As filed with the Securities and Exchange Commission on June 25, 1998
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Florida 59-3389871
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
101 Southhall Lane, Suite 210
Maitland, Florida 32751
(Address or Principal Executive Offices)
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
401(k) Plan
(Full Title of the Plan)
PAUL S. GLOVER
Vice President of Finance, CFO
101 Southhall Lane, Suite 210, Maitland, FL 32751
(407) 857-9991
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Titles of Amount Offering Aggregate Amount of
Securities to to be Price per Offering Registration
be Registered Registered(1) Share (2) Price (2) Fee
Common Stock, $.01
par value(3) 500,000 Share $1.125 $562,500 $165.94
Notes:
1. Plus such additional amount which may result from stock
splits, stock dividends or similar transactions with respect to
undistributed shares.
2. Estimated solely for the purpose of calculating the amount
of the registration fee pursuant to Rule 457(h) promulgated
under the Securities Act of 1933, as amended (the "Securities
Act"). Pursuant to Rule 457(h), the proposed maximum aggregate
offering price represents the average unit bid and asked price
on June 10, 1998 multiplied by the number of shares registered
multiplied by .000295.
3. In addition, pursuant to Rule 416(c) under the Securities
Act, this registration statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the
employee benefit plan and described herein. Pursuant to Rule
457(h)(2), no separate registration fee is required with respect
to interests in the Plan.
Page 1
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I
of Form S-8 will be sent or given to participants in the Dynamic
Healthcare Technologies, Inc. 401(k) Plan (the "Plan") as
specified by Rule 428(b)(1) promulgated by the Securities and
Exchange Commission (the "Commission") under the Securities Act.
Such document(s) are not being filed with the Commission, but
constitute (along with the documents incorporated by reference
into the Registration Statement pursuant to Item 3 of Part II
hereof) a prospectus that meets the requirements of Section
10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The Registrant hereby incorporates by reference into this
Registration Statement the following documents:
(i) the Registrant's latest Annual Report on Form 10-K;
(ii) all other reports and documents filed by the Registrant
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since the end of
the fiscal year covered by the Registrant's latest Annual Report
on Form 10-K; and
(iii) the description of the Registrant's Common Stock
contained in the Registrant's Registration Statements under the
Securities Exchange Act of 1934, including any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment which indicates that
all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be
deemed to be incorporated herein by reference and to be a part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the Common Stock offered pursuant to this
Registration Statement has been passed upon for the Company by
Cohen, Berke, Bernstein, Brodie & Kondell, P.A., 2601 South
Bayshore Drive, Suite 1900, Miami, Florida 33133. Richard N.
Bernstein, Esq., a principal in the law firm of Cohen, Berke,
Bernstein, Brodie & Kondell, P.A., is the trustee of the Laskey
Family Irrevocable Trust, which is the owner of 125,000 shares
of Registrant's Common Stock.
Page 2
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant has authority under Section 607.0850 of the
Florida Business Corporation Act to indemnify its directors and
officers to the extent provided for in such statute.
The provisions of the Florida Business Corporation Act that
authorize indemnification do not eliminate the duty of care of a
director, and in appropriate circumstances equitable remedies
such as injunctive or other forms of nonmonetary relief will
remain available under Florida law. In addition, each director
will continue to be subject to liability for (a) violations of
criminal laws, unless the director had reasonable cause to
believe his conduct was lawful, (b) deriving an improper
personal benefit from a transaction, (c) voting for or assenting
to an unlawful distribution and (d) willful misconduct or
conscious disregard for the best interests of the Registrant in
a proceeding by or in the right of the Registrant to procure a
judgment in its favor or in a proceeding by or in the right of a
shareholder. The statute does not affect a director's
responsibilities under any other law, such as the federal
securities or state or federal environmental laws.
Under the Registrant's Articles of Incorporation, Bylaws and
applicable state law, the Registrant will indemnify its
directors, officers, employees and agents against all expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement which are actually and reasonably incurred in
connection with any threatened, pending or actually completed
action, suit or proceedings, whether civil, criminal,
administrative or investigative, to which any such person
becomes subject as result of having served in such role, as an
employee or agent of the Registrant, or at the Registrant's
request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise. However, except as described below, such
indemnification will be made only if such person acted in good
faith and in a manner he or she reasonably believed to be in, or
not opposed to, the best interests of the Registrant and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere
or its equivalent will not, of itself, create a presumption that
such person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best
interests of the Registrant, or with any criminal action or
proceeding, did not have reasonable cause to believe that his or
her conduct was unlawful.
At present, there is no pending litigation or other
proceeding involving a director or officer of the Registrant as
to which indemnification is being sought, nor is the Registrant
aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See "Exhibit Index" on page 6 below.
Page 3
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against the public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Page 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S8 and
has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the
City of Maitland, State of Florida on June 25, 1998.
Dynamic Healthcare Technologies, Inc.
By: /S/PAUL S. GLOVER
Vice President Finance, CFO
Pursuant to the requirements of the Securities Act of 1933,
this registration statement or amendment thereto has been signed
by the following persons in the capacities and on the dates
indicated.
By his signature, each of the following persons authorizes
Mitchel J. Laskey and Paul S. Glover or any of them, with full
power of substitution, to execute in his name and on his behalf,
and to file any amendments (including, without limitation,
post-effective amendments) to this Registration Statement
necessary or advisable in the opinion of any of them to enable
the Company to comply with the Securities Act, and any rules,
regulations and requirements of the Commission thereunder, in
connection with the registration of the additional securities
which are the subject of this Registration Statement.
Signature Title Date
/S/DAVID M. POMERANCE Chairman JUNE 25, 1998
David M. Pomerance
/S/MITCHEL J. LASKEY President, CEO & Treasurer JUNE 25, 1998
Mitchel J. Laskey
/S/PAUL S. GLOVER VP Finance, CFO & Secretary JUNE 25, 1998
Paul S. Glover
/S/JERRY L. CARSON Director JUNE 25, 1998
Jerry L. Carson
/S/THOMAS J. MARTINSON Director JUNE 25, 1998
Thomas J. Martinson
/S/BRET R. MAXWELL Director JUNE 25, 1998
Bret R. Maxwell
/S/DANIEL RAYNOR Director JUNE 25, 1998
Daniel Raynor
/S/RICHARD W. TRUELICK Director JUNE 25, 1998
Richard W. Truelick
/S/GUY RABBAT Director JUNE 25, 1998
Guy Rabbat
Page 5
EXHIBIT INDEX
No. Description Page
5 Opinion of Cohen, Berke, Bernstein, 7
Brodie & Kondell, P.A.
15 Letter from KPMG Peat Marwick 8
regarding interim financial information
23.1 Consent of Cohen, Berke, Bernstein,
Brodie & Kondell, P.A. (contained in Exhibit 5)
23.2 Consent of KPMG Peat Marwick LLP 9
24 Power of Attorney is included on the signature
page of this Registration Statement
4.1 Dynamic Healthcare Technologies, Inc. 401(k) Plan 10
Page 6
June 15, 1998
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, FL 32751
Ladies and Gentlemen:
We have acted as counsel to Dynamic Healthcare Technologies,
Inc., a Florida corporation (the "Company"), in connection with
the filing of the Company's Registration Statement on Form S-8
pursuant to the Securities Act of 1933, as amended. The
Registration Statement is being filed in connection with the
Company's offering of an aggregate of 500,000 additional shares
of Common Stock, $.01 par value per share, (the "Plan Shares")
pursuant to the Company's 401(k) Plan (the "Plan").
We are of the opinion that when the Plan Shares shall have been
issued and sold on the terms contemplated by the Plan and the
Registration Statement shall have become effective, the Plan
Shares will be legally issued, fully paid and non-assessable.
This opinion shall be limited to the laws of the State of
Florida and the federal laws of the United States of America.
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement.
Sincerely,
/S/COHEN, BERKE, BERNSTEIN, BRODIE & KONDELL, P.A.
COHEN, BERKE, BERNSTEIN, BRODIE & KONDELL, P.A.
Page 7
Board of Directors
Dynamic Healthcare Technologies, Inc.
With respect to the subject registration statement on Form S-8,
we acknowledge our awareness of the incorporation by reference
of our report dated May 4, 1998, related to our review of
interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such
report is not considered part of a registration statement
prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of sections 7 and
11 of the Act.
/S/KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Orlando, Florida
June 25, 1998
Page 8
Independent Auditors' Consent
The Board of Directors
Dynamic Healthcare Technologies, Inc.:
We consent to the use of our report incorporated herein by
reference.
/S/KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Orlando, Florida
June 25, 1998
Page 9
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
401(K) PLAN
Amended and Restated
Effective
May 1, 1997
Page 10
TABLE OF CONTENTS
Article Page
I Nature of Plan 1
II Definitions and Construction 2
III Eligibility and Participation 11
IV Employee Contributions 13
V Employer Contributions 19
VI Allocations 24
VII Termination of ServiceParticipant Vesting 32
VIII Time and Method of Payment of Benefits 35
IX Employer Administrative Provisions 47
X Administrative Committee 48
XI Participant Administrative Provisions 52
XII Fiduciaries Duties 55
XIII Discontinuance, Amendment, and Termination 59
XIV The Trust Fund 63
XV Participation by Affiliate of Company and
Employment with a Member of a Controlled Group 64
XVI Directed Investment Options 66
XVII Top-Heavy Rules 67
XVIII Miscellaneous 72
XIX Joint and Survivor Annuity Requirements 74
SIGNATURE PAGE 82
ARTICLE I
NATURE OF PLAN
The Board of Directors of Dynamic Healthcare Technologies, Inc.
("Employer") has by appropriate resolution of said Board adopted
the amended and restated Dynamic Healthcare Technologies, Inc.
401(k) Plan ("Plan") as hereinafter stated to be effective as of
May 1, 1997.
The purpose of this Plan is to provide additional incentive and
retirement security for eligible Employees of the Employer.
WHEREAS, effective January 1, 1987, the Employer adopted the
original Plan known originally as the Dynamic Healthcare
Technologies, Inc. 401(k) Plan;
WHEREAS, effective May 1, 1997, the Employer has adopted this
amended and restated Plan;
WHEREAS, it is the intention of the Employer to continue to
maintain a 401(k) Plan and Trust for the sole and exclusive
benefit of its eligible Employees who qualify as Participants
hereunder and their beneficiaries, as herein provided, under the
provisions of Section 401 of the Internal Revenue Code, as
amended by the Employee Retirement Income Security Act of 1974,
and to make contributions thereto under the provisions of
Section 404 of said Internal Revenue Code, as amended; and
WHEREAS, it is the intention of the Employer and the Trustees
to operate this Plan and Trust in accordance with the provisions
of the Internal Revenue Code as amended by the Employee Retirement Income
Security Act of 1974, as interpreted by regulations prescribed
by the Department of the Treasury and the Secretary of Labor; and
WHEREAS, the benefits provided under the amended Plan will in
no event be less than the benefits accrued and vested by the
Participant in the original Plan; and
WHEREAS, this Plan embodied herein has been duly approved and
authorized by the Board of Directors of said Company;
NOW, THEREFORE, THIS AGREEMENT,
CREATION AND NAME
This Plan is amended and restated effective May 1, 1997. The
name of the Plan shall be designated as Dynamic Healthcare
Technologies, Inc. 401(k) Plan, hereafter referred to as "Plan".
1
ARTICLE II
DEFINITIONS AND CONSTRUCTION
Definitions. For the purpose of this Plan, the following
definitions shall apply unless the context requires otherwise:
2.01 "Accounts" shall mean the separate accounts maintained to
record the interest of a Participant under the Plan, consisting
of the following Accounts:
(a) Employee Retirement Savings Account shall mean a
separate account maintained for each Participant consisting of
all Employee Salary Deferral Contributions, earnings of the
Trust, adjustments for withdrawals, and realized and unrealized
gains and losses attributable thereto.
(b) Employee Rollover Account shall mean a separate account
maintained for each Participant who makes a Rollover
Contribution to the Plan consisting of such contribution,
earnings of the Trust, adjustments for withdrawals, and realized
and unrealized gains and losses attributable thereto.
(c) Employer Matching Account shall mean a separate account
maintained for each Participant who makes an Employee Salary
Deferral Contribution and consisting of his allocable share of
required Employer Matching Contributions and earnings of the
Trust, and realized and unrealized gains and losses allocable to
such account.
2.02 "Accrued Benefit" shall mean the amount in all of a
Participant's Accounts as defined in Section 2.01. The benefits
provided under the amended Plan will in no event be less than
the benefits accrued and vested by a Participant in the Plan as
of the later of May 1, 1997 or the adoption date of this
amendment and restatement.
2.03 "Act" shall mean the "Employee Retirement Income Security
Act of 1974", as amended.
2.04 "Adjustment Factor" shall mean the cost of living
adjustment factor prescribed by the Secretary of the Treasury
under Section 415(d) of the Code for Plan Years beginning after
December 31, 1987, as applied to such items and in such manner
as the Secretary shall provide.
2.05 "Affiliated Employer" shall mean the Employer and any
corporation which is a member of a controlled group of
corporations (as defined in Section 414(b) of the Code) which
includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in
Section 414(c) of the Code) with the Employer; any organization
(whether or not incorporated) which is a member of an affiliated
service group (as defined in Section 414(m) of the Code) which
includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to regulations under
Section 414(o) of the Code.
2
For purposes of this Section 2.05, the term "controlled
group" means any two or more corporations, trades or businesses
under common control of which the Employer is a member, or two
or more "affiliated organizations" under Code Section 414(m).
The term "two or more corporations, trades or businesses under
common control" will include any group of corporations, trades
or businesses which is either:
(a) a parentsubsidiary group, or
(b) a brothersister group, or
(c) a combined group
within the meaning under Code Sections 414(b), 414(c), and
414(m) and their Regulations.
All Employees of a controlled group will be treated as
employed by a single Employer for purposes of applying the
provisions of qualification of this Plan; of minimum
participation standards of this Plan; of minimum vesting
standards of this Plan; and of limitation of benefits and
contributions under this Plan.
2.06 "Annual Addition" shall mean the sum of the following
additions to a Participant's Account for the Limitation Year:
(a) Employer Contributions,
(b) Forfeitures,
(c) Employee Contributions, and
(d) Amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section 415(l)(2) of
the Code, which is part of a pension or annuity plan maintained
by the Employer and amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after
such date, which are attributable to postretirement medical
benefits, allocated to the separate account of a Key Employee,
as defined in Section 419(A)(d)(3) of the Code, under a welfare
benefit fund, as defined in Section 419(e) of the Code,
maintained by the Employer.
2.07 "Beneficiary" shall mean any person or fiduciary
designated by a Participant who is or may become entitled to a
benefit under the Plan following the death of the Participant.
2.08 "Board of Directors" shall mean the Board of Directors of
Dynamic Healthcare Technologies, Inc. unless otherwise indicated
or the context otherwise requires.
2.09 "Break-in-Service" shall mean a Plan Year in which an
Employee is credited with not more than 500 Hours of Service, as
measured by the Plan Year.
2.10 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
3
2.11 "Company" shall mean the Employer as defined in Section 2.17.
2.12 "Compensation" shall mean an Employee's Compensation for
any Plan Year consisting of the total annual compensation
actually paid to the Employee by the Employer for the Plan Year
concerned, including any amount of earnings deferred under any
other qualified Employer sponsored plan under Code Sections 125,
401(k), 403(b), 408(k), or any other qualified Cash or Deferred
Arrangement, but excluding any reimbursements for the use of an
automobile, any reimbursements due to moving expenses, and the
taxable value of any Employer paid group term life insurance, or
other taxable fringe benefit provided by the Employer. For Plan
Years beginning after December 31, 1988, annual Compensation
used shall not exceed $200,000, (or other amount as approved by
the Secretary of the Treasury). Notwithstanding the foregoing,
Compensation shall not include deferred compensation, stock
options, and other distributions which receive special Federal
income tax benefit within the meaning of Section 415 of the
Code. For the purposes of a contribution or an allocation under
the Plan based on compensation, Compensation shall only include
amounts actually paid an Employee during the period he is a
Participant in the Plan.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the plan to the
contrary, for plan years beginning on or after January 1, 1994,
the annual compensation of each employee taken into account
under the plan shall not exceed the OBRA'93 annual compensation
limit. The OBRA'93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living
in accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer
than 12 months, the OBRA'93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number
of months in the determination period, and the denominator of
which is 12.
For plan years beginning on or after January 1, 1994, any
reference in this plan to the limitation under section
401(a)(17) of the Code shall mean the OBRA'93 annual
compensation limit set forth in this provision.
If compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in
the current plan year, the compensation for that prior
determination period is subject to the OBRA'93 annual
compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first plan year beginning on or
after January 1, 1994, the OBRA'93 annual compensation limit is
$150,000.
2.13 "Contributions" shall mean contributions to this Plan
from one of the following sources:
(a) Employee Salary Deferral Contribution shall mean the
amount which the Employee contributes under Section 4.01(a) of
the Plan.
4
(b) Employer Matching Contribution shall mean the
Employer's required Contributions to the Plan under Section
5.01(a) for Participants making Employee Salary Deferral
Contributions.
(c) Rollover Contribution shall mean a contribution to the
Plan of any part or all (in excess of employee contributions) of
a distribution from an employee's trust described in Section
401(a) of the Code which is exempt from tax under Section 501(a)
thereof (other than a trust forming a part of a plan under which
the Employee was an employee within the meaning of Section
401(c) at the time contributions were made on his behalf under
the plan) or an annuity plan described in Section 403(a) of the
Code (other than a plan under which the Employee was an employee
within the meaning of Section 401(c) at the time contributions
were made on his behalf under the plan) and any earnings thereon
(whether such contribution is paid directly by the Employee,
from such other trust or annuity plan, or from an individual
retirement account, individual retirement annuity, or retirement
bond) in a manner which would constitute a rollover contribution
within the meaning of Section 402(a)(5), 403(a)(4), 408(d)(3),
or 409(b)(C) of the Code.
2.14 "Dates":
(a) Effective Date The original effective date of the Plan
was January 1, 1987. This restatement is effective May 1, 1997.
(b) Anniversary Date December 31.
(c) Plan Entry Dates January 1, April 1, July 1 and October 1.
(d) Allocation Dates of Assets each day of the Plan Year.
2.15 "Employee" shall mean any person on the payroll of the
Employer (including "leased" employees as defined by Code
Section 414(n)(2)), or on approved Leave of Absence who is
subject to withholding for purposes of Federal income taxes and
for purposes of the Federal Insurance Contributions Act with the
following exceptions:
(a) leased employees are not eligible to participate in the
Plan, and
(b) any Employee of the Employer who is included in a unit
of employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between
employee representatives and the Employer, if there is evidence
that retirement benefits were the subject of good faith
bargaining between such employee representatives and the
Employer, and
(c) contract employees, the terms of whose contract does not
specifically provide for inclusion in this Plan.
However, a leased employee will not be considered an Employee
for purposes of testing required under Code Section 410(b) if
the requirements of Code Section 414(n)(5) are satisfied.
5
2.16 "Employer" shall mean Dynamic Healthcare Technologies,
Inc., (a corporation). The term Employer shall also apply to
any subsidiary or Affiliated Employer who adopts the Plan and
who, at the time such reference applies, are included in the
list of Affiliated Employers set forth below. For the purpose
of this Plan, Dynamic Healthcare Technologies, Inc. shall deal
exclusively with the funding agent and shall be deemed the
representative of each Employer, and any action taken by Dynamic
Healthcare Technologies, Inc. shall be binding on all Employers.
List of Affiliated Employers Date of Plan Adoption
Collaborative Medical Systems Corp. May 1, 1997
An Employer may be removed from the above list as of the date
on which it ceases to be subsidiary to, affiliated with, or
allied with Dynamic Healthcare Technologies, Inc., or such
Employer loses its status as a legal entity by means of
dissolution, merger, consolidation, bankruptcy, or otherwise.
An Employer shall also be removed from the list of Employers
upon the termination of the Plan for that Employer.
As used in the further provisions of the Plan, the term
Employer shall be deemed to apply to each Employer
independently. The requirement that Dynamic Healthcare
Technologies, Inc. deal exclusively with the funding agent is
for administrative convenience only. In no event shall this
Plan be interpreted to be a multiemployer plan as defined in
Section 3(37) of the Employee Retirement Income Security Act of
1974.
2.17 "Employment Commencement Date" shall mean the date on
which an Employee first performs an Hour of Service for the
Employer.
2.18 "Fiscal Year" shall mean the Employer's taxable year for
Federal income tax purposes.
2.19 "Hour of Service" shall mean:
(a) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the
Employee is entitled to payment, for the performance of duties
during the Plan Year. The Administrative Committee shall credit
Hours of Service under this paragraph (a) to the Employee for
the Plan Year in which the Employee performs the duties,
irrespective of when paid.
(b) Each Hour of Service for back pay, (irrespective of
mitigation of damages), to which the Employer has agreed or for
which the Employee has received an award. The Administrative
Committee shall credit Hours of Service under this paragraph (b)
to the Employee for the Plan Year(s) to which the award or the
agreement pertains rather than for the Plan Year in which the
award, agreement or payment is made; and
6
(c) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the
Employee is entitled to payment (irrespective of whether the
employment relationship is terminated), for reasons other than
for the performance of duties during a Plan Year, such as Leave
of Absence, vacation, holiday, sick leave, illness, incapacity
(including disability), layoff, jury duty or military duty.
Notwithstanding the preceding provisions of this paragraph (c),
the Administrative Committee shall not credit:
(1) More than five hundred one (501) Hours of Service under
this paragraph (c) to an Employee on account of any single
continuous period during which the Employee does not perform any
duties (whether or not such period occurs during a single Plan
Year);
(2) An Hour of Service to an Employee on account of a
period during which the Employee does not perform any duties if
the payment the Employer makes (or the payment due) is under a
plan maintained solely for the purpose of complying with the
applicable workman's compensation law, unemployment compensation
law or disability insurance law; and
(3) An Hour of Service for a payment to an Employee which
solely reimburses the Employee for medical or medically related
expenses incurred by the Employee.
(d) The Administrative Committee shall not credit an Hour of
Service under more than one (1) of the above paragraphs.
Furthermore, if the Administrative Committee is to credit Hours
of Service to an Employee for the twelve (12) month period
beginning with the Employee's Employment Commencement Date, then
the twelve (12) month period shall be substituted for the term
"Plan Year" wherever the latter term appears in this paragraph.
The Administrative Committee shall resolve any ambiguity with
respect to the crediting of an Hour of Service in favor of the
Employee. Furthermore, in crediting Hours of Service under this
paragraph, the Administrative Committee shall apply the rules of
paragraphs (b) and (c) of Labor Reg. Section 2530.200b2, which
the Plan, by this reference, specifically incorporates in full
within this paragraph.
(e) An Employee or Participant for whom hourly records are
not maintained shall be credited with ninetyfive (95) Hours of
Service semimonthly, if compensated semimonthly, or one hundred
ninety (190) Hours of Service monthly, if compensated on a
monthly basis, for each period described above which if the
Employee were hourly rated would have been credited with one
Hour of Service under paragraphs (a), (b) or (c).
(f) Maternity Solely for purposes of determining whether a
Break in Service (as defined in Section 2.09) 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 subject
to a maximum of 501 Hours of Service for such Plan Year. For
purposes of this paragraph, an absence from work for maternity
7
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. The Hours of Service credited under this paragraph
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.
2.20 "Leave of Absence" shall mean any period of absence from
the active employment of the Employer due to jury duty and
compulsory service in the Armed Forces of the United States if
the Employee returns to active Service with the Employer within
90 days after he first becomes eligible for release from such
active duty. A Leave of Absence may be granted by the Employer
for sickness, vacations, disability, or other similar reasons
under rules established by it and uniformly applied by it to all
individuals similarly situated. If the Employee does not return
to active Service with the Employer within ninety (90) days of
the termination of his Leave of Absence, his Service will be
deemed to have ceased on the date his absence first commenced.
2.21 "Limitation Year" shall mean each 12 month period
beginning January 1, 1997 and ending the following December 31.
Execution of this Plan (or any amendment to this Plan changing
the Limitation Year) constitutes adopting a written resolution
by the Employer electing a Limitation Year pursuant to
governmental regulations.
2.22 "Normal Retirement Date" shall mean the first day of the
month coinciding with or next following the Participant's 65th
birthday.
2.23 "Participant" shall mean any Employee who becomes a
participant as provided in Article III and has not for any
reason become ineligible to participate further in the Plan. An
"Inactive Participant" shall mean any Employee or former
Employee who has ceased to be a Participant but on whose behalf
an Account is still maintained under the Plan.
2.24 "Party in Interest" shall mean:
(a) the Trustee of the Plan;
(b) a person providing services to the Plan;
(c) an Employer, any of whose Employees are covered by the
Plan;
(d) an Employee organization, any of whose members are
covered by the Plan;
(e) an owner of the Employer as defined in Section 3(14)(E)
of the Employee Retirement Income Security Act of 1974;
(f) a relative (as defined in Section 3(15) of the
Employee Retirement Income Security Act of 1974) of any
individual referred to in (a) through (e) above;
8
(g) an Employee, officer, director or 10% or more
shareholder of a person described in (b), (c), (d), and (e)
above;
(h) any other person, individual, corporation, partnership,
trust or estate who is considered a "party in interest" within
the meaning of Section 3(14) of the Employee Retirement Income
Security Act of 1974.
2.25 "Plan" shall mean the Dynamic Healthcare Technologies,
Inc. 401(k) Plan as established herein and amended from time to
time.
2.26 "Plan Administrator" shall mean the Employer or the
person or persons who have been or are in the future named by
the Employer to administer the Plan.
2.27 "Plan Year" shall mean the 12 consecutivemonth period
beginning January 1 and ending 12 months later on December 31.
2.28 "Service" shall mean any period of time the Employee is
in the employ of the Employer, including any period the Employee
is on Leave of Absence authorized by the Employer under a
uniform nondiscriminatory policy applicable to all Employees.
Service with any predecessor Employer that maintained this Plan
shall be recognized for all purposes hereunder.
2.29 "Suspense Account" shall mean an account established
pursuant to Section 6.05.
2.30 "Trust" shall mean the trust established to hold,
administer, and invest the contributions made under the Plan.
2.31 "Trust Agreement" shall mean the agreement between the
Employer and the Trustee or any successor Trustee establishing
the Trust and specifying the duties of the Trustee.
2.32 "Trustee" shall mean the person, persons or entity from
time to time appointed a Trustee under the Trust Agreement.
2.33 "Trust Fund" shall mean all property of every kind held
or acquired by the Trustee under the Trust Agreement.
2.34 "Vested Interest" shall mean a nonforfeitable right to
all or a portion of the Accrued Benefit.
2.35 "Year of Service" The term "Year of Service" means a 12
consecutive month period during the applicable computation
period in which the Employee has completed at least 1,000 Hours
of Service.
Military Service. Each Participant will receive credit for
Vesting Service as if his active Employment had continued during
the period of his military service with the Uniformed Services
of the United States of America; provided that he retains
statutory reemployment rights and resumes Employment within 90
days after his honorable discharge from military duty, or during
any other period prescribed by law.
9
Word Usage. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of the Plan dictates,
the plural shall be read as the singular and the singular as the plural.
Construction. It is the intention of the Employer that the Plan
be qualified under the provisions of the Code and the Act and all
provisions hereof shall be construed to that result.
10
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. An Employee, who as of April 30, 1997 was a
Participant in the prior Plan, shall be eligible to continue to
participate as of May 1, 1997 in this amended and restated Plan.
Effective May 1, 1997, all other Employees shall be eligible to
participate in this Plan on any subsequent Plan Entry Date
coincident with or next following the completion of one (1) Hour
of Service, if still employed on such Entry Date).
3.02 Participation Upon ReEmployment. Any former Participant
reemployed by the Employer prior to incurring a BreakinService
shall continue to participate in the Plan in the same manner as
if such termination had not occurred. A former Participant
whose employment terminates and who is reemployed after a
Breakin-Service shall reenter the Plan as of his reemployment
commencement date after he performs his first Hour of Service as
a result of his reemployment. Any other Employee whose
employment terminates and who is subsequently reemployed shall
commence participation in accordance with the provisions of
Section 3.01.
3.03 Employee Salary Deferral Contribution Application.
Participation in the Employee Salary Deferral Contribution
option of the Plan shall not be compulsory. A Participant as a
condition for participation must file an Employee Salary
Deferral Contribution election on a written form provided by the
Administrative Committee on or before the time prescribed by the
Administrative Committee before each Plan Entry Date. A
Participant who elects not to make an Employee Salary Deferral
Contribution will not participate in any Employer Matching
Contributions.
3.04 Transferred Participants:
(a) A Participant who is transferred to any Affiliated
Employer which is not an Employer as defined in Section 2.17 or
to a class of employees not covered by this Plan shall be
considered a Transferred Participant. The Accrued Benefit of
such Transferred Participant shall be determined as of the date
of transfer and shall be held under the Plan until such time as
the Transferred Participant becomes eligible to receive it. If
such Transferred Participant is not fully vested in his Accrued
Benefit as of the date of transfer, such service after the date
of transfer shall be used in determining Vesting Service. In no
event, however, shall service with the Affiliated Employer or in
a class of employees not covered by this Plan be used to accrue
further benefits under this Plan.
(b) A Participant whose employment changes to a class of
employment which is not covered by this Plan shall be considered
a Transferred Participant and shall be treated as described in
Section 3.04(a) above.
(c) An Employee, previously excluded from coverage under the
Plan because his
11
employment with the Employer was employment not
covered by this Plan, shall enter (or reenter, as the case may
be) the Plan in the Plan Year during which he no longer has this
excluded employment. All such Employees shall accrue benefits
under this Plan only with respect to those Years of Service not
deemed to be performed while under such excluded employment.
If such Employee is not fully vested in his Accrued Benefit
as of the date on which he no longer has this excluded
employment, service while the Employee was previously excluded
from Participation will be counted for vesting purposes.
If an Employee transfers from employment not covered under
this Plan, and if such transfer occurs at any time during a Plan
Year, all Hours of Service earned during such Plan Year,
regardless of whether or not they were worked under excluded
employment, shall be considered in determining Service for such
year.
12
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.01 Employee Contributions shall consist of:
(a) Employee Salary Deferral Contributions. A Participant
may elect to defer receipt of a portion of his Compensation, and
have the Employer contribute to the Plan on his behalf for each
Limitation Year an Employee Salary Deferral Contribution of from
one percent (1%) to twenty percent (20%) of his Compensation, in
accordance with this Section and such other rules as the
Administrative Committee may prescribe; provided, however, all
such Employee Salary Deferral Contributions shall be subject to
the provisions of Section 4.05 and Section 6.09. If it is
projected that the Employee's Salary Deferral Contribution and
the aniticipated Employer Contribution under Section 5.01(a) of
the Plan will exceed the limitations of Plan Section 6.09, then
the Plan Administrator may limit the level of the Employee's
Salary Deferral Contribution so that the limitations of Plan
Section 6.09 are not exceeded.
(1) No Participant shall be permitted to have Employee
Salary Deferral Contributions made under this Plan, or any other
qualified plan maintained by the Employer during any taxable
year, in excess of the dollar limitation contained in Section
402(g) of the Code in effect at the beginning of the Plan Year.
(2) "Employee Salary Deferral Contribution" shall mean any
Employer contributions made to the Plan at the election of the
Participant, in lieu of cash compensation, and shall include
contributions made pursuant to a salary reduction agreement or
other deferral mechanism. With respect to any taxable year, a
Participant's Employee Salary Deferral Contribution is the sum
of all Employer contribution made on behalf of such Participant
pursuant to an election to defer under any qualified CODA, as
described in Section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement, as described in Section
402(h)(1)(B), any eligible deferred compensation plan under
Section 457, any plan as described under Section 501(c)(18), and
any employer contributions made on behalf of a Participant for
the purchase of an annuity contract under Section 403(b)
pursuant to a salary reduction agreement.
(3) Make-Up Contributions After Military Leave. Each
Participant who resumes active employment after an unpaid
military leave will be permitted to make special Salary
Reduction Contributions in an amount up to the maximum amount he
could have contributed if he had remained in Employment during
his period of leave. Each make-up Contribution will be subject
to the limitations under Code Sections 402(g) and 415 in effect
for the year to which
13
the Contribution relates, but will be
ignored for purposes of the ADP Test. The Committee will permit
him to make his special Contributions during the period
beginning on the date when he resumes Employment and continuing
for a period equal to the lesser of three times the length of
his military leave, or five years. The amount of his special
Contributions will be based on the Compensation he would have
received if he had remained in active Employment, at his rate of
pay in effect when he began his leave. If that pay rate cannot
be determined with certainty, the Committee will treat him as
having Compensation equal to the amount he received during the
12-month period preceding his leave, or during the entire period
of his Employment if shorter than 12 months.
(b) Rollover Contributions. A Participant, with the
Administrative Committee's written consent and after filing with
the Trustee the form prescribed by the Administrative Committee,
may make a Rollover Contribution to the Plan. The
Administrative Committee shall allocate and credit a Rollover
Contribution to the contributing Participant's Employee Rollover
Account as of the Allocation Date for the Plan Year in which the
Rollover Contribution is made. If a Participant makes a
Rollover Contribution, the Participant may direct the Trustee to
invest the amount contributed as provided in Section 16.01.
In all other respects, the Trustee and the Committee shall
hold, administer, and distribute a Rollover Contribution in the
same manner as any Employee contribution made to the Trust.
4.02 How Paid or Deducted. Employee Salary Deferral
Contributions may be made by regular payroll deductions from the
Participant's Compensation, or in any other manner approved by
the Administrative Committee.
4.03 Modification of Employee Contributions. A Participant
may modify his Employee Salary Deferral Contributions at any
time on such forms as the Administrative Committee may
prescribe, and such modification shall become effective the
first day of the month coinciding with or next following
execution of the new election. Such modification shall be in
accordance with such rules as the Administrative Committee may
prescribe.
4.04 Termination of Employee Contributions. A Participant may
terminate his Salary Deferral Agreement at any time with respect
to Compensation not yet earned by delivering written notice of
termination to the Plan Administrator. Any Participant who
terminates his Salary Deferral Agreement may be permitted, in
accordance with uniform and nondiscriminatory rules prescribed
by the Plan Administrator, to execute a new Salary Deferral
Agreement and resume having Salary Deferral Contributions made
to the Trust on his behalf on the first day of the next month.
4.05 Maximum Deferral Percentage. The Average Actual Deferral
Percentage for Highly Compensated Participants for each Plan
Year shall not exceed the relationship to the Average Actual
Deferral Percentage of all NonHighly Compensated Participants
for the Plan Year of either of the following specified tests:
14
(a) Primary Test:
The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage for
Eligible Participants who are NonHighly Compensated Employees
for the Plan Year multiplied by 1.25; or
(b) Alternate Test:
The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage for
Eligible Participants who are NonHighly Compensated Employees
for the Plan Year multiplied by 2, provided that the Average
Actual Deferral Percentage for Eligible Participants who are
Highly Compensated Employees does not exceed the Average Actual
Deferral Percentage for Eligible Participants who are NonHighly
Compensated Employees by more than two (2) percentage points or
such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative
limitation with respect to any Highly Compensated Employee.
Definitions: For purposes of this Section 4.05, and for
purposes of this Plan, the following definitions shall be used:
(1) "Actual Deferral Percentage" shall mean the ratio
(expressed as a percentage), of Employee Salary Deferral
Contributions and Qualified Employer Deferral Contributions on
behalf of the Eligible Participant for the Plan Year to the
Eligible Participant's Compensation for the Plan Year.
(2) "Average Actual Deferral Percentage" shall mean the
average (expressed as a percentage) of the Actual Deferral
Percentage of the Eligible Participants in a group.
(3) "Qualified Employer Deferral Contributions" shall
mean Employer Contributions which are allocated to a
Participant's Employer Contribution Account that are
nonforfeitable when contributed by the Employer as a matching
Employer contribution.
(4) "Eligible Participant" shall mean any Employee of
the Employer who is otherwise eligible under the terms of the
Plan to have Employee Salary Deferral Contributions or Qualified
Employer Deferral Contributions allocated to his account for the
Plan Year.
(5) "Highly Compensated Participant" means any
Participant, or former Participant, who is a Highly Compensated
Employee, defined under Code Section 414(q), as follows:
15
(i) who was a 5% owner (as defined under Code Section
416(i)(1)(B)(i)) during the current or preceding Plan Year, or
(ii) Earned more than $80,000 (as adjusted by a Cost
of Living Index under Code Section 415(d) as approved by the
Secretary of the Treasury) during the preceding Plan Year and
was in the top-paid 20% of all Employees based on compensation.
To determine the number of Employees in the top-paid group, the
Plan may exclude Employees who either: (a) are under age 21;
(b) have fewer than 6 months of employment; (c) normally work
fewer than 172 hours per week; (d) normally work less than 6
months per Plan Year; (e) are included in a collective
bargaining unit; or (f) are non-resident aliens with no United
States source income.
(6) "NonHighly Compensated Employee" shall mean an
Employee of the Employer who is not a Highly Compensated
Employee.
(c) Special Rules.
(1) In the event that this Plan satisfies the requirements
of Section 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of Section 410(b) of the Code only if aggregated
with this Plan, then this Section 4.05 shall be applied by
determining the Actual Deferral Percentages of Eligible
Participants as if all such plans were a single plan.
(3) The determination and treatment of the Employee
Salary Deferral Contributions, Qualified Nonelective
Contributions and Actual Deferral Percentage of any Participant
shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(4) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Actual Deferral
Percentage test of this Section 4.05, satisfaction of the
Average Actual Contribution Percentage test of Section 5.05, and
the amount of Qualified Employer Deferral Contribution used in
such test.
16
4.06 Automatic Adjustments and/or Corrections to Employee
Salary Deferral Contributions. Within a reasonable period after
the beginning of each Plan Year, the Retirement Committee shall
cause the Employee Salary Deferral Contributions to be tested
for electing Participants to determine if the Maximum Deferral
Percentage of Section 4.05 has not been exceeded. Should it be
determined that the Actual Deferral Percentage of Highly
Compensated Participants exceeds the Maximum Deferral Percentage
as set forth in Section 4.05, the Retirement Committee shall
correct any Excess ADP Contribution (Employee Salary Deferral
Contribution and Employer Matching Contribution used to
determine the Actual Deferral Percentage, which have caused the
Plan to exceed the Maximum Deferral Percentage), under the
following rules:
(1) Correction before Excess ADP Contributions are Made. In
the event the Retirement Committee determines, before Excess ADP
Contributions are made, that the Plan will exceed the Maximum
Deferral Percentage for that Plan Year, then it will limit
Employee Salary Deferral Contributions, beginning with the
Highly Compensated Participant having the highest "Actual
Deferral Percentage", in order to comply with the Maximum
Deferral Percentage for the Plan Year.
(2) Correction after Excess ADP Contributions are Made. In
the event the Retirement Committee determines, after the Plan
has already received Excess ADP Contributions, that the Plan
will exceed the Maximum Deferral Percentage for that Plan Year,
then it will refund the excess amounts and attributable
earnings, as necessary not to exceed the Maximum Deferral
Percentage. The amount actually refunded will be reduced to the
extent that the amount of the excess has already been reduced by
the refund of any Employee Salary Deferral Contributions in
excess of $7,000 (indexed) under Section 4.07.
Excess ADP Contributions. When the Retirement Committee
corrects the excess by making refunds, it will refund Excess ADP
Contributions to Highly Compensated Participants in the order of
the dollar amount contributed, beginning with the Highly
Compensated Participant with the highest dollar amount and
continuing the refunds, if necessary, until all Highly
Compensated Participants have the same dollar amount, and then
reducing those dollar amounts equally. The Retirement Committee
will refund excess amounts and attributable earnings to the
affected Highly Compensated Participants no later than the end
of the Plan Year following the Plan Year for which the excess
amount was contributed, and if practicable by March 15 of that
Plan Year. For any Plan Year, the Retirement Committee may
forfeit Matching Contributions attributable to refunded Employee
Salary Deferral Contributions.
(3) Determination of Earnings Attributable to the Excess.
The Retirement Committee will use the Plan's normal method of
calculating earnings to determine the amount of earnings
attributable to each Participant's allocation of Excess ADP
Contributions.
4.07 Distribution of Excess Employee Salary Deferral
Contributions:
17
(a) In General. Notwithstanding any other provision of
this Plan, Excess Employee Salary Deferral Contribution Amounts
and income allocable thereto shall be distributed no later than
each April 15 to Participants who claim such allocable Excess
Employee Salary Deferral Contribution Amounts for the preceding
calendar year.
(b) Excess Employer Salary Deferral Contribution Amount.
For purposes of this Plan, the "Excess Employer Salary Deferral
Contribution Amount" shall mean the amount of Employee Salary
Deferral Contributions for a calendar year that the Participant
requests be allocated to and distributed from this Plan pursuant
to the claim procedure set forth in Section 4.07 (c).
(c) Claims. The Participant's claim shall be in writing,
shall be submitted to the Plan Administrator no later than March
1; shall specify the Participant's Excess Employee Salary
Deferral Contribution Amount for the preceding calendar year;
and shall be accompanied by the Participant's written statement
that if such amounts are not distributed, such Excess Employee
Salary Deferral Contribution Amount, when added to amounts
deferred under other plans or arrangements described in Sections
401(k), 408(k) or 403(b) of the Code, exceeds the limit imposed
on the Participant by Section 402(g) of the Code for the year in
which deferral occurred.
(d) Maximum Distribution Amount. The Excess Employee
Salary Deferral Contribution Amount distributed to a Participant
with respect to a calendar year shall be adjusted for income
and, if there is a loss allocable to the Excess Employer Salary
Deferral Contribution, shall in no event be less than the lesser
of the Participant's Account under the Plan or the Participant's
Employee Salary Deferral Contributions for the Plan Year.
18
ARTICLE V
EMPLOYER CONTRIBUTIONS
5.01 Employer Contributions:
(a) Employer Matching Contribution. Subject to the
limitations of Section 4.05 and 6.09, for each Plan Year that
ends with or within the Employer's taxable Year, the Employer
may contribute to the Trust, an Employer Matching Contribution
that the Board of Directors may from time to time deem
advisable. Initially, the Employer shall contribute to the
Trust an amount equal to thirty percent (30%) of the
Participant's Compensation deferred as an Employee Salary
Deferral Contribution. The match made be made in cash, common
stock of the Employer or any combination thereof.
(b) Make-Up Contributions After Military Leave. Each
Employer will make special Matching Contributions for each of
its Participants who returns to Employment from unpaid military
leave and contributes the make-up Salary Reduction Contributions
described in Subsection 4.01(a)(3). Each Matching Contribution
will relate to the year for which the make-up Salary Reduction
Contribution is made and will be subject to the
percentage-of-Compensation limit and Code Section 415 limit in
effect for that year. The Committee will ignore the make-up
Matching Contributions for purposes of the ADP and ACP Tests.
The Committee will not allocate investment earnings to the
make-up Contribution for the period of leave.
5.02 Determination of Contribution. The Employer, from its
records, shall determine the amount of any contributions to be
made by it to the Trust under the terms of the Plan.
5.03 Time and Method of Payment of Contribution. The Employer
may pay its contribution for each Limitation Year in one (1) or
more installments. The Employer's contribution for any
Limitation Year shall be due on the last day of its taxable year
coinciding with or within which such Limitation Year ends, and,
unless paid before, shall be payable then or as soon thereafter
as practicable, but not later than the time prescribed by law
for filing the Employer's Federal income tax return (including
extensions thereof) for such taxable year, without interest. If
the contribution is on account of the Employer's preceding
taxable year, the contribution shall be accompanied by the
Employer's signed statement to the Trustee that payment is on
account of such taxable year. Contributions may be paid in
cash. All contributions for each Limitation Year shall be
deemed to be paid as of the last day of such Limitation Year if
not allocated before the last day of the Limitation Year.
5.04 Return of Employer Contributions. Notwithstanding any
provision herein to the contrary, upon the Employer's request, a
contribution which was made upon a mistake of fact, conditioned
upon initial qualification of the Plan, or conditioned upon its
deductibility under Code Section 404, shall be returned to the
Employer within one year after payment of the contribution,
denial of the qualification or disallowance of the deduction, as
the case may be.
19
5.05 Maximum Contribution Percentage. The Average
Contribution Percentage for Eligible Participants who are Highly
Compensated Participants for the Plan Year shall not exceed the
relationship to the Average Actual Contribution Percentage of
all NonHighly Compensated Participants for the Plan Year of
either of the following specified tests:
(a) Primary Test: The Average Actual Contribution Percentage
for Eligible Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average Actual
Contribution Percentage for Eligible Participants who are
NonHighly Compensated Employees for the Plan Year multiplied by
1.25, or
(b) Alternative Test: The Average Actual Contribution
Percentage for Eligible Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Actual
Contribution Percentage for Eligible Participants who are
NonHighly Compensated Employees for the Plan Year multiplied by
2, provided that the Average Actual Contribution Percentage for
Eligible Participants who are Highly Compensated Employees does
not exceed the Average Actual Contribution Percentage for
Eligible Participants who are NonHighly Compensated Employees by
more than two (2) percentage points or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to any
Highly Compensated Employee.
Definitions: For purposes of this Section 5.05, and for
purposes of this Plan, the following definitions shall be used:
(1) "Average Contribution Percentage" shall mean the average
(expressed as a percentage) of the Contribution Percentages of
the Eligible Participants in a group.
(2) "Actual Contribution Percentage" shall mean the ratio
(expressed as a percentage), of the sum of the Employee
NonDeductible Contributions and Employer Matching Contributions
under the Plan on behalf of the Eligible Participant for the
Plan Year to the Eligible Participant's Compensation for the
Plan Year.
(3) "Eligible Participant" shall mean any Employee
of the Employer who is otherwise authorized under the terms of
the Plan to have NonDeductible Contributions or Employer
Matching Contributions allocated to his Account for the Plan
Year.
(4) "Qualified Nonelective Contributions" shall mean
contributions (other than Matching Contributions) made by the
Employer and allocated to Participants' accounts that the
Participant may not elect to receive in cash until distributed
from the plan; that are 100 percent vested and nonforfeitable
when made, and that are not distributable under the terms of the
plan to Participants or their beneficiaries earlier than the
earlier of:
20
(i) separation from service, death, or disability of the
Participant;
(ii) attainment of the age 592 by the Participant;
(iii) termination of the Plan without establishment of a
successor plan;
(iv) the events specified in those of Section 13.10, 13.11,
or 13.12 of this Plan adopted by the Employer; or,
(v) for Plan Years beginning before January 1 1989, upon
hardship of the Participant.
(c) Special Rules.
(1) For purposes of this Section 5.05, the Actual
Contribution Percentage for any Eligible Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to make NonDeductible Employee Contributions or to
receive Employer Matching Contributions, Qualified NonElective
Contributions or have Employee Salary Deferral Contributions
allocated to his Account under two or more plans as described in
Section 401(a) of the Code or arrangements described in Section
401(k) of the Code that are maintained by the Employer or an
Affiliated Employer shall be determined as if all such
contributions and Employee Salary Deferral Contributions were
made under a single Plan.
(2) In the event that this Plan satisfies the requirements
of Section 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of Section 410(b) of the Code only if aggregated
with this Plan, then this Section 5.05 shall be applied by
determining the Actual Contribution Percentages of Eligible
Participants as if all such plans were a single plan.
(3) The determination and treatment of the Actual
Contribution Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.
5.06 Adjustment for Excessive Average Actual Contribution
Percentage. In the event that the Average Actual Contribution
Percentage for the Highly Compensated Participant group exceeds
the Average Actual Contribution Percentage for the NonHighly
Compensated Participant group pursuant to Section 5.05, the Plan
Administrator (on or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than
the close of the following Plan Year) shall direct the Trustee
to distribute to the Highly Compensated Participant group the
amount of "Excess Aggregate Contributions" (and any income
allocable to such contributions). Such distribution shall be
made on behalf of the Highly Compensated Participant group in
order of the dollar amount contributed, beginning with the
Highly Compensated Employee with the highest dollar amount and
continuing the distributions, if necessary, until all Highly
Compensated Participants have the same dollar amount and then
reduce those dollar amounts equally. If there is a loss
allocable to such excess amount, the distribution shall in no
event be less than the lesser of the Participant's Account
attributable to Employer Matching Contributions or the
Employer's Matching Contributions for the Plan Year.
21
5.07 Distribution of Excess Contributions:
(a) In General. Notwithstanding any other provision of the
Plan, Excess Contributions and income allocable thereto shall be
distributed, to Participants on whose behalf such Excess
Contributions were made, no later than the end of the Plan Year
next following the Plan Year for which they were made.
(b) Excess Contributions. For purposes of this Section 5.07,
"Excess Contributions" shall mean the amount described in
Section 401(k)(8)(B) of the Code.
(c) Determination of Income. The income allocable to Excess
Contributions shall be determined by multiplying income
allocable to the Participant's Employee Salary Deferral
Contributions and Qualified Employer Deferral Contributions for
the Plan Year by a fraction, the numerator of which is the
Excess Contribution on behalf of the Participant for the
preceding Plan Year and denominator of which is the sum of the
Participant's Account Balances attributable to Employee Salary
Deferral Contributions and Qualified Employer Deferral
Contributions on the last day of the preceding Plan Year.
(d) Maximum Distribution Amount. The Excess Contributions
which would otherwise be distributed to the Participant shall be
adjusted for income; shall be reduced, in accordance with
regulations, by the amount of Excess Deferrals distributed to
the Participant; shall, if there is a loss allocable to the
Excess Contributions, in no event be less than the lesser of the
Participant's Account under the Plan or the Participant's
Employee Salary Deferral Contributions and Qualified Employer
Deferral Contributions for the Plan Year.
(e) Accounting for Excess Contributions. Amounts distributed
under this Section 5.07 shall first be treated as distributions
from the Participant's Employee Retirement Savings Account and
shall be treated as distributed from the Qualified Employer
Deferral Contribution Account only to the extent such Excess
Contributions exceed the balance in the Participant's Employee
Retirement Savings Account.
(f) The amount of Excess Contributions to be distributed (or
recharacterized, if the Plan so permits), shall be reduced by
Excess Contributions previously distributed for the taxable year
ending in the same Plan Year and Excess Contributions to be
distributed for a taxable year shall be reduced by Excess
Contributions previously distributed (or recharacterized, if
applicable) for the Plan Year beginning in such taxable year.
22
5.08 Distribution of Excess "Aggregate" Contributions.
(a) In General. Excess Aggregate Contributions and income
allocable thereto, attributed to Employer Matching Contributions
or Employee NonDeductible Contributions, shall be forfeited, if
otherwise forfeitable under the terms of this Plan, or if not
forfeitable, distributed to Participants on whose behalf such
Aggregate Excess Contributions were made, no later than the end
of the Plan Year next following the Plan Year for which they
were made.
(b) Excess Aggregate Contributions. For purposes of this
Section 5.08, "Excess Aggregate Contributions" shall mean the
amount described in Section 401(m)(6)(B) of the Code.
(c) Determination of Income. The income allocable to Excess
Aggregate Contributions shall be determined by multiplying the
income allocable to the Participant's Employee NonDeductible
Contributions and Employer Matching Contributions for the Plan
Year by a fraction, the numerator of which is the Excess
Aggregate Contributions on behalf of the Participant for the
preceding Plan Year and the denominator of which is the sum of
the Participant's account balances attributable to Employee
NonDeductible Contributions and Employer Matching Contributions
on the last day of the preceding Plan Year.
(d) Maximum Distribution Amount. The Excess Aggregate
Contributions to be distributed to a Participant shall be
adjusted for income, and, if there is a loss allocable to the
Excess Aggregate Contribution, shall in no event be less than
the lesser of the Participant's Account under the Plan or the
Participant's Employee NonDeductible Contributions and Employer
Matching Contributions for the Plan Year.
(e) Accounting for Excess Aggregate Contributions. Excess
Aggregate Contributions shall be distributed from the
Participant's Employee NonDeductible Account, and forfeited if
otherwise forfeitable under the terms of the Plan (or, if not
forfeitable), distributed from the Participant's Employer
Matching Contribution Account, in proportion to the
Participant's Employer NonDeductible Contributions and Employer
Matching Contributions for the Plan Year.
(f) Allocation of Forfeitures under this Section 5.08.
Amounts forfeited by Highly Compensated Employees under this
Section shall be applied to reduce Employer Matching
Contributions.
23
ARTICLE VI
ALLOCATIONS
6.01 Participant's Accounts. For each Participant, the
Administrative Committee shall establish an:
(a) Employee Retirement Savings Account
(b) Employer Matching Account
(c) Employee Rollover Account
which will reflect the Participant's share of contributions
and the income, losses, appreciation, depreciation, and
forfeitures, if applicable, attributable to all such Accounts.
The establishment of separate Accounts shall not require a
separation of the Trust assets.
6.02 Valuation of Accounts. As of each Allocation Date, prior
to allocating contributions and forfeitures, if any, for the
Plan Year, the Administrative Committee shall:
(a) First, charge to the proper Accounts all payments or
distributions made from Participants' Accounts since the last
preceding Allocation Date that have not been charged previously,
as provided in Section 6.03;
(b) Next, adjust the net credit balances in Participants'
Accounts upward or downward, on a timeweighted pro rata basis,
according to the net credit balances so that the totals of the
net credit balances will equal the then net worth of the Trust
Fund, less an amount equal to the sum of contributions, if any,
paid to the Trustee for the period elapsed since the last
preceding Allocation Date.
The Suspense Account, if any, shall not be adjusted to
reflect any Trust earnings or losses.
6.03 Charging of Payments and Distributions. As of each
Allocation Date, all payments and distributions made under the
Plan since the last preceding Allocation Date to or for the
benefit of a Participant or his Beneficiary will be charged to
the proper Account of such Participant.
6.04 Method for Allocating and Crediting Employee and Employer
Contributions.
Subject to the conditions and limitations of this Article VI,
as of each Allocation Date:
(a) The Employee Salary Deferral Contributions and Rollover
Contributions shall be credited to each Employee Retirement
Savings Account and Employee Rollover Account, respectively.
24
(b) The Employer's Matching Contribution shall be credited to
each Participant's Employer Matching Account in an amount equal
to thirty percent (30%) of the Participant's Compensation
deferred as an Employee Salary Deferral Contribution.
6.05 Suspense Account. The excess amount allocated to each
Participant shall by reason of Section 6.09 be held in this
Account and not distributed to a Participant but shall be
reapplied to reduce further Employer Matching Contributions
under the Plan for the next Limitation Year (and for each
succeeding Limitation Year, if necessary) for such Participant,
so that in each such year the actual Employer Matching
Contributions which would otherwise be allocated to each
Participant's Employer Matching Account will be made from this
Suspense Account. In the event the Participant is not employed
by the Employer at the end of any Limitation Year, then the
excess amounts shall not be distributed to the Participant but
shall be reapplied to reduce future such Employer Matching
Contributions for all remaining Participants in the Limitation
Year and each succeeding year, if necessary.
6.06 Employer Contributions Considered Made on Last Day of
Plan Year. For purposes of this Article VI, the Employer's
contribution which remains unallocated on the last day of any
Plan Year will be considered to have been made on the last day
of that year, regardless of when paid to the Trustee.
6.07 Accrual of Benefits. The Administrative Committee shall
determine a Participant's Accrued Benefit on the basis of the
Limitation Year. The Administrative Committee shall only take
into account the Compensation earned during that part of the
Limitation Year the Employee is actually a Participant in the
Plan.
6.08 Equitable Allocations. If the Administrative Committee
determines in making a valuation, an allocation, or by adding
interest to any Account under the provisions of the Plan, that
the strict application of the provisions of the Plan will not
produce an equitable and nondiscriminatory allocation among the
Accounts of the Participants, it may modify any procedure
specified in the Plan for the purpose of achieving an equitable
and nondiscriminatory allocation in accordance with the general
concepts of the Plan; provided, however, that any such
modification shall not reduce any Participant's Accrued Benefits
and shall be consistent with the provisions of Section 401(a)(4)
of the Code. Should the Administrative Committee in good faith
determine that certain expenses of administration paid by the
Trustee during the Plan Year under consideration are not
general, ordinary, and usual, and should not equitably be borne
by all Participants, but should be borne only by one or more
Participants, for whom or because of whom such specific expenses
were incurred, the net earnings and adjustments in value of the
Accounts shall be increased by the amounts of such expenses, and
the Administrative Committee shall make suitable adjustments by
debiting the particular Account or Accounts of such one or more
Participants, Former Participants, or Beneficiaries; provided,
however, that any such adjustment must be nondiscriminatory and
consistent with the provisions of Section 401(a) of the Code.
6.09 Maximum Annual Additions. Notwithstanding any other
provision of the Plan, the Annual Addition to a Participant's
Account for any Limitation Year may not exceed in any Limitation
Year an amount equal to the lesser of the:
25
(a) Defined Contribution Dollar Limitation (which means the
greater of $30,000 (or such larger amount as the Commissioner of
Internal Revenue may prescribe) or 25% of the Defined Benefit
Dollar Limitation set forth in Code Section 415(b)(1) as in
effect for the Limitation Year); or
(b) Twentyfive percent (25%) of the Compensation (within the
meaning of Code Section 415(c)(3)). However, the compensation
limitation in this subsection (ii) shall not apply to (a) any
contributions for medical benefits (within the meaning of Code
Section 419(A)(f)(2)) after separation from service which is
otherwise treated as an Annual Addition, or (b) any amount
otherwise treated as an Annual Addition under Code Section
415(l)(1).
If the Participant does not participate in, and never has
participated in another Qualified Plan maintained by the
Employer, or a welfare benefit fund, as defined in Section
419(e) of the Code maintained by the Employer, or an individual
medical account, as defined in Section 415(l)(2) of the Code,
maintained by the Employer, the amount of Annual Additions which
the Committee may allocate under this Plan on a Participant's
behalf for a Limitation Year shall not exceed the Maximum
Annual Addition. If the amount the Employer otherwise would
contribute to the Participant's Account would cause the Annual
Additions for the Limitation Year to exceed the Maximum Annual
Addition, the Employer will reduce the amount of its
contribution so the Annual Additions for the Limitation Year
will be equal to the Maximum Annual Addition.
Special Rules for Plans Subject to Overall Limitations Under
Code Section 415(e).
(a) Recomputation Not Required. The Annual Addition for any
Limitation Year beginning prior to January 1, 1987 shall not be
recomputed to treat all Employee Contributions as an Annual
Addition.
(b) Adjustment of Defined Contribution Plan Fraction. If the
Plan satisfied the applicable requirements of Section 415 of the
Code as in effect for all Limitation Years beginning before
January 1, 1987, an amount shall be subtracted from the
numerator of the Defined Contribution Plan Fraction (not
exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the Defined Benefit Plan Fraction
and Defined Contribution Plan Fraction computed under Section
415(e)(1) of the Code (as revised by this Section 6.09) does not
exceed 1.0 for such Limitation Year.
If the Participant presently participates, or has ever
participated under a Defined Benefit Plan maintained by the
Employer, then the sum of the Defined Benefit Plan Fraction and
the Defined Contribution Plan Fraction for the Participant for
that Limitation Year shall not exceed 1.0. If in any Limitation
Year the sum of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction on behalf of a Participant
does exceed 1.0, then the Employer shall reduce its contribution
on behalf of such Participant to the Defined Contribution Plan
to the extent necessary to prevent the sum of the Defined
Contribution Plan Fraction and the Defined Benefit Plan fraction
from exceeding 1.0.
26
For purposes of this Section, the following terms shall mean:
(a) "Defined Benefit Plan" A retirement plan which does not
provide for individual accounts for Employer contributions. The
Administrative Committee shall treat all defined benefit plans
(whether or not terminated) maintained by the Employer as a
single plan and the Administrative Committee shall treat all
defined contribution plans (whether or not terminated)
maintained by the Employer as a single plan.
(b) "Defined Benefit Plan Fraction"
projected annual benefit of the Participant
under the defined benefit plan(s) (divided by)
The lesser of (i) 125% of the dollar
limitation in effect under Code Section 415(b)(1)(A)
for the Limitation Year, or (ii) 140% of the
Participant's average Compensation for his
highest paid three (3) consecutive Years of Service
If the Employee was a Participant in one or more defined
benefit plans maintained by the Employer which were in existence
on July 1, 1982, the denominator of this fraction will not be
less than 125% of the sum of the annual benefits under such
plans which the Employee had accrued as of the end of the 1982
Limitation Year (the last Limitation Year beginning before
January 1, 1983). The preceding sentence only applies if the
defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 as in effect at
the end of the 1982 Limitation Year.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer which were in existence
on May 6, 1986, the denominator of this fraction will not be
less than 125 percent of the sum of the annual benefits under
such plans which the Participant had accrued as of the end 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.
(c) "Defined Contribution Plan Fraction"
the sum of the Annual Additions to the Participant's
Account under the defined contribution plan(s)
as of the close of the Limitation Year (divided by)
27
the sum of the lesser of the following amounts
determined for the Limitation Year and for each
prior Year of Service with the Employer: (i) 125%
of the dollar limitation in effect under Code
Section 415(c)(1)(A) for the Limitation Year (determined
without regard to the special dollar limitations
for employee stock ownership plans), or (ii) 35%
of the Participant's Compensation for the
Limitation Year
If the Employee was a Participant in one or more defined
contribution plans maintained by the Employer which were in
existence on July 1, 1982, the Administrative Committee will
redetermine the Defined Contribution Plan Fraction and the
Defined Benefit Plan Fraction, as of the end of the 1982
Limitation Year (the last Limitation Year beginning before
January 1, 1983), under this Section. If the sum of the
redetermined fractions exceeds 1.0, the Administrative Committee
will subtract permanently from the numerator of this fraction 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.
The Administrative Committee also may use any transitional rules
(see Section 6.09(d) below) provided by law which are applicable
in computing the Participant's Defined Contribution Plan
Fraction.
The Administrative Committee will make a similar adjustment
to the numerator of this fraction if the sum of the fractions
exceeds 1.0, as of the end of the 1983 Limitation Year (the last
Limitation Year beginning before January 1, 1984), because (a)
the Plan is TopHeavy in the first Plan Year beginning after
December 31, 1983, and the Administrative Committee must apply
Article XVII or (b) the terms of one or more July 1, 1982, plans
required Annual Additions or accruals during the 1983 Limitation
Year in excess of the Code Section 415 limitations as amended by
the Tax Equity and Fiscal Responsibility Act of 1982.
Notwithstanding the above, if the Employee was a Participant
as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined contribution plans
maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum
of this fraction and the Defined Benefit Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess of
the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Code Section 415
limitation applicable to the first Limitation Year beginning on
or after January 1, 1987. 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.
28
(d) "Projected Annual Benefit". The annual retirement
benefit (adjusted to an actuarially equivalent straight life
annuity if the plan expresses such benefit in a form other than
a straight life annuity or qualified joint and survivor annuity)
of the Participant under the terms of the Defined Benefit Plan
on the assumptions he continues employment until his normal
retirement age as stated in the Defined Benefit Plan, his
compensation continues at the same rate as in effect in the
Limitation Year under consideration until the date of his normal
retirement age and all other relevant factors used to determine
benefits under the Defined Benefit Plan remain constant as of
the current Limitation Year for all future Limitation Years.
(e) "Compensation" The Participant's earned income, wages,
salaries, fees for professional service and other amounts
received for personal services actually rendered in the course
of employment with the Employer maintaining the Plan (including,
but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on
insurance premiums, tips and bonuses). The term "Compensation"
shall not include:
(1) Employer contributions to a plan of deferred
compensation to the extent the contributions are not included in
the gross income of the Employee for the taxable year in which
contributed, on behalf of an Employee to a Simplified Employee
Pension Plan described in Code Sec. 408(k) to the extent such
contributions are deductible by the Employee under Code Sec.
219(b)(7), and any distributions from a plan of deferred
compensation, regardless of whether such amounts are includible
in the gross income of the Employee when distributed.
(2) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property) held by an
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.
(4) Other amounts which receive special tax benefits, such
as premiums for group term life insurance (but only to the
extent that the premiums are not includible in the gross income
of the Employee), or contributions made by an Employer (whether
or not under a salary reduction agreement) towards the purchase
of an annuity contract described in Code Sec. 403(b) (whether or
not the contributions are excludible from the gross income of
the Employee).
For purposes of applying the limitations of Section 6.04
through this Section 6.09, amounts included as Compensation are
those amounts actually paid to a Participant or includible in
his gross income within the Limitation Year.
(5) Notwithstanding the above, effective for Plan Years
beginning after December
29
31, 1997, the term "Compensation"
Includes (1) an Employee's elective deferrals under Code Sec.
402(g)(3), and (2) amounts contributed or deferred under Code
Sec. 125 or Code Sec. 457 by the Employer at the Employee's
election that aren't otherwise includible in the Employee's
gross income.
(f) "Employer" The Employer that adopts this Plan. In the
case of a group of employers which constitutes a controlled
group of corporations (as defined in Code Sec. 414(b) as
modified by Code Sec. 415(h)), which constitutes trades or
businesses (whether or not incorporated) which are under common
control (as defined in Code Sec. 414(c) as modified by Code Sec.
415(h)), which constitutes an "affiliated service" group within
the meaning of Code Sec. 414(m), the Committee shall consider
all such employers as a single employer for purposes of applying
the limitations of this Article 6.
(g) "Limitation Year" For purposes of this Section 6.09,
"Limitation Year" shall mean the limitation year specified in
the Plan, or if none is specified, the Calendar Year.
30
(h) "Effective Date of Section 6.09 Provisions" The
provisions of this Section 6.09 shall be effective for
Limitation Years beginning after December 31, 1986.
(i) The preceding Sections of this Article VI are intended to
comply with the provisions of Code Section 415 and the
Regulations thereunder. Code Section 415 and the relevant
Regulations are hereby incorporated by reference.
31
ARTICLE VII
TERMINATION OF SERVICEPARTICIPANT VESTING
7.01 Normal Retirement. A Participant's Normal Retirement Age
under the Plan is age 65. At such time he shall be 100% vested
in, and shall have a nonforfeitable right to his Accrued
Benefit. A Participant who remains in the employ of the
Employer after attaining Normal Retirement Age shall continue to
participate in Employer contributions until the date of his
actual retirement. Upon termination of a Participant's
employment for any reason after attaining Normal Retirement Age,
the Administrative Committee shall direct the Trustee to make
payment of the full value of the Participant's Accrued Benefit
to him at such times and in such manner as provided in Article
VIII hereof. The value of the Participant's Accrued Benefit
shall be determined as of the Allocation Date which coincides
with, or next follows the date of the Participant's employment
termination.
7.02 Early Retirement. This Plan does not contain an Early
Retirement provision.
7.03 Disability. A Participant who becomes permanently
disabled shall be 100% vested in and shall have a nonforfeitable
right to his Accrued Benefit paid to him at such time and in
such manner as provided in Article VIII hereof. The value of a
disabled Participant's Accrued Benefit shall be determined as of
the Allocation Date which coincides with, or which next follows
the date of the Participant's termination of employment due to
disability. A Participant shall be considered "disabled" when
the Administrative Committee determines the Participant is not
able to engage in any gainful activity by reason of any
medically determinable physical or mental impairment, which the
Administrative Committee expects to result in death or which the
Administrative Committee expects to last for a continuous period
of not less than twelve (12) months. The Administrative
Committee shall apply the provisions of this Section 7.03 in a
nondiscriminatory, consistent and uniform manner.
7.04 Death. Upon the death of a Participant, his Accrued
Benefit shall be 100% vested, and his Surviving Spouse, if he is
married, or in the event there is no surviving Spouse, or if the
Spouse has waived, in writing, the right to such death benefits,
his other named Beneficiary shall be entitled to receive the
full value of the deceased Participant's Accrued Benefit
(reduced by any security interest held by the Plan by reason of
a loan outstanding to such Participant) determined as of the
Allocation Date which coincides with, or which next follows the
date of such Participant's death. The death benefit so provided
shall be payable at such time and in such manner as provided in
Article VIII hereof. In the event the Spouse completes a valid
Waiver, and a beneficiary is named other than the Spouse, the
Spouse must consent to and acknowledge the specific nonspouse
beneficiary. The nonspouse beneficiary so named may not be
subsequently changed without the Spouse's written consent. The
number of revocations of prior beneficiary designations made by
the Participant and so consented to by the Spouse shall not be
limited.
7.05 No Distributions Prior to Separation From Service.
Except as provided in Sections 8.01, 8.09, 8.10, 8.12, 13.10,
13.11 and 13.12 a Participant shall receive no distribution from
the Plan or Trust prior to separation from Service.
33
7.06 Vesting on Termination of Employment If a Participant
shall terminate employment for reasons other than death,
disability or retirement, all of his Accounts shall be 100%
vested, regardless of his number of Years of Service with the
Employer.
7.07 Years of Service for Vesting For purposes of determining
his vested percentage an Employee shall be credited with one
Year of Service as follows:
(a) Years of Service prior to January 1, 1976, shall mean
all full years of continuous employment.
(b) Years of Service on or after January 1, 1976, shall mean
all Plan Years during which a Participant completed 1,000 or
more Hours of Service with the Employer or any Affiliated
Employer of the Employer provided that the following special
provisions shall apply:
(1) Except as otherwise provided in paragraph (2)
immediately following, if an Employee who has a Break in Service
after January 1, 1976 shall reenter service following such
break, Years of Service of such Employee prior to such break
shall not be taken into account unless and until he shall have a
Year of Service following such recommencement of service; and
(2) Notwithstanding the provisions of paragraph (1)
immediately preceding, with respect to an Employee who shall
have a Break in Service after January 1, 1985 and before he
shall have any Vested Interest in his Accrued Benefit under the
Plan, all such Years of Service prior to such break shall be
disregarded if the number of consecutive Plan Years in which the
Break in Service continues, equals or exceeds the greater of (a)
five (5) consecutive one Year Breaks in Service, or (b) the
aggregate number of Years of Service earned before the
consecutive Breaks in Service. For the purpose of determining
Years of Service prior to such break, there shall be excluded
any Years of Service previously disregarded under this paragraph
(2).
(c) Service of any Employee who is a leased Employee to any
Employer aggregated under Section 414(b), (c), or (m) of the
Internal Revenue Code must be credited for vesting purposes
whether or not such individual is eligible to participate in the
Plan.
(d) If a Participant returns to work before incurring a Break
in Service, he will continue to vest starting at the point in
the vesting schedule where he left employment in both his
preseparation and postseparation accrued benefit.
(e) Military Service. Each Participant will receive credit
for Vesting Service as if his active Employment had continued
during the period of his military service with the Uniformed
Services of the United States of America; provided that he
retains statutory reemployment rights and resumes Employment
within 90 days after his honorable discharge from military duty,
or during any other period prescribed by law.
33
(f) Service with any of the following predecessor employers
shall be credited under the terms of the Plan:
(1) Dynamic Technical Resources, Inc.
(2) Dimensional Medicine, Inc.
(3) Collaborative Medical Systems, Inc.
(4) Dynacor, Incorporated.
7.08 If the present value of the Participant's vested Accrued
Benefit derived from Employer and Employee contributions is
$3,500 or less ($5,000 or less for Plan Years beginning on or
after January 1, 1998), a lump sum cash payment will be made to
the Participant, within a reasonable time following the
Participant's termination of employment. However, if the
present value of the Participant's vested Accrued Benefit
derived from Employer and Employee contributions is more than
$3,500 ($5,000 for Plan Years beginning on or after January 1,
1998), the written consent of the Participant is necessary
before such lump sum cash payment can be made.
7.09 No Divestment for Cause Under no circumstances shall a
Participant be divested of any vested benefit for any cause.
34
ARTICLE VIII
TIME AND METHOD OF PAYMENT OF BENEFITS
8.01 Time of Payment. Subject to the exceptions found in
Sections 8.09, 8.10, 8.12, 13.10, 13.11 and 13.12, no
distribution of a Participant's Retirement Savings Account
comprised of Employee Salary Deferral Contributions) shall occur
prior to age 592 except for Retirement, Death, Disability, or
termination of employment.
(a) Retirement. In the event of Normal Retirement, payment
of a Participant's Accrued Benefit shall commence within a
reasonable time after the Allocation Date the Participant
becomes eligible to receive benefits, unless the Participant
otherwise elects.
(b) Death or Disability. In the event of death or permanent
disability, payment of the Participant's Accrued Benefit shall
commence within a reasonable time after the Allocation Date
(unless the Participant or his Beneficiary otherwise elects)
following receipt by the Administrative Committee of proof of
death, or after the determination by the Administrative
Committee that permanent disability exists.
(c) Other Termination of Service. Upon a Participant's
termination of employment for any reason other than retirement,
permanent disability, or death, the Trustee shall distribute the
Participant's vested Accrued Benefit as soon as practical
following the date on which the Participant terminates
employment, unless the Participant's vested Accrued Benefit is
in excess of $3,500 ($5,000 for Plan Years beginning on or after
January 1, 1998), and the Participant elects to defer payment
and not receive his distribution upon termination of employment.
If the Participant dies or becomes permanently disabled
after terminating employment, but prior to receiving his Accrued
Benefit, the Administrative Committee, upon confirmation of the
death or disability, shall direct the Trustee to make payment of
the Accrued Benefit to the Participant (or to his Beneficiary if
the Participant is deceased) in accordance with the provisions
of Section 8.02 within sixty (60) days after the Allocation
Date, following receipt by the Administrative Committee of proof
of death, or after the determination by the Administrative
Committee that permanent disability exists.
(d) Time of Payment of Benefits Unless the Participant
elects otherwise, payment of benefits must begin no later than
60 days after the close of the Plan Year in which the latest of
the following events occur:
(1) the Participant attains age 65 or earlier Normal
Retirement Age specified under the Plan,
(2) the termination of the Participant's service with the
Employer,
35
(3) the 10th anniversary of the year in which the
Participant commenced participation in the Plan (the 5th
anniversary of the year in which the Participant commenced
participation in the Plan, in the case of a Participant who
commences participation in the Plan within 5 years before
attaining Normal Retirement Age under the Plan), or
(4) a later date elected by the Participant.
(e) Distributions: Notwithstanding subsection (d), prior to
January 1, 1997 distribution to a Participant must commence no
later than the first day of April following the calendar year in
which the Participant attains age 702, regardless of whether he
has retired.
However, effective January 1, 1997 a Participant may defer
the receipt of any benefits under this Plan until the later of
the April 1st following the calendar year in which he attained
the age of 702 or his actual retirement; notwithstanding any
"5%-owner" (as defined under Code Section 416(i)(1)(B)(i)) or
more shareholder must commence payment of his benefit no later
than the April 1st following the calendar year in which he
attained age 702 regardless of whether he actually retired.
Compliance with Code Section 401(a)(9). The intent of this
Section is that the beginning dates and payment periods of
benefits payable to each Participant and beneficiary will be
within the limitations permitted under Code Section 401(a)(9).
If there is any discrepancy between this Section and Code
Section 401(a)(9), that Code Section will prevail.
(f) Death Distribution Provisions: Upon the death of the
Participant, the following distribution provisions shall take
effect:
(1) If the Participant dies after distribution of his or her
interest has commenced, the remaining portion of such interest
will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's
death.
(2) If the Participant dies before distribution of his or
her interest commences, the Participant's entire interest will
be distributed no later than five (5) years after the
Participant's death except to the extent that an election is
made to receive distributions in accordance with (i) or (ii)
below:
(i) If any portion of the Participant's interest is
payable to a designated Beneficiary, distributions may be made
in substantially equal installments over the life or life
expectancy of the designated Beneficiary commencing no later
than one (1) year after the Participant's death;
36
(ii) If the designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required to begin
in accordance with (i) above shall not be earlier than the date
on which the Participant would have attained age 702, and, if
the Spouse dies before payments begin, subsequent distributions
shall be made as if the Spouse had been the Participant.
(3) For purposes of 8.01(f)(2) above, payments will be
calculated by use of the return multiples specified in section
1.729 of the regulations. Life expectancy of a surviving Spouse
may be recalculated annually; however, in the case of any other
designated Beneficiary, such life expectancy will be calculated
at the time payment first commences without further
recalculation.
(4) For purposes of (1), (2) and (3) above, any amount paid
to a child of the Participant will be treated as if it had been
paid to the surviving Spouse if the amount becomes payable to
the surviving Spouse when the child reaches the age of majority.
(g) Transitional Rule: Notwithstanding the above
distribution requirements of Section 8.01, distribution on
behalf of any Employee, including a "5%-owner" shall be made in
accordance with all of the following requirements (regardless of
when such distribution commences):
(1) The distribution by the Plan and Trust is one which
would not have disqualified such Trust under section 401(a)(9)
of the Code as in effect prior to amendment by the Deficit
Reduction Act of 1984.
(2) The distribution is in accordance with a method of
distribution designated by the Participant whose interest in the
Trust 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 will
commence, the period over which distributions will be made and
in the case of any distribution upon the Participant's death,
the Beneficiaries of the Participant listed in order of priority.
Unless paid to a surviving Spouse under a Qualified Joint
and Survivor Annuity, the method of distribution selected must
assure that more than fifty percent (50%) of the present value
of the amount available for distribution is paid within the life
expectancy of the Participant.
37
A distribution upon death will not be covered by this
Transitional Rule unless the information in the designation
contains the required information described above, with respect
to the distributions to be made upon the death of the Employee.
For 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, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in subsections (1) and (5) above.
If a designation is revoked, any subsequent distribution
must satisfy the requirements of section 401(a)(9) of the Code
as amended. Any changes in the designation will be considered
to be a revocation of the designation. However, the mere
substitution or addition of another beneficiary (one not named
in the designation) under the designation will not be considered
to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly or
indirectly (for example, by altering the relevant measuring
life).
8.02 Method of Payment. After all required accounting
adjustments, the Trustee, in accordance with the direction of
the Administrative Committee, shall make payment of the
Participant's Accrued Benefit in a lump sum, or at the request
of a Participant, in substantially equal quarterly or annual
installments over a fixed reasonable period of time, or by the
purchase of a term certain nontransferable annuity.
Limitation on Settlement Options: The Distributions, if not
made in a lump sum, may only be made over one of the following
periods (or a combination thereof):
(a) a period certain not extending beyond the life expectancy
of the Participant, or
(b) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
beneficiary.
If the Participant's entire interest is to be distributed in
other than a lump sum, then the amount to be distributed each
year must be at least an amount equal to the quotient obtained
by dividing the Participant's entire interest by the life
expectancy of the Participant or joint and last survivor
expectancy of the Participant and designated beneficiary. Life
expectancy and joint and last survivor expectancy are computed
by the use of the return multiples contained in section 1.729 of
the Income Tax Regulations. For purposes of this computation, a
Participant's life expectancy may be recalculated no more
frequently than annually; however, the life expectancy of a
nonspouse beneficiary may not be recalculated. If the
Participant's spouse is not the designated beneficiary, the
method of distribution selected must assure that more than fifty
percent (50%) of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
38
A Participant may not elect an optional form of payment
providing monthly benefits to a contingent annuitant who is
other than his Spouse, or to a Beneficiary, unless the actuarial
value of the payments expected to be made to the Participant at
the time the payment is to commence is more than 50% of the
actuarial value of the total payments expected to be made under
such optional form. In no event, however, can the amount of
each monthly payment to a contingent annuitant or Beneficiary
exceed that payable to the Participant.
8.03 Deferral of Payments. Should a Participant's Accounts be
retained in the Trust after the date on which his participation
ends, the Accounts may continue to be treated as a part of the
Trust Fund. The Accounts will be credited (or debited) with
their share of the net income (or loss) attributable to the
investments of such Accounts. Notwithstanding the foregoing,
the Administrative Committee at its sole discretion may direct
that the Former Participant's Accounts be segregated and placed
in insured interestbearing savings accounts or time deposit(s)
(or a combination of both), or invested in a single premium
deferred nontransferable annuity. Once Accounts are segregated,
they will no longer share in income, increases, or decreases, if
any, of the Trust. A segregated account alone shall share in
any income it earns, and it alone shall bear any expense or loss
it incurs.
8.04 Limitation on Distributions. Except as otherwise
provided in this Article VIII, a Participant, Former
Participant, or Beneficiary is not entitled to any payment,
withdrawal, or distribution under the Plan.
8.05 Payment in the Event of Legal Disability. Payments to
any Participant, Former Participant, or Beneficiary shall be
made to the recipient entitled thereto in person or upon his
personal receipt, in form satisfactory to the Administrative
Committee, except when the recipient entitled thereto shall be
under a legal disability, or, in the sole judgment of the
Administrative Committee, shall otherwise be unable to apply
such payment in furtherance of his own interest and advantage.
The Administrative Committee may, in such event, at its sole
discretion, direct all or any portion of such payments to be
made in any one or more of the following ways:
(a) To such person directly;
(b) To the guardian of his person or his estate;
(c) To a relative or friend of such person, to be expended
for his benefit; or
(d) To a custodian for such person under any Uniform Gifts to
Minors Act.
The decision of the Administrative Committee, in each case,
will be final, binding, and conclusive upon all persons ever
interested hereunder. The Administrative Committee shall not be
obliged to see to the proper application or expenditure of any
payment so made. Any payment made pursuant to the power herein
conferred upon the Administrative Committee shall operate as a
complete discharge of all obligations of the Trustee and the
Administrative Committee, to the extent of the distributions so
made.
39
8.06 Accounts Charged. The Administrative Committee shall
charge all distributions made to a Participant or to his
Beneficiary from his Accounts against the Accounts of the
Participant when made.
8.07 Payments Only from Trust Fund. All benefits of the Plan
shall be payable solely from the Trust Fund and neither the
Employer, Administrative Committee, nor Trustee shall have any
liability or responsibility therefor excepts expressly provided
herein.
8.08 Participant Benefit Payment Election. The Administrative
Committee may permit a Participant who terminates employment
after attaining Normal Retirement Age to elect any of the forms
of payment of retirement benefits prescribed by Section 8.02.
Upon the Participant's request, the Administrative Committee
shall furnish the Participant an appropriate form for the making
of the election. The Participant shall make an election under
this Section 8.08 by filing the election form with the Plan
Administrator on or before the last day of the Plan Year
following which the Trustee would otherwise commence to pay a
Participant's vested Accrued Benefit in accordance with the
requirements of Section 8.01. The Participant shall not make
any election for an optional form of retirement benefit under
which the present value of the retirement benefits payable
solely to the Participant will not be greater than fifty percent
(50%) of the present value of the total retirement benefits
payable to the Participant and his Beneficiaries. The
Administrative Committee shall determine "present value" as of
the date the Trustee is to commence payment of the retirement
benefits to the Participant. The Administrative Committee shall
charge the electing Participant's Account for any expense
incurred in making the "present value" determination. If the
Administrative Committee determines not to permit the
Participant's election, it shall direct the Trustee in writing
to make distribution of the Participant's Vested Accrued Benefit
to him in accordance with Section 8.02. The Administrative
Committee shall apply the Provisions of this Section 8.08 in a
nondiscriminatory and uniform manner. Should the Administrative
Committee reject the Participant's claim in whole or in part the
appeal procedures in Section 11.09 shall apply.
8.09 Hardship Withdrawals.
(a) Definition of Hardship. A Participant shall be entitled
to a Hardship Withdrawal from his separate Employee Saving Plus
Account established for Employee Salary Deferral Contributions
if:
(1) There is an immediate and heavy financial need, and
(2) Other resources are not reasonably available to meet the
need.
With regard to satisfaction of requirement 8.09(a)(1) above,
the following expenses are deemed to constitute immediate and
heavy financial needs:
40
(i) Medical expenses incurred by the Employee, the
Employee's Spouse, or any dependents of the Employee (as defined
in Code Section 213(d);
(ii) Purchase (excluding mortgage payments) of a principal
residence for the Employee;
(iii) Payment of tuition for the next semester or quarter
for postsecondary education for the Employee, his Spouse or
children; and
(iv) Payments of amounts necessary to prevent the eviction
of the Employee from his principal residence or foreclosure on
the mortgage of the Employee's principal residence.
In determining whether expenses constitute an "immediate and
heavy financial need", or if the requirement of 8.09(a)(2) above
is met, the Administrative Committee, acting in a uniform and
nondiscriminatory manner, can reasonably rely upon the
representations of the Employee regarding the Employee's
financial affairs, and the Administrative Committee shall not be
required to make an independent investigation of the Employee's
financial affairs.
The Administrative Committee in so relying upon such
financial representations of the Employee shall consider all
relevant facts and circumstances. A distribution will be
treated as necessary to satisfy a financial need of an Employee
if such need cannot be relieved by:
(1) Reimbursement or compensation by insurance or otherwise,
(2) Reasonable liquidation of the Employee's assets to the
extent such liquidation would not itself cause an immediate and
heavy financial need,
(3) Cessation of elective contributions or Employee
Contributions under the Plan, or
(4) Other distribution or nontaxable (at the time of the
loan) loans from plans maintained by the Employer or any other
employer, or by borrowing from commercial sources on reasonable
terms.
The above listed possible sources of other financial
remedies available to the Employee shall be deemed to include
those assets of the Employee's Spouse and minor children that
are reasonably available to the Employee, excluding such
property held for the Employee's child under an irrevocable
trust or under the Uniform Gifts to Minors Act.
(b) Amount of Hardship Withdrawal. The amount of any
approved Hardship Withdrawal shall not exceed the lesser of the
Participant's:
41
(1) Employee Retirement Savings Account balance, or
(2) his cumulative Employee Salary Deferral Contributions, or
(3) the amount of the Employee's immediate and heavy
financial need.
(c) Prior Withdrawal of Employee NonDeductible Contributions
Required. A Participant shall not be permitted to make a
Hardship Withdrawal unless he has already withdrawn any amount
credited to his separate Account established for Employee
NonDeductible Contributions (if applicable).
(d) Manner of Making Withdrawals. Any request for a Hardship
Withdrawal by a Participant must be filed with the
Administrative Committee in writing specifying the nature of the
withdrawal (and the reasons therefore, if a Hardship
Withdrawal), the amount of funds requested to be withdrawn, and
the investment Account (if applicable) which should be redeemed
to make the withdrawal. Upon approving any withdrawal, the Plan
Administrator shall furnish the Trustee with written
instructions directing the Trustee to make the withdrawal in a
lump sum payment of cash to the Participant. In making any such
withdrawal payment, the Trustee shall be fully entitled to rely
on the instructions furnished by the Plan Administrator, and
shall be under no duty to make any inquiry or investigation with
respect thereto.
(e) A Participant who receives a hardship withdrawal will not
be allowed to make Employee Salary Deferral Contributions to
this Plan (or to any other qualified cash or deferred
arrangement sponsored by the Company) for a period of twelve
(12) months following the date of receipt of the hardship
withdrawal.
(f) The Code Section 402(g) limit for the calendar year
subsequent to the calendar year of the hardship withdrawal shall
be reduced by the Employee Salary Deferral Contribution to this
Plan for the calendar year of the hardship distribution.
8.10 Loans.
Amount of Loan. The Plan Administrator may direct the
Trustee to make a loan to a Participant in any Plan Year under
the following circumstances:
(a) loans shall be made available to all Participants on a
reasonably equivalent basis; but a Participant may have only one
loan outstanding at any time.
(b) loans shall not be made available to Highly Compensated
Participants, officers, or shareholders in an amount greater
than the amount made available to other Participants;
(c) loans shall bear a reasonable rate of interest;
42
(d) loans shall be adequately secured;
(e) repayment shall be over a reasonable period of time;
(f) loans shall not be made to any ShareholderEmployee unless
an exemption for such loan is obtained pursuant to Act Section
408 and further provided that such loan would not be subject to
tax pursuant to Code Section 4975, and
(g) loans shall not be granted to any Participant that
provides for a repayment period extending beyond such
Participant's Normal Retirement Date.
(h) The minimum loan shall not be less than $1,000. The total
amount of any such loan (when added to the outstanding balance
of all other loans to the Participant under the Plan or any
other qualified plan of the Employer or an Affiliated Employer)
shall not exceed the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant
during the one year period ending on the day before the date on
which such loan is made over the outstanding balance of loans
from the Plan to the Participant on the date on which such loan
was made, or
(2) onehalf (1/2) of the vested amount of the Participant's
separate Accounts as of the date of the loan.
For purposes of this limit, all plans of the Employer shall
be considered one plan. Additionally, with respect to any loan
made prior to January 1, 1987, the $50,000 limit specified in
(1) immediately above shall be unreduced.
(i) Security for Loan. Any loan to a Participant under the
Plan shall be secured by the pledge of all the Participant's
right, title and interest in the Trust. Such pledge shall be
evidenced by the execution of a promissory note by the
Participant which shall provide that, in the event of any
default by the Participant on a loan repayment, the Plan
Administrator shall be authorized (to the extent permitted by
law) to deduct the amount of the loan outstanding and any unpaid
interest due thereon from the Participant's wages or salary to
be thereafter paid by the Employer, and to take any and all
other actions necessary and appropriate to enforce collection of
the unpaid loan.
43
(j) Interest Rate Charged. The rate of interest charged on
any loan to a Participant under the Plan shall be determined by
the Plan Administrator, taking into consideration interest rates
being charged under generally prevailing market conditions for
similarly secured personal loans but not less than the one
percent (1%) over the prime rate reported in the Wall Street
Journal as of the last business day of the week preceding prior
to the date the loan is issued. The Plan Administrator shall
not discriminate among Participants in the matter of interest
rates, but loans granted at different times may bear different
interest rates if, in the opinion of the Plan Administrator, the
difference in rates is justified by a change in general economic
conditions.
(k) Repayment of Loans.
(1) Loans shall provide for level amortization with payments
to be made not less frequently than quarterly over a period not
to exceed five (5) years. However, loans used to acquire any
dwelling unit which, within a reasonable time, is to be used
(determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five
(5) years (but not to exceed ten (10)years). Notwithstanding
the foregoing, loans made prior to January 1, 1987 which are
used to acquire, construct, reconstruct or substantially
rehabilitate any dwelling unit which, within a reasonable period
of time is to be used (determined at the time the loan is made)
as a principal residence of the Participant or a member of his
family (within the meaning of Code Section 267(c)(4)) may
provide for periodic repayment over a reasonable period of time
that may exceed five (5) years. Additionally, loans made prior
to January 1, 1987, may provide for periodic payments which are
made less frequently than quarterly and which do not necessarily
result in level amortization. Prepayment of the loan in full is
permitted; partial prepayments of loan principal is not.
(2) No distribution of benefits under Section 8.01 shall be
made from amounts credited to a Participant's separate Accounts
under the Plan unless and until all loans to the Participant
have been repaid.
(3) Suspension of Repayments During Military Leave. Each
Participant may elect to suspend his loan repayments while he is
on unpaid military leave. The five-year maximum repayment
period will be extended by the length of the suspension.
(l) Manner of Making Loans. A request by a Participant
for a loan shall be made as specified in the loan policy. The
terms and conditions on which the Plan Administrator shall
approve loans under the Plan shall be applied on a uniform and
nondiscriminatory basis with respect to all Participants. If a
Participant's request for a loan is approved by the Plan
Administrator, the Plan Administrator shall furnish the Trustee
with written instructions directing the Trustee to make the loan
in a lump sum payment of cash to the Participant. In making any
loan under this Section 8.10, the Trustee shall be fully
entitled to rely on the instructions furnished by the Plan
Administrator, and shall be under no duty to make any inquiry or
investigation with respect thereto.
8.11 Direct Rollover. This Section applies to distributions
made on or after January 1, 1993.
44
Notwithstanding any provision
of the plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee may
elect, at the time and in the manner prescribed by the plan
administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
Definitions.
(l) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code;
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).
(2) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in section 408(a)
of the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section
401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or
individual retirement annuity.
(3) Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in
section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(4) Direct rollover: A direct rollover is a payment by the
plan to the eligible retirement plan specified by the
distributee.
8.12 In-Service Distribution.
(a) Prior to Age 592. Prior to the attainment of age 592, a
Participant may withdraw all or any portion of the Employee
Rollover Account.
(b) After Attainment of Age 592. After attainment of age
592, a Participant may withdraw all or any portion of his
Accrued Benefit, including earnings thereon. The amount of any
withdrawal shall be taken from the Participant's Accounts in the
following order, with the entire balance in each Account being
distributed prior to distribution of the next Account:
45
(i) Employee Rollover Account
(ii) Employer Matching Account
(iii) Employee Retirement Savings Account
46
ARTICLE IX
EMPLOYER ADMINISTRATIVE PROVISIONS
9.01 Information. The Employer shall, upon request, or as may
be specifically required hereunder, furnish or cause to be
furnished, all of the information or documentation which is
necessary or required by the Administrative Committee and
Trustee to perform their respective duties and functions under
the Plan. The Employer's records as to the current information
the Employer furnishes to the Administrative Committee and
Trustee shall be conclusive to all persons.
9.02 No Liability. Subject to Article XII hereof, the
Employer assumes no obligation or responsibility to any of the
Employees, Participants, or Beneficiaries for any act of, or
failure to act, on the part of the Administrative Committee or
the Trustee.
9.03 Employer Action. Any action required of the Employer
shall be by resolution of its Board of Directors or by a person
authorized to act by Board resolution.
9.04 Indemnity. The Employer agrees it will indemnify and
hold harmless the Board of Directors, individual Trustee(s), and
the members of the Administrative Committee, and each of them,
from and against any and all loss resulting from liability to
which the Board of Directors, individual Trustee(s), and the
Administrative Committee, or the members of the Board of
Directors and Administrative Committee, may be subjected by
reason of any act or conduct (except willful or reckless
misconduct) in their official capacities in the administration
of this Plan or Trust or both, including all expenses reasonably
incurred in their defense, in case the Employer fails to provide
such defense. The indemnification provisions of this Section
9.04 shall not relieve the Board of Directors, individual
Trustee(s), or any members of the Administrative Committee from
any liability they may have under the Act for breach of a
fiduciary duty.
47
ARTICLE X
ADMINISTRATIVE COMMITTEE
10.01 Appointment of Committee. The Employer's Board of
Directors shall appoint an Administrative Committee consisting
of not less than three members to administer the Plan, the
members of which may also be Participants in the Plan.
10.02 Term. Each member of the Administrative Committee shall
serve until his successor is appointed. Any member of the
Administrative Committee may be removed by the Board of
Directors, with or without cause. The Board of Directors shall
have the power to fill any vacancy which may occur. An
Administrative Committee member may resign upon written notice
to the Employer.
10.03 Compensation. The members of the Administrative
Committee shall serve without compensation for services in
behalf of the Plan, but the Employer shall pay all expenses,
including the expenses for any bond required under Act Section
412. To the extent such expenses are not paid by the Employer,
they shall be paid by the Trustee from the Trust Fund.
10.04 Powers of Administrative Committee. Subject to Article
XII hereof, the Administrative Committee shall have the
following powers and duties:
(a) To direct the administration of the Plan in accordance
with the provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for
the administration of the Plan, provided the rules are not
inconsistent with the terms of the Plan;
(c) To determine all questions with regard to rights of
Employees, Participants, and Beneficiaries under the Plan,
including but not limited to rights of eligibility of an
Employee to participate in the Plan and the value of the Accrued
Benefit of each Participant;
(d) To enforce the terms of the Plan and the rules and
regulations it adopts;
(e) To direct the Trustee as respects the crediting and
distribution of the Trust and all other matters within its
discretion as provided in the Trust Agreement;
(f) To review and render decisions respecting a claim for (or
denial of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the
Employer may require for tax or other purposes;
48
(h) To engage the service of counsel (who may, if
appropriate, be counsel for the Employer) and agents whom it may
deem advisable to assist it with the performance of its duties;
(i) To prescribe procedures to be followed by distributees in
obtaining benefits;
(j) To receive from the Employer and from Employees such
information as shall be necessary for the proper administration
of the Plan;
(k) To receive and review reports of the financial condition
and of the receipts and disbursements of the Trust Fund from the
Trustee;
(l) To establish a nondiscriminatory policy which the Trustee
shall observe in making loans, if any, to Participants;
(m) To maintain, or cause to be maintained, separate Accounts
in the name of each Participant to reflect the Participant's
Accrued Benefits under the Plan;
(n) To select a secretary, who need not be a member of the
Administrative Committee;
(o) To interpret and construe the Plan;
(p) To select the issuing company or companies from which
Insurance Contracts shall be purchased as may be provided
herein; and to determine the form, type, and kind of such
contract;
(q) To engage the services of an Investment Manager or
Managers (as defined in Act Section 3 (38)) each of whom shall
have full power and authority to manage, acquire or dispose (or
direct the Trustee with respect to acquisition or disposition)
of any Plan Asset under its control; and
(r) To direct the Trustee in the investment, reinvestment,
and disposition of the Trust Fund as provided in the Trust
Agreement.
10.05 Manner of Action. The decision of a majority of the
members of the Administrative Committee appointed and qualified
shall control. In case of a vacancy in the membership of the
Administrative Committee, the remaining members of the
Administrative Committee may exercise any and all of the powers,
authorities, duties, and discretions conferred upon such
Administrative Committee, pending the filling of the vacancy.
The Administrative Committee may, but need not, call or hold
formal meetings. Any decisions made or action taken pursuant to
written approval of a majority of the then members shall be
sufficient. The Administrative Committee shall maintain
adequate records of its decisions.
10.06 Authorized Representative. The Administrative Committee
may authorize any one of its members, or its secretary, to sign
on its behalf any notices, directions, applications,
49
certificates, consents, approvals, waivers, letters, or other
documents. The Administrative Committee must evidence this
authority by an instrument signed by all its respective members
and filed with the Trustee.
10.07 Nondiscrimination. The Administrative Committee shall
administer the Plan in a uniform, nondiscriminatory manner for
the exclusive benefit of the Participants and their
Beneficiaries.
10.08 Interested Member. No member of the Administrative
Committee may decide or determine any matter concerning the
distribution, nature, or method of settlement of his own
benefits under the Plan unless there is only one person acting
alone in the capacity as the Administrative Committee.
10.09 Funding Policy. The Administrative Committee shall
review, not less often than annually, all pertinent Employee
information and Plan data in order to establish the funding
policy of the Plan to determine the appropriate methods of
carrying out the Plan's objectives. The Administrative
Committee shall communicate annually to the Trustee or to any
Plan Investment Manager (herein socalled), if any, the Plan's
shortterm and longterm financial needs so investment policy can
be coordinated with Plan financial requirements.
10.10 Individual Statement. As soon as practicable after the
Allocation Dates of each Plan Year, but within the time
prescribed by the Act and the regulations under the Act, the
Administrative Committee will deliver to each Participant (and
to each Beneficiary) a statement reflecting the condition of his
Accrued Benefit in the Trust as of that date, and such other
information the Act requires be furnished the Participant or
Beneficiary. No Participant, except a member of the
Administrative Committee, shall have the right to inspect the
records reflecting the Account of any other Participant.
10.11 Books and Records. The Administrative Committee shall
maintain, or cause to be maintained, records which will
adequately disclose at all times the state of the Trust Fund and
of each separate interest therein. The books, forms, and
methods of accounting shall be the responsibility of the
Administrative Committee.
10.12 Unclaimed Account Procedure. Neither the Trustee nor
the Administrative Committee shall be obliged to search for, or
ascertain the whereabouts of, any Participant or Beneficiary.
The Administrative Committee, by certified or registered mail
addressed to his last known address of record with the
Administrative Committee or the Employer, shall notify any
Participant, or Beneficiary, that he is entitled to a
distribution under this Plan, and the notice shall quote the
provisions of this section. If the Participant, or Beneficiary,
fails to claim his distributive share or make his whereabouts
known in writing to the Administrative Committee within six (6)
months from the date of mailing of the notice, or before this
Plan is terminated or discontinued, whichever should first
occur, the Administrative Committee shall direct the Trustee to
segregate the Participant's unclaimed Accrued Benefit in a
nontransferable deferred annuity or in a segregated interest
bearing Account in the name of the Participant or Beneficiary.
The Administrative Committee shall then notify the Social
Security Administration of the Participant's (or Beneficiary's)
failure to claim the distribution to which he is entitled. The
Administrative Committee shall request the Social Security
Administration to notify the Participant (or Beneficiary) in
accordance with procedures it has established for this purpose.
The segregated Account shall be entitled to all income it earns
and shall bear all expense or loss it incurs.
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10.13 Valuation. Within a reasonable time after the close of
each Plan Year, the Trustee shall prepare or cause to be
prepared a statement of the condition of the Trust Fund, setting
forth all investments, receipts, and disbursements, and other
transactions effected by it during such Plan Year, and showing
all the assets of the Trust Fund and the cost and fair market
value thereof. This statement shall be delivered to the
Administrative Committee. The Administrative Committee shall
then cause to be prepared, and shall deliver to each Participant
or Former Participant an annual report disclosing the status of
his Accounts in the Trust. The Trustee's determination of the
fair market value of the assets of the Trust Fund and the
Administrative Committee charges or credits to Accounts shall be
final and conclusive on all persons ever interested hereunder,
subject to Section 11.09.
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ARTICLE XI
PARTICIPANT ADMINISTRATIVE PROVISIONS
11.01 Beneficiary Designation. Each Participant may from time
to time designate, in writing, a Beneficiary and/or a Contingent
Beneficiary to whom the Trustee shall pay his Accrued Benefit in
the Trust Fund in the event of his death. The Administrative
Committee shall prescribe the form for the written designation
of Beneficiary and, upon the Participant's filing the form with
the Administrative Committee, it effectively shall revoke all
designations filed prior to that date by the same Participant.
As a condition to any married Participant designating a
Beneficiary other than his spouse, the Administrative Committee
shall require the spouse's written consent. The spouse's
signature must be notarized by a notary public or witnessed by a
plan representative. The spouse's consent must acknowledge the
effect of waiving his (her) rights under the Plan and
specifically consent to the election of any alternate
beneficiary other than the spouse.
11.02 No Beneficiary Designation. With respect to any death
benefit provided hereunder, the Participant shall file a
beneficiary designation with the Committee and the Participant,
during his lifetime, shall have the right, which may be
successively exercised by written instrument filed with and
received by the Committee, to request a change of his designated
beneficiary. In the event the designated beneficiary is not
living at the death of the Participant, or if no beneficiary has
been designated, the death benefit shall be payable to the
spouse of the Participant, if living; otherwise to his children,
equally per stirpes; if none, then to the estate of the
Participant.
11.03 Personal Data to Administrative Committee. Each
Participant and Beneficiary must furnish to the Administrative
Committee evidence, data, or information as the Administrative
Committee considers necessary or desirable for the purpose of
administering the Plan. The provisions of this Plan are
effective for the benefit of each Participant upon the condition
precedent that each Participant will furnish promptly full,
true, and complete evidence, data, and information when
requested by the Administrative Committee, provided the
Administrative Committee shall advise each Participant of the
effect of his failure to comply with its request.
11.04 Address for Notification. Each Participant and each
Beneficiary of a deceased Participant shall file with the
Administrative Committee, in writing, his post office address,
and each subsequent change of such post office address. Any
payment or distribution hereunder, and any communication
addressed to a Participant or his Beneficiary, shall be sent to
the last address filed with the Administrative Committee, or if
no such address has been filed, then the last address indicated
on the records of the Employer, shall be deemed to have been
delivered to the Participant or his Beneficiary on the date that
such distribution or communication is deposited in the United
States mail, postage prepaid.
11.05 Assignment or Alienation. To the extent permitted by
law, the Participant may not anticipate, encumber, alienate or
assign any of his rights, claims, or interests in this Plan or
any part thereof, or any payments, benefits, or rights arising
by reason of this Plan shall in any way be subject to the
Participant's debts, contracts, or engagements, or to any
judicial processes to levy upon or attach the same for payment
thereof.
52
Notwithstanding the above, in the event of a Qualified
Domestic Relations Order no violation of the nonalienation
provisions of ERISA occurs where a portion of the benefits of a
Participant is required to be paid to the Participant's spouse
pursuant to a Qualified Domestic Relations Order. A "Qualified
Domestic Relations Order" is a judgment or decree (including
approval of a property settlement agreement) that relates to the
provisions of child support, alimony payments or marital
property, rights to a spouse, former spouse, child or other
dependent of a Participant and is made pursuant to a state
domestic relations law. The Qualified Domestic Relations Order
may not alter the amount, time, or form of payment of plan
benefits.
11.06 Litigation Against the Trust. If any legal action is
filed against the Trustee, Board of Directors, or the Committee,
or against any member or members of the Committee or Board of
Directors, by or on behalf of any Participant or Beneficiary,
the Employer shall reimburse the Trust, the Board of Directors,
Administrative Committee, and any member or members of the
Administrative Committee or Board of Directors, for all costs
and fees expended by it or them by surcharging all costs and
fees against the same payable under the Plan to the Participant
or to the Beneficiary, but only to the extent a court of
competent jurisdiction specifically authorizes and directs any
such surcharges.
11.07 Information Available. Any Participant in the Plan or
any Beneficiary may examine copies of the summary plan
description, latest annual report, any bargaining agreement,
this Plan, trust, or any other instrument under which the Plan
was established or is operated. The Administrative Committee
will maintain all of the items listed in this Section in its
office, or in such other place or places as it may designate
from time to time in order to comply with the regulations issued
under the Act for examination during reasonable business hours.
Upon the written request of a Participant or Beneficiary, the
Administrative Committee shall furnish him with a copy of any
item listed in this Section. The Administrative Committee may
make a reasonable charge to the requesting person for the copy
so furnished.
11.08 Beneficiary's Right to Information. A Beneficiary's
right to (and the Administrative Committee's duty to provide to
the Beneficiary) information or data concerning the Plan shall
not arise until he first becomes entitled to receive a benefit
under the Plan.
11.09 Appeal Procedure for Denial of Benefits. The
Administrative Committee shall provide adequate notice in
writing to any Participant or to any Beneficiary (claimant)
whose claim for benefits under this Plan has been denied. The
Administrative Committee's notice to the claimant shall set
forth:
(a) The specific reason for the denial;
(b) Specific reference to pertinent Plan provisions on which
the Administrative Committee based its denial;
53
(c) A description of any additional material and information
needed for the claimant to perfect his claim and an explanation
of why the material or information is needed;
(d) A statement that the claimant may:
(1) request a review upon written application to the
Committee;
(2) review pertinent Plan documents; and
(3) submit issues and comments in writing; and
(e) That any appeal the claimant wishes to make of the
adverse determination must be in writing to the Administrative
Committee within seventyfive (75) days after receipt of the
Administrative Committee's notice of denial of benefits. The
Administrative Committee's notice must further advise the
claimant that his failure to appeal the action to the
Administrative Committee in writing within the seventyfive (75)
day period will render the Administrative Committee's
determination final, binding, and conclusive.
If the claimant should appeal to the Administrative
Committee, he, or his duly authorized representative, may
submit, in writing, whatever issues and comments he, or his duly
authorized representative, feels are pertinent. The
Administrative Committee shall reexamine all facts related to
the appeal and make a final determination as to whether the
denial of benefits is justified under the circumstances. The
Administrative Committee shall advise the claimant of its
decision within sixty (60) days of the claimant's written
request for review, unless special circumstances (such as a
hearing) would make the rendering of a decision within the sixty
(60) day limit infeasible, but in no event shall the
Administrative Committee render a decision respecting a denial
for a claim for benefits later than one hundred twenty (120)
days after its receipt of a request for review. A written
statement stating the decision on review, the specific reasons
for the decision, and the specific Plan provisions on which the
decision is based shall be mailed or delivered to the claimant
within such sixty (60) (or one hundred twenty (120)) day period.
The Administrative Committee's notice of denial of benefits
shall identify the name of each member of the Administrative
Committee and the name and address of the Administrative
Committee member to whom the claimant may forward his appeal.
11.10 No Rights Implied. Nothing contained in this Plan, or
any modification or amendment to the Plan, or in the creation of
any benefit, or the payment of any benefit, shall give any
Employee, Participant, or any Beneficiary any right to continue
employment, any legal or equitable right against the Employer or
any officer, director, or Employee of the Employer, or its
agents or employees.
54
ARTICLE XII
FIDUCIARIES DUTIES
12.01 Named Fiduciary. The "Named Fiduciary" of the Plan
shall consist of the following:
(a) The Employer;
(b) The Administrative Committee;
(c) The Trustee; and
(d) Such other person or persons that are designated to carry
out fiduciary responsibilities under the Plan in accordance with
Section 12.03 (c) hereof.
Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan. A Named Fiduciary
may employ one or more persons to render advice with regard to
any responsibility such Named Fiduciary has under the Plan.
12.02 Allocation of Responsibilities. The powers and
responsibilities of the Named Fiduciary are hereby allocated as
indicated below:
(a) Employer. The Employer shall be responsible for all
functions assigned or reserved to it under the Plan and Trust
Agreement. Any authority assigned or reserved to the Employer
under the Plan and Trust Agreement shall be exercised by
resolution of the Employer's Board of Directors.
(b) Administrative Committee. The Administrative Committee
shall have the responsibility and authority to control the
operation and administration of the Plan in accordance with the
terms of the Plan and Trust Agreement, except with respect to
duties and responsibilities specifically allocated to other
fiduciaries. The Administrative Committee shall have the
authority to issue written directions to the Trustee to the
extent provided in the Trust Agreement. The Trustee shall
follow the Administrative Committee's directions, unless it is
clear that the actions to be taken under those directions would
be violations of applicable fiduciary standards, or would be
contrary to the terms of the Plan or Trust Agreement.
The Administrative Committee shall have the responsibility
and authority to control the investment of the Trust Fund in
accordance with the terms of the Plan and Trust Agreement,
except with respect to duties and responsibilities specifically
allocated to other fiduciaries. The Administrative Committee
shall have the authority to issue written directions to the
Trustee to the extent provided in the Trust Agreement.
The Trustee shall follow the Administrative Committee's
directions, unless it is clear that the actions to be taken
under those directions would be violations of applicable
fiduciary standards or would be contrary to the terms of the
Plan or Trust Agreement.
55
(c) Trustee. The Trustee shall have the duties and
responsibilities set out in the Trust Agreement, subject,
however, to direction by the Committee as set out in the Trust
Agreement.
(d) Allocation. Powers and responsibilities may be allocated
to other Fiduciaries in accordance with Section 12.03 hereof, or
as otherwise provided herein or in the Trust Agreement.
This Article is intended to allocate to each Named Fiduciary
the individual responsibility for the prudent execution of the
functions assigned to it, and none of such responsibilities or
any other responsibility shall be shared by two or more of such
Named Fiduciaries, unless such sharing shall be provided by a
specified provision of the Plan or Trust Agreement.
12.03 Procedures for Delegation and Allocation of
Responsibilities. Fiduciary responsibilities may be allocated
as follows:
(a) The Administrative Committee may specifically allocate
responsibilities to a specified member or members of the
Administrative Committee.
(b) The Administrative Committee may designate a person or
persons other than a Named Fiduciary to carry out fiduciary
responsibilities under the Plan (this authority shall not cause
any person or persons employed to perform ministerial acts and
services for the Plan to be deemed fiduciaries of the Plan).
(c) The Administrative Committee may appoint an Investment
Manager or managers to manage (including the power to acquire
and dispose of) the assets of the Plan (or a portion thereof).
(d) If at any time there be more than one Trustee serving
under the Trust Agreement, such Trustees may allocate specific
responsibilities, obligations, or duties among themselves in
such manner as they shall agree.
Any allocation of responsibilities pursuant to this Section
shall be made by filing a written notice thereof with the
Administrative Committee specifically designating the person or
persons to whom such responsibilities or duties are allocated
and specifically setting out the particular duties and
responsibilities with respect to which the allocation or
designation is made.
12.04 General Fiduciary Standards. Subject to Section 12.05
hereof, a Named Fiduciary shall discharge his duties with
respect to the Plan solely in the interest of the Participants
and their Beneficiaries and:
(a) For the exclusive purpose of providing benefits to
Participants and their Beneficiaries and paying reasonable
expenses of administering the Plan;
56
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
(c) By diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the
circumstances it is deemed prudent not to do so; and
(d) In accordance with documents and instruments governing
the Plan, insofar as such documents and instruments are
consistent with the provisions of Title I of the Act.
12.05 Liability Among CoNamed Fiduciaries.
(a) General. Except for any liability which he may have
under the Act, a fiduciary shall not be liable for the breach of
a fiduciary duty or responsibility by another fiduciary of the
Plan except in the following circumstances:
(1) He participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing
such act or omission is a breach;
(2) By his failure to comply with the general fiduciary
standards set out in Section 12.04 hereof in the administration
of his specific responsibilities which give rise to his status
as a fiduciary to commit a breach; or
(3) He has knowledge of a breach by such other fiduciary and
he does not undertake reasonable efforts under the circumstances
to remedy the breach.
(b) CoTrustees. In the event that there are two or more
Trustees serving under the Trust Agreement each should use
reasonable care to prevent a CoTrustee from committing a breach
of fiduciary responsibility and they shall jointly manage and
control assets of the Plan, except that in the event of an
allocation of responsibilities, obligations, or duties, a
Trustee to whom such responsibilities, obligations, or duties
have not been allocated shall not be liable to any person by
reason of this Section, either individually or as a Trustee, for
any loss resulting to the Plan arising from the acts or
omissions on the part of the Trustee to whom such
responsibilities, obligations, or duties have been allocated.
(c) Liability Where Allocation is in Effect. To the extent
that fiduciary responsibilities are specifically allocated by a
Named Fiduciary, or pursuant to the express terms hereof, to any
person or persons, then such Named Fiduciary shall not be liable
for any act or omission of such person in carrying out such
responsibility, except to the extent that the Named Fiduciary
violated Section 12.04 hereof (i) with respect to such
allocation or designation, (ii) with respect to the
establishment or implementation of the procedure for making such
an allocation or designation, (iii) in continuing the allocation
or designation or (iv) the Named Fiduciary would otherwise be
liable in accordance with this Section 12.05.
57
(d) Liability of Trustee Following Administrative Committee
Directions. No Trustee shall be liable for following
instructions of the Administrative Committee given pursuant to
Section 12.02 (b) and (c) hereof.
(e) No Responsibility for Employer Action. Neither the
Trustee, nor the Administrative Committee, shall have any
obligation nor responsibility with respect to any action
required by the Plan to be taken by the Employer, any
Participant or eligible Employee, nor the failure of any of the
above persons to act or make any payment or contribution, or to
otherwise provide any benefit contemplated under this Plan, nor
shall the Trustee, nor the Administrative Committee be required
to collect any contribution required under the Plan, or
determine the correctness of the amount of any Employer
contribution.
(f) No Duty to Inquire. Neither the Trustee nor the
Administrative Committee shall have any obligation to inquire
into or be responsible for any action or failure to act on the
part of others.
(g) Liability of Trustee Where Investment Manager Appointed.
If an Investment Manager has been appointed pursuant to Section
12.03 (c) hereof, then neither the Trustee nor the
Administrative Committee shall be liable for the acts or
omissions of such Investment Manager, or be under any obligation
to invest or otherwise manage any assets of the Plan which are
subject to the management of such Investment Manager.
(h) Successor Fiduciary. No Named Fiduciary shall be liable
with respect to any breach of fiduciary duty if such breach was
committed before he became a Named Fiduciary or after he ceased
to be a Named Fiduciary.
58
ARTICLE XIII
DISCONTINUANCE, AMENDMENT, AND TERMINATION
13.01 Discontinuance. The Employer shall have the right, at
any time, to suspend or discontinue its contributions under the
Plan.
13.02 Amendment. The Employer shall have the right at any
time to amend the Plan in any manner it deems necessary or
advisable in order to qualify (or maintain qualification of) the
Plan and Trust under the provisions of Code Section 401(a) and
to amend the Plan in any other manner, provided no amendment
shall:
(a) Authorize or permit any of the Trust Fund (other than the
part which is required to pay taxes and administration expenses)
to be used for or diverted to purposes other than for the
exclusive benefit of the Participants or their Beneficiaries;
(b) Cause or permit any portion of the Trust Fund to revert
to or become the property of the Employer;
(c) Increase duties or responsibilities of the Trustee or the
Administrative Committee without the written consent of the
affected Trustee or the affected member of the Administrative
Committee.
(d) Revise the vesting schedule under the Plan unless each
Participant having three (3) Years or more of Service is
permitted to elect within a reasonable period after the adoption
of such amendment to have his vested benefit computed under the
Plan without regard to such amendment; a reasonable period for
purposes of this Section shall be a period which begins no later
than the date the Plan amendment is adopted and ends no later
than the last to occur of the following:
(1) sixty (60) days after the date of Plan amendment is
adopted;
(2) sixty (60) days after the day on which the Plan
amendment becomes effective; or
(3) sixty (60) days after a Participant is issued written
notice of the Plan amendment.
(e) Revise the vested benefit of a Participant determined as
of the later of the date such amendment is adopted, or the date
such amendment becomes effective, if such revised vested benefit
is less than that computed under the Plan without regard to such
amendment.
(f) Procedure
59
(1) All proposed amendments shall be set forth in a written
instrument, detailing any and all changes to the Plan.
(2) All proposed amendments shall be presented to the Board
of Directors for its consideration and shall be enacted by a
vote of the Board of Directors.
(3) All actions taken by the Board of Directors shall be set
forth in enabling documentation (e.g., minutes of meetings
setting forth appropriate resolutions adopted therein or
appropriate certification of actions taken by the Board of
Directors in lieu of a formal meeting).
(4) The Board of Directors shall authorize, in the
documentation referred to under (3), above, an officer or
officers of the Company to execute said amendment or amendments
on behalf of the Company and to certify as to the date on which
the steps set forth under (1), (2), and (3) took place (e.g., a
Certificate of Resolution).
The Employer shall make all amendments in writing. Each
amendment shall state the date to which it is either
retroactively or prospectively effective.
13.03 Termination. The Employer shall have the right to
terminate the Plan at any time. The Plan shall terminate upon
the first to occur of the following:
(a) The date terminated by action of the Board of Directors;
(b) The date the Employer shall be judicially declared
bankrupt or insolvent; or
(c) The dissolution, merger, consolidation, or reorganization
of the Employer or the sale by the Employer of all or
substantially all of its assets, unless the successor or
purchaser makes provisions to continue the Plan, in which event
the successor or purchaser shall be substituted as the Employer
under this Plan.
(d) Termination Procedure
(1) A proposal to terminate the Plan shall be set forth in
a written instrument, detailing said action to the Board of
Directors.
(2) A proposal to terminate the Plan shall be presented to
the Board of Directors for its consideration and shall be
enacted by a vote of the Board of Directors.
(3) All actions taken by the Board of Directors to terminate
the Plan shall be set forth in enabling documentation (e.g.,
minutes of meetings setting forth appropriate resolutions
adopted therein or appropriate certification of actions taken by
the Board of Directors in lieu of a formal meeting).
(4) The Board of Directors shall authorize, in the
documentation referred to under
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(3), above, an officer or
officers of the Company to execute such instruments and take
such actions as are necessary to effectuate the termination of
the Plan on behalf of the Company and to certify as to the date
on which the steps set forth under (1), (2), and (3) took place
(e.g., a Certificate of Resolution).
13.04 Vesting on Termination or Suspension. Notwithstanding
any other provision of the Plan to the contrary, upon the date
of full or partial termination of the Plan, or, upon complete
discontinuance of contributions to the Plan, an affected
Participant's right to his Accrued Benefit shall be one hundred
percent (100%) vested and nonforfeitable. The Administrative
Committee shall interpret and administer this Section 13.04 in
accordance with the intent and scope of the Regulations issued
under Code Section 411 (d) (3).
13.05 Procedure on Termination. In the event of termination
of the Plan or permanent discontinuance of Employer
contributions, the Employer shall, at its sole discretion,
authorize any one of the following procedures:
(a) Continue Trust. To continue the Trust in operation in
all respects until the Trustee has distributed all benefits
under the Plan, except that no further persons shall become
Participants, no further contributions shall be made, all
Accounts shall be fully vested, and no further payments shall be
made, except in distribution of the Trust Fund and payment of
administration expenses; or
(b) Liquidate Plan. To wind up and liquidate the Plan and
Trust and distribute the assets thereof after deduction of all
expenses to the Participants, Former Participants, and
Beneficiaries in accordance with their respective Accounts as
then constituted. If the Employer makes no election before
termination, then this subsection (b) will govern distribution
of the Trust Fund.
13.06 Merger. The Trustee shall not consent to, or be a party
to, any merger or consolidation with another plan, unless
immediately after the merger, consolidation, or transfer, the
surviving Plan provides each Participant a benefit equal to or
greater than the benefit each Participant would have received
had the Plan terminated immediately before the merger,
consolidation, or transfer.
13.07 Notice of Change in Terms. The Administrative
Committee, within the time prescribed by the Act and applicable
regulations, shall furnish all Participants and Beneficiaries a
summary plan description of any material amendment to the Plan
or notice of discontinuance of the Plan and all other
information required by the Act to be furnished without charge.
13.08 Initial Qualification. Notwithstanding any other
provisions of this Plan, the Employer's adoption of this Plan is
subject to the condition precedent that the Plan initially shall
be approved and deemed qualified by the Internal Revenue Service
as satisfying the requirements of Section 401(a) of the Code and
that the Trust shall be entitled to exemption under the
provisions of Section 501(a). In the event the Employer shall
fail to secure such initial determination, the contributions
made by the Employer together with any income received or
accrued thereon less any expenses paid shall be returned to the
Employer and the Plan and Trust shall terminate. No Participant
or Beneficiary shall have any right or claim to the Trust Fund,
or to any benefit under the Plan, before the Internal Revenue
Service initially determines that the Plan and Trust qualify
under the provisions of Sections 401(a) and 501(a) of the Code.
61
13.09 Reversion of Suspense Account. Notwithstanding any
provisions contained herein to the contrary, the Employer
reserves the right to recover, upon the termination of the Plan
and Trust Fund, any amounts held in a Suspense Account that
cannot be allocated to the accounts of Participants and their
Beneficiaries in the year of termination, because of the
limitations contained in Section 6.09 of the Plan and Section
415 of the Code, after the satisfaction of all fixed and
contingent obligations to Participants and their Beneficiaries
under the Plan.
13.10 Distributions Upon Plan Termination. All Elective
Deferrals, Qualified Employer Deferral Contributions, and income
attributable thereto, shall be distributed to Participants or
their Beneficiaries as soon as administratively feasible after
the termination of the Plan, provided that neither the Employer
nor an Affiliated Employer maintains a successor plan.
13.11 Distributions Upon Sale Of Assets. All Elective
Deferrals, Qualified Employer Deferral Contributions, and income
attributable thereto, shall be distributed to Participants as
soon as administratively feasible after the sale, to an entity
that is not an Affiliated Employer, of substantially all of the
assets used by the Employer in the trade or business in which
the Participant is employed.
13.12 Distributions Upon Sale Of Subsidiary. All Elective
Deferrals, Qualified Employer Deferral Contributions, and income
attributable thereto shall be distributed to Participants as
soon as administratively feasible after the sale, to an entity
that is not an Affiliated Employer, of an incorporated
Affiliated Employer's interest in a subsidiary to Participants
employed by such subsidiary.
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ARTICLE XIV
THE TRUST FUND
14.01 Purpose of the Trust Fund. A Trust Fund has been
created and will be maintained for the purposes of the Plan, and
the assets thereof shall be invested in accordance with the
terms of the Trust Agreement or Group Annuity Contract. All
contributions will be paid into the Trust Fund, and all benefits
under the Plan will be paid from the Trust Fund.
14.02 Appointment of Trustee. (If applicable) Trustee(s)
shall be appointed by the Board of Directors to administer the
Trust Fund. The Trustees' obligations, duties, and
responsibilities shall be governed solely by the terms of the
Trust Agreement.
14.03 Exclusive Benefit of Participants. Subject to Sections
5.04 and 13.08 hereof, the Trust Fund will be used and applied
only in accordance with the provisions of the Plan to provide
the benefits thereof, and no part of the corpus or income of the
Trust Fund shall be used for or diverted to purposes other than
for the exclusive benefit of the Participants and their
Beneficiaries or for expenses of administration.
Notwithstanding the preceding sentence, as provided in Section
13.09 hereof, the Employer reserves the right to recover any
amounts held in a Suspense Account at the termination of the
Trust Fund that cannot be allocated to the Accounts of
Participants and their Beneficiaries in the year of termination
because of the limitations contained in Section 6.09 of the Plan
and Section 415 of the Code.
14.04 Benefits Supported Only By the Trust Fund. Any person
having any claim under the Plan will look solely to the assets
of the Trust Fund for satisfaction.
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ARTICLE XV
PARTICIPATION BY AFFILIATE OF COMPANY AND
EMPLOYMENT WITH A MEMBER OF A CONTROLLED GROUP
15.01 Employment With a Member of a Controlled Group. Any
employment service completed by an Employee with an Affiliated
Employer, shall be credited as service with the Employer for
purposes of determining "participation" and "vesting" under the
Plan. Determination of membership within the controlled group
shall be determined under the provisions of Section 1563(a) of
the Code, but without regard to Section 1563(a) (4) and (e) (3)
(c).
15.02 Adoption by Affiliates. Any corporation or other
business entity which is a member of an affiliated group (as
defined in Section 1504(a) of the Code, or any successor
provision), which includes the Company, may, with the consent of
the Company, adopt the Plan for its Employees. Such adoption
shall be made by resolution of such corporation's Board of
Directors and an instrument executed by its officers pursuant
thereto. The provisions of the Plan shall apply to each
Employer, except as provided in the instrument adopting the Plan
and Trust otherwise specifically provided herein.
15.03 Amendment. If the Plan and Trust are amended by the
Company, after they are adopted by such affiliate, unless
otherwise expressly provided, they shall be treated as so
amended by such other business entity without the necessity of
any action on its part.
15.04 Withdrawal by Affiliated Employers
(a) Any one or more of the Employers included in the Plan may
withdraw from the Plan at any time by giving six months' advance
notice in writing of the intention to withdraw, (unless a
shorter notice shall be agreed to by the Board of Directors).
(b) After an Employer has given notice as provided in
subsection (a), the Plan Administrator shall establish an amount
of the Trust Fund to be allocated to such Employer's portion of
the Plan. No Participant of the Plan, including Participants
who are Employees of the withdrawing Employer, shall receive a
benefit immediately after such withdrawal, determined as if the
Plan had terminated at that time, which is less than the benefit
such Participants would have received immediately prior to such
withdrawal had the Plan terminated at that time.
(c) If the Trust is not to be terminated with respect to the
withdrawing Employer, then as of the date of withdrawal, the
Trustee shall distribute securities, property, or money of the
Trust Fund representing the portion of the Trust Fund allocated
to the withdrawing Employer and such securities, property or
money shall thereafter be held and invested as a separate trust
fund pursuant to the terms of the plan adopted by the
withdrawing Employer.
(d) If the Plan is to be terminated with respect to the
withdrawing Employer, then the
64
amount set aside pursuant to subsection (b) shall be dealt with
according to the provisions of Article XIII.
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ARTICLE XVI
DIRECTED INVESTMENT OPTIONS
16.01 Authorized Investment Funds. The Administrative
Committee will provide for the investment of Plan assets.
Investment funds will be developed by the Trustee to accommodate
this direction. The Administrative Committee may increase or
decrease the number of authorized investment funds by agreement
with the Trustee.
16.02 Participant Direction. If authorized in accordance with
Section 16.01 above, each Participant may direct, on forms
provided by the Administrative Committee, that contributions to
his Account be invested in the various investment funds provided
under Section 16.01. A Participant may redirect the investment
of his Accounts as well as future contributions. The election
to direct or redirect the investment of Accounts will be made
during such times as the Administrative Committee shall
determine, after consultation with the Trustee. The
Administrative Committee may impose such limitations on such
direction of Account investments as it deems appropriate, for
example, limitations on minimum percentage investments in an
investment fund or minimum notice periods when Accounts may be
redirected.
16.03 Principal Life Insurance Company Contract. Participants
who have a portion of their Accrued Benefit invested under
Contract Number (3)72215 (the "Contract") with the Principal
Mutual Life Insurance Company shall have the right to elect, as
of each January 1 or July 1, to transfer their interest in the
Contract to the investment alternatives offerred under Section
16.01 and 16.02, above. No transfer of any portion of a
Participant's Accrued Benefit shall be permitted into the
Contract.
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ARTICLE XVII
TOPHEAVY RULES
17.01 TopHeavy Status. If the Plan is or becomes TopHeavy in
any Plan Year beginning after December 31, 1983, the provisions
of this Article will supersede any conflicting provision in the
Plan. The following definitions apply in making this
determination:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was (i) an officer of the Employer, (if
such officer's Compensation exceeds 50% of the annual benefit
limit for defined benefit plans, as indexed, pursuant to Section
415(b)(1)(A)), (ii) an owner (or considered an owner under
Section 318 of the Code) of one of the ten largest interests in
the Employer, (if such individual's Compensation exceeds the
dollar limit on Annual Additions to a Defined Contribution Plan
under Section 415 of the Code), (iii) a five percent Owner of
the Employer, or (iv) a one percent Owner of the Employer who
has an annual Compensation of more than $150,000. 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 will be made in
accordance with Section 416(i) (1) of the Code and the
regulations thereunder. A NonKey Employee is any Employee who
does not meet the definition of Key Employee contained herein.
(b) TopHeavy Plan: For any Plan Year after December 31,
1983, this Plan is TopHeavy if any of the following conditions
exists:
(1) If the TopHeavy Ratio for this Plan exceeds 60 percent,
and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans, or
(2) If this Plan is a part of a Required Aggregation Group
of plans, but not part of a Permissive Aggregation Group, and
the TopHeavy Ratio for the group of plans exceeds 60 percent, or
(3) If this Plan is a part of a Required Aggregation Group,
and part of a Permissive Aggregation Group of plans, and the
TopHeavy Ratio for the Permissive Aggregation Group exceeds 60
percent.
(c) TopHeavy Ratio:
(1) If the Employer maintains one or more Defined
Contribution Plans (including any Simplified Employee Pension
Plan) and the Employer has never maintained any Defined Benefit
Plan which has covered or could cover a Participant in this
Plan, the TopHeavy Ratio is a fraction, the numerator of which
is the sum of the Account balances of all Key Employees as of
the Determination Date (including any part of any Account
balance distributed in the fiveyear period ending on the
Determination Date), and the denominator of which is the sum of
all Account balances (including any part of any Account balance
distributed in the fiveyear period ending on the Determination
Date) of all Participants as of the Determination Date. Both
the numerator and denominator of the TopHeavy Ratio are adjusted
to reflect any distributions of any Account balances or any
Accrued Benefits made in the fiveyear period ending on the
Determination Date and contribution which is due but unpaid as
of the Determination Date.
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(2) If the Employer maintains one or more Defined
Contribution Plans (including any Simplified Employee Pension
Plan) and the Employer maintains or has maintained one or more
Defined Benefit Plans, which have covered or could cover a
Participant in this Plan, the TopHeavy Ratio is a fraction, the
numerator of which is the sum of the Account balances under the
Defined Contribution Plans for all Key Employees and the present
value of Accrued Benefits under the Defined Benefit Plans for
all Key Employees, and the denominator of which is the sum of
the Account balances under the Defined Contribution Plans for
all Participants and the present value of the Accrued Benefits
under the Defined Benefit Plans for all Participants. Both the
numerator and denominator of the TopHeavy Ratio are adjusted for
any distributions of any Account balances or any Accrued
Benefits made in the fiveyear period ending on the Determination
Date and any contribution due but unpaid as of the Determination
Date.
(3) For purposes of (2) and (3) above, the value of Account
balances and the Present Value of Accrued Benefits will be
determined as of the most recent Allocation Date that falls
within or ends with the twelvemonth period ending on the
Determination Date. The Account balances and Accrued Benefits
of a Participant who is not a Key Employee but who was a Key
Employee in a prior year will be disregarded, provided he had
performed no service with the Employer during the last five
Plan Years. The calculation of the TopHeavy Ratio, and the
extent to which distributions, rollovers, and the transfers are
taken into account will be made in accordance with Section 416
of the Code and the regulations thereunder. Deductible employee
contributions will not be taken into account for purposes of
computing the TopHeavy Ratio. When aggregating plans, the value
of Account balances and Accrued Benefits will be calculated with
reference to the Determination Dates that fall within the same
calendar year.
(d) Permissive Aggregation Group: The Required Aggregation
Group of plans plus any other plan or plans of the Employer,
which when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of Sections
401 (a) (4) 410 of the Code.
(e) Required Aggregation Group: (i) Each qualified plan of
the Employer in which at least one Key Employee participates,
and (ii) any other qualified plan of the Employer which enables
a plan described in (i) to meet the requirements of sections 401
(a) (4) and 410 of the Code.
68
Solely for the purpose of determining if the Plan, or any
other plan included in a Required Aggregation Group of which
this Plan is a part, is TopHeavy, the Accrued Benefit of an
Employee other than a Key Employee (within the meaning of
Section 416(i)(1) of the Code) shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes
under all plans maintained by the Affiliated Employers, 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 Section 411(b)(1)(C) of the Code.
(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) Allocation Date: The last day of the Limitation Year
for which Account balances or Accrued Benefits are valued for
purposes of calculating the TopHeavy Ratio.
(h) Present Value: Present value shall be based upon
assumptions provided for under Section 416 of the Code and
regulations.
17.02 Minimum Allocation.
(a) Except as otherwise provided in (c) and (d) below, the
Employer Profit Sharing Contributions, and Forfeitures
attributed to previously allocated Employer Profit Sharing
Contribution, allocated on behalf of any Participant who is not
a Key Employee shall not be less than the lesser of 3% of such
Participant's Compensation, or in the case where the Employer
has no Defined Benefit Plan which designates this plan to
satisfy section 401 of the Code, the largest percentage of
Employer Contributions and Forfeitures, as a percentage of the
Key Employee's Compensation, allocated on behalf of any Key
Employee for that year. If the highest rate allocated to a Key
Employee for a year in which the Plan is TopHeavy is less than
3%, then amounts contributed as a result of a Salary Deferral
Agreement must be included in determining contributions made on
behalf of Key Employees. The Minimum Allocation is determined
without regard to any Social Security contribution. This
Minimum Allocation shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser
allocation for the Plan Year because of (i) the Participant's
failure to complete 1,000 Hours of Service (or any equivalent
provided in the Plan), or (ii) the Participant's failure to make
mandatory Employee Contributions to the Plan, or (iii)
Compensation less than a stated amount.
(b) For purposes of computing the Minimum Allocation,
Compensation will mean Compensation as defined in Section 2.12.
69
(c) The provision in (a) above shall not apply to any
Participant who was not employed by the Employer on the last day
of the Plan Year.
(d) The provision in (a) above shall not apply to any
Participant to the extent the Participant is covered under any
other plan or plans of the Employer and the Employer has
provided the Minimum Allocation or benefit requirement
applicable to TopHeavy plans will be met in the other plan or
plans.
17.03 Minimum Vesting. For any Plan Year in which this Plan
is TopHeavy, one of the minimum vesting schedules will
automatically apply to the Plan. The minimum vesting schedule
applies to all benefits within the meaning of Section 411(a)(7)
of the Code, including benefits accrued before the effective
date of Section 416 and benefits accrued before the Plan became
TopHeavy.
Further, no reduction in vested benefits may occur in the
event the Plan's status as TopHeavy changes for any Plan Year.
However, this Section does not apply to the Account balances of
any Employee who does not have an Hour of Service after the Plan
has initially become TopHeavy, and such Employee's Account
balance attributable to Employer Contributions and Forfeitures
will be determined without regard to this Section.
The nonforfeitable interest of each Employee in his or her
Account balance attributable to Employer Contributions shall be
100% vested, regardless of his number of Years of Service with
the Employer.
Provided, however, if the Plan should become TopHeavy, for
purposes of applying the above listed table, any Employer
Contributions not already 100% vested will be 100% vested
immediately, for such Plan Year, if such contributions are
Qualified Employer Deferral Contributions that are taken into
account for purposes of meeting the Actual Deferral Percentage
test described in Section 4.05.
If the vesting schedule under the plan shifts in or out of
the preceding schedule for any Plan Year because of the Plan's
TopHeavy status, such shift is an amendment to the vesting
schedule, and the election in Section 13.02(d) of the Plan
applies.
17.04 Limitation on Allocations. If, during any Limitation
Year, the Participant is a participant in both a Defined
Contribution Plan and a Defined Benefit Plan, which are a part
of a TopHeavy group, the Administrative Committee shall apply
the limitations of Article VI to such Participant by
substituting "100%" for "125%" each place it appears in Section
6.09. This Section 17.04 shall not apply if:
(a) The Plan would satisfy Section 17.02 if the guaranteed
minimum contribution was one percent (1%) greater than the
guaranteed minimum contribution the Administrative Committee
otherwise would calculate; and
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(b) The TopHeavy Ratio does not exceed ninety percent (90%).
17.05 Compensation Limitations. Shall mean the limitation set
forth under Section 401(a)(17) of the Code.
17.06 Participation In More Than One Plan. If a NonKey
Employee participates in a TopHeavy Defined Benefit Plan
maintained by the Employer, Section 17.02 will not apply to the
NonKey Employee and the TopHeavy Defined Benefit will provide
the "minimum benefit accrual."
71
ARTICLE XVIII
MISCELLANEOUS
18.01 Execution of Receipts and Releases. Any payment to any
Participant, or to his legal representative or Beneficiary, in
accordance with the provisions of the Plan, shall to the extent
thereof be in full satisfaction of all claims hereunder against
the Plan and Trust Fund. The Administrative Committee may
require such a Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to
execute a receipt and release therefore in such form as it shall
determine.
18.02 No Guarantee of Interests. Neither the Trustee (if
applicable), the Insurer, the Administrative Committee, nor the
Employer guarantee the Trust Fund from loss or depreciation.
The Employer does not guarantee the payment of any money which
may be or becomes due to any person from the Trust Fund. The
liability of the Administrative Committee and the Trustee or
Insurer to make any payment from the Trust Fund is limited to
the then available assets of the Trust Fund.
18.03 Payment of Expenses. All expenses incident to the
administration, termination, protection of the Plan and Trust
Fund, including but not limited to legal, accounting, and
Trustee or investment management fees, shall be paid by the
Employer, except that in case of failure of Employer to pay the
expenses, they will be paid from the Trust Fund, and until paid,
shall constitute a first and prior claim and lien against the
Trust Fund. Notwithstanding the preceding sentence, all asset
based fees and asset management fees will be charged against the
accounts of the Participants.
18.04 Employer Records. Records of the Employer as to an
Employee's or Participant's period of employment, termination of
employment and the reason therefore, leaves of absence,
reemployment, and compensation will be conclusive for all
persons, unless determined to be incorrect.
18.05 Interpretations and Adjustments. To the extent
permitted by law, an interpretation of the Plan and a decision
of any matter within the Named Fiduciary's discretion made in
good faith is binding on all persons. A misstatement or other
mistake of fact shall be corrected when it becomes known and the
person responsible shall make such adjustment on account thereof
as he considers equitable and practicable.
18.06 Uniform Rules. In the administration of the Plan,
uniform rules will be applied to all Participants similarly
situated.
18.07 Evidence. Evidence required of anyone under the Plan
may be by certificate, affidavit, document, or other
information, which the person acting on it considers pertinent
and reliable, and signed, made or presented by the proper party
or parties.
18.08 Severability. In the event any provision of the Plan
shall be held to be illegal or invalid for any reason, the
illegal or invalid provisions of the Plan shall be fully
severable and the Plan shall be construed and enforced as if the
illegal or invalid provision had never been included herein.
72
18.09 Notice. Any notice required to be given herein by the
Trustee, the Employer, or the Administrative Committee, shall be
deemed delivered, when personally delivered, or placed in the
United States mail, in an envelope addressed to the last known
address of the person to whom the notice is given.
18.10 Waiver of Notice. Any person entitled to notice under
the Plan may waive the notice.
18.11 Successors. The Plan shall be binding upon all persons
entitled to benefits under the Plan, their respective heirs and
legal representatives, upon the Employer, its successors and
assigns, and upon the Trustee, the Administrative Committee, and
their successors.
18.12 Headings. The titles and headings of Articles and
sections are included for convenience of reference only and are
not to be considered in construction of the provisions hereof.
18.13 Governing Law. All questions arising with respect to
the provisions of this Agreement shall be determined by
application of the laws of the State of Florida, except to the
extent Florida law is preempted by Federal statute.
73
ARTICLE XIX
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
19.01 Limited Application. This Plan is a profit sharing
401(k) Plan to which the exception set forth under Section
401(a)(11)(B)(iii) of the Code applies. The provisions of this
Article XIX apply only to a Participant described under this
Section 19.01. This Article XIX only applies to:
(a) a Participant with respect to whom the Plan is a direct or
indirect transferee from a plan subject to the Code Section 417
requirements and the Plan received the transfer after December
31, 1984, unless the transfer is an "elective transfer" as
described herein,
(b) a Participant who elects a life annuity distribution (if
Code Section 411(d)(6) requires the Plan to provide a life
annuity option), or
(c) a Participant whose benefits under a defined benefit plan
maintained by the Employer are offset by benefits provided under
this Plan.
A transfer is an "elective transfer" if:
(1) the transfer satisfies the merger and consolidation rules
as set forth under Section 414(l) of the Code (and the
regulations promulgated thereunder);
(2) the transfer is voluntary, under a fully informed
election by the Participant;
(3) the Participant has an alternative that retains his Code
'411(d)(6) protected benefits (including an option to leave his
benefit in the transferor plan, if that plan is not
terminating);
(4) the transfer satisfies the applicable spousal consent
requirements of the Code;
(5) the transferor plan satisfies the joint and survivor
notice requirements of the Code, if the Participant's
transferred benefit is subject to those requirements;
(6) the Participant has a right to immediate distribution
from the transferor plan, in lieu of the elective transfer;
(7) the transferred benefit is at least the greater of the
single sum distribution provided by the transferor plan for
which the Participant is eligible or the present value of the
Participant's accrued benefit under the transferor plan payable
at that plan's normal retirement age;
(8) the Participant has a 100% Nonforfeitable interest in the
transferred benefit; and
(9) the transfer otherwise satisfies applicable Treasury
regulations.
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19.02 Notwithstanding the provisions of Section 7.04 to the
contrary, upon the death of a Participant, his Accrued Benefit
shall be 100% vested and his Surviving Spouse, if he is married,
or in the event there is no surviving Spouse, or if the Spouse
has waived, in writing, the right to such death benefits, his
other named Beneficiary shall be entitled to receive the full
value of the deceased Participant's Accrued Benefit (reduced by
any security interest held by the Plan by reason of a loan
outstanding to such Participant) determined as of the Valuation
Date which coincides with, or which next follows the date of
such Participant's death.
If a Participant dies before the Annuity Starting Date, (a)
his Surviving Spouse (as defined in Section 19.06(e)) or (b) his
other Beneficiary (or Beneficiaries) if he has made a Qualified
Election as provided in Article 19, or if he has no Surviving
Spouse, shall be entitled to the full value of his Account
Balance as of the Valuation Date coinciding with or next
following the date of his death.
If there is a Surviving Spouse, such Account Balance shall be
paid in the form of a "Qualified Preretirement Survivor Annuity"
to the Surviving Spouse of such Participant, unless he has made
a Qualified Election as provided in Article 19. Provided,
however, if the amount of the death benefit so payable under
this Section is $3,500 or less, payment shall be made in a lump
sum cash payment to the Surviving Spouse or other Beneficiary
(or Beneficiaries) of record.
19.03 Notwithstanding the provisions of Section 8.02 to the
contrary, after all required accounting adjustments, the
Trustee, in accordance with the direction of the Administrative
Committee, shall make payment of the Participant's Accrued
Benefit. Benefits shall be provided for the Participant in
accordance with this Article 19, from the Plan assets. Any
annuity contract distributed to a retiring Participant from the
Plan must be "nontransferable". The terms of any annuity
contract purchased and distributed by the Plan to a Participant
or Spouse shall comply with the requirements of this Plan.
The benefits payable pursuant to this Article 19, with respect
to a Participant who has been married throughout the one year
period ending on his actual retirement date, shall be payable
under the Plan in the form of the Qualified Joint and Survivor
Annuity with 50% continuation as described in Section 19.06(d),
subject to the following:
(a) The Participant's Spouse shall be designated as the
contingent annuitant.
(b) In lieu of this form of payment, a Participant (with his
Spouse's consent) may, prior to his actual retirement date,
elect in writing (after having received a written explanation of
the terms and conditions of the survivor annuity described in
this Section and the effect of an election under this
subsection) to have his retirement benefit payable under any one
of the other forms of retirement benefits or annuity options
provided under the Plan. In order to elect out of a Qualified
Joint and Survivor Annuity, the Participant and his Spouse must
comply with the provisions of the "Joint and Survivor Annuity
Requirements" in this Article 19.
Limitation on Settlement Options: If a Participant elects
(after a Qualified Election) not to take
75
his distribution in the form of a Qualified Joint and Survivor Annuity,
any such benefit may be distributed by the Committee in such manner as the
Participant may elect. Such distribution may be in one or more
of the following forms:
(a) lump sum cash payment, or
(b) over one of the following periods (or a combination
thereof):
(1) a period certain not extending beyond the life expectancy
of the Participant, or
(2) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
beneficiary.
If the Participant's entire interest is to be distributed in
other than a lump sum, then the amount to be distributed each
year must be at least an amount equal to the quotient obtained
by dividing the Participant's entire interest by the life
expectancy of the Participant or joint and last survivor
expectancy of the Participant and designated beneficiary. Life
expectancy and joint and last survivor expectancy are computed
by the use of the return multiples contained in section 1.729 of
the Income Tax Regulations. For purposes of this computation, a
Participant's life expectancy may be recalculated no more
frequently than annually; however, the life expectancy of a
nonspouse beneficiary may not be recalculated. If the
Participant's spouse is not the designated beneficiary, the
method of distribution selected must assure that more than fifty
percent (50%) of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
A Participant may not elect an optional form of payment
providing monthly benefits to a contingent annuitant who is
other than his Spouse, or to a Beneficiary, unless the actuarial
value of the payments expected to be made to the Participant at
the time the payment is to commence is more than 50% of the
actuarial value of the total payments expected to be made under
such optional form. In no event, however, can the amount of
each monthly payment to a contingent annuitant or Beneficiary
exceed that payable to the Participant.
19.04 Qualified Joint and Survivor Annuity. Unless an optional
form of benefit is selected, pursuant to a Qualified Election
within the 90day period ending on the date benefit payments
would commence, a Participant's entire (100% vested) Accrued
Benefit will be paid in the form of a Qualified Joint and
Survivor Annuity.
19.05 Qualified Preretirement Survivor Annuity. Unless an
optional form of benefit has been selected within the Election
Period, pursuant to a Qualified Election, if a Participant dies
before benefits have commenced, then the Participant's entire
(100% vested) Accrued Benefit shall be applied toward the
purchase of an annuity for the life of the Surviving Spouse.
The starting date of such annuity payments to the Surviving
Spouse shall be the Earliest Retirement Age as defined in
Section 19.06(b) below. Any distribution of an annuity contract
purchased by the Plan must satisfy all notice and consent
requirements of Section 417 of the Code and the regulations
thereunder.
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19.06 Definitions.
(a) Election Period (for Qualified Preretirement Survivor
Annuity): The period which 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 benefits accrued prior to
separation, the Election Period shall begin on the date of
separation.
(b) Earliest Retirement Age: The earliest date on which, under
the Plan, the Participant could elect to receive retirement
benefits.
(c) Qualified Election (Waiver): Waiver of a Qualified Joint
and Survivor Annuity or a Qualified Preretirement Survivor
Annuity. The Waiver must be in writing and must be consented to
by the Participant's Spouse. The Spouse's consent must
acknowledge the effect of the election. Additionally, a
Participant's waiver of the Qualified 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. The Spouse's consent to a Waiver must be witnessed by
a Plan representative or Notary Public. Notwithstanding this
consent requirement, if the Participant establishes to the
satisfaction of a Plan representative that such written consent
may not be obtained because there is no Spouse or the Spouse
cannot be located, a Waiver will be deemed a Qualified Election.
Any consent necessary under this provision will be valid only
with respect to the Spouse who signs the consent, or in the
event of a deemed Qualified Election, the designated Spouse. In
the event the Spouse completes a valid Waiver, and a Beneficiary
is named other than the Spouse, the Spouse must consent to and
acknowledge the specific nonspouse Beneficiary. The nonspouse
Beneficiary so named may not be subsequently changed without the
Spouse's consent. The number of revocations of prior
Beneficiary designations made by the Participant and so
consented to by the Spouse shall not be limited.
The Participant, and Spouse if any, may affirmatively waive
the 30-day election period but must have an election period of
at least 7 days. The normal form annuity cannot be waived after
the Benefit Commencement Date.
(d) Qualified Joint and Survivor Annuity: An immediate annuity
for the life of the Participant with a survivor annuity for the
life of the 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 the Spouse
and which is the amount of benefit which can be purchased with
the Participant's vested Accrued Benefit. A Qualified Joint and
Survivor Annuity with respect to an unmarried Participant shall
be in the form of a life annuity. Payments to the Spouse of a
deceased Participant being paid as the result of the death of a
Participant shall not be terminated or reduced as the result of
the remarriage of such Spouse.
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(e) Spouse (Surviving Spouse): The Spouse or Surviving Spouse
of the Participant, provided that a former Spouse will be
treated as the Spouse or Surviving Spouse to the extent provided
under a Qualified Domestic Relations Order, as described in
Section 414(p) of the Code.
(f) "Annuity Starting Date" shall mean the first day of the
first period for which an amount under this Plan is payable in
the form of an annuity, or, in the case of a benefit not payable
in the form of an annuity, the first day on which all events
have occurred which entitles the Participant to such benefit.
(g) "Qualified Preretirement Survivor Annuity" shall mean an
annuity for the life of the Surviving Spouse the actuarial
equivalent of which is 100 percent of the Accrued Benefit of the
Participant as of the date of death.
19.07 Notice Requirements.
(a) In the case of a Qualified Joint and Survivor Annuity, as
described in Section 19.04, the Plan Administrator shall provide
each Participant, within a reasonable period prior to the
commencement of benefits, a written explanation of:
(1) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(2) the Participant's right to make and the effect of an
election to waive his Qualified Joint and Survivor Annuity form
of benefit;
(3) the rights of a Participant's Spouse; and
(4) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity.
(b) In the case of a Qualified Preretirement Survivor Annuity,
as described in Section 19.05, the Plan Administrator shall
provide each Participant within the period beginning on 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, a written
explanation of the Qualified Preretirement Survivor Annuity in
such terms and in such manner as would be comparable to the
explanation provided for meeting the requirements of Section
19.07(a) applicable to a Qualified Joint and Survivor Annuity.
(If a Participant enters the Plan after the first day of the
Plan Year in which the Participant attained age 32, the Plan
Administrator shall provide the notice required by this Section
19.07(a) no later than the close of the second Plan Year
succeeding the entry of the Participant in the Plan.)
(c) Notwithstanding the other requirements of this Section
19.07 the respective
78
notices prescribed by this Section need not
be given to a Participant if this Plan "fully subsidizes" the
costs of a Qualified Joint and Survivor Annuity or Qualified
Preretirement Survivor Annuity. For purposes of this Section, a
Plan fully subsidizes the costs of a benefit if under the Plan
the failure to waive such benefit by a Participant would not
result in a decrease in any plan benefits with respect to such
Participant and would not result in increased contributions from
the Participant.
19.08 Transitional Rules (Terminated Vested Participants)
(a) Any living Participant not receiving benefits on January
23, 1984, who would otherwise not receive the benefits
prescribed by the previous Sections of this Article 19, must be
given the opportunity to elect to have the prior Sections of
this Article apply if such Participant is credited with at least
one Hour of Service under this Plan, or a Predecessor Plan in a
Plan Year beginning on or after January 1, 1976, and such
Participant had at least 10 years of vesting Service when he or
she separated from Service.
(b) Any living Participant not receiving benefits on January
23, 1984, who was credited with at least one Hour of Service
under this Plan or a Predecessor Plan on or after January 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 or her benefits paid in accordance
with Section 19.08(d) of this Article.
(c) The respective opportunities to elect (as described in
Sections 19.08(a) and 19.08(b) above) must be afforded to the
appropriate Participants during the period commencing on January
23, 1984, and ending on the date benefits would otherwise
commence to said Participants.
(d) Any Participant who has elected, pursuant to Section
19.08(b) of this Article, and any Participant who does not elect
under Section 19.08(a) or who meets the requirements of Section
19.08(a) except that such Participant does not have at least 10
years of vesting Service when he or she separates from Service,
shall have his or her benefits distributed in accordance with
all of the following requirements, if benefits would have been
payable in the form of a life annuity:
(1) 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 Age; or
(ii) dies on or after Normal Retirement Age while still
working for the Employer; or
79
(iii) begins to receive payments on or after the Qualified
Early Retirement Age; or
(iv) separates from Service on or after attaining Normal
Retirement Age (or the Qualified Early Retirement Age) 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 will be received under this Plan in the
form of a Qualified 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 Age and end not
more than 90 days before the commencement of benefits. Any
election hereunder will be in writing and may be changed by the
Participant at any time.
(2) Election of Early Survivor Annuity a Participant who
is employed after attaining the Qualified Early Retirement Age
will be given the opportunity to elect, 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 Qualified Joint and Survivor
Annuity, if the Participant had retired on the day before his
death. Any election under this provision will be in writing and
may be changed by the Participant at any time. The Election
Period begins on the later of:
(i) the 90th day before the Participant attains the
Qualified Early Retirement Age, or
(ii) the date on which participation begins, and ends on
the date the Participant terminates employment.
(3) For purposes of this Section 19.08(d):
(i) Qualified Early Retirement Age is the latest of:
(a) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
(b) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(c) the date on which the Participant begins
participation.
(ii) Qualified Joint and Survivor Annuity is an annuity
for the life of
80
the Participant with a survivor annuity for the
life of the Spouse as described in Section 19.07(d).
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SIGNATURE PAGE
Signed the 31st day of March, 1998,
but effective as of the 1st day of May, 1997.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
/S/MITCHEL J. LASKEY
President
ATTEST:
/S/PAUL S. GLOVER
Secretary
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