a). In the event
the Employer is switching from an individually designed plan or from
one prototype plan to another, a list of the Section "411(d)(6)
protected benefits" that must be preserved may be attached, and such
a list would not be considered an amendment to the plan.
11.1.3 This Plan will be recognized as a Prototype Plan by the
Sponsor only by complying with the registration requirements as
specified in the Adoption Agreement.
11.2 Plan Amendment
11.2.1 Except as provided in Section 11.2.2, no amendment pursuant
to Section 11.1 shall:
(A) authorize any part of the Trust Fund to be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or
their Beneficiaries;
(B) decrease the accrued benefits of any Participant or his or her
Beneficiary under the Plan; An amendment which has the effect of (1)
eliminating or reducing an Early Retirement benefit or a retirement-
type subsidy, or (2) eliminating an optional form of benefit
payment, with respect to benefits attributable to service before the
amendment shall be treated as reducing accrue benefits. In the case
of a retirement-type subsidy, the preceding sentence shall apply
only with respect to a Participant who satisfies (either before or
after the amendment) the preamendment conditions for the subsidy.
In general, a retirement-type subsidy is a subsidy that continues
after retirement, but does not include a qualified disability
benefit, a medical benefit, a social security supplement, a death
benefit (including life insurance), or a plant shutdown benefit
(that does not continue after retirement age).
(C) reduced the vested percentage of any Participant determined
without regard to such amendment as of the later of the date such
amendment is adopted or the date it becomes effective;
(D) eliminate an optional form of benefit distribution with respect
to benefits attributable to service before the amendment; or
(E) change the vesting schedule, or in any way amend the Plan to
either directly or indirectly affect the computation of a
Participant's vested percentage, unless each Participant having no
less than 3 years of Vesting Service is permitted to elect, within
a reasonable period specified by the Administrator after the
adoption of such amendment, to have his or her vested percentage
computed without regard to such amendment.
For Participants who do not have at least one Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "5 Years of Vesting Service" for "3
Years of Vesting Service" where such language appears. The period
during which the election may be made shall commence with the date
the amendment is adopted and shall end on the later of :
(i) 609 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; or
(iii) 60 days after the Participant is issued written notice by the
Administrator.
11.2.2 Anything contained in this Section 11.2 to the contrary
notwithstanding, a Participant's benefit may be reduced to the
extent permitted under Code Section 412(c)(8).
11.3 Right of the Employer to Terminate Plan
11.3.1 The Employer intends an expects that from year to year it
will be able to and will deem it advisable to continue this Plan in
effect and to make contributions as herein provided. The Employer
reserves the right, however, to terminate the Plan with respect to
its Employees at any time by an instrument in writing delivered to
the Administrator and the Trustee, or to completely discontinue its
contributions thereto at any time.
11.3.2 The Plan will also terminate: (A) if the Employer is a sole
proprietorship, upon the death of the sole proprietor; (B) if the
Employer is a partnership, upon termination of the partnership; (C)
if the Employer is judicially declared bankrupt or insolvent; (D)
upon the sale or other disposition of all or substantially all of
the assets of the business; or (E) upon any other termination of the
business. Any successor to or purchaser of the Employer's trade or
business, after any event specified in the prior sentence may
continue the Plan in which case the successor or purchaser will
thereafter be considered the Employer for purposes of the Plan.
Such a successor or purchaser shall execute an appropriate Adoption
Agreement if and when requested by the Administrator.
11.3.3 Anything contained herein to the contrary notwithstanding,
if the Employer fails to attain or retain qualification of the Plan
under Code Section 401(a), the Plan will not participate in this
Prototype Plan and will, instead, be considered an individually
designed plan for purposes of such qualification.
11.4 Effect of Partial or Complete Termination or Complete
Discontinuance of Contributions
11.4.1 Determination of Date of Complete or Partial Termination.
The date of complete or partial termination shall be established by
the Administrator in accordance with the directions of the Employer
(if then in existence) in accordance with applicable law.
11.4.2 Effect of Termination.
(A) As of the date of a partial termination of the Plan:
(i) the accrued benefit of each affected Participant, to the extent
funded, shall become nonforfeitable;
(ii) no affected Participant shall be granted credit based on Hours
of Service after such date;
(iii) Compensation paid to affected Participants after such date
shall not be taken into account; and
(iv) no contributions by affected Participants shall be required or
permitted.
(B) A of the date of the complete termination of the Plan or of a or
a complete discontinuance of contributions:
(i) the accrued benefit of each affected Participant to the extent
funded, shall become nonforfeitable;
(ii) no affected Participant shall be granted credit based on Hours
of Service after such date;
(iii) Compensation paid after such date shall not be taken into
account;
(iv) no contributions by affected Participants shall be required or
permitted;
(v) no Eligible Employee shall become a Participant after such
date; and
(vi) except as may otherwise be required by applicable law, all
obligations of the Employer and Participating Affiliates to fund the
Plan shall terminate.
(C) All other provisions of the Plan shall remain in effect unless
otherwise amended.
11.4.3 Upon the complete discontinuance of profit-sharing
contributions under the Plan, at the Employer's election, either the
Trust Fund shall continue to e held and distributed as if the Plan
had not been terminated (in which case such Plan shall continue to
be subject to all requirements under Title I of ERISA, and
qualification requirements under the Code) or any and all assets
remaining in the Trust Fund as of the date of such termination or
discontinuance, together with any earnings subsequently accruing
thereon, shall be distributed by the Trustee to the Participant at
the Administrator's direction. Upon the complete termination of the
Plan, the Trust Fund shall be distributed to Participants within one
year after the date of termination.
If the Plan does not offer an annuity option (purchased from a
commercial provider) and if the Employer or any Affiliate does not
maintain another Defined Contribution Plan (other than an employee
stock ownership plan as defined in Code Section 497(e)(7)) the
Participant's benefit may, without the Participant's consent, be
distributed to the Participant. However, if any Affiliate maintains
another Defined Contribution Plan (other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)), then the
Participant's Account(s) will be transferred, without the
Participant's consent, to the other plan if the Participant does not
consent to an immediate distribution. Distributions shall be made
in compliance with the applicable provisions, including
restrictions, of Articles VI and VII. The Trust Fund shall continue
in effect until all distributions therefrom are complete. Upon the
completion of such distributions, the Trustee shall be relieved from
all further liability with respect to al amounts so paid or
distributed.
11.5 Bankruptcy
In the event that the Employer shall at any time be judicially
declared bankrupt or insolvent without any provisions being made for
the continuation of this Plan, the Plan shall be completely
terminated accordance with this Article XI.
ARTICLE XII MISCELLANEOUS PROVISIONS
12.1 Exclusive Benefit of Participants
Notwithstanding anything in the Plan to the contrary, the Trust Fund
shall be held for the benefit of all persons who shall be entitled
to receive payments under the Plan. Subject to Section 3.10, it
shall be prohibited at any time for any part of the Trust Fund
(other than such part as is required to pay expenses) to be used
for, or diverted to, purposes other than for the exclusive benefit
of participants or their Beneficiaries.
12.2 Plan Not a Contract of Employment
The Plan is not a contract of Employment, and the terms of
Employment of any Employee shall not be affected in any way by the
Plan or related instruments except as specifically provided therein.
12.3 Action by Employer
Any action by an Employer which is a corporation shall be taken by
the board of directors of the corporation or any person or persons
duly empowered to exercise the powers of the corporation with
respect to the Plan. In the case of an Employer which is a
partnership, action shall be taken by any general partner of the
partnership, and in the case of an Employer which is a sole
proprietorship, action shall be taken by the sole proprietor.
12.4 Source of Benefits
Benefits under the Plan shall be paid or provided for solely from
the Trust Fund, and neither the Employer, any Participating
Affiliate, the Trustee, the Administrator, no any Investment Manager
or insurance company shall assume any liability under the Plan
therefor.
12.5 Benefits Not Assignable
Benefits provided under the Plan may not be assigned or alienated,
either voluntarily or involuntarily. In the event that a
Participant or Beneficiary becomes individually liable with respect
to any expenses listed in Section 8.5, the provision of Section
401(a)(13) of the Code shall be applicable with respect to any claim
the Plan may have against the Participant or Beneficiary
individually with respect to such expenses. The preceding sentence
shall also apply to the creation, assignment or recognition of a
right to any benefit payable with respect to a Participant pursuant
to a"domestic relations order" (as defined in Code Section 414(p))
unless such order is determined by the Administrator to be a
"qualified domestic relations order" (as defined in Code Section
414(p)) or, in the case of a "domestic relations order" entered
before January 1, 1985, if either payment of benefits pursuant to
the order has commenced as of that date or the Administrator decides
to treat such order as a "qualified domestic relations order" within
the meaning of Code Section 414(p) even if it does not otherwise
qualify as such.
12.6 Domestic Relations Orders
Any other provision of the Plan to the contrary notwithstanding, the
Administrator shall have all powers necessary with respect to the
Plan for the proper operation of Code Section 414(p) with respect to
"qualified domestic relations order" (or domestic relations orders"
treated as such) referred to in Section 12.5, including, but not
limited to, the power to establish all necessary or appropriate
procedures, to authorize the establishment of new accounts with such
assets and subject to such investment control by the Administrator
as the Administrator may deem appropriate, and the Administrator may
decide upon and direct appropriate distributions therefrom.
12.7 Claims Procedure
In the event that a claim by a Participant, Beneficiary, or other
person for benefits under the Plan is denied, the Administrator will
so notify the claimant, giving the reasons for the denial. This
notice will also refer to the specific provisions of the Plan on
which the denial was based, will specify whether any additional
information is needed from the Participant or Beneficiary and will
explain the review procedure.
Within 60 days after receiving the denial, the claimant may submit,
directly or through a duly authorized representative, a written
request for reconsideration of the application to the Administrator.
Documents or records relied on by the claimant should be filed with
the request. The person making the request may review relevant
documents and submit issues and additional comments in writing.
The Administrator will review the claim within 60 days (or 120 days
if a hearing is held because special circumstances exist) and
provide a written response to the appeal. The response will explain
the reasons for the decision and will refer to the Plan provisions
on which the decision is based. The decision of the Administrator
is the final one under this claims procedure.
12.8 Records and Documents; Errors
Participants and Beneficiaries must supply the Administrator with
such personal history data as may be required by the Administrator
in the operation of the Plan. Proof of age, when required, must be
established by evidence satisfactory to the Administrator, and the
records of the Employer and Participating Affiliates concerning
length of service and compensation may be accepted by the
Administrator as conclusive for the purposes of the Plan. Should
any error in the records maintained under the Plan result in any
Participant or Beneficiary receiving from the Plan more or less than
he or she would have been entitled to receive had the records been
correct, the Administrator, in its discretion, may correct such
error and, as far as practicable, may adjust benefits in such manner
that the aggregate value of the benefit under the Plan shall be the
amount to which such Participant or Beneficiary was properly
entitled.
12.9 Benefits Payable to Minors, Incompetents and Others
In the event any benefit is payable to a minor or to a Participant
or Beneficiary declared incompetent by a court having jurisdiction
over such matters and a guardian, committee, conservator or other
legal representative of the estate of such a person is appointed,
benefits to which he or she is entitled shall be paid to the legally
appointed person. The receipt by any such person to whom any such
payment on behalf of any Participant or Beneficiary is made shall be
a sufficient discharge thereof.
12.10 Plan Merger or Transfer of Assets
12.10.1 The merger or consolidation of the Employer with any other
person, or the transfer of the assets of the Employer to any other
person, or the merger of the Plan with any other plan shall not
constitute a termination of the Plan if provision is made for the
continuation of the Plan.
12.10.2 The Plan may not merger or consolidate with, or transfer
any assets or liabilities to, any other plan, unless each
Participant would (if the Plan had then terminated) receive a
benefit immediately after the merger, consolidation or transfer
which is equal to or greater than the benefit he or she would have
been entitled to received immediately before the merger,
consolidation or transfer (if the Plan had then terminated). Any
merger or consolidation shall not constitute a termination of a Plan
or require the acceleration of vesting of Participant's Account
Balances.
12.11 Participating Affiliates
12.11.1 With the consent of the Employer and by duly authorized
action, any Affiliate may adopt the Plan. Such Affiliate shall
determine the classes of its Employees who shall be Eligible
Employees and the amount of its contribution to the Plan on behalf
of such Employees.
12.11.2 With the consent of the Employer and by duly authorized
action, a Participating Affiliate may terminate its participation in
the Plan or withdraw from the Plan. Any such withdrawal shall be
deemed an adoption by such Participating Affiliate of a plan and
trust identical to the Plan and the Trust, except that all
references to the Employer shall be deemed to refer to such
Participating Affiliate. At such time and in such manner as the
Employer directs the assets of the Trust allocable to Employees of
such Participating Affiliate shall be transferred to the trust
deemed adopted by such Participating Affiliate.
12.11.4 A Participating Affiliate shall have no power with respect
to the Plan except as specifically provided herein.
12.12 Controlling Law
The Plan is intended to qualify under Code Section 401(a) and to
comply with ERISA, and its terms shall be interpreted accordingly.
Otherwise, to the extent not preempted by ERISA, the laws of the
State of New York shall control the interpretation and performance
of the terms of the Plan.
12.13 Singular and Plural and Article and Section References
As used in the Plan, the singular includes the plural, and the
plural includes the singular, unless qualified by the context.
Titles of Articles and Sections of the Plan are for convenience of
reference only and are to be disregarded in applying the provisions
of the Plan. Any reference is this Prototype Plan to an Article or
Section is to the Article or Section so specified of the Prototype
Plan, unless otherwise indicated.
EXHIBIT 4.2
MERRILL LYNCH
------------
SPECIAL
------------
PROTOTYPE DEFINED
CONTRIBUTION PLAN
ADOPTION AGREEMENT
401(K) PLAN
EMPLOYEE THRIFT PLAN
PROFIT-SHARING PLAN
Letter Serial Number: D359287b
National Office Letter Date: 6/29/93
This Prototype Plan and Adoption Agreement are important legal
instruments with legal and tax implications for which the Sponsor,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, does not assume
responsibility. The Employer is urged to consult with its own
attorney with regard to the adoption of this Plan and its
suitability to its circumstances.
Adoption of Plan
The Employer named below hereby establishes or restates a profit-
sharing plan that includes a 401(K) (the "Plan") by adopting the
Merrill Lynch Special Prototype Defined Contribution Plan and Trust
as modified by the terms and provisions of this Adoption Agreement.
Employer and Plan Information
Employer Name:* Chyron Corp.
Business Address: 5 Hub Drive
Melville, NY 11747
Telephone Number: (516) 845-2069
Employer Taxpayer ID Number: 11-2117385
Employer Taxable Year ends on : December 31st
Plan Name: Chyron Corp. 401(K) Plan
Plan Number: 001
401(K) Profit Thrift Sharing
Effective Date of Adoption or Restatement: 01/01/95
Tax Reform Act of 1986 Restatement Date:
Original Effective Date: 01/01/94
If this Plan is a continuation or an amendment of a prior plan, all
optional forms of benefits provided in the prior plans must be
provided under this Plan to any Participant who had an account
balance, whether or not vested in the prior plan.
*If there are any Participating Affiliates in this Plan, list below
the proper name of each Participating Affiliate.
ARTICLE I. Definitions
A. "Compensation"
(1) With respect to each Participant, except as provided below,
Compensation shall mean the 401(K) and/or Thrift compensation for
Code Section 415 safe-harbor purposes (as defined in Section 3.9.1
(H)(i) of basic plan document #03) for the applicable period
selected in Item 5 below.
(2) Treatment of Elective Contributions for purposes of
contributions, Compensation shall include Elective Deferrals and
amounts excludable from the gross income of the Employee under Code
Section 125, Code Section 402(e)(3), Code Section 402(h) or Code
Section 403(b) ("elective contributions").
(3) CODA Compensation for purposes of the ADP and ACP Tests,
Compensation shall include "elective contributions".
(4) With respect to Contributions to an Employer Contributions
Account, Compensation shall include all Compensation during the Plan
Year in which the Participants enters the Plan.
(5) The applicable period for determining Compensation shall be the
Plan Year.
B. "Disability"
(1) Definition:
Disability shall mean a condition which results in the Participant's
total and permanent inability to meet the requirements of the
Participant's customary employment which can be expected to last for
a continuous period of not less than 12 months.
(2) Contributions Due to Disability:
no contributions to an Employer Contributions Account will be made
on behalf of a Participant due to his or her Disability.
C. "Early Retirement"
Early Retirement is not permitted.
D. "Eligible Employees"
the following Employees are not eligible to participate in the Plan:
Employees included in a unit of Employees covered by a collective
bargaining agreement between the Employer or a Participating
Affiliate and the Employee representatives (not including any
organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer or Participating
Affiliate) in the negotiation of which retirement benefits were the
subject of good faith bargaining, unless the bargaining agreement
provides for participation in the Plan.
Non-resident aliens who received no earned income from the Employer
or a Participant Affiliate which constitutes income from source
within the United States.
E. "Entry Date"
Entry Date shall mean the first day of the Plan Year and the first
day of the seventh month of the Plan Year following the date the
Employee meets the eligibility requirements.
F. "Hours of Service"
Hours of Service for the purpose of determining a Participant's
Period of Severance and Year of Service shall be determined on the
basis of the method specified below:
1. Eligibility Service: For purposes of determining whether a
Participant has satisfied eligibility requirements, the following
method shall be used 401(k) and/or Thrift elapse time period.
2. Vesting Service: A Participant's nonforfeitable interest shall
be determined on the basis of hourly records method.
3. Hourly Records: For the purpose of determining Hours of Service
under the hourly record method only actual hours for which an
Employee is paid or entitled to payment shall be counted.
G. "Integration Level"
This Plan is not integrated with Social Security.
H. "Limitation Compensation"
For purposes of Code Section 415, Limitation Compensation shall be
compensation as determined for purposes of Code Section 415 Safe-
Harbor as defined in Section 3.9.1(H)(i) of basic plan document #03.
I. "Limitation Year"
For purposes of Code Section 415, the Limitation Year shall be the
Plan Year.
J. "Net Profits"
Net Profits are not necessary for any contribution.
K. "Normal Retirement Age"
Normal Retirement Age shall be attainment of age 65 (not more than
65) by the Participant.
L. "Participant Directed Assets"
Participant Directed Assets are premitted.
M. "Plan Year"
The Plan Year shall end on the 31st day of December.
N. "Predecessor Service"
Predecessor service will be credited only as required by the Plan.
O. "Valuation Date"
The Valuation Date shall mean Daily.
ARTICLE II. Participation
Participation Requirements:
An Eligible Employee must meet the following requirements to become
a Participant. Attainment of age 18 (maximum 20 1/2) and completion
of 1/4 (not more than 1/2) Years of Service. If this is selected no
Hours of Service shall be counted for 401(k) and/or Thrift.
Each Employee who is an Eligible Employee on 01/01/94 will be deemed
to have satisfied the participation requirements on the effective
date without regard to such Eligible Employee's actual age and/or
service for 401(k) and/or Thrift.
ARTICLE III. 401(K) Contributions and Account Allocation
A. Elective Deferrals:
If selected below, a Participant's Elective Deferrals will be a
dollar amount or a percentage of Compensation, as specified by the
Participant on his or her 401(k) Election form, which may not exceed
20% of his or her Compensation.
B. Matching 401(k) Contributions:
If selected below, the Employer may make Matching 401(k)
Contributions for each Plan Year:
Discretionary Formula: Discretionary Matching 401(k) Contribution
equal to such a dollar amount or percentage of Elective Deferrals,
as determined by the Employer, which shall be allocated in an amount
not to exceed 10% of each Participant's first 4% of Compensation
contributed as Elective Deferrals for the Plan Year. If any
Matching 401(k) Contribution remains, it is allocated to each such
Participant in an amount not to exceed _____% of the next _____% of
each Participant's Compensation contribution as Elective Deferrals
for the Plan Year.
C. Participants Eligible for Matching 401(K) Contribution
Allocation:
The following Participants shall be eligible for an allocation to
their Matching 401(k) Contributions Account. Any Participant who
makes Elective Deferrals.
D. Qualified Matching Contributions:
If selected below, the Employer may make Qualified Matching
Contributions for each Plan year:
1. In its discretion, the Employer may make Qualified Matching
Contributions on behalf of only those Participants who are Nonhighly
Compensated Employees and who make Elective Deferrals for that Plan
Year.
2. Qualified Matching Contributions will be contributed and
allocated to each Participant in an amount equal to such an amount,
determined by the Employer, which is needed to meet the ACP Test.
3. In its discretion, the Employer may elect to designate all or
any part of Matching 401(k) Contributions as Qualified Matching
contributions that are taken into account as Elective Deferrals --
included in the ADP Test and excluded from the ACP Test -- on behalf
of only Participants who are Nonhighly Compensated Employees who
make Elective Deferrals for that Plan Year.
E. Qualified Nonelective Contributions:
If selected below, the Employer may make Qualified Nonelective
Contributions for each Plan Year:
1. In its discretion, the Employer may make Qualified Nonelective
contributions on behalf of only Eligible Participants who are
Nonhighly Compensated Employees.
2. Qualified Nonelective Contributions will be contributed and
allocated to each Eligible Participant in an amount equal to such an
amount determine by the Employer, which is needed to meet either the
ADP Test or ACP Test.
3. At the discretion of the Employer, as needed and t taken into
account as Elective Deferrals included in the ADP Test on behalf of
only those Eligible Participants who are Nonhighly Compensated
Employees.
F. Elective Deferrals used in ACP Test:
At the discretion of the Employer, Elective Deferrals may be used to
satisfy the ACP Test.
G. Making and Modifying a 401(k) Election:
An Eligible Employee shall be entitled to increase, decrease or
resume his or her Elective Deferral percentage with the following
frequency during the Plan year - quarterly.
Any such increase, decrease or resumption shall be effective as of
the first payroll period coincident with or next following the first
day of each period set forth above. A Participant may completely
discontinue making Elective Deferrals at any time effective for the
payroll period after written notice is provided to the
Administrator.
ARTICLE IV. Profit-Sharing Contributions and Account Allocation
A. Profit-Sharing contributions: N/A
B. Allocation of Contributions to Employer Contributions Account:
N/A
C. Participant Eligible for Employer Contribution Allocation: N/A
ARTICLE V. Thrift Contributions
A. Employee Thrift Contributions: N/A
B. Matching and modifying an Employee Thrift Contribution Election:
N/A
C. Thrift Matching Contributions: N/A
D. Qualified Matching Contributions: N/A
ARTICLE VI. Participant Contributions
Participant Voluntary Nondeductible Contributions:
Participant Voluntary Nondeductible Contributions are not permitted.
ARTICLE VII. Vesting
A. Employer Contribution Accounts:
1. A Participant shall have a vested percentage in his or her
Profit-Sharing Contributions, Matching 401(k) Contributions and/or
Matching Thrift Contributions, if applicable, in accordance with the
following schedule:
100% vesting immediately upon participation. Grading Vesting
Schedule: 33-1/2% after 1 year of Vesting Service; 67% after 2 years
of Vesting Service; 100% (not less than 20%) after 3 years of
Vesting Service.
2. Top Heavy Plan. Vesting Schedule is 100% vesting immediately
upon participation. 33 1/2% after 1 year of Vesting Service; 67%
(not less than 20%) after 2 years of Vesting Service; 100% (not less
than 40%) after 3 years of Vesting Service.
Top Heavy Ratio:
If the adopting Employer maintains or has ever maintained a
qualified defined benefit plan, for purposes of establishing present
value to compute the top-heavy ratio, any benefit shall be
discontinued only for mortality and interest based o in the
following:
Interest Rate: 8%
Mortality Table: Up '84
For purposes of computing the top-heavy ration, the valuation ate
shall be the last business day of each Plan Year.
B. Allocation of Forfeitures: N/A
C. Vesting Service:
For purposes of determining Years of Service for Vesting Service all
Years of Service shall be included.
ARTICLE VIII. Deferral of Benefit Distributions, In-Service
Withdrawals and Loans
A. Deferral of Benefit Distribution: N/A
B. In-Service Distributions:
In-Service distributions may be made from any of the Participant's
vested Accounts, at any time upon or after the occurrence of the
following events: A Participant's attainment of age 59-1/2 or due
to hardships as defined in Section 5.9 of the Plan.
C. Loans:
Loans are permitted.
ARTICLE IX Group Trust
Group Trust: N/A
ARTICLE X. Miscellaneous
A. Identification of Sponsor:
The address and telephone number of the Sponsor's authorized
representative is 800 Scudders Mill Road, Plainsboro, new Jersey
08536; (609) 282-2272. This authorized representative can answer
inquiries regarding the adoption of the Plan, the intended meaning
of any Plan provisions, an the effect of the opinion letter.
The Sponsor will inform the adopting Employer of any amendments made
to the Plan or the discontinuance or abandonment of the Plan.
B. Plan Registration:
1. Initial Registration: This plan must be registered with the
Sponsor, Merrill Lynch, Pierce, Fenner & Smith Incorporate, in order
to be considered a Prototype Plan by the Sponsor. Registration is
required so that the Sponsor is able to provide the Administrator
with documents, forms and announcements relating to the
administration of the Plan with Plan amendments and other documents,
all of which relate to administering the Plan in accordance with
applicable law and maintaining compliance of the Plan with the law.
The Employer must complete and sign the Adoption Agreement. Upon
receipt of the Adoption Agreement, the Plan will be registered as a
Prototype Plan of Merrill Lynch, Pierce, Fenner & Smith
Incorporated. The Adoption Agreement will be countersigned by an
authorized representative and a copy of the countersigned Adoption
Agreement will be return to the Employer.
2. Registration Renewal: Annual registration renewal is required
in order for the employer to continue to receive any and all
necessary updating documents. there is an annual registration fee
in the amount set forth with the initial registration material. The
adopting Employer authorizes Merrill Lynch, Pierce, Fenner & Smith
Incorporated, to debit the account established for the plan for
payment of agreed upon annual fee; provided, however, if the assets
of an account are invested solely in Participant-Directed Assets, a
notice for this annual fee will be sent to the Employer annually.
The sponsor reserves the right to change this fee from time to time
an will provide notice in advance of any change.
C. Prototype Replacement Plan: This Adoption Agreement is a
replacement prototype plan for the (1) Merrill Lynch Special
Prototype Defined Contribution Plan and Trust - 401(k) Plan #03-004
and Merrill Lynch Asset Management, Inc., Special prototype Defined
Contribution Plan and Trust - 401(k) Plan Adoption Agreement #03-
004.
D. Reliance: The adopting Employer may not rely on the opinion
letter issued by the National Office of the Internal Revenue Service
as evidence that this Plan is qualified under Code Section 401. In
order t obtain reliance, the Employer must apply to the appropriate
key District Director of the Internal Revenue Service for a
determination letter with respect to the Plan.
EMPLOYER'S SIGNATURE
Name of Employer: Chyron corporation
By: /s/ Patricia Lampe
Patricia Lampe
Title: Chief Financial Officer
Date: August 25, 1995
TO BE COMPLETED BY MERRILL LYNCH:
Sponsor Acceptance:
Subject to the terms and conditions of the Prototype Plan and this
Adoption Agreement, this Adoption Agreement is accepted by Merrill
Lynch, Pierce, Fenner & Smith Incorporated as the Prototype Sponsor.
TRUSTEE(S) SIGNATURE
This Trustee Acceptance is to be completed only if the Employer
appoints one or more Trustees and does not appoint Merrill Lynch
Trust Company as Trustee.
The undersigned hereby accepts all of the terms, conditions, and
obligations of appointment as Trustee under the Plan. If the
Employer has elected a Group Trust in this Adoption Agreement, the
undersigned Trustee(s) shall be the Trustee(s) of the Group Trust.
AS TRUSTEE:
/s/ Patricia Lampe
Patricia Lampe
EXHIBIT 5.1 AND 23.3
April 8, 1998
Chyron Corporation
5 Hub Drive
Melville, New York 11747
Gentlemen:
You have requested our opinion in connection with the Registration
Statement on Form S-8 (the "Registration Statement") to be filed by
Chyron Corporation (the "Company") with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, for
registration under said Act of an additional 7,000,000 shares of
common stock (the "Shares") in connection with the Company's 1995
401(k) Plan, as amended (the "Plan").
As counsel for the Company, we have examined such records, documents
and questions of law as we have deemed appropriate for the purposes
of this opinion and, on the basis thereof, advise you that in our
opinion the Shares to be issued by the Company as a result of the
exercise, if any, of the options under the Plan will be legally
issued and outstanding and fully paid and non-assessable when issued
upon proper exercise.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
Camhy Karlinsky & Stein LLP
EXHIBIT 5.2
Internal Revenue Service
District Director
G.P.O. Box 1680
Brooklyn, NY 11202
September 29, 1995
Chyron Corporation
5 Hub Drive
Melville, NY 11747
Employer Identification Number: 11-2117385
File Folder Number: 113032288
Person to Contact: John Liljehult
Contact Telephone Number: (718) 488-2411
Plan Name: Chyron Corp 401K Plan
Plan Number: 001
Dear Applicant:
We have made a favorable determination on your plan, identified
above, based on the information supplied. Please keep this letter
in your permanent records.
Continued qualification of the plan under its present form will
depend on its effect in operation. (See section 1.401-1(b)(3) of
the Income Tax Regulations.) We will review the status of the plan
in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the
qualified status of your employee retirement plan, and provides
information on the reporting requirements for your plan. It also
describes some events that automatically nullify it. It is very
important that you read the publication.
This letter relates only to the status of your plan under the
Internal Revenue code. It is not a determination regarding the
effect of other federal or local statutes.
This determination letter is applicable for the plan adopted on June
22, 1994.
This plan has been mandatorily disaggregated, permissively
aggregated, or restructured to satisfy the nondiscrimination
requirements.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as
otherwise specified in this letter.
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4)b_ of the regulations with
respect to those benefits, rights, and features t hat are currently
available to all employees in the plan's coverage group. For this
purpose, the plan's coverage group consists of those employees
treated as currently benefiting for purposes of demonstrating that
the plan satisfies the minimum coverage requirements of section
410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay
Round Agreements Act, Publ. L. 103-465.
We have sent a copy of this letter to your representative as
indicated in the power of attorney.
If you have any questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
Herber J. Huff
District Director
Enclosures:
Publication 794
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 of our report dated January 29,
1998 appearing on page 23 of Chyron Corporation's Annual Report on
Form 10-K for the year ended December 31, 1997.
PRICE WATERHOUSE
New York, New York
April 17, 1998
