<PAGE> 1
As filed with the Securities and Exchange Commission on September 1, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
Central Reserve Life Corporation
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Ohio 34-1017531
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
17800 Royalton Road
Strongsville, Ohio 44136
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICER) (ZIP CODE)
---------------
THE RETIREMENT PLAN FOR EMPLOYEES
OF THE CENTRAL RESERVE LIFE INSURANCE COMPANY
(FULL TITLE OF THE PLAN)
---------------
LINDA S. STANDISH
Secretary
17800 Royalton Road
Strongsville, Ohio 44136
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(440) 572-2400
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
TITLE OF AMOUNT PROPOSED MAXIMUM PROPOSED AMOUNT OF
SECURITIES TO TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
================================================================================================================================
<S> <C> <C> <C> <C>
Common Shares, without
par value 500,000 $6.75(1) $3,375,000 $996
Plan Interests Indeterminate(2)
================================================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(h) solely for the purpose of
determining the registration fee. The fee with respect to 500,000 shares is
based on $6.75 per share, the last sale price reported of the Registrant's
Common Shares on the NASDAQ National Market on August 31, 1998.
(2) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this
Registration Statement covers an indeterminate amount of plan interests to
be offered or sold pursuant to the Plan.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
The common shares (the "Common Shares") and plan interests
(the "Plan Interests") registered by Central Reserve Life Corporation (the
"Registrant") pursuant to this Registration Statement will be offered and sold
under The Retirement Plan for Employees of The Central Reserve Life Insurance
Company (the "Plan"). Central Reserve Life Insurance Company is a wholly-owned
subsidiary of the Registrant.
Item 3. Incorporation of Documents by Reference.
The documents listed in (a) through (c) below are incorporated
by reference in the Registration Statement. All documents filed by the
Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") subsequent to the date of the filing
of this Registration Statement and prior to the filing of a post-effective
amendment that indicates that all securities registered hereunder have been
sold, or that de-registers all securities then remaining unsold, are
incorporated by reference in the Registration Statement and are a part hereof
from the date of the filing of such documents.
(a) The Registrant's Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1997 (the "1997 Form
10-K");
(b) All other reports filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Exchange Act since
December 31, 1997, including the Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1998 and
June 30, 1998 and the Current Report on Form 8-K
filed on July 16, 1998; and
(c) The description of the Registrant's Common Shares
contained in a registration statement on Form 10
filed with the Securities and Exchange Commission on
May 6, 1977 (Commission File No. 0-8483) under the
Exchange Act, including any amendment or report filed
for the purpose of updating such documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
The Ohio Revised Code (the "Ohio Code") authorizes Ohio
corporations to indemnify an officer or director from liability if the officer
or director acted in good faith and in a manner reasonably believed by the
officer or director to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action, if the officer or director
had no reason to believe his action was unlawful. In the case of an action by or
on behalf of a corporation, indemnification may not be made (i) if the
II-2
<PAGE> 3
person seeking indemnification is adjudged liable for negligence or misconduct,
unless the court in which such action was brought determines such person is
fairly and reasonably entitled to indemnification or (ii) if the liability
asserted against such person concerns certain unlawful distributions. The
indemnification provisions of the Ohio Code require indemnification if a
director or officer has been successful on the merits or otherwise in defense of
any action, suit or proceeding that he was a party to by reason of the fact that
he is or was a director or officer of the corporation
Article V of the Registrant's code of regulations (the "Code
of Regulations") contains certain indemnification provisions adopted pursuant to
authority contained in the Ohio Code. The Code of Regulations requires the
indemnification of an officer or director, former officer or director, and each
person who is serving or has served at the request of the Registrant as a
director or officer of another corporation, and permits the indemnification of
any employee, former employee or any person who is serving or has served at the
request of the Registrant as an employee of another corporation, against
expenses, judgments, decrees, fines, penalties and amounts paid in settlement in
connection with the defense of any pending or threatened claim, action, suit, or
proceeding, whether civil or criminal, to which he was or is a party or
threatened to be made a party by reason of acting in such capacity, provided
that it is determined, (a) that such director, officer, or employee was not, and
has not been adjudicated to have been, negligent or guilty of misconduct in the
performance of his duty to the corporation of which he is or was a director,
officer, or employee, (b) that he acted in good faith in what he reasonably
believed to be the best interest of such corporation, and (c) that, in any
matter the subject of a criminal action, suit, or proceeding, he had no
reasonable cause to believe that his conduct was unlawful. The determination as
to (a), (b), and (c) will be made by the directors acting at a meeting at which
a quorum consisting of directors who are not parties to or threatened with any
such claim, action, suit or proceeding is present, or by independent legal
counsel. Any director who is a party to or threatened with any such claim,
action, suit, or proceeding is not qualified to vote and, if for that reason a
quorum of directors is not obtained to vote on the indemnification, such
indemnification will not be made unless a determination is made by a written
opinion of independent legal counsel selected by a majority of all the
directors. Such indemnification is not exclusive of any other rights to which
such director, officer or employee (or his heirs, executors or administrators)
may be entitled under the Registrant's articles of incorporation, the Code of
Regulations, any agreement, any insurance purchased by the Registrant, any vote
of shareholders, or otherwise. At present there is no claim, action, suit or
proceeding pending in which indemnification would be required under these
provisions, and the Registrant does not know of any threatened claim, action,
suit or proceeding that may result in a request for such indemnification.
II-3
<PAGE> 4
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------- ----------------------
4(a) The Retirement Plan for Employees of The Central Reserve Life
Insurance Company.
4(b) Amended Articles of Incorporation of Central Reserve Life
Corporation(1)
4(c) Code of Regulations of Central Reserve Life Corporation(2)
5 Opinion of Baker & Hostetler LLP as to legality of the Plan
Interests being registered
23 Consent of KPMG Peat Marwick LLP
24 Powers of Attorney (included on II-6)
- ------------------------
1) Incorporated by reference from the Registrant's Annual Report on Form
10-K/A for the fiscal year ended December 31, 1997, Exhibit 3(c)
therein.
2) Incorporated by reference from the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, Exhibit 3(b) therein
(Commission File No. 0-8483).
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended (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 that time
shall be deemed to be the initial bona fide offering thereof;
and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant further 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 that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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<PAGE> 5
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 provisions described under Item 6 above 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 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.
II-5
<PAGE> 6
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities
Act of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Strongsville, State of Ohio, on this
31st day of August, 1998.
CENTRAL RESERVE LIFE CORPORATION
/s/ Peter W. Nauert
By
--------------------------------
Peter W. Nauert, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Peter W. Nauert and Linda S.
Standish, or either of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all post-effective
amendments to this Registration Statement, and to file the same with all
exhibits hereto, and other documents in connection herewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed on August 31, 1998 by the following
persons in the capacities indicated below.
SIGNATURE TITLE
--------- -----
/s/ Peter W. Nauert
Director, President and Chief
- ---------------------------- Executive Officer
Peter W. Nauert (Principal Executive Officer)
/s/ Fred Lick, Jr.
Director and Chairman of the Board
- ----------------------------
Fred Lick, Jr.
/s/ Frank W. Grimone
Senior Executive Vice President
- ---------------------------- and Chief Financial Officer
Frank W. Grimone (Principal Financial Officer and
Principal Accounting Officer)
/s/ Andrew A. Boemi
Director
- -----------------------------
Andrew A. Boemi
/s/ Michael A. Cavataio
Director
- -----------------------------
Michael A. Cavataio
II-6
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/s/ Bradley E. Cooper
- ------------------------------ Director
Bradley E. Cooper
/s/ Jack F. Novatney, Jr.
Director
- ------------------------------
Jack F. Novatney, Jr.
/s/ Richard M. Osborne
Director
- ------------------------------
Richard M. Osborne
/s/ Robert A. Spass
Director
- ------------------------------
Robert A. Spass
/s/ Mark H. Tabak
Director
- ------------------------------
Mark H. Tabak
II-7
<PAGE> 8
THE PLAN. Pursuant to the requirements of the Securities Act
of 1933, the administrator of The Retirement Plan for Employees of The Central
Reserve Life Insurance Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto authorized, in the City of
Strongsville, State of Ohio, on this 31st day of August 1998.
THE RETIREMENT PLAN FOR EMPLOYEES OF THE CENTRAL
RESERVE LIFE INSURANCE COMPANY
/s/ James A. Weisbarth
By:
-----------------------------------------------
James A. Weisbarth
Executive Vice President
Central Reserve Life Insurance Company
II-8
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EXHIBIT INDEX
-------------
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
4(a) The Retirement Plan for Employees of The Central Reserve Life
Insurance Company
4(b) Amended Articles of Incorporation of Central Reserve Life
Corporation(1)
4(c) Code of Regulations of Central Reserve Life Corporation(2)
5 Opinion of Baker & Hostetler LLP as to legality of the Plan
Interests being registered
23 Consent of KPMG Peat Marwick LLP
24 Power of Attorney (included on II-6)
- ------------------------
(1) Incorporated by reference from the Registrant's Annual Report on Form
10-K/A for the fiscal year ended December 31, 1997, Exhibit 3(c)
therein.
(2) Incorporated by reference from the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1991, Exhibit 3(b) therein
(Commission File No. 0-8483).
<PAGE> 1
Exhibit 4(a)
The Retirement Plan for Employees of The
Central Reserve Life Insurance Company
<PAGE> 2
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
FLEXINVEST(R)-PLUS PROTOTYPE PROFIT-SHARING/401(K) PLAN
PART I DEFINITIONS
PART II CREDITING SERVICE
PART III ELIGIBILITY AND PARTICIPATION
PART IV CONTRIBUTIONS
PART V LIMITATION ON ALLOCATIONS
PART VI PLAN INVESTMENT - CONTRACT
PART VII PLAN INVESTMENT - POLICIES
PART VIII PARTICIPANT'S ACCOUNT
PART IX VESTING
PART X IN-SERVICE WITHDRAWALS
PART XI PARTICIPANT LOANS
PART XII TERMINATION OF EMPLOYMENT
PART XIII FORFEITURES
PART XIV RETIREMENT BENEFITS
PART XV DEATH BENEFITS
PART XVI TOP-HEAVY REQUIREMENTS
PART XVII INSURANCE COMPANY
PART XVIII AMENDMENT, TERMINATION, MERGER, ETC. OF PLAN
PART XIX ADMINISTRATION OF PLAN
PART XX MISCELLANEOUS
PART XXI TRANSITIONAL RULE-RETIREMENT DISTRIBUTIONS
PART XXII TRANSITIONAL RULE-SURVIVOR ANNUITIES
(C)Copyright 1996 by Massachusetts Mutual Life Insurance Company.
All Rights Reserved. No reproduction of provisions in this document are
permitted without the express written consent of Massachusetts Mutual Life
Insurance Company, Springfield, Massachusetts 01111-0001.
<PAGE> 3
MASSACHUSETTS MUTUAL FLEXINVEST(R)-PLUS PROTOTYPE
PROFIT-SHARING/401(K) PLAN
Table of Contents
<TABLE>
<S> <C> <C>
INTRODUCTION PAGE
Prototype Profit-Sharing 401(k) Plan and Adoption Agreement 1
Purpose of Plan 1
PART I - DEFINITIONS
1.1 Administrator 2
1.2 Anniversary Date 2
1.3 Annual Additions 2
1.4 Automatic Joint and Survivor Annuity 2
1.5 Beneficiary 2
1.6 Benefiting 3
1.7 Business Day 3
1.8 Code 3
1.9 Company 3
1.10 Company Matching Contributions 3
1.11 Company Profit-Sharing Contributions 3
1.12 Company Qualified Matching Contributions 3
1.13 Company Qualified Nonelective Contributions 3
1.14 Compensation 3
1.15 Contract 5
1.16 Deferred Salary Agreement 5
1.17 Direct Rollover 5
1.18 Effective Date 5
1.19 Election Period 5
1.20 Elective Deferrals 5
1.21 Eligible Retirement Plan 6
1.22 Eligible Rollover Distribution 6
1.23 Employee 6
1.24 Employer 6
1.25 Entry Date 6
1.26 Excess Aggregate Contributions 7
1.27 Excess Annual Additions 7
1.28 Excess Contributions 7
1.29 Excess Deferrals 7
1.30 Highly Compensated Employee 7
1.31 Hour of Service 9
1.32 Insurance Company 10
1.33 Leased Employee 10
1.34 Limitation Year 10
</TABLE>
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<TABLE>
<S> <C> <C>
1.35 Maximum Permissible Amount 10
1.36 One-Year Break in Service 11
1.37 Participant 11
1.38 Participant Matched Contributions 11
1.39 Participant Nondeductible Voluntary Contributions 11
1.40 Plan 11
1.41 Plan Year 11
1.42 Policy 11
1.43 Prototype Plan 11
1.44 Qualified Election 11
1.45 Spouse 12
1.46 Straight Life Annuity 12
1.47 Termination of Employment 12
1.48 Valuation Date 12
1.49 Year of Service 12
PART II - CREDITING SERVICE
2.1 General Method of Crediting Service 12
2.2 Equivalency Methods Based Upon Periods of Employment 12
2.3 One Method of Crediting Service for All Employees 12
2.4 Service With a Predecessor Employer 12
PART III - ELIGIBILITY AND PARTICIPATION
3.1 Eligibility 13
3.2 Eligibility Computation Period 13
3.3 Break in Service/Return to Service 13
3.4 Notification of Eligible Employees 14
3.5 Conditions of Continued Participation 14
PART IV - CONTRIBUTIONS
4.1 Contributions to the Plan 14
4.2 Limitations on Elective Deferrals 15
4.3 Excess Contributions 17
4.4 Limitations on Company and Participant Contributions 18
4.5 Excess Aggregate Contributions 20
4.6 Multiple Use of Alternative Test 21
4.7 Permitted Disparity 21
4.8 Collection of Participant Contributions 22
</TABLE>
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<TABLE>
<S> <C> <C>
4.9 Company Contributions - Timing 22
4.10 Company Contributions - Profits 22
4.11 Return of Company Contributions 23
4.12 Rollover Contributions 23
4.13 Transfers of Amounts From Other Plans 24
4.14 Participant Deductible Voluntary Contributions 24
4.15 Additional Requirements for Owner-Employees 24
PART V - LIMITATION ON ALLOCATIONS
5.1 Maximum Permissible Amount 25
5.2 Estimate of Maximum 25
5.3 Reconciliation 25
5.4 Excess Annual Additions 25
5.5 If Company Maintains Other Defined Contribution Plans 26
5.6 If Company Maintains Other Plans 27
5.7 Controlled Group of Employers, Etc. 27
5.8 Definitions 27
PART VI - PLAN INVESTMENT - CONTRACT
6.1 Funding Policy 29
6.2 Contract 29
6.3 Insurance Company's Authority to Direct Investments 29
6.4 Participant-Directed Investments 30
6.5 Combining Assets of More Than One Plan in a Single Contract 30
PART VII - PLAN INVESTMENT - POLICIES
7.1 Request of Participant 31
7.2 Limitations on Purchase 31
7.3 Company is Owner 31
7.4 Premium Payments 31
7.5 Dividends 32
7.6 Distribution of Policies 32
7.7 Change in Amount of Insurance 32
7.8 Policies upon Termination of Employment 32
</TABLE>
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<TABLE>
<S> <C> <C>
PART VIII - PARTICIPANT'S ACCOUNTS
8.1 Participant's Account 32
8.2 Valuation of Accounts 33
PART IX - VESTING
9.1 Full Vesting in Certain Separate Accounts 33
9.2 Vesting in Participant's Accounts Attributable to
Company Matching and Profit-Sharing Contributions 34
9.3 Vesting Years of Service/Breaks in Service 34
PART X - IN-SERVICE WITHDRAWALS
10.1 In General 35
10.2 Sequence and Conditions for Withdrawal 35
10.3 Financial Hardship 35
10.4 No Forfeiture of Participant's Account
Attributable to Participant Contributions 36
PART XI - PARTICIPANT LOANS
11.1 In General 36
11.2 Application for Loans 37
11.3 Amount of Loan 37
11.4 Interest Rate 37
11.5 Repayments 37
11.6 Default and/or Acceleration 38
PART XII - TERMINATION OF EMPLOYMENT
12.1 Notice of Termination of Employment 38
12.2 Amount of Participant's Benefit 38
12.3 Participant's Election of a Form of Benefit 39
12.4 Forfeiture of Nonvested Portion of Participant's Account 40
12.5 Repayment 40
PART XIII - FORFEITURES
13.1 Occurrence of Forfeiture 41
13.2 Application of Forfeitures 41
</TABLE>
iv
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<TABLE>
<S> <C> <C>
PART XIV - RETIREMENT BENEFITS
14.1 Normal Form of Retirement Benefit 41
14.2 Optional Forms of Benefit 42
14.3 Special Rule 42
14.4 Waiver of Thirty-Day Period for Consent 42
14.5 Amount of Retirement Benefit 42
14.6 Participant Election of a Retirement Date 43
14.7 Participant's Right to Defer Retirement 43
14.8 Distribution of Retirement Benefits 43
14.9 Minimum Amounts to be Distributed from
Participant Account 44
PART XV - DEATH BENEFITS
15.1 Pre-retirement Death of a Participant 45
15.2 Pre-retirement Survivor Annuity 46
15.3 Post-retirement Death of a Participant 47
15.4 Designation of a Beneficiary 47
PART XVI - TOP-HEAVY REQUIREMENTS
16.1 In General 47
16.2 Minimum Contribution Under a Top-Heavy Plan 47
16.3 Non-forfeitability of Minimum Contribution 48
16.4 Top-Heavy Vesting 48
16.5 Top-Heavy Definitions 48
PART XVII - INSURANCE COMPANY
17.1 Not a Party 51
17.2 Not Responsible for the Acts of
the Company or Administrator 51
17.3 Reliance on Signatures 51
17.4 Acquittance 51
17.5 Duties of the Insurance Company 51
17.6 Plan Controls 51
PART XVIII - AMENDMENT, TERMINATION, MERGER, ETC. OF PLAN
18.1 Permanency 51
18.2 Amendment by Insurance Company 51
18.3 Permissible Amendments by Company 52
18.4 Restrictions on Amendments 52
</TABLE>
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<TABLE>
<S> <C> <C>
18.5 Termination of Plan 53
18.6 Full Vesting Upon Termination 53
18.7 Merger, Consolidation or Transfer of Plan Assets 53
PART XIX- ADMINISTRATION OF PLAN
19.1 Appointment of Administrator 54
19.2 Administrator's Powers and Duties 54
19.3 Delegation of Administrative Responsibilities 55
19.4 Bonding 55
19.5 Fiduciary Liability Insurance and Indemnification 55
19.6 Compensation of Administrator 55
19.7 Service of Legal Process 56
19.8 Company Census Report 56
19.9 Information About Plan 56
19.10 Information About Participants and Beneficiaries 56
19.11 Claim for Benefits 56
19.12 Claims Review Procedure 57
19.13 Missing Participants or Beneficiaries 57
PART XX - MISCELLANEOUS
20.1 Assignment or Alienation 57
20.2 Responsibility for Qualification of Plan 57
20.3 Original Document 58
20.4 State Law 58
20.5 Not an Employment Contract 58
20.6 Word Usage 58
20.7 Interpretation of Plan 58
20.8 Headings 58
PART XXI - TRANSITIONAL RULE - RETIREMENT DISTRIBUTIONS 58
PART XXII - TRANSITIONAL RULE - SURVIVOR ANNUITIES 59
</TABLE>
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ADOPTION AGREEMENT
A. Plan Name
B. Contract
C. Dates
D. Eligibility Requirements
E. Compensation
F. Retirement
G. Elective Deferrals
H. Company Qualified Non-elective Contributions
I. Company Matching and Company Qualified
Matching Contributions
J. Participant Contributions
K. Company Profit-Sharing Contributions
L. Forfeitures
M. Investment Allocation And Profit Requirement
N. Policies
O. In-Service Withdrawals
P. Loans
Q. Special Top-Heavy Elections
R. Vesting
S. Termination of Employment
T. Limitation on Allocating Contributions
U. Present Value of Accrued Benefits
V. Adoption Conditional Upon IRS Approval
<PAGE> 10
Massachusetts Mutual Life Insurance Company
FLEXINVEST(R) PROTOTYPE PROFIT-SHARING/401(k)
PLAN
Established Under Revenue Procedure 89-9
IRS Serial No. D265755a (Standardized) and D365756a (Non-standardized)
Massachusetts Mutual Life Insurance Company of Springfield, Massachusetts
(MassMutual) has prepared this Profit-Sharing/401(k) Plan for Employers
interested in providing retirement benefits for their Employees. Any Company may
adopt this Plan, provided that it executes an agreement, hereinafter referred to
as the Adoption Agreement, delivers a copy of the executed Adoption Agreement to
MassMutual and agrees to conform to and abide by all of the terms and provisions
of this Plan. The Company must also apply for and have issued to it a group
annuity contract to fund the Plan and to provide benefits under the Plan. The
Company may also apply for and have issued to it individual life insurance
Policies.
MassMutual has received a favorable Opinion Letter for this Prototype plan from
the Internal Revenue Service in accordance with Revenue Procedure 89-9. A copy
of that Opinion Letter is contained in the Adoption Agreement. MassMutual
strongly suggests that the Company adopting the non-standardized Plan file with
the appropriate Internal Revenue Service Key District Office for a Determination
Letter. If the Company adopting the standardized Plan maintains or later adopts
another Plan in addition to this Plan, MassMutual strongly suggests that the
adopting Company file with the appropriate Internal Revenue Service Key District
Office for a Determination Letter.
PURPOSE OF PLAN
The Company establishes this Plan to provide funds for its Employees' retirement
and to provide funds for their Beneficiaries in the event of death. The benefits
provided in this Plan shall be paid from a Group Annuity Contract and individual
life insurance policies issued to the Company. The Plan is established and shall
be maintained for the exclusive benefit of eligible Employees and their
Beneficiaries. If the Company adopts this Plan as an amendment to an existing
plan, the existing plan shall be superseded by this Plan.
This Plan and any related documents are instruments having IMPORTANT FINANCIAL,
LEGAL AND TAX IMPLICATIONS. Neither MassMutual nor its representatives can give
assurances that the adoption of this Plan shall create a qualified Plan for a
particular Company. Each Company must assume responsibility for the tax or legal
aspects pertaining to its Plan. EACH COMPANY SHOULD CONSULT ITS OWN ATTORNEY FOR
LEGAL ADVICE.
References to Parts and to numbered Paragraphs relate to the Plan document and
those made to Sections relate to the Adoption Agreement.
1
<PAGE> 11
PART I - DEFINITIONS
1.1 ADMINISTRATOR - The person or persons designated by the Company in
accordance with Paragraph 19.1 to manage the Plan. If no person is
appointed, the Administrator shall be the Company.
1.2 ANNIVERSARY DATE - The first day of each Plan Year designated in
Section (C) by the Company.
1.3 ANNUAL ADDITIONS - The sum of the following amounts credited to a
Participant's Account for the Limitation Year:
(a) Company contributions,
(b) Participant contributions,
(c) Forfeitures,
(d) Amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2), which
is part of a pension or annuity plan maintained by the
Company, 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 such date, which are attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Company, are treated as
Annual Additions to a defined contribution plan, and
(e) Allocations under a simplified employee pension plan.
For this purpose, any Excess Annual Additions applied under
Paragraphs 5.4 or 5.5 in the Limitation Year to reduce Company
contributions shall be considered Annual Additions for such
Limitation Year.
The Annual Addition for any Limitation Year beginning before January
1, 1987 shall not be recomputed to treat all Participant
contributions as an Annual Addition.
1.4 AUTOMATIC JOINT AND SURVIVOR ANNUITY - An immediate annuity for the
life of the Participant with a survivor annuity for the life of the
Participant's Spouse which is not less than 50 percent and not more
than 100 percent of the amount of the annuity which is payable during
the joint lives of the Participant and his Spouse, and which is the
amount of benefit which can be purchased with the Participant's
vested account balance. The percentage of the survivor annuity under
the Plan shall be 50 percent unless a different percentage is elected
by a Participant.
1.5 BENEFICIARY - The person or persons designated under Paragraph 15.4 in
accordance with Code Section 401(a)(9) (and the Regulations
thereunder), to receive any benefits under the Plan on account of the
death of the Participant. If any Policy is issued hereunder on the life
of a Participant, the Beneficiary thereunder shall be designated
separately under such Policy.
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1.6 BENEFITING - A Participant is treated as benefiting under the Plan for
any Plan Year during which the Participant received or is deemed to
receive an allocation in accordance with Code Section 1.410(b)-3(a).
1.7 BUSINESS DAY- A day on which the New York Stock Exchange is open for
business.
1.8 CODE - The Internal Revenue Code of 1986, as amended.
1.9 COMPANY - The employer adopting this Plan.
1.10 COMPANY MATCHING CONTRIBUTIONS - If elected in Section (I), the Company
may contribute money to match the Participant's Elective Deferrals
and/or Participant Matched Contributions. The amount of the
contribution shall be determined in accordance with the formula elected
in Section (I).
1.11 COMPANY PROFIT-SHARING CONTRIBUTIONS - If elected in Section (K), the
Company may make an extra contribution to the Plan. The amount of the
contribution is determined at the sole discretion of the Company. The
Administrator shall allocate Company Profit-Sharing Contributions to
Participants' Accounts in accordance with the allocation formula
elected in Section (K). Company Profit-Sharing Contributions shall be
allocated to the Account of each Participant who has completed the
requirements elected in Section (K). In the case of a Participant whose
Entry Date is other than the first day of the Plan Year, all Hours of
Service during the Plan Year in which participation commenced (or
recommenced), including Hours of Service credited to a Participant
prior to his Entry Date, shall be taken into account when determining
whether or not the Participant has met the Hours of Service requirement
during the Plan Year.
1.12 COMPANY QUALIFIED MATCHING CONTRIBUTIONS - If elected in Section (I),
the Company may contribute money to match the Participant's Elective
Deferrals and/or Participant Matched Contributions. These contributions
are subject to the distribution and nonforfeitability requirements
under Code Section 401(k) when made. The amount of the contribution
shall be determined in accordance with the formula elected in Section
(I).
1.13 COMPANY QUALIFIED NONELECTIVE CONTRIBUTIONS - If elected in Section
(H), the Company may elect to make an extra annual contribution to the
Plan. These contributions are nonforfeitable when made; and are
distributable only in accordance with the distribution provisions of
Code Section 401(k).
In addition, in accordance with Paragraphs 4.3(a) and 4.5(a), a Company
may make Qualified Nonelective Contributions on behalf of non-Highly
Compensated Employees that are sufficient to satisfy either the Actual
Deferral Percentage test or the Actual Contribution Percentage test, or
both, pursuant to Regulations under the Code.
1.14 COMPENSATION - As elected by the Company in Section (E), for all
purposes of this Plan other than Part V, LIMITATION ON ALLOCATIONS,
Compensation shall mean all of each Participant's:
(a) INFORMATION REQUIRED TO BE REPORTED UNDER CODE SECTIONS 6041 AND
6051 (Wages, Tips and Other Compensation as reported on Form W-2).
Compensation is defined as wages within the meaning of Code Section
3401(a) and all other payments of compensation to an Employee by the
Company (in the course of the Company's trade or business) for which
the Company is required to furnish the Employee with a written
statement under Code Sections 6041(d), 6051(a)(3) and 6052.
Compensation must be determined without regard to any rules under Code
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 Code Section
3401(a)(2)).
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(b) CODE SECTION 3401(A) WAGES. Compensation is defined as wages as
defined in 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)).
(c) CODE SECTION 415 SAFE-HARBOR COMPENSATION UNDER IRS REG.
SS.415-2(D)(10). Compensation is defined as 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 with the Company to the
extent that the amounts are includible in gross income (including, but
not limited to, commissions paid to salesmen, compensation for services
on the basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and reimbursements and
expense allowances under a nonaccountable plan as described in IRS Reg.
ss.1.62-2(c)), and excluding all other amounts including the following:
(1) Company 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 Company contributions under a simplified Employee
pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan or deferred compensation;
(2) Amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture; (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 by the Company (whether or not under a salary reduction agreement)
towards the purchase of an annuity contract described in Code Section
403(b) (whether or not the contributions are actually excludable from
the gross income of the Employee).
(d) TOTAL COMPENSATION AS DEFINED UNDER IRS REG. SS.1.415-2(D)(1) AND
(2). Compensation is defined as immediately above in Subparagraph
1.14(c), but also including the following: (1) In the case of a
Participant who is an Employee within the meaning of Code Section
401(c)(1) and the regulations thereunder, the Participant's earned
income (as described in Code Section 401(c)(2) and the regulations
thereunder). (2) Amounts described in Code Sections 104(a)(3), 105(a)
and 105(h), but only to the extent that these amounts are includible in
the gross income of the Employee. (3) Amounts paid or reimbursed by the
Company for moving expenses incurred by an Employee, but only to the
extent that these amounts are not deductible by the Employee under Code
Section 217. (4) The value of a non-qualified stock option granted to
an Employee by the Company, but only to
the extent that the value of the option is includible in the gross
income of the Employee for the taxable year in which granted. (5) The
amount includible in the gross income of an Employee upon making the
election described in Code Section 83(b).
The Compensation of each Participant taken into account annually for
determining all benefits provided under the Plan for any Plan Year
shall not exceed $150,000, as adjusted for increases in the
cost-of-living in accordance with Code Section 401(a)(17)(B). The
cost-of-living adjustment in effect for a calendar year applies to the
plan year beginning in such calendar year. If a plan year consists of
fewer than 12 months, the Compensation limit is an amount equal to the
otherwise applicable annual compensation limit multiplied by a
fraction, the numerator of which is the number of months in the short
plan year, and the denominator of which is 12.
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<PAGE> 14
In determining the Compensation of a Participant for purposes of this
limitation, the rules 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 age 19 before the close of the year. If, as a result of
the application of such rules, the adjusted $150,000 limitation is
exceeded, then (except for the purposes of determining the portion of
Compensation up to the integration level if this Plan provides for
permitted disparity), the limitation shall be prorated among the
affected individuals in proportion to each such individual's
Compensation as determined under this Paragraph prior to the
application of this limitation.
For any self-employed individual covered under the Plan, Compensation
shall mean earned income. Earned income means the net earnings from
self-employment in the trade or business with respect to which the Plan
is established, for which personal services of the individual are a
material income-producing factor. Net earnings shall be determined
without regard to items not included in gross income and the deductions
allocable to such items. Net earnings are reduced by contributions by
the Company to a qualified plan to the extent deductible under Code
Section 404. Net earnings shall be determined with regard to the
deduction allowed to the Company by Code Section 164(f) for taxable
years beginning after December 31, 1989.
1.15 CONTRACT - The group annuity contract issued by the Insurance Company
to the Company or as specified in Section (B).
1.16 DEFERRED SALARY AGREEMENT - The agreement entered into by a Participant
with the Company to reduce his Compensation pursuant to Paragraph 1.20.
Any Deferred Salary Agreement or other deferral mechanism cannot be
adopted retroactively.
1.17 DIRECT ROLLOVER - A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
1.18 EFFECTIVE DATE - The date elected in Section (C) as the first day of
the first Plan Year.
1.19 ELECTION PERIOD - The period during which a Participant may waive the
Preretirement Survivor Annuity under Paragraph 15.2. If Paragraph 14.3
is operative, this period begins on the first day of the Plan Year in
which the Participant attains age 35 and ends on the date of the
Participant's death. If a Participant separates from service prior to
the first day of the Plan Year in which age 35 is attained, with
respect to the account balance as of the date of separation, the
Election Period shall begin on the date of separation. In addition, a
Participant who has not yet attained age 35 as of the end of any
current Plan Year may make a special Qualified Election to waive the
Preretirement Survivor Annuity for the period beginning on the date of
such election and ending on the first day of the Plan Year in which the
Participant attains age 35. Such election shall not be valid unless the
Participant receives a written explanation of the Preretirement
Survivor Annuity in such terms as are comparable to the explanation
required under Paragraph 14.3. Preretirement Survivor Annuity coverage
shall be automatically reinstated as of the first day of the Plan Year
in which the Participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of Paragraphs 1.44
and 15.2.
1.20 ELECTIVE DEFERRALS - If elected in Section (G), the Company may make
contributions to the Plan at the election of the Participant, in lieu
of cash Compensation. Elective Deferrals shall include contributions
made pursuant to a Deferred Salary Agreement or other deferral
mechanism. Elective Deferrals shall not include any deferrals properly
distributed as Excess Annual Additions.
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<PAGE> 15
1.21 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 Participant'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. For purposes of
this definition, a former spouse who is the alternate payee under a
qualified domestic relations order, as defined in section 414(p) of the
Code may make an Eligible Rollover Distribution to an Eligible
Retirement Plan described in Code Section 402(c)(8)(B).
1.22 ELIGIBLE ROLLOVER DISTRIBUTION - An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of
the Participant or Spousal Beneficiary, 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
Participant or Spousal Beneficiary or the joint lives (or joint life
expectancies) of the Participant and the Participant's designated
beneficiary (if permitted in the Plan), 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).
1.23 EMPLOYEE - Any person employed by the Company or any other Company
required to be aggregated under Paragraph 1.24. The term Employee shall
also include an individual who is self-employed, an owner-Employee, or
a Leased Employee.
Self-employed individual means a person who has earned income for the
taxable year from the trade or business for which the Plan is
established; also, a person who would have had earned income but for
the fact that the trade or business had no net profits for the taxable
year.
Owner-Employee means a person who is sole proprietor, or who is a
partner owning more than 10 percent of either the capital or profits
interest in the partnership.
1.24 EMPLOYER - The entity that establishes or maintains this Plan; any
organization which has adopted this Plan with the consent of such
establishing Employer; and any successor of such Employer. Except as
provided for purposes of LIMITATION ON ALLOCATIONS in Paragraph 5.7,
and for separate lines of business in Code Section 414(r), all
Employees of all corporations which are members of a controlled group
of corporations (as defined in Code Section 414(b)), all trades or
businesses (whether or not incorporated) which are under common control
(as defined in Code Section 414(c)), all members of an affiliated
service group (as defined in Code Section 414(m)) and any other entity
required to be aggregated pursuant to Regulations under Code Section
414(o) shall be treated as employed by a single Employer.
1.25 ENTRY DATE - The date on which an Employee becomes a Participant as
designated in Section (D) after satisfying the eligibility requirements
of Section (D).
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1.26 EXCESS AGGREGATE CONTRIBUTIONS - With respect to any Plan Year,
the excess of:
(a) The aggregate Actual Contribution Percentage amounts taken
into account in computing the numerator of the ACP actually
made on behalf of Highly Compensated Employees for such Plan
Year, over
(b) The maximum Actual Contribution Percentage amounts permitted
by the ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their ACP,
beginning with the highest of such percentages).
Such determination shall be made after first determining Excess
Deferrals pursuant to Paragraph 4.2(a) and then determining Excess
Contributions pursuant to Paragraph 4.2(b).
1.27 EXCESS ANNUAL ADDITIONS - The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
1.28 EXCESS CONTRIBUTIONS - With respect to any Plan Year, the excess of:
(a) The aggregate amount of Company contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
(b) 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 their ADPs, beginning
with the highest of such percentages).
1.29 EXCESS DEFERRALS - A Participant's Elective Deferrals that are
includible in the Participant's gross income under Code Section 402(g)
to the extent such Participant's Elective Deferrals for a taxable year
exceed the dollar limitation under such Code Section. Excess Deferrals
shall be treated as Annual Additions under the Plan, unless such
amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
1.30 HIGHLY COMPENSATED EMPLOYEE - The group of Highly Compensated Employees
("HCEs") includes any Employee who is employed by the Employer on the
snapshot day and who (i) is a 5-percent owner on the snapshot day, (ii)
receives compensation for the Plan Year in excess of the Code Section
414(q)(1)(B) amount for the Plan Year, (iii) receives compensation for
the Plan Year in excess of the Code Section 414(q)(1)(C) amount for the
Plan Year and is a member of the top paid group of Employees within the
meaning of Code Section 414(q)(4), or (iv) is an officer on the
snapshot day and receives compensation during the Plan Year that is
greater than 50 percent of the dollar limitation in effect under Code
Section 415(b)(1)(A). If no officer satisfies the compensation
requirement of (iv) above, the highest paid officer for such Plan Year
shall be treated as a HCE.
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<PAGE> 17
For purposes of determining who is a HCE, compensation means
compensation within the meaning of Code Section 415(c)(3) as set forth
in the Plan for purposes of determining the Code Section 415 limits,
except that amounts excluded pursuant to Code Sections 125, 402(e)(3),
402(h)(1)(B) and 403(b) are included. If compensation used for purposes
of determining the Code Section 415 limits under the Plan is not
defined as total compensation as provided under Code Section 415(c)(3)
and the regulations thereunder, then for purposes of determining who is
a HCE, compensation means compensation within the meaning of Code
Section 1.415-2(d)(11)(i) of the Income Tax Regulations, except that
amounts excluded pursuant to Code Sections 125, 402(e)(3), 402(h)(1)(B)
and 403(b) are included.
If, as of the snapshot day, an Employee is a family member of either a
5-percent owner (whether active or former) or a HCE who is one of the
10 most HCEs ranked on the basis of compensation paid by the Employer
during such year, then the family member and the 5-percent owner or
top-ten HCE shall be aggregated. In such case, the family member and
5-percent owner or top-ten HCE shall be treated as a single Employee
receiving compensation and Plan contributions or benefits equal to the
sum of the compensation and contributions and benefits of the family
member and 5-percent owner or top-ten HCE. For purposes of this
Section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee, and the spouses of such
ascendants and descendants.
The snapshot day selected in Section (C)(5) must be a single day during
the Plan Year that is reasonably representative of the Employer's
workforce and the Plan's coverage throughout the Plan Year. In
addition, if the Employer uses a snapshot day in substantiating
compliance with the nondiscrimination requirements of Code Sections
401(a)(4), 410(b), or 414(s), the same snapshot day must be used for
purposes of determining the HCEs.)
The group of HCEs will also include any Employee who during the Plan
Year:
(a) terminated employment prior to the snapshot day and was a HCE
in the prior Plan Year;
(b) terminated employment prior to the snapshot day and (i) was a
5-percent owner, or (ii) has compensation for the Plan Year
which is greater than or equal to the compensation of any
Employee who is treated as a HCE on the snapshot day (except
for Employees who are HCEs solely because they are 5-percent
owners or officers), or (iii) was an officer and has
compensation greater than or equal to the compensation of any
other officer who is a HCE on the snapshot day solely because
that person is an officer; or
(c) becomes employed subsequent to the snapshot day during the
Plan Year and (i) is a 5-percent owner, or (ii) has
compensation for the Plan Year that is greater than or equal
to the compensation of any Employee who is treated as a HCE on
the snapshot day (except Employees who are HCEs solely because
they are 5-percent owners or officers), or (iii) is an officer
and has compensation that is greater than or equal to the
compensation of any other officer who is a HCE on the snapshot
day solely because that person is an officer.
The determination of who is a HCE, including the determinations of the
number and identity of Employees in the top paid group, the number of
Employees treated as officers and the compensation that is taken into
account, will be made in accordance with Code Section 414(q) and Code
Section 1.414(q)-1T of the temporary Income Tax Regulations to the
extent they are not inconsistent with the method established above.
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1.31 HOUR OF SERVICE -
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Company. These
hours shall be credited to the Employee for the computation
period in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Company on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than 501
Hours of Service shall be credited under this Paragraph for
any single continuous period (whether or not such period
occurs in a single computation period). Hours under this
Paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which is
incorporated herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company. The
same Hours of Service shall not be credited both under
Subparagraph (a) or Subparagraph (b), as the case may be, and
under this Subparagraph (c). These Hours shall be credited to
the Employee for the computation period or periods to which
the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made.
(d) Where an Employee leaves a non-temporary position with the
Company to enter the United States military service and
receives an honorable discharge upon completion of military
service, application for reemployment must be made within the
following time periods: if the military service is less than
31 days, the employee must report for reemployment on the
first full working day; if the service is from 31 to 181 days,
the employee must apply to the company within 14 days; and if
service is over 180 days, the employee must apply to the
Company within 90 days. If the employee is hospitalized or
injured, the time to apply to the Company is extended for two
years.
(e) Hours of Service shall be credited for employment with other
members of an affiliated service group (under Code Section
414(m)), a controlled group of corporations (under Code
Section 414(b)), a group of trades or businesses under common
control (under Code Section 414(c)), of which the adopting
Company is a member, and any other entity required to be
aggregated with the Company pursuant to Code Section 414(o)
and the Regulations thereunder. Hours of Service shall also be
credited for any individual considered an Employee for
purposes of this Plan under Code Section 414(n) or Section
414(o) and the Regulations thereunder.
(f) Hours of Service shall be determined on the basis of the
method selected in Section (D).
(g) Solely for purposes of determining whether a Break in Service,
as defined in Paragraph 1.36, for participation and vesting
purposes has occurred in a computation period, an individual
who is absent from work for maternity or paternity reasons
shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be
determined, 8 Hours of Service per day of such absence. For
purposes of this Subparagraph, an absence from work for
maternity or paternity reasons means an absence (1) by reason
of the pregnancy of the individual, (2) by reason of a birth
of a child of the individual, (3) by reason of the placement
of a child with the individual in connection with the adoption
of such child by such individual, or (4) for purposes of
caring for such child for a period beginning immediately
following such birth or placement.
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<PAGE> 19
The Hours of Service credited under this Subparagraph shall be
credited (1) in the computation period in which the absence
begins if the crediting is necessary to prevent a Break in
Service in that period, or (2) in all other cases, in the
following computation period.
1.32 INSURANCE COMPANY - Massachusetts Mutual Life Insurance Company or MML
Pension Insurance Company, or with respect to Policies, any other legal
reserve life insurance company authorized to do business in the state
of policy issue.
1.33 LEASED EMPLOYEE - Any person (other than an Employee of the recipient)
who pursuant to an agreement between the recipient and any other person
("leasing organization"), has performed services for the recipient (or
for the recipient and related persons determined in accordance with
Code Section 414(n)(6)) on a substantially full-time basis for a period
of at least one year, and such services are of a type historically
performed by Employees in the business field of the recipient Company.
Contributions or benefits provided a leased Employee by the leasing
organization which are attributable to services performed for the
recipient Company shall be treated as provided by the recipient
Company.
A leased Employee shall not be considered an Employee of the recipient
if: (1) such Employee is covered by a money purchase pension plan
providing: (i) a non-integrated Company contribution rate of at least
10 percent of Compensation, as defined in Code Section 415(c)(3) but
including amounts contributed by the Company pursuant to a Deferred
Salary Agreement which are excludable from the Employee's gross income
under Code Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b), (ii)
immediate participation, and (iii) full and immediate vesting; and (2)
leased Employees do not constitute more than 20 percent of the
recipient's non-Highly Compensated workforce.
1.34 LIMITATION YEAR - A calendar year or any other 12-consecutive month
period elected by the Company in Section (C). All qualified plans
maintained by the Company 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.
1.35 MAXIMUM PERMISSIBLE AMOUNT - The maximum Annual Addition that may be
contributed or allocated to a Participant's Account under the Plan for
any Limitation Year shall not exceed the lesser of: (a) the defined
contribution dollar limitation, or (b) 25 percent of the Participant's
Compensation for the Limitation Year.
The Compensation limit 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 Sections 415(l)(1) or 419A(d)(2).
The defined contribution dollar limitation is $30,000 or if greater,
one-fourth of the defined benefit dollar limitation set forth in Code
Section 415(b)(1) as in effect for the Limitation Year.
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 shall not exceed the defined contribution
dollar limitation multiplied by the following fraction:
Number of Months in the Short Limitation Year
---------------------------------------------
12
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1.36 ONE-YEAR BREAK IN SERVICE - A 12-consecutive month period (computation
period) during which the Participant does not complete more than 500
Hours of Service with the Company.
1.37 PARTICIPANT - Any eligible active Employee of the Company who became a
member of this Plan on an Entry Date.
1.38 PARTICIPANT MATCHED CONTRIBUTIONS - The Company may elect in Section
(J) to allow Participants to contribute amounts to the Plan based on
nondeferred (after-tax) Compensation. Participants may or may not be
required to make the contribution to the Plan. However, if the
contribution is made, it shall cause the Company to contribute amounts
to the Plan on behalf of the Participant known as Company Matching
Contributions or Company Qualified Matching Contributions.
1.39 PARTICIPANT NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS - The Company may
elect in Section (J) to allow the Participant to contribute amounts to
the Plan based on non-deferred (after-tax) Compensation. The
Participant is not required to contribute to the Plan and the
contributions shall not cause the Company to contribute additional
amounts to the Plan on behalf of a Participant, but they provide
additional benefits for the Participant under the Plan.
1.40 PLAN - The MassMutual FLEXINVEST(R) Prototype Profit-Sharing/401(k)
Plan as applied separately to the Company.
1.41 PLAN YEAR - The 12-consecutive month period designated by the Company
in Section (C).
1.42 POLICY - An individual life insurance policy issued by the Insurance
Company to the Company on the life of a Participant.
1.43 PROTOTYPE PLAN - A plan, the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
1.44 QUALIFIED ELECTION - A waiver of an Automatic Joint and Survivor
Annuity or a Preretirement Survivor Annuity. A waiver shall not be
effective unless: (a) the Participant's Spouse consents in writing to
the election; (b) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiary,
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 acknowledges the effect of
the election; and (d) the Spouse's consent is witnessed by a plan
representative or notary public. Additionally, a Participant's waiver
of the Automatic Joint and Survivor Annuity shall 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 by the Participant without any further spousal consent).
If it is established to the satisfaction of a plan representative that
there is no Spouse or that the Spouse cannot be located, a waiver shall
be deemed a Qualified Election.
Any consent by a Spouse obtained under this provision (or establishment
that the consent of a Spouse may not be obtained) shall be effective
only with respect to such Spouse. A consent that permits designations
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. A revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before the
commencement of benefits. The number of revocations shall not be
limited. No consent obtained under this provision shall be valid unless
the Participant has received notice as provided in Paragraph 14.3.
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1.45 SPOUSE - The Spouse or surviving spouse of the Participant, provided
that a former spouse shall be treated as the Spouse or surviving spouse
and a current spouse shall not be treated as the Spouse or surviving
spouse to the extent provided under a qualified domestic relations
order as described in Code Section 414(p).
1.46 STRAIGHT LIFE ANNUITY - An annuity payable in equal installments for
the life of the Participant that terminates upon the Participant's
death.
1.47 TERMINATION OF EMPLOYMENT - The separation from service of the
Participant before Normal Retirement Date other than by reason of
death, disability as determined under Section (F)or early retirement,
if elected in Section (F).
1.48 VALUATION DATE - Each Business Day.
1.49 YEAR OF SERVICE - A 12-consecutive month period (computation period)
during which the Employee completes at least 1,000 Hours of Service.
The applicable 12-consecutive month period for eligibility and
participation purposes can be found in Part III, and for vesting in
Part IX.
PART II - CREDITING SERVICE
2.1 GENERAL METHOD OF CREDITING SERVICE. The Administrator shall count
actual Hours of Service during the applicable 12-consecutive month
computation period as elected under Section (D). The Employee shall
receive credit for a Year of Service if the Employee is credited with
1000 or more Hours of Service during the computation period and shall
incur a One-Year Break in Service if the Participant is not credited
with more than 500 Hours of Service during the computation period. In
general, the Employee's entitlement with respect to participation and
vesting shall be determined by totaling the number of Years of Service
credited to the Employee.
2.2 EQUIVALENCY METHODS BASED UPON PERIODS OF EMPLOYMENT. The Administrator
shall credit the Employee with a specified number of Hours of Service
for each period of employment if the Employee would receive credit for
at least one Hour of Service in that period of employment as elected
under Section (D). The periods of employment on which equivalency may
be based, if applicable and subject to this election, are: days worked,
weeks worked, semi-monthly payroll period and months worked. The
Employee shall receive credit for a Year of Service if the Employee is
credited with 1000 or more equivalency Hours of Service during a
computation period and shall incur a One-Year Break in Service if the
Participant does not complete more than 500 equivalency Hours of
Service during the computation period. In general, the Employee's
entitlement with respect to participation and vesting shall be
determined by totaling the number of Years of Service credited to the
Employee.
2.3 ONE METHOD OF CREDITING SERVICE FOR ALL EMPLOYEES. The Administrator
shall credit Service for all classifications of Employees under the
Plan using the same method of crediting service set forth in Section
(D).
2.4 SERVICE WITH A PREDECESSOR EMPLOYER. Where the Company maintains the
plan of a predecessor employer, service for such predecessor employer
shall be treated as service for the Company for purposes of determining
an Employee's eligibility to participate in the Plan and vesting. Where
a Company establishes the Plan which was not maintained by a
predecessor employer, service with the predecessor employer, including
a sole proprietorship or partnership, shall be treated as service with
the Company for eligibility to participate and vesting only if elected
by the Company in Section (D).
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PART III - ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Each present and future Employee of the Company shall be
entitled to participate in this Plan on the Effective Date or on an
Entry Date coincident with or immediately following the date on which
he satisfies the classification, service, and age requirements set
forth in Section (D). If this Plan amends and restates a former plan
that was qualified under Code Sections 401(a) or 403(a), each Employee
who was a Participant (or entitled to participate) in the former plan
on the day before the Effective Date of this restated Plan shall
continue as a Participant (or continue to be entitled to participate)
in the Plan.
3.2 ELIGIBILITY COMPUTATION PERIOD. Years of Service and Breaks in Service
shall be measured on the same eligibility computation period. The
initial eligibility computation period is the 12-consecutive month
period beginning on the date the Employee first performs an Hour of
Service for the Company (employment commencement date).
The succeeding 12-consecutive month periods commence with the first
Plan Year which commences prior to the first anniversary of the
Employee's employment commencement date regardless of whether the
Employee is entitled to be credited with 1,000 Hours of Service during
the initial eligibility computation period. An Employee who is credited
with 1,000 Hours of Service in both the initial eligibility computation
period and the first Plan Year which commences prior to the first
anniversary of the Employee's initial eligibility computation period
shall be credited with two Years of Service for purposes of eligibility
to participate.
3.3 BREAK IN SERVICE/RETURN TO SERVICE. A former Participant shall become a
Participant immediately upon his return to the employ of the Company if
such former Participant had a nonforfeitable right to all or a portion
of his account balance derived from Company contributions at the time
of his termination.
For a former Participant who did not have any nonforfeitable right to
the account balance derived from Company contributions, Years of
Service before a period of consecutive One-Year Breaks in Service shall
not be taken into account in computing eligibility service if the
number of consecutive One-Year Breaks in Service in such period equals
or exceeds the greater of 5 or the aggregate number of Years of
Service. Such aggregate number of Years of Service shall not include
any Years of Service disregarded under the preceding sentence by reason
of prior Breaks in Service.
If a Participant's Years of Service are disregarded pursuant to the
preceding paragraph, such Participant shall be treated as a new
Employee for eligibility purposes. If a Participant's Years of Service
may not be disregarded pursuant to the preceding paragraph, such
Participant shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
In the event a Participant is no longer a member of an eligible class
of Employees and becomes ineligible to participate but has not incurred
a Break in Service, such Employee shall participate immediately upon
returning to an eligible class of Employees. If such Participant incurs
a Break in Service, eligibility shall be determined pursuant to the
three preceding paragraphs.
In the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee shall
participate immediately if such Employee has satisfied the minimum age
and service requirements and would have otherwise previously become a
Participant.
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3.4 NOTIFICATION OF ELIGIBLE EMPLOYEES. The Administrator shall notify each
Employee of his right to participate in the Plan prior to the Entry
Date he first becomes entitled to participate. On the date of such
notification, the Administrator shall furnish such Employee with a
summary plan description of the Plan, the options available to him
under the Plan and an enrollment form. If a Participant requests to
have a Policy purchased on his behalf, the Participant shall also
complete an application for the Policy. To become a Participant as of
the Entry Date provided in Section (D), the Employee must complete the
form and file it with the Administrator not later than one week after
his Entry Date. If the Employee files the form later than one week
after his Entry Date, he shall become a Participant on the first day of
the second calendar month next following the date he files the form.
3.5 CONDITIONS OF CONTINUED PARTICIPATION. As a condition of continued
participation under the Plan, each Participant agrees to:
(a) Limit his recourse for payment of any benefits to which he is
entitled to the assets of the Plan;
(b) Complete and file with the Administrator an enrollment form, a
Deferred Salary Agreement and such other forms as required by
the Administrator or Insurance Company;
(c) Submit such evidence of insurability as may be required; and
(d) Provide the Administrator with such information about himself
and his Beneficiary as required by Paragraph 19.10.
PART IV - CONTRIBUTIONS
4.1 CONTRIBUTIONS TO THE PLAN. The Company shall contribute to the Plan,
for each Plan Year:
(a) Elective Deferrals (if elected in Section (G));
(b) Company Matching Contributions (if elected in Section (I));
(c) Company Qualified Matching Contributions (if elected in
Section (I));
(d) Company Profit-Sharing Contributions (if elected in Section
(K)); and
(e) Company Qualified Nonelective Contributions (if elected in
Section (H)).
Each Participant may, by written direction to the Administrator, elect
to make to the Plan:
(a) Participant Matched Contributions (if permitted by Section
(J));
(b) Participant Nondeductible Voluntary Contributions (if
permitted by Section (J)).
The Participant may suspend his contributions, if allowed, during any
time period by filing a written notice with the Administrator.
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<PAGE> 24
4.2 LIMITATIONS ON ELECTIVE DEFERRALS.
(a) MAXIMUM AMOUNT OF ELECTIVE DEFERRALS: No Participant shall be
permitted to have Elective Deferrals made under this Plan, or
any other qualified plan maintained by the Company, during the
Participant's taxable year, in excess of the dollar
limitations contained in Code Section 402(g) in effect at the
beginning of such taxable year. With respect to any taxable
year, a Participant's elective deferrals are the sum of all
Company contributions made on behalf of such Participant
pursuant to an election to defer under any qualified CODA as
described in Code Section 401(k), a simplified employee
pension cash or deferred arrangement as described in Code
Section 402(h)(1)(B), any eligible deferred compensation plan
under Code Section 457, any plan as described under Code
Section 501(c)(18), and any Company contributions made on
behalf of a Participant for the purchase of an annuity
contract under Code Section 403(b) pursuant to a Deferred
Salary Agreement.
A Participant may assign to this Plan any Excess Deferrals
made during a taxable year by notifying the Administrator in
writing on or before March 1st of the amount of the Excess
Deferrals to be designated to the Plan. A Participant is
deemed to notify the Administrator of any Excess Deferrals
that arise by taking into account only those Elective
Deferrals made to this Plan and any other plans of this
Employer. Notwithstanding any other provision of the Plan,
Excess Deferrals, plus any income and minus any loss allocable
thereto, shall be distributed no later than April 15 to any
Participant to whose account Excess Deferrals were assigned
for the preceding year and who claims Excess Deferrals for
such taxable year.
Excess Deferrals shall be adjusted for any income or loss. The
income or loss allocable to Excess Deferrals is the sum of
income or loss allocable to the Participant's Elective
Deferral account for the taxable year multiplied by a
fraction, the numerator of which is such Participant's Excess
Deferrals for the year and the denominator is the
Participant's account balance attributable to Elective
Deferrals plus any withdrawals of Elective Deferrals without
regard to any income or loss occurring during such taxable
year. In the event that any Excess Deferrals returned under
this Paragraph were matched by Company Matching Contributions,
those Company Matching Contributions, together with earnings,
shall be forfeited and applied under Paragraph 4.5(b).
(b) ACTUAL DEFERRAL PERCENTAGE: The Actual Deferral Percentage
(hereinafter "ADP") for Participants who are Highly
Compensated Employees for each Plan Year and the ADP for
Participants who are non-Highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
(1) The ADP for the Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for
Participants who are non-Highly Compensated Employees for the
same Plan Year multiplied by 1.25; or
(2) The ADP for the Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for
Participants who are non-Highly Compensated Employees for the
same Plan Year multiplied by 2.0, provided that the ADP for
Participants who are Highly Compensated Employees does not
exceed the ADP for Participants who are non-Highly Compensated
Employees by more than two (2) percentage points.
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<PAGE> 25
"Actual Deferral Percentage" shall mean, for a specified group
of Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in such group) of
(1) the amount of Company contributions actually paid over to
the Plan on behalf of such Participant for the Plan Year to
(2) the Participant's Compensation for such Plan Year.
Compensation taken into account for this purpose may be
limited to Compensation received by an employee while the
employee is a Participant. Company contributions on behalf of
any Participant shall include: (1) any Elective Deferrals made
pursuant to the Participant's deferral election, including
Excess Deferrals of the Highly Compensated Employees, but
excluding Excess Deferrals of Non-Highly Compensated Employees
that arise solely from Elective Deferrals made under the Plan
or plans of this Employer and Elective Deferrals that are
taken into account in the Actual Contribution Percentage test
(provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals); and (2) at the
election of the Company, Company Qualified Nonelective
Contributions and Company Qualified Matching Contributions.
For purposes of computing ADP's, an Employee who would be a
Participant but for the failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Company Qualified Nonelective
Contributions or Company Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP
test) allocated to his accounts under two or more arrangements
described in Code Section 401(k) that are maintained by the
Company, shall be determined as if such Elective Deferrals
(and, if applicable, such Company Qualified Nonelective
Contributions or Company Qualified Matching Contributions, or
both) were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan years, all cash
or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b) only if aggregated with
one or more other plans, or if one or more other plans satisfy
the requirements of such Code Sections only if aggregated with
this Plan, then this Paragraph shall be applied by determining
the ADP of Employees as if all such plans were a single plan.
Plans may be aggregated to satisfy Code Section 401(k) only if
they have the same Plan Year.
For purposes of determining the ADP of a Participant who is a
5 percent owner or one of the ten most highly-paid Highly
Compensated Employees, the Elective Deferrals (and Company
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for
purposes of the ADP test) and Compensation of such Participant
shall include the Elective Deferrals (and, if applicable,
Company Qualified Nonelective Contributions and Qualified
Matching Contributions, or both) and Compensation for the Plan
Year of the family members (as defined in Code Section
414(q)(6)). The combined actual deferral ratio for the family
group shall be the actual deferral ratio determined by
combining the Elective Deferrals, Compensation and amounts
treated as Elective Deferrals of all the eligible family
members. Family members with respect to such Highly
Compensated Employees, shall be disregarded as separate
Employees in determining the ADP both for Participants who are
non-Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
For purposes of determining the ADP test, Elective Deferrals,
Qualified Nonelective Contributions, and Qualified Matching
Contributions must be made before the last day of the
twelve-month period immediately following the Plan Year to
which contributions relate.
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<PAGE> 26
The Company shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Company
Qualified Nonelective Contributions or Company Qualified
Matching Contributions, or both, used in such test. The
determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
4.3 EXCESS CONTRIBUTIONS.
(a) EXTRA CONTRIBUTION: If the ADP limitation in Paragraph 4.2(b)
is not met, the Company may elect to make an extra Company
Qualified Nonelective Contribution to eligible non-Highly
Compensated Employees sufficient to satisfy the ADP limit. The
contribution shall be subject to the distribution and
nonforfeitability requirements of Code Section 401(k).
If the Company does not make such a contribution, a corrective
distribution of Excess Contributions will be made in
accordance with Section 4.3(b) below.
(b) CORRECTIVE DISTRIBUTIONS OF EXCESS: The Company may also
satisfy Paragraph 4.2(b) by distributing the Excess
Contributions in accordance with this Paragraph. Excess
Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess
Contributions were allocated for the preceding Plan Year. If
such excess amounts are distributed more than 2 1/2 months
after the last day of the Plan Year in which such excess
amounts arose, a ten (10) percent excise tax shall be imposed
on the Company maintaining the Plan with respect to such
amounts. Such distributions shall be made to Highly
Compensated Employees on the basis of the respective portions
of the Excess Contributions attributable to each of such
Employees. Excess Contributions shall be allocated among
Participants who are subject to the family member aggregation
rules of Code Section 414(q)(6) in proportion to the Elective
Deferrals of each family member that are combined to determine
the actual deferral ratio. Excess Contributions (including the
amounts recharacterized) shall be treated as Annual Additions
under the Plan.
Excess Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable
to Excess Contributions is the income or loss allocable to the
Participant's Elective Deferral account (and, if applicable,
the Company Qualified Nonelective Contribution account or the
Company Qualified Matching Contribution account or both) for
the Plan Year multiplied by a fraction, the numerator of which
is such Participant's Excess Contributions for the year and
the denominator is the Participant's account balance
attributable to Elective Deferrals (and Company Qualified
Nonelective Contributions or Company Qualified Matching
Contributions, or both, if any of such contributions are
included in the ADP test) plus any withdrawals of these
contributions and without regard to any income or loss
occurring during such Plan Year.
Excess Contributions shall be distributed from the
Participant's Elective Deferral account and Company Qualified
Matching Contribution account (if applicable) in proportion to
the Participant's Elective Deferrals and Company Qualified
Matching Contributions (to the extent used in the ADP test)
for the Plan Year. Excess Contributions shall be distributed
from the Participant's Company Qualified Nonelective
Contribution account only to the extent that such Excess
Contributions exceed the balance in the Participant's Elective
Deferral account and Company Qualified Matching Contribution
account. In the event that any Excess Contributions returned
under this Paragraph were matched by Company Matching
Contributions, those Company Matching Contributions, together
with earnings, shall be forfeited and applied under Paragraph
4.5(b).
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<PAGE> 27
(c) RECHARACTERIZATION: If all Participants are eligible to make
Participant contributions under the Plan, the Company may also
satisfy Paragraph 4.2(b) by recharacterizing the Excess
Contributions. A Participant may treat his Excess
Contributions as an amount distributed to him and then
contributed by him to the Plan. Excess Contributions may only
be recharacterized in the Plan from which they arose.
Recharacterized amounts shall remain nonforfeitable and
subject to the same distribution requirements as Elective
Deferrals. Amounts may not be recharacterized by a Highly
Compensated Employee to the extent that such amount in
combination with other Participant contributions made by that
Employee would exceed any stated limit under the Plan on
Participant contributions.
Recharacterization must occur no later than 2 1/2 months after
the last day of the Plan Year in which such Excess
Contributions arose and is deemed to occur no earlier than the
date the last Highly Compensated Employee is informed in
writing of the amount recharacterized and the consequences
thereof. Recharacterized amounts shall be taxable to the
Participant for the Participant's tax year in which the
Participant would have received them in cash.
4.4 LIMITATIONS ON COMPANY AND PARTICIPANT CONTRIBUTIONS. The Actual
Contribution Percentage ("hereinafter ACP") for Participants who are
Highly Compensated Employees for each Plan Year and the ACP for
Participants who are non-Highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(a) The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants
who are non-Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants
who are non-Highly Compensated Employees for the same Plan
Year multiplied by 2.0, provided that the ACP for Participants
who are Highly Compensated Employees does not exceed the ACP
for Participants who are non-Highly Compensated Employees by
more than two (2) percentage points.
"Actual Contribution Percentage" shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated
separately for each Participant in such group) of (1) the Participant's
Actual Contribution Percentage amounts to (2) the Participant's
Compensation for the Plan Year. Compensation taken into account for
this purpose may be limited to Compensation received by an Employee
while the Employee is a Participant. Actual Contribution Percentage
amounts are the sum of the Participant Nondeductible Voluntary
Contributions, recharacterized Elective Deferrals (Paragraph 4.3(c)),
Participant Matched Contributions, Company Matching Contributions, and
Company Qualified Matching Contributions (to the extent not taken into
account for purposes of the ADP test) made under the Plan on behalf of
the Participant for the Plan Year. Such Actual Contribution Percentage
amounts shall not include Matching Contributions that are forfeited
either to correct Excess Aggregate Contributions or because the
contributions to which they relate are forfeited due to Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions.
Such Actual Contribution Percentage amounts shall include forfeitures
of Excess Aggregate Contributions or Company Matching Contributions
allocated to the Participant's Company Match Account, which shall be
taken into account in the year in which such forfeiture is allocated.
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<PAGE> 28
The Company may include in the ACP amounts, Elective Deferrals or
Company Qualified Nonelective Contributions, or both, so long as the
ADP test is met before the Elective Deferrals and Company Qualified
Nonelective Contributions are used in the ACP test and continues to be
met following the exclusion of these contributions that are used to
meet the ACP test. The inclusion of Company Qualified Nonelective
Contributions and Elective Contributions in the ACP amounts shall be
performed in a manner consistent with the provisions of Reg.
ss.1.401(m)-1(b)(5).
For purposes of computing the ACP, any Employee is eligible if he can
make a Participant contribution, or an Elective Deferral (if the
Company takes such contributions into account in the calculation of the
Actual Contribution Percentage), or can receive a Company Matching
Contribution (including forfeitures) or a Company Qualified Matching
Contribution. If a Participant contribution is required as a condition
of participation in the Plan, any Employee who would be a Participant
in the Plan if such Employee made such a contribution shall be treated
as an eligible Participant on behalf of whom no Participant
contributions are made.
The ACP for any Participant who is a Highly Compensated Employee for
the Plan Year and who is eligible to have Actual Contribution
Percentage amounts allocated to his accounts under two or more plans
described in Code Section 401(a), or arrangements described in Code
Section 401(k) that are maintained by the Company, shall be determined
as if such Actual Contribution Percentage amounts were made under a
single plan. If a Highly Compensated Employee participates in two or
more plans described in Code Section 401(a) or arrangements described
in Code Section 401(m) that have different Plan Years, all such plans
or arrangements ending with or within the same calendar year shall be
treated as a single plan.
In the event that this Plan satisfies the requirements of Code Sections
401(m), 401(a)(4) or 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such
Code Sections only if aggregated with this Plan, then this Paragraph
shall be applied by determining the ACP of Employees as if all such
plans were a single plan. Plans may be aggregated to satisfy Code
Section 401(m) only if they have the same Plan Year.
For purposes of determining the ACP of a Participant who is a 5 percent
owner or one of the ten most highly-paid Highly Compensated Employees,
the Actual Contribution Percentage amounts and Compensation of such
Participant shall include the Actual Contribution Percentage amounts
and Compensation for the Plan Year of family members (as defined in
Code Section 414(q)(6). The combined actual contribution ratio for the
family group shall be the actual contribution ratio determined by
combining the Participant contributions, Compensation, matching
contributions and amounts treated as matching contributions of all the
eligible family members. Family members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the ACP both for Participants who are non-Highly
Compensated Employees and for Participants who are Highly Compensated
Employees.
For purposes of determining the ACP test, Participant contributions are
considered to have been made in the Plan Year in which contributed to
the Plan. Company Matching and Qualified Matching Contributions and
Company Qualified Nonelective Contributions shall be considered made
for a Plan Year if made no later than the end of the twelve-month
period beginning on the day after the close of the Plan Year.
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<PAGE> 29
The Company shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Company Qualified
Nonelective Contributions or Qualified Matching Contributions, or both,
used in such test. The determination and treatment of the ACP amounts
of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
In addition, a Company shall not allocate contributions to a
Participant's Account which would result in an Excess Annual Addition
under Part V, LIMITATION ON ALLOCATIONS. The aggregate Company
contributions for any Plan Year may also be limited to the amount
deductible by the Company under Code Section 404 with reductions made,
in order, to Company Profit-Sharing, Company Matching, Company
Qualified Matching, Company Qualified Nonelective and Elective Deferral
Contributions.
4.5 EXCESS AGGREGATE CONTRIBUTIONS.
(a) EXTRA CONTRIBUTION: If the ACP limitation in Paragraph 4.4 is
not met, the Company may elect to make an extra Company
Qualified Nonelective Contribution to eligible non-Highly
Compensated Employees sufficient to satisfy the ACP limit. The
contribution shall be subject to the distribution and
nonforfeitability requirements of Code Section 401(k).
(b) CORRECTIVE DISTRIBUTION OF EXCESS: The Company may also
satisfy Paragraph 4.4 by distributing or forfeiting the Excess
Aggregate Contributions in accordance with this Paragraph.
Excess Aggregate Contributions, plus any income and minus any
loss allocable thereto, shall be forfeited, if forfeitable, or
if not forfeitable, distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan
Year. If such Excess Aggregate Contributions are distributed
more than 2 1/2 months after the last day of the Plan year in
which such excess amounts arose, a ten (10) percent excise tax
shall be imposed on the Company maintaining the Plan with
respect to such amounts. Any distribution or forfeiture of
Excess Aggregate Contributions for any Plan Year shall be made
on the basis of the respective portions of such amounts
attributable to each Highly
Compensated Employee. Excess Aggregate Contributions shall be
allocated to Participants who are subject to the family member
aggregation rules of Code Section 414(q)(6) in proportion to
the Participant contributions and matching contributions of
each family member that are combined to determine the actual
contribution ratio. Excess Aggregate Contributions shall be
treated as Annual Additions under the Plan. In the event that
any Excess Aggregate Contributions returned under this
Paragraph were matched by Company Matching Contributions,
those Company Matching Contributions, together with earnings,
shall be forfeited and applied under this Paragraph.
Excess Aggregate Contributions shall be adjusted for any
income or loss. The income or loss allocable to Excess
Aggregate Contributions is the income or loss allocable to the
Participant's Participant Contribution account, Company
Matching Contribution account (if any, and if all amounts
therein are not used in the ADP test) and, if applicable,
Company Qualified Nonelective Contribution account and
Elective Deferral account for the Plan Year multiplied by a
fraction, the numerator of which is such Participant's Excess
Aggregate Contributions for the year and the denominator is
the Participant's account balance(s) attributable to Actual
Contribution Percentage amounts plus any withdrawals of these
amounts and without regard to any income or loss occurring
during such Plan Year.
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<PAGE> 30
Forfeitures of Excess Aggregate Contributions shall be applied
to reduce Company contributions. Excess Aggregate
Contributions attributable to amounts other than Participant
contributions, including forfeited matching contributions,
shall be treated as Company contributions for purposes of Code
Sections 404 and 415, even if distributed from the Plan.
Excess Aggregate Contributions shall first be distributed from
the Participant Nondeductible Voluntary Contributions Account.
To the extent that Excess Aggregate Contributions exceed the
balance in the Participant Nondeductible Voluntary
Contribution Account, the Excess Aggregate Contributions shall
be forfeited, if forfeitable, or distributed on a pro rata
basis from the Participant Matched Contribution accounts and
Company Matching Contribution accounts.
4.6 MULTIPLE USE OF ALTERNATIVE TEST. If one or more Highly Compensated
Employees participate in both a CODA and a plan subject to the ACP test
maintained by the Company and the sum of the ADP and ACP of those
Highly Compensated Employees subject to either or both tests exceeds
the Aggregate Limit, then the ADP or ACP of those Highly Compensated
Employees who also participate in a CODA shall be reduced (beginning
with such Highly Compensated Employee whose ACP is the highest) so that
the limit is not exceeded. The amount by which each Highly Compensated
Employee's Actual Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The ADP and ACP of the
Highly Compensated Employees are determined after any corrections
required to meet the ADP and ACP tests. Multiple use does not occur if
both the ADP and ACP of the Highly Compensated Employees does not
exceed 1.25 multiplied by the ADP and ACP of the non-Highly Compensated
Employees.
The "Aggregate Limit" shall mean the greater of:
(a) the sum of (i) 125 percent of the greater of the ADP of the
non-Highly Compensated Employees for the Plan Year or the ACP of
non-Highly Compensated Employees under the Plan subject to Code Section
401(m) for the Plan Year beginning with or within the Plan Year of the
CODA and (ii) two percentage points plus the lesser of the relevant ADP
or the relevant ACP. In no event, however, shall this amount exceed
twice the lesser of the relevant ADP or the relevant ACP; or
(b) (i) 125 percent of the lesser of the ADP of the non-Highly
Compensated Employees for the Plan Year or the ACP of non-Highly
Compensated Employees under the Plan subject to Code Section 401(m) for
the Plan Year beginning with or within the Plan Year of the CODA and
(ii) two percentage points plus the greater of the relevant ADP or the
relevant ACP. In no event, however, shall this amount exceed twice the
greater of the relevant ADP or the relevant ACP.
4.7 PERMITTED DISPARITY. Unless elected otherwise in Section (K), the
Company Profit-Sharing Contribution for the Plan Year shall be
allocated to each Participant's account:
First, in the ratio that each Participant's Compensation not in excess
of the integration level bears to all Participants' Compensation not in
excess of the integration level, but such allocation percentage shall
not be in excess of the profit-sharing maximum disparity rate.
Second, any remaining contribution shall be allocated to each
Participant's account in the ratio that each Participant's Compensation
for the Plan Year in excess of the integration level bears to the
excess Compensation of all Participants. This excess contribution, as a
percentage of excess Compensation, cannot exceed two times the
allocation percentage of the above paragraph.
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Third, any remaining Company Profit-Sharing contribution shall be
allocated to each Participant's account in the ratio that each
Participant's total Compensation bears to the sum of all Participants'
total Compensation.
The integration level shall be equal to the taxable wage base or such
lesser amount elected by the Company in Section (K). The taxable wage
base is the maximum amount of earnings which may be considered wages
for a year under Code Section 3121(a)(1) in effect as of the beginning
of the Plan Year.
The profit-sharing maximum disparity rate shall be as follows:
If the integration level is more than $0 but not more than 20
percent of the taxable wage base, the rate shall be 5.7
percent.
If the integration level is more than 20 percent of the
taxable wage base but not more than 80 percent of the taxable
wage base, the rate shall be 4.3 percent.
If the integration level is more than 80 percent of the
taxable wage base, but less than 100 percent of the taxable
wage base, the rate shall be 5.4 percent.
If the integration level used is equal to the taxable wage
base, the rate shall be 5.7 percent.
The Company Profit-Sharing Contribution for top-heavy plans shall be
allocated in accordance with Paragraph 16.2, MINIMUM CONTRIBUTION UNDER
A TOP-HEAVY PLAN.
Notwithstanding the preceding paragraphs, for any Plan Year this Plan
benefits any Participant who benefits under another qualified plan or
simplified employee pension plan, as defined in Code Section 408(k),
maintained by the Company that provides for permitted disparity (or
imputes disparity), Company contributions and forfeitures will be
allocated to the account of each Participant in the ratio that such
Participant's Compensation bears to the Compensation of all
Participants.
Effective for Plan Years beginning on or after January 1, 1995, the
cumulative permitted disparity limit for a Participant is 35 total
cumulative permitted disparity years. Total cumulative permitted years
means the number of years credited to the Participant for allocation or
accrual purposes under this Plan, any other qualified plan or
simplified employee pension plan (whether or not terminated) ever
maintained by the Company. For purposes of determining the
Participant's cumulative permitted disparity limit, all years ending in
the same calendar year are treated as the same year. If the Participant
has not benefited under a defined benefit or target benefit plan for
any year beginning on or after January 1, 1994, the Participant has no
cumulative disparity limit.
4.8 COLLECTION OF PARTICIPANT CONTRIBUTIONS. Participant contributions
shall be collected by the Company through payroll deduction or
otherwise within the limits set forth in this Part. All such
contributions shall be paid over to the Insurance Company.
4.9 COMPANY CONTRIBUTIONS - TIMING. The Company shall pay its Contributions
for each Plan Year on or before the time required by law for filing the
Company's federal income tax return (including extensions) for the
taxable year with respect to which the contributions are made.
4.10 COMPANY CONTRIBUTIONS - PROFITS. If the Company elects in Section (M),
Company contributions, including Elective Deferrals, may be made
without regard to profits. The Plan shall continue to qualify as a
profit-sharing plan for purposes of Code Sections 401(a), 402, 412 and
417.
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4.11 RETURN OF COMPANY CONTRIBUTIONS. Except as provided below, no part of
the Plan's assets shall revert to the Company or be diverted for
purposes other than the exclusive benefit of the Employees or their
Beneficiaries:
(a) Any contribution made by the Company because of a mistake of
fact shall be returned to the Company upon written notice to
the Insurance Company. A contribution shall not be refunded
more than one year after the payment of the contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Code, any contribution made incident to that initial
qualification by the Company must be returned to the Company
within one year of the date the initial qualification is
denied but only if the application for the qualification is
made by the time prescribed by law for filing the Company's
return for the taxable year in which the Plan is adopted, or
such later date as the Secretary of the Treasury may
prescribe. After the denial of qualification and upon receipt
of evidence thereof, the Contract, and Policies shall be
canceled and an amount equal to the value of all Participants'
Accounts as determined in accordance with the terms of the
Contract or Policies shall be paid to the Company.
(c) Any contribution made by the Company is conditioned on the
deductibility of such contribution, and shall be refunded to
the Company, to the extent disallowed, upon written notice to
the Insurance Company. A contribution shall not be returned
more than one year after the disallowance of the contribution.
If the Internal Revenue Service determines that the Plan is
not qualified, the amount returned shall be determined under
Paragraph 20.2.
4.12 ROLLOVER CONTRIBUTIONS. Subject to approval by the Administrator and
Insurance Company and if permitted in Section (M), an Employee who
satisfies the classification requirements of Section (D) may contribute
to the Plan an amount which qualifies as a rollover contribution within
the meaning of Code Sections 402(a)(5), 403(a)(4), or 408(d)(3)(A)(ii).
As such, the rollover contribution must have been distributed to the
Employee from a qualified employee trust or qualified annuity plan or
must be a directed rollover from such trust or plan to this Plan as
specified by the Employee; or from an individual retirement arrangement
("IRA"), but only if such funds originated from a qualified employee
trust or qualified annuity plan. The amount distributed to the Employee
from the qualified employee trust, qualified annuity plan or IRA must
be transferred to the Plan in cash within 60 days after the Employee
receives it. The maximum amount which the Employee may rollover is the
amount distributed to him less the sum of nondeductible employee
contributions made to the prior qualified employee trust or qualified
annuity plan. A lesser amount may be rolled over and the difference
retained by the Employee. The amount retained shall be subject to tax.
The Rollover Contribution shall be paid to the Contract, and invested
as selected in Section (M). Rollover contributions shall be accounted
for separately and shall be fully vested at all times. The separate
account established for Rollover Contributions shall be withdrawn in
accordance with Section (O).
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4.13 TRANSFERS OF AMOUNTS FROM OTHER PLANS. If the Plan amends and restates,
or replaces a former plan that was qualified under Code Sections 401(a)
or 403(a), the Company may cause amounts from such former plan to be
transferred into the Contract subject to consent of the Insurance
Company. At the discretion of the Administrator and subject to the
consent of the Insurance Company, the Plan may also accept other
plan-to-plan transfers. The amounts so transferred shall be accompanied
by written instructions from the Administrator identifying: the former
plan; this Plan; the name of each Participant; the amount of any
account balance transferred to the Plan from the former plan
attributable to the contributions of each Participant and of the
Company on his behalf; the vesting percentage for amounts attributable
to Company contributions; and any other information that may be
required by the Insurance Company.
The Administrator shall advise the Insurance Company in writing of the
allocation of such amounts within the Contract. The amounts so
transferred may be deposited in the Participant's Account in accordance
with the most recent allocation instructions or with special allocation
instructions. The amounts transferred shall be distributed to
Participants in accordance with the terms of the Plan.
4.14 PARTICIPANT DEDUCTIBLE VOLUNTARY CONTRIBUTIONS. The Administrator shall
not accept Participant Deductible Voluntary Contributions which are
made for a taxable year beginning after December 31, 1986.
Contributions made prior to that date shall be maintained in a separate
account which shall be nonforfeitable at all times. The account shall
share in the gains and losses of the Plan in the same manner as
described in Paragraph 8.1. No part of the Participant Deductible
Voluntary Contribution account shall be used to purchase life
insurance. Subject to Paragraphs 14.3 and 14.4, the Participant may
withdraw any part of the Deductible Voluntary Contribution account by
making a written application to the Administrator.
4.15 ADDITIONAL REQUIREMENTS FOR OWNER-EMPLOYEES. If this Plan provides
contributions for one or more owner-Employees who control both the
business for which this Plan is established and one or more other
trades or businesses, this Plan and the plan established for other
trades or businesses must, when looked at as a single plan, satisfy
Code Sections 401(a) and (d) for the Employees of this and all other
trades or businesses.
If this Plan provides contributions for one or more owner-Employees who
control one or more trades or businesses, the Employees of the other
trades or businesses must be included in a plan which satisfies Code
Sections 401(a) and (d) and which provides contributions not less
favorable than provided for owner-Employees under this Plan.
If an individual is covered as an owner-Employee under the plans of two
or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions of the
Employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for him under the
most favorable plan of the trade or business which is not controlled.
For purposes of the preceding Paragraphs, an owner-Employee or two or
more owner-Employees shall be considered to control a trade or business
if such owner-Employee, or such two or more owner-Employees together:
(a) own the entire interest in an unincorporated trade or
business, or
(b) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in such
partnership.
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For purposes of the preceding sentence, an owner-Employee, or two or
more owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which the owner-Employee, or such two or more owner-Employees, are
considered to control within the meaning of the preceding sentence.
PART V - LIMITATION ON ALLOCATIONS
5.1 MAXIMUM PERMISSIBLE AMOUNT. If the Participant does not participate in,
and has never participated in another qualified plan maintained by the
Company, a welfare benefit fund, as defined in Code Section 419(e),
maintained by the adopting Company, or an individual medical account as
defined in Code Section 415(l)(2), maintained by the Company, which
provides an Annual Addition as defined in Paragraph 1.3, the amount of
Annual Additions which may be credited to the Participant's Account for
any Limitation Year shall not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan. If
the Company contribution that would otherwise be contributed or
allocated to the Participant's Account would cause the Annual Additions
for the Limitation Year to exceed the Maximum Permissible Amount, the
amount contributed or allocated shall be reduced so that the Annual
Additions for the Limitation Year shall equal the Maximum Permissible
Amount.
For purposes of applying Part V, LIMITATIONS ON ALLOCATIONS,
compensation for a Limitation Year is the compensation actually paid or
includible in gross income during such Limitation Year as defined in
Paragraph 1.14 only.
5.2 ESTIMATE OF MAXIMUM. Prior to determining the Participant's actual
Compensation for the Limitation Year, the Company may determine the
Maximum Permissible Amount for the Participant on the basis of a
reasonable estimation of the Participant's Compensation for the
Limitation Year, uniformly determined for all Participants similarly
situated.
5.3 RECONCILIATION. As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year shall be determined on the basis of the Participant's
actual Compensation for the Limitation Year.
5.4 EXCESS ANNUAL ADDITIONS. If, pursuant to Paragraph 5.3 or as a result
of the allocation of Forfeitures, there is an Excess Annual Addition,
the excess shall be disposed of as follows:
(a) First, any Participant Nondeductible Voluntary Contributions,
and any earnings thereon, to the extent they reduce the Excess
Annual Additions, shall be returned to the Participant.
Second, any Participant Matched Contributions, and any
earnings thereon, shall be returned to the Participant.
(b) If after the application of Paragraph (a) Excess Annual
Additions still exist, any Elective Deferrals and any earnings
thereon shall be returned to the Participant.
(c) If after the application of Paragraphs (a) and (b) Excess
Annual Additions still exist and the Participant is covered by
the Plan at the end of the Limitation Year, the Excess Annual
Additions in the Participant's Account shall be held
unallocated in a suspense account and used to reduce Company
contributions (including any allocation of forfeitures) for
such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary.
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If after the application of Paragraphs (a) and (b) Excess
Annual Additions still exist, and the Participant is not
covered by the Plan at the end of the Limitation Year, the
Excess Annual Additions shall be held unallocated in a
suspense account. The suspense account shall be applied to
reduce future Company contributions (including allocation of
any forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if
necessary.
The Excess Annual Additions in a Participant's Account shall
be determined as being first from Company Profit-Sharing
Contributions, then from Company Nonelective Contributions,
then from Company Qualified Matching Contributions, and
finally from Company Matching Contributions. Neither the
consent of the Participant nor the Participant's Spouse shall
be required to the extent that the distribution is required to
satisfy Code Section 415.
If a suspense account is in existence at any time during the
Limitation Year pursuant to this Paragraph 5.4, it shall
participate in the allocation of the gains and losses. All
amounts in a suspense account must be allocated to
Participants accounts before any Company or any Participant
contributions may be made to the Plan for that Limitation
year. Excess Annual Additions held in the suspense account may
not be distributed to Participants or Former Participants.
5.5 IF COMPANY MAINTAINS OTHER DEFINED CONTRIBUTION PLANS. Prior to
determining the Participant's actual Compensation for the Limitation
Year, the Company may determine the Maximum Permissible Amount for a
Participant in the manner described in Paragraph 5.2. This Paragraph
applies if, in addition to this Plan, the Participant is covered under
another qualified master or Prototype defined contribution plan
maintained by the Company, a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Company, or an individual medical
account, as defined in Code Section 415(l)(2), maintained by the
Company, which provides an Annual Addition as defined in Paragraph 1.3,
during any Limitation Year. The Annual Additions which may be credited
to the Participant's Account under this Plan for any such Limitation
Year shall be limited in accordance with this Paragraph, unless the
Company provides other limitations in Section (U). Annual Additions
shall not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to the Participant's Account under the other plans
and welfare benefit funds for the same Limitation Year. If the Annual
Additions with respect to the Participant under other defined
contribution plans and welfare benefit funds maintained by the Company
are less than the Maximum Permissible Amount and the Company
contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation, the amount
contributed or allocated shall be reduced so that the Annual Additions
under all such plans and funds for the Limitation Year shall equal the
Maximum Permissible Amount.
If the Annual Additions with respect to the Participant under such
other defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount,
no amount shall be contributed or allocated to the Participant's
Account under this Plan for the Limitation Year.
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As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for the Limitation Year shall be
determined on the basis of the Participant's actual Compensation for
the Limitation Year. If, pursuant to the preceding sentence or as a
result of the allocation of forfeitures, a Participant's Annual
Additions under this Plan and such other plans would result in Excess
Annual Additions for a Limitation Year, the Excess Annual Additions
shall be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account shall be deemed to have been allocated first
regardless of the actual allocation date.
If an Excess Annual Addition was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Annual Additions attributed to this Plan shall
be the product of:
(a) The total Excess Annual Additions allocated as of such date,
times
(b) The ratio of (i) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (ii) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified Master or Prototype defined
contribution plans.
Any Excess Annual Additions attributed to the Plan shall be disposed of
in the manner described in Paragraph 5.4.
5.6 IF COMPANY MAINTAINS OTHER PLANS. If the Participant is covered under
another qualified defined contribution plan maintained by the Company
which is not a master or Prototype Plan, Annual Additions which may be
credited to the Participant's Account under this Plan for any
Limitation Year shall be limited in accordance with Paragraphs 5.1
through 5.6 as though the other plan were a master or Prototype Plan
unless the Company provides other limitations in Section (T).
If the Company maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum of
the Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction shall not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's Account
under this Plan for any Limitation Year shall be limited in accordance
with Section (T).
5.7 CONTROLLED GROUP OF EMPLOYERS, ETC. For purposes of this Part, Employer
shall mean the Company that adopts this Plan, and all members of a
controlled group of corporations (as defined in Code Section 414(b) as
modified by Code Section 415(h)), all commonly controlled trades or
businesses (as defined in Code Section 414(c) as modified by Code
Section 415(h)), or affiliated service groups (as defined in Code
Section 414(m)), of which the adopting Company is a part, and any other
entity required to be aggregated with the Company pursuant to
Regulations under Code Section 414(o).
5.8 DEFINITIONS.
(a) DEFINED BENEFIT FRACTION - A fraction, the numerator of which
is the sum of a Participant's Projected Annual Benefit under
all the defined benefit plans (whether or not terminated)
maintained by the Company, and the denominator of which is the
lesser of: 125 percent of the dollar limitation determined for
the Limitation Year under Code Section 415(b) and (d) or 140
percent of the highest average Compensation, including any
adjustments under Code Section 415(b).
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The highest average Compensation is the Participant's average
Compensation for the three consecutive Years of Service with
the Company that produces the highest average. A Year of
Service with the Company is the 12-consecutive month period
defined in Paragraph 1.49.
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 Company which were in
existence on May 6, 1986, the denominator of this fraction
shall not be less than 125 percent of the sum of the annual
benefits under such plans which the Participant had accrued as
of the close of the last Limitation Year beginning before
January 1, 1987, disregarding any changes in the terms and
conditions of the Plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements
of Code Section 415 for all Limitation Years beginning before
January 1, 1987.
(b) PROJECTED ANNUAL BENEFIT - 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 the Plan
assuming:
(i) the Participant shall continue employment until
normal retirement date under the Plan (or current
age, if later) and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used
to determine benefits under the Plan shall remain
constant for all future Limitation Years.
(c) DEFINED CONTRIBUTION FRACTION - A fraction, the numerator of
which is the sum of the Annual Additions to the Participant's
Accounts under all the defined contribution plans (whether or
not terminated) maintained by the Company for the current and
all prior Limitation Years (including the Annual Additions
attributable to the Participant's Nondeductible Voluntary
Contributions to all defined benefit plans, whether or not
terminated, maintained by the Company and the Annual Additions
attributable to all welfare benefit funds, as defined in Code
Section 419(e), and individual medical accounts, as defined in
Code Section 415(l)(2), maintained by the Company), and the
denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of
Service with the Company (regardless of whether a defined
contribution plan was maintained by the Company). The maximum
aggregate amount in any Limitation Year is the lesser of: 125
percent of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's Compensation
for such year.
If the Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after December 31,
1986, in one or more defined contribution plans maintained by
the Company which were in existence on May 6, 1986, the
numerator of this fraction shall be adjusted if the sum of
this fraction and the defined benefit fraction would otherwise
exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of
the fractions over 1.0 times (2) the denominator of this
fraction, shall be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the
Plan made after May 6, 1986, but using the Code Section 415
limitation applicable to the first Limitation Year beginning
on or after January 1, 1987.
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PART VI - PLAN INVESTMENT - CONTRACT
6.1 FUNDING POLICY. Plan benefits shall be provided under a Contract owned
by the Company and any Policies purchased under Paragraph 7.1. The
Company shall have the duty to establish attending policy to carry out
the objectives of the Plan. The funding policy is intended to establish
a desired ratio of fixed income to equity risk for the Plan taking into
account plan liquidity and diversification needs, the type of qualified
plan and the financial stability of the Company. The funding policy
shall include the selection of investment funds offered by the
Insurance Company and a determination of the portion of contributions
and funds held under the Contract to be invested in the investment
funds selected. The general funding policy of the Plan shall be at all
times to maintain a balance between safety in capital investment and
investment return. The funding policy should consider anticipated
future contributions and rates of return on investments and should be
designed to meet the short and long-term financial needs of the Plan.
Once the Company has directed the investment of Plan assets under the
Contract to achieve the basic assets mix objective, the Company shall
monitor the Plan's participation in investment funds under the
Contract. The Company shall meet periodically for the purpose of
reviewing and, if necessary, revising the funding policy of the Plan.
The Company may request the Insurance Company to amend the Contract to
change the investment funds offered under the Contract. Any actions
taken by the Company shall be communicated in writing to the
Administrator and shall be recorded in the official records of the
Company. The Company may delegate the responsibility for allocation of
Plan assets among investment funds maintained by the Insurance Company
to an investment manager by entering into an agreement for
discretionary asset management services. An investment manager named by
the Company shall serve at the pleasure of the Company, but may resign
by a written resignation to the Company. The Company shall periodically
review the performance of the investment manager.
6.2 CONTRACT. The Plan shall be funded by a Contract issued by the
Insurance Company. The Company shall execute the application for the
Contract and shall be the owner of such Contract. The Contract shall
provide for investment of contributions in the general investment
account and/or separate investment accounts offered by the Insurance
Company. The Contract shall provide for the valuation of assets and
Participants' Accounts as of each Valuation Date. The Contract shall
provide the terms and conditions by which sums may be transferred
between such investment funds or withdrawn from the Contract.
6.3 INSURANCE COMPANY'S AUTHORITY TO DIRECT INVESTMENTS. The Insurance
Company shall be the fiduciary with authority to carry out the funding
policy of the Plan subject to the following limitations:
(a) All contributions made under the Plan by and for a
Participant, less applicable Plan and Contract expenses, and
premiums to provide Policies shall be invested, as directed by
the Company (or investment manager, if appointed) in written
allocation instructions to the Insurance Company in the
general investment account and/or separate investment accounts
of the Insurance Company to the extent permissible under the
Contract.
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(b) The Insurance Company shall follow directions of the Company
(or investment manager, if appointed) concerning the exercise
or non-exercise of any power or options concerning the
Contract and any Policies held under the Plan. However, if
sums under the Contract are invested in the separate
investment accounts of the Insurance Company, the Insurance
Company retains the right to, in its sole discretion, exercise
any of the powers of an owner with respect to stocks, bonds,
securities or other property held in the separate investment
accounts. Sums held under the Contract may be transferred in
accordance with its terms among investment funds within the
Contract by direction of the Company (or investment manager,
if appointed).
(c) The Insurance Company shall follow the directions of each
Participant to the extent provided in Paragraph 6.4.
(d) The Insurance Company shall invest funds according to the
stated objectives of its various investment funds. The Company
may obtain a description of such stated objectives from the
Insurance Company. The Insurance Company does not make
investments with a view to the needs of a particular plan. The
Company (or investment manager, if appointed) retains the
responsibility for allocation of funds between the investment
funds.
(e) For purposes of determining the fiduciary responsibilities of
the Insurance Company, the Contract is the Plan asset with
respect to contributions invested in the general investment
account. To the extent the Contract also invests in separate
investment accounts of the Insurance Company, the Plan assets
shall be the assets held by the separate investment accounts.
6.4 PARTICIPANT-DIRECTED INVESTMENTS. If permitted in Section (M)(1), each
Participant shall designate in writing the investment funds under the
Contract in which his Participant contributions and Company
contributions on his behalf are to be invested. The investment funds
which shall be available shall be stated in the Contract. Subject to
the terms of the Contract, such Participant direction may be to
allocate 100 percent of such contributions to one of the investment
funds or to allocate such contributions among more than one investment
fund, provided that such allocation shall be integral percentages. The
Administrator may establish minimum percentages for any contribution on
account of any Participant that may be allocated to each investment
fund. If permitted in Section L, forfeitures shall be reallocated in
the same percentages and in the same investment funds allocable to
Company contributions. A Participant may elect in writing to change his
allocation of future contributions. Such election shall become
effective upon receipt by the Insurance Company. Subject to any
restrictions in the Contract, a Participant may elect in writing to
transfer all or a portion of his Participant's Account between
investment funds as often as permitted by the Contract. If a
Participant fails to make an initial written election, his
Participant's Account shall be allocated to an investment fund
designated by the Company and if none is designated, to the Guaranteed
Interest Account under the Contract.
6.5 COMBINING ASSETS OF MORE THAN ONE PLAN IN A SINGLE CONTRACT. With the
consent of the Insurance Company, the assets of the Plan may be
combined with the assets of any other qualified retirement plan of the
Company, or an affiliated Employer which is a member of the same
controlled group of corporations (as defined in Code Section 414(b)),
the same controlled group of trades or businesses (as defined in Code
Section 414(c)) or the same affiliated service group (as defined in
Code Section 414(m)) as the Company; in a single Contract for
investment purposes without terminating the separateness of such Plan;
provided that, in such event:
(a) Accounting records shall be maintained so that the assets of
each Plan can be separately determined.
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(b) All contributions to the Contract shall be accompanied by
written instructions from the Company designating the amount
or amounts allocable to each Plan in which such Company
participates.
(c) None of the contributions and assets attributable to one Plan
shall be used to pay benefits or expenses under any other
plan.
So long as the foregoing provisions are complied with, the
provisions of Paragraph 18.7 shall not be deemed to apply to
such combining of assets in one Contract.
PART VII - PLAN INVESTMENT - POLICIES
7.1 REQUEST OF PARTICIPANT. At the Participant's request and if permitted
by Section (N), the Company shall purchase life insurance Policies from
the Insurance Company for the benefit of a Participant and his
Beneficiary and charged against the Participant's Account. The premiums
for the Policies shall be paid with Company contributions as elected in
Section (N).
7.2 LIMITATIONS ON PURCHASE. In the event a Participant directs the Company
to purchase a Policy or Policies on the Participant's life, the Company
shall limit the amount of Company contributions to be invested in the
Policies as follows:
(a) Ordinary life - For purposes of these incidental insurance
provisions, ordinary life insurance policies are policies with
both nondecreasing death benefits and nonincreasing premiums.
If such policies are purchased, less than 1/2 of the aggregate
Company contributions allocated to any Participant shall be
used to pay the premiums attributable to them.
(b) Term and universal life - No more than 1/4 of the aggregate
Company contributions allocated to any Participant shall be
used to pay the premiums on term life insurance policies,
universal life insurance policies, and all other life
insurance policies which are not ordinary life.
(c) Combination - The sum of 1/2 of the ordinary life insurance
premiums and all other life insurance premiums shall not
exceed 1/4 of the aggregate Company contributions allocated to
any Participant.
7.3 COMPANY IS OWNER. The Company shall apply for and shall be the owner of
any Policies purchased under the terms of this Plan. The Policies must
provide that proceeds shall be payable to the Company, however the
Company shall be required to pay over all proceeds of the policies to
the Participant's designated Beneficiary in accordance with the
distribution provisions of this Plan. A Participant's Spouse shall be
the designated Beneficiary of the proceeds in all circumstances unless
a Qualified Election has been made in accordance with Paragraph 1.44.
Under no circumstances shall the Plan retain any part of the proceeds.
In the event of any conflict between the terms of this Plan and the
terms of any Policy purchased hereunder, the Plan provisions shall
control.
7.4 PREMIUM PAYMENTS. All Policies shall, as far as is practical, have a
common premium due date. The Company shall pay the initial and renewal
premiums under the Policies on any Participant's life. If no
contribution is to be made at the time a policy premium is due, the
Company may pay the premium by a policy loan or by withdrawing the
amount from the Participant's Account under the Contract if the limits
set forth in Paragraph 7.2 are not exceeded.
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7.5 DIVIDENDS. At the discretion of the Company, a Policy may provide that:
(i) dividends be applied to accumulate with interest, or to purchase
annual additions, in which case dividends shall be added to the
proceeds of the Policy for the benefit of the Participant or his
Beneficiary, or (ii) dividends shall be used to reduce premiums. Any
dividends paid after retirement, however, shall be paid to the
Participant; and any dividends paid after the Participant's death shall
be added to and become a part of the proceeds of the Policy.
7.6 DISTRIBUTION OF POLICIES. Subject to Paragraph 14.3, if applicable, the
Policies on the Participant's life shall be converted to cash or an
annuity or distributed to the Participant upon commencement of
benefits.
7.7 CHANGE IN AMOUNT OF INSURANCE. When an increase or decrease of the
amount of insurance is required because of a change in the amount of
contributions allocated to the Participant or because the aggregate
Policy premiums would exceed the limits in Paragraph 7.2, the Company
shall advise the Insurance Company to adjust the amount of the
Participant's Policies.
7.8 POLICIES UPON TERMINATION OF EMPLOYMENT. In the event a terminated
Participant is entitled to the full value of a Policy on his life, the
Participant may request the Administrator to transfer and distribute
the Policy to him. In the event a terminating Participant is not
entitled to the full value of the Policy, the Administrator after
consulting with the Participant, may:
(a) Surrender the Participant's Policy and pay the Participant's
vested portion to him;
(b) Obtain a policy loan equal to the nonvested portion of its
value and distribute the Policy to him; or
(c) Sell the Policy to the Participant for an amount equal to its
cash surrender value. The proceeds of the sale shall be
credited to the Participant's Account. If the Participant
declines to purchase the Policy, the Policy may also be sold
to: (i) a relative of the Participant who is a Beneficiary
under the Policy, (ii) the Company, or (iii) to another
employee benefit plan in which he is a Participant.
PART VIII - PARTICIPANT'S ACCOUNT
8.1 PARTICIPANT'S ACCOUNT. A separate account shall be maintained for each
Participant to which shall be credited the Company contributions and
earnings thereon. At any time, a Participant's Account shall equal: (i)
the sum of the value of accounts established and maintained under the
Contract on behalf of the Participant as of the latest Valuation Date,
and (ii) the value of any Policies on the life of the Participant.
Contributions of a Participant shall be accounted for separately from
the Company's contributions. The Insurance Company shall maintain
appropriate contribution accounts for each type of contribution
referred to in Part IV and made to the Plan, including accounts for:
(a) Elective Deferrals (if elected in Section (G));
(b) Company Matching Contributions (if elected in Section (I)) and
reallocated Matching Contribution forfeitures;
(c) Company Profit-Sharing Contributions (if elected in Section
(K)) and reallocated Profit-Sharing Contribution forfeitures;
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(d) Company Qualified Nonelective Contributions (if elected in
Section (H));
(e) Company Qualified Matching Contributions (if elected in
Section (I));
(f) Participant Matched Contributions (if elected in Section (J));
(g) Participant Nondeductible Voluntary Contributions (if elected
in Section (J));
(h) Rollover Contributions, if permitted under Section (M); and
(i) Direct transfers from other plans.
Contributions made by or for a Participant shall be credited to the
Participant's Account as of the date such contributions are applied
under the Contract. The amount of any premium for Policies purchased by
the Company shall be charged against the value of the Participant's
separate accounts under this Plan. Administrative expenses shall be
charged against the value of the Participants' accounts, unless the
Company agrees to pay them. Such administrative expenses, if charged
against the value of the Participants' accounts, shall be allocated on
a pro rata basis among the investment funds under the Contract.
Premiums for Policies on the life of the Participant shall be paid for
with Company contributions as elected in Section (N). If premiums for
Policies are paid for with both Elective Deferrals and other Company
contributions, then the cash surrender value of the Policies derived
from Elective Deferrals shall equal the value which bears the same
ratio to the cash surrender value of the Policies as the total amount
of Elective Deferrals used to pay Policy premiums bears to the total
amount of premiums paid. The value of the Policies derived from Company
Matching and/or Company Profit-Sharing Contributions is the cash
surrender value of the Policies on the Participant's life less the cash
surrender value of the Policies derived from Elective Deferrals.
8.2 VALUATION OF ACCOUNTS. The Administrator shall determine the value of
each Participant's Account at least annually as of the last Valuation
Date on or prior to the last day of the Plan Year.
PART IX - VESTING
9.1 FULL VESTING IN CERTAIN SEPARATE ACCOUNTS. Each Participant shall at
all times have a 100 percent vested interest in the following accounts:
(a) Elective Deferral account (if elected in Section (G));
(b) Participant Matched Contribution account (if elected in
Section (J));
(c) Participant Nondeductible Voluntary Contribution account (if
elected in Section (J));
(d) Company Qualified Nonelective Contribution account (if elected
in Section (H));
(e) Company Qualified Matching Contribution account (if elected in
Section (I));
(f) Rollover Contributions account if permitted under Section (M);
and
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(g) Account for direct transfers from other plans.
In addition, each Participant shall be fully vested in the cash
surrender value of any Policy on his life derived from Elective
Deferrals.
9.2 VESTING IN PARTICIPANT'S ACCOUNTS ATTRIBUTABLE TO COMPANY MATCHING AND
PROFIT-SHARING CONTRIBUTIONS. Each Participant shall be vested in the
value of his: (i) Company Matching Contribution account, if any; (ii)
Company Profit-Sharing Contribution account, if any; and reallocated
forfeitures (if reallocated under Section (L)); and (iii) the cash
surrender value of any Policy on his life derived from Company
Profit-Sharing and/or Matching Contributions as follows:
(a) 100 percent upon attainment of Participant's Normal Retirement
Date (as elected in Section (F));
(b) 100 percent upon retirement on or after Participant's Early
Retirement Date (if elected in Section (F));
(c) 100 percent upon Participant's death prior to the date an
annuity becomes effective;
(d) 100 percent upon Participant's Disability Retirement Date (if
elected in Section (F)); and
(e) at any other time, including Termination of Employment, the
percentage determined in accordance with the vesting schedule
specified in Section (R).
9.3 VESTING YEARS OF SERVICE/BREAKS IN SERVICE. All Years of Service with
the Company shall be included for purposes of determining the
Participant's vested interest under Paragraph 9.2(e), except that Years
of Service shall not include Service disregarded in Section (R). For
purposes of computing a Participant's nonforfeitable right to the
Account balance derived from Company contributions, the Years of
Service and Breaks in Service shall be the Plan Year.
In the case of a Participant who incurred a One-Year Break in Service,
Years of Service before such Break shall not be taken into account
until the Participant has completed a Year of Service after such Break
in Service.
In the case of a Participant who has 5 or more consecutive One-Year
Breaks in Service, all service after such Breaks in Service shall be
disregarded for the purpose of vesting the Company-derived account
balance that accrued before such Breaks in Service. Such Participant's
pre-break service shall count in vesting the post-break Company-derived
account balance only if either:
(a) such Participant has any nonforfeitable interest in the
account balance attributable to Company contributions at the
time of separation from service; or
(b) upon returning to service the number of consecutive One-Year
Breaks In Service is less than the number of Years Of Service.
Separate accounts shall be maintained for the Participant's pre-break
and post-break Company-derived account balance. Both accounts shall
share in the earnings and losses of the fund.
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PART X - IN-SERVICE WITHDRAWALS
10.1 IN GENERAL. A Participant or former Participant may request cash
withdrawals or a Direct Rollover of an Eligible Rollover Distribution,
under the Plan in accordance with Paragraph 14.4, if operative, and
procedures established by the Administrator, subject to the sequence
and conditions for withdrawal set forth in Paragraph 10.2. The minimum
amount of withdrawal shall be set by the Administrator. If Paragraph
14.3 is operative, withdrawals that may be made are subject to the
spousal and Participant consent requirements contained in Code Sections
401(a)(11) and 417.
10.2 SEQUENCE AND CONDITIONS FOR WITHDRAWAL. A Participant shall request the
Administrator to effect a cash withdrawal and such amounts shall be
debited from his Participant's Account. The Administrator shall
withdraw amounts in the following sequence and upon the following
conditions:
(a) FIRST (if permitted by Section (O)), a Participant may
withdraw all or part of the value from his contribution
accounts for Participant Nondeductible Voluntary Contributions
and for Participant Matched Contributions.
(b) SECOND (if permitted by Section (O)), a Participant may
withdraw all or part of the value of his contribution account
for Rollover Contributions.
(c) THIRD (if permitted by Section (O)), a Participant may
withdraw all or part of the full value of his vested interest
determined under Section (R) in his contribution accounts for:
Company Matching Contributions; Company Profit-Sharing
Contributions; and transfers from Employer-provided benefits
from other plans.
If a Participant receives a withdrawal attributable to Company
contributions, the Participant's future vested interest after
the distribution shall be equal to an amount ("X") determined
by the formula:
X = P(AB + D) - D
For purposes of applying the formula: P is the nonforfeitable
percentage at the relevant time, AB is the account balance at
the relevant time, and D is the amount of the withdrawal.
(d) FOURTH (if permitted by Section (O)), a Participant may
withdraw all or part of the value of his account for Elective
Deferrals, Company Qualified Matching Contributions and
Company Qualified Nonelective Contributions if the Participant
is age 59 1/2 or older. If a Participant is less than age 59
1/2, a Participant may withdraw upon written request to the
Administrator all or part of his Elective Deferrals (and
earnings thereon accrued as of December 31, 1988) due to
financial hardship.
10.3 FINANCIAL HARDSHIP. A withdrawal shall be on account of financial
hardship if it is based on an immediate and heavy financial need of the
Participant where such Participant lacks other available resources. The
following are the only financial needs considered immediate and heavy:
(1) expenses incurred or necessary for medical care, described in Code
Section 213(d) of the Participant, his Spouse, children or dependents;
(2) the purchase (excluding mortgage payments) of a principal residence
for the Participant; (3) payment of tuition and related educational
fees and room and board expenses for the next 12 months of
post-secondary education for the Participant, his Spouse, children or
dependents; or (4) the need to prevent eviction of the Participant
from, or a foreclosure on the mortgage of, the Participant's principal
residence.
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A withdrawal shall be considered necessary to satisfy an immediate and
heavy financial need of the Participant only if:
a. The Participant has obtained all distributions other than
hardship distributions, and all non-taxable loans under all
plans maintained by the Company;
b. All plans maintained by the Company provide that the
Participant's Elective Deferrals (and Participant
contributions) shall be suspended for twelve months after
receipt of the hardship distribution;
c. The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts
necessary to pay any Federal, state, or local income taxes or
penalties reasonably anticipated to result from the
distribution); and
d. All plans maintained by the Company provide that 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 taxable year less the
amount of such Participant's Elective Deferrals for the
taxable year of the hardship distribution.
10.4 NO FORFEITURE OF PARTICIPANT'S ACCOUNT ATTRIBUTABLE TO PARTICIPANT
CONTRIBUTIONS. No forfeiture of the Participant's account shall occur
solely as a result of the withdrawal of Participant contributions.
PART XI - PARTICIPANT LOANS
11.1 IN GENERAL. If permitted in Section (P) and if the Company has
designated Trustees for this loan program pursuant to the Trust, a
Participant or beneficiary who is a party-in-interest with respect to
the Plan may request a loan under the Plan. All loans made by the
Trustees shall be subject to the terms and conditions set forth in this
Part and the Trust. A loan to a Participant is considered a
Participant-directed investment.
The Trustee shall have the responsibility to develop rules regarding
the financial ability of the Participant to repay the amount he seeks
to borrow and the authority to adopt additional terms and conditions,
provided that all such rules, terms and conditions shall apply to all
Participants uniformly. Loans shall be made available to all
Participants on a reasonably equivalent basis and such availability
shall be communicated to all Participants. The amount available to
Highly Compensated Employees shall not be in an amount greater than the
amount made available to other Employees.
No loan shall be made to any owner-Employee or shareholder-Employee
unless such Participant has applied for and received a prohibited
transaction exemption. For purposes of this requirement, a
shareholder-Employee means an Employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as
owning within the meaning of Code Section 318(a)(1), on any day during
the taxable year of such corporation, more than 5 percent of the
outstanding stock of the corporation.
The order of withdrawal from contribution accounts for loans are:
Deferred Salary/Deferred Bonus, Qualified Nonelective/Qualified
Elective, Rollover/Transfer, Company Profit-Sharing, Company Matching
and Participant Nondeductible Voluntary Contributions, to the extent
there are assets in the contribution accounts.
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The amount withdrawn from the Participant's accounts shall be prorated
across all funds in which the accounts are invested.
11.2 APPLICATION FOR LOANS. The Participant shall make written application
for a loan to the Trustee, on a form provided by the Administrator and
executed by the Participant. The Participant shall execute a promissory
note in the amount of the loan including interest, payable to the
Trustee, which indicates the repayment period, the amount of loan, the
rate of interest and other provisions pertaining to repayment of the
loan.
Loans must be adequately secured. At the time each new loan is made, in
no event shall the sum of the new loan and remaining principal balance
of any loan outstanding be secured by less than one-half of the
Participant's current vested account balance under the Plan.
Additionally, no more than 50 percent of the Participant's vested
account balance will be considered by the Plan as security for the
outstanding loan balance of all Plan loans made to that Participant.
If Paragraph 14.3 is operative, a Participant must obtain the consent
of his Spouse, if any, to use the account balance as security for the
loan. Spousal consent shall be obtained no earlier than the beginning
of the 90-day period that ends on the date on which the loan is to be
so secured. The consent must be in writing, must acknowledge the effect
of the loan, and must be witnessed by a plan representative or notary
public. Such consent shall thereafter be binding with respect to the
consenting Spouse or any subsequent Spouse with respect to that loan. A
new consent shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the loan.
If valid spousal consent has been obtained in accordance with the prior
Paragraph, then, notwithstanding any other provision of this Plan, the
portion of the Participant's vested account balance 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 account balance payable at the time of death or
distribution, but only if the reduction is used as repayment of the
loan.
11.3 AMOUNT OF LOAN. The minimum loan shall be $1,000. The aggregate amount
of any new loan and of all other outstanding loans made to the
Participant shall be limited to the lesser of:
(a) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans during the 1-year period ending
on the day before the loan application is approved by the
Trustee over the outstanding balance of loans from the Plan on
the date the loan application is approved, or
(b) One-half the present value of the nonforfeitable accrued
benefit of the Participant.
For the purpose of the above limitation, all loans from all plans of
the Company and other members of a group of Employers described in Code
Sections 414(b), 414(c) and 414(m) are aggregated.
11.4 INTEREST RATE. Loans must bear a reasonable rate of interest. The rate
of interest shall be the prevailing rate used by commercial lending
institutions.
11.5 REPAYMENTS. The loan repayment period shall not exceed five years. If
elected in Section (P), this 5-year requirement shall not apply to any
loan used to acquire a principal residence for the Participant. The
maximum repayment period for such home loans shall be a reasonable
number of years.
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Repayment of loans (principal and interest) shall be by payroll
deduction, on a level amortization basis over the term of the loan. All
loan repayments shall be transmitted monthly to the Insurance Company,
and invested in accordance with Section (M). Subject to approval by the
Insurance Company, a Participant may prepay all or a portion of the
loan principal prior to separation from service.
Loan repayments returned to the Participant's account(s) shall be
prorated based on the amount of the loan withdrawn from the account(s).
The money shall be placed in the Contract's funds and/or invested in
Shares of the Fund based on the Participant's and/or Company's current
investment selections, unless otherwise stipulated in a prepayment
agreement with the Insurance Company and/or Fund. In no event shall any
part of a Participant's loan repayment be allocated to an alternate
payee's account.
As of such valuation dates as the Trustee may set from time to time,
but not less frequently than once every twelve months, the Trustee
shall report to the Company the outstanding balance of such loans and
the fair market value of the other assets held in the Trust.
11.6 DEFAULT AND/OR ACCELERATION. Default shall be defined in the
Participant's promissory note or other loan documents. The Trustee must
notify the Insurance Company when a Participant defaults on a loan
repayment. In the event the Participant defaults on a loan repayment,
the Trustee shall notify the Participant that the loan is immediately
due and payable. The Trustee may also direct the Administrator to
refuse to make any Plan benefit payment otherwise due to the
Participant or Beneficiary until scheduled loan repayments are made, or
to offset overdue loan repayments against the amount of benefits which
otherwise may be due. In the event of default, attachment of security
shall not occur until a distributable event occurs in the Plan.
The loan must be paid in full upon the Participant's death, disability
or separation from service, upon the Participant's failure to make loan
repayments for three consecutive months or failure to receive
Compensation in an amount at least equivalent to the periodic loan
repayment amount for over three consecutive months, or upon termination
of this Plan or the Trust. The Trustee may also direct the
Administrator to offset the remaining loan balance against the amount
of benefits which otherwise may be due the Participant or Beneficiary.
PART XII - TERMINATION OF EMPLOYMENT
12.1 NOTICE OF TERMINATION OF EMPLOYMENT. If the Termination of Employment
of a Participant occurs, the Company shall immediately give written
notice to the Administrator of the date of Termination of Employment of
such Participant. Upon receipt of such notice, the Administrator shall
determine the Participant's vested interest in his Participant's
Account pursuant to Part IX, VESTING, or if the Plan is or was
top-heavy pursuant to Part XVI.
12.2 AMOUNT OF PARTICIPANT'S BENEFIT. The amount of a Participant's Plan
benefit upon Termination of Employment shall equal his vested
Participant's Account. A Participant whose Termination of Employment
occurs prior to the end of the Plan Year shall share in Company
contributions and reallocations of forfeitures credited prior to his
Termination of Employment, but shall or shall not share in Company
contributions and reallocated forfeitures for such Plan Year credited
after the date of his Termination of Employment as elected in Section
(K) and (L).
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12.3 PARTICIPANT'S ELECTION OF A FORM OF BENEFIT. If Termination of
Employment occurs, the Participant shall receive his vested
Participant's Account in a form of benefit elected by him, subject to
the provisions of Paragraph 14.3 or 14.4, whichever is operative. The
Participant's election shall occur within 60 days after the forms of
benefit first become available to him. Written notice shall be made on
such forms provided by the Administrator, including a form necessary to
comply with Paragraph 14.3 or 14.4, whichever is operative.
The forms of benefit are:
(a) OPTION A. The Participant may elect to continue his Account
until age 70 1/2 (if elected in Section (S)(1)), his Normal
Retirement Date or earlier, at which time he may elect OPTION
B, OPTION C, OPTION D,, or OPTION E (if permitted in Section
(S)(1)). If the Participant dies prior to commencement of
retirement benefits, the value of the Participant's Account
shall be paid in one sum to his Beneficiary.
(b) OPTION B. The Participant may elect to receive an annuity in
accordance with Part XIV, RETIREMENT BENEFITS, to commence on
his Early Retirement Date, if permitted in Section (F)(2), or
on his Normal Retirement Date as specified in Section (F)(1).
Once made this election shall be irrevocable.
(c) OPTION C. If permitted in Section (S)(1), the Participant may
elect a one-sum cash payment. Such election is subject to a
Qualified Election if Paragraph 14.3 is operative. One-sum
cash payments or a partial cash payment in addition to any of
the other options shall be made during the Plan Year in which
the event which gives rise to the distribution occurs or as
soon thereafter as is reasonably practical.
(d) OPTION D. If permitted in Section (S)(1), the Participant may
elect installment payments, in accordance with Paragraph 14.2,
to commence upon separation from service. Such election is
subject to a Qualified Election if Paragraph 14.3 is
operative.
(e) OPTION E. Subject to the consent of the Administrator and the
Insurance Company, and in accordance with procedures set forth
in the recipient plan, the Participant may elect a
plan-to-plan transfer. The account balance shall be
transferred to the Participant's account under a plan
maintained by his new employer that is qualified under Code
Sections 401(a) or 403(a).
(f) A Participant may elect to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Participant in a Direct Rollover.
If the value of the Participant's vested account balance derived from
Company and Participant contributions exceeds (or at the time of any
prior distribution exceeded) $3,500, and the account balance is
immediately distributable, the Participant and the Participant's Spouse
(if Paragraph 14.3 is operative), (or where either the Participant or
the Spouse has died, the survivor) must consent to any distributions of
such Account balance. Consent is not valid unless the Administrator
notifies the Participant and the Participant's Spouse of the right to
defer any distribution until the Participant's Account balance is no
longer immediately distributable. The notice shall acknowledge the
right, if any, to defer distributions and must describe the investment
features.
Notwithstanding any form of benefit permitted under this Paragraph, if
a distribution from a Participant's Account would cause the remaining
account balance to equal or to be less than $3,500, such distribution
will only be permitted if the entire vested account balance is
distributed.
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An amount distributed to a Participant prior to his attaining age 59
1/2 (except for amounts distributed due to disability, death,
separation from service on or after attaining age 55 or equal periodic
payments made for the life or life expectancy of the Participant and
Spouse) may be deemed to be a premature distribution made during a
taxable year. The distribution is subject to a 10 percent excise tax on
the portion of the amount received which is includible in his gross
income for the taxable year.
12.4 FORFEITURE OF NONVESTED PORTION OF PARTICIPANT'S ACCOUNT. If a
Participant terminates employment, the amounts which were in excess of
his vested interest shall be withdrawn from the appropriate investment
funds under the Contract and under the Funds and any Policies and shall
be allocated to the fixed investment option under the Contract. If the
value of the Participant's vested account balance derived from Company
and the Participant contributions is not greater than $3,500, the
Participant shall receive a distribution of the value of the entire
vested portion of such account balance and the nonvested portion shall
be treated as a forfeiture. For purposes of this Paragraph and
Paragraph 12.5, if the value of a Participant's vested account balance
is zero, the Participant shall be deemed to have received a
distribution of such vested account balance. A Participant's vested
account balance shall not include accumulated Participant Deductible
Voluntary Contributions within the meaning of Code Section 72(o)(5)(B)
for Plan Years beginning prior to January 1, 1989.
If a Participant terminates service, and elects, in accordance with
Section (T), to receive the value of the Participant's vested account
balance, the nonvested portion shall be treated as a forfeiture. If the
Participant elects to have distributed less than the entire vested
portion of the account balance derived from Company contributions, the
part of the nonvested portion that shall be treated as a forfeiture is
the total nonvested portion multiplied by a fraction, the numerator of
which is the amount of the distribution attributable to Company
contributions and the denominator of which is the total value of the
vested Company derived account balance.
In the case of a Participant who receives a distribution of part of his
Account attributable to Company contributions and does not repay under
Paragraph 12.5, the Participant's future nonforfeitable interest at any
relevant time shall be equal to an amount ("X") determined by the
formula:
X = P(AB + D) - D
For purposes of applying the formula: P is the nonforfeitable
percentage at the relevant time, AB is the account balance at the
relevant time, and D is the amount of the distribution.
12.5 REPAYMENT. In accordance with Section (S), a returning Participant may
repay the full amount of any distribution from the Plan attributable to
Company contributions made on account of Termination of Employment. All
or part of the amount of the distribution attributable to Participant
contributions may also be repaid. Such repayment, if any, must be made
before the earlier of:
(a) five years after the first date on which the Participant is
subsequently reemployed by the Company; or
(b) the date the Participant incurs five consecutive One-Year
Breaks in Service following the date of distribution.
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If a Participant receives or is deemed to receive a distribution
pursuant to this Part and the Participant resumes employment covered
under this Plan before incurring five consecutive One-Year Breaks in
Service, the amount so forfeited, unadjusted for subsequent gains and
losses, shall be restored to the Participant's Account at the end of
the Plan Year, subject to the repayment requirement if elected in
Section (S). Permissible sources for restoration of the Participant's
Account are amounts forfeited from his Account, other forfeitures, and
if necessary an extraordinary Company contribution sufficient when
added to the forfeiture to restore the Participant's Account.
Any Policy distributed to the Participant that is still in effect on a
premium-paying basis on the date of repayment may be transferred to the
Plan, and the cash value shall be counted as part of the amount repaid.
PART XIII - FORFEITURES
13.1 OCCURRENCE OF FORFEITURE. In accordance with Paragraph 12.4, a
forfeiture shall occur as of the date a Participant terminates
employment with the Company and receives a distribution. If the
Participant does not receive a distribution, forfeiture shall occur
after five (5) consecutive One-Year Breaks in Service. The forfeiture
shall be the Participant's account attributable to Company Matching and
Profit-Sharing Contributions which has not become vested under Part IX.
In addition, a Highly Compensated Participant shall forfeit his
nonvested Company contributions (and earnings thereon) in excess of the
amount permitted under the Actual Contribution Percentage limits of
Paragraph 4.4 and such forfeitures shall be applied under Paragraph
4.5(b). A Participant shall not forfeit any part of his nonvested
Participant's account attributable to Company contributions solely as a
result of a withdrawal prior to retirement under Part X. Furthermore, a
Participant shall not forfeit any part of his Participant's account for
any other cause.
The nonvested portion of a Company contribution or a forfeiture
allocation credited to a Participant's account in a Plan Year following
his Termination of Employment shall be allocated at the next allocation
date.
13.2 APPLICATION OF FORFEITURES. Forfeitures shall first be allocated to the
accounts of Participants whose benefits are entitled to be restored
under Paragraph 12.4. The remaining forfeitures shall then be applied
in the manner elected in Section (L). If forfeitures are reallocated, a
Participant whose employment is terminated before the end of the Plan
Year, but after he has completed 1,000 Hours of Service or more during
the Plan Year shall or shall not share in reallocated forfeitures for
the Plan Year allocated after the date of his Termination of Employment
as elected in Section (L). Forfeitures derived from Company Matching
Contributions and Company Profit-Sharing Contributions shall be
reallocated to the account for Company Profit-Sharing Contributions of
each Participant who is entitled to share in the forfeitures.
Forfeitures shall not be reallocated to a Participant to the extent it
would be an Excess Annual Addition under Part V, LIMITATION ON
ALLOCATIONS. If more than one Company adopts the Plan, any forfeitures
reallocated will be applied in accordance with Section (L).
PART XIV - RETIREMENT BENEFITS
14.1 NORMAL FORM OF RETIREMENT BENEFIT. The Normal Form of benefit shall be
a one-sum cash distribution or, at the election of the Participant, the
form of benefit described in Paragraph 14.2.
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14.2 OPTIONAL FORMS OF BENEFIT. The Participant may elect a form of
distribution consisting of installments, any form of annuity provided
by the Insurance Company, a Direct Rollover of an Eligible Rollover
Distribution or a partial cash payment in addition to the optional form
of benefits described in this section, instead of the Normal Form
described in Paragraph 14.1.
Installment payments shall be made over a period not to exceed the
Participant's (or the Participant's and Spouse's) life expectancy.
Any annuity contract distributed herefrom must be nontransferable. The
terms of any annuity contract purchased and distributed by the Plan to
a Participant and Spouse shall comply with the requirements of this
Plan.
14.3 SPECIAL RULE. This Paragraph shall be operative with respect to the
Participant if it is determined that this Plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, target
benefit plan, stock bonus or profit-sharing plan which is subject to
the survivor annuity requirements of Code Sections 401(a)(11) and 417.
In addition, this Paragraph applies to the Participant if at least one
of the following two conditions are met: (1) the Participant elects
retirement benefits in the form of a life annuity under Paragraph 14.2,
and (2) on the death of the Participant, the Participant's vested
account balance is not paid to the Participant's surviving Spouse in
accordance with Paragraph 15.1.
If this Paragraph is operative, the Normal Form of benefit shall be a
life annuity. The Normal Form shall be paid to a Participant who is not
married and does not elect a one-sum cash payment or an optional form
of benefit under Paragraph 14.2. A married Participant's entire account
balance (attributable to both Company and Participant contributions)
shall be paid in the form of an Automatic Joint and Survivor Annuity,
unless a one-sum cash payment or an optional form of benefit is
selected (pursuant to a Qualified Election) within the 90-day period
ending on the annuity starting date. The annuity starting date is the
first day of the first period for which an amount is paid as an annuity
or any other form.
In the case of an Automatic Joint and Survivor Annuity, the
Administrator shall provide each Participant no less than 30 days and
no more than 90 days prior to the annuity starting date a written
explanation of: (i) the terms and conditions of an Automatic Joint and
Survivor Annuity; (ii) the Participant's right to make and effect of an
election to waive the Automatic Joint and Survivor Annuity form of
benefit; (iii) the rights of a Participant's Spouse; and (iv) the right
to make, and the effect of, a revocation of a previous election to
waive the Automatic Joint and Survivor Annuity.
14.4 WAIVER OF THIRTY-DAY PERIOD FOR CONSENT. If the provisions of Paragraph
14.3 are not operative, a 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, that: (1) the 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 elects a distribution.
14.5 AMOUNT OF RETIREMENT BENEFIT. The amount of a Participant's retirement
benefit shall equal the Participant's vested account balance. The
vested account balance is the aggregate value of the Participant's
vested Account balances derived from Company and Participant
contributions (including rollovers), including the proceeds of
insurance contracts, if any, on the Participant's life.
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Upon retirement, contributions by or on behalf of a Participant shall
cease. If a Participant retires prior to the end of a Plan Year, any
contributions credited prior to retirement to his Participant's Account
for the Plan Year shall be applied for him as part of his retirement
benefit.
14.6 PARTICIPANT ELECTION OF A RETIREMENT DATE. A Participant shall be
entitled to a retirement benefit upon separation from service:
(a) On or after his Normal Retirement Date as designated in
Section (F);
(b) On his Early Retirement Date as permitted in Section (F);
(c) On his Disability Retirement Date as permitted in Section (F).
The Participant's Account shall be paid in a form and on a Retirement
Date elected by the Participant. A Participant shall give the
Administrator written notice of his intention to retire on a Retirement
Date within 90 days prior to separation from service. Written notice
shall be made on a form required by the Administrator.
If a Participant separates from service before satisfying the age
requirement for early retirement, if elected in Section (F), but has
satisfied the Service requirement, the Participant shall be entitled to
elect an early retirement benefit upon satisfaction of such age
requirement.
14.7 PARTICIPANT'S RIGHT TO DEFER RETIREMENT. A Participant may defer
retirement without Company approval. If, however, any Participant after
the age of 65 is employed in a bona-fide executive or high policymaking
position during the two-year period immediately before his retirement
date and if such Participant is entitled to an immediate nonforfeitable
annual retirement benefit from this Plan and from all other pension,
profit-sharing, savings or deferred compensation plans of the Company,
or any combination of such plans, which equals, in aggregate $44,000 or
more, then the Company may provide for the retirement of such
Participant on or after Normal Retirement Date without such
Participant's consent.
In the case of continued employment after Normal Retirement Date,
Company contributions and forfeitures shall continue to be allocated on
behalf of Participants. Investment gains and losses shall continue to
be credited to the Participant's Account. A Participant who defers
retirement after his Normal Retirement Date shall defer distribution of
his Participant's Account, in accordance with Paragraph 14.8.
14.8 DISTRIBUTION OF RETIREMENT BENEFITS. If the Participant's Account
balance is $3,500 or less, the entire Participant's Account shall be
distributed. No one-sum cash distribution shall be made under the
preceding sentence after the annuity starting date.
Unless the Participant elects otherwise, distribution of benefits shall
begin the first day of the calendar month coincident with or,
otherwise, next following the later of:
(a) the Participant attaining age 65 (or Normal Retirement Date,
if earlier);
(b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or,
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(c) the Participant terminates service with the Company; provided,
however, that if the Participant's vested account balance
derived from Company and Participant contributions exceeds
$3,500, no distribution shall be made without the consent of
the Participant (and, if Paragraph 14.3 is operative,
surviving Spouse) before the Participant attains or would have
attained, if not deceased, the later of the Normal Retirement
Date or age 62. Failure to consent shall be deemed an election
to defer commencement of payment of any benefit.
If allowed in Section (F), a retired Participant may also elect to
defer payment of any benefit after retirement. However, the entire
interest of the Participant must be distributed or begin to be
distributed no later than the Participant's required beginning date.
The required beginning date of a retired or active Participant is the
first day of April following the calendar year in which such individual
attains age 70 1/2, except as otherwise elected in accordance with Part
XXI.
Notwithstanding the prior sentence, if an active Participant attained
age 70 1/2 in 1987 or earlier, and was not a 5 percent owner in any
year since attaining age 66 1/2, the Participant's account balance can
be distributed upon retirement. The minimum distribution for other
calendar years, including the minimum distribution for the distribution
calendar year in which the Participant's required beginning date
occurs, must be made on or before December 31 of that distribution
calendar year. A distribution calendar year is a calendar year for
which a minimum distribution is required. The first distribution
calendar year is the calendar year immediately preceding the calendar
year which contains the Participant's required beginning date. Neither
the consent of the Participant nor of the Participant's Spouse shall be
required to the extent that a distribution is required to satisfy this
Paragraph.
All distributions required under this Part 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 Proposed Regulations.
14.9 MINIMUM AMOUNTS TO BE DISTRIBUTED FROM PARTICIPANT ACCOUNT. If a
Participant has attained age 70 1/2, benefits to be distributed in
installment payments will not exceed a period beyond the life
expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's Spouse. The amount
required to be distributed for each calendar year, beginning with
distributions for the first distribution calendar year, shall not be
less than the quotient obtained by dividing the Participant's benefit
by the applicable life expectancy. If elected by the Participant, life
expectancies shall be recalculated annually. Such election shall be
irrevocable as to the Participant (or Spouse) and shall apply to all
subsequent years.
The Participant's benefit is the account balance as of the last
Valuation Date in the calendar year immediately preceding the
distribution calendar year (valuation calendar year) increased by the
amount of any contributions or forfeitures allocated to the account
balance as of dates in the valuation calendar year after the Valuation
Date and decreased by distributions made in the valuation calendar year
after the Valuation Date. For purposes of this Paragraph, if any
portion of the minimum distribution for the first distribution calendar
year is made in the second distribution calendar year on or before the
required beginning date, the amount of the minimum distribution made in
the second distribution calendar year shall be treated as if it had
been made in the immediately preceding distribution calendar year.
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Unless the Administrator directs in writing an alternative method of
determining life expectancy in accordance with IRS Reg. Sections
1.401(a)(9)-1 and 1.401(a)(9)-2, the life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the
Participant (or Participant and Spouse) as of the Participant's (or
Participant's and Spouse's) birthday in the applicable calendar year
shall be 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. If installment payments
commence before the required beginning date, the date distribution is
considered to begin is the date distribution actually commences.
Life expectancy and joint and last survivor expectancy are computed by
use of the expected return multiples in Tables V and VI of Section
1.72-9 of the Income Tax Regulations.
PART XV - DEATH BENEFITS
15.1 PRERETIREMENT DEATH OF A PARTICIPANT. If the Participant dies before
distribution of his interest begins, the Participant's account balance
shall become fully vested. The account balance shall be paid to the
Participant's surviving Spouse. The Spouse may elect whether to receive
the Participant's account balance in the form of a Preretirement
Survivor Annuity, installments, a one-sum cash payment, or as a Direct
Rollover of an Eligible Rollover Distribution. If the surviving Spouse
elects the latter option as the form of benefit, the requirements of
Paragraph 12.3(f) shall apply.
If there is no surviving Spouse, or, if the surviving Spouse has
already consented in a manner conforming to a Qualified Election, the
account balance shall be paid to the Participant's designated
Beneficiary. Unless otherwise elected by the Participant, any portion
of the Participant's interest payable to a designated Beneficiary other
than the Participant's surviving Spouse shall be paid in the form of an
annuity, installments, or a one-sum cash payment. A Qualified Election
is not required with respect to the amount at risk portion of any
Policies. For purposes of the foregoing consent requirements, the
Participant's vested account balance shall not include amounts
attributable to accumulated Participant Deductible Voluntary
Contributions within the meaning of Code Section 72(o)(5)(B).
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
to receive distributions in accordance with (a) or (b) below:
(a) If any portion of the Participant's interest is payable to a
designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the life
expectancy of the designated Beneficiary commencing on or
before December 31 of the calendar year immediately following
the calendar year in which the Participant died;
(b) If the designated Beneficiary is the Participant's surviving
Spouse, the date distributions are required to begin in
accordance with (a) above shall not be earlier than the later
of (1) December 31 of the calendar year immediately following
the calendar year in which the Participant died and (2)
December 31 of the calendar year in which the Participant
would have attained age 70 1/2.
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If the Participant has not made an election pursuant to this Paragraph
by the time of his death, the Participant's designated Beneficiary must
elect the method of distribution no later than the earlier of (1)
December 31 of the calendar year in which distributions would be
required to begin under this Paragraph, or (2) 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.
For purposes of this Paragraph, if the surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions
of this Paragraph, with the exception of Paragraph (b) therein, shall
be applied as if the surviving Spouse were the Participant.
For the purposes of this Paragraph, distribution of a Participant's
interest is considered to begin on the Participant's required beginning
date (or, if the Spouse dies after the Participant, the date
distribution is required to begin to the surviving Spouse). If
distribution in the form of an annuity irrevocably commences to the
Participant before the required beginning date, the date distribution
is considered to begin is the date distribution actually commences.
The entire Participant's Account shall be distributed if the
Participant's Account is $3,500 or less. No one-sum cash distribution
shall be made to the surviving Spouse under the preceding sentence
after the annuity starting date or if the Account exceeds $3,500 unless
the surviving Spouse consents in writing to such distribution.
15.2 PRERETIREMENT SURVIVOR ANNUITY. The Preretirement Survivor Annuity is
an annuity for the life of the surviving Spouse. The surviving Spouse
may elect to have such annuity distributed within a reasonable period
after the Participant's death. If Paragraph 14.3 or 14.4 is operative,
the Administrator shall provide each Participant a written explanation
of the Preretirement Survivor Annuity in such terms and in such manner
as would be comparable to the explanation provided for meeting the
requirements applicable to an Automatic Joint and Survivor Annuity.
The applicable period for a Participant is whichever of the following
periods end last:
(a) 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;
(b) A reasonable period ending after the Employee becomes a
Participant;
(c) A reasonable period ending after Paragraph 14.3 first applies
to the Participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after Termination of Employment in the case of
a Participant who separates from service before attaining age 35.
For purposes of applying the preceding Paragraph, a reasonable period
ending after the enumerated events is the end of the two-year period
beginning one year prior to the date of the applicable event occurs,
and ending one year after that date.
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In the case of a Participant who separates from service before the Plan
Year in which age 35 is attained, notice shall be provided within the
two-year period beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter returns to
employment with the Company, the applicable period for such Participant
shall be redetermined.
15.3 POST-RETIREMENT DEATH OF A PARTICIPANT. If the Participant dies after
distribution of his interest has begun, the remaining portion of such
interest shall continue to be distributed at least as rapidly as under
the method of distribution being used prior the Participant's death. In
the case of an installment payment option, installment payments
remaining at the Participant's death shall be distributed as a one-sum
cash payment.
15.4 DESIGNATION OF A BENEFICIARY. Subject to Code Sections 401(a)(11) and
417, the Participant shall have the right to designate his Beneficiary
and to change his Beneficiary in accordance with the terms of the
Contract and Policy. The Participant shall also have the right to
designate or change the form of death benefit to his Beneficiary in
accordance with the terms of the Contract and Policy. Any such right
may be exercised by filing written notice(s) with the Insurance
Company, and the effective date thereof shall be as provided in the
Contract or Policy, whichever is applicable. If no Beneficiary is
named, the payment of death benefits shall be made in accordance with
the terms of the Contract and the Policy. A designation of a
Beneficiary other than the Spouse of a married Participant may be made
only as a Qualified Election.
PART XVI - TOP-HEAVY REQUIREMENTS
16.1 IN GENERAL. If the Plan is or becomes top-heavy in any Plan Year, the
provisions of this Part XVI shall supersede any conflicting provisions
in the Plan or Adoption Agreement. For purposes of this Part,
compensation shall mean Compensation as defined in Section (E)(1) of
the Adoption Agreement, but including amounts contributed by the
Company pursuant to a Deferred Salary Agreement which are excludable
from the Employee's gross income under Code Section 125, 402(e)(3),
402(h)(1)(B) or 403(b).
16.2 MINIMUM CONTRIBUTION UNDER A TOP-HEAVY PLAN. Company contributions and
forfeitures allocated on behalf of any Participant who is a non-Key
Employee shall not be less than the lesser of 3 percent of such
Participant's compensation or in the case where the Company has no
defined benefit plan which designates this Plan to satisfy Code Section
401, the largest percentage of Company contributions and forfeitures,
as a percentage of the first $150,000 of the Key Employee's
compensation, allocated on behalf of any Key Employee for that year.
This minimum contribution is determined without regard to any Social
Security contribution. The minimum contribution shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive a contribution, or would have received
a lesser contribution for the year because of:
(a) the Participant's failure to complete 1,000 Hours of Service
(or any equivalent provided in the Plan),
(b) the Participant's failure to make Elective Deferrals, as
described in Section (G), or
(c) compensation less than a stated amount.
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Notwithstanding the above, the provision contained in the preceding
Subparagraph shall not apply to any Participant who was not employed by
the Company on the last day of the Plan Year. Also, such provision
shall not apply to any Participant to the extent provided by Section
(R).
Elective Deferrals, Company Qualified Matching, and Company Matching on
behalf of Key Employees shall be taken into account in determining the
minimum contribution. However, Elective Deferrals on behalf of non-Key
Employees may not be taken into account for the purpose of satisfying
the minimum top-heavy contribution requirements. Further, Company
Matching and Company Qualified Matching Contributions cannot be
utilized to satisfy the minimum contribution requirements for Plan
Years beginning after 1988.
16.3 NONFORFEITABILITY OF MINIMUM CONTRIBUTION. The minimum contribution
required (to the extent required to be nonforfeitable under Code
Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or
411(a)(3)(D).
16.4 TOP-HEAVY VESTING. During and subsequent to the first Plan Year in
which this Plan is top-heavy, one of the minimum vesting schedules as
elected by the Company in Section (R) shall automatically apply to the
Plan. The minimum vesting schedule applies to all benefits within the
meaning of Code Section 411(a)(7) except those attributable to
Participant contributions and Elective Deferrals, including benefits
accrued before the effective date of Code Section 416 and benefits
accrued before the Plan became top-heavy. However, this Paragraph does
not apply to the account balances of any Participant who does not have
an Hour of Service after the Plan has initially become top-heavy and
such Participant's account balance attributable to Company
contributions and forfeitures shall be determined without regard to
this Paragraph.
16.5 TOP-HEAVY DEFINITIONS.
(a) KEY EMPLOYEE: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was an officer of the Company if such
individual's annual compensation exceeded 50 percent of the
dollar limitation under Code Section 415(b)(1)(A), an owner
(or considered an owner under Code Section 318) of one of the
ten largest interests in the Company if such individual's
compensation exceeds 100 percent of the dollar limitation
under Code Section 415(c)(1)(A), a 5 percent owner of the
Company, or a 1 percent owner of the Company who has annual
compensation of more than $150,000.
For purposes of determining the number of officers taken into
account, Employees described in Code Section 414(q)(8) shall
be excluded. The determination period is the Plan Year
containing the Determination Date and the four preceding Plan
Years. The determination of who is a Key Employee shall be
made in accordance with Code Section 416(i)(1) and the
Regulations thereunder. For purposes of determining whether a
plan is top-heavy under Code Section 416, Elective Deferrals
are considered Company contributions.
(b) TOP-HEAVY PLAN: For any Plan Year beginning after December 31,
1983, this Plan is top-heavy if any of the following
conditions exists:
(i) If the top-heavy ratio for this Plan exceeds 60
percent and this Plan is not part of any required
aggregation group or permissive aggregation group of
plans.
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(ii) If this 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 percent.
(iii) If this 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 percent.
(c) TOP-HEAVY RATIO
(i) Defined Contribution Plan Only:
If the Company maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Company has never maintained
any defined benefit plan which during the 5-year
period ending on the Determination Date(s) has or has
had accrued benefits, the top-heavy ratio for this
Plan alone or for the required or permissive
aggregation group as appropriate is a fraction, the
numerator of which is the sum of the account balances
of all Key Employees as of the Determination Date(s)
(including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)), and the denominator of which
is the sum of all account balances (including any
part of any account balance distributed in the 5-year
period ending on the Determination Date(s)), both
computed in accordance with Code Section 416 and the
Regulations thereunder.
Both the numerator and denominator of the top-heavy
ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which
is required to be taken into account on that date
under Code Section 416 and the Regulations
thereunder.
(ii) Defined Contribution and Defined Benefit Plan:
If the Company maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Company maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the Determination
Date(s) has or has had any accrued benefits, the
top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the
numerator of which is the sum of account balances
under the aggregated defined contribution plan or
plans for all Key Employees determined in accordance
with (i) above, and the present value of accrued
benefits under the aggregated defined benefit plan or
plans for all Key Employees as of the Determination
Date(s), and the denominator of which is the sum of
the account balances under the aggregated defined
contribution plan or plans for all Participants
determined in accordance with (i) above, and the
present value of accrued benefits under the defined
benefit plans for all Participants as of the
Determination Date(s), all determined in accordance
with Code Section 416 and the Regulations thereunder.
The accrued benefits under a defined benefit plan in
both the numerator and denominator of the top-heavy
ratio are adjusted for any distribution of an accrued
benefit made in the 5-year period ending on the
Determination Date.
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(iii) For purposes of (i) and (ii) above, the value of
account balances and the present value of accrued
benefits shall be determined as of the most recent
Valuation Date that falls within or ends with the
12-month period ending on the Determination Date,
except as provided in Code Section 416 and the
Regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances
and accrued benefits of a Participant (1) who is a
non-Key Employee but who was a Key Employee in a
prior year or (2) who has not been credited with at
least one Hour of Service with any Employer
maintaining the Plan at any time during the 5-year
period ending on the Determination Date shall be
disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account shall be made in
accordance with Code Section 416(g)(4)(A) and the
Regulations thereunder. For purposes of determining
whether a plan is top-heavy under Code Section 416,
Elective Deferrals are considered Company
contributions.
When aggregating plans, the value of account balances
and accrued benefits shall be calculated with
reference to the Determination Dates that fall within
the same calendar year. The accrued benefit of an
Employee other than a Key Employee shall be
determined under (a) the method, if any, that
uniformly applies for accrual purposes under all
plans maintained by the Company, or (b) if there is
no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under
the fractional accrual rate of Code Section
411(b)(1)(C).
(d) PERMISSIVE AGGREGATION GROUP: The required aggregation group
of plans plus any other plan or plans of the Company 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(b).
(e) REQUIRED AGGREGATION GROUP:
(i) Each qualified plan of the Company 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 Company which enables
a plan described in (i) to meet the requirements of
Code Sections 401(a)(4) or 410(b).
(f) DETERMINATION DATE: 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.
(g) VALUATION DATE: The date stated in Section (C)(4) as of which
account balances or accrued benefits are valued for purposes
of calculating the top-heavy ratio.
(h) PRESENT VALUE: Present value shall be based only on the
interest and mortality rates specified in Section (U).
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PART XVII - INSURANCE COMPANY
17.1 NOT A PARTY. The Insurance Company is not a party to the Plan and is
not responsible for the validity of the Plan as adopted by the Company
or the qualification of the Plan under the tax laws.
17.2 NOT RESPONSIBLE FOR THE ACTS OF THE COMPANY OR ADMINISTRATOR. The
Insurance Company shall not be responsible to look to the terms of the
Plan to determine whether or not any action of the Company or
Administrator is authorized by its terms.
17.3 RELIANCE ON SIGNATURES. Any instruments executed by the Administrator
or officers of the Company may be accepted by the Insurance Company as
the duly authorized act of the Administrator or the Company.
17.4 ACQUITTANCE. The Insurance Company shall be discharged from all
liability for any amount paid to the Company or paid in accordance with
the direction of the Company and shall not be obliged to see to the
distribution or further application of any monies by it.
17.5 DUTIES OF THE INSURANCE COMPANY. The obligations of the Insurance
Company shall be determined solely by the terms of its Contracts,
Policies and other agreements executed by it. The Insurance Company
shall maintain records concerning its Contracts and Policies and shall
supply such records to the Administrator when necessary to assure
proper administration of the Plan. The Insurance Company also shall
perform such duties as are directed by the Administrator pursuant to an
executed services agreement on behalf of the Plan.
17.6 PLAN CONTROLS. In the event of any conflict between the provisions of
the Plan and the terms of any Contract or Policy, the provisions of the
Plan shall control, provided that the mutual rights and obligations of
the parties to any Contract, agreement or Policy shall not thereby be
altered.
PART XVIII - AMENDMENT, TERMINATION, MERGER, ETC. OF PLAN
18.1 PERMANENCY. The expectation of the Company is that the Plan and the
payment of contributions hereunder, shall be continued indefinitely,
but continuance of the Plan is not assured as a contractual obligation
of the Company. This Plan may be amended or terminated only as provided
in this Part. All Plan amendments, including one to terminate the Plan,
shall be adopted in writing by the Company's board of directors. Any
material modification of the Plan by amendment or termination shall be
communicated to all interested parties, the Department of Labor, and
the Internal Revenue Service in the time and manner prescribed by law.
18.2 AMENDMENT BY INSURANCE COMPANY. The Company hereby delegates to the
Insurance Company, the Sponsoring Organization, the right to amend the
Plan and its Adoption Agreement and the Company and Administrator shall
be deemed to have consented to such amendment. Such delegation shall be
limited to the right to amend and shall not be construed to make the
Insurance Company a party to this Plan or the Adoption Agreement. The
Insurance Company shall, after amendment, contact each Company of
record who has previously adopted the Prototype Plan and give the
Company the opportunity to continue under the amended Prototype Plan.
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18.3 PERMISSIBLE AMENDMENTS BY COMPANY. Subject to Paragraph 18.4, the
Company, through its duly authorized management committee or by such
persons as the committee delegates its authority, may (1) change the
choice of options in the Adoption Agreement, (2) add overriding
language in the Adoption Agreement when such language is necessary to
satisfy Code Sections 415 or 416 because of the required aggregation of
multiple plans, and (3) add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption
shall not cause the Plan to be treated as individually designed. A
Company that amends the Plan for any other reason, including a waiver
of the minimum funding requirement under Code Section 412(d), shall no
longer participate in this master or Prototype Plan and shall be
considered to have an individually designed plan.
Any amendment shall be stated by executing an amended Adoption
Agreement and delivering a copy of such amendment to the Administrator
and the Insurance Company. Upon execution and delivery of the executed
Adoption Agreement, the Participants and Beneficiaries shall be bound
thereby.
18.4 RESTRICTIONS ON AMENDMENTS. No amendment:
(a) Shall increase the duties of the Administrator without his
written consent.
(b) To the vesting schedule under Section (R) shall deprive a
Participant of his nonforfeitable rights to benefits accrued
to the date of the amendment. Further, if the vesting schedule
of the Plan is amended, if the Plan is amended in any way that
directly or indirectly affects the computation of a
Participant's nonforfeitable percentage, or if the Plan is
deemed amended by an automatic change to a top-heavy vesting
schedule, each Participant with at least 3 Years of Service
with the Company may elect, within a reasonable period after
the adoption of the amendment, to have his nonforfeitable
percentage computed under the Plan without regard to such
amendment or changes. 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) 60 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 of the amendment by the Company or
Administrator.
(c) Shall be effective to the extent that it has the effect of
decreasing a Participant's accrued benefit. Notwithstanding
the preceding sentence, a Participant's account balance may be
reduced to the extent permitted under Code Section 412(c)(8).
For purposes of this Paragraph, a Plan amendment which has the
effect of decreasing a Participant's account balance or
eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment, shall
be treated as reducing an accrued benefit. Furthermore, if the
vesting schedule of the Plan is amended, in the case of an
Employee who is a Participant as of the later of the date of
the date such amendment is adopted or the date it becomes
effective, the nonforfeitable percentage (determined as of
such date) of such Employee's Employer-derived accrued benefit
shall not be less than the percentage computed under the Plan
without regard to such amendment.
(d) Shall change the funding method unless the new funding method
has been approved by the Internal Revenue Service.
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(e) Shall change the Plan Year unless the new Plan Year has been
approved by the Internal Revenue Service or is permitted by
IRS Revenue Procedure 87-27.
18.5 TERMINATION OF PLAN. The Company expressly reserves the right to
terminate the Plan in whole or in part at any time without the consent
of any Participant or Beneficiary. The Company shall give written
notice of termination of this Plan to the Administrator and the
Insurance Company. The Plan shall terminate upon the first of the
following events:
(a) The date terminated by the Company without establishment of
another defined contribution plan;
(b) The date the Company is judicially determined bankrupt or
insolvent;
(c) The date of the disposition by a corporation to an unrelated
corporation of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) used in a trade or business
of such corporation if such corporation continues to maintain
this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation
acquiring such assets; or
(d) The date of the disposition by a corporation to an unrelated
corporation of such corporation's interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) if such
corporation continues to maintain this Plan after the
disposition, but only with respect to Employees who continue
employment with such subsidiary.
18.6 FULL VESTING UPON TERMINATION. If this Plan is terminated or partially
terminated or upon a complete discontinuance of contributions, each
affected Participant shall be fully vested in his Participant's
Account. Upon termination of this Plan, all unallocated forfeitures
shall be reallocated among Participants' Accounts of those Participants
then entitled to share in current allocations, without the restrictions
of Section (L)(2). Following this final allocation, if any forfeiture
causes a Participant's Account to be in excess of the limitation on
allocations provided in Code Section 415, such excess will be disposed
of in accordance with Part V of the Plan.
The value of the Participants' accounts shall be distributed to all
affected Participants as one-sum cash payments. However, if elected by
the Administrator, all affected Participants shall have their benefits
distributed to them in the form of an annuity under the Contract.
If one-sum cash payments are made to the Participants and the Contract
values include allocations to the general investment account of the
Insurance Company, the amounts distributed shall be less any investment
loss charges and other deductions authorized by the Contract. Any
distributions pursuant to this Paragraph are subject to the spousal and
Participant consent requirements (if Paragraph 14.3 is operative)
contained in Code Sections 401(a)(11) and 417.
Notwithstanding the above provision, if any affected Participant had
commenced to receive annuity payments upon separation from service, he
shall continue to receive payments in the form elected.
18.7 MERGER, CONSOLIDATION, OR TRANSFER OF PLAN ASSETS. No merger or
consolidation of this Plan with, or transfer of assets or liabilities
to any other plan shall become effective until at least 30 days after
the Company or Administrator has filed with the Secretary of the
Treasury such statement as shall be required by law. In the case of any
such merger, consolidation or transfer of assets to any other plan,
each Participant shall receive a benefit immediately after the merger,
etc., (as if the plan then terminated) which is at least equal to the
benefit the Participant was entitled to immediately before such merger,
etc., (as if the Plan had terminated).
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PART XIX - ADMINISTRATION OF PLAN
19.1 APPOINTMENT OF ADMINISTRATOR. The Company shall appoint an
Administrator. A written appointment shall be filed in the Company's
official records. The Insurance Company may not be appointed as
Administrator. The Administrator may be a person, organization, or Plan
committee. Any person so appointed shall accept by filing a written
acceptance with the Company. The Administrator shall serve at the
discretion of the Company, but may resign by filing a written
resignation with the Company.
The discharge of an Administrator shall be made in writing by the
Company, delivered to the person and filed in the official records of
the Company. A new Administrator shall be appointed as soon as possible
after an Administrator resigns or is discharged. If no appointment is
effective at any time, the Administrator shall be the Company. The
Secretary of the Company shall certify in writing the name and
signature of the Administrator, or person acting on behalf of the
Administrator, his address and telephone number to the Insurance
Company. The Insurance Company may assume that such person continues to
hold office until a new certificate is received from the Company. The
Company agrees to fully protect and to indemnify the Insurance Company
in relying upon any authorization or direction the Insurance Company
reasonably believes to be authentic.
19.2 ADMINISTRATOR'S POWERS AND DUTIES. The Administrator shall be
responsible for the day-to-day administration of this Plan and for the
exercise of all fiduciary responsibilities provided for in the Plan
that are not assigned to other parties pursuant to the terms of the
Plan. The Administrator's duties shall include, but not be limited to
the following:
(a) To construe and interpret the provisions of the Plan;
(b) To decide all questions of eligibility for Plan participation
and for the payment of benefits;
(c) To provide appropriate parties, including government agencies,
with such returns, reports, schedules, descriptions, and
individual statements as are required by law within the times
prescribed by law; and to furnish to the Company, upon
request, copies of any or all such materials, and further, to
make copies of such instruments, reports, and descriptions as
are required by law to be available for examination by
Participants and such of their Beneficiaries who are or may be
entitled to benefits under the Plan in such places and in such
manner as required by law; (the Administrator may make a
reasonable charge for copies);
(d) To furnish to each Participant and each Beneficiary receiving
benefits under the Plan a copy of a summary plan description
and a summary of any material modifications thereof at the
time and in the manner prescribed by law;
(e) To obtain from the Company, the Employees and the Insurance
Company such information as shall be necessary for the proper
administration of the Plan;
(f) To determine the amount, manner and time of payment of
benefits thereunder;
(g) Subject to the approval of the Company only as to any
additional expense, to appoint and retain such agents,
counsel, and accountants for the purpose of properly
administering the Plan;
(h) To take all actions and to communicate to the Insurance
Company in writing all necessary information to carry out the
terms of the Plan;
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(i) To notify the Insurance Company in writing of a termination, a
partial termination or a complete discontinuance of
contributions to the Plan;
(j) To direct the Insurance Company to distribute benefits of the
Plan to each Participant and Beneficiary in accordance with
the terms of the Plan;
(k) To provide each Participant within the time period set forth
in Paragraphs 14.3 and 15.2, if applicable, a written
explanation of: the Automatic Joint and Survivor Annuity and
the Preretirement Survivor Annuity; and
(l) To do such other acts reasonably required to administer the
Plan in accordance with its provisions or as may be provided
for or required by law.
The Administrator and each other fiduciary shall discharge their duties
with respect to the Plan in accordance with the provisions of the Plan,
including the Adoption Agreement.
19.3 DELEGATION OF ADMINISTRATIVE RESPONSIBILITIES. The Administrator may
appoint other persons to perform any of his administrative functions.
Such appointment shall be made in writing and shall be effective upon
the written approval of the Company. The Administrator and any such
appointee may employ advisors and other persons necessary to help the
Administrator carry out his functions, including fiduciary functions.
The Administrator shall monitor the work and review the performance of
each such appointee, and he shall remove any such appointee from his
position if the Administrator determines that his performance is
unsatisfactory. Any person or group of persons may serve in more than
one fiduciary capacity. The Administrator may delegate one or more of
his responsibilities to the Insurance Company by a written
administrative services agreement entered into with the Insurance
Company. The Insurance Company's administrative responsibilities shall
be limited to those services set forth in such agreement.
19.4 BONDING. The Administrator, and any other fiduciary, officer of the
Company and Employee of the Company who handles funds of the Plan shall
be bonded as required by ERISA. Such bond shall protect the Plan
against loss by reason of acts of fraud or dishonesty by such persons
directly or through the connivance of others. The amount of the bond
shall not be less than 10 percent of the value of the Contract at the
beginning of the Year nor more than $500,000. In no event shall the
bond be less than $1000. If the Secretary of the U.S. Department of
Labor prescribes an amount in excess of $500,000, however, a bond in
the prescribed amount shall be obtained.
19.5 FIDUCIARY LIABILITY INSURANCE AND INDEMNIFICATION. The Company may
purchase fiduciary liability insurance or agree to indemnify and hold
harmless the Administrator and persons appointed by the Administrator
or Company to carry out fiduciary functions against any and all claims,
loss, damage, expense or liability arising from their official
capacities in the administration of the Plan, unless the same is
determined to be due to gross negligence or willful misconduct.
19.6 COMPENSATION OF ADMINISTRATOR. The Company shall reimburse the
Administrator for any reasonable costs and expenses, including
fiduciary liability insurance, incurred by the Administrator as a
result of performance of his duties or functions. The Company shall
compensate the Administrator for services rendered under this Plan,
except that no Administrator who receives full-time compensation from
the Company shall be so compensated.
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19.7 SERVICE OF LEGAL PROCESS. The Administrator is the designated agent to
receive service of legal process on behalf of the Plan, unless the
Company designates some other party in writing in the summary plan
description.
19.8 COMPANY CENSUS REPORT. To enable the Administrator to perform his
functions, the Company shall furnish the Administrator full and timely
information on or before each Plan Year (and more frequently, if
required) on all matters relating to classification of Employees, their
dates of employment, ages, Hours of Service, Compensation, dates of
retirement, death, disability or Termination of Employment, causes of
Termination of Employment and such other census data as may be required
to administer the Plan. The Administrator shall advise the Insurance
Company in writing of such information about Participants' and
Beneficiaries' status, including changes in status, pertinent to
determining benefit entitlements under the Contract or Policies.
19.9 INFORMATION ABOUT PLAN. Any Participant in the Plan, or any Beneficiary
receiving benefits under the Plan, may examine copies of the Plan, the
Contract, any Policies on his life, the summary plan description, the
latest annual report, any collective bargaining agreement, Contract or
any other instrument under which this Plan is maintained or operated.
The Administrator shall maintain all items listed in this Paragraph in
his office, or in other places as he may designate from time to time to
comply with regulations issued under ERISA, for examination during
normal business hours. Upon written request of a Participant or
Beneficiary receiving benefits under this Plan, the Administrator shall
furnish him with a copy of any item listed in this Paragraph. The
Administrator may impose a charge equal to the costs of reproduction,
but in no event shall the costs exceed 25 cents per page.
19.10 INFORMATION ABOUT PARTICIPANTS AND BENEFICIARIES. Each Participant and
each Beneficiary of a deceased Participant shall file with the
Administrator from time to time in writing his current post office
address. Any communication, statement, or notice addressed to a
Participant or a Beneficiary at his last post office address filed with
the Administrator or as shown on the Company's records, shall bind the
Participant or Beneficiary for all purposes of this Plan. Each
Participant shall file with the Administrator his name, Social Security
number, date of birth, and marital status. Each married Participant
shall file, upon request, with the Administrator the name, date of
birth, and date of marriage to his Spouse. The Administrator may
require satisfactory evidence of any personal information required to
administer the Plan. The information provided by the Participant
concerning his Spouse shall bind the Participant, the Participant's
Spouse and their heirs for all purposes of the Plan. The Participant
shall be required to notify the Administrator of any changes in
information previously filed.
19.11 CLAIM FOR BENEFITS. All applications for benefits under the Plan shall
be submitted to the Administrator in writing on forms prescribed by the
Administrator. The application shall be signed by the Participant, and
the Participant's Spouse if required by the Administrator, or in the
case of a death benefit by the Beneficiary or legal representative of
the deceased Participant. Each Participant and each Beneficiary of a
deceased Participant must furnish the Administrator with such evidence,
data or other information as the Administrator or Insurance Company
considers necessary or desirable for purposes of administering the
Plan. The provisions of this Plan are effective for the benefit of each
Participant subject to the condition that each Participant or
Beneficiary shall furnish promptly full, true and complete evidence,
data or other information when requested by the Administrator, provided
the Participant or Beneficiary is advised of the affect of his failure
to comply with the request. The Administrator shall make all
determinations as to the right of any person to a benefit under the
Plan. The Administrator shall notify the claimant of the acceptance or
denial of any claim within 90 days, unless special circumstances are
deemed by the Administrator to require an additional period of no more
than 90 days. If an extension is necessary, the Administrator shall
notify the claimant in writing explaining why more time is needed and
indicate a date by which the Administrator expects to render a
decision.
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19.12 CLAIMS REVIEW PROCEDURE. The Administrator shall provide to any
claimant whose claim for benefits under the Plan has been fully or
partially denied a written notice setting forth the specific reasons
for such denial. Such notice shall state that the claimant is entitled
to request a review by the Administrator of the decision denying the
claim, the reasons for denial, the Plan provisions upon which the
denial is based, a description and reason for needing any additional
information needed to consider the claim, and an explanation of the
review procedure. The claimant or his authorized representative may
within 60 days of the denial of the claim: request a claim review by
the Administrator, review pertinent documents relating to the denial,
and submit issues and comments in writing to the Administrator. The
Administrator must make a final decision on a claim reviewed within
sixty days. The Administrator shall make a full and fair review of such
claim and any written materials submitted by the claimant and may
require the claimant or the Company to submit such additional evidence
as the Administrator deems necessary or advisable to make a claims
review.
On the basis of the review, the Administrator shall make an independent
determination of the claimant's entitlement to benefits under the Plan.
The decision of the Administrator upon review, if supported by
substantial evidence in the record, shall be final and conclusive on
all parties to the Plan. The Administrator shall give the claimant
written notice of his decision upon review which shall include specific
reasons and references to the Plan provision upon which his decision is
based. The 60-day review period may be extended for another 60 days if
the Administrator finds that special circumstances require an extension
of time. If after such review the Administrator concludes that the
denial of benefits was erroneous or contrary to the Plan or to the law,
the Administrator shall take such action as shall be appropriate to
provide such benefit.
19.13 MISSING PARTICIPANTS OR BENEFICIARIES. In the event a person entitled
to a benefit is unable to be found after a diligent one-year search by
the Administrator, the benefit payable to that person shall be
forfeited and applied to reduce the Company's contributions under the
Plan, provided, however, that the Administrator shall reinstate the
benefit in the event the person entitled thereto is found or makes a
claim. The sources for restoration of the benefit shall be forfeitures
or an additional Company contribution.
PART XX - MISCELLANEOUS
20.1 ASSIGNMENT OR ALIENATION. No benefit or interest available hereunder
shall be subject to assignment or alienation, either voluntarily or
involuntarily. 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, unless
such order is determined to be a qualified domestic relations order, as
defined in Code Section 414(p), or any domestic relations order entered
before January 1, 1985. Notwithstanding any other provision to the Plan
and as directed in writing by the Administrator, a distribution shall
be made immediately to an alternate payee pursuant to such qualified
domestic relations order.
20.2 RESPONSIBILITY FOR QUALIFICATION OF PLAN. The Company is solely
responsible for the qualification of the Plan under the Code. Should
the Plan fail to initially attain qualified plan status, the Plan shall
terminate and contributions shall be returned to the Company and to
Participants in accordance with Subparagraph 4.11(b). If an initially
qualified plan fails to retain qualified plan status, the Plan shall
terminate and the interest of each Participant shall be distributed in
the same manner as provided under Paragraph 18.6.
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20.3 ORIGINAL DOCUMENT. The Plan may be executed in any number of
counterparts, each of which shall be deemed an original, and said
counterparts shall constitute but one and the same instrument and may
be sufficiently evidenced by any one counterpart.
20.4 STATE LAW. The Plan is to be regulated and construed in accordance with
the laws of the State in which the Company maintains its principal
office, except to the extent such laws are preempted by Federal law.
20.5 NOT AN EMPLOYMENT CONTRACT. No Employee of the Company nor anyone else
shall have any rights against the Company as a result of this Plan,
except those expressly granted hereunder. Nothing herein shall be
construed to give any Participant the right to remain in the employ of
the Company.
20.6 WORD USAGE. Words when used herein are used irrespective of number or
gender unless the context clearly requires otherwise.
20.7 INTERPRETATION OF PLAN. The intention of the Company is that the Plan
shall comply with the provisions of the Code, the Employee Retirement
Income Security Act, the Tax Equity and Fiscal Responsibility Act, and
the corresponding provisions of any subsequent laws, and the provisions
of the Plan shall be construed to effectuate such intention.
In the event any provision or provisions shall be determined to be
illegal or invalid for any reason, the illegal or invalid provision
shall not affect the remaining parts of the Plan and the Company,
Administrator, or Trustee may perform such alternative acts which most
clearly carry out the intent and purpose of the Plan.
20.8 HEADINGS. The headings of the Parts, Paragraphs and Sections of this
Plan are for convenience and reference only, and any conflict between
such headings and the text shall be resolved in favor of the text.
PART XXI
Transitional Rule - Retirement Distributions
Subject to Part XIV and XV, distributions on behalf of any Participant,
including a 5-percent owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(1) The distribution by the Plan is one which would not have disqualified
such Plan under Code Section 401(a)(9) as in effect prior to amendment
by DEFRA.
(2) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being
distributed or, if the Participant is deceased, by a Beneficiary of
such Participant.
(3) Such designation was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(4) The Participant had accrued a benefit under the Plan as of December 31,
1983.
(5) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution shall commence,
the period over which distributions shall be made, and in the case of
any distribution upon the Participant's death, the Beneficiaries of the
Participant listed in order of priority.
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A distribution upon death shall not be covered by this transitional rule unless
the information in the designation contains the required information described
above with respect to the distributions to be made upon the death of the
Participant.
For any distribution which commences before January 1, 1984, but continues after
December 31, 1983, the Participant, or the Beneficiary, to whom such
distribution is being made, shall be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirement in Subparagraph (5) above.
If a designation is revoked any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) and the Regulations thereunder. If a
designation is evoked subsequent to the date distributions are required to
begin, the Plan must distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total amount not yet
distributed which would have been required to have been distributed to satisfy
Code Section 401(a)(9) and the Regulations thereunder, but for the Section
242(b)(2) election. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit requirements
in Section 1.401(a)-2 of the Income Tax Regulations. Any changes in the
designation shall 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 shall not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life). In the
case in which an amount is transferred or rolled over from one plan to another
plan, the rules in Q&A J-2 and Q&A J-3 shall apply.
PART XXII
Transitional Rules - Survivor Annuities
B1. Any living Participant not receiving benefits on August 23, 1984, who
would otherwise not receive the benefits prescribed by Paragraphs 14.3
and 15.2 of the Plan must be given the opportunity to elect to have
such Paragraphs apply if the 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 vesting service when he separated from Service.
B2. 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 any Service in a Plan Year beginning on or
after January 1, 1976, must be given the opportunity to have his
benefits paid in accordance with Paragraph B4.
B3. The respective opportunities to elect (as described in Paragraphs B1
and B2 above) must be afforded to the appropriate Participants during
the period commencing on August 23, 1984, and ending on the date
benefits would otherwise commence to said Participants.
B4. Any Participant who has elected pursuant to Paragraph B2 and any
Participant who does not elect under Paragraph B1 or who meets the
requirements except that such Participant does not have at least 10
years of vesting Service when he separates from Service, shall have his
benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life
annuity:
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(a) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married
Participant who:
(i) begins to receive payments under the Plan on or after
Normal Retirement Date;
(ii) dies on or after Normal Retirement Date while still
working for the Company;
(iii) begins to receive payments on or after the Qualified
Early Retirement Date; or
(iv) separates from service on or after attaining Normal
Retirement Date (or the Qualified Early Retirement
Date) and after satisfying the eligibility
requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive
such benefits; then such benefits shall be received
under this Plan in the form of an Automatic Joint and
Survivor Annuity, unless the Participant has elected
otherwise during the Election Period. The Election
Period must begin at least 6 months before the
Participant attains Qualified Early Retirement Date
and end not more than 90 days before the commencement
of benefits. Any election hereunder shall be in
writing and may be changed by the Participant at any
time.
(b) Election of Early Survivor Annuity. A Participant who is
employed after attaining the Qualified Early Retirement Date
shall be given the opportunity to elect, during the Election
Period, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have
been made to the Spouse under the Automatic Joint and Survivor
Annuity if the Participant had retired on the day before his
death. Any election under this provision shall be in writing
and may be changed by the Participant at any time. The
election period begins on the later of (1) the 90th day before
the Participant attains the Qualified Early Retirement Date,
or (2) the date on which participation begins, and ends on the
date the Participant terminates employment.
(c) For purposes of this Paragraph B4, Qualified Early Retirement
Date 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 Date, or
(iii) the date the Participant begins participation.
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FL 2372 - 2372
PROTOTYPE
- --------------------------------------------------------------------------------
FLEXINVEST(R)
-------------------------------------
PROFIT-SHARING/401(k) PLAN
ADOPTION AGREEMENT
FOR NON-STANDARDIZED PLANS
<PAGE> 71
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
FLEXINVEST(R) PROTOTYPE PROFIT-SHARING/401(k) PLAN
--------------------------------------------------
PROFIT-SHARING/401(k) PLAN ADOPTION AGREEMENT
For Non-Standardized Plans
In accordance with and as permitted by the provisions of the Massachusetts
Mutual Life Insurance Company FLEXINVEST(R) Prototype Profit-Sharing/40 I (k)
Plan, herein called the Plan, a copy of which is hereto attached, the
undersigned Company pursuant to vote of its Board of Directors hereby adopts the
Plan to provide retirement and incidental benefits for its Employees, and agrees
1. to conform to and abide by all of the terms, provisions and
requirements of the Plan;
2. that any action taken or to be taken in accordance with or as required
by the Plan or any action taken in conjunction with the Plan as
required by any law or regulations is and will be its sole
responsibility;
3. that the liability of Massachusetts Mutual Life Insurance Company is
limited to the obligations under the terms of the Contract and the
Policies.
Sponsoring Organization: Massachusetts Mutual Life Insurance Company
Defined Contribution Operations
1295 State Street
Springfield, MA 01111-0001
(413) 788-8411
The Sponsoring Organization will notify the undersigned Company of any
amendments made to the Plan or of the discontinuance or abandonment of
the Plan.
PLEASE NOTE: Failure to properly fill out this Adoption
Agreement may result in disqualification of the Plan.
(C) Copyright 1996 by Massachusetts Mutual Life Insurance Company. All Rights
Reserved. No reproduction of provisions in this document are permitted without
the express written consent of Massachusetts Mutual Life Insurance Company,
Springfield, MA 01111-0001.
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The undersigned Company elects as follows:
(A) PLAN NAME
The Plan will be known as THE RETIREMENT PLAN FOR EMPLOYEES OF THE
CENTRAL RESERVE LIFE INSURANCE COMPANY.
Amended (or Restated) Plans:
The Plan is adopted by amendment in substitution for THE PENSION PLAN FOR
EMPLOYEES OF THE CENTRAL RESERVE LIFE INSURANCE COMPANY, the Company's
pre-existing Plan, which is hereby replaced.
(B) CONTROLLED GROUPS/AFFILIATED EMPLOYERS (Paragraph 6.5)
Check if applicable:
[ ] The Plan will be funded through the Contract of an affiliated
Employer's Plan, Contract No. _______ issued by the Insurance Company
to _________.
(C) DATES
(1) The Effective Date of the Plan is January 1. 1978. (The
original effective date of the Plan prior to any amendment.)
Amended (or Restated) Plans: The Effective Date of this
Amendment is January 1, 1998.
Notwithstanding any other plan provision, this Effective Date
applies to all current and future Participants including
terminated vested Participants who return to employment with
the Company.
(2) The Plan Year is a period beginning on January 1, 1998 , and
ending on December 31, 1998 Subsequent Plan Years will be
consecutive 12-month periods ending on the same date each year
thereafter.
(3) In the case of a top-heavy plan, the Determination Date will
be the last day of the Plan Year for the first Plan Year, and
for any other Plan Year, the last day of the preceding Plan
Year.
(4) The Valuation Date, for purposes of Part XVI, will be the most
recent Valuation Date occurring within the 12-month period
ending on the Determination Date.
(5) For purposes of determining Highly Compensated Employees
(Paragraph 1.30) and notwithstanding any Plan provision to the
contrary, the lookback provisions of Code Section 414(q) shall
not apply.
The snapshot day of 12/31 (month and day) will be used for
purposes of determining Highly Compensated Employees.
(6) Limitation Year will mean:
(a) [X] the calendar year.
(b) [ ] the 12-consecutive month period coinciding with the
Plan Year.
(c) [ ] the 12-consecutive month period from _____.
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NOTE: If the Company is a member of a controlled group of
corporations, a controlled group of trades or businesses or an
affiliated service group, the Limitation Year must be the same
for all members of the group.
(D) ELIGIBILITY FOR PARTICIPATION (PART III)
(1) Classification(s) of eligible employees:
(a) [X] All
[ ] Salaried
[ ] Hourly
[ ] Commissioned
[ ] All non-Highly Compensated Employees
(b) [ ] Division, Plant, Location or Other (Specify).
-----------------
(c) [ ] Employees not covered by a collective bargaining
agreement.
(2) Present Employees:
(a) [ ] An Employee who is employed on the Effective Date
(or Amendment Date, if later) will become a
Participant on the Effective Date (or Amendment
Date, if later).
(b) [X] An Employee who is employed on the Effective Date
(or Amendment Date, if later) will become a
Participant upon meeting the requirements in (D)(3).
(3) Future Employees:
An Employee who becomes employed after the Effective Date (or
the Amendment Date, if later) will become a Participant upon
meeting the following requirements:
(a) Service Requirement
(i) [ ] None
(ii) [X] Completion of 1/2 Years of Service
(401(k) Plans: Not to exceed 1, or if
(D)(7)(a) is elected, 1/2. PROFIT-SHARING
PLANS: Not to exceed 2, or if (D)(7)(a)
is elected, 1 1/2. If years exceed 1,
(R)(1)(a) must be elected.)
NOTE: If a fractional year is elected, an Employee
will not be required to complete any specified number
of Hours of Service to receive credit for such
fractional year.
(b) Age Requirement
(i) [ ] None
(ii) [X] Attainment of age 20.5 (not to exceed
21, or if (D)(7)(a) is elected, 20 1/2)
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(4) Employees eligible for participation under another plan
qualified under Code Sections 401 or 403 to which the Company
contributes will be eligible for participation in this Plan.
[ ] Yes [ ] No [X] Not Applicable. There is no other Plan.
Name of other plan: ___________________________
(D) ELIGIBILITY FOR PARTICIPATION (CONTINUED)
(5) If the Company has acquired the trade or business from another
Company, including a sole proprietorship or partnership,
service with the predecessor Company
(Name of predecessor Company: ____________) which did not
maintain this Plan will be considered Service with the
Company for purposes of determining:
(a) [ ] Initial and continued eligibility to participate in
the Plan.
(b) [ ] A Participant's vested interest in his Participant's
Account.
(c) [ ] No credit for prior service.
(d) [X] Not Applicable. There was no predecessor Company, or
the predecessor Company maintained this Plan.
(6) Hours of Service will be determined on the basis of the method
selected below. Only one method may be selected. The method
selected will be applied to all Employees covered under the
Plan.
(a) [X] On the basis of actual hours for which an Employee is
paid or entitled to payment.
(b) [ ] On the basis of days worked. An Employee will be
credited with ten (10) Hours of Service if under
Paragraph 1.31 of the Plan such Employee would be
credited with at least one (1) Hour of Service during
the day.
(c) [ ] On the basis of weeks worked. An Employee will be
credited with forty-five (45) Hours of Service if
under Paragraph 1.31 of the Plan such Employee would
be credited with at least one (1) Hour of Service
during the week.
(d) [ ] On the basis of semi-monthly payroll periods. An
Employee will be credited with ninety-five (95) Hours
of Service if under Paragraph 1.31 of the Plan such
Employee would be credited with at least one (1) Hour
of Service during the semi-monthly payroll period.
(e) [ ] On the basis of months worked. An Employee will be
credited with one hundred ninety (190) Hours of
Service if under Paragraph 1.31 of the Plan such
Employee would be credited with at least one (1) Hour
of Service during the month.
(7) The Entry Date will be:
(a) [ ] an Anniversary Date of the Plan.
(b) [X] semi-annually, i.e., an Anniversary Date or the first
day of the sixth month following an Anniversary Date.
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<PAGE> 75
(c) [ ] quarterly, i.e., an Anniversary Date or the first day
of the third, sixth, or ninth month following an
Anniversary Date.
(d) [ ] the first day of any calendar month.
(E) COMPENSATION (PARAGRAPH 1. 14)
(1) Compensation will mean all of each Participant's:
(a) (i) [X] Compensation required to be reported under
Code Sections 6041 and 6051 (Wages, Tips, and
Other Compensation on Form W-2).
(ii) [ ] Wages as defined in Code Section 3401(a).
(iii)[ ] 415 safe-harbor compensation.
(iv) [ ] Total compensation as defined in Treas.
Reg. sections 1.415-2(d)(1) and (2).
(b) The definition selected above shall exclude the following
items (even if includible in gross income): reimbursements
or other expense allowances, fringe benefits (cash and
noncash), moving expenses, and welfare benefits.
[X] Yes [ ] No
(c) (i) [ ] The definition selected in (a) and (b) above
will apply to integrated contributions, the
operation of the ADP and ACP tests and the
minimum contribution in a top-heavy plan.
However, for all other Plan purposes, including
forfeiture allocation, Compensation will mean
all of each Participant's Regular or Base Salary
or Wages including:
[ ] bonuses
[ ] overtime
[ ] commissions
[ ] discretionary bonuses
[ ] none of the above
(ii) [X] Not applicable. The definition selected in (a)
will apply for all Plan purposes.
NOTE: If (i) above is elected, the Compensation
percentage for the Highly Compensated Employees
cannot be greater than the Compensation percentage
for other Employees. The Compensation percentage for
a group of Employees may be calculated by averaging
the separately calculated Compensation ratios for
each Employee in the group. An Employee's
Compensation ratio is calculated by dividing the
Employee's Compensation under (c) by the Employee's
Compensation under (a).
(2) Compensation will:
[X] will include
[ ] will not include
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Company contributions made pursuant to deferred salary
agreements which are not includible in the gross income of the
Employees under Code Sections 125, 402(e)(3), 402(h)(1) or
403(b).
(F) RETIREMENT (PART XIV)
(1) The Normal Retirement Date of a Participant will be:
(a) [X] Age 65 (not to exceed 65).
--
(b) [ ] The later of age _____ (not to exceed 65) or the
_____ (not to exceed 5th) anniversary of the
participation commencement date. The
participation commencement date is the first day
of the first Plan Year in which the Participant
commences participation in the Plan.
(c) [ ] Age _____ (not to exceed 65) and _____ (not to
exceed 5th) anniversary of the commencement date
of service with the Employer.
NOTE: The Normal Retirement Date, as elected above, may not
exceed any mandatory retirement age enforced by the Company.
(2) The Early Retirement Date of a Participant will be:
(a) [ ] None
(b) [X] The first day of any calendar month after
his 55th birthday.
(c) [ ] The first day of any calendar month after
his ____ birthday and his completion of
(i) ______ Years of Service.
(ii) ______ Years of Service following
commencement of participation.
(d) [ ] The first day of any calendar month after
his completion of
(i) _____ Years of Service.
(ii) _____ Years of Service following
commencement of participation.
(3) The Disability Retirement Date of a Participant will be:
(a) [ ] None.
(b) [ ] The first day of day calendar month after
his birthday.
(c) [ ] The first day of any calendar month after
his ___ birthday and his completion of __
Years of Service.
(d) [X] The first day of any calendar month.
(F) RETIREMENT (CONTINUED)
(4) Determination of Disability:
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<PAGE> 77
(a) [ ] If entitled to disability benefits under the
Federal Social Security Act.
(b) [X] Determined by the Company in accordance with
its normal personnel practice applied in a
uniform and nondiscriminatory manner.
(c) [ ] Determined by the Company in accordance with
the collective bargaining agreement.
(d) [ ] If entitled to disability benefits under the
Company's Long Term Disability Insurance
Plan.
(e) [ ] Not Applicable. Disability Retirement is not
allowed.
(5) Benefit Option
Continuation of retired Participant's Account until the first
day of April following the calendar year in which the retired
Participant attains age 70 1/2 is:
[X] Permitted.
[ ] Not Permitted.
If permitted under (M)(1), the retired Participant's account balance will be
invested in accordance with the Participant's direction as permitted under the
Plan.
(G) ELECTIVE DEFERRALS (Paragraph 1.20)
For each Plan Year the Company will make available the following
amounts to the Plan:
(1) [X] Deferred Salary
An amount not to exceed 10 % of a Participant's
Compensation pursuant to a Deferred Salary Agreement.
(a) A Participant may elect to commence Elective
Deferrals as of his Entry Date or any other
date thereafter elected below:
[ ] the first day of the Plan Year.
[ ] the first day of any month.
[X] 1ST Day of my Calendar Quarter
------------------------------
Such election will become effective as soon
as administratively feasible thereafter.
(b) A Participant's election to have Elective
Deferrals made pursuant to a Deferred Salary
Agreement will remain in effect until
modified or terminated. A Participant may
modify the amount of Elective Deferrals as
of
[ ] the first day of the Plan Year.
[ ] the first day of any month.
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<PAGE> 78
[X] 1st Day of any Calendar Quarter
-------------------------------
Such election will become effective as soon
as administratively feasible thereafter.
(2) [ ] Deferred Bonus
An amount under this Plan of:
[ ] ________% of Compensation of each Participant.
[ ] A uniform percentage of the Compensation of each
Participant, which the Company, in its sole
discretion, determines.
[ ] A percentage of Compensation of a Participant, which
the Company, in its sole discretion, determines.
A Participant will be afforded a reasonable period to elect
to defer all, part or none of the amount described above.
Such election will become effective as soon as
administratively feasible thereafter.
(3) [ ] Elective Deferrals will not be contributed to the
Plan. The Plan is a profit-sharing plan only, without
a 401 (k) feature.
(H) COMPANY QUALIFIED NONELECTIVE CONTRIBUTIONS (Paragraph 1.13)
(1) The Company [ ] will [X] will not make Qualified Nonelective
Contributions to the Plan. If the Company does make such
contributions to the Plan, then the amount of such
contributions for each Plan Year will be:
(a) [ ] ______% (not to exceed 15 percent) of the
Compensation of all Participants eligible to
share in the allocation.
(b) [ ] ______% of the net profits, but in no event
more than $________ for any Plan Year.
(c) [ ] An amount determined by the Company.
(2) (a) Allocation of Company Qualified Nonelective
Contributions will be made to the accounts of:
[ ] All Participants.
[ ] All non-Highly Compensated Participants.
(b) Allocation of Company Qualified Nonelective
Contributions will be made:
[ ] In the ratio in which each Participant's
Compensation for the Plan Year bears to the
total Compensation of all Participants for
such Plan Year.
[ ] In the ratio in which each Participant's
Compensation not in excess of $_______ for
the Plan Year bears to the total
Compensation of all Participants not in
excess of $_______ for such Plan Year.
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[X] Not Applicable. No Company Qualified
Nonelective Contributions will be made.
(I) COMPANY MATCHING AND COMPANY QUALIFIED MATCHING CONTRIBUTIONS
(Paragraphs 1.10 and 1.12)
(1) The Company will:
(a) [ ] Make Company Matching Contributions to the
Plan.
(b) [ ] Make Company Qualified Matching
Contributions to the Plan.
(c) [X] Not make any Company Matching or Qualified
Matching Contributions to the Plan.
(2) The Formula for determining the Company Matching or Qualified
Matching Contribution will be:
(a) [ ] FIXED PERCENTAGE - An amount equal to the
percentages of the Elective Deferrals and
Participant Matched Contributions designated
below, the total contribution not to exceed
the lesser of $______ or _______% of
Compensation.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
ELECTIVE DEFERRALS AND PERCENTAGE
PARTICIPANT MATCHED CONTRIBUTIONS MATCHED
----------------------------------------------------------------------
<S> <C>
up to 1% of Compensation %
----------------------------------------------------------------------
over 1% up to 2% of Compensation %
----------------------------------------------------------------------
over 2% up to 3% of Compensation %
----------------------------------------------------------------------
over 3% up to 4% of Compensation %
----------------------------------------------------------------------
over 4% up to 5% of Compensation %
----------------------------------------------------------------------
over 5% up to 6% of Compensation %
----------------------------------------------------------------------
over 6% up to 7% of Compensation %
----------------------------------------------------------------------
over 7% up to 8% of Compensation %
----------------------------------------------------------------------
over 8% up to 9% of Compensation %
----------------------------------------------------------------------
over 9% up to 10% of Compensation %
----------------------------------------------------------------------
over 10% of Compensation %
--------------------------------------------- ------------------------
</TABLE>
(I) COMPANY MATCHING AND COMPANY QUALIFIED MATCHING CONTRIBUTIONS
(continued)
(b) [ ] DISCRETIONARY PERCENTAGE MATCH - An amount between
the minimum and maximum percentages designated below
of the Elective Deferrals and Participant Matched
Contributions. The actual percentage will be
determined by the Company prior to the beginning of
each Plan Year, the total contribution not to exceed
the lesser of $______ or _________% of Compensation.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
ELECTIVE DEFERRALS AND PERCENTAGE
PARTICIPANT MATCHED CONTRIBUTIONS MATCHED
----------------------------------------------------------------------
<S> <C> <C> <C>
up to 1% of Compensation % to %
----------------------------------------------------------------------
over 1% up to 2% of Compensation % to %
----------------------------------------------------------------------
over 2% up to 3% of Compensation % to %
----------------------------------------------------------------------
over 3% up to 4% of Compensation % to %
----------------------------------------------------------------------
over 4% up to 5% of Compensation % to %
----------------------------------------------------------------------
over 5% up to 6% of Compensation % to %
----------------------------------------------------------------------
over 6% up to 7% of Compensation % to %
----------------------------------------------------------------------
</TABLE>
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<TABLE>
<S> <C> <C> <C>
over 7% up to 8% of Compensation % to %
----------------------------------------------------------------------
over 8% up to 9% of Compensation % to %
----------------------------------------------------------------------
over 9% up to 10% of Compensation % to %
----------------------------------------------------------------------
over 10% of Compensation % to %
--------------------------------------------- -------- ------- -------
</TABLE>
(c) [ ] GRADUATED MATCH - An amount equal to a specified
percentage of the Elective Deferrals and Participant
Matched Contributions, the total contribution not to
exceed the lesser of $______ or ______% of
Compensation. The specified percentage will vary with
the Years of Service credited to the Participant as
follows:
<TABLE>
-------------------------------------------------
PERCENTAGE
YEAR OF SERVICE MATCH
-------------------------------------------------
<S> <C> <C>
1 %
-------------------------------------------------
2 %
-------------------------------------------------
3 %
-------------------------------------------------
4 %
-------------------------------------------------
5 %
-------------------------------------------------
6 %
-------------------------------------------------
7 %
-------------------------------------------------
8 %
-------------------------------------------------
9 %
-------------------------------------------------
10 or more %
-------------------------------------------------
</TABLE>
NOTE: If a Graduated Match is elected, this
contribution must satisfy all applicable
nondiscrimination requirements.
(J) PARTICIPANT CONTRIBUTIONS (Paragraphs 1.38 and 1.39)
(1) Participant Matched Contributions:
(a) [ ] Will be accepted by the Plan if the
Participant elects to make such a contribution, of no more than _____% of the
Participant's Compensation.
(b) [X] None
(c) [ ] Will be required as a
[ ] condition of employment.
[ ] condition of participation.
The amount that a Participant must contribute is:
(i) [ ] an amount equal to ______ % of
the Participant's Compensation.
(ii) [ ] _________ cents per hour worked
by the Participant.
(iii) [ ] a flat dollar amount of $_____
per Plan Year, due ratably each
pay period.
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These contributions [ ] may [ ] may not be suspended
by the Participant. No Company Matched Contribution
will be allocated on behalf of a Participant during a
time period in which he suspends his contribution.
(2) Participant Nondeductible Voluntary Contribution:
(a) [ ] Not Permitted
(b) [ ] Plan has frozen Participant Nondeductible
Voluntary Contributions. Ongoing Participant
Nondeductible Voluntary Contributions not
permitted.
(c) [X] Plan permits an amount equal to a percentage
of the Participant's Compensation elected by
him which is not more than 10 %(not to
exceed 10 percent).
(K) COMPANY PROFIT-SHARING CONTRIBUTIONS (Paragraph 1.11)
(1) (a) The Company:
(i) [X] May make Company Profit-Sharing
Contributions for any Plan Year at
its discretion.
(ii) [ ] Will not make any Company
Profit-Sharing Contributions to the
Plan.
(b) Company Profit-Sharing Contributions for any Plan
Year will be allocated to the Accounts of all
Participants except:
(i) [X] Those Participants who have not
been credited with 1000 or more
Hours of Service during the Plan
Year.
(ii) [X] Those Participants whose employment
with the Company terminated prior
to the end of the Plan Year will
not share in contributions
allocated after the date of
Termination of Employment.
(iii) [ ] No exceptions.
NOTE 1: If (i) or (ii) above are elected,
contributions cannot be made more frequently than
annually.
NOTE 2: A zero dollar allocation to a Participant
under (1)(b)(ii) may result in prohibited
discrimination in favor of Highly Compensated
Employees and thereby disqualify the Plan. See Rev.
Rul. 76-250.
(c) Notwithstanding (K)(l)(b)(i) or (ii), if a
Participant terminates employment due to death,
disability or retirement, Company Profit-Sharing
Contributions [X] will [ ] will not be allocated to
the Participant in that Plan Year.
(2) FOR NON-INTEGRATED PLANS: Company Profit-Sharing
Contributions, for the Plan Year, will be allocated to each
Participant's Account as follows:
(a) [ ] _______ % of Compensation for each
Participant.
(b) [X] The ratio which a Participant's Compensation
bears to the total Compensation of all
Participants (calculated to the nearest
dollar).
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<PAGE> 82
(c) [ ] The ratio which the units allocated to a
Participant bear to the total units
allocated to all Participants, with one unit
allocated for each $100 of Compensation and
[ ] no units [ ] one unit [ ] two units for
each completed Year of Service.
(d) [ ] Not Applicable. The Plan is integrated.
(3) FOR INTEGRATED PLANS: Company Profit-Sharing Contributions,
for the Plan Year, will be allocated to each Participant's
Account:
(a) (i) [ ] Based on the provisions of
Paragraph 4.7, with the initial
contribution amount determined by the
Company prior to the end of the Plan
Year.
(ii) [ ] Based on the provisions of Paragraph
4.7, except that the limit of
Compensation in the first step will
be _____% (an amount not in excess of
the profit-sharing permitted
disparity rate).
NOTE: If this integrated contribution is to be used
as the top-heavy minimum contribution, the percentage
selected cannot be lower than 3%.
(iii) [X] Not Applicable. The Plan is
non-integrated.
(b) The integration level is equal to:
(i) [ ] The Taxable Wage Base in effect on
the first day of the Plan Year. It
is the maximum amount of earnings
which may be considered wages for
such year under Code Section
3121(a)(1).
(ii) [ ] $ ____ (a dollar amount less than
the Taxable Wage Base).
(iii) [ ] % of the Taxable Wage Base (not to
exceed 100%).
(iv) [X] Not Applicable. Plan is
non-integrated.
(L) FORFEITURES (Paragraph 13.2)
(1) All forfeitures will be:
(a) [ ] Applied first to reduce expenses related to
the administration of the Plan and then to
reduce Company contributions to the Plan.
(Elect this if any Plan expenses will be
billed to the Company.)
(b) [X] Applied to reduce Company contributions to
the Plan. (Elect this if Plan expenses will
be deducted from Participant accounts.)
(c) [ ] Reallocated among Participants in the ratio
that the Compensation of each Participant
bears to the total Compensation of all
Participants.
(d) [ ] Not Applicable. The Plan has 100% immediate
vesting.
NOTE: Amounts forfeited by Highly Compensated Employees as a
result of Excess Aggregate Contributions will only be applied
under (a) or (b).
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<PAGE> 83
(2) If forfeitures will be reallocated in (1)(c) above for any
Plan Year, the allocation will be made to Accounts of all
Participants EXCEPT:
(a) [ ] Those Participants who have not been
credited with 1000 or more Hours of Service
during the Plan Year.
(b) [ ] Those Participants whose employment with the
Company terminated prior to the end of the
Plan Year will not share in forfeitures
allocated after the date of Termination of
Employment.
(c) [ ] No exceptions.
(3) Notwithstanding (L)(2)(a) or (b), if a Participant terminates
employment due to death, disability or retirement, forfeitures
[ ] will [ ] will not be allocated to the Participant in that
Plan Year.
(4) If more than one Company adopts the Plan, and forfeitures will
be reallocated in (1)(c) above for any Plan Year:
(a) [ ] The allocation will be made to the Accounts
of the remaining Participants of the Company
in which the forfeiting Participant was
employed.
(b) [ ] The allocation will be made to all
Participant Accounts of companies who are
members of an affiliated or controlled
group.
(c) [ ] Not applicable. This Plan has been adopted
by a single employer.
(M) INVESTMENT ALLOCATION AND PROFIT REQUIREMENT (Paragraphs 4.10, 4.12 and
6.4)
(1) Investment allocation instructions will be made by the:
(a) [ ] Administrator.
(b) [ ] Participant.
(c) [ ] Administrator for Company contributions, and
Participant for Participant contributions
and Elective Deferrals.
NOTE: Investment rights granted to Participants under Paragraph 6.4 may
be suspended by the Company by providing prior written notice to such
affected Participants and the Insurance Company. Upon such notice, the
Company or trustees, if applicable, shall control the investment of
plan assets within the Participants' Accounts in accordance with their
fiduciary obligations until such time as subsequent written notice is
provided to the Participants and the Insurance Company specifying that
Participants shall designate in writing the investment funds in which
contributions are to be invested.
(2) Rollover contributions will be invested:
(a) [ ] The same as all other contributions in the
Plan.
(b) [ ] The same as Participant Contributions and
Elective Deferrals.
(c) [ ] The same as Company Matching and Company
Profit-Sharing Contributions.
(d) [X] By a separate election of the Participant.
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<PAGE> 84
(e) [ ] Not applicable. Plan does not accept
rollover contributions.
(3) The Company will make contributions to the Plan based on current or
accumulated earnings and profits for the taxable year or years ending
with or within the Plan Year.
[X] Yes [ ] No
Contributions will be made from:
[X] current profits only.
[ ] current and accumulated profits.
(N) POLICIES (Paragraph 7. 1) [ ] will [X] will not be purchased under
the Plan. If Policies will be purchased at the request of a
Participant, the premium for the Policies will be paid with:
(1) [ ] Elective Deferrals.
(2) [ ] Company Matching Contributions.
(3) [ ] Company Profit-Sharing Contributions.
(O) IN-SERVICE WITHDRAWALS (Part X)
(1) Participant Contributions - The Participant may withdraw:
(a) [X] His separate account attributable to
Participant Nondeductible Voluntary
Contributions.
(b) [ ] His separate account attributable to
Participant Matched Contributions.
(c) [ ] No withdrawals permitted.
(d) [ ] Not Applicable. No Participant contributions
are permitted in Plan.
(2) Rollover Contributions - The Participant may withdraw his
separate account attributable to Rollover Contributions.
[X] Yes [ ] No [ ] Not Applicable
If "Yes," withdrawal restrictions will be as follows:
(a) [ ] Same restrictions as Company contributions
in (O)(3)(a).
(b) [ ] Same restrictions as Elective Deferrals in
(O)(3)(b) and (c).
(c) [X] No restrictions.
(3) Company Contributions - If withdrawal of all Participant
contributions and the earnings attributable to them is
permitted in (O)(1), or if no Participant contributions are
allowed in the Plan, the Participant may withdraw:
(a) [ ] The vested portion of the Participant's
Account attributable to Company
Matching Contributions and Company
Profit-Sharing Contributions
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<PAGE> 85
(only in a non-integrated plan).
Participants may only withdraw this
portion if;
(i) [ ] The Participant has 5 or more years
of Plan participation.
[ ] The Company contributions and their
earnings have been in the Plan for
at least two years.
[ ] Amended/Restated Plans: The
Participant has 5 or more years of
Plan participation. However, if the
Participant was employed on the
Amendment Date, the Participant may
withdraw the Company Contributions
and their earnings that have accrued
up until the Amendment Date after
they have been in the Participant's
Account for at least two years.
[ ] NOTE: Only one or no election may be
made in (i).
(ii) [ ] The withdrawal is based on financial
hardship as defined by Paragraph
10.3 notwithstanding any of the
restrictions elected above.
(iii) [ ] The withdrawal is based on the
Participant attaining age 59 1/2
notwithstanding any of the
restrictions elected above.
(iv) [ ] The election under (i) [ ] will [ ]
will not apply to (ii) and (iii)
above.
(b) [ ] Any amount not in excess of the sum of the
Participant's Elective Deferrals:
[ ] excluding
[ ] including
pre-1989 earnings based on financial
hardship as defined in Paragraph 10.3.
(c) [ ] The portion of the Participant's Account
attributable to:
[ ] Elective Deferrals
[ ] Company Qualified Matching
Contributions
[ ] Company Qualified Nonelective
Contributions
based on the Participant's attainment of age
59 1/2.
(d) [X] Company Contributions cannot be withdrawn.
NOTE: If (a), (b), or (c) is elected, (d) should not be
elected.
(4) Suspension. If Company contributions may be withdrawn in
(O)(3)(a), will the Participant, upon withdrawal, forfeit the
right to future Company Matching Contributions or Company
Profit-Sharing Contributions (in a non-integrated plan) for
12-consecutive months beginning from the date of withdrawal?
[ ] Yes [ ] No [X] Not Applicable
-16-
<PAGE> 86
NOTE: Notwithstanding the elections made in this Section, a
Participant who has attained age 70 1/2 may withdraw all or a
portion of his vested account balance.
(P) LOANS (Part XI)
(1) Loans [ ] will [X] will not be permitted to Participants. A
Participant may have up to _______ (not to exceed 5) loan(s)
outstanding at any one time.
(2) The Repayment Period for loans to purchase a principal
residence [ ] can [ ] cannot exceed 5 years.
(Q) SPECIAL TOP-HEAVY ELECTIONS (Paragraph 16.2)
(1) IF EMPLOYEES PARTICIPATE IN MULTIPLE PLANS OF THE COMPANY: If
the Company maintains one or more plans in addition to this
Plan and if one or more Employees participate in this Plan and
in another plan, the minimum top-heavy contribution or benefit
will be determined as follows:
(a) [ ] a Minimum Contribution will be made to this
Plan of:
(i) [ ] 3% of Compensation (for
Participants in defined
contribution plans only).
(ii) [ ] 5% of Compensation (for
Participants in this Plan
and in an active or defined
benefit plan or a defined
benefit plan that has
terminated within five
years of the Determination
Date).
(b) [ ] the Minimum Contribution or benefit will be
satisfied by the Plan named hereafter:
_____________.
(c) [X] Not Applicable. Company has only this Plan
and has not maintained a defined benefit
plan within five years of the Determination
Date.
(2) MAXIMUM DEFINED CONTRIBUTION AND DEFINED BENEFIT FRACTIONS: If
the Plan becomes top-heavy, the dollar limitation factor in
the denominators of the Defined Benefit Fraction and Defined
Contribution Fraction is computed by substituting a factor of
1.0 for 1.25. The dollar limitation factor can be restored
under this Plan to 1.25 by electing one of the following
options. This election will be effective in any year in which
the top-heavy ratio is more than 60 percent but not more than
90 percent. (Paragraphs 5.8(a) and 5.8(c))
(a) [ ] the Minimum Contribution under this Plan
will be 4 percent of Compensation (if
additional benefits are provided under this
Plan and the defined benefit plan of the
Company).
(b) [ ] the Minimum Contribution under this Plan
will be: 7 1/2 percent of Compensation for
Participants entitled to minimum benefits
under both this Plan and the Company's
defined benefit plan, and 4 percent of
Compensation for Participants who are not
entitled to minimum benefits under the
defined benefit plan.
(c) [ ] Other (specify)
(d) [X] Not Applicable. Company does not have an
active or terminated defined benefit plan.
-17-
<PAGE> 87
(3) The Company may set forth in the space provided below any
provisions to override Plan provisions in order to comply with
the rules regarding required aggregation of multiple plans
under Code Sections 415 and 416.
(R) VESTING (Part IX)
Prior to retirement or Plan termination, the value of a Participant's
Account attributable to Company Matching and Company Profit-Sharing
Contributions is as follows: (Select one option each under (1) and (2)
below.) (Paragraphs 9.2 and 16.4)
(1) Regular Vesting Schedule
(a) [ ] 100%
(b) [ ] 100% upon completion of _________ Years of
Service (not more than 5).
(c) [ ] _____% after 1 Year of Service
_____% after 2 Years of Service
_____% after 3 Years of Service
_____% after 4 Years of Service
_____% after 5 Years of Service
(no less than 100%)
(d) [X] 0% after 1 Year of Service
0% after 2 Years of Service
20% after 3 Years of Service
(no less than 20%)
40% after 4 Years of Service
(no less than 40%)
60% after 5 Years of Service
(no less than 60%)
80% after 6 Years of Service
(no less than 80%)
100% after 7 or more Years of Service
(no less than 100%)
(e) [ ] Not applicable. No Company contributions
will be made to this Plan.
(2) top-heavy Vesting Schedule (Paragraph 16.4)
During and subsequent to the first Plan Year for which the
Plan is a Top-Heavy Plan, the following vesting schedule will
apply notwithstanding the vesting schedule elected in Section
(R)(1).
(a) [ ] 100%
(b) [ ] ______% after 1 Years of Service
______% after 2 Years of Service
______% after 3 Years of Service
(no less than 1001/6)
(c) [X] 0% after 1 Year of Service
20% after 2 Years of Service
(no less than 20%)
40% after 3 Years of Service
(no less than 40%)
60% after 4 Years of Service
(no less than 60%)
80% after 5 Years of Service
(no less than 80%)
100% after 6 or more Years of Service
(no less than 100%)
(d) [ ] Not Applicable. Plan's schedule elected in
(R)(1) has the same or more rapid vesting
than the above schedules.
-18-
<PAGE> 88
(3) For purposes of this Section, "Years of Service" will not
include: (Paragraph 9.3)
(a) [X] Years of Service before age 18.
(b) [ ] Years of Service during a period for which
the Employee made no Participant Matched
Contributions, if required by Section
(J)(1)(c).
(c) [ ] Years of Service before the Company
maintained this Plan or a predecessor plan.
(S) PARTICIPANT'S ACCOUNT UPON TERMINATION OF EMPLOYMENT (Paragraph 12.3)
(1) Benefit Options:
OPTION A -
(a) Continuation of Account. If permitted under
(M)(1), the Participant's vested interest
will be invested in accordance with the
Participant's direction as permitted under
the Plan.
(b) Continuation of terminated Participant's
Account until the first day of April
following the calendar year in which the
terminated Participant attains age 70 1/2
is:
[X] Permitted
[ ] Not Permitted
OPTION B - Deferred Annuity.
OPTION C - One-Sum Cash Distribution is:
(a) [X] Permitted immediately upon
Termination of Employment of a
Participant.
(b) [ ] Permitted 12 months following the
date on which the Participant
terminates employment.
(c) [ ] Permitted only for distribution of
Participant Nondeductible Voluntary
Contributions and Elective
Deferrals, if any.
OPTION D - Immediate installment payments are:
[X] Permitted
[ ] Not Permitted
NOTE: If the vested Participant's Account is $3,500 or less,
the entire vested Participants Account will be distributed
with or without the Participant's consent.
(2) Forfeiture Restoration (Paragraph 12.5):
-19-
<PAGE> 89
A reinstated Participant must repay the full amount
distributed to him attributable to Company contributions at
Termination of Employment prior to restoration of any
forfeited nonvested Account balance.
[X] Yes [ ] No [ ] Not Applicable. Plan provides
immediate 100% vesting.
(T) LIMITATION ON ALLOCATING CONTRIBUTIONS (Paragraphs 5.5 and 5.6)
This Section will apply if the Company maintains or ever maintained
another qualified plan in which any Participant in this Plan is (or
was) a Participant or could become a Participant. It also applies if
the Company maintains a welfare benefit fund, as defined in Code
Section 419(e) or an individual medical account, as defined in Code
Section 415(l)(2), under which amounts are treated as Annual Additions
with respect to any Participant in this Plan.
(1) If the Participant is covered under another qualified defined
contribution plan maintained by the Company, other than a
master or Prototype plan:
(a) [ ] Annual Additions under this Plan will be
reduced until the plans satisfy the Maximum
Permissible Amount limit.
(b) [ ] The Annual Additions under the other plan(s)
will be reduced until the plans satisfy the
Maximum Permissible Amount limit.
(Name of Plan) ______.
(c) [ ] The provisions of Paragraph 5.5 will apply
as if the other plan were a master or
Prototype plan.
(d) [ ] Other method of limiting Annual Additions
(describe below).
(e) [X] Not Applicable. Company has only this Plan.
(2) If the Participant is or has ever been a Participant in a defined
benefit plan maintained by the Company:
(a) [ ] The Annual Additions will be limited to this
and/or other qualified defined contribution
plans for the Limitation Year so that the
sum of the Defined Contribution Fraction and
the Defined Benefit Fraction does not exceed
1.0. (State which plan will be limited and
describe below if limitation is not under
this Plan.).
(b) [ ] The Projected Annual Benefit will be reduced
in one or more of the qualified defined
benefit plans so that the sum of the Defined
Contribution Fraction and the Defined
Benefit Fraction does not exceed 1.0 as
described below.
(c) [ ] The Annual Additions will be limited and the
Projected Annual Benefit will be reduced as
described below.
(d) [X] Not Applicable. Company does not maintain a
defined benefit plan.
(U) PRESENT VALUE OF ACCRUED BENEFITS (Paragraph 16.5)
-20-
<PAGE> 90
If the Company maintains or has maintained one or more qualified
defined benefit plans for purposes of establishing present value to
compute the top-heavy ratio, any benefit will be discounted only for
mortality and, interest based on the following:
(1) [ ] Interest Rate ____% Mortality Rate ___%
(2) [X] Not Applicable. Company does not have an active or
terminated defined benefit plan.
(V) ADOPTION CONTINGENT ON IRS APPROVAL
The opinion letter issued to MassMutual by the National Office of the
Internal Revenue Service evidences the acceptability of the form of the
Prototype Plan under Code Section 401. The adopting Company may not
rely on an opinion letter issued by the National Office of the Internal
Revenue Service as evidence that the Plan is qualified under Code
Section 401. To obtain reliance with respect to plan qualification, the
Company must apply to the appropriate Key District Office of the
Internal Revenue Service for a determination letter.
The adoption of the Plan and contributions thereto are subject to the
condition that the Internal Revenue Service will determine that
initially the Plan, as it relates to the undersigned Company, meets the
requirements of the Internal Revenue Code and Regulations issued
thereunder and, until the Company has received a favorable
determination letter from the Internal Revenue Service, no Participant
will have any vested interest in any equity created by contributions
made by the Company. As soon as reasonably possible, after the
execution of this Adoption Agreement, the Administrator will submit to
the Internal Revenue Service the documents required to obtain a
determination as to the qualified status of this Plan as it relates to
the Company. Upon receipt of a determination letter, the Administrator
will submit evidence thereof to the Insurance Company.
Upon receipt of evidence that the Plan is not so qualified or if
evidence is not received within one year after adoption of the Plan, or
such longer period as may be agreed to by the Insurance Company, the
Contract will be canceled and the Insurance Company will pay to the
Company an amount equal to the value of the total of all the
Participant's Accounts as determined by the Insurance Company in
accordance with the terms of the Contract and Policies.
This Adoption Agreement may be used only in conjunction with basic plan
document 002, IRS Serial No. D365756a.
Has the Company terminated another plan, including a cash or deferred
arrangement within the last 12 months of the Effective Date of the
Plan, making this Plan the successor plan as defined under Code Section
401 (k) and the Regulations thereunder?
[ ] Yes [X] No
The Company is [X] incorporated [ ] unincorporated.
Plan Serial Number is 001
---
Company's Fiscal Year is January 1 To December 31
------------------------
(V) ADOPTION CONTINGENT ON IRS APPROVAL (continued)
Has the Company terminated another plan, including a cash or deferred
arrangement within the last 12 months of the Effective Date of the
Plan, making this Plan the successor plan as defined under Code Section
401(k) and the Regulations thereunder?
-21-
<PAGE> 91
[ ] Yes [X] No
The Company is [X] incorporated [ ] unincorporated.
Plan Serial Number is 001
---
Company's Fiscal Year is to 1/1 to 12/31
The undersigned has consulted their own tax-counsel in completing this document.
Signed this day of 25th day of November, 1997 at Strongsville, Ohio
- --------------------------------------------------------------------------------
/s/ Frank W. Grimone
By:
--------------------------------------------------
Signature
Frank W. Grimone, CFO
------------------------------------------
Printed Name and Title
Central Reserve Life Insurance Company
------------------------------------------
Company Name
------------------------------------------
By: 34-0970995
--------------------------------------------------
Company's Employer I.D. No.
-22-
<PAGE> 92
FIRST AMENDMENT TO THE
RETIREMENT PLAN FOR EMPLOYEES OF THE
CENTRAL RESERVE LIFE INSURANCE COMPANY
THIS AMENDMENT, made this 1st day of January, 1998, by the Central Reserve Life
Insurance Company (hereinafter called the "Employer").
W I T N E S S E T H:
--------------------
WHEREAS, the Employer did establish the Retirement Plan for Employees of the
Central Reserve Life Insurance Company (the "Plan") for the sole and exclusive
benefit of its eligible participants and their respective beneficiaries under
the terms and provisions of the Internal Revenue Code of 1986, as amended, and
WHEREAS, the Employer reserved the right to amend said Plan;
NOW, THEREFORE. effective as of January 1, 1998, the Adoption Agreement to the
Plan shall be amended as follows:
1. Section (R)(1) is hereby amended by striking the existing
provision and substituting thereof the following:
(R) Vesting
Prior to retirement or Plan termination, the value of
a Participant's Account attributable to Company
Matching Company Profit-Sharing Contributions is as
follows: (Select one option each under (1) and (2)
below.) (Paragraphs 9.2 and 16.4)
(1) REGULAR VESTING SCHEDULE
(a) x 100%. immediate for all
employer contributions
transferred from the
Company's prior money
purchase pension plan to
this plan.
(b) 100% upon completion of _____ Years
of Service - (not more than 5).
(c) _____ % after 1 Year of Service
_____ % after 2 Years of Service
_____ % after 3 Years of Service
_____ % after 4 Years of Service
_____ % after 5 Years of Service
(no less than 100%)
(d) x 0 % after 1 Year of Service
0 % after 2 Years of Service
20 % after 3 Years of Service
<PAGE> 93
(no less than 20%)
40 % after 4 Years of Service
(no less than 40%)
60 % after 5 Years of Service
(no less than 60%)
80 % after 6 Years of Service
(no less than 80%)
100 % after 7 Years of Service
(no less than 100%)
2. In all other respects, the Plan shall remain unchanged by this
Amendment.
IN WITNESS WHEREOF, the Employer has caused this instrument to be executed the
day and year first above written.
CENTRAL RESERVE LIFE INSURANCE COMPANY
ate: 8/10/98 By: /s/ James A. Weisbarth, Senior V.P. & Treasurer
--------------- ------------------------------------------------
Signature and Title
<PAGE> 94
SECOND AMENDMENT TO THE
RETIREMENT PLAN FOR EMPLOYEES OF THE
CENTRAL RESERVE LIFE INSURANCE COMPANY
THIS AMENDMENT made this 28th day of August, 1998.by the Central Reserve Life
Insurance Company (hereinafter called the "Employer").
W I T N E S S E T H
-------------------
WHEREAS. the Employer did establish the Retirement Plan for Employees of the
Central Reserve Life Insurance Company (the "Plan") for the sole and exclusive
benefit of its eligible participants and their respective beneficiaries under
the terms and provisions of the Internal Revenue Code of 1986. as amended. and
WHEREAS. the Employer reserved the right to amend said Plan:
NOW, THEREFORE. effective as of September 1. 1998. the Adoption Agreement to thc
Plan shall be amended as follows:
1. Section (1)(1) is hereby amended by striking the existing
provision and substituting thereof thc following
(I) Company Matching and Company Qualified Matching
Contributions
(1) The Company Will
(a) [check mark]Make Company Matching
Contributions to the Plan
(b) Make Company Qualified Matching
Contributions to the Plan
(c) Not make any Company Matching or
Qualified Matching Contributions to
the Plan
2. Section (R)(l) and (R)(2)(c) is hereby amended by striking the
existing provision and substituting thereof the following
(R) Vesting
Prior to retirement or Plan termination the value of
a Participant's Account attributable to Company
Matching Company Profit Sharing Contributions is as
follows (Select one option each under (1) and (2)
below ) (Paragraphs 92 and 16.4)
<PAGE> 95
(R) Vesting (continued)
(1) REGULAR VESTING SCHEDULE
(a) 100%
(b) 100% upon: completion of _____ Years of
Service (not more than 5)
(c) [check mark]
0 % after 1 Year of Service
0 % after 2 Years of Service
33 % after 3 Years of Service
67 % after 4 Years of Service
100 (degree)/o after 5 Years of Service
(no less than 100%)
(d) _____ % after 1 Year of Service
_____ % after 2 Years of Service
_____ % after 3 Years of Service
(no less than 20%)
_____ % after 4 Years of Service
(no less than 40%)
_____ % after 5 Years of Service
(no less than 60%)
_____ % after 6 Years of Service
(no less than 80%
_____ % after 7 or more Years of Service
(no less than 100%
(2) Top-Heavy Vesting Schedule
During and subsequent to the first Plan Year for
which the Plan is a Top-Heavy Plan. the following
vesting schedule will apply notwithstanding the
vesting schedule elected in Section (R)(IN.
(Paragraph I 6.)
(c) 20% after 1 year of Service
40% after 2 Years of Service
(no less than 20%)
60% after 3 Years of Service
(no less than 40%)
80% after 4 Years of service
(no less than 60%)
100% after 5 Years of Service
(no less than 80%)
_____% after 6 or more Years of Service
(no less than 100%)
<PAGE> 96
3. In all other respects, the Plan shall remain unchanged by this
Amendment.
IN WITNESS WHEREOF, the Employer has caused this instrument to be executed the
day and year first above written.
CENTRAL RESERVE LIFE INSURANCE COMPANY
Date: 8/28/98 By: /s/ Frank W. Grimone - CFO
------------------------------- -------------------------------
Signature and Title
<PAGE> 97
THIRD AMENDMENT TO THE
RETIREMENT PLAN FOR EMPLOYEES OF THE
CENTRAL RESERVE LIFE INSURANCE COMPANY
THIS AMENDMENT made this 27th day of August, 1998, by the Central Reserve Life
Insurance Company (hereinafter called the "Employer").
W I T N E S S E T H:
--------------------
WHEREAS, the Employer did establish the Retirement Plan for Employees of the
Central Reserve Life Insurance Company (the "Plan") for the sole and exclusive
benefit of its eligible participants and their respective beneficiaries under
the terms and provisions of the Internal Revenue Code of 1986, as amended, and
WHEREAS, the Employer reserved the right to amend said Plan,
NOW, THEREFORE, effective as of September 1, 1998, the Adoption Agreement to the
Plan shall be amended as follows:
1. Section (D)(7) is hereby amended by striking the existing
provision and substituting thereof the following:
(D) Eligibility for Participation (Part III)
(7) The entry date will be:
(a) an Anniversary Date of the Plan;
(b) semi-annually, i.e., an Anniversary
Date or the first day of the third,
sixth or ninth month following an
Anniversary Date;
(c)[check mark]quarterly, i.e., an
Anniversary Date or the first day of
the third, sixth or ninth month
following an Anniversary Date;
(d) the first day of any calendar month.
2. In all other respects. the Plan shall remain unchanged by this
Amendment.
IN WITNESS WHEREOF. the Employer has caused this instrument to be executed the
day and year first above written.
CENTRAL RESERVE LIFE INSURANCE
COMPANY
Date: 8/27/98 By: /s/ Frank W. Grimone - CFO
------------------------------- --------------------------------
Signature and Title
<PAGE> 98
ADDENDUM
TO THE
RETIREMENT PLAN FOR EMPLOYEES OF
THE CENTRAL RESERVE LIFE COMPANY
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
FLEXINVEST-PLUS PROTOTYPE PROFIT-SHARING/401(K) PLAN
BASIC PLAN DOCUMENT 002
Notwithstanding any contrary recitals or provisions contained
in the Massachusetts Mutual Life Insurance Company FlexInvest-Plus Prototype
Profit-Sharing/401(k) Basic Plan Document 002 (the "Plan Document") (including
without limitation Part XVIII thereof), Central Reserve Life Insurance Company
(the "Company") hereby establishes and adopts this Addendum to supplement and
modify the Plan Document as to the following matters and in the following
respects, effective September 1, 1998 (except as otherwise expressly indicated):
1. Section 1.10 of the Plan Document ("Company Matching Contributions")
is revised to provide in its entirety as follows:
"1.10 COMPANY MATCHING CONTRIBUTIONS. - Effective September 1, 1998,
the Company shall contribute money, property, or a combination
of money and property (as determined by the Company, acting in
its sole discretion following consultation with the Trustee)
to match the Elective Deferrals and/or Participant Matched
Contributions made on behalf of a Participant. However, the
Company's matching contributions shall be made and allocated
only to those Participants who cause an equal amount of their
Elective Deferrals (to a maximum of one thousand dollars
($1,000) per Plan Year) to be invested in the Company Stock
Fund maintained as part of the Trust Fund. This provision
shall apply to all Elective Deferrals received on or after the
Effective Date (exclusive of any amounts transferred from
other employer-sponsored pension benefit plans).
<PAGE> 99
2. Section 1.48 of the Plan Document ("Valuation Date") is
revised to provide in its entirety as follows:
"1.48 VALUATION DATE. - For investment funds offered by the
Insurance Company under a Contract, Valuation Date shall mean
each Business Day. For the Company Stock Fund and any other
investment funds or media offered other than under a Contract,
Valuation Date shall mean such periodic days or dates during
the Plan Year as may be designated by the Company."
3. Part I of the Plan Document is supplemented by adding to the
end thereof the following three additional definitions:
"1.50 COMPANY STOCK - Common, no par value shares of Central Reserve
Life Corporation ("CRL"), issued to the Trustee by CRL or
purchased in the open market by the Trustee (or at its
direction). Notwithstanding the preceding sentence to the
contrary, the term "Company Stock" also shall apply to any
other equity security issued by CRL that qualifies as a
"qualifying employer security" (within the meaning of Section
407(d)(5) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and satisfies the additional
requirements imposed by Section 407(f) of ERISA, so long as
such security also satisfies the requirements of Section
409(e) of the Code. Up to one hundred percent (100%) of the
assets of the Plan (or if less, the maximum percentage
permitted under ERISA) may be invested in Company Stock."
"1.51 TRUST FUND - Any fund or funds settled and established by the
Company, and maintained by the Trustee (as defined in Section
1.52 hereof) pursuant to a declaration and agreement of trust
between the Company and such Trustee.
"1.52 TRUSTEE - That certain individual or institution designated
and appointed by the Company to receive, hold and maintain in
trust, in one (1) or more Trust Funds, certain of the Plan's
assets as directed by the Participants and Beneficiaries or as
otherwise specified under the terms of the Plan, including
specifically and without limitation, Plan assets to be
invested and reinvested in shares of Company Stock."
"1.53 COMPANY STOCK FUND - That certain Trust Fund, or sub-trust,
settled and established by the Company with the Trustee (or by
the Trustee at the direction of the Company) to invest and
reinvest primarily in shares of Company Stock, subject only to
the maintenance of such cash and marketable securities as the
Company designates as necessary to maintain such Trust Fund as
an open end unitrust and preserve its liquidity. Any Company
Stock Fund so established shall provide that (a) Participants
and Beneficiaries shall have the authority and an
Page 2
<PAGE> 100
adequate opportunity to instruct the Trustee how to vote or
dispose of their proportionate interest in Company Stock then
held by the Trustee as part of such Fund; and (b) Company
Stock acquired thereunder shall only be sold or exchanged in
order to pay Plan benefits or respond to investment directions
provided by Participants and Beneficiaries."
4. Section 4.9 of the Plan Document ("Company Contributions -
Timing") is revised to provide in its entirety as follows:
"4.9 COMPANY CONTRIBUTIONS - TIMING. The Company shall pay its
Contributions for each Plan Year on or before the time
required by law for filing the Company's federal income tax
return (including extensions) for the taxable year with
respect to which the contributions are made. The Company in
its sole discretion may make its Company Matching
Contributions monthly, prepay such Contributions, or make such
Contributions at times and on terms different from those
applicable to other Company Contributions. Notwithstanding the
two preceding sentences to the contrary, to the extent the
Company makes Company Matching Contributions for a particular
Plan Year more than thirty-one (31) days following the close
of such Plan Year, the amount of such Company Matching
Contributions (otherwise determined in accordance with Section
1.10 hereof) shall be adjusted so the amount of such Company
Matching Contribution (and corresponding allocations) is based
on the closing share price for Company Stock in effect on the
last day of such Plan Year."
5. Part VI of the Plan Document is renamed "Funding Policy".
6. Section 6.1 of the Plan Document ("Funding Policy") is revised
to provide in its entirety as follows:
"6.1 FUNDING POLICY. Plan benefits shall be provided under one (1)
or more Contracts, Policies or Trust Funds (or a combination
thereof), to be settled and established or otherwise obtained
by the Company for the purpose of providing benefits under the
Plan to Participants and Beneficiaries.
(a) The Company shall establish and maintain a funding
policy, to carry out the objectives of the Plan, and
shall periodically review and revise the funding
policy to take into account changes in the Plan and
changes in the needs and interests of Participants
and Beneficiaries.
(b) The Company may delegate the responsibility for
allocating Plan assets among investment funds
maintained by Insurance Company or the Trustee (or
both). Acting in its sole and exclusive discretion,
the Company also may delegate to Participants the
authority to direct and control the investment of all
or a part of their Plan interest in accordance with
Section
Page 3
<PAGE> 101
6.4 hereof; or delegate to one (1) or more qualified
investment managers (within the meaning of Section
3(38) of ERISA) the authority to direct and control
the investment of all or a discrete part of the
Contracts and Policies then comprising or holding the
assets of the Plan.
(c) The Company shall communicate in writing to the
Administrator and as applicable, the Trustee and the
Insurance Company any actions taken by the Company to
alter the funding policy; delegate investment
authority to Participants or to any investment
manager; or amend, modify, revise, terminate or
replace any Contract, Policy or trust fund."
7. Section 6.2 of the Plan Document ("Contract") is revised to
provide in its entirety as follows:
"6.2 FUNDING ARRANGEMENTS. One (1) or more Trust Funds, one (1) or
more Contracts, or a combination of Trust Funds and Contracts
shall fund the Plan. The Company in its sole discretion shall
determine whether to hold directly any Contracts used to fund
Plan benefits, or to direct the Trustee to apply for and
obtain, or take assignment of, such Contract or Contracts.
(a) Any Contract so obtained shall provide for: (i) the
investment of contributions in the general investment
account and/or separate investment accounts offered
by the Insurance Company; (ii) the valuation of
assets and Participants' Accounts as of each
Valuation Date; and (iii) the terms and conditions by
which amounts held under such Contract may be
transferred between such investment funds, or between
such Contract and any other Contract(s) or trust
funds used to fund Plan benefits, or withdrawn or
distributed from such Contract.
(b) Any Trust Fund so settled and established shall
provide for: (i) the establishment of one (1) or more
sub-trusts, to invest and re-invest Plan assets in
such investments and the Company shall specify in the
declaration and agreement of trust, or otherwise by
written instrument; and (ii) the establishment of a
Company Stock Fund, to invest and re-invest assets in
Company Stock (and such cash and cash equivalents as
may be needed to preserve liquidity)."
8. Section 6.3 of the Plan Document ("Insurance Company's Authority To
Direct Investments") shall be revised to provide in its entirety as follows:
"6.3 AUTHORITY TO DIRECT INVESTMENTS. The Company shall have the
ultimate responsibility, as a "named" fiduciary, to carry out
the funding policy of the Plan, in accordance with and
subject to the following provisions and limitations:
Page 4
<PAGE> 102
(a) All contributions made under the Plan by and for a
Participant, less applicable Plan, Contract and Trust
Fund expenses, and premiums to provide Policies,
shall be invested and reinvested as directed by the
Company (or investment manager, if appointed) in
written allocation instructions provided to the
Trustee (and as applicable, the Insurance Company).
Any investments made in a Contract shall specify how
such investments are to be made in the general
investment account and/or separate investment
accounts of the Insurance Company (to the extent
permissible under such Contract.
(b) For any investment made in a Contract or consisting
of a Policy, the Insurance Company shall follow
directions provided by the Company (or where
applicable, the Trustee or an investment manager)
regarding the exercise or non-exercise of any power
or options concerning such Contract or Policy.
However, if sums held under such a Contract are
invested in the separate investment accounts of the
Insurance Company, the Insurance Company shall have
the right, in its sole discretion, to exercise any of
the powers of an owner with respect to stocks, bonds,
securities or other property held in the separate
investment accounts. Sums held in such a Contract may
be transferred in accordance with its terms among
investment funds within such Contract, or between
such Contract and any Trust Fund(s) or other
Contract(s) being maintained to fund Plan benefits,
at the direction of the Company (or investment
manager, if appointed) or (as applicable) at the
direction of a Participant or Beneficiary acting in
accordance with Section 6.4 hereof.
(c) For any investment made under a Trust Fund but not
transferred to and held under a Contract, the Trustee
shall follow directions provided by the Company (or
where applicable, an investment manager) regarding
the exercise or non-exercise of any power or options
regarding such Trust Fund. However, if sums held
under such Trust Fund are invested in the Company
Stock Fund, the Trustee shall invest and re-invest
such sums in Company Stock (to the furthest extent
practicable, based on directions provided by the
Company), acquiring such Stock in the open market and
disposing of such Stock only as and to the extent
directed by the Company or a Participant acting in
accordance with Section 6.4 hereof. Subject only to
the preceding sentence, the Company (or an investment
manager, acting as the Company's delegee) shall
direct the Trustee in the exercise of any ownership
rights held or otherwise owned by the Trustee with
regard to stocks, bonds, securities, Contracts,
Policies, or other property comprising such Trust
Fund.
(d) The Insurance Company, and the Trustee, shall invest
funds according to the stated objectives of the
investment funds, Trust Funds and sub-trusts within
their control. The Company may obtain, upon
demand made upon
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<PAGE> 103
the Insurance Company or the Trustee (as applicable),
a description of the stated objectives of any such
investment fund, Trust Fund or sub-trust.
(e) For purposes of determining the relative fiduciary
responsibilities of the Company, the Insurance
Company and the Trustee hereunder, the Insurance
Company is neither a "named" fiduciary nor a trustee;
rather, the Insurance Company shall only be a
fiduciary to the extent required under ERISA Section
401(c)."
9. Section 6.4 ("Participant-Directed Investments") is revised to
provide in its entirety as follows:
"6.4 PARTICIPANT DIRECTED INVESTMENTS.
(a) Notwithstanding any contrary provision in this Part
VI, each Participant (and Beneficiary, where
applicable) shall be entitled to specify and direct
on an ongoing basis how those amounts held in his
Account are to be invested among the investment funds
then made available for such investment. A
Participant's or Beneficiary's authority to direct
investments in any event shall be subject to the
following limitations: (i) Company Matching
Contributions shall only be invested and reinvested
in the Company Stock Fund; and (ii) any Participant
who makes Elective Deferrals and designates such
Deferrals for investment in the Company Stock Fund in
order to qualify for Company Matching Contributions
shall be deemed to have irrevocably waived his right
to further direct the investment of the first one
thousand dollars ($1,000) of such Elective Deferrals
per plan year (and any earnings or gains on such
Deferrals) for a period of two (2) years commencing
with the close of the calendar month in which such
Elective Deferrals are contributed to the Trustee.
(b) Subject to the terms of any Contracts, Trust Funds or
other funding arrangements and the limitations set
forth in subsection (a) hereof, a Participant (or
where applicable, a Beneficiary) may direct that his
Plan account may be one hundred percent (100%)
invested in any one investment fund, or among more
than one investment fund, so long as any such
direction be provided using integral percentages. The
Administrator may establish minimum percentages, to
control the ability of Participants and Beneficiaries
to have Accounts invested among several investment
funds, to facilitate record keeping and simplify
administration. Neither the Administrator, nor the
Trustee nor the Insurance Company shall have any duty
or obligation whatsoever to balance or otherwise
adjust the investment of a Participant's or
Beneficiary's Account to reflect such Participant's
or Beneficiary's most recent investment directions.
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<PAGE> 104
(c) A Participant (or where applicable, a Beneficiary)
may elect to redirect and otherwise alter the
allocation and investment of future contributions. A
Participant (or where applicable, a Beneficiary) also
may elect to have some or all of the existing amounts
credited to his Plan Account transferred and
reallocated between and among the investment funds
and trust funds then available for such
Participant-directed investment. Any election by a
Participant or Beneficiary to redirect or alter the
investment of future contributions, or to effect a
transfer or reallocation of any amounts then credited
to such Participant's or Beneficiary's Plan Account,
shall be made in accordance with the terms,
conditions and limitations then being imposed under
the Contract(s), Trust Fund(s) and other funding
arrangements used to fund the Plan. Any investment
elections made by a Participant or Beneficiary
hereunder shall be made in writing (or, at the
election of the Insurance Company or other Plan
record keeper, be provided orally and subsequently
acknowledged and confirmed in writing). Any election
made in writing shall become effective upon receipt
by the Insurance Company or other Plan record keeper;
any election provided orally shall become effective
in accordance with rules published by the Insurance
Company or other plan record keeper and made
applicable to such verbal instructions.
(d) Except for those forfeitures consisting of Company
Matching Contributions (which shall be charged
exclusively against a Participant's interest in the
Company Stock Fund), forfeitures shall be charged PRO
RATA against the investments then being made at such
Participant's direction.
(e) Any Participant or Beneficiary who fails to make an
effective election regarding the investment or
allocation of some or all of his Plan Account
(whether with respect to newly-received
contributions, the redirection and reallocation of
allocated investments with regard to an investment
fund or trust fund that has been terminated,
suspended or discontinued, or otherwise) shall be
deemed to have elected to have such amounts invested
and reinvested in whatever fixed income fund is then
being maintained under the Contract. In the event no
Contract is then maintained to provide for the
funding of Plan benefits, the Company shall designate
the fixed income fund, or account, into which such
non-elected amounts are to be invested and
reinvested."
10. The first paragraph of Section 8.1 of the Basic Plan Document
is hereby revised to provide in its entirety as follows:
"PARTICIPANT'S ACCOUNT. A separate account shall be maintained
for each Participant to which shall be credited Company
contributions and earnings thereon. At any time, a
Participant's Account shall equal the sum of: (i) the value of
any accounts maintained for such Participant under any
Contracts as of the
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<PAGE> 105
most recent Valuation Date; (ii) the value of any Policies
issued on the life of such Participant, valued at their
surrender value; and (iii) the value of any accounts
maintained for such participant under any Trust Fund
established by the Company, valued as of the most recent
Valuation Date.
11. Section 10.3 of the Plan Document ("Financial Hardship") is
revised to provide in its entirety as follows:
"10.3 HARDSHIP WITHDRAWALS.
(a) In the case of a financial hardship, a
Participant may withdraw a portion of the amounts credited to
his Participant's Account (as further described in subsection
(c) hereof), subject to the terms, conditions and limitations
set forth in this Section. For purposes of this Section, a
withdrawal will be considered to be on account of a financial
hardship if the withdrawal is necessary in light of an
immediate and heavy financial need of the Participant and is
necessary to satisfy such financial need. A withdrawal based
upon financial hardship shall not exceed the amount required
to meet the financial need created by the hardship (including
any amounts the Participant reasonably anticipates are needed
to pay applicable federal, state and local income taxes and
penalties resulting from such withdrawal). In determining the
existence of financial hardship and the amount required to
meet the financial need, the Administrator shall take into
account all non-hardship distributions and non-taxable
participant loans available from the Plan and from the
Company's other tax qualified plans. Any hardship withdrawal
made hereunder in any event shall be made in accordance with
the hardship provisions of Section 401(k) of the Code and with
uniform and nondiscriminatory standards established by the
Administrator.
(b) A Participant will be deemed to have an immediate
and heavy financial need (for hardship withdrawal purposes) if
the withdrawal is needed for the following expenditures:
(i) Medical expenses described in Section 213(d) of the
Code incurred by a Participant or such Participant's
spouse or dependents (as defined in Section 152 of
the Code), or amounts necessary for such individuals
to obtain medical care described in Section 213(d);
(ii) Purchase of a principal residence for a Participant
(excluding mortgage payments);
(iii) Tuition and related educational fees and room and
board expenses for the next twelve (12) months of
post-secondary education for a Participant or such
Participant's spouse, children, or dependents (as
defined in Section 152 of the Code); or
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<PAGE> 106
(iv) Payment necessary to prevent the eviction of a
Participant from his principal residence or
foreclosure on the mortgage of such Participant's
principal residence.
(c) Hardship withdrawals shall be permitted only from
the following sources, and in the following order of priority:
(i) Transfer Contributions, and related earnings (if
any), from the money purchase pension plan previously
maintained by the Company;
(ii) Company Profit-Sharing Contributions (to the extent
then vested), and related earnings (if any);
(iii) Rollover Contributions from other qualified plans (if
any), and related earnings (if any); and
(iv) Elective Deferrals (excluding any earnings, and
further excluding any amounts then invested in the
Company Stock Fund).
Withdrawals due to a financial hardship shall be made
proportionally from the investment funds in which a
Participant's Account is then invested (other then the Company
Stock Fund).
(d) Withdrawals shall be made in accordance with
procedures established by the Administrator and shall be
uniformly and nondiscriminatorily applied. If a Participant
makes a withdrawal from his Account on account of a financial
hardship, such Participant's right to make Elective Deferrals
(or contribute employee monies under any other
Company-sponsored plan), shall be suspended for a period of
twelve (12) months commencing with the date of withdrawal. In
addition thereto, the amount of Elective Deferrals permitted
to be made by a Participant making a hardship withdrawal for
the Plan Year following the year such withdrawal occurs will
be limited to the maximum amount permitted under Section
402(g) of the Code, less the amount of Elective Deferrals made
in the year such withdrawal occurred."
12. The first sentence of Section 12.4 of the Plan Document is hereby
revised to provide in its entirety as follows:
"If a Participant separates from employment and incurs a
One-Year Break in Service, the amounts in excess of such
Participant's vested interest shall be withdrawn from the
applicable investment funds (whether held under a Contract, as
part of a Policy, or in a Trust Fund, or otherwise) and be
transferred to the fixed investment option then provided under
the Contract."
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<PAGE> 107
This Addendum hereby is specifically adopted and executed by
the Central Reserve Life Insurance Company this 28th day of August, 1998.
CENTRAL RESERVE LIFE
INSURANCE COMPANY
By: /s/ Frank Grimone
Its: Senior Executive Vice President
and Chief Financial Officer
ACKNOWLEDGEMENT AND AGREEMENT
-----------------------------
Massachusetts Mutual Life Insurance Company ("MassMutual")
hereby acknowledges that the Company has adopted an Addendum to supplement and
modify the MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY FLEXINVEST-PLUS PROTOTYPE
PROFIT-SHARING/401(k) PLAN (the "Basic Plan Document"). Pursuant to and
consistent with the terms of Section 18.3 of the Basic Plan Document, the
Company shall be considered to have adopted an individually-designed plan
document and shall no longer participate in the prototype plan. MassMutual
agrees that it will continue to provide administrative services to the Plan
evidenced in part by the Basic Plan Document (as so modified). Notwithstanding
any provision to the contrary in Section 18.3 of the Basic Plan Document,
MassMutual agrees to continue to provide the Company with copies of any
amendment or modification it makes to the Basic Plan Document or the Adoption
Agreement for the Basic Plan Document, as provided in Section 18.2 thereof.
Notwithstanding the preceding sentence, no actions taken by MassMutual
subsequent to the execution of the adoption agreement supplemented by this
instrument shall constitute, or be considered, a warranty as to the legal or
federal tax consequences of this instrument or any further amendments or
modifications.
MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY
By /s/ Edmond Ryan
-----------------------------
Its Senior Vice President
----------------------------
Date August 31, 1998
---------------------------
Page 10
<PAGE> 108
ADDENDUM
TO THE
RETIREMENT PLAN FOR EMPLOYEES OF
THE CENTRAL RESERVE LIFE COMPANY
ADOPTION AGREEMENT FOR NON-STANDARDIZED PLANS
Notwithstanding any contrary recitals or provisos contained in
the Massachusetts Mutual Life Insurance Company FlexInvest Prototype
Profit-Sharing/401(k) Plan Adoption Agreement For Non-Standardized Plans
executed and dated November 25, 1997, by Central Reserve Life Insurance Company
(the "Company"), this Addendum supplements and modifies said Adoption Agreement
as to the following matters and in the following respects:
1. Section (I) (COMPANY MATCHING AND COMPANY QUALIFIED MATCHING
CONTRIBUTIONS) hereby is revised to provide in its entirety as follows:
"The Company will make Company Matching Contributions to the Plan, in
accordance with the terms specified in Paragraphs 1.10 and 4.9 of
Basic Plan Document 002 (as modified as provided in that certain
Addendum To Basic Plan Document 002 dated August 27, 1998)."
2. Section (M) (INVESTMENT ALLOCATION AND PROFIT REQUIREMENT), No. (1)
hereby is revised to provide in its entirety as follows:
"Investment allocation instructions will be made by the (d)
Administrator for Company Matching Contributions (and related
earnings, gains and losses), and Participant for all other
contributions (and related earnings, gains and losses) credited to the
Participant's Account."
This Addendum hereby is specifically adopted and executed by
the Central Reserve Life Insurance Company this 28th day of August, 1998.
CENTRAL RESERVE LIFE
INSURANCE COMPANY
By: /s/ Frank Grimone
Its: Senior Executive Vice President and
Chief Financial Officer
<PAGE> 109
ACKNOWLEDGEMENT AND AGREEMENT
-----------------------------
Massachusetts Mutual Life Insurance Company ("MassMutual")
hereby acknowledges that the Company has adopted an Addendum to supplement and
modify the MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY FLEXINVEST-PLUS PROTOTYPE
PROFIT-SHARING/401(k) PLAN (the "Basic Plan Document"). Pursuant to and
consistent with the terms of Section 18.3 of the Basic Plan Document, the
Company shall be considered to have adopted an individually-designed plan
document and shall no longer participate in the prototype plan. MassMutual
agrees that it will continue to provide administrative services to the Plan
evidenced in part by the Basic Plan Document (as so modified). Notwithstanding
any provision to the contrary in Section 18.3 of the Basic Plan Document,
MassMutual agrees to continue to provide the Company with copies of any
amendment or modification it makes to the Basic Plan Document or the Adoption
Agreement for the Basic Plan Document, as provided in Section 18.2 thereof.
Notwithstanding the preceding sentence, no actions taken by MassMutual
subsequent to the execution of the adoption agreement supplemented by this
instrument shall constitute, or be considered, a warranty as to the legal or
federal tax consequences of this instrument or any further amendments or
modifications.
MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY
By /s/ Edmond Ryan
-----------------------------
Its Senior Vice President
----------------------------
Date August 31, 1998
---------------------------
Page 2
<PAGE> 1
Exhibit 5
[Baker & Hostetler LLP letterhead]
August 31, 1998
Central Reserve Life Corporation
17800 Royalton Road
Strongsville, Ohio 44136
Gentlemen:
We have acted as counsel to Central Reserve Life Corporation, an Ohio
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-8 (the "Registration Statement") being filed under the
Securities Act of 1933 relating to The Retirement Plan for Employees of The
Central Reserve Life Insurance Company (the "Plan") and up to 500,000 common
shares, without par value, of the Company and interests in the Plan (the "Plan
Interests") which may be offered and sold pursuant to the Plan.
In connection with the foregoing, we have examined: (a) the Amended
Articles of Incorporation and Code of Regulations of the Company, (b) the Plan,
and (c) such records of the corporate proceedings of the Company and such other
documents as we deemed necessary to render this Opinion.
Based on such examination, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Ohio;
2. The Plan Interests, when issued in accordance with the
provisions of the Plan, will be valid and binding obligations of the Plan,
except as enforcement thereof may be limited by the terms of the Plan and the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and subject to general equity principles; and
3. The provisions of the written documents relating to the
Plan comply with the applicable provisions of ERISA.
We hereby consent to the filing of this Opinion as Exhibit 5
to the Registration Statement.
Very truly yours,
/s/ Baker & Hostetler LLP
<PAGE> 1
Exhibit 23
The Board of Directors
Central Reserve Life Corporation:
We consent to the use of our report dated February 20, 1998, except for Notes
1(b) and 7, as to which the date is March 30, 1998, related to the consolidated
balance sheets of Central Reserve Life Corporation and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1997, and all related schedules, which
report appears in the December 31, 1997 annual report on Form 10-K/A of Central
Reserve Life Corporation and is incorporated by reference in the registration
statement on Form S-8 of the Company for the Retirement Plan for Employees of
the Central Reserve Life Insurance Company.
Our report dated February 20, 1998, except for notes 1(b) and 7, as to which the
date is March 30, 1998, contains an explanatory paragraph that states that the
Company has suffered substantial losses from operations in 1997 and 1996 that
resulted in a significantly reduced net capital position and that in December
1997, the Company obtained an interim loan of $20 million that absent some
future event the Company would not have the ability to repay, which matters
raise substantial doubt about its ability to continue as a going concern. The
consolidated financial statements and financial statement schedules do not
include any adjustments that might result from the outcome of that uncertainty.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Columbus, Ohio
August 28, 1998
