As filed with the Securities and Exchange Commission on
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE COMMERCE GROUP, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2599931
(State or other (IRS Employer
jurisdiction Identification
of Incorporation) No.)
211 Main Street Webster, Massachusetts 01570
(Address of principal executive offices) (Zip Code)
THE COMMERCE GROUP, INC. 401 (k) PLAN
(Full title of plan)
RANDALL V. BECKER,
TREASURER AND CHIEF ACCOUNTING OFFICER
THE COMMERCE GROUP, INC.
211 MAIN STREET
WEBSTER, MA 01570
(508) 943-9000
(Name, address and telephone
number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum Amount of
Title of securities Amount being offering price aggregated offering registration
to be registered(1) registered(1) per share(2 ) price(2) fee
Common Stock, 1,585,166 $28.3125 $44,880,012 $13,240
$0.50 par value per share
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of
1933, this registration statement
also covers an indeterminate amount of interests to be offered or
sold pursuant to the employee benefit plan described herein.
(2) Estimated solely for purposes of calculating the registration fee;
based upon the price at which The Commerce
Group, Inc. stock currently is being offered to the public in a
best efforts offering.
(Page 1 of 8 pages; exhibit index on page 8)
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3 Incorporation of Documents by Reference
The following documents previously filed with the Securities and
Exchange Commission (the "Commission") by The Commerce Group, Inc. (the
"Registrant") (SEC File No. 0-16882) are incorporated herein by
reference and made a part hereof as of the respective dates of filing of
such documents:
(1) The Registrant's Annual Report on Form 10-K for the
fiscal year ended
December 31, 1997;
(2) The Registrant's Quarterly Report on Form 10-Q filed
with the Commission
for the three month periods ended March 31, 1998 and
June 30, 1998, respectively;
(3) The description of the Common Stock of the
Registrant contained in the Registrant's Registration
Statement on Form 8-A, filed with the Commission on
April 27, 1988, pursuant to Section 12 of the Exchange
Act, including any amendments or reports filed for the
purpose of updating such description; and
All documents which may be filed by the Registrant with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act subsequent to the date hereof and prior to the filing of a
post-effective amendment which indicates that all securities offered
hereunder have been sold or which deregisters all securities then
remaining unsold, shall also be deemed to be incorporated herein by
reference and to be made 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
Regan P. Remillard, General Counsel and Director of the
Registrant, has rendered the legal opinion as to the validity of the
Registrant's common stock. Mr. Remillard is the son of the President
and Chief Executive Officer of the Registrant. Mr. Remillard is a
stockholder of the Registrant (and is entitled to participate in the
Plan).
ITEM 6 Indemnification of Directors and Officers
The Company is a Massachusetts corporation. Section 67 of the
Massachusetts Business Corporation Law provides that, to the extent
specified in or authorized by a corporation's Articles of Organization,
a by-law adopted by the stockholders, or a stockholder vote, or for
persons who are not directors, officers, employees, by a director vote,
under certain conditions, a corporation may indemnify its directors,
officers, employees and other agents, and persons who serve at its
request as directors, officers, employees, or other agents of another
organization, or who serve at its request in any capacity with respect
to any matter as to which such a person shall have been adjudicated in
any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interest of the corporation or, to the
extent to that such matter relates to service with respect to an
employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan.
(Page 2 of 8 pages; exhibit index on page 8)
<PAGE>
ITEM 6 Indemnification of Directors and Officers (Continued)
Section 67 further provides that such indemnification may include
payment by the corporation of the expenses incurred in defending an
action or proceeding in advance of the final disposition of such action
or proceeding if the person to whom advances are made agrees to repay
them if he or she is not ultimately entitled to indemnification. The
promise to repay may be accepted by the corporation without reference to
the final availability of the person to repay. Any other rights such
person may have to indemnification shall not be limited by the absence
of an express provision providing for indemnification. A person may
purchase and maintain on behalf of the persons it has the power to
indemnify liability insurance, whether or not the corporation would have
the power to indemnify such persons under the statute against such
liability.
Article XI of the Company's By-Laws provides, in effect, that each
director, officer, former director, former officer and each person who
served at the request of the Company as a director, officer, partner,
trustee, employee, agent, or nominee or any other entity shall be
indemnified to the maximum extent permitted by law. Article XI has
received the requisite stockholder approval under Section 67 of the
Massachusetts Business Corporation Law.
Article VI of the Company's Articles of Organization eliminates
the monetary liability of directors for certain breaches of fiduciary
duty to the full extent now or hereafter permitted by the Massachusetts
Business Corporation Law. A director is not liable to the Company or
its stockholders for any monetary damages for negligence or gross
negligence in exercising his or her business judgment. This provision
does not change the standard of a director's duty of care and does not
limit or eliminate the right of the Company or any stockholder to seek
an injunction or any other non-monetary relief in the event of a breach
of a director's duty of care. A director will continue to be held
liable for monetary damages for a breach of the duty of loyalty, bad
faith, intentional misconduct, a knowing violation of law, an improper
personal benefit and authorizing dividends, stock redemptions or
repurchase, or loans to directors or officers which violate the
Massachusetts Business Corporation Law.
The Company has obtained director and officer liability insurance.
ITEM 7 Exemption from Registration Claimed
Not Applicable.
ITEM 8 Exhibits
See the Exhibit Index Attached hereto.
The Internal Revenue Service (the "IRS") has determined that the
prototype plan from which the Plan is adopted is, in form, a tax-
qualified employee benefit plan meeting the requirements of Section
401(a) of the Internal Revenue Code of 1986, as amended. (A copy of the
IRS determination letter is included herewith as part of Exhibit 1)
Recently, certain amendments to the Plan have been adopted. The
undersigned Registrant hereby undertakes to submit the Plan, as amended,
to the IRS in a timely manner and to make those changes, if any,
required by the IRS in order for the Plan to qualify as a tax-qualified
employee benefit plan meeting the requirements of Section 401(a) of the
Internal Revenue Code of 1986, as amended.
(Page 3 of 8 pages; exhibit index on page 8)
<PAGE>
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.
(4) 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 (and, where applicable,
each filing of an employee benefit plan's annual report
pursuant to 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.
(b) 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 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 of 8 pages; exhibit index on page 8)
<PAGE>
SIGNATURES
The Registrant Pursuant to the requirements of the Securities
Act of 1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Webster,
State of Massachusetts, on the 21st day of August, 1998.
THE COMMERCE GROUP, INC.
By ARTHUR J. REMILLARD, JR.
Arthur J. Remillard, Jr.
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of August, 1998.
Signature Title
ARTHUR J. REMILLARD, JR. President, Chief Executive
Officer and
(Arthur J. Remillard, Jr.) Director
GERALD FELS Executive Vice President, Chief
(Gerald Fels) Financial Officer and Director
ARTHUR J. REMILLARD, III Senior Vice President -
Policyholder
(Arthur J. Remillard, III) Benefits, Assistant Clerk and
Director
REGAN P. REMILLARD Senior Vice President, General
Counsel
(Regan P. Remillard) President of Commerce West Insurance
Company and Director
JOHN W. SPILLANE Clerk and Director
(John W. Spillane)
RANDALL V. BECKER Treasurer and Chief Accounting
Officer
(Randall V. Becker)
(Page 5 of 8 pages; exhibit index on page 8)
<PAGE>
Signature Title
HERMAN F. BECKER Director
(Herman F. Becker)
JOSEPH A. BORSKI, JR. Director
(Joseph A. Borski, Jr.)
ERIC G. BULTER Director
(Eric G. Butler)
HENRY J. CAMOSSE Director
(Henry J. Camosse)
DAVID R. GRENON Director
(David R. Grenon)
ROBERT W. HARRIS Director
(Robert W. Harris)
ROBERT S. HOWLAND Director
(Robert W. Howland)
JOHN J. KUNKEL Director
(John J. Kunkel)
RAYMOND J. LAURING Director
(Raymond J. Lauring)
ROGER E. LAVOIE Director
(Roger E. Lavoie)
NORMAND R. MAROIS Director
(Normand R. Marois)
SURYAKANT M. PATEL Director
(Suryakant M. Patel)
(Page 6 of 8 pages; exhibit index on page 8)
<PAGE>
Signature Title
Director
(Antranig A. Sahagian)
GURBACHAN SINGH Director
(Gurbachan Singh)
The Plan Pursuant to the requirements of the Securities Act of
1933, the trustee has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Webster, State of Massachusetts, on the 21st day of August
1998.
THE COMMERCE GROUP, INC.
401(k) PLAN
By RANDALL V. BECKER
Randall V. Becker
Treasurer and Chief Accounting Officer
(Page 7 of 8 pages; exhibit index on page 8)
<PAGE>
EXHIBITS
1. The Plan
2. Opinion of The Commerce Group, Inc. General Counsel
3. Consent of Ernst & Young LLP
4. Consent of PricewaterhouseCoopers LLP
(Page 8 of 8 pages; exhibit index on page 8)
<PAGE>
________________________________________________________
MERRILL LYNCH
- ----------------
SPECIAL
- ---------------
PROTOTYPE DEFINED
CONTRIBUTION PLAN
ADOPTION AGREEMENT
________________________________________________________
401(k) PLAN
EMPLOYEE THRIFT PLAN
PROFIT-SHARING PLAN
Letter Serial Number: D359287b
National Office Letter Date: 6/29/93
This Prototype Plan and Adoption Agreement are important legal
instruments with legal and tax implications for which the Sponsor,
Merrill Lynch, Pierce, Fenner & Smith, Incorporated, does not assume
responsibility. The Employer is urged to consult with its own attorney
with regard to the adoption of this Plan and its suitability to its
circumstances.
<PAGE>
Adoption of Plan
The Employer named below hereby establishes or restates a profit-sharing
plan that includes a
1 401(k), 0 profit-sharing and/or 0 thrift plan feature (the "Plan")
by adopting the Merrill Lynch Special Prototype Defined Contribution
Plan and Trust as modified by the terms and provisions of this Adoption
Agreement.
Employer and Plan Information
Employer Name:* The Commerce Group, Inc.
Business Address: 211 Main Street
Webster, MA 01570
Telephone Number: (508) 943-9000
Employer Taxpayer ID Number: 04-2599931
Employer Taxable Year ends on: December 31st
Plan Name: The Commerce Group, Inc.
401k Plan
Plan Number: 002
Effective Date of Adoption 401(k) Profit Sharing Thrift
or Restatement: 09/01/98 / / / /
Original Effective Date: / / / / / /
If this Plan is a continuation or an amendment of a prior plan, all
optional forms of benefits provided in the prior plan must be provided
under this Plan to any Participant who had an account balance, whether
or not vested, in the prior plan.
* If there are any Participating Affiliates in this Plan, list below
the proper name of each Participating Affiliate.
Commerce Holdings, Inc.; The Commerce Insurance Co.;
Citation Insurance Co.; Commerce West Insurance Co.;.
Bay Finance Co.; Clark-Prout Insurance Agency.
2
<PAGE>
ARTICLE I. Definitions
A. "Compensation"
(1) With respect to each Participant, except as provided below.
Compensation shall mean the (select all those applicable for each
column):
401(k) and/ Profit
or Thrift Sharing
1 0 (a) amount reported in the "Wages
Tips and Other Compensation" Box on Form W-2 for
the applicable period selected in Item 5 below.
0 0 (b) compensation for Code Section 415
safe-harbor purposes (as defined in Section
3.9.1 (H)(i) of basic plan document #03) for the
applicable period selected in Item 5 below.
0 0 (c) amount reported pursuant to Code
Section 3401(a) for the applicable period
selected in Item 5 below.
0 0 (d) all amounts received (under
options (a) (b) or (c) above) for personal
services rendered to the Employer but excluding
(select one):
0 overtime
0 bonuses
0 commissions
0 amounts in excess of $
0 other (specify) .
(2) Treatment of Elective Contributions (select one):
1 (a) For purposes of contributions, Compensation shall
include Elective Deferrals and amounts excludable from the
gross income of the Employee under Code Section 125, Code
Section 402(e)(3), Code Section 402(h) or Code Section
403(b) ("elective contributions").
0 (b) For purposes of contributions, Compensation shall not
include "elective contributions."
(3) CODA Compensation (select one):
1 (a) For purposes of the ADP and ACP Tests, Compensation
shall include "elective contributions."
0 (b) For purposes of the ADP and ACP Tests, Compensation
shall not include "elective contributions."
3
<page
(4) With respect to Contributions to an Employer Contributions
Account, Compensation
shall include all Compensation (select one):
0 (a) during the Plan Year in which the Participant
enters the Plan.
1 (b) after the Participant's Entry Date.
(5) The applicable period for determining Compensation shall be (select
one):
1 (a) the Plan Year.
0 (b) the Limitation Year.
0 (c) the consecutive 12-month period ending on
_____
B. "Disability"
(1) Definition
Disability shall mean a condition which results in the Participant's
(select one):
0 (a) inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of
not less than 12 months.
1 (b) total and permanent inability to meet the requirements of the
Participant's customary employment which can be expected to
last for a continuous period of not less than 12 months.
0 (c) qualification for Social Security disability benefits.
0 (d) qualification for benefits under the Employer's long-term
disability plan.
(2) Contributions Due to Disability (select one):
1 (a) No contributions to an Employer Contributions Account will be
made on behalf of a Participant due to his or her Disability.
0 (b) Contributions to an Employer Contributions Account will be
made on behalf of a Participant due to his or her Disability
provided that: the Employer elected option (a) or (c) above as
the definition of Disability, contributions are not made on
behalf of a Highly Compensated Employee, the contribution is
based on the Compensation each such Participant would have
received for the Limitation Year if the Participant had been
paid at the rate of Compensation paid immediately before his or
her Disability, and contributions made on behalf of such
Participant will be nonforfeitable when made.
4
<PAGE>
C. "Early Retirement" is (select one):
0 (1) not permitted.
1 (2) permitted if a Participant terminates Employment before
Normal Retirement Age and has (select one):
0 (a) attained age
1 (b) attained age 55 and completed 5 Years
of Service
0 (c) attained age and completed Years of
Service as a Participant.
D. "Eligible Employees" (select one):
1 (1) All Employees are eligible to participate in the
Plan.
0 (2) The following Employees are not eligible to
participate in the Plan (select all those applicable):
0 (a) Employees included in a unit of Employees
covered by a collective bargaining agreement between the
Employer or a Participating Affiliate and the Employee
representatives (not including any organization more
than half of whose members are Employees who are owners,
officers, or executives of the Employer or Participating
Affiliate) in the negotiation of which retirement
benefits were the subject of good faith bargaining,
unless the bargaining agreement provides for
participation in the Plan.
0 (b) non-resident aliens who received no earned
income from the Employer or a Participating Affiliate
which constitutes income from sources within the United
States.
0 (c) Employees of an Affiliate.
0 (d) Employees employed in or by the following
specified division, plant, location, job category or
other identifiable individual or group of Employees:
5
<PAGE>
E. "Entry Date" Entry Date shall mean (select as applicable):
401(k)
and/or Profit
Thrift Sharing
0 0 (1) If the initial Plan Year is less than
twelve months, the day of and
thereafter:
0 0 (2) the first day of the Plan Year following
the date the Employee meets the eligibility
requirements. If the Employer elects this option (2)
establishing only one Entry Date, the eligibility "age
and service" requirements elected in Article II must
be no more than age 20-1/2 and 6 months of service.
1 0 (3) the first day of the month following the
date the Employee meets the eligibility requirements.
0 0 (4) the first day of the Plan Year and the
first day of the seventh month of the Plan Year
following the date the Employee meets the eligibility
requirements.
0 0 (5) the first day of the Plan Year, the first
day of the fourth month of the Plan Year, the first
day of the seventh month of the Plan Year, and the
first day of the tenth month of the Plan Year
following the date the Employee meets the eligibility
requirements.
0 0 (6) other: provided that the Entry Date or
Dates selected are no later than any of the options
above.
F. "Hours of Service"
Hours of Service for the purpose of determining a Participant's Period
of Severance and Year of Service shall be determined on the basis of the
method specified below:
(1) Eligibility Service: For purposes of determining
whether a Participant has satisfied the eligibility
requirements, the following method shall be used (select
one):
401(k)
and/or Profit
Thrift Sharing
1 0 (a) elapsed time method
0 0 (b) hourly records method
6
<PAGE>
(2) Vesting Service: A Participant's nonforfeitable interest shall
be determined on the basis of the method specified below (select
one):
0 (a) elapsed time method
0 (b) hourly records method
1 (c) If this item (c) is checked, the Plan only
provides for contributions that are always 100% vested
and this item (2) will not apply.
(3) Hourly Records: For the purpose of determining Hours of Service
under the hourly record method (select one):
0 (a) only actual hours for which an Employee is paid or
entitled to payment shall be counted.
0 (b) an Employee shall be credited with 45 Hours of
Service if such Employee would be credited with at least
1 Hour of Service during the week.
G. "Integration Level"
1 (1) This Plan is not integrated with Social Security.
0 (2) This Plan is integrated with Social Security. The
Integration Level shall be (select one):
0 (a) the Taxable Wage Base.
0 (b) $_____ (a dollar amount less than the Taxable
Wage Base).
0 (c) _____% of the Taxable Wage Base (not to exceed
100%).
0 (d) the greater of $10,000 or 20% of the Taxable
Wage Base.
H. "Limitation Compensation"
For purposes of Code Section 415, Limitation Compensation shall be
compensation as determined for purposes of (select one):
0 (1) Code Section 415 Safe-Harbor as defined in Section
3.9.1(H)(i) of basic plan document #03.
0 (2) the "Wages, Tips and Other Compensation" Box on
Form W-2.
1 (3) Code Section 3401(a) Federal Income Tax
Withholding.
I. "Limitation Year"
For purposes of Code Section 415, the Limitation Year shall be (select
one):
1 (1) the Plan Year.
0 (2) the twelve consecutive month period ending on the
day of the month of.
7
<PAGE>
J. "Net Profits" are (select one):
1 (1) not necessary for any contribution.
0 (2) necessary for (select all those applicable):
0 (a) Profit-Sharing Contributions.
0 (b) Matching 401(k) Contributions.
0 (c) Matching Thrift Contributions.
K. "Normal Retirement Age"
Normal Retirement Age shall be (select one):
1 (1) attainment of age 65 (not more than 65) by the
Participant.
0 (2) attainment of age (not more than 65) by the
Participant or the
anniversary (not more than the 5th) of
the first day of the Plan Year in which the Eligible
Employee became a Participant, whichever is later.
0 (3) attainment of age (not more than 65) by the
Participant or the
anniversary (not more than the 5th) of the first
day on which the Eligible Employee performed an Hour of
Service, whichever is later.
L. "Participant Directed Assets" are:
401(k) and/ Profit
or Thrift Sharing
1 0 (1) permitted.
0 0 (2) not permitted.
M. "Plan Year"
The Plan Year shall end on the 31st day of December.
N. "Predecessor Service"
Predecessor service will be credited (select one):
1 (1) only as required by the Plan.
0 (2) to include, in addition to the Plan requirements and
subject to the limitations set forth below, service with
the following predecessor employer(s) determined as if
such predecessors were the Employer: .
8
<PAGE>
Service with such predecessor employer applies [select either or both
(a) and/or (b); (c) is only available in addition to (a) and/or (b)]:
0 (a) for purposes of eligibility to participate;
0 (b) for purposes of vesting;
0 (c) except for the following service: .
0. "Valuation Date"
Valuation Date shall mean (select one for each column, as applicable):
401(k) and/ Profit
or Thrift Sharing
0 0 (1) the last business day of each month.
0 0 (2) the last business day of each quarter
within the Plan Year.
0 0 (3) the last business day of each semi-
annual period within the Plan Year.
0 0 (4) the last business day of the Plan
Year.
1 0 (5) other: daily basis.
ARTICLE II. Participation
Participation Requirements
An Eligible Employee must meet the following requirements to become a
Participant (select one or more for each column, as applicable):
401(k) and/ Profit
or Thrift Sharing
0 0 (1) Performance of one Hour of Service.
0 0 (2) Attainment of age (maximum 20
1/2) and completion of (not more than 1/2)
Years of Service. If this item is selected, no
Hours of Service shall be counted.
1 0 (3) Attainment of age 21 (maximum 21) and
completion of 1/4 Year(s) of Service. If more
than one Year of Service is selected, the
immediate 100% vesting schedule must be selected
in Article VII of this Adoption Agreement.
9
<PAGE>
401(k) and/ Profit
or Thrift Sharing
0 0 (4) Attainment of age (maximum 21)
and completion of Year(s)of Service. If more
than one Year of Service is selected, the
immediate 100% vesting schedule must be selected in
Article VII of this Adoption Agreement.
0 0 (5) Each Employee who is an Eligible
Employee on will be deemed to have
satisfied the participation requirements on the
effective date without regard to such Eligible
Employee's actual age and/or service.
ARTICLE 111. 401(k) Contributions and Account Allocation
A. Elective Deferrals
If selected below, a Participant's Elective Deferrals will be (select
all applicable):
1 (1) a dollar amount or a percentage of Compensation, as
specified by the Participant on his or her 401(k) Election
form, which may not exceed 15 % of his or her
Compensation.
0 (2) with respect to bonuses, such dollar amount or
percentage as specified by the Participant on his or her
401(k) Election form with respect to such bonus.
B. Matching 401(k) Contributions
If selected below, the Employer may make Matching 401(k) Contributions
for each Plan Year (select one):
0 (1) Discretionary Formula:
Discretionary Matching 401(k) Contribution equal to such a dollar
amount or percentage of Elective Deferrals, as determined by the
Employer, which shall be allocated (select one):
0 (a) based on the ratio of each Participant's Elective Deferral
for the Plan Year to the total Elective Deferrals of all
Participants for the Plan Year. If inserted, Matching 401(k)
Contributions shall be subject to a maximum amount
of $ for each Participant or % of each
Participant's Compensation.
10
<PAGE>
0 (b) in an amount not to exceed % of each Participant's
first % of Compensation contributed as Elective
Deferrals for the Plan Year. If any Matching 401(k)
Contribution remains, it is allocated to each such
Participant in an amount not to xceed % of the next
% of each Participant's Compensation contributed as
Elective Deferrals for the Plan Year.
Any remaining Matching 401(k) Contribution shall be allocated to each
such Participant in the ratio that such Participant's Elective
Deferral for the Plan Year bears to the total Elective Deferrals of
all such Participants for the Plan Year. If inserted, Matching
401(k) Contributions shall be subject to a maximum amount of $
for each Participant or % of each Participant's Compensation.
0 (2) Nondiscretionary Formula:
A nondiscretionary Matching 401(k) Contribution for each Plan Year
equal to (select one):
0 (a) % of each Participant's Compensation contributed
as Elective Deferrals. If inserted, Matching 401(k)
Contributions shall be subject to a maximum amount of $
for each Participant or % of each Participant's
Compensation.
0 (b) % of the first % of the Participant's
Compensation contributed as Elective Deferrals and % of
the next % of the Participant's Compensation
contributed as Elective Deferrals. If inserted, Matching
401(k) Contributions shall be subject to a maximum amount of
$ for each Participant or % of each Participant's
Compensation.
C. Participants Eligible for Matching 401(k) Contribution Allocation
The following Participants shall be eligible for an allocation to their
Matching 401(k) Contributions Account (select all those applicable):
0 (1) Any Participant who makes Elective Deferrals.
0 (2) Any Participant who satisfies those requirements elected
by the Employer for an allocation to his or her Employer
Contributions Account as provided in Article IV Section C.
0 (3) Solely with respect to a Plan in which Matching 401(k)
Contributions are made quarterly (or on any other regular
interval that is more frequent than annually) any
Participant whose 401(k) Election is in effect throughout
such entire quarter (or other interval). (quarterly,
monthly or semi-annual)
11
<PAGE>
D. Qualified Matching Contributions
If selected below, the Employer may make Qualified Matching
Contributions for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
0 (a) all Participants who make Elective Deferrals in that
Plan Year.
1 (b) only those Participants who are Nonhighly Compensated
Employees and who make Elective Deferrals for that Plan
Year.
(2) Qualified Matching Contributions will be contributed and
allocated to each Participant in an amount equal to (select
one):
0 (a) % of the Participant's Compensation contributed
as Elective Deferrals. If inserted, Qualified Matching
Contributions shall not exceed % of the
Participant's Compensation.
1 (b) Such an amount, determined by the Employer, which is
needed to meet the ACP Test.
(3) In its discretion, the Employer may elect to designate all or
any part of Matching 401(k) Contributions as Qualified Matching
Contributions that are taken into account as Elective Deferrals
- -- included in the ADP Test and excluded from the ACP Test --on
behalf of (select one):
0 (a) all Participants who make Elective Deferrals for
that Plan Year.
1 (b) Only Participants who are Nonhighly Compensated
Employees who make Elective Deferrals for that Plan
Year.
E. Qualified Nonelective Contributions
If selected below, the Employer may make Qualified Nonelective
Contributions for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Nonelective
Contributions on behalf of (select one):
0 (a) all Eligible Participants.
1 (b) only Eligible Participants who are Nonhighly
Compensated Employees.
12
<PAGE>
(2) Qualified Nonelective Contributions will be contributed and
allocated to each Eligible Participant in an amount equal to
(select one):
0 (a) % (no more than 15%) of the Compensation of
each Eligible Participant eligible to share in the
allocation.
1 (b) Such an amount determined by the Employer, which is
needed to meet either the ADP Test or ACP Test.
(3) At the discretion of the Employer, as needed and taken into
account as Elective Deferrals included in the ADP Test on behalf
of (select one):
0 (a) all Eligible Participants.
1 (b) only those Eligible Participants who are Nonhighly
Compensated Employees.
F. Elective Deferrals used in ACP Test (select one):
1 (1) At the discretion of the Employer, Elective Deferrals may
be used to satisfy the ACP Test.
0 (2) Elective Deferrals may not be used to satisfy the ACP
Test.
G. Making and Modifying a 401(k) Election
An Eligible Employee shall be entitled to increase, decrease or resume
his or her Elective Deferral percentage with the following frequency
during the Plan Year (select one):
0 (1) annually
0 (2) semi-annually
0 (3) quarterly
1 (4) monthly
0 (5) other (specify):
Any such increase, decrease or resumption shall be effective as of
the first payroll period coincident with or next following the
first day of each period set forth above. A Participant may
completely discontinue making Elective Deferrals at any time
effective for the payroll period after written notice is provided
to the Administrator.
13
<PAGE>
ARTICLE IV. Profit-Sharing Contributions and Account Allocation
A. Profit-Sharing Contributions
If selected below, the following contributions for each Plan Year will
be made:
Contributions to Employer Contributions Accounts (select one):
0 (a) Such an amount, if any, as determined by the Employer.
0 (b) % of each Participant's Compensation.
B. Allocation of Contributions to Employer Contributions Accounts
(select one):
0 (1) Non-Integrated Allocation
The Employer Contributions Account of each Participant
eligible to share in the allocation for a Plan Year shall
be credited with a portion of the contribution, plus any
forfeitures if forfeitures are reallocated to
Participants, equal to the ratio that the Participant's
Compensation for the Plan Year bears to the Compensation
for that Plan Year of all Participants entitled to share
in the contribution.
0 (2) Integrated Allocation
Contributions to Employer Contributions Accounts with
respect to a Plan Year, plus any forfeitures if
forfeitures are reallocated to Participants, shall be
allocated to the Employer Contributions Account of each
eligible Participant as follows:
(a) First, in the ratio that each such eligible
Participant's Compensation for the Plan Year bears to
the Compensation for that Plan Year of all eligible
Participants but not in excess of 3% of each
Participant's Compensation.
(b) Second, any remaining contributions and forfeitures
will be allocated in the ratio that each eligible
Participant's Compensation for the Plan Year in excess
of the Integration Level bears to all such
Participants' excess Compensation for the Plan Year
but not in excess of 3%.
14
<PAGE>
(c) Third, any remaining contributions and forfeitures
will be allocated in the ratio that the sum of each
Participant's Compensation and Compensation in excess
of the Integration Level bears to the sum of all
Participants' Compensation and Compensation in excess
of the Integration Level, but not in excess of the
Maximum Profit-Sharing Disparity Rate (defined below).
(d) Fourth, any remaining contributions or forfeitures
will be allocated in the ratio that each Participant's
Compensation for that year bears to all Participants'
Compensation for that year.
The Maximum Profit-Sharing Disparity Rate is equal to the lesser of:
(a) 2.7% or
(b) The applicable percentage determined in accordance
with the following table:
If the Integration Level is
(as a % of the Taxable Wage
Base ("TWB")). The applicable percentage is:
20% (or $10,000 if greater)
or less of the TWB 2.7%
More than 20% (but not less than
$10,001 but not more than
80% of the TWB 1.3%
More than 80% but not less
than 100% of the TWB 2.4%
100% of the TWB 2.7%
15
<PAGE>
C. Participants Eligible for Employer Contribution Allocation
The following Participants shall be eligible for an allocation to their
Employer Contributions Account (select all those applicable):
0 (1) Any Participant who was employed during the Plan Year.
0 (2) In the case of a Plan using the hourly record method for
determining Vesting Service, any Participant who was
credited with a Year of Service during the Plan Year.
0 (3) Any Participant who was employed on the last day of the
Plan Year.
0 (4) Any Participant who was on a leave of absence on the last
day of the Plan Year.
0 (5) Any Participant who during the Plan Year died or became
Disabled while an Employee or terminated employment after
attaining Normal Retirement Age.
0 (6) Any Participant who was credited with at least 501 Hours
of Service whether or not employed on the last day of the
Plan Year.
0 (7) Any Participant who was credited with at least 1,000
Hours of Service and was employed on the last day of the
Plan Year.
ARTICLE V. Thrift Contributions
A. Employee Thrift Contributions
If selected below, Employee Thrift Contributions, which are required for
Matching Thrift Contributions, may be made by a Participant in an amount
equal to (select one):
0 (1) A dollar amount or a percentage of the Participant's
Compensation which may not be less than % nor may not
exceed % of his or her Compensation.
0 (2) An amount not less than % of and not more than %
of each Participant's Compensation.
16
<PAGE>
B. Making and Modifying an Employee Thrift Contribution Election
A Participant shall be entitled to increase, decrease or resume his or
her Employee Thrift Contribution percentage with the following frequency
during the Plan Year (select one):
0 (1) annually
0 (2) semi-annually
0 (3) quarterly
0 (4) monthly
0 (5) other (specify):
Any such increase, decrease or resumption shall be effective as of the
first payroll period coincident with or next following the first day of
each period set forth above. A Participant may completely discontinue
making Employee Thrift Contributions at any time effective for the
payroll period after written notice is provided to the Administrator.
C. Thrift Matching Contributions
If selected below, the Employer will make Matching Thrift Contributions
for each Plan Year (select one):
0 (1) Discretionary Formula:
A discretionary Matching Thrift Contribution equal to such a
dollar amount or percentage as determined by the Employer, which
shall be allocated (select one):
0 (a) based on the ratio of each Participant's Employee
Thrift Contribution for the Plan Year to the total
Employee Thrift Contributions of all Participants for
the Plan Year. If inserted, Matching Thrift
Contributions shall be subject to a maximum amount of
$ for each Participant or %of each
Participant's Compensation.
0 (b) in an amount not to exceed % of each
Participant's first % of Compensation
contributed as Employee Thrift Contributions for the
Plan Year. If any Matching Thrift Contribution
remains, it is allocated to each such Participant in
an amount not to exceed % of the next
% of each Participant's Compensation contributed as
Employee Thrift Contributions for the Plan Year.
Any remaining Matching Thrift Contribution shall be allocated to
each such Participant in the ratio that such Participant's
Employee Thrift Contributions for the Plan Year bears to the
total Employee Thrift Contributions of all such Participants for
the Plan Year. If inserted, Matching Thrift Contributions shall
be subject to a maximum amount of $ for each Participant
or % of each Participant's Compensation.
17
<PAGE>
0 (2) Nondiscretionary Formula:
A nondiscretionary Matching Thrift Contribution for each Plan Year
equal to (select one):
0 (a) % of each Participant's Compensation contributed
as Employee Thrift Contributions. If inserted, Matching
Thrift Contributions shall be subject to a maximum amount
of $ for each Participant or % of each
Participant's Compensation.
0 (b) % of the first % of the Participant's
Compensation contributed as Employee Thrift Contributions
and % of the next % of the Participant's
Compensation contributed as Employee Thrift Contributions.
If inserted, Matching Thrift Contributions shall be subject
to a maximum amount of $ for each Participant or %
of each Participant's Compensation.
D. Qualified Matching Contributions
If selected below, the Employer may make Qualified Matching
Contributions for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
0 (a) all Participants who make Employee Thrift
Contributions.
0 (b) only those Participants who are Nonhighly Compensated
Employees and who make Employee Thrift Contributions.
(2) Qualified Matching Contributions will be contributed and
allocated to each Participant in an amount equal to:
0 (a) % of the Participant's Employee Thrift
Contributions. If inserted, Qualified Matching
Contributions shall not exceed % of the
Participant's Compensation.
0 (b) such an amount, determined by the Employer which is
needed to meet the ACP Test.
ARTICLE VI. Participant Contributions
Participant Voluntary Nondeductible Contributions
Participant Voluntary Nondeductible Contributions are (select one):
0 (a) permitted.
1 (b) not permitted.
18
<PAGE>
ARTICLE VII. Vesting
A. Employer Contribution Accounts
(1) A Participant shall have a vested percentage in his or her
Profit-Sharing Contributions, Matching 401(k) Contributions
and/or Matching Thrift Contributions, if applicable, in
accordance with the following schedule (Select one):
Matching 401(k)
and/or Matching Profit-sharing
Thrift contributions contributions
<TABLE>
<CAPTION>
<S> <C> <C>
0 0 (a) 100% vesting immediately
upon participation.
0 0 (b) 100% after (not
more than 5) years of Vesting
Service.
0 0 (c) Graded vesting schedule:
% % after 1 year of Vesting Service;
% % after 2 years of Vesting
Service;
% % (not less than 20%) after 3
years of Vesting Service;
% % (not less than 40%) after 4
years of Vesting Service;
% % (not less than 60%) after 5
years of Vesting Service;
% % (not less than 80%) after 6
years of Vesting Service;
</TABLE>
100% after 7 years of Vesting Service.
19
<page
(2) Top Heavy Plan
Matching 401(k)
and/or Matching Profit-Sharing
Thrift Contributions Contributions
<TABLE>
<CAPTION>
Vesting Schedule (Select one):
<S> <C> <C>
0 0 (a) 100% vesting immediately upon
participation.
0 0 (b) 100% after (not more than 3)
years of Vesting Service.
0 0 (c) Graded vesting schedule:
% % after 1 year of Vesting Service;
% % (not less than 20%) after 2 years
of Vesting Service;
% % (not less than 40%) after 3 years
of Vesting Service;
% % (not less than 60%) after 4 years
of Vesting Service;
% % (not less than 80%) after 5 years
of Vesting Service;
</TABLE>
100% after 6 years of Vesting Service.
Top Heavy Ratio:
(a) If the adopting Employer maintains or has ever maintained a
qualified defined benefit plan, for purposes of establishing
present value to compute the top-heavy ratio, any benefit shall
be discounted only for mortality and interest based on the
following:
Interest Rate: 8 %
Mortality Table: UP '84
(b) For purposes of computing the top-heavy ratio, the valuation
date shall be the last business day of each Plan Year.
20
<PAGE>
B. Allocation of Forfeitures
Forfeitures shall be (select one from each applicable column):
Matching 401(k)
and/or Matching Profit-Sharing
Thrift Contributions Contributions
0 0 (1) used to reduce
Employer contributions for
succeeding Plan Year.
0 0 (2) allocated in the
succeeding Plan Year in the ratio which
the Compensation of each Participant
for the Plan Year bears to the total
Compensation of all Participants
entitled to share in the contributions.
If the Plan is integrated with Social
Security, forfeitures shall be
allocated in accordance with the
formula elected by the Employer.
C. Vesting Service
For purposes of determining Years of Service for Vesting Service [select
(1) or (2) and/or (3)]:
1 (1) All Years of Service shall be included.
0 (2) Years of Service before the Participant attained age 18
shall be excluded.
0 (3) Service with the Employer prior to the effective date of
the Plan shall be excluded.
ARTICLE VIII. Deferral of Benefit Distributions,
In-Service Withdrawals and Loans
A. Deferral of Benefit Distributions
401(k) and/ Profit
or Thrift Sharing
0 0 If this item is checked, a Participant's
vested benefit in his or her Employer Accounts
shall be payable as soon as practicable after
the earlier of: (1) the date the Participant
terminates Employment due to Disability or (2)
the end of the Plan Year in which a terminated
Participant attains Early Retirement Age, if
applicable, or Normal Retirement Age.
21
<PAGE>
B. In-Service Distributions
1 (1) In-service distributions may be made from any of the
Participant's vested Accounts, at any time upon or after the
occurrence of the following events (select all applicable):
1 (a) a Participant's attainment of age 59-1/2.
1 (b) due to hardships as defined in Section 5.9 of the
Plan.
0 (2) In-service distributions are not permitted.
C. Loans are:
401(k) and/ Profit
or Thrift Sharing
0 0 (1) permitted.
1 0 (2) not permitted.
ARTICLE IX. Group Trust
0 If this item is checked, the Employer elects to establish a Group
Trust consisting of such Plan assets as shall from time to time be
transferred to the Trustee pursuant to Article X of the Plan. The
Trust Fund shall be a Group Trust consisting of assets of this Plan
plus assets of the following plans of the Employer or of an
Affiliate: .
ARTICLE X. Miscellaneous
A. Identification of Sponsor
The address and telephone number of the Sponsor's authorized
representative is 800 Scudders Mill Road, Plainsboro, New Jersey
08536; (609) 282-2272. This authorized representative can answer
inquiries regarding the adoption of the Plan, the intended meaning
of any Plan provisions, and the effect of the opinion letter.
The Sponsor will inform the adopting Employer of any amendments
made to the Plan or the discontinuance or abandonment of the Plan.
22
<PAGE>
B. Plan Registration
1. Initial Registration
This Plan must be registered with the Sponsor, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, in order to be considered a
Prototype Plan by the Sponsor. Registration is required so that
the Sponsor is able to provide the Administrator with documents,
forms and announcements relating to the administration of the
Plan and with Plan amendments and other documents, all of which
relate to administering the Plan in accordance with applicable
law and maintaining compliance of the Plan with the law.
The Employer must complete and sign the Adoption Agreement. Upon
receipt of the Adoption Agreement, the Plan will be registered as
a Prototype Plan of Merrill Lynch, Pierce, Fenner & Smith
Incorporated. The Adoption Agreement will be countersigned by an
authorized representative and a copy of the countersigned
Adoption Agreement will be returned to the Employer.
2. Registration Renewal
Annual registration renewal is required in order for the Employer
to continue to receive any and all necessary updating documents.
There is an annual registration renewal fee in the amount set
forth with the initial registration material. The adopting
Employer authorizes Merrill Lynch, Pierce, Fenner & Smith
Incorporated, to debit the account established for the Plan for
payment of agreed upon annual fee; provided, however, if the
assets of an account are invested solely in Participant-Directed
Assets, a notice for this annual fee will be sent to the Employer
annually. The Sponsor reserves the right to change this fee from
time to time and will provide written notice in advance of any
change.
C. Prototype Replacement Plan
This Adoption Agreement is a replacement prototype plan for the (1)
Merrill Lynch Special Prototype Defined Contribution Plan and Trust
- -401(k) Plan #03-004 and (2) Merrill Lynch Asset Management, Inc.,
Special Prototype Defined Contribution Plan and Trust - 401(k) Plan
Adoption Agreement #03-004.
D. Reliance
The adopting Employer may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as evidence
that this Plan is qualified under Code Section 401. In order to
obtain reliance, the Employer must apply to the appropriate Key
District Director of the Internal Revenue Service for a
determination letter with respect to the Plan.
23
<PAGE>
EMPLOYER'S SIGNATURE
Name of Employer: THE COMMERCE GROUP, INC.
By: RANDALL BECKER
Authorized Signature
RANDALL BECKER
Print Name
TREASURER
Title
Date: August 14, 1998
TO BE COMPLETED BY MERRILL LYNCH:
Sponsor Acceptance:
Subject to the terms and conditions of the Prototype Plan and this
Adoption Agreement, this
Adoption Agreement is accepted by Merrill Lynch, Pierce, Fenner & Smith
Incorporated as the
Prototype Sponsor.
Authorized
Signature: Joseph T. Donahue
24
<PAGE>
TRUSTEE(S) SIGNATURE
This Trustee Acceptance is to be completed only if the Employer appoints
one or more Trustees and does not appoint a Merrill Lynch Trust Company
as Trustee.
The undersigned hereby accept all of the terms, conditions, and
obligations of appointment as Trustee under the Plan. If the Employer
has elected a Group Trust in this Adoption Agreement, the undersigned
Trustee(s) shall be the Trustee(s) of the Group Trust.
AS TRUSTEE:
(Signature) (print or type name)
(Signature) (print or type name)
(Signature) (print or type name)
(Signature) (print or type name)
(Signature) (print or type name)
(Signature) (print or type name)
Dated: , 19
25
<PAGE>
THE MERRILL LYNCH TRUST COMPANIES AS TRUSTEE
This Trustee Acceptance and designation of Investment Committee are to
be completed only when a Merrill Lynch Trust Company is appointed as
Trustee.
To be completed by the Employer:
Designation Of Investment Committee
The Investment Committee for the Plan is (print or type names):
Name: Randy V. Becker
Name: Joseph A. Borski, Jr.
Name: Gerald Fels
Name:
Name:
Name:
To be completed by Merrill Lynch Trust Company:
Acceptance By Trustee:
The undersigned hereby accept all of the terms, conditions, and
obligations of appointment as Trustee under the Plan. If the Employer
has elected a Group Trust in this Adoption Agreement, the undersigned
Trustee(s) shall be the Trustee(s) of the Group Trust.
SEAL MERRILL LYNCH TRUST COMPANY, FSB
By: Melanie Madeira
Dated: September 1, 1998
26
<PAGE>
THE MERRILL LYNCH TRUST COMPANIES AS ONE OF THE TRUSTEES
This Trustee Acceptance is to be completed only if, in addition to a
Merrill Lynch Trust Companies as Trustee, the Employer appoints an
additional Trustee of a second trust fund.
The undersigned hereby accept all of the terms, conditions, and
obligations of appointment as Trustee under the Plan. If the Employer
has elected a Group Trust in this Adoption Agreement, the undersigned
Trustee(s) shall be the Trustee(s) of the Group Trust.
as TRUSTEE
(Signature) (print or type name)
Dated: , 19
SEAL MERRILL LYNCH TRUST COMPANY, FSB
By:
Dated: , 19
DESIGNATION OF INVESTMENT COMMITTEE
The Investment Committee for the Plan is (print or type names):
Name:
Name:
Name:
Name:
27
<PAGE>
MERRILL LYNCH
SPECIAL
PROTOTYPE
DEFINED CONTRIBUTION PLAN
Base Plan Document #03 used in conjunction with:
Non-standardized Profit Sharing Plan with CODA
Letter Serial Number: D35928b
National Office Letter Date: 6/29/93
Non-standardized Money Purchase Pension Plan
Letter Serial Number: D359288b
National Office Letter Date: 6/29/93
Non-standardized Profit Sharing Plan
Letter Serial Number: D359289b
National Office Letter Date: 6/29/93
Non-standardized Target Benefit Plan
Letter Serial Number: D361009a
National Office Letter Date: 6/29/93
This Prototype Plan and Adoption Agreement are important legal
instruments with legal and tax
implications for which the Sponsor, Merrill Lynch, Pierce, Fenner &
Smith, Incorporated, does not assume
responsibility. The Employer is used to consult with its own attorney
with regard to the adoption of this
Plan and its suitability to its circumstances.
<PAGE>
61
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan with
CODA
FFN: 5033981603-004 Case: 9201920 EIN: 13-5674085
Washington, DC: 20224
BPD: 03 Plan. 004 Letter Serial No: D359287b
Person to Contact: Mr. Wolf
MERRILL LYNCH PIERCE FENNER & SMITH INC
Telephone Number: (202) 622-8380
P 0 BOX 9038
Refer Reply to: E:EP:Q:1
PRINCETON, NJ 08543
Date: 06/29/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above
does not in and of itself adversely affect the plan's acceptability
under section 401 of the Internal Revenue code. This opinion relates
only to the amendment to the form of the plan It is not an opinion as to
the acceptability of any other amendment or of the form of the plan as a
whole, or as to the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan: You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
An employer who adopts the amended form of the plan after the date of
the amendment should apply for a determination letter by filing an
application with the Key District Director of Internal Revenue on Form
5307, Short Form Application for Determination for Employee Benefit
Plan.
This letter with respect to the amendment to the form of the plan does
not affect the applicability to the plan of the continued, interim and
extended reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-
9, 1989-1 C.B. 780. The applicability of such provisions may be
determined by reference to the initial opinion letter issued with
respect to the plan.
If you, the sponsoring organization, have any questions concerning the
IRS processing of this case, please call the above telephone number.
This number is only for use of the sponsoring organization. Individual
participants and/or adopting employers with questions concerning the
plan should contact the sponsoring organization. The plan's adoption
agreement must include the sponsoring organization's address and
telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number and the most convenient time for us to call in case we
need more information. Whether you call or write, please refer to the
Letter Serial Number and File Folder Number shown in the heading of this
letter.
You should keep this letter as a permanent record. Please notify us if
you modify or discontinue sponsorship of this plan.
Chief, Employee Plans Qualifications Branch
<PAGE>
61
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Money Purchase Pension Plan
FFN: 50339816103-003 Case: 9201919 EIN: 13-5674085
Washington, DC: 20224
BPD: 03 Plan: 003 Letter Serial No: D359288b
Person to Contact: Mr. Wolf
MERRILL LYNCH PIERCE FENNER & SMITH INC
Telephone Number: (202) 622-8380
P 0 BOX 9038
Refer Reply to: E:EP:Q:1
PRINCETON, NJ 08543
Date: 06/29/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above
does not in and of itself adversely affect the plan's acceptability
under section 401 of the Internal Revenue Code. This opinion relates
only to the amendment to the form of the plan. It is not an opinion as
to the acceptability of any other amendment or of the form of the plan
as a whole. or as to the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan: You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
An employer who adopts the amended form of the plan after the date of
the amendment should apply for a determination letter by filing an
application with the Key District Director of Internal Revenue on Form
5307. Short Form Application for Determination for Employee Benefit
Plan.
This letter with respect to the amendment to the form of the plan does
not affect the applicability to the plan of the continued, interim and
extended reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-
9, 1989-1 C.B. 780. The applicability of such provisions may be
determined by reference to the initial opinion letter Issued with
respect to the plan.
If you, the sponsoring organization, have any questions concerning the
IRS processing of this case, please call the above telephone number.
This number is only for use of the sponsoring organization. Individual
participants and/or adopting employers with questions concerning the
plan should contact the sponsoring organization. The plan's adoption
agreement must include the sponsoring organization's address and
telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number and the most convenient time for us to call in case we
need more Information. 'Whether you call or write, please refer to the
Letter Serial Number and File Folder Number shown in the heading of this
letter.
You should keep this letter as a permanent record. Please notify us if
you modify or discontinue sponsorship of this plan.
Chief, Employee Plans Qualifications Branch
<PAGE>
61
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Profit Sharing Plan
Washington, DC: 20224
FFN: 50339816103-002 Case: 9201918 EIN: 13-5674085
BPD: 03 Plan: 002 Letter Serial No: D359289b Person to Contact: Mr. Wolf
MERRILL LYNCH PIERCE FENNER & SMITH INC
Telephone Number (202)622-8380
P0 BOX 9038
Refer Reply to: E:EP:Q:1
PRINCETON, NJ 08543
Date: 06/29/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above
does not in and of itself adversely affect the plan's acceptability
under section 401 of the Internal Revenue code. This opinion relates
only to the amendment to the form of the plan. It is not an opinion as
to the acceptability of any other amendment or of the form of the plan
as a whole, or as to me effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan. You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
An employer who adopts the amended form of the plan after the date of
the amendment should apply for a determination letter by filing an
application with the Key District Director of Internal Revenue on Form
5307, Short Form Application for Determination for Employee Benefit
Plan.
This letter with respect to the amendment to the form of the plan does
not affect the applicability to the plan of the continued, interim and
extended reliance provisions of sections 13 and 17.03 of Rev. Proc. 89-
9, 1989-1 C.B. 780. The applicability of such provisions may be
determined by reference to the initial opinion letter issued with
respect to the plan.
If you, the sponsoring organization, have any questions concerning the
IRS processing of this case, please call the above telephone number.
This number is only for use of the sponsoring organization. Individual
participants and/or adopting employers with questions concerning the
plan should contact the sponsoring organization. The plan's adoption
agreement must include the sponsoring organization's address and
telephone number for inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number and the most convenient time for us to call in case we
need more information. Whether you call or write, please refer to the
Letter Serial Number and File Folder Number shown in the heading of this
letter.
You should keep this letter as a permanent record. Please notify us if
you modify or discontinue sponsorship of this plan.
Chief, Employee Plans Qualifications Branch
<PAGE>
61
Internal Revenue Service Department of the Treasury
Plan Description: Prototype Non-standardized Target Benefit Plan
FFN: 50339816103-001 Case: 8904027 EIN: 13-5674085 Washington, DC: 20224
BPD: 03 Plan: 001 Letter Serial No: D361009a
Person to Contact Mr. Wolf
MERRILL LYNCH PIERCE FENNER L SMITH INC
Telephone Number: (202)622-8380
P 0 BOX 9038
Refer Reply to: E:EP:Q:1
PRINCETON, NJ 08543
Date: 06/29/93
Dear Applicant:
In our opinion. the form of the plan identified above is acceptable
under section 401 of the Internal Revenue Code for use by employers for
the benefit of their employees. This opinion relates only to the
acceptability of the form of the plan under the Internal Revenue Code.
It is not an opinion of the effect of other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan. You are also required to send a copy of the approved form of the
plan, any approved amendments and related documents to each Key District
Director of Internal Revenue Service in whose jurisdiction there are
adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling
or determination as to whether an employer's plan qualifies under Code
section 401(a). Therefore, an employer adopting the form of the plan
should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue Service on Form 5307,
Short Form Application for Determination for Employee Benefit Plan.
If you, the sponsoring organization, have any questions concerning the
IRS processing of this case. please. call the above telephone number.
This number Is only for use of the sponsoring organization. Individual
participants and/or adopting employers with questions concerning the
plan should contact the sponsoring organization. The plan's adoption
agreement must include the sponsoring organization's address and
telephone number for Inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your
telephone number and the most convenient time for us to call in case we
need more information. Whether you call or write, please refer to the
Letter Serial Number and File Folder Number shown in the heading of this
letter.
You should keep this letter as a permanent record. Please notify us if
you modify or discontinue sponsorship of this plan.
Chief, Employee Plans Qualifications Branch
<PAGE>
TABLE OF Contents
ARTICLE I DEFINITIONS
1.1 "Account" 1
1.2 "Account Balance" 1
1.3 "ACP Test" 1
1.4 "Actual Deferral Percentage" 1
1.5 "Adjustment Factor" 1
1.6 "Administrator" 1
1.7 "Adoption Agreementt" 1
1.8 "ADP Test" 1
1.9 "Affiliate" 1
1.10 "Annuity Contract" 1
1.11 "Average Actual Deferral Percentage" 1
1.12 "Average Contribution Percentage" 1
1.13 "Beneficiary" 1
1.14 "Benefit Commencement Date" 2
1.15 "CODA" 2
1.16 "CODA Compensation" 2
1.17 "Code" 2
1.18 "Compensation" 2
1.19 "Contribution Percentage" 3
1.20 "Contribution Percentage Amounts" 3
1.21 "Defined Benefit Plan" 3
1.22 "Defined Contribution Plan" 3
1.23 "Disability" 3
1.24 "Early Retirement" 3
1.25 "Early Retirement Date" 3
1.26 "Earned Income" 3
1.27 "Elective Deferrals" 3
1.28 "Elective Deferrals Account" 4
1.29 "Eligible Employee" 4
1.30 "Eligible Participant" 4
1.31 "Employee" 4
1.32 "Employee Thrift Contributions" 4
1.33 "Employee Thrift Contributions Account" 4
1.34 "Employer" 4
1.35 "Employer Account" 4
1.36 "Employer Contributions" 4
1.37 "Employer Contributions Account" 4
1.38 "Employment" 4
1.39 "Entry Date" 4
1.40 "ERISA" 4
1.41 "Excess Aggregate Contributions" 5
1.42 "Excess Contributions" 5
1.43 "Excess Elective Deferrals" 5
1.44 "Family Member" 5
1.45 "401(k) Contributions Accounts" 5
<PAGE
TABLE OF CONTENTS
1.46 "401(k) Election" 5
1.47 "Fully Vested Separation" 5
1.48 "Group Trust" 5
1.49 "Highly Compensated Employee" 5
1.50 "Hour of Service" 6
1.51 "Immediately Distributable" 6
1.52 "Investment Manager" 6
1.53 "Key Employee" 6
1.54 "Leased Employee" 7
1.55 "Limitation Year" 7
1.56 "Master or Prototype Plan" 7
1.57 "Matching 401(k) Contribution" 7
1.58 "Matching 401(k) Contributions Account" 7
1.59 "Matching Thrift Contributions" 7
1.60 "Matching Thrift Contributions Account" 7
1.61 "Net Profits" 7
1.62 "Nonhighly Compensated Employee" 7
1.63 "Nonvested Separation" 7
1.64 "Normal Retirement Age" 7
1.65 "Owner-Employee" 7
1.66 "Partially Vested Separation" 8
1.67 "Participant" 8
1.68 "Participant Contributions Account" 8
1.69 "Participant-Directed Assets" 8
1.70 "Participant Voluntary Nondeductible Contributions" 8
1.71 "Participant Voluntary Nondeductible Contributions Account"8
1.72 "Participating Affiliate 8
1.73 "Period of Severance" 8
1.74 "Plan" 8
1.75 "Plan Year" 8
1.76 "Prototype Plan" 9
1.77 "Qualified Joint and Survivor Annuity" 9
1.78 "Qualified Matching Contributions" 9
1.79 "Qualified Matching Contributions Account" 9
1.80 "Qualified Nonelective Contributions" 9
1.81 "Qualified Nonelective Contributions Account" 9
1.82 "Qualified Plan" 9
1.83 "Qualifying Employer Securities" 9
1.84 "Rollover Contribution" 9
1.85 "Rollover Contributions Account" 9
1.86 "Self-Employed Individual" 9
1.87 "Social Security Retirement Age" 9
1.88 "Sponsor" 9
1.89 "Spouse" 9
1.90 "Surviving Spouse" 10
1.91 "Taxable Wage Base" 10
<PAGE>
TABLE OF CONTENTS
1.92 "Transferred Account" 10
1.93 "Trust" 10
1.94 "Trust Fund" 10
1.95 "Trustee" 10
1.96 "Valuation Date" 10
1.97 "Vesting Service" 10
1.98 "Years of Service" 10
ARTICLE II PARTICIPATION
2.1 Admission as a Participant 10
2.2 Rollover Membership and Trust to Trust Transfer 11
2.3 Crediting of Service for Eligibility Purposes 11
2.4 Termination of Participation 11
2.5 Limitation for Owner-Employee 11
2.6 Corrections with Regard to Participation 12
2.7 Provision of Information 12
ARTICLE III CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
3.1 Employer Contributions and Allocations 12
3.2 Participant Voluntary Nondeductible Contributions 13
3.3 Rollover Contributions and Trust to Trust Transfers 13
3.4 401(k) - Contributions and Account Allocations 13
3.5 Matching 401(k) Contributions 16
3.6 Thrift Contributions 18
3.7 Treatment of Forfeitures 19
3.8 Establishing of Accounts 19
3.9 Limitation on Amount of Allocations 19
3.10 Return of Employer Contributions Under Special Circumstances 24
ARTICLE IV VESTING
4.1 Determination of Vesting 24
4.2 Rules for Crediting Vesting Service 24
4.3 Employer Accounts Forfeitures 24
4.4 Top-Heavy Provisions 25
ARTICLE V AMOUNT AND DISTRIBUTION OF
BENEFITS, WITHDRAWALS AND LOANS
5.1 Distribution Upon Termination of Employment 27
5.2 Amount of Benefits Upon a Fully Vested Separation 27
5.3 Amount of Benefits Upon a Partially Vested Separation 27
5.4 Amount of Benefits Upon a Nonvested Separation 27
<PAGE>
TABLE OF CONTENTS
5.5 Amount of Benefits Upon a Separation Due to Disability 27
5.6 Distribution and Restoration 27
5.7 Withdrawals During Employment 28
5.8 Loans 28
5.9 Hardship Distributions 30
5.10 Limitation on Commencement of Benefits 30
5.11 Distribution Requirements 30
ARTICLE VI FORMS OF PAYMENT OF RETIREMENT BENEFITS
6.1 Methods of Distribution 34
6.2 Election of Optional Forms 35
6.3 Change in Form of Benefit Payments 36
6.4 Direct Rollovers 36
ARTICLE VII DEATH BENEFITS
7.1 Payment of Account Balances 37
7.2 Beneficiaries 37
7.3 Life Insurance 39
ARTICLE VIII FIDUCIARIES
8.1 Named Fiduciaries 40
8.2 Employment of Advisers 40
8.3 Multiple Fiduciary Capacities 40
8.4 Indemnification 40
8.5 Payment of Expenses 40
ARTICLE IX PLAN ADMINISTRATION
9.1 The Administrator 41
9.2 Powers and Duties of the Administrator 41
9.3 Delegation of Responsibility 41
ARTICLE X TRUSTEE AND INVESTMENT COMMITTEE
10.1 Appointment of Trustee and Investment Committee 41
10.2 The Trust Fund 42
10.3 Relationship with Administrator 42
10.4 Investment of Assets 42
10.5 Investment Direction, Participant-Directed Assets
and Qualifying Employer Investments 43
10.6 Valuation of Accounts 45
10.7 Insurance Contracts 45
10.8 The Investment Manager 45
<PAGE>
TABLE OF CONTENTS
10.9 Powers of Trustee 46
10.10 Accounting and Records 47
10.11 Judicial Settlement of Accounts 47
10.12 Resignation and Removal of Trustee 47
10.13 Group Trust 48
ARTICLE XI PLAN AMENDMENT OR TERMINATION
11.1 Prototype Plan Amendment 48
11.2 Plan Amendment 48
11.3 Right of the Employer to Terminate Plan 49
11.4 Effect of Partial or Complete Termination or
Complete Discontinuance of Contributions 49
11.5 Bankruptcy 50
ARTICLE XII MISCELLANEOUS PROVISIONS
12.1 Exclusive Benefit of Participants 50
12.2 Plan Not a Contract of Employment 50
12.3 Action by Employer 50
12.4 Source of Benefits 50
12.5 Benefits Not Assignable 50
12.6 Domestic Relations Orders 51
12.7 Claims Procedure 51
12.8 Records and Documents; Errors 51
12.9 Benefits Payable to Minors, Incompetents and Others 51
12.10 Plan Merger or Transfer of Assets 51
12.11 Participating Affiliates 52
12.12 Controlling Law 52
12.13 Singular and Plural and Article and Section References 52
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Prototype Plan and in each Adoption Agreement, each of
the following terms shall have the meaning for that term set forth in
this Article I:
1.1 Account: A separate Elective Deferrals Account, Employee Thrift
Contributions Account, Employer Contributions Account, Matching 4O1(k)
Contributions Account, Matching Thrift Contributions Account,
Participant Voluntary Nondeductible Contributions Account, Qualified
Matching Contributions Account, Qualified Nonelective Contributions
Account, Rollover Contribution Account, and Transferred Account, as the
case may be.
1.2 Account Balance: The value of an Account determined as of the
applicable Valuation Date.
1.3 ACP Test: The Contribution Percentage test that is set forth in
Section 3.5.2 of the Plan.
1.4 Actual Deferral Percentage: The ratio (expressed as a
percentage), of (A) Elective Deferrals made on behalf of an Eligible
Participant for the Plan Year (including Excess Elective Deferrals of
Highly Compensated Employees and, at the election of the Employer,
Qualified Nonelective Contributions and/or Qualified Matching
Contributions), but excluding (1) Excess Elective Deferrals of Nonhighly
Compensated Employees that arise solely from Elective Deferrals made
under the Plan or plans of the Employer or an Affiliate and (2) Elective
Deferrals that are taken into account in the ACP Test provided the ADP
Test is satisfied with or without the exclusion of such Elective
Deferrals) to (B) the Participant's CODA Compensation for the Plan Year
(whether or not the Eligible Employee was a Participant for the entire
Plan Year). The Actual Deferral Percentage of an Eligible Participant
who would be a Participant but for the failure to make an Elective
Deferral is zero.
1.5 Adjustment Factor: The cost of living adjustment factor
prescribed by the Secretary of the Treasury under Code Section 415(d)
for years beginning after December 31, 1987, as applied to such items
and in such manner as the Secretary shall provide.
1.6 administrator: The Employer, unless otherwise specified by duly
authorized action by the Employer.
1.7 Adoption Agreement: The document so designated with respect to
this Prototype Plan that is executed by the Employer, as amended from
time to time.
1.8 ADP Test: The Average Actual Deferral Percentage test set forth
in Section 3.4.2(B) of the Plan.
1.9 Affiliate: Any corporation or unincorporated trade or business
(other than the Employer) while it is:
(A) a member of a "controlled group of corporations" (within the
meaning of Code Section 414(b)) of which the Employer is a member;
(B) a member of any trade or business under "common control" (within
the meaning of Code Section 414(c)) with the Employer;
(C) a member of an "affiliated service group" (as that term is defined
in Code Section 414(m)) which includes the Employer; or
(D) any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o). With respect to Section 3.9,
"Affiliate" status shall be determined in accordance with Code Section
415(h).
1.10 Annuity Contract An individual or group annuity contract
issued by an insurance company providing periodic benefits, whether
fixed, variable or both, the benefits or value of which a Participant or
Beneficiary cannot transfer, sell, assign, discount, or pledge as
collateral for a loan or as security for the performance of an
obligation, or for any other purpose, to any person other than the
issuer thereof. The terms of any annuity contract purchased and
distributed by the Plan to a Participant or Spouse shall comply with the
requirements of this Plan.
1.11 Average Actual Deferral Percentage: For any group of Eligible
Participants, the average (expressed as a percentage) of the Actual
Deferral Percentages for each of the Eligible Participants in that
group, including those not making Elective Deferrals.
1.12 Average Contribution Percentage: For any group of Eligible
Participants, the average (expressed as a percentage) of the
Contribution Percentages for each of the Participants in that group,
including those on whose behalf Matching 401(k) Contributions and/or
Matching Thrift Contributions, if applicable, are not being made.
1.13 Beneficiary. A person or persons entitled to receive any payment
of benefits pursuant to Article VII.
1.14 Benefit Commencement Date: The first day, determined pursuant
to Article V, for which a Participant or Beneficiary receives or begins
to receive payment in any form of distribution as a result of death,
Disability, termination of Employment, Early Retirement, Plan
termination or upon or after Normal Retirement Age or age 70-1/2.
1
<PAGE>
1.15 CODA: A cash or deferred arrangement pursuant to Code Section
401(k) which is part of a profit sharing plan and under which an
Eligible Participant may elect to make Elective Deferrals in accordance
with Section 3.4.1.
1.16 CODA Compensation: Solely for purposes of determining the
Actual Deferral Percentage and the Contribution Percentage, CODA
Compensation shall be Compensation excluding or including "elective
contributions" as specified in the Adoption Agreement. The preceding
sentence shall be effective for Plan Years beginning on or after January
1, 1989.
1.17 Code: The Internal Revenue Code of 1986, as now in effect or as
amended from time to time. A reference to a specific provision of the
Code shall include such provision and any applicable regulation
pertaining thereto.
1.18 Compensation: For purposes of contributions, Compensation shall
be defined in the Adoption Agreement and Section 3.9.1(H), subject to
any exclusions elected under Section IAA(d) of the Adoption Agreement,
Section 3.1.4 and the following modifications:
(A) For a Self-Employed Individual, Compensation means his or her
Earned Income, provided that if the Self-Employed Individual is not a
Participant for an entire Plan Year, his or her Compensation for that
Plan Year shall be his or her Earned Income for that Plan Year
multiplied by a fraction the numerator of which is the number of days he
or she is a Participant during the Plan Year and the denominator of
which is the number of days in the Plan Year.
(B) Compensation of each Participant taken into account under this Plan
for any Plan Year beginning after December 21,1988 shall be limited to
the first $200,000 as adjusted by the Adjustment Factor. In determining
the Compensation of a Participant for purposes of this limitation, the
rule of Code Section 414(q)(6) shall apply, except in applying such
rules, the term "family" shall included only the Spouse of the
Participant and any lineal descendants of the Participant who have not
attained the age of 19 before the close of the year. If, as a result of
the application of such rules, the adjusted $200,000 limitation is
exceeded, (except for purposes of determining the portion of
Compensation up to the Integration Level if this Plan is integrated with
Social Security) the limitation shall be prorated among the affected
Participants in proportion to each such Participant's Compensation as
determined under this Section 1.18 prior to the application of this
limitation. In a manner applied uniformly to all Eligible Employees,
only Compensation during the period in which the Employee is an Eligible
Employee may be taken into account for purposes of the nondiscrimination
tests described in Code Section 401(k:) and 401(m).
(C) If Compensation for any prior Plan Year is taken into account in
determining an Employee's contributions or benefits for the current
year, the Compensation for such prior year is subject to the applicable
annual compensation limit in effect for that prior year. For this
purpose, for years beginning before January 1,1990, the applicable
annual compensation limit is $200,000.
(D) In addition to other applicable limitations set forth in the Plan,
and not withstanding 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 0BRA'93 annual
compensation limit is $150,000 as adjusted by the Commissioner for
increases in the cost of living in accordance with Section 401 (a) (17)
(B) of the Internal Revenue Code.
The cost of living adjustment in effect for a calendar year applies to
any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA'93
annual compensation limit will be multiplied by a fraction the numerator
of which is the number of months in the determination period, and the
denominator of which is 12.
For Plan years beginning on or after January 1,1994, any reference in
this Plan to the limitations under Section 401(a)(17) of the Code shall
mean the OBRA'93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account
in determining an Employee's benefits accruing, in the current Plan
year, the Compensation for that prior determination period is subject to
the OBRA'93 annual compensation limit in effect for that prior
determination period. For this purpose, for prior determination periods
beginning before the first day of the first Plan year beginning on or
after January 1,1994, the OBRA'93 Compensation limit is $150,000.
1.19 Contribution Percentage: The ratio (expressed as a percentage)
of the Participants Contribution Percentage Amounts to the Participant's
CODA Compensation for the Plan Year, whether or not the Eligible
Employee was a Participant for the entire Plan Year.
1.20 Contribution Percentage Amounts shall mean the sum of the: (A)
Matching 401(k) Contributions; (B) Matching Thrift Contributions; (C)
Qualified Matching Contributions (to the extent not taken into account
for purposes of the ADP Test); ([)) Employee Thrift Contributions; and
(E) Participant Voluntary Nondeductible Contributions, as applicable,
made on behalf of the Participant for the Plan Year. Such Contribution
Percentage Amounts shall not include Matching 401(k) Contributions that
are forfeited either to correct Excess Aggregate Contributions or
because the contributions to which they relate are Excess Elective
Deferrals, Excess Contributions or Excess Aggregate Contributions. The
Employer may include Qualified Nonelective Contributions in the
Contribution Percentage Amounts, as specified in the Adoption Agreement
Elective Deferrals may also be used in the Contribution Percentage
Amounts so long as the ADP Test is met before the Elective Deferrals are
used in the ACP Test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP Test, as
specified in the Adoption Agreement. An Eligible Participant who does
not direct an Elective Deferral or an Employee Thrift Contribution shall
be treated as an Eligible Participant on behalf of whom no such
contributions are made.
2
<PAGE>
1.21 Defined Benefit Plan: A plan of the type defined in Code
Section 414(j) maintained by the Employer or Affiliate, as applicable.
1.22 Defined Contribution Plan: A plan of the type defined in Code
Section 414(i) maintained by the Employer or Affiliate, as applicable.
1.23 Disability: Disability as defined in the Adoption Agreement.
The permanence and degree of such impairment shall be supported by
medical evidence.
1.24 Early Retirement: An actively employed Participant is eligible
for Early Retirement upon satisfying the requirements set forth in the
Adoption Agreement.
1.25 Early Retirement Date: The Participant's Benefit Commencement
Date following his or her termination of Employment on or after
satisfying the requirements for Early Retirement and prior to Normal
Retirement Age.
1.26 Earned Income: The "net earnings from self-employment" within
the meaning of Code Section 401(c)(2) of a Self-Employed Individual from
the trade or business with respect to which the Plan is established, but
only if the personal services of the Self-Employed Individual are a
material income-producing factor in that trade or business. Net earnings
will be determined without regard to items not included in gross income
and the deductions properly allocable to or chargeable against such
items and are to be reduced by contributions by the Employer or
Affiliate to a Qualified Plan to the extent deductible under Code
Section 404. Where this Plan refers to Earned Income in the context of a
trade or business other than that with respect to which the Plan is
adopted, the term Earned Income means such net earnings as would be
Earned Income as defined above if that trade or business was the trade
or business with respect to which the Plan is adopted.
Net earnings shall be determined with regard to the deduction allowed to
the Employer by Code Section 164(f) for taxable years beginning after
December 31, 1989.
1.27 Elective Deferrals: Contributions made to the Plan during the
Plan Year by the Employer, at the election of the Participant, in lieu
of cash compensation and shall include contributions that are made
pursuant to a 401(k) Election. A Participant's Elective Deferral in any
taxable year is the sum of all Employer and Affiliate contributions
pursuant to an election to defer under any qualified cash or deferred
arrangement, any simplified employee pension plan or deferred
arrangement as described in Code Section 402(h)(1)(B), any eligible
deferred compensation plan under Code Section 457, any plan as described
under Code Section 501(c)(18), and any Employer contributions made on
behalf of a Participant for the purchase of an annuity under Code
Section 403(b) pursuant to a salary reduction agreement Such
contributions are nonforfeitable when made and are not distributable
under the terms of the Plan to Participants or their Beneficiaries
earlier than the earlier of:
(A) termination from Employment, death or Disability of the
Participant;
(B) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(C) disposition by the Employer or Affiliate to an unrelated
corporation of substantially all of its assets used in a trade or
business if such unrelated corporation continues to maintain this Plan
after the disposition but only with respect to Employees who continue
employment with the acquiring unrelated entity. The sale of 85% of the
assets used in a trade or business will be deemed a sale of
"substantially all" the assets used in a trade or business;
(D) sale by the Employer or Affiliate to an unrelated entity of its
interest in an Affiliate if such unrelated entity continues to maintain
the Plan but only with respect to Employees who continue employment with
such unrelated entity; or
(E) the events specified in Part B, Article VIII of the Adoption
Agreement
Elective Deferrals shall not include any deferrals properly distributed
as an "Excess Amount" pursuant to Section 3.9.2.
1.28 Elective Deferrals Account: The Account established for a
Participant pursuant to Section 3.8.1.
1.29 Eligible Employee: Those Employees specified in the Adoption
Agreement
1.30 Eligible Participant: An Eligible Employee who has met the
eligibility requirements set forth in the Adoption Agreement whether or
not he or she makes Elective Deferrals and/or Employee Thrift
Contributions.
1.31 Employee: A Self-Employed Individual, or any individual who is
employed by the Employer in the trade or business with respect to which
the Plan is adopted and any individual who is employed by an Affiliate.
Each Leased Employee shall also be treated as an Employee of the
recipient Employer. The preceding sentence shall not apply, however, to
any leased Employee who is (A) covered by a money purchase pension plan
maintained by the "leasing organization" referred to in Section 1.54
which provides, with respect to such Leased Employee, a norrintegrated
Employer contribution rate of at least 10% of Limitation Compensation,
but including amounts contributed pursuant to a salary reduction
agreement which are excluded from the Employee's gross income under Code
Section 402(a)(8), Code Section 402(h) or Code Section 403(b), immediate
participation, and full and immediate vesting and (B) such Leased
Employees do not constitute more than 20% of the Employer's and
Affiliates' nonhighly compensated workforce. For purposes of the Plan,
all Employees will be treated as employed by a single employer.
3
<PAGE>
1.32 Employee Thrift Contributions: Employee nondeductible
contributions which are required to be eligible for a Matching Thrift
Contribution. Employee Thrift Contributions do not include Participant
Voluntary Nondeductible Contributions.
1.33 Employee Thrift Contributions Account: The Account established
for a Participant pursuant to Section 3.8.3.
1.34 Employer: The sole proprietorship, partnership or corporation
that adopts the Plan by executing the Adoption Agreement. For all
purposes relating to eligibility, participation, contributions, vesting
and allocations, Employer includes all Participating Affiliates.
1.35 Employer Account: The Participant's Matching 401(k:)
Contributions Account, Matching Thrift Contributions Account, Employer
Contributions Account, Qualified Matching Contributions Account and
Qualified Nonelective Contributions Account, as the case may be.
1.36 Employer Contributions: Any contributions made by the Employer
for the Plan Year on behalf of a Participant in accordance with Section
3.1 of the Plan.
1.37 Employer Contributions Account: The Account established for a
Participant pursuant to Section 3.8.2.
1.38 Employment: An Employee's employment or self-employment with
the Employer, Affiliate or a "leasing organization" referred to in
Section 1.54 or, to the extent required under Code Section 414(a)(2) or
as otherwise specified by the Administrator on a uniform and
nondiscriminatory basis, any predecessor of any of them. If any of them
maintains a plan of a "predecessor employer" (within the meaning of Code
Section 414(a)(1)) employment or self-employment with the "predecessor
employer" will be treated as Employment Additionally, if the trade or
business conducted by a Self-Employed Individual becomes incorporated,
all employment with that trade or business or with any Affiliate shall
be treated as Employment with the Employer.
1.39 Entry Date: The date on which an Eligible Employee becomes a
Participant, as specified in the Adoption Agreement
1.40 ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific provision of ERISA
shall include such provision and any applicable regulation pertaining
thereto.
1.41 Excess Aggregate Contributions: With respect to any Plan Year,
the excess of:
(A) The aggregate Contribution Percentage Amounts, taken into account
in computing the numerator of the Contribution Percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
(B) The maximum Contribution Percentage Amounts permitted by the ACP
Test (determined by reducing contributions made on behalf of Highly
Compensated Employees in the order of their Contribution Percentages
beginning with the highest of such percentages) Such determination shall
be made after first determining Excess Elective Deferrals and then
determining Excess Contributions.
1.42 Excess Contributions: With respect to any Plan Year, the
aggregate amount of Elective Deferrals, Qualified Nonelective
Contributions and Qualified Matching Contributions, if applicable,
actually paid over to the Trust Fund on behalf of Highly Compensated
Employees for such Plan Year, over the maximum amount of such
contributions permitted by the ADP Test (determined by reducing
contributions made on behalf of Highly Compensated Employees in order of
the Actual Deferral Percentages, beginning with the highest of such
percentages).
1.43 Excess Elective Deferrals: The amount of Elective Deferrals for
a Participant's taxable year that are includible in the gross income of
the Participant to the extent that such Elective Deferrals exceed the
Code Section 402(g) dollar limitation and which the Participant
allocates to this Plan pursuant to the procedure set forth in Section
3A.2. Excess Elective Deferrals shall be treated as an Annual Addition
pursuant to Section 3.9, unless such amounts are distributed no later
than the first April 15th following the close of the Participant's
taxable year.
1.44 Family Member: An individual described in Code Section
414(q)(6) (B).
1.45 401(k) Contributions Accounts: The Participant's Elective
Deferral Account, Qualified Nonelective Contributions Account, and/or
Qualified Matching Contributions Account, as the case may be.
1.46 401(k) Election: The election by a Participant to make Elective
Deferrals in accordance with Section 3.4.1.
1.47 Fully Vested Separation: Termination of Employment, by reason
other than death, of a Participant whose vested percentage in each
Employer Account is 100%.
1.48 Group Trust: A Trust Fund consisting of assets of any Plan
maintained and established by the Employer or an Affiliate pursuant to
Section 10.14.
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1.49 Highly Compensated Employee: The term Highly Compensated
Employee includes highly compensated active Employees and highly
compensated former employees.
(A) A highly compensated active Employee includes any Employee who
performs service for the Employer or Affiliate during the Plan Year and
who, during the look-back year (the twelve-month period immediately
preceding the Plan Year):
(i) received Compensation from the Employer or Affiliate in excess of
$75,000 (as adjusted by the Adjustment Factor);
(ii) received Compensation from the Employer or Affiliate in excess of
$50,000 (as adjusted by the Adjustment Factor) and was a member of the
top-paid group for such year; or
(iii) was an officer of the Employer or Affiliate and received
Compensation during such year that is greater than 50% of the Defined
Benefit Dollar Limitation.
(B) The term Highly Compensated Employee also includes:
(i) Employees who are both described in the preceding sentence if the
term "Plan Year" is substituted for the term "look-back year" and the
Employee is one of the 100 Employees who received the most Compensation
from the Employer or Affiliate during the Plan Year; and
(ii) Employees who are 5% owners at any time during the look-back year
or Plan Year.
(C) If no officer has received Compensation that is greater than 50% of
the Defined Benefit Dollar Limitation in effect during either the Plan
Year or look-back year, the highest paid officer of such year shall be
treated as a Highly Compensated Employee.
(D) A highly compensated former employee includes any Employee who
terminated Employment (or was deemed to have terminated) prior to the
Plan Year, performs no service for the Employer or Affiliate during the
Plan Year, and was a highly compensated active employee for either the
separation year or any Plan Year ending on or after the Employee's 55th
birthday.
(E) If an Employee is, during a Plan Year or look-back year, a Family
Member of either (i) a 5% owner who is an active or former Employee or
(ii) a Highly Compensated Employee who is one of the ten most highly
compensated employees ranked on the basis of Compensation paid by the
Employer or Affiliate during such year, then the Family Member and the
5% owner or top-ten Highly Compensated Employee shall be aggregated. In
such case, the Family Member and 5% owner or top-ten Highly Compensated
Employee shall be treated as a single Employee receiving Compensation
and plan contributions or benefits equal to the sum of such Compensation
and contributions or benefits of the Family Member and 5% owner or -ten
ten Highly Compensated Employee. For purposes of this section, Family
Member includes the Spouse, lineal ascendants and descendants of the
Employee or former employee and the spouses of such lineal ascendants
and descendants.
(F) The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-
paid group; the top 100 Employees; the number of Employees treated as
officers; and the Compensation that is considered will be made in
accordance with Code Section 414(q).
1.50 Hour of Service: If the Employer elects in the Adoption
Agreement the hourly record method, an Hour of Service shall include:
(A) Each hour for which an Employee is paid, or entitled to payment, by
the Employer or an Affiliate for the performance of duties for the
Employer or an Affiliate. These hours will be credited to the Employee
for each Plan Year in which the duties are performed, or with respect to
eligibility under Article II, the applicable computation period under
the definition of Year of Service in which the duties are performed;
(B) Each hour for which an Employee is paid, or entitled to payment, by
the Employer or an Affiliate due to a period of time during which no
duties are performed (irrespective of whether Employment has terminated)
due to vacation, holiday, illness, incapacity (including Disability),
layoff, jury duty, military duty, or leave of absence. No more than 501
Hours of Service will be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph will be calculated and
credited pursuant to section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference; and
(C) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer or an Affiliate. The same
Hours of Service will not be credited both under subparagraph (A) or
subparagraph (B), as the case may be, and under this subparagraph (C).
These hours will be credited to the Employee for the Year of Service or
other computation period to which the award or agreement
pertains rather than the Year of Service or other computation period in
which the award, agreement or payment is made.
If the Employer elects in the Adoption Agreement the elapsed time
method, an Hour of Service is an hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer or
an Affiliate.
With respect to both the hourly record method and the elapsed time
method, in addition to service with an Affiliate, Hours of Service will
also be credited for any individual considered an Employee for purposes
of this Plan under Code Section 414(n).
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1.51 Immediately Distributable: A Participant's Account is
Immediately Distributable if any part of such Account could be
distributed to the Participant or Participant's Surviving Spouse before
the Participant attains (or would have attained if not deceased) the
later of Normal Retirement Age or age 62.
1.52 Investment Manager: Any person appointed by the Trustee or,
with respect to Participant-Directed Assets, by the Participant or
Beneficiary having the power to direct the investment of such assets, to
serve as such in accordance with Section 10.8.
1.53 Key Employee: Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the
"determination period" was (A) an officer of the Employer or Affiliate,
having an annual Compensation greater than 50% of the Defined Benefit
Dollar Limitation for any Plan Year within the "determination
period";(B) an owner (or considered an owner under Code Section 318) of
one of the ten largest interests in the Employer or Affiliate if such
individual's Compensation exceeds 100% of the dollar limitation under
Code Section 415(c)(1)(A); (C) a "5% owner" (as defined in Code Section
416(i)) of the Employer or Affiliate; or (D) a "1% owner" (as defined in
Code Section 416(i)) of the Employer or Affiliate who has an annual
Compensation of more than $150,000. Annual Compensation means
compensation as defined in Code Section 415(c)(3), but including amounts
contributed by the Employer pursuant to a salary reduction agreement
which are excludible from the Employee's gross income under Code Section
125, Code Section 402(a)(8), Code Section 402(h) or Code Section 403(b).
The "determination period" is the Plan Year containing the
"determination date" and the four preceding Plan Years. The
"determination date" for the first Plan Year is the last day of that
Plan Year, and for any subsequent Plan Year is the last day of the
preceding Plan Year. The determination of who is a Key Employee will be
made in accordance with Code Section 416(i).
1.54 Leased Employee: Any individual (other than an Employee of the
recipient Employer or Affiliate) who, pursuant to an agreement between
the Employer or Affiliate and any other person (the "leasing
organization") has performed services for the Employer (or for the
Employer or Affiliate and "related persons" determined in accordance
with Code Section 414(n)(6)) on a substantially full-time basis for a
period of at least one year, which services are of a type historically
performed, in the business field of the recipient Employer or Affiliate,
by employees. Contributions or benefits provided a Leased Employee by
the leasing organization which are attributable to services performed
for the recipient Employer or Affiliate shall be treated as provided by
the recipient Employer.
1.55 Limitation Year: The Limitation Year as specified in the
Adoption Agreement All Qualified Plans maintained by the Employer must
use the same Limitation Year. If the Limitation Year is amended to a
different 12-consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year in which the amendment is
made.
1.56 Master or Prototype Plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue Service.
1.57 Matching 401(k) Contribution: Any contribution made by the
Employer to this and/or any other Defined Contribution Plan for the Plan
Year, by reason of the Participant's 401(k) Election, and allocated to a
Participant's Matching 401(k) Contributions Account or to a comparable
account in another Defined Contribution Plan. Matching 401(k)
Contributions are subject to the distribution provisions applicable to
Employer Accounts in the Plan.
1.58 Matching 401(k) Contributions Account: The Account established
for a Participant pursuant to Section 3.8.4.
1.59 Matching Thrift Contributions: Any contribution made by the
Employer for the Plan Year by reason of Employee Thrift Contributions.
Matching Thrift Contributions shall be subject to the distribution
provisions applicable to Employer Accounts in the Plan.
1.60 Matching Thrift Contributions Account: The Account established
for a Participant pursuant to Section 3.8.5.
1.61 Net Profits: The current and accumulated profits of the
Employer from the trade or business of the Employer with respect to
which the Plan is established, as determined by the Employer before
deductions for federal, state and local taxes on income and before
contributions under the Plan or any other Qualified Plan.
1.62 Nonhighly Compensated Employee: An Employee of the Employer who
is neither a Highly Compensated Employee nor a Family Member.
1.63 Nonvested Separation: Termination of Employment of a
Participant whose vested percentage in each Employer Account is 0%.
1.64 Normal Retirement Age: The age specified in the Adoption
Agreement Notwithstanding the Employer's election in the Adoption
Agreement, if, for Plan Years beginning before January 1,1988, Normal
Retirement Age was determined with reference to the anniversary of the
participation commencement date (more than 5 but not to exceed 10
years), the anniversary date for Participants who first commenced
participation under the Plan before the first Plan Year beginning on or
after January 1,1988, shall be the earlier of (A) the tenth anniversary
of the date the Participant commenced participation in the Plan (or such
anniversary as had been elected by the Employer, if less than 10) or (B)
the fifth anniversary of the first day of the first Plan Year beginning
on or after January 1,1988.
1.65 Owner-Employee: An individual who is a sole proprietor, if the
Employer is a sole proprietorship, or if the Employer is a partnership,
a partner owning more than 10% of either the capital interest or the
profits interest in the Employer; provided that where this Plan refers
to an Owner-Employee in the context of a trade or business other than
the trade or business with respect to which the Plan is adopted, the
term Owner-Employee means a person who would be an Owner-Employer as
defined above if that other trade or business was the Employer.
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1.66 Partially Vested Separation: Termination of Employment of a
Participant whose vested percentage in any Employer Account is less than
100% but greater than 0%.
1.67 Participant: An Employee who has commenced, but not terminated,
participation in the Plan as provided in Article II.
1.68 Participant Contributions Account: The Participant's
Participant Voluntary Nondeductible Contributions Account and/or
Employee Thrift
Contributions Account, as the case may be.
1.69 Participant-Directed Assets: The assets of an Account which are
invested, as described in Section 10.5.1, according to the direction of
the Participant or the Participant's Beneficiary, as the case may be, in
either individually selected investments or in commingled funds or in
shares of regulated investment companies.
1.70 Participant Voluntary Nondeductible Contributions: Any
voluntary nondeductible contributions made in cash by a Participant to
this Plan other than Employee Thrift Contributions.
1.71 Participant Voluntary Nondeductible Contributions Account: The
Account established for a Participant pursuant to Section 3.8.6.
1.72 Participating Affiliate: Any Affiliate or any other employer
designated as such by the Employer, and, by duly authorized action, that
has adopted the Plan with the consent of the Employer and has not
withdrawn therefrom.
1.73 Period of Severance: For purposes of the hourly records method,
a Period of Severance is a period equal to the number of consecutive
Plan Years or, with respect to eligibility, the applicable computation
period under the definition of Year of Service, in which an Employee has
500 Hours of Service or less. The Period of Severance shall be
determined on the basis of Hours of Service and shall commence with the
first Plan Year in which the Employee has 500 Hours of Service or less.
With respect to any period of absence during which a Period of Severance
does not commence, the Participant shall be credited with the Hours of
Service (up to a maximum of 501 Hours of Service in a Plan Year) which
would otherwise have been credited to him or her but for such absence,
or if such Hours of Service cannot be determined, 8 Hours of Service for
each day of absence.
For purposes of the elapsed time method, a Period of Severance is a
continuous period of at least 12-consecutive months during which an
individual's Employment is not continuing, beginning on the date an
Employee retires, quits or is discharged or, if earlier, the first 12-
month anniversary of the date that the individual is otherwise first
absent from service (with or without pay) for any other reason, and
ending on the date the individual again performs an Hour of Service.
Anything in the definition thereof to the contrary notwithstanding, a
Period of Severance shall not commence if the Participant is:
(A) On an authorized leave of absence in accordance with standard
personnel policies applied in a nondiscriminatory manner to all
Employees similarly situated and returns to active Employment by the
Employer
or Affiliate immediately upon the expiration of such leave of absence;
(B) On a military leave while such Employee's re-employment rights are
protected by law and returns to active Employment within ninety days
after his or her discharge or release (or such longer period as may be
prescribed by law); or
(C) Absent from work by reason of (i) the pregnancy of the Employee,
(ii) the birth of a child of the Employee, or (iii) the placement of a
child with the Employment in connection with the adoption of such child
by such Employee, or (iv) the care of such child for a period beginning
immediately following such birth or placement In determining when such a
Participant's Period of Severance begins, the Participant will be
credited with (i) for purposes of the elapsed time method, the 12-
consecutive month period beginning on the first anniversary of the first
date of such absence; or (ii) for purposes of the hourly records method,
the Hours of Service he or she would normally have had but for such
absence, or if such Hours cannot be determined, eight Hours of Service
for each day of such absence; provided, however, that such Hours of
Service shall not exceed 501 and shall be credited only in the year in
which such absence began if such crediting would prevent the Participant
from incurring a Period of Severance in that year, or in any other case,
shall be credited in the immediately following year.
1.74 Plan: The plan established by the Employer in the form of this
Prototype Plan and the applicable Adoption Agreement executed by the
Employer. The Plan shall have the name specified in the Adoption
Agreement
1.75 Plan Year: Each 12-consecutive month period ending on the date
s-fled in the Adoption Agreement, during any part of which the Plan is
in effect.
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1.76 Prototype Plan: The Merrill Lynch Special Prototype Defined
Contribution Plan set forth in this document, as amended or restated
from time to time.
1.77 Qualified Joint and Survivor Annuity: An immediate annuity for
the life of Participant with a survivor annuity continuing after the
Participant's death to the Participant's Surviving Spouse for the
Surviving Spouse's life in an amount equal to 50% of the amount of the
annuity payable during the joint lives of the Participant and such
Surviving Spouse and which is the actuarial equivalent of a single life
annuity which could be provided for the Participant under an Annuity
Contract purchased with the aggregate vested Account Balances of the
Participant's Accounts at the Benefit Commencement Date.
1.78 Qualified Matching Contributions: Matching Contributions
which, pursuant to the election made by the Employer, and in accordance
with Code Section 401(m), are nonforfeitable when made and subject to
the limitation on distribution set forth in the definition of Qualified
Nonelective Contributions.
1.79 Qualified Matching Contributions Account: The Account
established for a Participant pursuant to Section 3.8.7.
1.80 Qualified Nonelective Contributions: Contributions (other than
Matching 401(k) Contributions, Qualified Matching 401(k) Contributions
or Elective Deferrals), if any, made by the Employer which the
Participant may not elect to receive in cash until distributed from the
Plan, which are nonforfeitable when made, and which are not
distributable under the terms of the Plan to Participants or their
Beneficiaries earlier than the earlier of:
(A) termination of Employment, death, or Disability of the Participant;
(B) attainment of the age 59-1/2 by the Participant;
(C) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(D) disposition by the Employer or Participating Affiliate to an
unrelated corporation of substantially all of its assets used in a trade
or business if such unrelated corporation continues to maintain this
Plan after the disposition but only with respect to Employees who
continue employment with the acquiring unrelated entity. The sale of 85%
of the assets used in a trade or business will be deemed a sale of
"substantially all" the assets used in a trade or business;
(E) sale by the Employer to an unrelated entity of its interest in an
Affiliate if such unrelated entity continues to maintain the Plan but
only with respect to Employees who continue employment with such
unrelated entity; and effective for Plan Years beginning before January
1, 1989, upon the hardship of the Participant.
1.81 Qualified Nonelective Contributions Account: The Account
established for a Participant pursuant to Section 3.8.7.
1.82 Qualified Plan: A Defined Benefit Plan or Defined Contribution
Plan.
1.83 Qualified Employer Securities: Employer securities, as that
term is defined in ERISA Section 407(d)(5).
1.84 Rollover Contribution: A contribution described in Section
3.4.
1.85 Rollover Contributions Account: The Account established for a
Participant pursuant to Section 3.8.9.
1.86 Self-Employed Individual: An individual who has Earned Income
for the Plan Year involved from the trade or business for which the Plan
is established, or who would have had such Earned Income but for the
fact that the trade or business with respect to which the Plan is
established had no Net Profits for that Plan Year.
1.87 Social Security Retirement Age: Age 65 in the case of a
Participant attaining age 62 before January 1, 2000 (i.e. born before
January 1, 1938), age 66 for a Participant attaining age 62 after
December 31,1999, and before January 1,2017 (i.e. born after December
31, 1937, but before January 1, 1955), and age 67 for a Participant
attaining age 62 after December 31, 2016 (i.e., born after December
31,1954).
1.88 Sponsor: The mass submitter, Merrill Lynch Pierce, Fenner &
Smith Incorporated and any successor thereto, and any other qualifying
sponsoring organization who sponsors with the consent of the mass
submitter, the Prototype Plan and makes the Prototype Plan available for
adoption by Employers.
1.89 Spouse: The person married to a Participant, provided that a
former spouse will be treated as the Spouse to the extent provided under
a "qualified domestic relations order" (or a "domestic relations order"
treated as such) as referred to in Section 12.6.
1.90 Surviving Spouse: The person married to a Participant on the
earliest of:
(A) the date of the Participant's death; (B) the Participant's Benefit
Commencement Date; or (C) the date on which an Annuity Contract is
purchased for the Participant providing benefits under the Plan;
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Anything contained herein to the contrary notwithstanding, a former
spouse will be treated as the Surviving Spouse to the extent provided
under a "qualified domestic relations order" (or a "domestic relations
order" treated as such) as referred to in Section 12.6.
1.91 Taxable Wage Base: The maximum amount of earnings which may be
considered "wages" for the Plan Year involved under Code Section
3121(a)(1).
1.92 Transferred Account: The Account established for a Participant
pursuant to Section 3.8.10.
1.93 Trust: The trust established under the Plan to which Plan
contributions are made and in which Plan assets are held.
1.94 Trust Fund: The assets of the Trust held by or in the name of
the Trustee.
1.95 Trustee: The person appointed as Trustee pursuant to Article X
and any successor Trustee.
1.96 Valuation Date: The last business day of each Plan Year, the
date s-fled in the Adoption Agreement or determined pursuant to Section
10.6, if applicable, and each other date as may be determined by the
Administrator.
1.97 Vesting Service: The Years of Service credited to a Participant
under Article IV for purposes of determining the Participant's vested
percentage in any Employer Account established for the Participant.
1.98 Years of Service: If the Employer elects the hourly records
method in the Adoption Agreement, an Employee shall be credited with one
Year of Service for each Plan Year in which he or she has 1,000 Hours of
Service. Solely for purposes of eligibility to participate, an Employee
shall be credited with a Year of Service on the last day of the 12-
consecutive month period which begins on the first day on which he or
she has an Hour of Service, if he or she has at least 1,000 Hours of
Service in that period. If an Employee fails to be credited with a Year
of Service on such date, he or she shall be credited with a Year of
Service on the last day of each succeeding 12-consecutive month period.
If the Employer elects the elapsed time method in the Adoption
Agreement, the Employee's Years of Service shall be a span of service
equal to the sum of:
(A) the period commencing on the date the Employee first performs an
Hour of Service and ending on the date he or she quits, retires, is
discharged, dies, or if earlier, the 12-month anniversary of the date on
which the Employee was otherwise first absent from service (with or
without pay) for any other reason; and
(B) (i) if the Employee quits, retires, or is discharged, the period
commencing on the date the Employee terminated his or her Employment and
ending on the first date on which he or she again performs an Hour of
Service, if such date is within 12 months of the date on which he or she
last performed an Hour of Service; or
(ii) if the Employee is absent from work for any other reason and,
within 12 months of the first day of such absence, the Employee quits,
retires or is discharged, the period commencing on the first day of such
absence and ending on the first day he or she again performs an Hour of
Service if such day is within 12 months of the date his or her absence
began.
With respect to both the elapsed time method and the hourly record
method, service with a predecessor employer, determined in the manner in
which the rules of this Plan would have credited such service had the
Participant earned such service under the terms of this Plan, may be
included in Years of Service, as s-fled in the Adoption Agreement.
ARTICLE II PARTICIPATION
2.1 Admission as a Participant
2.1.1 An Eligible Employee shall become a Participant on the Entry
Date coincident with or next following the date on which he or she meets
the eligibility requirements s-fled in the Adoption Agreement; provided,
however that
(A) an Eligible Employee who has met the eligibility requirements as of
the first day of the Plan Year in which the Plan is adopted as a new
Plan shall become a Participant as of such date;
(B) an Eligible Employee who had met the eligibility requirements of a
plan that is restated and/or amended to become this Plan shall become a
Participant as of the date this Plan is adopted; and
(C) if selected in the Adoption Agreement, an Eligible Employee shall
become a Participant on the effective date of the Plan providing he or
she is an Eligible Employee on such date.
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2.1.2 An Employee who did not become a Participant on the Entry
Date coincident with or next following the day on which he or she met
the eligibility requirements because he or she was not then an Eligible
Employee shall become a Participant on the first day on which he or she
again becomes an Eligible Employee unless determined otherwise in
accordance with Section 2.3.1 of the Plan.
2.1.3 If the Plan includes a CODA or thrift feature, in addition to
the participation requirements set forth in Section 2.1.1, an Eligible
Employee shall become a Participant upon filing his or her 4O1(k)
Election or election to make Employee Thrift Contributions with the
Administrator. An election shall not be required if the Employer has
elected to make contributions to an Employer Account and/or Qualified
Nonelective Contributions with respect to all Eligible Participants.
2.1.4 An individual who has ceased to be a Participant and who
again becomes an Eligible Employee shall become a Participant
immediately upon reemployment as an Eligible Employee unless determined
otherwise in accordance with Section 23.1 of the Plan.
2.2 Rollover Membership and Trust to Trust Transfer
An Eligible Employee who makes a Rollover Contribution or a trust to
trust transfer shall become a Participant as of the date of such
contribution or transfer even if he or she had not previously become a
Participant Such an Eligible Employee shall be a Participant only for
the purposes of such Rollover Contribution or transfer and shall not be
eligible to share in contributions made by the Employer until he or she
has become a Participant in accordance with Section 2.1.
2.3 Crediting of Service for Eligibility Purposes
2.3.1 For purposes of eligibility to participate, an Eligible
Employee or Participant without any vested interest in any Employer
Account and without an Elective Deferrals Account who terminates
Employment shall lose credit for his or her Years of Service prior to
such termination of Employment if his or her Period of Severance equals
or exceeds five years or, if greater, the aggregate number of Years of
Service.
2.3.2 For purposes of eligibility to participate, a Participant who
has a vested interest in any Employer Account and who terminates
Employment shall retain credit for his or her Years of Service prior to
such termination of Employment without regard to the length of his or
her Period of Severance. In the event such Participant returns to
Employment, he or she shall participate immediately.
2.3.3 A former Eligible Employee who was not a Participant who again
becomes an Eligible Employee with no Years of Service to his or her
credit shall be treated as a new Employee.
2.4 Termination of Participation
A Participant shall cease to be a Participant
(A) upon his or her death;
(B) upon the payment to him or her of all nonforfeitable benefits due to
him or her under the Plan, whether directly or by the purchase of an
Annuity Contract; or
(C) upon his or her Nonvested Separation.
2.5 Limitation for Owner-Employee
2.5.1 If the Plan provides contributions or benefits for one or more
Owner-Employees who control the trade or business for which this Plan is
established and who also control as an Owner-Employee or as Owner-
Employees one or more other trades or businesses, this Plan and the plan
established for each such other trade or business must, when looked at
as a single plan, satisfy the requirements of Code Sections 401 (a) and
(d) with respect to the employees of this and all of such other trades
or businesses.
2.5.2 If the Plan provides contributions or benefits for one or more
Owner-Employees who control as an Owner-Employee or as Owner-Employees
one or more other trades or businesses, the employees of the other
trades or businesses must be included in a plan which satisfies the
requirements of Code Sections 401 (a) and (d) and which provides
contributions and benefits for the employees of such other trades or
businesses not less favorable than the contributions and benefits
provided for Owner-Employees under this Plan.
2.5.3 If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not controlled and
the individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trades or businesses
which are controlled must be as favorable as those provided for such
individual under the most favorable plan of the trade or business which
is not controlled.
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2.5.4 For purposes of the preceding three subsections, an Owner-
Employee, or two or more Owner-Employees, will be considered to control
a trade or business if the Owner-Employee, or two or more Owner-
Employees together:
(A) own the entire interest in an unincorporated trade or business, or
(B) in the case of a partnership, own more than 50% of either the
capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees, shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
2.6 Corrections with Regard to Participation
2.6.1 If in any Plan Year an Eligible Employee who should be included
as a Participant in the Plan is erroneously omitted and discovery of
such omission is not made until after a contribution by the Employer for
the year has been made, the Employer shall make a subsequent
contribution with respect to the omitted Eligible Employee in the amount
which would have contributed with respect to such Eligible Employee had
he or she not been omitted. Such contribution shall be made whether or
not it is deductible in whole or in part in any taxable year under
applicable provisions of the Code. It shall be the responsibility of the
Employer and Administrator to take any and all actions as required by
this Section 26.1.
2.6.2 If in any Plan Year any person who should not have been included
as a Participant in the Plan is erroneously included and discovery of
such incorrect inclusion is not made until after a contribution for the
year has been made, the amount contributed on behalf of such ineligible
person shall constitute a forfeiture for the Plan Year in which the
discovery is made. It shall be the responsibility of the Employer and
Administrator to take any and all actions as required by this Section
2.6.2.
2.7 Provision of Information
Each Employee shall execute such forms as may reasonably be required by
the Administrator, and shall make available to the Administrator any
information the Administrator may reasonably request in this regard. By
virtue of his or her participation in this Plan, an Employee agrees, on
his or her own behalf and on behalf of all persons who may have or claim
any right by reason of the Employee's participation in the Plan, to be
bound by all provisions of the Plan.
ARTICLE III
CONTRIBUTIONS AND ACCOUNT
ALLOCATIONS
3.1 Employer Contributions and Allocations
3.1.1 If the Plan is a profit-sharing plan, the Employer will
contribute cash and/or Qualifying Employer Securities to the Trust Fund,
in such amount, if any, as specified in the Adoption Agreement and with
respect to Qualifying Employer Securities as is consistent with Sections
10.4.2 and 10A.3. If the Plan is a profit-sharing plan, Net Profits may
be necessary for an Employer to make contributions, as s-fled in the
Adoption Agreement Employer Contributions for a Plan Year will be
allocated no later than the last day of the Plan Year to the Employer
Contributions Account of Participants eligible for an allocation in the
manner s-fled in the Adoption Agreement A not-for-profit corporation may
adopt a profit-sharing plan as an incentive plan; provided, however,
that such a plan may not contain a CODA feature unless otherwise
permitted by law.
3.1.2 If the Plan is a money purchase pension plan, the Employer will
contribute cash to the Trust Fund in an amount equal to that percentage
of the Compensation of each Participant eligible for an allocation of
Employer contributions for that Plan Year as s-fled in the Adoption
Agreement Employer Contributions for the Plan Year will be allocated as
of the last day of the Plan Year to the Employer Contributions Accounts
of Participants eligible for an allocation and entitled to share in such
contributions in the manner s-fled in the Adoption Agreement
3.1.3 If the Plan is a target benefit plan, the Employer will
contribute cash to the Trust Fund in an amount s-fled in the Adoption
Agreement The amount contributed with respect to the targeted benefit of
each Participant eligible for an allocation for that Plan Year will be
allocated as of the last day of the Plan Year to the Participant's
Employer Contributions Account in the manner s-fled in the Adoption
Agreement
3.1.4 If the Employer elects in the Adoption Agreement to make
contributions on behalf of a Participant whose Employment terminated due
to Disability, "Compensation" shall mean, with respect to such
Participant, the Compensation he or she would have received for the
entire calendar year in which the Disability occurred if he or she had
been paid for such year at the rate at which he or she was being paid
immediately prior to such Disability. Employer Contributions may be
taken into account only if the Participant is a Nonhighiy Compensated
Employee and contributions made on his or her behalf are nonforfeitable.
3.1.5 If an Employer has adopted more than one Adoption Agreement, or
has adopted a plan pursuant to the Merrill Lynch Special Prototype
Defined Benefit Plan and Trust, only one Adoption Agreement may be
integrated with Social Security.
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3.1.6 For purposes of the Plan, contributions provided by the
"leasing organization" referred to in Section 1.37 of a Leased Employee
which are attributable to services performed for the Employer shall be
treated as provided by the Employer.
3.2 Participant Voluntary Nondeductible Contributions
3.2.1 If elected by the Employer in the Adoption Agreement, each
Participant while actively employed may make Participant Voluntary
Nondeductible Contributions in cash in a dollar amount or a percentage
of Compensation which does not, when included in the Contribution
Percentage Amount, exceed the limitations set forth in Code Section
401(m).
3.2.2 Participant Voluntary Nondeductible Contributions shall be made
in accordance with rules and procedures adopted by the Administrator.
3.3 Rollover Contributions and Trust to Trust Transfers
3.3.1 Any Eligible Employee or Participant may make a Rollover
Contribution under the Plan. A Rollover Contribution shall be in cash or
in other property acceptable to the Trustee and shall be a contribution
attributable to (a) a "qualified total distribution" (as defined in Code
Section 402(a)(5)), distributed to the contributing Employee under Code
Section 402(a)(5) from a Qualified Plan or distributed to the Employee
under Code Section 403(a)(4) from an "employee annuity" or referred to
in that section, or (b)a payout or distribution to the Employee referred
to in Code Section 408(d)(3) from an "individual retirement account" or
an "individual retirement annuity" described, respectively, in Code
Section 408(a) or Section 408(b consisting exclusively of amounts
attributable to "qualified total distributions" (as defined in Code
Section 402(a)(5)) from a Qualified Plan. The Plan shall not accept a
Rollover Contribution attributable to any accumulated deductible
employee contributions as defined by Code Section 72(o)(5)(B). The
Trustee may condition acceptance of a Rollover Contribution upon receipt
of such documents as it may require. In the event that an Employee makes
a contribution pursuant to this Section 3.3 intended to be a Rollover
Contribution but which did not qualify as a Rollover Contribution, the
Trustee shall distribute to the Employee as soon as practicable after
that conclusion is reached the entire Account balance in his or her
Rollover Contributions Account deriving from such contributions
determined as of the valuation date coincident with or immediately
preceding such discovery.
3.3.2 Any Eligible Employee or Participant may direct the
Administrator to direct the Trustee to accept a transfer to the Trust
Fund from another trust established pursuant to another Qualified Plan
of all or any part of the assets held in such other trust. The Plan
shall not accept a direct transfer attributable to accumulated
deductible employee contributions as defined by Code Section
72(o)(5)(B). The Trustee may condition acceptance of such a trust to
trust transfer upon receipt of such documents as it may require.
3.4 Section 401(k) Contributions and Account Allocations
3.4.1 Elective Deferrals
(A) Amount of Elective Deferrals
Subject to the limitations contained in Section 3.4.2, the Employer will
contribute cash to the Trust Fund in an amount equal to:
(i) as specified on the Participant's 401(k) Election form, the specific
dollar amount, or the deferral percentage multiplied by each such
Participant's Compensation; or
(ii) a bonus contribution made pursuant to Section 3.4.1 (C).
(B) The amount elected by a Participant pursuant to a 401 (k) Election
shall be determined within the limits s-fled in the Adoption Agreement
The 401(k) Election shall be made on a form provided by the
Administrator but no election shall be effective prior to approval by
the Administrator. The Administrator may reduce the amount of any 401
(k) Election, or make such other modifications as necessary, so that the
Plan complies with the provisions of the Code. A Participant's 401(k)
Election shall remain in effect until modified or terminated.
Modification or termination of a 401(k) Election shall be made at such
time as specified in the Adoption Agreement.
(C) If elected by the Employer in the Adoption Agreement, an Eligible
Employee may make a 401(k) Election to have an amount withheld up to the
amount of any bonus payable for such Plan Year and direct the Employer
to contribute the amount so withheld to his or her Elective Deferrals
Account.
3.42 Limitation on Elective Deferrals
(A) Maximum Amount of Elective Deferrals and Distribution of Excess
Elective Deferrals
(i) No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other Qualified Plan maintained by the Employer,
during any Plan Year in excess of the dollar limitation contained in
Code Section 402(g) in effect at the beginning of the Participant's
taxable year.
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(ii) Notwithstanding any other provision of the Plan, Excess Elective
Deferrals made to this Plan or assigned to this Plan, plus any income
and minus any loss allocable thereto, shall he distributed no later than
April 15, 1988, and each April 15 thereafter, to Participants to whose
accounts Excess Elective Deferrals were designated for the preceding
Plan Year and who claim Excess Elective Deferrals for such taxable year.
Excess Elective Deferrals shall be treated as Annual Additions.
(iii) Claims. A Participant may designate to this Plan any amount of
his or her Elective Deferrals as Excess Elective Deferrals during his or
her taxable year. A Participant's claim shall he in writing, shall he
submitted to the Administrator no later than March 1, shall specify the
Participant's Excess Elective Deferral for the preceding Plan Year, and
shall be accompanied by the Participant's written statement that if such
amounts are not distributed, such Excess Elective Deferral, when added
to amounts deferred under other plans or arrangements described in Code
Section 401(k), Code Section 408(k:), Code Section 403(b,) or Code
Section 457, exceeds the limit imposed on the Participant by Code
Section 402(g) for the year in which the deferral occurred. A
Participant is deemed to notify the Administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective
Deferrals made to this Plan and any other plans of the Employer or an
Affiliate.
(iv) Determination of Income or Loss. Excess Elective Deferrals shall be
adjusted for income or loss up to the date of distribution. The income
or loss allocable to Participant's Excess Elective Deferrals is the sum
of:
(1) the income or loss allocable to the Participant's Elective Deferrals
Account for the Participant's taxable year multiplied by a fraction, the
numerator of which is the Participant's Excess Elective Deferrals for
the Participant's taxable year and the denominator of which is the
Account Balance of the Participant's Elective Deferrals Account without
regard to any income or loss occurring during such taxable year; and (2)
ten percent of the amount determined under (1) multiplied by the number
of whole calendar months between the end of the Participant's taxable
year and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
Anything in the preceding paragraph of this Section 3.4.2(A)(iv) to the
contrary notwithstanding, any reasonable method for computing the income
or loss allocable to Excess Elective Deferrals may be used, provided
that such method is used consistently for all Participants and for all
corrective distributions under the Plan, and is used by the Plan for
allocating income or loss to Participants' Accounts. Income or loss
allocable to the period between the end of the taxable year and the date
of distribution may he disregarded in determining income or loss.
(B) ADP Test
The Average Actual Deferral Percentage for Highly Compensated Employees
for each Plan Year and the Average Actual Deferral Percentage for
Nonhighly Compensated Employees for the same Plan Year must satisfy one
of the following tests:
(i) The Average Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year shall not exceed
the Average Actual Deferral Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the Plan Year multiplied by 2.0;
provided that the Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees does not exceed the
Average Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees by more than two percentage points.
(C) Special Actual Deferral Percentage Rules
(i) The Actual Deferral Percentage for any Eligible Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to
have Elective Deferrals and Qualified Matching Contributions or
Qualified Nonelective Contributions, or both, if treated as Elective
Deferrals for purposes of the ADP Test, allocated to his or her accounts
under two or more plans or arrangements described in Code Section 4O1(k)
that are maintained by the Employer shall be determined as if all such
Elective Deferrals, Qualified Matching Contributions and Qualified
Nonelective Contributions were made under a single arrangement. If a
Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(ii) In the event that this Plan satisfies the requirements of Code
Section 401(k), Code Section 401(a)(4) or Code Section 410(b) only if
aggregated with one or more other qualified plans, or if one or more
other qualified plans satisfy the requirements of such Code Sections
only if aggregated with this Plan, then this Section shall be applied by
determining the Actual Deferral Percentage of Employees as if all such
qualified plans were a single qualified plan. For Plan Years beginning
after December 31,1989, plans may be aggregated in order to satisfy Code
Section 401(k) only if they have the same plan year.
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(iii) For purposes of determining the Actual Deferral Percentage of an
Eligible Participant who is a 5% owner or one of the ten most highly
paid Highly Compensated Employees, the Elective Deferrals (and Qualified
Matching Contributions or Qualified Nonelective Contributions, or both
if treated as Elective Deferrals for purposes of one of the tests
referred to in Section 3.4.2(B)) and CODA Compensation of such
Participant shall include the Elective Deferrals (and, if applicable,
Qualified Matching Contributions, Qualified Nonelective Contributions)
and CODA Compensation for the Plan Year of Family Members. Family
Members with respect to such Highly Compensated Employees shall be
disregarded as separate employees in determining the Actual Deferral
Percentage both for Eligible Participants who are Nonhighly Compensated
Employees and for Eligible Participants who are Highly Compensated
Employees.
(iv) For purposes of determining the ADP Test, Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective must be made
before the last day of the 12-month period immediately following the
Plan Year to which such contributions relate.
(v) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP Test and the amount of Qualified Nonelective
Contributions and/or Qualified Matching Contribution used in such test.
(vi) The determination and treatment of the Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective
Contributions, used in the ADP Test shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(D) Distribution of Excess Contributions
(i) In General. Notwithstanding any other provision of the Plan except
Section 3.4.2(E), Excess Contributions, plus any income and minus any
loss allocable thereto, shall be distributed no later than the last day
of each Plan Year beginning after December 31, 1987, to Participants to
whose Accounts Elective Deferrals, Qualified Matching Contributions, and
Qualified Nonelective Contributions were allocated for the preceding
Plan Year.1 Excess Contributions of Participants who are subject to the
Family Member aggregation rules shall be allocated among the Family
Members in proportion to the Elective Deferrals (and amounts treated as
Elective Deferrals) of each Family Member that is combined to determine
the combined Actual Deferral Percentage. Excess Contributions shall be
treated as Annual Additions.
(ii) Determination of Income or Loss. Excess Contributions shall be
adjusted for any income or loss up to the date of distribution. The
income or loss allocable to Excess Contributions is the sum of: (1) the
income or loss allocable to the Participant's Elective Deferrals Account
(and, if applicable, the Qualified Nonelective Contributions Account or
the Qualified Matching Contributions Account or both) for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator of which is the
Account Balances of Participants Elective Deferrals Account, Qualified
Nonelective Contributions Account and Qualified Matching Contributions
Account if any of such contributions are included in the ADP Test,
without regard to any income or loss occurring during such Plan Year;
and
1 Distribution of Excess Contributions on or before the last day of the
Plan Year after the Plan Year in which such excess amounts arose is
required under Code Section 401(k)(8) if the Plan is to maintain its
tax-qualified status. However, if such excess amounts, plus any income
and minus any loss allocable thereto, are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amounts
arose, then Code Section 4979 imposes a 10% excise tax on the employer
maintaining the plan with respect to such amounts.
(2)10% of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
Anything in the preceding paragraph of this Section 3.4.2(D)(ii) to the
contrary notwithstanding, any reasonable method for computing the income
or loss allocable to Excess Contributions may be used, provided that
such method is used consistently for all Participants and for all
corrective distributions under the Plan for the Plan Year, and is used
by the Plan for allocating income or loss to Participant's Accounts.
Income or loss allocable to the period between the end of the Plan Year
and the date of distribution may be disregarded in determining income or
loss.
(iii) Accounting for Excess Contributions. Amounts distributed under
this Section 3.4.2(D) shall first be distributed from the Participant's
Elective Deferrals Account and Qualified Matching Contributions Account
in proportion to the Participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the ADP Test) for the Plan
Year. Excess Contributions shall be distributed from the Participant's
Qualified Nonelective Contributions Account only to the extent that such
Excess Contributions exceed the balance in the Participant's Elective
Deferrals Account and Qualified Matching Contributions Account.
(E) In lieu of distributing Excess Contributions pursuant to the
preceding Section 3.4.2(D), and as s-fled in the Adoption Agreement, the
Employer may make special Qualified Nonelective Contributions on behalf
of Nonhighly Compensated Employees that are sufficient to satisfy the
ADP Test
(F) In lieu of distributing Excess Contributions, the Participant may
treat his or her Excess Contributions as an amount distributed and then
re-contributed by such Participant Recharacterized amounts are 100%
nonforfeitable and subject to the same distribution requirements as
Elective Deferrals. Amounts may not be recharacterized by a Highly
Compensated Employee to the extent that such amount in combination with
other amounts made to the Participant's Participant Contributions
Account would exceed any stated limit on such contributions, as
specified in the Adoption Agreement If Excess Contributions are
recharacterized, they must be so no later than two and one half months
after the last day of the Plan Year in which such Excess Contributions
arose and they are deemed to occur no earlier than the date the last
Highly Compensated Employee is informed in writing of the amount
recharacterized and the consequences thereof. Recharacterieed amounts
are taxable to the Participant for the tax year in which he or she would
have received such contributions in cash.
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(G) Under no circumstances may Elective Deferrals, Qualified Matching
Contributions and Qualified Nonelective Contributions be contributed and
allocated to the Trust later than the last day of the 12-month period
immediately following the Plan Year to which such contributions relate.
3.5 Matching 401(k) Contributions
3.5.1 Amount of Matching Contributions Subject to the limitations
contained in Sections 3.9 and 3.5.2, for each Plan Year the Employer
will contribute in cash and/or Qualifying Employer Securities, Matching
401(k) Contributions to the Trust Fund in an amount, if any, calculated
by reference to the Participants' Elective Deferrals as specified in the
Adoption Agreement.
3.51 Limitation on Contribution Percentage
(A) ACP Test
The Average Contribution Percentage for Eligible Participants who are
Highly Compensated Employees for the Plan Year and the Average
Contributions Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the same Plan Year must satisfy one of the
following tests:
(i) the Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees for the Plan Year shall not exceed the
Average Contribution Percentage for Eligible Participants who are
Nonhighly Compensated Employees for the same Plan Year multiplied by
1.25; or
(ii) the Average Contribution Percentage for Eligible Participants who
are Highly Compensated Employees shall not exceed the Average
Contribution Percentage for Eligible Participants who are Nonhighly
Compensated Employees by more than two percentage points or such lesser
amount as the Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to any Highly
Compensated Employee.
(B) Special Average Contribution Percentage Rules
(i) For purposes of this Section 3.5.2, the Contribution Percentage for
any Eligible Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Matching 401(k) Contributions or
Matching Thrift Contributions, as the case may be (other than Qualified
Matching Contributions), allocated to his or her account under two or
more qualified plans described in Code Section 401 (a), or arrangements
described in Code Section 401(k) shall be determined as if the total of
such Contribution Percentage Amounts was made under each plan. If a
Highly Compensated Employee participates in 2 or more cash or deferred
arrangements that have different plan years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(ii) In the event that this Plan satisfies the requirements of Code
Section 410(b,) only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of Code Section 410(b)
only if aggregated with this Plan, then this Section 3.5.2 shall be
applied by determining the Contribution Percentages of Employees as if
all such plans were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to satisfy Code
Section 401(m) only if they have the same plan year.
(iii) For purposes of determining the Contribution Percentage of an
Eligible Participant who is a 5% owner or one of the 10 most highly-paid
Highly Compensated Employees, the Contribution Percentage Amounts and
the CODA Compensation of such Participant shall include the Contribution
Percentage Amounts and CODA Compensation for the Plan Year of Family
Members. Family Members with respect to Highly Compensated Employees
shall be disregarded as separate employees in determining the
Contribution Percentage both for Participants who are Nonhighly
Compensated Employees and for Participants who are Highly Compensated
Employees.
(iv) For purposes of determining the ACP Test, Matching 401(k)
Contributions, Matching Thrift Contributions and Qualified Nonelective
Contributions will be considered made for a Plan Year if made no later
than the end of the 12-month period beginning on the day after the close
of the Plan Year.
(v) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP Test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in such
test.
(C) Multiple Use
If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement and a plan subject to the ACP Test and the sum
of the Actual Deferral Percentage and the Actual Contribution Percentage
of those Highly Compensated Employees exceeds the "aggregate limit",
then the Actual Contribution Percentage of those Highly Compensated
Employees will be reduced, beginning with such Highly Compensated
Employee whose Actual Contribution Percentage is the highest, so that
the limit is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage is reduced shall be treated as an
Excess Aggregate Contribution. The Actual Deferral Percentage and Actual
Contribution Percentage of the Highly Compensated Employees are
determined after any corrections required to meet the ADP Test and the
ACP Test Multiple use does not occur if either the Average Deferral
Percentage or Actual Contribution Percentage of the Highly Compensated
Employees does not exceed 1.25 multiplied by the Actual Deferral
Percentage and the Actual Contribution Percentage of the Nonhighly
Compensated Employees.
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(i) The "aggregate limit" is the sum of (1) 125% of the greater of the
Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year or the Actual Deferral
Percentage for Participants who are Nonhighly Compensated Employees for
the Plan Year beginning with or within the Plan Year and (2) the lesser
of 200% or two plus the lesser of such Actual Deferral Percentage or
Actual Contribution Percentage. "Lesser" is substituted for "greater" in
"(1)," above, and "greater" is substituted for "lesser" after "two plus
the" in "(2)" if it would result in a larger aggregate limit.
(D) Forfeiture of Excess Aggregate Contributions
(i) In General. Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited and applied to reduce subsequent Matching
401(k) Contributions or Matching Thrift Contributions, as the case may
be. No forfeitures arising under this Section 3.6.2(D) shall be
allocated to the account of any Highly Compensated Employee. If not
forfeitable, Excess Aggregate Contributions shall be distributed no
later than the last day of each Plan Year beginning after December
31,1987, to Participants to whose Accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the Family
Member aggregation rules shall be allocated among the Family Members in
proportion to the amounts constituting Contribution Percentage Amounts
of each Family Member that is combined to determine the combined Actual
Contribution Percentage. Excess Aggregate Contributions shall be treated
as Annual Additions. Anything above to the contrary notwithstanding, any
forfeiture or distribution under this Section 3.5.2(D)(i) shall occur
only if sufficient Employee Thrift Contributions and/or Participant
Voluntary Nondeductible Contributions, as the case may be, are not
distributed from the qualified plan holding such Employee Thrift
Contributions and/or Participant Voluntary Nondeductible Contributions,
as the case may be.2
(ii) Determination of Income or Loss. Excess Aggregate Contributions
shall be adjusted for any income or loss up to the date of distribution.
The income or loss allocable to Excess Aggregate Contributions is the
sum of: (1) the income or loss allocable to the Participant's Matching
401(k) Contribution Account or Matching milt Contribution Account (if
any, and if all amounts therein are not used in the ADP Test) and, if
applicable, Qualified Nonelective Contribution Account and Elective
Deferrals Account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate Contributions
for the year and the denominator of which is the Participant's Account
Balance(s) attributable to Contribution Percentage Amounts without
regard to any income or loss occurring during such Plan Year; and (2)10%
of the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
Anything in the preceding paragraph of this Section 3.5.2(D)(ii) to the
contrary notwithstanding, any reasonable method for computing the income
or loss allocable to Excess Aggregate Contributions may be used,
provided that such method is used consistently for all Participants and
for all corrective distributions under the Plan for the Plan Year, and
is used by the Plan for allocating income or loss to Participants'
Accounts. Income or loss allocable to the period between the end of the
Plan Year and the date of distribution may be disregarded in determining
income or loss.
(iii) The determination of the Excess Aggregate Contributions shall be
made after first determining the Excess Elective Deferrals, and then
determining the Excess Contributions.
3.5.3 For purposes of determining the ACP Test, Qualified Nonelective
Contributions, Matching 401(k) Contributions and Matching Thrift
Contributions will be considered made for a Plan Year if paid to the
Trustee no later than the end of the 12-month period beginning on the
day after the close of the Plan Year.
3.6 Thrift Contributions
3.6.1 Employee Thrift Contributions. If elected by the Employer in the
Adoption Agreement to provide for Employee Thrift Contributions, the
Employer will contribute cash to the Trust Fund in an amount equal to
(A) the Employee Thrift Contribution percentage of each Participant on
his or her Employee Thrift Contribution election form multiplied by each
such Participant's Compensation or (B) the specific dollar amount set
forth on the Participant's election form.
The amount elected by a Participant pursuant to a Participant's Employee
Thrift Contribution election shall be determined within the limits s-
fled in the Adoption Agreement. Such election shall be made on a form
provided by the Administrator but no election shall be effective prior
to approval by the Administrator. The Administrator may reduce the
amount of any Employee Thrift Contribution, or make such other
modifications as necessary, so that the Plan complies with the
provisions of the Code. A Participant's election shall remain in effect
until modified or terminated at such times as specified in the Adoption
Agreement.
3.6.2 Matching Thrift Contributions. Subject to the limitations
contained in Sections 3.9 and 3.5.2, for each Plan Year the Employer
will contribute in cash and/or Qualifying Employer Securities, Matching
Thrift Contributions to the Trust Fund in an amount, if any, calculated
by reference to the Participants' Employee Thrift Contributions, as
specified in the Adoption Agreement
Matching Thrift Contributions made by the Employer will be allocated to
the Matching Thrift Contributions Account of those Participants who have
contributed Employee Thrift Contributions to the Plan, as specified in
the Adoption Agreement.
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2Distribution or forfeiture of Excess Aggregate Contributions on or
before the last day of the Plan Year after the Plan Year in which such
excess amounts arose is required under Code Section 401(m)(6) if the
Plan is to maintain its tax-qualified status. However, if such excess
amounts, plus any income and minus any loss allocable thereto, are
distributed more than 2-1/2 months after the last day of the Plan Year
in which such excess amounts arose, then Code Section 4979 imposes a 10%
excise tax on the employer maintaining the plan with respect to such
amounts.
3.7 Treatment of Forfeitures
3.7.1 If the Employer has elected in the Adoption Agreement to
reallocate forfeitures for a Plan Year among Participants, then such
forfeitures, if any, shall be allocated as of the last day of the Plan
Year to the Employer Accounts of those Participants who are eligible to
share in the allocation of contributions to that particular Employer
Account (whether or not a contribution was made for that Plan Year) for
that Plan Year in that particular Employer Account category with respect
to which such forfeitures are attributable. If the Plan Is a Target
Benefit Plan, forfeitures may only be used to reduce Employer
Contributions, in accordance with Section 3.7.2.
3.7.2 If the Employer has elected in the Adoption Agreement to use
forfeiture to reduce contributions, then forfeitures shall be applied in
the succeeding Plan Year to reduce Employer Contributions in that
particular Employer Account category to which such forfeitures were
attributable.
3.8 Establishing of Accounts
3.8.1 An Elective Deferrals Account shall be established for each
Eligible Participant who makes a 401(k) Election to which the
Administrator shall credit, or cause to be credited, Elective Deferrals
allocable to each such Participant, plus earnings or losses thereon.
3.8.2 An Employer Contributions Account shall be established for each
Participant to which the Administrator shall credit or cause to be
credited Employer contributions pursuant to Section 3.1, and forfeitures
attributable to such contributions, if any, plus earnings or losses
thereon.
3.8.3 An Employee Thrift Contributions Account shall be established
for each Participant who makes Employee Thrift Contributions to the
Plan, to which the Administrator shall credit, or cause to be credited,
all amounts allocable to each such Participant, plus earnings or losses
thereon.
3.8.4 A Matching 401(k) Contributions Account shall be established
for each Participant for whom Matching 401(k) Contributions are made, to
which the Administrator shall credit, or cause to be credited, all such
amounts allocable to each such Participant, plus earnings or losses
thereon.
3.8.5 A Matching Thrift Contributions Account shall be established
for each Participant for whom Matching Thrift Contributions are made, to
which the Administrator shall credit, or cause to be credited, all
amounts allocable to each such Participant, plus earnings or losses
thereon.
3.8.6 A Participant Voluntary Nondeductible Contributions Account
shall be established for each Participant who makes Participant
Voluntary Nondeductible Contributions to the Plan, plus earnings or
losses thereon.
3.8.7 A Qualified Matching Contributions Account shall be established
for each Eligible Participant for whom Qualified Matching Contributions
are made, to which the Administrator shall credit, or cause to be
credited, all amounts allocable to each such Participant, plus earnings
or losses thereon.
3.8.8 A Qualified Nonelective Contributions Account shall be
established for each Participant for whom Qualified Nonelective
Contributions are made, to which the Administrator shall credit, or
cause to be credited, all amounts allocable to each such Participant,
plus earnings or losses thereon.
3.8.9 A Rollover Contributions Account shall be established for each
Participant who contributes to the Plan pursuant to Section 3.3 to which
the Administrator shall credit, or cause to be credited, Rollover
Contributions made by the Participant, plus earnings or losses thereon
3.8.10 A Transferred Contributions Account shall be established for
each Participant for whom assets are transferred from another Qualified
Plan, to which the Administrator shall credit, or cause to be credited,
transferred assets, plus earnings or losses thereon.
3.9 Limitation on Amount of Allocations
3.9.1 As used in this Section 3.9, each of the following terms shall
have the meaning for that term set forth in this Section 3.9.1.
(A) Annual Additions means, for each Participant, the sum of the
following amounts credited to the Participant's Accounts for the
Limitation Year:
(i) Employer Contributions within the meaning of IRS regulation 1.4154-
6(b);
(ii) Employee Contributions;
(iii) forfeitures;
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(iv) allocation under a simplified employee pension; and
(v) any Excess Amount applied under a Defined Contribution Plan in the
Limitation Year to reduce Employer Contributions will also be considered
as part of the Annual Additions for such Limitation Year.
Amounts allocated after March 31, 1984, to an "individual medical
benefit account" as defined in Code Section 415(1)(2) ("Individual
Medical Benefit Account") which is part of a pension or annuity plan
maintained by the Employer or Affiliate are treated as Annual Additions
to a Defined Contribution Plan. Also, amounts derived from contributions
paid or accrued after December 31,1985, in taxable years ending after
that date, which are attributable to post-retirement medical benefits
allocated to the separate account of a "key employee" as defined in Code
Section 419A(d)(3) under a "welfare benefit fund" as defined in Code
Section 419(e) ("Welfare Benefit Fund") maintained by the Employer or
Affiliate, are treated as Annual Additions to a Defined Contribution
Plan.
(B) Defined Benefit Dollar Limitation means $90,000 multiplied by the
Adjustment Factor or such other limitation set forth in Code Section
415(b)(1) as in effect for the Limitation Year.
(C) Defined Benefit Fraction means a fraction, the numerator of which is
the sum of the Projected Annual Benefits of the Participant involved
under all Defined Benefit Plans (whether or not terminated) maintained
by the Employer or Affiliate, and the denominator of which is the lesser
of 125% of the Defined Benefit Dollar Limitation determined for the
Limitation Year or 140% of the Participant's Highest Average Limitation
Compensation, including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant as of
the first day of the first Limitation Year beginning after December 31,
1986, in one or more Defined Benefit Plans maintained by the Employer or
Affiliate which were in existence on May 5,1986, the denominator of this
fraction will not be less than 125% of the sum of the annual benefits
under such Plans which the Participant had accrued as of the dose of the
last Limitation Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plans after May 5,1986. The
preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied the requirements of Code
Section 415 for all Limitation Years beginning before January 1, 1987.
(D) Defined Contribution Dollar Limitation means $30,000 or if
greater, one-fourth of the Defined Benefit Dollar Limitation as in
effect for the Limitation Year.
(E) Defined Contribution Fraction means a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's Account or
Accounts under all the Defined Contribution Plans (whether or not
terminated) maintained by the Employer or Affiliate for the current and
all prior Limitation Years (including the Annual Additions attributable
to the Participant's nondeductible contributions to all Defined Benefit
Plans, whether or not terminated, maintained by the Employer or
Affiliate and the Annual Additions attributable to all Welfare Benefit
Funds, Individual Medical Benefit Accounts, and simplified employee
pensions maintained by the Employer or Affiliate), and the denominator
of which is the sum of the "maximum aggregate amounts" (as defined in
the following sentence) for the current and all prior Limitation Years
of service with the Employer or Affiliate (regardless of whether a
Defined Contribution Plan was maintained by the Employer or Affiliate).
The "maximum aggregate amount" in any Limitation Year is the lesser of
(i) 125% of the Defined Benefit Dollar Limitation in effect under Code
Section 415(c)(1)(A) or (ii) 35% of the Participant's Compensation for
such year.
If the Employee was a Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more
Defined Contribution Plans maintained by the Employer or Affiliate in
existence on May 5,1986, the numerator of this fraction will be adjusted
if the sum of this fraction and the Defined Benefit Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (A) the excess of the sum of the
fractions over 1.0 times (B) the denominator of this fraction will be
permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed
as of the later of the end of the last Limitation Year beginning before
January 1, 1987, and disregarding any changes in the terms and
conditions of the Plans made after May 6, 1986, but using the Code
Section 415 limitation applicable to the first Limitation Year beginning
on or after January 1, 1987. The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to treat all
Participant contributions as Annual Additions.
(F) Excess Amounts means the excess of the Participant's Annual
Additions for the Limitation Year involved over the Maximum Permissible
Amount for that limitation Year.
(G) Highest Average Limitation Compensation means the average
Compensation as defined in Code Section 415(c)(3) of the Participant
involved for that period of three consecutive Years of Service with the
Employer or Affiliate (or if the Participant has less than three such
Years of Service, the actual number thereof) that produces the highest
average.
(H) Limitation Compensation means Compensation, as defined in either
(i), (ii) or (iii) below, as specified in the Adoption Agreement:
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(i) Code Section 415 Safe-Harbor Compensation
For an Employee other than a Self-Employed Individual, the Employee's
earned income, wages, salaries, and fees for professional services and
other amounts received (without regard to whether or not an amount is
paid in cash) for personal services actually rendered in the course of
Employment (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan
(as described in Reg. 1.62-2(c)) and excluding the following:
(1) Employer contributions to a plan of deferred compensation which are
not includible in the Employee's gross income for the taxable year in
which contributed, or contributions under a "simplified employee
pension" plan (within the meaning of Code Section 408(k)) to the extent
such contributions are deductible by the Employee, or any distributions
from a plan of deferred compensation;
(2) amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or other property) held by the Employee either
becomes freely "transferable" or is no longer subject to a "substantial
risk of forfeiture" (both quoted terms within the meaning of Code
Section 83(a));
(3) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(4) other amounts which received special tax benefits, or contributions
made (whether or not under a salary reduction agreement) towards the
purchase of an annuity described in Code Section 403(b) (whether or not
the amounts are actually excludable from the gross income of the
Employee); or For Limitation Years beginning after December 31, 1991,
Limitation Compensation shall include only that compensation which is
actually paid or made available during the Limitation Year.
(ii) Information required to be reported under Sections 6041 and 6051.
("Wages, Tips and other Compensation Box" Form W-2) Limitation
Compensation is defined as wages as defined in Code Section 3401(a) and
all other payments of compensation to an Employee by the Employer (in
the course of the Employer's trade or business) for which the Employer
is required to furnish the Employee a written statement under Sections
6041(d) and 6051(a)(3) of the Code. Compensation must be determined
without regard to any rules under Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
(iii) Code Section 3401(a) wages
Limitation Compensation is defined as wages within the meaning of Code
Section 3401 (a) for the purposes of income tax withholding at the
source but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
Without regard to the definition of Limitation Compensation elected by
the Employer, for a Self-Employed Individual, Limitation Compensation
means his or her Earned Income, provided that if the Self-Employed
Individual is not a Participant for an entire Plan Year, his or her
Limitation Compensation for that Plan Year shall be his or her Earned
Income for that Plan Year multiplied by a fraction the numerator of
which is the number of days he or she is a Participant during the Plan
Year and the denominator of which is the number of days in the Plan
Year. Additionally, Limitation Compensation for a Participant in a
Defined Contribution Plan who is permanently and totally disabled (as
defined in Code Section 22(e)) is the compensation such Participant
would have received for the Limitation Year if the Participant had been
paid at the rate of compensation paid immediately before becoming
disabled; such imputed compensation may be taken into account only if
the Participant is not a Highly Compensated Employee and contributions
made on behalf of such Participant are nonforfeitable when made.
(I) Maximum Permissible Amount means the maximum Annual Addition which
may be contributed or allocated to a Participant's Account under the
Plan for any Limitation Year. The maximum Annual Addition shall not
exceed the lesser of: (a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation Year. The
Compensation limitation referred to in ( b) shall not apply to any
contribution for medical benefits (within the meaning of Code Sections
401(h) or 419A(f)(2)) which is otherwise treated as an Annual Addition
under Code Sections 415(I)(1) or 419A(d)(2). If a short Limitation Year
is created because of an amendment changing the Limitation Year to a
different 12-consecutive month period, the Maximum Permissible Amount
will not exceed the Defined Contribution Dollar Limitation multiplied by
the following fraction:
Number of months in the short Limitation Year
12
(J) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such
benefit is expressed in a form other than a straight life annuity or
Qualified Joint and Survivor Annuity) to which the Participant would be
entitled under the terms of a Defined Benefit Plan assuming:
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(i) the Participant continues in employment with the Employer or
Affiliate until the Participant's "normal retirement age" under the Plan
within the meaning of Code Section 411(a)(8) (or the Participant's
current age, if later); and
(ii) the Participant's Limitation Compensation for the current
Limitation Year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future limitation
Years.
3.9.2 The provisions of this subsection 3.9.2 apply with respect to a
Participant who does not participate in, and has never participated in,
another Qualified Plan, a Welfare Benefit Fund or an Individual Medical
Benefit Account or a simplified employee pension, as defined in Code
Section 401(k), maintained by the Employer or an Affiliate, which
provides an Annual Addition as defined in Section 3.9.1(A) of the Plan,
other than this Plan:
(A) The amount of Annual Additions which may be credited to the
Participant's Account for any Limitation Year will not exceed the lesser
of the Maximum Permissible Amount or any other limitation contained in
this Plan. If the Employer Contribution that would otherwise be
contributed or allocated to the Participant's Account would cause the
Annual Additions on behalf of the Participant for the Limitation Year to
exceed the Maximum Permissible Amount with respect to that Participant
for the limitation Year, the amount contributed or allocated will be
reduced so that the Annual Additions on behalf of the Participant for
the Limitation Year will equal such Maximum Permissible Amount
(B) Prior to determining the Participant's actual Limitation
Compensation for a Limitation Year, the Employer may determine the
Maximum Permissible Amount for the Participant for the Limitation Year
on the basis of a reasonable estimation of the Participant's
Compensation for that Limitation Year. Such estimated Compensation shall
be uniformly determined for all Participants similarly situated.
(C) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual compensation
for the Limitation Year.
(D) If pursuant to Section 3.9.2(C) or as a result of the allocation of
forfeitures, there is an Excess Amount with respect to the Participant
for a Limitation Year, the Excess Amount shall be disposed of as
follows:
(i) First, any contribution to the Participant's Elective Deferrals
Account, Participant's Voluntary' Nondeductible Contributions Account or
Employee Thrift Contributions Account, if applicable, and any earnings
allocable thereto will be distributed to the Participant to the extent
that the return thereof would reduce the Excess Amount in such
Participant's Accounts;
(ii) If after the application of Section 3.9.2(D)(i) an Excess Amount
still exists, and the Participant is covered by the Plan at the end of
the Limitation Year, the remaining Excess Amount in the Participant's
Account will be used to reduce Employer contributions (including
allocation of any forfeitures) under this Plan for such Participant in
the next Limitation Year, and in each succeeding Limitation Year, if
necessary.
(iii) If after the application of Section 3.9.2(D)(i) an Excess Amount
still exists, and the Participant is not covered by the Plan at the end
of the Limitation Year, the Excess Amount will be held unallocated in a
suspense account The suspense account will be applied to reduce future
Employer contributions under this Plan for all remaining Participants in
the next limitation Year, and in each succeeding Limitation Year, if
necessary; provided, however, that if all or any part of the Excess
Amount held in a suspense account is attributable to a Participant's
Elective Deferrals, such Excess Amount shall be held unallocated in a
suspense account to be used for such Participant in the next Limitation
Year and each succeeding Limitation Year as an Elective Deferral if such
Participant is covered by the Plan in the next and each succeeding
Limitation Year, if necessary.
(iv) If a suspense account is in existence at any time during a
Limitation Year pursuant to Section 3.9.2(D)(iii), the suspense account
will not participate in the allocation of the Trust Fund's investment
gains or losses to or from any other Account If a suspense account is in
existence at any time during a particular Limitation Year, all amounts
in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer or Participant contributions
may be made to the Plan for the Limitation Year. Excess Amounts, other
than those Excess Amounts referred to in Section 3.9.2(D)(i), may not be
distributed to Participants or Former Participants.
3.9.3 The provisions of this subsection 3.9.3 apply with respect to a
Participant who, in addition to this Plan, is covered or has been
covered under one or more Defined Contribution Plans which are Master or
Prototype Plans, Welfare Benefit Funds an Individual Medical Benefit
Account or a simplified employee pension maintained by the Employer or
an Affiliate, which provides an Annual Addition as described in Section
3.9.1(A) of the Plan during any Limitation Year:
(A) The Annual Additions which may be credited to a Participant's
Accounts under this Plan for any such Limitation Year will not exceed
the Maximum Permissible Amount reduced by the Annual Additions credited
to the Participant's account or accounts under any other plans and
Welfare Benefit Fund, Individual Medical Benefit Account or simplified
employee pension for the same Limitation Year. If the Annual Additions
with respect to the Participant under any one or more other such Defined
Contribution Plans or Welfare Benefit Funds, Individual Medical Benefit
Account or simplified employee pension maintained by the Employer are
less than the Maximum Permissible Amount and the Employer Contribution
that would otherwise be contributed or allocated to a Participant's
Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or
allocated shall be reduced so that the Annual Additions under all such
plans and funds for the Limitation Year will equal the Maximum
Permissible Amount.
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If the Annual Additions with respect to the Participant under such other
Defined Contribution Plans and Welfare Benefit Funds, Individual Medical
Benefit Account or simplified employee pension in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will
be contributed or allocated to any of the Participant's Account under
this Plan for the Limitation Year.
(B) Prior to determining the Participant's actual compensation for a
Limitation Year, the Maximum Permissible Amount for a Participant may be
determined in the manner described in Section 3.9.2(B).
(C) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Limitation
Compensation for the Limitation Year.
(D) If, pursuant to subsection 3.9.3(C) above, or as a result of the
allocation of forfeitures, a Participant's Annual Additions under this
Plan and the Participant's Annual Additions under such other plans would
result in an Excess Amount for a Limitation Year, the Excess Amount will
be deemed to consist of the Annual Additions last allocated, except that
Annual Additions attributable to simplified employee pension will be
deemed to have been allocated first, followed by Annual Additions to a
Welfare Benefit Fund or Individual Medical Benefit Account regardless of
the actual allocation date.
(E) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
such plan, the Excess Amount attributed to this Plan will be the product
of: (i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (A) the Annual Additions allocated to the Participant
for the Limitation Year as of such date under this Plan to (B) the total
Annual Additions allocated to the Participant for the Limitation Year as
of such date under this Plan and all of the other plans referred to in
the first sentence of this Section 3.9.3.
(F) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 3.9.2(D).
3.9.4 If a Participant is covered under one or more Defined
Contribution Plans, other than this Plan, maintained by the Employer or
an Affiliate which are not Master or Prototype Plans, or Welfare Benefit
Funds or an Individual Medical Benefit Account maintained by the
Employer, Annual Additions which may be credited to the Participant's
Account under this Plan for any Limitation Year shall be limited in
accordance with the provisions of subsections 3.9:3(A) -(F) above as
though each such other plan was a Master or Prototype Plan.
3.9.5 If the Employer maintains, or at any time maintained, a Defined
Benefit Plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Fraction and Defined Contribution Fraction
will not exceed 1.0 in any Limitation Year. If such sum would otherwise
exceed 1.0 and if such Defined Benefit Plan does not provide for a
reduction in benefits thereunder, Annual Additions which may be credited
to a Participant's Account under this Plan for any Limitation Year shall
be limited in accordance with the provisions of Section 3.9.2.
3.9.6 If required pursuant to Section 4.4.4, "100%" shall be
substituted for "125%" wherever the latter percentage appears in this
Section 3.9.
3.10 Return of Employer Contributions Under Special Circumstances
Notwithstanding any provision of this Plan to the contrary, upon timely
written demand by the Employer or the Administrator to the Trustee:
(A) Any contribution by the Employer to the Plan under a mistake of
fact shall be returned to the Employer by the Trustee within one year
after the payment of the contribution.
(B) Any contribution made by the Employer incident to the determination
by the Commissioner of Internal Revenue that the Plan is initially a
Qualified Plan shall be returned to the Employer by the Trustee within
one year after notification from the Internal Revenue Service that the
Plan is not initially a Qualified Plan but only if the application for
the qualification is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan is adopted, or
such later date as the Secretary of the Treasury may prescribe.
(C) In the event the deduction of a contribution made by the Employer
is disallowed under Code Section 404, such contribution (to the extent
disallowed) must be returned to the Employer within one year of the
disallowance of the deduction.
ARTICLE IV VESTING
4.1 Determination of Vesting
4.1.1 A Participant shall at all times have a vested percentage of
100% in the Account Balance of each of his or her Participant
Contributions Accounts, 401(k) Contributions Accounts, Rollover
Contributions Account and Transferred Account.
4.1.2 A Participant shall have a vested percentage of 100% in his or
her Account Balance of each of his or her Employer Accounts if he or she
terminates Employment due to the attainment of Normal Retirement Age,
Early Retirement specified in the Adoption Agreement, if elected by the
Employer in the Adoption Agreement, or upon Disability or death.
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4.1.3 The vested percentage of a Participant in the Account Balance of
each of his or her Employer Accounts not vested pursuant to Section
4.1.1 or 4.1.2 shall be determined in accordance with the vesting rule
or schedule specified in the Adoption Agreement
4.2 Rules for Crediting Vesting Service
4.2.1 Subject to Section 4.2.2, Years of Service shall be credited for
purposes of determining a Participant's Vesting Service as specified in
the Adoption Agreement. If the Employer maintains the plan of a
predecessor employer, service with such predecessor employer shall be
treated as service with the Employer for purposes of Vesting Service.
4.2.2 An Employee who terminates Employment with no vested percentage
in an Employer Account shall, if he or she returns to Employment, have
no credit for Vesting Service prior to such termination of Employment if
his or her Period of Severance equals or exceeds five years.
4.2.3 Vesting Service of an Employee following a Period of Severance
of five years or more shall not be counted for the purpose of computing
his or her vested percentage in his or her Employer Accounts derived
from contributions accrued prior to the Period of Severance. If
applicable, separate records shall be maintained reflecting the
Participant's vested rights in his or her Account Balance attributable
to service prior to the Period of Severance and reflecting the
Participant's vested percentage in his or her Account Balance
attributable to service after the Period of Severance. Vesting Service
prior to and following an Employee's Period of Severance shall be
counted for purposes of computing his or her vested percentage in an
Employer Account derived from contributions made after the Period of
Severance.
4.3 Employer Accounts Forfeitures
4.3.1 Subject to Section 5.6, upon the Nonvested Separation of a
Participant, the nonvested portion of each Employer Account of such
Participant will be forfeited as of the date of termination of
Employment.
Upon the Partially Vested Separation of a Participant, the nonvested
portion of each Employer Account of such Participant will be forfeited
as of the date of termination of Employment; provided, however, that
such Participant receives a distribution in accordance with Section 5.6.
If a Participant does not receive a distribution following his or her
termination of Employment, the nonvested portion of each Employer
Account of the Participant shall be forfeited following a Period of
Severance of five years.
4.3.2 If the Employer elects in the Adoption Agreement to reallocate
forfeitures, forfeitures for a Plan Year shall be allocated in
accordance with Section 3.7.1. If the Employer elects in the Adoption
Agreement to use forfeitures to reduce Employer contributions,
forfeitures shall be applied in accordance with Section 3.7.2.
4.4 Top-Heavy Provisions
4.4.1 As used in this Section 4.4, each of the following terms shall
have the meanings for that term set forth in this Section 4.4.1:
(A) Determination Date means, for any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan year. For the first Plan
Year of the Plan, the last day of that year.
(B) Permissive Aggregation Grout means the Required Aggregation Group
of plans plus any other plan or plans of the Employer or Affiliate
which, when considered as a group with the Required Aggregation Group,
would continue to satisfy the requirements of Code Sections 401(a)(4)
and 410.
(C) Required Aggregation Group means (i) each Qualified Plan of the
Employer or Affiliate in which at least one Key Employee participates or
participated at any time during the determination period (regardless of
whether the Plan has terminated), and (ii) any other qualified plan of
the Employer or Affiliate which enables a plan described in (i) to meet
the requirements of Code Sections 401(a)(4) or 410.
(D) Super Top-Heavy means, for any Plan Year beginning after December
31, 1983, the Plan if any Top-Heavy Ratio as determined under the
definition of Top-Heavy Plan exceeds 90%.
(E) Top-Heavy Plan means, for any Plan Year beginning after December
31,1983, the Plan if any of the following conditions exists:
(i) If the Top-Heavy Ratio for the Plan exceeds 60% and the Plan is not
part of any Required Aggregation Group or Permissive Aggregation Group
of Plans.
(ii) If the Plan is a part of a Required Aggregation Group of plans but
not part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the
group of plans exceeds 60%.
(iii) If the Plan is a part of a Required Aggregation Group and part of
a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
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(F) Top-Heavy Ratio means
(i) If the Employer or Affiliate maintains one or more Defined
Contribution Plans (including any Simplified Employee Pension Plan) and
the Employer or Affiliate has never maintained any Defined Benefit Plan
which during the five-year period ending on the Determination Date has
or has had accrued benefits, the Top-Heavy Ratio for this Plan alone or
for the Required or Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of the Account Balances of
all Key Employees as of the Determination Date (including any part of
any Account Balance distributed in the five-year period ending on the
Determination Date), and the denominator of which is the sum of all
Account Balances (including any part of any Account Balance distributed
in the five-year period ending on the Determination Date), both computed
in accordance with Code Section 416. Both the numerator and denominator
of the Top-Heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be
taken into account on that date under Code Section 416.
(ii) If the Employer or an Affiliate maintains one or more Defined
Contribution Plans (including any Simplified Employee Pension Plan) and
the Employer or an Affiliate maintains or has maintained one or more
Defined Benefit Plans which during the five-year period ending on the
Determination Date has or has had any accrued benefits, the Top-Heavy
Ratio for any Required or Permissive Aggregation Group as appropriate is
a fraction, the numerator of which is the sum of Account Balances under
the aggregated Defined Contribution Plans for all Key Employees,
determined in accordance with (i) above, and the present value of
accrued benefits under the aggregated Defined Benefit Plans for all Key
Employees as of the Determination Date, and the denominator of which is
the sum of the Account Balances under the aggregated Defined
Contribution Plans for all Participants, determined in accordance with
(i) above, and the present value of accrued benefits under the Defined
Benefit Plans for all Participants as of the Determination Date, all
determined in accordance with Code Section 416. The accrued benefit
under a Defined Benefit Plan in both the numerator and denominator of
the Top-Heavy Ratio are increased for any distribution of an accrued
benefit made in the five-year period ending on the Determination Date.
(iii) For purposes of (i) and (ii) above, the value of Account Balances
and the present value of accrued benefits will be determined as of the
most recent Valuation Date that falls within or ends with the 12-month
period ending on the Determination Date, except as provided in Code
Section 416 for the first and second Plan Years of a Defined Benefit
Plan. The Account Balances and accrued benefits of a Participant (1) who
is not a Key Employee but who was a Key Employee in a prior year, or (2)
who has not been credited with at least one Hour of Service with the
Employer or an Affiliate at any time during the five- year period ending
on the Determination Date, will be disregarded. The calculation of the
Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Code
Section 416.
Elective Deferrals will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of
Account Balances and accrued benefits will be calculated with reference
to the Determination Dates that fall within the same calendar year.
The accrued benefit of a Participant who is not a Key Employee shall be
determined under (A) the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans or (B) if there is no
such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of Code Section
411(b,)(1)(C).
4.4.2 If the Plan is determined to be a Top-Heavy Plan or a Super
Top-Heavy Plan as of any Determination Date after December 31, 1983,
then the Top-Heavy vesting schedule specified in the Adoption Agreement,
beginning with the first Plan Year commencing alter such Determination
Date, shall apply only for those Plan Years in which the Plan continues
to be a Top-Heavy Plan or Super Top-Heavy Plan, as the case may be
4.4.3 (A) Except as provided in Sections 4.4.3(C) and ([)), for any
Plan Year in which the Plan is a Top- Heavy Plan, contributions and
forfeitures allocated to the Employer Contributions Account of any
Participant who is not a Key Employee in respect of that Plan Year shall
not be less than the lesser of:
(i) 3% of such Participant's Limitation Compensation, or
(ii) if the Employer has no Defined Benefit Plan which designates this
Plan to satisfy Code Section 401, the largest percentage of
contributions and forfeitures. as a percentage of the Key Employee's
Limitation Compensation, allocated to the Employer Contributions Account
of any Key Employee for that year. The minimum allocation is determined
without regard to any Social Security contribution. This minimum
allocation shall be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation, or
would have received a lesser allocation for the Plan Year because of (a)
the Participant's failure to complete a Year of Service, (b) the
Participant's failure to make mandatory Participant contributions to the
Plan or (c) compensation less than a stated amount.
(B) For purposes of computing the minimum allocation, a Participant's
Limitation Compensation will be applied.
(C) The provision in (A) above shall not apply to any Participant who
was not employed by the Employer or an Affiliate on the last day of the
Plan Year.
(D) If the Employer or an Affiliate has executed Adoption Agreements
covering Participants by a plan which is a profit-sharing plan and by
another plan which is a money purchase pension plan or a target benefit
plan, the minimum allocation specified in the preceding Section 4.4.3(A)
shall be provided by the money purchase pension plan or by the target
benefit plan, as the case may be. If a Participant is covered under this
Plan and a Defined Benefit Plan maintained pursuant to Adoption
Agreements offered by the Sponsor. the minimum allocation specified in
the preceding Section 4.4.3(A) shall not be applicable and the
Participant shall receive the minimum benefit specified in the Defined
Benefit Plan.
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(E) With respect to any profit-sharing or money purchase pension plan
which becomes Top-Heavy and is integrated with Social Security, prior to
making the allocations specified in the Adoption Agreement, anything
contained therein to the contrary notwithstanding, there shall be an
allocation of the Employer Contribution to each eligible Participant's
Employer Contribution Account in the ratio that each such Participant's
Limitation Compensation for the Plan Year bears to the Limitation
Compensation of all such Participants for the Plan Year, but not in
excess of 3% of such Limitation Compensation.
4.4.4 If the Plan becomes a Top-Heavy Plan, then the maximum benefit
which can be provided under Section 3.9 shall continue to be determined
by applying "125%" wherever it appears in that Section and by
substituting for "4%" for "3%" wherever that appears in Section 4.4.3.
However, if the Plan becomes a Super Top-Heavy Plan, the maximum benefit
which can be provided under Section 3.9 shall be determined by
substituting "100%" for "125%" wherever the latter percentage appears
and the 3% minimum contribution provided for in Section 4.4.4 shall
remain unchanged.
4.4.5 Beginning with the Plan Year in which this Plan is Top-Heavy,
one of the minimum Top-Heavy vesting schedules as s-fled in the Adoption
Agreement will apply. The minimum vesting schedule applies to all
benefits within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including benefits accrued
before the effective date of Code Section 416 and benefits accrued
before the Plan became Top-Heavy. However, this Section 4.4 does not
apply to the Account Balances of any Employee who does not have an Hour
of Service after the Plan has initially become Top-Heavy and such
Employee's vesting in his or her Employer Contributions Account will be
determined without regard to this Section 4.4. The minimum allocation
pursuant to Section 4.4.3 (to the extent required to be nonforfeitable
under Code Section 416(b)) may not be forfeited under Code Section
411(a)(3)(B) or Code Section 411(a)(3)(D).
ARTICLE V
AMOUNT AND DISTRIBUTION OF BENEFITS,
WITHDRAWALS AND LOANS
5.1 Distribution Upon Termination of Employment
5.1.1 Subject to Section 5.1.2, a Participant's Benefit Commencement
Date shall be as soon as practicable following his or her Fully Vested
Separation, Partially Vested Separation or Nonvested Separation, if
applicable, and in accordance with Section 5.6. If the Plan includes a
CODA feature, each 401(k) Contributions Account of a Participant shall
be payable in accordance with the events specified in Section 1.27 of
the Plan.
5.1.2 If specified in the Adoption Agreement, a Participant's Benefit
Commencement Date shall be deferred until the earliest of his or her
Normal Retirement Age, Disability, or if elected by the Employer in the
Adoption Agreement, Early Retirement If a Participant terminates
Employment after satisfying any service requirement for Early Retirement
specified in the Adoption Agreement, he or she shall be entitled to
elect to receive a distribution of his or her vested Employer Accounts
upon satisfaction of any age requirement for Early Retirement.
5.2 Amount of Benefits Upon a Fully Vested Separation
A Participant's benefits upon his or her Fully Vested Separation for any
reason other than Disability shall be the Account Balance of all of his
or her Accounts determined in accordance with Section 10.6.2.
5.3 Amount of Benefits Upon a Partially Vested Separation
A Participant's benefits upon his or her Partially Vested Separation for
any reason other than Disability shall be:
(A) the Account Balance of his or her Employer Accounts determined in
accordance with Section 10.6.2 multiplied by his or her vested
percentage determined pursuant to Section 4.1.3, or, if applicable,
Section 4.4.2, plus (B) the Account Balance of his or her other Accounts
determined in accordance with Section 10.6.2.
5.4 Amount of Benefits Upon a Nonvested Separation
A Participant's benefits upon his or her Nonvested Separation shall be
the Account Balance of his or her Accounts other than Employer Accounts,
if any, determined in accordance with Section 10.6.2.
5.5 Amount of Benefits Upon a Separation Due to Disability
If a Participant terminates Employment due to a Disability, his or her
benefit shall be the Account Balance of all of his or her Accounts
determined as a Fully Vested Separation in accordance with Section 5.2
and Section 10.6.2. The Benefit Commencement Date of any such
Participant on whose behalf contributions are being made pursuant to
Section 3.1.4 shall be as soon as practicable after the date such
contributions cease
5.6 Distribution and Restoration
5.6.1 If, upon a Participant's termination of Employment, the vested
Account Balance of his or her Accounts as of the applicable Valuation
Date is equal to or less than $3,500, such Participant will receive a
distribution of his or her entire vested benefit and the nonvested
portion will be treated as forfeiture. If the value of a Participant's
vested Account is zero, the Participant shall be deemed to have received
a distribution of such vested Account.
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5.6.2 If, upon a Participant's termination of Employment, the vested
Account Balance of his or her Accounts as of the applicable Valuation
Date exceeds $3,500, the Participant may elect, in accordance with
Article VI, to receive a distribution of the entire vested portion of
such Accounts and the nonvested portion, if any, will be treated as a
forfeiture.
5.6.3 If the vested Account Balance of a Participant's Accounts as of
the applicable Valuation Date has an aggregate value exceeding (or at
the time of any prior distribution exceeded) $3,500, and the
Participant's benefit is Immediately Distributable, the Participant and
the Participant's Spouse (or where either the Participant or the Spouse
has died, the survivor) must consent to any distribution of such benefit
The consent of the Participant and the Participant's Spouse shall be
obtained in writing within the 90-day period ending on the Participant's
Benefit Commencement Date; provided, however, that if the Plan is a
profit-sharing plan and Section 6.1.2 applies, the consent of the
Participant's Spouse will not be required. The Administrator shall
notify the Participant and the Participant's Spouse of the right to
defer any distribution until the Participant's benefit is no longer
Immediately Distributable. Such notification shall include a general
description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the Plan in a
manner that would satisfy the notice requirements of Code Section
417(a)(3), and shall be provided no less than 30 days and no more than
90 days prior to the Benefit Commencement Date.
5.6.4 Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a Qualified Joint
and Survivor Annuity while the Participant's benefit is Immediately
Distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a distribution
is required to satisfy Code Section 401(a)(9) or Code Section 415.
5.6.5 For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the
first Plan Year beginning after December 31, 1988, the Participant's
vested benefit shall not include amounts attributable to accumulated
deductible Participant contributions within the meaning of Code Section
72(o)(5)(B).
5.6.6 If a Participant, who after termination of Employment received a
distribution and forfeited any portion of an Employer Account or is
deemed to have received a distribution in accordance with Section 5.6.1,
resumes Employment, he or she shall have the right, while an Employee,
to repay the full amount previously distributed from such Employer
Account. Such repayment must occur before the earlier of (i) the date on
which he or she would have incurred a Period of Severance of five years
commencing after the distribution or (ii) five years after the first
date on which the Participant is subsequently reemployed. If the
Participant makes a repayment, the Account Balance of his or her
relevant Employer Account shall be restored to its value as of the date
of distribution. The restored amount shall be derived from forfeitures
during the Plan Year and, if such forfeitures are not sufficient, from a
contribution by the Employer made as of that date (determined without
reference to Net Profits). If an Employee who had a Nonvested Separation
and was deemed to receive a distribution resumes Employment before a
Period of Severance of five years, his or her Employer Account will be
restored, upon reemployment, to the amount on the date of such deemed
distribution.
5.7 Withdrawals During Employment
5.7.1 If the Plan is a profit-sharing plan, and if the Employer has
elected in the Adoption Agreement to permit withdrawals during
Employment, prior to termination of Employment, each Participant upon
attainment of age 59-1/2 may elect to withdraw, as of the Valuation Date
next following the receipt of an election by the Administrator, and upon
such notice as the Administrator may require, all or any part of the
vested Account Balance of all of his or her Accounts, as of such
Valuation Date.
5.7.2 Notwithstanding Section 5.7.1, prior to termination of
Employment, each Participant with a Rollover Contributions Account
and/or a Participant Voluntary Nondeductible Contributions Account may
elect to withdraw, as of the Valuation Date next following the receipt
of an election by the Administrator, and upon such notice as the
Administrator may require, all or any of such Account, as of such
Valuation Date.
5.7.3 The Administrator may establish from time to time rules and
procedures with respect to any withdrawals including the order of
Accounts from which such withdrawals shall be made.
5.7.4 No forfeitures shall occur as a result of a withdrawal pursuant
to this Section 5.7.
5.7.5 If a Participant is married at the time of such election, the
Participant's Spouse must consent to such a withdrawal in the same
manner as provided in Section 6.2.4; provided, however, that if the Plan
is a profit-sharing plan and Section 6.1.2 applies, the consent of the
Participant's Spouse will not be required.
5.8 Loans
5.8.1 If the Employer has elected in the Adoption Agreement to make
loans available, a Participant may submit an application to the
Administrator to borrow from any Account maintained for the Participant
(on such terms and conditions as the Administrator shall prescribe) an
amount which when added to the outstanding balance of all other loans to
the Participant would not exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of loans during
the one year period ending on the day before the loan is made, over the
outstanding balance of loans from the Plan on the date the loan is made,
or (b) 50% of the vested portion of his or her Account from
which the borrowing is to be made as of the Valuation Date next
following the receipt of his or her loan application by the
Administrator and the expiration of such notice period as the
Administrator may require. For this purpose, all loans from Qualified
Plans of the Employer or an Affiliate shall be aggregated and an
assignment or pledge of any portion of the Participant's interest in the
Plan, and a loan, pledge or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this
Section 5.8.1.
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5.8.2 If approved, each such loan shall comply with the following
conditions:
(A) it shall be evidenced by a negotiable promissory note;
(B) the rate of interest payable on the unpaid balance of such loan
shall be a reasonable rate determined by the Administrator;
(C) the Participant must obtain the consent of his or her Spouse, if
any, within the 90-day period before the time an Account is used as
security for the loan; provided, however, that if the Plan is a profit-
sharing plan that meets the requirements in Section 6.1.2 of the Plan,
the consent of the Participants Spouse will not be required. A new
consent is required if an Account is used for any increase in the amount
of security. The consent shall comply with the requirements of Section
6.2.4, but shall be deemed to meet any requirements contained in section
6.2.4 relating to the consent of any subsequent Spouse. A new consent
shall be required if an Account is used for renegotiation, extension,
renewal, or other revision of the loan;
(D) the loan, by its terms, must require repayment principal and
interest) be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond five years from the date
of the loan; provided, however, that if the proceeds of the loan are
used to acquire a dwelling unit which within a reasonable time
(determined at the time the loan is made) will be used as the principal
residence of the Participant, the repayment schedule may be for a term
in excess of five years; and
(E) the loan shall be adequately secured and may be secured by no more
than 50% of the Participant's vested interest in the Account Balance of
his or her Accounts.
5.8.3 If a Participant or Beneficiary requests and is granted a loan,
and the loan is made from Participant-Directed Assets, principal and
interest payments with respect to the loan shall be credited solely to
the Account of the borrowing Participant from which the loan was made.
Any loss caused by nonpayment or other default on a Participant's loan
obligations shall be charged solely to that Account Any other loan shall
be treated as an investment of the Trust Fund and interest and principal
payments on account thereof shall be credited to the Trust Fund. The
Administrator shall determine the order of Accounts from which a loan
may be made.
5.8.4 Anything herein to the contrary notwithstanding:
(A) in the event of a default, foreclosure on the promissory note will
not occur until a distributable event occurs under this Article V;
(B) no loan will be made to any Owner-Employee or to any "shareholder-
Employee" of the Employer or a Participating Affiliate or with respect
to any amounts attributable to a Rollover Contribution or a trust to
trust transfer and relating to prior participation by such an individual
in a Qualified Plan. For this purpose, a "shareholder-Employee" means an
employee or officer of an electing small business i e. an "S
corporation" as defined in Code Section 1361, who owns (or is considered
as owning within the meaning of Code Section 318(a)(1)) on any day
during the taxable year of such corporation, more than 5% of the
outstanding stock of the corporation; and
(C) loans shall not be made available to Highly Compensated Employees
in an amount greater than the amount made available to other Employees.
5.8.5 If a valid spousal consent has been obtained in accordance with
Section 5.8.2(C), then, notwithstanding any other provision of this
Plan, the portion of the Participant's vested Account used as a security
interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the
amount of the Participant's benefit payable at the time of death or
distribution; but only if the reduction is used as repayment of the
loan. If less than 100% of the Participant's vested benefit (determined
without regard to the preceding sentence) is payable to the Surviving
Spouse, then the Participant's benefit shall be adjusted by first
reducing the Participant's vested benefit by the amount of the security
used as repayment of the loan, and then determining the benefit payable
to the Surviving Spouse.
5.9 Hardship Distributions
5.9.1 Effective January 1, 1989, if available and elected by the
Employer in the Adoption Agreement, a Participant may request a
distribution due to hardship from the vested portion of his or her
Accounts, (other than from his or her Qualified Nonelective
Contributions Account, Qualified Matching Contributions Account or
earnings accrued after December 31, 1988, on the Participant's Elective
Deferrals) only if the distribution is made both due to an immediate and
heavy financial need of the Participant and is necessary to satisfy such
financial need.
5.9.2 A hardship distribution shall be permitted only if the
distribution is due to:
(A) expenses incurred or necessary for medical care described in Code
Section 213(d) incurred by the Participant, the Participant's Spouse, or
any dependents of the Participant (as defined in Code Section 152);
(B) purchase (excluding mortgage payments) of a principal residence for
the Participant;
(C) payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his or her
Spouse, children or dependents;
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(D) the need to prevent the eviction of the Participant from his or her
principal residence or foreclosure on the mortgage of the Participant's
principal residence; or
(E) any other condition or event which the Commissioner of the Internal
Revenue Service determines is a deemed immediate and financial need.
5.9.3 A distribution will be considered necessary to satisfy an
immediate and heavy financial need of a Participant if all of the
following requirements are satisfied:
(A) the distribution will not be in excess of the amount of the
immediate and heavy financial need of the Participant (including amounts
necessary to pay any Federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution);
(B) the Participant obtains all distributions, other than hardship
distributions, and all nontaxable loans currently available under all
plans maintained by the Employer or an Affiliate;
(C) the Participant's Elective Deferrals, Employee Thrift Contributions
and Participant Voluntary Nondeductible Contributions will be suspended
for at least 12 months after receipt of the hardship distribution in
this Plan and in all other plans maintained by the Employer or an
Affiliate; and
(D) the Participant may not make Elective Deferrals for the
Participant's taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under Code
Section 402(g) for' such next taxable year less the amount of such
Participant's Elective Deferrals for the taxable year of the
distribution in this Plan and in all other plans maintained by the
Employer or an Affiliate.
5.9.4 If the distribution is made from any Account other than a401(k)
Contributions Account, a distribution due to hardship may be made
without application of Section 5.9.3(B), 5.9.3(C), or 5.9.3(D).
5.10 Limitation on Commencement of Benefits
5.10.1 Anything in this Article V to the contrary notwithstanding, a
Participant's Benefit Commencement Date shall in no event be later than
the 60th day after the close of the Plan Year in which the latest of the
following events occur:
(A) the attainment by the Participant of his or her Normal Retirement
Age;
(B) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(C) the Participant's termination of Employment Notwithstanding the
foregoing, the failure of a Participant and Spouse to consent to a
distribution while a benefit is Immediately Distributable, shall be
deemed to be an election to defer commencement of payment of any benefit
sufficient to satisfy this Section.
5.10.2 If it is not possible to distribute a Participant's Accounts
because the Administrator has been unable to locate the Participant
after making reasonable efforts to do so, then a distribution of the
Participant's Accounts shall be made when the Participant can be
located.
5.11 Distribution Requirements
5.11.1 Subject to the Joint and Survivor Annuity rules set forth in
Article VI, the requirements of this Article shall apply to any
distribution of a Participant's interest and will take precedence over
any inconsistent provisions of this Plan. Unless otherwise s-fled, the
provisions of this article apply to calendar years beginning after
December 31, 1984. As used in this Section 5.11, each of the following
terms shall have the meaning for that term set forth in this Section
5.11.1:
(A) Applicable Life Expectancy. The life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the
Participant (or designated Beneficiary) as of the Participant's (or
designated Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year which has elapsed since the date
Life Expectancy was first calculated. If Life Expectancy is being
recalculated, the Applicable Life Expectancy shall be the Life
Expectancy as so recalculated. The applicable calendar year shall be the
first distribution calendar year, and if Life Expectancy is being
recalculated such succeeding calendar year.
(B) Designated Beneficiary. The individual who is designated as the
Beneficiary under the Plan in accordance with Code Section 401(a)(9). In
the event that a Participant names a trust to be a designated
Beneficiary, such designation shall provide that, as of the later of the
date on which the trust is named as a Beneficiary or the Participant's
Required Beginning Date, and As of all subsequent periods during which
the trust is named as a Beneficiary, the following requirements are met
(i) the trust is a valid trust under state law, or would be but for the
fact that there is no corpus; (ii) the trust is irrevocable; (iii) the
Beneficiaries of the trust who are Beneficiaries with respect to the
trust's interest in the Participant's benefits are identifiable from the
trust instrument within the meaning of Code Section 401(a)(9); and (iv)
a copy of the trust is provided to the Plan.
(C) Distribution Calendar Year. A calendar year for which a minimum
distribution is required. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the
calendar year immediately preceding the calendar year which contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first Distribution Calendar Year is the
calendar year in which distributions are required to begin pursuant to
Section 7.2.
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(D) Life Expectancy. Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of section 1.72-9 of the regulations issued under the
Code.
Unless otherwise elected by the Participant (or Spouse, in the case of
distributions described in Section 7.2) by the time distributions are
required to begin, Life Expectancies shall not be recalculated annually.
Such election shall be irrevocable as to the Participant or Spouse and
shall apply to all subsequent years. The Life Expectancy of a nonspouse
Beneficiary may not be recalculated.
(E) Required Beginning Date.
(i) General rule. The Required Beginning Date of a Participant is the
first day of April of the calendar year following the calendar year in
which the Participant attains age 70-1/2.
(ii) Transitional rule. The Required Beginning Date of a Participant
who attains age 70-1/2 before January 1, 1988, shall be determined in
accordance with (1) or (2) below:
(1) Non-5% owners. The Required Beginning Date of a Participant who is
not a "5% owner" as defined in (iii) below is the first day of April of
the calendar year following the calendar year in which the later of
retirement or attainment of age 70-1/2 occurs.
(2) 5% owners. The Required Beginning Date of a Participant who is a 5%
owner during any year beginning after December 31, 1979, is the first
day of April following the later of:
(a) the calendar year in which the Participant attains age 70-1/2; or
(b) the earlier of the calendar year with or within which ends the Plan
Year in which the Participant becomes a 5% owner, or the calendar year
in which the Participant retires.
The Required Beginning Date of a Participant who is not a 5% owner who
attains age 70-1/2 during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(iii) 5% owner. A Participant is treated as a 5% owner for purposes of
this Section 5.11 if such Participant is a 5% owner as defined in Code
Section 416(i) (determined in accordance with section 416 but without
regard to whether the plan is top-heavy) at any time during the Plan
Year ending with or within the calendar year in which such owner attains
age 66-1/2 or any subsequent Plan Year
(iv) Once distributions have begun to a 5% owner under this Section
5.11, they must continue to be distributed, even if the Participant
ceases to be a 5% owner in a subsequent year.
5.11.2 All distributions required under this Section 5.11 shall be
determined and made in accordance with the Income Tax Regulations under
Code Section 401(a)(9), including the minimum distribution incidental
benefit requirement of section 1.401(a)(9),-2 of the regulations issued
under the Code. The entire interest of a Participant must be distributed
or begin to be distributed no later than the Participant's Required
Beginning Date.
5.11.3 Limits on Distribution Periods. As of the first Distribution
Calendar Year, distributions, if not made in a lump sum, may only be
made over one of the following periods (or a combination thereof):
(A) the life of the Participant;
(B) the life of the Participant and a Designated Beneficiary;
(C) a period certain not extending beyond the Life Expectancy of the
Participant; or
(D) a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a Designated Beneficiary.
For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the Designated Beneficiary, the method of
distribution selected must assure that at least 50% of the present value
of the amount available for distribution is paid within the Life
Expectancy of the Participant
5.11A Determination of Amount to be Distributed Each Year. (A) If the
Participant's interest is to be paid in the form of annuity
distributions under the Plan (whether directly or in the form of an
annuity purchased from an insurance company) payments under the annuity
shall satisfy the following requirements:
(i) the annuity distributions must be paid in periodic payments made at
intervals not longer than one year;
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(ii) the distribution period must be over a life (or lives) or over a
period certain not longer than a Life Expectancy (or joint life and last
survivor expectancy) described in Code Section 401(a)(9)(A)(ii) or Code
Section 401(a)(9)(B)(iii), whichever is applicable;
(iii) Life Expectancy (or joint life and last survivor expectancy) for
purposes of determining the period certain shall be determined without
recalculation of Life Expectancy;
(iv) once payments have begun over a period certain, the period certain
may not be lengthened even if the period certain is shorter than the
maximum permitted;
(v) payments must either be nonincreasing or increase only as follows:
(1) with any percentage increase in a s-fled and generally recognized
cost-of-living index;
(2) to the extent of the reduction to the amount of the Participant's
payments to provide for a survivor benefit upon death, but only if the
Beneficiary whose life was being used to determine the distribution
period described in Section 5.11.4(A)(iii) dies and the payments
continue otherwise in accordance with that section over the life of the
Participant;
(3) to provide cash refunds of Employee contributions upon the
Participant's death; or
(4) because of an increase in benefits under the Plan.
(vi) If the annuity is a life annuity (or a life annuity with a period
certain not exceeding 20 years), the amount which must be distributed on
or before the Participant's Required Beginning Date (or, in the case of
distributions after the death of the Participant, the date distributions
are required to begin pursuant to Section 7.2) shall be the payment
which is required for one payment interval. The second payment need not
be made until the end of the next payment interval even if that payment
interval ends in the next calendar year. Payment intervals are the
periods for which payments are received, e.g. bimonthly, monthly, semi-
annually, or annually.
If the annuity is a period certain annuity without a life contingency
(or is a life annuity with a period certain exceeding 20 years) periodic
payments for each distribution calendar year shall be combined and
treated as an annual amount. The amount which must be distributed by the
Participant's Required Beginning Date (or, in the case of distributions
after the death of the Participant, the date distributions are required
to begin pursuant to Section 7.2) is the annual amount for the first
Distribution Calendar Year. The annual amount for other Distribution
Calendar Years, including the annual amount for the calendar year in
which the Participant's Required Beginning Date (or the date
distributions are required to begin pursuant to Section 7.2) occurs,
must be distributed on or before December 31 of the calendar year for
which the distribution is required.
(B) Annuities purchased after December 31, 1988, are subject to the
following additional conditions:
(i) Unless the Participant's Spouse is the Designated Beneficiary, if
the Participant's interest is being distributed in the form of a period
certain annuity without a life contingency, the period certain as of the
beginning of the first Distribution Calendar Year may not exceed the
applicable period determined using the table set forth in Q&A A-5 of
section 1.401(a)(9)-2 of the regulations issued under the Code.
(ii) If the Participant's interest is being distributed in the form of
a joint and survivor annuity for the joint lives of the Participant and
a nonspouse Beneficiary, annuity payments to be made on or after the
Participant's Required Beginning Date to the Designated Beneficiary
after the Participant's death must not at any time exceed the applicable
percentage of the annuity payment for such period that would have been
payable to the Participant using the table set forth in Q&A A-6 of
section 1.401(a)(9)-2 of the regulations under the Code.
(C) Transitional Rule. If payments under an annuity which complies
with Section 5.11.4(A) begin prior to January 1, 1989, the minimum
distribution requirements in effect as of July 27, 1987, shall apply to
distributions from this Plan, regardless of whether the annuity form of
payment is irrevocable. This transitional rule also applies to deferred
annuity contracts distributed to or owned by the Participant prior to
January 1, 1989, unless additional contributions are made under the Plan
by the Employer or Affiliate with respect to such contract.
(D) If the form of distribution is an annuity made in accordance with
Section 5.11.4, any additional benefits accruing to the Participant
after his or her Required Beginning Date shall be distributed as a
separate and identifiable component of the annuity beginning with the
first payment interval ending in the calendar year immediately following
the calendar year in which such amount accrues.
(E) Any part of the Participant's interest which is in the form of an
individual account shall be distributed in a manner satisfying the
requirements of Code Section 401(a)(9).
5.11.5 Transitional Rule: Section 242 Election. Notwithstanding the
other requirements of this Article and subject to the Joint and Survivor
Annuity rules set forth in Article VI, distribution on behalf of any
Employee, including a 5% owner, may be made in accordance with all of
the following requirements (regardless of when such distribution
commences):
(A) the distribution by the trust is one which would not have
disqualified such trust under Code Section 401(a)(9) as in effect prior
to amendment by the Deficit Reduction Act of 1984;
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(B) the distribution is in accordance with a method of distribution
designated by the Employee whose interest in the trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such
Employee;
(C) such designation was in writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984;
(D) the Employee had accrued a benefit under the Plan as of December
31, 1983; and
(E) the method of distribution designated by the Employee or the
Beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Employee's death, the Beneficiaries of the
Employee listed in order of priority.
A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required
information described above with respect to the distributions to be made
upon the death of the Employee.
For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary, to
whom such distribution is being made, will be presumed to have
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 5.11.5(A)
and(E).
If a designation is revoked any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9). If a designation is revoked
subsequent to the date distributions are required to begin, the trust
must distribute by the end of the calendar year following the calendar
year in which the revocation occurs the total amount not yet distributed
to satisfy Code Section 401(a)(9) but for the Section 242(b)(2)
election. For calendar years beginning after December 31, 1988, such
distributions must meet the minimum distribution incidental benefit
requirements in section 1.401(a)(9)-2 of the regulations issued under
the Code. Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution or
addition of another Beneficiary (one not named in the designation) under
the designation will not be considered to be a revocation of the
designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring
life). In the case in which an amount is transferred or rolled over from
one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of section
1.401(a)(9)-1 of the regulations issued under the Code.
ARTICLE VI
FORMS OF PAYMENT OF RETIREMENT
BENEFITS
6.1 Methods of Distribution
6.1.1 If the Plan is a money purchase pension plan or a target benefit
plan, a Participant's benefit shall be payable in the normal form of a
Qualified Joint and Survivor Annuity if the Participant is married on
his or her Benefit Commencement Date and in the normal form of an
immediate annuity for the life of the Participant if the Participant is
not married on that date. A Participant who terminated Employment on or
after satisfying the requirements for Early Retirement may elect to have
his or her Qualified Joint and Survivor Annuity distributed upon
attainment of such Early Retirement. If the Plan is a profit-sharing
plan that satisfies the requirements set forth in Section 6.1.2, a
Participant's Accounts shall only be payable in the normal form of a
lump-sum distribution in accordance with Section 6.1.1(B) below. A
Participant in a money purchase pension plan, a target benefit plan, or
a profit-sharing plan that does not satisfy the requirements set forth
in Section 6.1.2, may at any time after attaining age 35 and prior to
his or her Benefit Commencement Date elect, in accordance with Section
6.2, any of the following optional forms of payment instead of the
normal form:
(A) An Annuity Contract payable as:
(i) a single life annuity;
(ii) a joint and 50% survivor annuity with a contingent annuitant;
(iii) a joint and 100% survivor annuity with a contingent annuitant;
(iv) an annuity for the life of the Participant with 120 monthly
payments certain;
(B) A lump-sum distribution in cash or in kind, or part in cash and
part in kind; or
(C) In installments payable in cash or in kind, or part in cash and
part in kind over a period not in excess of that required to comply with
Section 5.11.4.
Anything in this Section 6.1.1 to the contrary notwithstanding, if the
value of a Participant's vested Account as of the applicable Valuation
Date is $3,500 or less, his or her benefit shall be paid in the form of
a lump-sum distribution and no optional form of benefit payment shall be
available.
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6.1.2 If the Plan is a profit-sharing plan then: (A) the Participant
cannot elect payments in the form of a Life annuity (this Section 6.1.2
shall not apply if a life annuity form is an optional form preserved
under Code Section 411(d)(6)); (B) on the death of the Participant, the
Participant's benefits will be paid to his or her Surviving Spouse, if
any, or, if his or her Surviving Spouse has already consented in a
manner conforming to an election under Section 6.2.4, then to the
Participant's Beneficiary; and (C) the normal form of benefit shall be a
lump-sum and Sections 6.2.1, 6.2.2 and 6.2.4 shall not be applied by the
Administrator. A Participant in such a profit-sharing plan may also
elect to receive his or her benefit in the form of installments in
accordance with Section 6.1.1(C) of the Plan. This Section 6.1.2 shall
not apply, however, with respect to the Participant if it is determined
that the Plan is a direct or indirect transferee of a defined benefit
plan, a money purchase pension plan (including a target benefit plan) or
a stock bonus or profit-sharing plan which is subject to the survivor
annuity requirements of Code Sections 401(a)(11) and 417. In addition,
this Section 6.1.2 shall not apply unless the Participant's Surviving
Spouse, if any, is the Beneficiary of (i) the proceeds of any insurance
on the Participant's life purchased by Employer contributions or (ii)
forfeitures allocated to the Participant's Employer Account or unless
the Participant's Surviving Spouse has consented to the Participant's
designation of another Beneficiary as referred to in subsection (C) of
this Section 6.1.2.
6.1.3 The following transitional rules shall apply for those
Participants entitled to but not receiving benefits as of August 23,
1984:
(A) Any living Participant not receiving benefits on August 23, 1984,
who would otherwise not receive the benefits prescribed by Section 6.1
must be given the opportunity to elect to have Section 6.1 apply if such
Participant is credited with at least one Hour of Service under this
Plan or a predecessor plan in a Plan Year beginning on or after January
1, 1976, and such Participant had at least 10 Years of Service when he
or she terminated from Employment.
(B) Any living Participant not receiving benefits on August 23, 1984,
who was credited with at least one Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with an Hour of Service in a Plan Year beginning on or after
January 1, 1976, must be given the opportunity to have his or her
benefits paid in accordance with this Section 6.1.3(D).
(C) The respective opportunities to elect (as described in these
Sections 6.1.3(A) and (B)) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending
on such Participant's Benefit Commencement Date.
(D) Any Participant who has elected pursuant to this Section 6.1.3(B)
and any Participant who does not elect under this Section 6.1.3(A) or
who meets the requirements of this Section 6.1.3(A) except that such
Participant does not have at least ten Years of Service when he or she
terminates from Employment, shall have his or her benefits distributed
in accordance with all of the following requirements if benefits would
have been payable in the form of a single life annuity:
(1) Automatic Qualified Joint and Survivor Annuity
If benefits in the form of a single life annuity become payable to a
married Participant who:
(a) begins to receive payments on or after Normal Retirement Age; or
(b) dies on or after Normal Retirement Age while in active Employment;
or
(c) begins to receive payments on or after the "Qualified Early
Retirement Age", as that term is defined in Section 6.1.3(D)(3)(a); or
(d) terminates from Employment on or after attaining Normal Retirement
Age (or Qualified Early Retirement Age) and after satisfying the
eligibility requirement for the payment of benefits under the Plan and
thereafter dies before his or her Benefit Commencement Date; then such
benefits will be received in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during the
election period which begins at least six months before the Participant
attains Qualified Early Retirement Age and ends no earlier than 90 days
before his or her Benefit Commencement Date. Any election hereunder will
be in writing and may be changed by the Participant at any time.
(2) Election of early survivor annuity
A Participant who is employed after attaining the Qualified Early
Retirement Age will be given the opportunity to elect, beginning on the
later of (1) the 90th day before he or she attains his or her Qualified
Early Retirement Age, or (2) the date on which participation begins, and
ending on the date he or she terminates Employment, to have a survivor
annuity payable on death. If the Participant elects the survivor
annuity, 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 or
her death. Any election under this provision will be in writing and may
be changed by the Participant at any time.
(3) Qualified Earl Retirement Age
(a) For purposes of this section 6.1.3, Qualified Early Retirement Age
is the latest of:
(i) the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits,
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(iii) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(iii) the date the Participant begins participation.
(b) Qualified Joint and Survivor Annuity is an annuity for the life of
the Participant with a survivor annuity for the life of the Spouse as
described in Section 1.77.
6.2 Election of Optional Forms
6.2.1 By notice to the Administrator at any time prior to a
Participant's date of death and beginning on the first day of the Plan
Year in which the Participant attains age 35, the Participant may elect,
in writing, not to receive the normal form of benefit payment otherwise
applicable and to receive instead an optional form of benefit payment
provided for in Section 6A.1. If the Participant separates from
Employment prior to the first day of the Plan Year in which the
Participant attains age 35, the Participant may make such election
beginning on the date he or she separates from Employment. This Section
6.2.1 shall not be applicable if Section 6.1.2 applies to a Participant.
6.2.2 Within a reasonable period, but in any event no less than 30 and
no more than 90 days prior to each Participant's Benefit Commencement
Date, the Administrator shall provide to each Participant a written
explanation of the terms and conditions of a Qualified Joint and
Survivor Annuity. Such written explanation shall consist of:
(A) the terms and conditions of the Qualified Joint and Survivor
Annuity;
(B) the Participant's right to make, and the effect of, an election to
waive the Qualified Joint and Survivor Annuity;
(C) the rights of the Participant's Spouse under Section 6.2.4;
(D) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity; and
(E) the relative values of the various optional forms of benefit under
the Plan.
The Administrator may, on a uniform and nondiscriminatory basis, provide
for such other notices, information or election periods or take such
other action as the Administrator considers necessary or appropriate to
implement the provisions of this Section 6.2.2.
6.2.3 A Participant may revoke his or her election to take an optional
form of benefit, and elect a different form of benefit, at any time
prior to the Participant's Benefit Commencement Date.
6.2.4 The election of an optional benefit by a Participant after
December 31, 1984, must also be a waiver of a Qualified Joint and
Survivor Annuity by the Participant. Any waiver of a Qualified Joint and
Survivor Annuity shall not be effective unless (A) the Participant's
Spouse consents in writing; (B) the election designates a specific
alternate Beneficiary, including any class of Beneficiaries or any
contingent Beneficiaries which may not be changed without spousal
consent (or the Spouse expressly permits designations by the Participant
without any further spousal consent); (C) the Spouse's consent to the
waiver is witnessed by a Plan representative or notary public; and (D)
the Spouse's consent acknowledges the effect of the election.
Additionally, a Participant's waiver of the Qualified Joint and Survivor
Annuity will not be effective unless the election designates a form of
benefit payment which may not be changed without spousal consent or the
Spouse expressly permits designations without any further spousal
consent. Notwithstanding this consent requirement, if the Participant
establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no Spouse or the
Spouse cannot be located, the election will be deemed effective. Any
consent necessary under this provision will not be valid with respect to
any other Spouse. A consent that permits designations by the Participant
without any requirement of further consent by such Spouse must
acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit, where applicable, and that
the Spouse voluntarily elects to relinquish either or both of such
rights. Additionally, a revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before his or
her Benefit Commencement Date. The number of revocations shall not be
limited. Any new waiver will require a new consent by the electing
Participant's Spouse. No consent obtained under this provision shall be
valid unless the Participant has received notice as provided in this
Section.
6.2.5 The election of an optional form of benefit which contemplates
the payment of an annuity shall not be given effect if any person who
would receive benefits under the annuity dies before the Benefit
Commencement Date.
6.3 Change in Form of Benefit Payments
Any former Employee whose payments are being deferred or who is
receiving installment payments may request acceleration or other
modification of the form of benefit distribution, subject: to Code
Section 401(a)(9), provided that any necessary consent to such change
required pursuant to Section 6.2.4 is obtained from the Employee's
Spouse. This Section 6.3 shall not apply to any Employee who becomes a
Participant on or after January 1, 1989 or to Plans adopted after that
date.
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6.4 Direct Rollovers
6.4.1 The provisions of this Section 6.4 apply only to distributions
made on or after January 1, 1993.
6.4.2 Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Section 6.4, a
Distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
6.4.3 Definitions - All terms used in this Section 6.4 shall have the
meaning set forth below:
(A) Eligible Rollover Distribution: An Eligible Rollover Distribution
is any distribution of all or any portion of the balance to the credit
of the Distributee, except, that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required under Code
Section 401(a)(9); and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities).
(B) Eligible Retirement Plan: An Eligible Retirement Plan is an
individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 401 (a) that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an Eligible
Rollover Distribution to the Surviving Spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement
annuity.
(C) Distributee: A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's Surviving Spouse and
the Employee's or former Employee's Spouse or former Spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code Section 414(p), are Distributees with regard to the interest of
the Spouse or former Spouse.
(D) Direct Rollover: A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
ARTICLE VII
Death Benefits
7.1 Payment of Account Balances
7.1.1 The benefits payable to the Beneficiary of a Participant who
dies while an Employee shall be the Account Balance of all of his or her
Accounts including, if applicable, the proceeds of any life insurance
contract in effect on the Participant's life in accordance with Section
7.3. The benefits payable to the Beneficiary of a Participant who dies
after terminating Employment shall be the vested Account Balance of all
of his or her Accounts. Except as otherwise provided in this Article
VII, a Beneficiary may request that he or she be paid his or her
benefits as soon as practicable after the Participant's death.
7.1.2 If a Participant dies before distribution of his or her entire
interest in the Plan has been completed, the remaining interest shall,
subject to Section 7.2.5, be distributed to the Participant's
Beneficiary in the form, at the time and from among the methods
specified in Section 6.1.1 as elected by the Beneficiary in writing
filed with the Administrator. If an election is not received by the
Administrator within 90 days following the date the Administrator is
notified of the Participant's death, the distribution shall be made, if
to a Surviving Spouse, in accordance with Section 7.2.5(B), and, if to
some other Beneficiary, to the Beneficiary in a lump-sum.
7.1.3 The value of the benefits payable to a Beneficiary shall be
determined in accordance with Section 10.6.2. If the value of such death
benefit is $3,500 or less, distribution of such benefit shall be made in
a lump-sum as soon as practicable following the death of the
Participant.
7.2 Beneficiaries
7.2.1 The Administrator shall provide each Participant, within the
period described in Section 7.2.1(A) for such Participant, a written
explanation of the death benefit in such terms and in such a manner as
would be comparable to the explanation provided for meeting the
requirements applicable to a Qualified Joint and Survivor Annuity. This
Section 7.2.1 shall not be applicable if Section 6.1.2 applies to a
Participant
(A) The period for providing a written explanation of the death benefit
for a Participant ends on the latest of the following to occur:
(i) the period beginning with the first day of the Plan Year in which
the Participant attains age 32 and ending with the close of the Plan
Year preceding the Plan Year in which the Participant attains age 35;
(ii) a reasonable period ending after the Employee becomes a
Participant; or
(iii) a reasonable period ending after Code Section 417 first applies to
the Participant.
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Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after termination of Employment in case of a
Participant who terminates Employment before attaining age 35 and who
has a vested interest in his or her Account
(B) For purposes of the preceding paragraph, a reasonable period ending
after the enumerated events described in (ii) and (iii) is the end of
the two-year period beginning one year prior to the date the applicable
event occurs and ending one year after that date. A Participant who has
a vested interest in his or her Account and who terminates Employment
before the Plan in which age 35 is attained, shall be provided such
notice within the two-year period beginning one year prior to and ending
one year after termination. If such a Participant returns to Employment,
the applicable period for such Participant shall be redetermined.
7.2.2 A Participant shall designate one or more Beneficiaries to whom
amounts due after his or her death, other than under the Qualified Joint
and Survivor Annuity, shall be paid. In the event a Participant fails to
make a proper designation or in the event that no designated Beneficiary
survives the Participant, the Participant's Beneficiary shall be the
Participant's Surviving Spouse, or if the Participant has no Surviving
Spouse, the legal representative of the Participant's estate, as an
asset of that estate. A Participant's Beneficiary shall not have any
right to benefits under the Plan unless he or she shall survive the
Participant.
7.2.3 Any designation of a Beneficiary incorporated into an Annuity
Contract or insurance contract shall be governed by the terms of such
Annuity Contract or insurance contract Any other designation of a
Beneficiary must be filed with the Administrator, in a time and manner
designated by such Administrator, in order to be effective. Any such
designation of a Beneficiary may be revoked by filing a later
designation
or an instrument of revocation with the Administrator, in a time and
manner designated by the Administrator.
7.2.4 Effective after December 31, 1984, a married Participant whose
designation of a Beneficiary is someone other than his or her Spouse,
including a Beneficiary referred to in the first sentence of Section or
the change of any such Beneficiary to a new Beneficiary other than the
Participant's Spouse, shall not be valid unless made in writing and
consented to by the Participant's Spouse in such terms and in such a
manner as would be comparable to the consent provided for a waiver of
the Qualified Joint and Survivor Annuity. The Spouse's consent to such
designation must be made in the manner described in Section 6.2.4.
7.2.5 Notwithstanding any other provision of the Plan to the contrary:
(A) If the Participant dies after his or her Benefit Commencement Date,
but before distribution of his or her benefit has been completed, the
remaining portion of such benefit may continue in the form and over the
period in which the distributions were being made, but in any event must
continue to be made at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(B) If the Participant dies leaving a Surviving Spouse before his or
her Benefit Commencement Date, the Participant's benefit shall be
payable to the Participant's Surviving Spouse in the form of an annuity
for the life of the Surviving Spouse. The preceding sentence shall not
apply if, within 90 days following the date the Administrator is
notified of the Participant's death, his or her Surviving Spouse elects,
by written notice to the Administrator, any other form of benefit
payment specified in Section 6.1.1, or the such Surviving Spouse has
already consented in a manner described in Section 6.2.4 to a
distribution to an alternate Beneficiary designated by the Participant.
If the Plan is a profit-sharing plan which meets the requirements of
Section 6.1.2., the Surviving Spouse shall receive his or her
distribution in the form of a lump-sum unless she or he elects within 90
days following the date the Administrator is notified of the
Participant's death, any other form of benefit payment specified in
Section 6.1.1, or the Participant's Surviving Spouse has already
consented in a manner described in Section 6.2.4 to a distribution to an
alternate Beneficiary designated by the Participant. If the
Participant's benefit is $3,500 or less, distribution shall be made in
the form of a lump-sum comprised of the assets in the Account
immediately prior to the distribution if the Account consists of
Participant-Directed Assets. If the Account does not consist of
Participant-Directed Assets, the distribution shall be in cash. If the
Participant's benefit is distributable in the form of an annuity for the
life of the Surviving Spouse, the Surviving Spouse may elect to have
such annuity distributed immediately.
(C) If the Participant dies before his or her Benefit Commencement
Date, the distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death except to the extent that an
election is made by the designated Beneficiary involved to receive
distributions in accordance with (i) or (ii) of this subsection (C)
below.
(i) if any portion of the Participant's interest is payable to a
designated Beneficiary who is an individual, distributions may be made
in substantially equal installments over the life or Life Expectancy, as
defined in Section 5.11.1(D), of the designated Beneficiary commencing
on or before December 31 of the calendar year immediately following the
calendar year of the Participant's death;
(ii) if the designated Beneficiary is the Participant's Surviving
Spouse, the date distributions are required to begin in accordance with
(i) of this subsection (C) shall not be earlier than the later of
December 31 of the calendar year in which the Participant died and
December 31 of the calendar year in which the Participant would have
attained age 65; and
(iii) if the Surviving Spouse dies before payments begin subsequent
distributions shall be made as if the Surviving Spouse had been the
Participant.
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(D) For purposes of this Section 7.2.5, distribution of a Participant's
interest is considered to begin on the Participant's Required Beginning
Date, as defined in Section 5.11.1(E). If distribution in the form of an
annuity irrevocably commences to the Participant before such Required
Beginning Date, the date distribution is considered to begin is the date
distribution actually commences.
(E) For purposes of this Section 7.2.5, any amount paid to a child of
the Participant will be treated as if it had been paid to the
Participant's Surviving Spouse if the amount becomes payable to such
Surviving Spouse when the child reaches the age of majority.
(F) If the Participant has not made an election pursuant to this
Section 7.2.5 by the time of his or her death, the Participant's
designated Beneficiary must elect the method of distribution no later
than the earlier of (i) December 31 of the calendar year in which
distributions would be required to begin under this Section or (ii)
December 31 of the calendar year which contains the fifth anniversary of
the date of death of the Participant. If the Participant has no
designated Beneficiary, or if the designated Beneficiary does not elect
a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
7.3 Life Insurance
7.3.1 With the consent of the Administrator and upon such notice as
the Administrator may require, a Participant may direct that a portion
of his or her Account be used to pay premiums on life insurance on the
Participant's life; provided, however, that (a) the aggregate premiums
paid on ordinary life insurance must be less than 50% of the aggregate
contributions allocated to the Participant's Employer Accounts, (b) the
aggregate premiums paid on term life insurance contracts, universal life
insurance contracts and all other life insurance contracts which are not
ordinary life insurance may not exceed 25% of the aggregate
contributions allocated to the Participant's Employer Account, and (c)
the sum of one-half of the premiums paid on ordinary life insurance and
the total of all other life insurance premiums may not exceed 25% of the
aggregate contributions allocated to the Employer Account of the
Participant. For purposes of these limitations, ordinary life insurance
contracts are contracts with both non-decreasing death benefits and non-
increasing premiums.
7.3.2 The Trustee shall be the owner of each life insurance contract
purchased under this Section 7.3 and the proceeds of each such contract
shall be payable to the Trustee, provided that all benefits, rights and
privileges under each contract on the life of a Participant which are
available while the Participant is living shall be exercised by the
Trustee only upon and in accordance with the written instructions of the
Participant. The proceeds of all such insurance on the life of a
Participant shall be paid over by the Trustee to the Participant's
Beneficiary in accordance with this Article VII. Under no circumstances
shall the Trustee retain any part of the proceeds.
7.3.3 Any dividends or credits earned on a life insurance contract
shall be applied when received in reduction of any premiums thereon, or,
if no premiums are due, applied to increase the proceeds of the
insurance contract.
7.3.4 If a Participant is found by the Administrator to be insurable
only at a substandard premium rate, the policy shall provide a reduced
death benefit using the same premium as would be required if the
Participant were a standard risk, the amount of the death benefit being
determined in accordance with the amount of the rating.
7.3.5 The cash surrender value of an insurance contract to the extent
deriving from Employer or Participant contributions, if any, shall be
included, respectively, in the Account Balance of the Account from which
the premiums were paid. Any death benefits under an insurance contract
payable before the Participant's termination of Employment will be paid
to the Trustee for addition to the relevant Account of the Participant
for distribution in accordance with Section 7.1.
7.3.6 Any other provisions herein to the contrary notwithstanding, the
purchase of life insurance for any Participant shall be subject to such
minimum premium requirements as the Trustee may determine from time to
time.
7.3.7 Premiums on life insurance contracts on a Participant's life
shall be paid by the Trustee, unless directed otherwise by the
Participant, first from cash in the Participant's Employer Accounts to
the extent thereof, and then from cash in the Participant's Participant
Contributions Accounts, if any, to the extent thereof. If there is
insufficient cash in either Account to pay premiums due, the Trustee
shall notify the Participant of this fact. If the Participant does not
thereafter instruct the Trustee to sell sufficient assets in an Account
of the Participant to pay premiums due on a timely basis, the Trustee
shall not be obligated to take any further action with respect to any
life insurance contract on the Participant's life, whether as regards
continuing insurance on a paid-up basis, effecting a reduction of the
insurance in force, or otherwise, except at the direction of the
Participant.
7.3.8 Prior to such time as a Participant becomes entitled to receive
a distribution of any benefits under this Plan for any reason other than
the Participant's death, the Trustee shall, pursuant to the written
direction of the Participant delivered to the Administrator within such
period of time as is acceptable to the Administrator, either convert all
life insurance contracts on the Participant's life into cash or an
annuity to provide current or future retirement income to the
Participant or distribute the contracts to the Participant as a part of
a benefit distribution; provided, however, that:
(A) the contracts shall not be distributed unless, if the Participant
is married at the time the distribution of the contracts is to be made,
and the Plan is a money purchase pension plan, a target benefit plan or
a profit-sharing plan to which Section 6.1.2 does not apply, the
Participant's Spouse at that time consents to a distribution in the
manner prescribed by Section 6.2.4; and
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(B) if the cash value of any contracts at the time they become
distributable to a Participant exceeds a Participant's vested interest
in his or her Employer Accounts at that time, the Participant shall be
entitled to receive a distribution of such contracts only if the
Participant promptly pays such excess in cash to the Trust Fund.
Life insurance contracts on a Participant's life shall not continue to
be maintained under the Plan following the Participant's termination of
Employment or after Employer contributions have ceased.
If a Participant on whose life an insurance contract is held does not
make a timely and proper direction regarding the contract under this
Section
7.3.8, the Participant shall be deemed to have directed that the
contract be converted into cash to be distributed in the manner in which
the Participant's benefit is to be distributed.
7.3.9 Anything contained herein to the contrary notwithstanding, in
the event of any conflict between the terms of the Plan and the terms of
any insurance contract purchased under this Section 7.3, the provisions
of the Plan shall control.
ARTICLE VIII
FIDUCIARIES
8.1 Named Fiduciaries
8.1.1 The Administrator shall be a "named fiduciary" of the Plan, as
that term is defined in ERISA Section 402(a)(2), with authority to
control and manage the operation and administration of the Plan, other
than authority to manage and control Plan assets. The Administrator
shall also be the "administrator" and "plan administrator" with respect
to the Plan, as those terms are defined in ERISA Section 3(16)(A) and in
Code Section 414(g), respectively.
8.1.2 The Trustee, or Investment Committee if appointed by the
Employer, shall be a "named fiduciary" of the Plan, as that term is
defined in ERISA Section 402(a)(2), with authority to manage and control
all Trust Fund assets and to select an Investment Manager or Investment
Managers. If Merrill Lynch Trust Company is the Trustee, it shall be a
nondiscretionary trustee; an Investment Committee shall be appointed and
shall be the Employer, who may also remove such Investment Committee;
and the Investment Committee shall be the "named fiduciary" with respect
to Trust Fund assets. Anything in this Section 8.1.2. to the contrary
notwithstanding, with respect to Participant-Directed Assets, the
Participant or Beneficiary having the power to direct the investment of
such assets shall be the "named fiduciary" with respect thereto.
8.1.3 The Trustee, or Investment Committee if appointed by the
Employer, shall have the power to make and deal with any investment of
the Trust Fund permitted in Section 10.4, except Participant-Directed
Assets or assets for which an Investment Manager has such power, in any
manner which it deems advisable and shall also:
(A) establish and carry out a funding policy and method consistent with
the objectives of the Plan and the requirements of ERISA;
(B) have the power to select Annuity Contracts, if applicable;
(C) have the power to determine, if applicable, what investments
specified in Section 10.4, including, without limitation, Qualified
Employer Securities and regulated investment company shares, are
available as Participant-Directed Assets; and
(D) have all the rights, powers, duties and obligations granted or
imposed upon it elsewhere in the Plan.
8.2 Employment of Advisers
A "named fiduciary", with respect to the Plan (as defined in ERISA
Section 402(a)(2)) and any "fiduciary" (as defined in ERISA Section
3(4)) appointed by such a "named fiduciary", may employ one or more
persons to render advice with regard to any responsibility of such
"named fiduciary or "fiduciary" under the Plan.
8.3 Multiple Fiduciary Capacities
Any "named fiduciary" with respect to the Plan (as defined in ERISA
Section 402(a)(2)) and any other "fiduciary" (as defined in ERISA
Section 3(4)) with respect to the Plan may serve in more than one
fiduciary capacity.
8.4 Indemnification
To the extent not prohibited by state or federal law, the Employer
agrees to, and shall indemnify and save harmless, as the case may be,
each Administrator (if a person other than the Employer), Trustee,
Investment Committee and/or any Employee, officer or director of the
Employer, or an Affiliate, from all claims for liability, loss, damage
or expense (including payment of reasonable expenses in connection with
the defense against any such claim) which result from any exercise or
failure to exercise any of the indemnified person's responsibilities
with respect to the Plan, other than by reason of gross negligence.
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8.5 Payment of Expenses
8.5.1 All Plan expenses including without limitation, expenses and
fees (including fees for legal services rendered and fees to the
Trustee) of the Sponsor, Administrator, Investment Manager, Trustee, and
any insurance company, shall be charged against and withdrawn from the
Trust Fund; provided, however, the Employer may pay any of such expenses
or reimburse the Trust Fund for any payment.
8.5.2 All transactional costs or charges imposed or incurred (if any)
for Participant-Directed Assets shall be charged to the Account of the
directing Participant or Beneficiary. Transactional costs and charges
shall include, but shall not be limited to, charges for the acquisition
or sale or exchange of Participant-Directed Assets, brokerage
commissions, service charges and professional fees.
8.5.3 Any taxes which may be imposed upon the Trust Fund or the income
therefrom shall be deducted from and charged against the Trust Fund.
ARTICLE IX
PLAN ADMINISTRATION
9.1 The Administrator
9.1.1 The Employer may appoint one or more persons as Administrator,
who may also be removed by the Employer. If any individual is appointed
as Administrator, and the individual is an Employee, the individual,
will be considered to have resigned as Administrator if he or she
terminates Employment and at least one other person continues to serve
as Administrator. Employees shall receive no compensation for their
services rendered to or as Administrator.
9.1.2 If more than one person is designated as Administrator, the
Administrator shall act by a majority of its members at the time in
office and such action may be taken either by a vote at a meeting or in
writing without a meeting. However, if less than three members are
appointed, the Administrators shall act only upon the unanimous consent
of its members. An Administrator who is also a Participant shall not
vote or act upon any matter relating to himself or herself, unless such
person is the sole Administrator.
9.1.3 The Administrator may authorize in writing any person to execute
any document or documents on the Administrator's behalf, and any
interested person, upon receipt of notice of such authorization directed
to it, may thereafter accept and rely upon any document executed by such
authorized person until the Administrator shall deliver to such
interested person a written revocation of such authorization.
9.2 Powers and Duties of the Administrator
9.2.1 The Administrator shall have the power to construe the Plan and
to determine all questions of fact or interpretation that may arise
thereunder, and any such construction or determination shall be
conclusively binding upon all persons interested in the Plan.
9.2.2 The Administrator shall have the power to promulgate such rules
and procedures, to maintain or cause to be maintained such records and
to issue such forms as it shall deem necessary and proper for the
administration of the Plan.
9.2.3 Subject to the terms of the Plan, the Administrator shall
determine the time and manner in which all elections authorized by the
Plan shall be made or revoked.
9.2.4 The Administrator shall have all the rights, powers, duties and
obligations granted to or imposed upon it elsewhere in the Plan.
9.2.5 The Administrator shall exercise all of its responsibilities in
a uniform and nondiscriminatory manner.
9.3 Delegation of Responsibility
The Administrator may designate persons, including persons other than
"named fiduciaries" (as defined in ERISA Section 402(a)(2)) to carry out
the specified responsibilities of the Administrator and shall not be
liable for any act or omission of a person so designated.
ARTICLE X
TRUSTEE AND INVESTMENT COMMITTEE
10.1 Appointment of Trustee and Investment Committee
10.1.1 The Employer shall appoint one or more persons as a Trustee who
shall serve as such for all or a portion of the Trust Fund. By executing
the Adoption Agreement: (i) the Employer represents that all necessary
action has been taken for the appointment of the Trustee; (ii) the
Trustee acknowledges that it accepts such appointment; and (iii) both
the Employer and the Trustee agree to act in accordance with the Trust
provisions contained in this Article X.
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10.1.2 An Employee appointed as Trustee or to the Investment Committee
shall receive no compensation for services rendered in such capacity and
will be considered to have resigned if he or she terminates Employment
and at least one other person continues to act as Trustee or as the
Investment Committee, as the case may be. If Merrill Lynch Trust Company
is the Trustee, the Employer shall appoint an Investment Committee, and
Merrill Lynch Trust Company shall be a nondiscretionary trustee.
10.1.3 If more than one person is acting as the Trustee, or as an
Investment Committee, such Trustee, or Investment Committee, shall act
by a majority of the persons at the time so acting and such action may
be taken either by a vote at a meeting or in writing without a meeting.
If less than three members are serving, the Trustee, or Investment
Committee, shall act only upon the unanimous consent of those serving.
The Trustee, or Investment Committee, may authorize in writing any
person to execute any document or documents on its behalf, and any
interested person, upon receipt of notice of such authorization directed
to it may thereafter accept and rely upon any document executed by such
authorized person until the Trustee, or Investment Committee, shall
deliver to such interested person a written revocation of such
authorization.
10.2 The Trust Fund
The Trustee shall receive such sums of money or other property
acceptable to the Trustee which shall from time to time be paid or
delivered to the Trustee under the Plan. The Trustee shall hold in the
Trust Fund all such assets, without distinction between principal and
income, together with all property purchased therewith and the proceeds
thereof and the earnings and income thereon The Trustee shall not be
responsible for, or have any duty to enforce, the collection of any
contributions or assets to be paid or transferred to it, or for
verifying whether contributions or transfers to it are allowable under
the Plan, nor shall the Trustee be responsible for the adequacy of the
Trust Fund to meet or discharge liabilities under the Plan.
10.2.1 The Trustee shall receive in cash or other assets acceptable to
the Trustee, so long as such assets received do not constitute a
prohibited transaction, all contributions paid or delivered to it which
are allocable under the Plan and to the Trust Fund and all transfers
paid or delivered under the Plan to the Trust Fund from a predecessor
trustee or another trust (including a trust forming part of another plan
qualified under Code Section 401 (a); provided, however, that the
Trustee shall not be obligated to receive any such contribution or
transfer unless prior thereto or coincident therewith, as the Trustee
may specify, the Trustee has received such reconciliation, allocation,
investment or other information concerning, or such direction,
contribution or representation with respect to, the contribution or
transfer or the source thereof as the Trustee may require. The Trustee
shall have no duty or authority to (a) require any contributions or
transfers to be made under the Plan or to the Trustee,(b) compute any
amount to be contributed or transferred under the Plan to the Trustee,
or (c) determine whether amounts received by the Trustee comply with the
Plan.
10.2.2 The Trust Fund shall consist of all money and other property
received by the Trustee pursuant to Section 10.2, increased by any
income or gains on or increment in such assets and decreased by any
investment loss or expense, benefit or disbursement paid pursuant to the
Plan.
10.3 Relationship with Administrator
10.3.1 Neither the Trustee, nor the Investment Committee, if any,
shall be responsible in any respect for the administration of the Plan.
Payments of money or property from the Trust Fund shall be made by the
Trustee upon direction from the Administrator or its designee. Payments
by the Trustee shall be transmitted to the Administrator or its designee
for delivery to the proper payees or to payee addresses supplied by the
Administrator or its designee, and the Trustee's obligation to make such
payments shall be satisfied upon such transmittal. The Trustee shall
have no obligation to determine the identity of persons entitled to
payments under the Plan or their addresses.
10.3.2 Directions from or on behalf of the Administrator or its
designee shall be communicated to the Trustee or the Trustee's designee
for that purpose only in a manner and in accordance with procedures
acceptable to the Trustee. The Trustee's designee shall not, however, be
empowered to implement any such directions except in accordance with
procedures acceptable to the Trustee. The Trustee shall have no
liability for following any such directions or failing to act in the
absence of any such directions. The Trustee shall have no liability for
the acts or omissions of any person making or failing to make any
direction under the Plan or the provisions of this Article X nor any
duty or obligation to review any such direction, act or omission.
10.3.3 If a dispute arises over the propriety of the Trustee making
any payment from the Trust Fund, the Trustee may withhold the payment
until the dispute has been resolved by a court of competent jurisdiction
or settled by the parties to the dispute. The Trustee may consult legal
counsel and shall be fully protected in acting upon the advice of
counsel.
10.4 Investment of Assets
10.4.1 Except as provided in Section 10.4.2, investments of the Trust
Fund shall be made in the following, but only if compatible with the
Sponsor's administrative and operational requirement and framework:
(A) shares of any regulated investment company managed in whole or in
part by the Sponsor or any affiliate of the Sponsor;
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(B) any property purchased through the Sponsor or any affiliate of the
Sponsor, whether or not productive of income or consisting of wasting
assets, including, without limitation by specification, governmental
corporate or personal obligations, trust and participation certificates,
leaseholds, fee titles, mortgages and other interests in realty,
preferred and common stocks, convertible stocks and securities, shares
of regulated investment companies, certificates of deposit, put and call
options and other option contracts of any type, foreign or domestic,
whether or not traded of an exchange, futures contracts and options on
futures contracts traded on or subject to the rules of an exchange which
has been designated as a contract market by the Commodity Futures
Trading Commission, an independent U.S. government agency, contracts
relating to the lending of property, evidences of indebtedness or
ownership in foreign corporations or other enterprises, or indebtedness
of foreign governments, group trust participations, limited or general
partnership interests, insurance contracts, annuity contracts, any other
evidences of indebtedness or ownership including oil, mineral or gas
properties, royalty interests or rights (including equipment pertaining
thereto); and
(C) Qualifying Employer Securities or "qualifying employer real
properties" (as that term is defined in ERISA Section 407(d) to the
extent permitted in Section 10.4.3).
10.4.2 (A) Up to 25% or with the written consent of the Sponsor or its
representative, an additional percentage of each Plan Year's
contributions may be invested in property as specified in Section
10.4.1(B) acquired through a person other than the Sponsor or an
affiliate of the Sponsor.
(B) Except as permitted by Section 10.4.2 and except as may result from
a Rollover Contribution or a trust to trust transfer, without the
written consent of the Sponsor or its representative, property may not
be acquired through a person other than the Sponsor or an affiliate of
the Sponsor if following such acquisitions the value of the property so
acquired would exceed 25% of the value of the Trust Fund.
10.4.3 In its sole discretion, the Investment Committee, or Trustee if
there is no Investment Committee:
(A) may permit the investment of up to 10% of the Trust Fund in
Qualifying Employer Securities or "qualifying employer real property"
(as that term is defined in ERISA Section 407(d)), to the extent such
investment is compatible with the Sponsor's administrative and
operational requirements and framework; and
(B) may determine, subject to Section 10.4.2, that a percentage of
assets in excess of 10% of the Trust Fund may be invested in Qualifying
Employer Securities or "qualifying employer real property" by a profit-
sharing plan.
10.4.4 This Plan will be recognized as a Prototype Plan by the Sponsor
only by complying with the provisions of this Section 10.4.
10.5 Investment Direction, Participant-Directed Assets and Qualifying
Employer Investments
10.5.1 The Trustee, or Investment Committee if appointed, shall manage
the investment of the Trust Fund except insofar as (a) an Investment
Manager has authority to manage Trust assets, or (b) Participant-
Directed Assets are permitted as specified in the Adoption Agreement.
Except as required by ERISA, if an Investment Committee is acting, the
Trustee shall invest the Trust Fund as directed by the Investment
Committee, an Investment Manager or a Participant or Beneficiary, as the
case may be, and the Trustee shall have no discretionary control over,
nor any other discretion regarding, the investment or reinvestment of
any asset of the Trust Participant-Directed Assets shall be invested in
accordance with the direction of the Participant or, in the event of the
Participant's death before an Account is fully paid out, the
Participant's Beneficiary with respect to the assets involved; provided,
however, that Participant-Directed Assets may not be invested in
"collectibles" (as defined in Code Section 408(m)(2)). If there are
Participant-Directed Assets, the investment of these assets shall be
made in accordance with such rules and procedures established by the
Administrator which must be consistent with the rules and procedures of
the Sponsor or its affiliate, as the case may be.
10.5.2 With respect to Participant-Directed Assets, neither the
Administrator, the Investment Committee nor the Trustee shall:
(A) make any investments or dispose of any investments without the
direction of the Participant or Beneficiary for whom the Participant-
Directed Assets are maintained, except as provided in Section 8.5 so as
to pay fees or expenses of the Plan;
(B) be responsible for reviewing any investment direction with respect
to Participant-Directed Assets or for making recommendations on
acquiring, retaining or disposing of any assets or otherwise regarding
any assets;
(C) have any duty to determine whether any investment is an authorized
or proper one; or
(D) be liable for following any investment direction or for any losses,
taxes or other consequences incurred as a consequence of investments
selected by any Participant or Beneficiary or for holding assets
uninvested until it receives proper instructions.
10.5.3 If Participant-Directed Assets are permitted, a list of the
Participants and Beneficiaries and such information concerning them as
the Trustee may specify shall be provided by the Employer or the
Administrator to the Trustee and/or such person as are necessary for the
implementation of the directions in accordance with the procedure
acceptable to the Trustee.
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10.5.4 It is understood that the Trustee may, from time to time, have
on hand funds which are received as contributions or transfers to the
Trust Fund which are awaiting investment or funds from the sale of Trust
Fund assets which are awaiting reinvestment Absent receipt by the
Trustee of a direction from the proper person for the investment or
reinvestment of such funds or otherwise prior to the application of
funds in implementation of such a direction, the Trustee shall cause
such funds to be invested in shares of such money market fund or other
short term investment vehicle as the Trustee, or Investment Committee if
appointed, may specify for this purpose from time to time. Any such
investment fund may be sponsored, managed or distributed by the Sponsor
or an affiliate of the Sponsor.
10.5.5 Directions for the investment or reinvestment of Trust assets
of a type referred to in Section 10.4 from the Investment Committee, an
Investment Manager or a Participant or Beneficiary, as the case may be,
shall. in a manner and in accordance with procedures acceptable to the
Trustee, be communicated to and implemented by, as the case may be, the
Trustee, the Trustee's designee or, with the Trustee's consent and if an
Investment Committee is operating, a broker/dealer designated for the
purpose by the Investment Committee. Communication of any such direction
to such a designee or broker/dealer shall conclusively be deemed an
authorization to the designee or broker/dealer to implement the
direction even though coming from a person other than the Trustee. The
Trustee shall have no liability for its or any other person's following
such directions or failing to act in the absence of any such directions.
The Trustee shall have no liability for the acts or omissions of any
person directing the investment or reinvestment of Trust Fund assets or
making or failing to make any direction referred to in Section 10.5.6.
10.5.6 The voting and other rights in securities or other assets held
in the Trust shall be exercised by the Trustee provided, however, that
if an Investment Committee is appointed, the Trustee shall act as
directed by such person who at the time has the right to direct the
investment or reinvestment of the security or other asset involved.
10.5.7 With respect to any Qualifying Employer Securities allocated to
an Account, each Participant shall be entitled to direct the Trustee in
writing as to the manner in which Qualifying Employer Securities are to
be voted.
10.5.8 With respect to any Qualifying Employer Securities allocated to
an Account, each Participant shall be entitled to direct the Trustee in
writing as to the manner in which to respond to a tender or exchange
offer or other decisions with respect to the Qualifying Employer
Securities. The Administrator shall utilize its best efforts to timely
distribute or cause to be distributed to each Participant such
information received from the Trustee as will be distributed to
shareholders of the Employer in connection with any such tender or
exchange offer or other similar matter or any vote referred to in
Section 10.5.7.
10.5.9 If an Investment Committee is appointed, notwithstanding any
provision hereof to the contrary, in the event the person with the right
to direct a voting or other decision with respect to any security,
Qualifying Employer Securities, or other asset held in the Trust does
not communicate any decision on the matter to the Trustee or the
Trustee's designee by the time prescribed by the Trustee or the
Trustee's designee for that purpose or if the Trustee notifies the
Investment Committee, if applicable, either that it does not have
precise information as to the securities, Qualifying Employer
Securities, or other assets involved allocated on the applicable record
date to the accounts of all Participants and Beneficiaries or that time
constraints make it unlikely that Participant, Beneficiary or Investment
Manager direction, as the case may be, can be received on a timely
basis, the decision shall be the responsibility of the Investment
Committee and shall be communicated to the Trustee on a timely basis. In
the event an Investment Committee with any right under the Plan to
direct a voting or other decision with respect to any security,
Qualifying Employer Securities, or other asset held in the Trust, does
not communicate any decision on the matter to the Trustee or the
Trustee's designee by the time prescribed by the Trustee for that
purpose, the Trustee may, at the cost of the Employer, retain an
Investment Manager with full discretion to make the decision. Except as
required by ERISA, the Trustee shall (a) follow all directions above
referred to in this Section and (b) shall have no duty to exercise
voting or other rights relating to any such security, Qualifying
Employer Security or other asset.
10.5.10 The Administrator shall establish, or cause to be established,
a procedure acceptable to the Trustee for the timely dissemination to
each person entitled to direct the Trustee or its designee as to a
voting or other decision called for thereby or referred to therein of
all proxy and other materials bearing on the decision.
10.5.11 Any person authorized to direct the investment of Trust assets
may, if the Trustee and the Investment Committee, if applicable, so
permit, direct the Trustee to invest such assets in a common or
collective trust maintained by the Trustee for the investment of assets
of qualified trusts under section 401(a) of the Code, individual
retirement accounts under section 408(a) of the Code and plans or
governmental units described in section 818(a)(6) of the Code. The
documents governing any such common or collective trust fund maintained
by the Trustee, and in which Trust assets have been invested, are hereby
incorporated into this Article X by reference.
10.6 Valuation of Accounts
10.6.1 A Participant's Accounts shall be valued at fair market value
on each Valuation Date. Subject to Section 10.6.2(A), as of each
Valuation Date, the earnings and losses and expenses of the Trust Fund
shall be allocated to each Participant Account in the ratio that such
Account Balance in that category of Accounts bears to all Account
Balances in that category. With respect to Participant-Directed Assets,
the earnings and losses and expenses (including transactional expenses
pursuant to Section 8.5.2) of such Participant-Directed Assets shall be
allocated to the Account the Participant or Beneficiary having authority
to direct the investment of the assets in his or her Account.
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10.6.2 The Valuation Date with respect to any distributions
(including, without limitation, loan distributions and purchase of
annuities) from any Account upon the occurrence of a Benefit
Commencement Date or otherwise, shall be:
(A) with respect to Participant-Directed Asset, the date as of which
the Account distribution is made; and
(B) with respect to other assets, the Valuation Date immediately
preceding the Benefit Commencement Date, if applicable, or immediately
preceding the proposed date of any other distribution from an Account.
With respect to any contribution allocable to an Account which has not
been made as of a Valuation Date determined pursuant to this Section
10.6.2, the principal amount of such contribution distributable because
of the occurrence of a Benefit Commencement Date shall be distributed as
soon as practicable after the date paid to the Trust Fund.
10.6.3 The assets of the Trust shall be valued at fair market value as
determined by the Trustee based upon such sources of information as it
may deem reliable, including, but not limited to, stock market
quotations, statistical evaluation services, newspapers of general
circulation, financial publications, advice from investment counselors
or brokerage firms, or any combination of sources. The reasonable costs
incurred in establishing values of the Trust Fund shall be a charge
against the Trust Fund, unless paid by the Employer.
When the Trustee is unable to arrive at a value based upon information
from independent sources, it may rely upon information from the
Employer, Administrator, Investment Committee, appraisers or other
sources, and shall not incur any liability for inaccurate valuation
based in good faith upon such information.
10.7 Insurance Contracts
The Trustee, if an Investment Committee is not appointed, Investment
Committee, or Participant or Beneficiary with respect to Participant-
Directed Assets, may appoint one or more insurance companies to hold
assets of the Plan, and may direct, subject to Section 7.3, the purchase
of insurance contracts or policies from one or more insurance companies
with assets of the Plan. Neither the Investment Committee, Trustee nor
the Administrator shall be liable for the validity of any such contract
or policy, the failure of any insurance company to make any payments or
for any act or omission of an insurance company with respect to any
duties delegated to any insurance company.
10.8 The Investment Manager
10.8.1 The Trustee, if an Investment Committee is not appointed,
Investment Committee, or the Participant or Beneficiary with respect to
Participant-Directed Assets, may, by an instrument in writing, appoint
one or more Investment Managers, who may be an affiliate of the Merrill
Lynch Trust Company, to direct the Trustee in the investment of all or a
specified portion of the assets of the Trust in property specified in
Section 10.4. Any such Investment Manager shall be directed by the
Trustee, if an Investment Committee is not appointed, Investment
Committee, Participant or Beneficiary, as the case may be, to act in
accordance with the procedures referred to in Section 10.5.5. If
appointed, the Investment Committee shall notify the Trustee in writing
before the effectiveness of the appointment or removal of any Investment
Manager. If there is more than one Investment Manager whose appointment
is effective under the Plan at any one time, the Trustee shall, upon
written instructions from the Investment Committee, Participant or
Beneficiary, establish separate funds for control by each such
Investment Manager. The funds shall consist of those Trust Fund assets
designated by the Investment Committee, Participant or Beneficiary.
10.8.2 Each person appointed as an Investment Manager shall be:
(A) an investment adviser registered under the Investment Advisers Act
of 1940,
(B) a bank as defined in that Act, or
(C) an insurance company qualified to manage, acquire or dispose of any
asset of the Plan under the laws of more than one state.
10.8.3 Each Investment Manager shall acknowledge in writing that it is
a "fiduciary" (as defined in ERISA Section 3(21)) with respect to the
Plan. The Trustee, or the Investment Committee if appointed, shall enter
into an agreement with each Investment Manager specifying the duties and
compensation of such Investment Manager and the other terms and
conditions under which such Investment Manager shall be retained.
Neither the Trustee nor the Investment Committee, if appointed, shall be
liable for any act or omission of any Investment Manager and shall not
be liable for following the advice of any Investment Manager with
respect to any duties delegated to any Investment Manager.
10.8.4 The Trustee, or Investment Committee if appointed, or the
Participant or Beneficiary, if applicable with respect to Participant-
Directed Assets, shall have the power to determine the amount of Trust
Fund assets to be invested pursuant to the direction of a designated
Investment Manager and to set investment objectives and guidelines for
the Investment Manager.
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10.8.5 Second Trust Fund. The Employer may appoint a second trustee
under the Plan with respect to assets which the Employer desires to
contribute or have transferred to the Trust Fund, but which the other
Trustee does not choose to accept provided, however, that if a Merrill
Lynch Trust Company is a Trustee, its consent (which consent may be
evidenced by its acceptance of its appointment as Trustee) shall be
required. In the event and upon the effectiveness of the acceptance of
the second Trustee's appointment, the Employer shall be deemed to have
created two trust funds under the Plan, each with its own Trustee, each
governed separately by this Article X. Each Trustee under such an
arrangement shall, however, discharge its duties and responsibilities
solely with respect to those assets of the Trust delivered into its
possession and except pursuant to ERISA, shall have no duties,
responsibilities or obligations with respect to property of the other
Trust nor any liability for the acts or omissions of the other Trustee.
As a condition to its consent to the appointment of a second trustee,
the Merrill Lynch Trust Company shall assure that recordkeeping,
distribution and reporting procedures are established on a coordinated
basis between it and the second trustee as considered necessary or
appropriate with respect to the Trusts.
10.9 Powers of Trustee
10.9.1 At the direction of the person authorized to direct such action
as referred to in Section 10.5.1, but limited to those assets or
categories of assets acceptable to the Trustee as referred to in Section
10.4, or at its own discretion if no such person is so authorized, the
Trustee, or the Trustee's designee or a broker/dealer as referred to in
Section 10.5.5, is authorized and empowered:
(A) To invest and reinvest the Trust Fund, together with the income
therefrom, in assets specified in Section 10.4;
(B) To deposit or invest all or any part of the assets of the Trust in
savings accounts or certificates of deposit or other deposits in a bank
or savings and loan association or other depository institution,
including the Trustee or any of its affiliates, provided with respect to
such deposits with the Trustee or an affiliate the' deposits bear a
reasonable interest rate;
(C) To hold, manage, improve, repair and control all property, real or
personal, forming part of the Trust Fund; to sell, convey, transfer,
exchange, partition, lease for any term, even extending beyond the
duration of this Trust, and otherwise dispose of the same from time to
time;
(D) To have, respecting securities, all the rights, powers and
privileges of an owner, including the power to give proxies, pay
assessments and other sums deemed by the Trustee necessary for the
protection of the Trust Fund; to vote any corporate stock either in
person or by proxy, with or without power of substitution, for any
purpose; to participate in voting trusts, pooling agreements,
foreclosures, reorganizations, consolidations, mergers and liquidations,
and in connection therewith to deposit securities with or transfer title
to any protective or other committee; to exercise or sell stock
subscriptions or conversion rights; and, regardless of any limitation
elsewhere in this instrument relative to investments by the Trustee, to
accept and retain as an investment any securities or other property
received through the exercise of any of the foregoing powers;
(E) Subject to Section 10.5.4 hereof, to hold in cash, without
liability for interest, such portion of the Trust Fund which it is
directed to so hold pending investments, or payment of expenses, or the
distribution of benefits;
(F) To take such actions as may be necessary or desirable to protect
the Trust from loss due to the default on mortgages held in the Trust
including the appointment of agents or trustees in such other
jurisdictions as may seem desirable, to transfer property to such agents
or trustees, to grant to such agents such powers as are necessary or
desirable to protect the Trust Fund, to direct such agent or trustee, or
to delegate such power to direct, and to remove such agent or trustee;
(G) To settle, compromise or abandon all claims and demands in favor of
or against the Trust Fund;
(H) To invest in any common or collective trust fund of the type
referred to in Section 10.5.8 hereof maintained by the Trustee;
(I) To exercise all of the further rights, powers, options and
privileges granted, provided for, or vested in trustees generally under
the laws of the State of New Jersey, so that the powers conferred upon
the Trustee herein shall not be in limitation of any authority conferred
by law, but shall be in addition thereto;
(J) To borrow money from any source and to execute promissory notes,
mortgages or other obligations and to pledge or mortgage any trust
assets as security, subject to applicable requirements of the Code and
ERISA; and
(K) To maintain accounts at, execute transactions through, and lend on
an adequately secured basis stocks, bonds or other securities to, any
brokerage or other firm, including any firm which is an affiliate of the
Trustee.
10.9.2 To the extent necessary or which it deems appropriate to
implement its powers under Section 10.9.1 or otherwise to fulfill any of
its duties and responsibilities as trustee of the Trust Fund, the
Trustee shall have the following additional powers and authority:
(A) to register securities, or any other property, in its name or in
the name of any nominee, including the name of any affiliate or the
nominee name designated by any affiliate, with or without indication of
the capacity in which property shall be held, or to hold securities in
bearer form and to deposit any securities or other property in a
depository or clearing corporation;
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(B) to designate and engage the services of, and to delegate powers and
responsibilities to, such agents, representatives, advisers, counsel and
accountants as the Trustee considers necessary or appropriate, any of
whom may be an affiliate of the Trustee or a person who renders services
to such an affiliate, and, as a part of its expenses under this Trust
Agreement, to pay their reasonable expenses and compensation;
(C) to make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other instruments
in writing necessary or appropriate for the accomplishment of any of the
powers listed in this Trust Agreement; and
(D) generally to do all other acts which the Trustee deems necessary or
appropriate for the protection of the Trust Fund.
10.9.3 The Trustee shall have no duties or responsibilities other
than those specified in the Plan.
10.10 Accounting and Records
10.10.1 The Trustee shall maintain or cause to be maintained accurate
records and accounts of all Trust transactions and assets. The records
and accounts shall be available at reasonable times during normal
business hours for inspection or audit by the Administrator, Investment
Committee, if appointed, or any person designated for the purpose by
either of them.
10.10.2 Within 90 days following the close of each fiscal year of the
Plan or the effective date of the removal or resignation of the Trustee,
the Trustee shall file with the Administrator a written accounting
setting forth all transactions since the end of the period covered by
the last previous accounting. The accounting shall include a listing of
the assets of the Trust showing the value of such assets at the close of
the period covered by the accounting. On direction of the Administrator,
and if previously agreed to by the Trustee, the Trustee shall submit to
the Administrator interim valuations, reports or other information
pertaining to the Trust
The Administrator may approve the accounting by written approval
delivered to the Trustee or by failure to deliver written objections to
the Trustee within 60 days after receipt of the accounting. Any such
approval shall be binding on the Employer, the Administrator, the
Investment Committee and, to the extent permitted by ERISA, all other
persons.
10.11 Judicial Settlement of Accounts
The Trustee can apply to a court of competent jurisdiction at any time
for judicial settlement of any matter involving the Plan including
judicial settlement of the Group Trustee's account If it does so, the
Trustee must give the Administrator the opportunity to participate in
the court proceedings, but the Trustee can also involve other persons.
Any expenses the Trustee incurs in legal proceedings involving the Plan,
including attorney's fees, are chargeable to the Trust Fund as an
administrative expense. Any judgment or decree which may be entered in
such a proceeding, shall, subject to the provision of ERISA, be
conclusive upon all persons having or claiming to have any interest in
the Trust Fund or under any Plan.
10.12 Resignation and Removal of Trustee
10.12.1 The Trustee may resign at any time upon at least 30 days'
written notice to the Employer.
10.2.2 The Employer may remove the Trustee upon at least 30 days'
written notice to the Trustee.
10.2.3 Upon resignation or removal of the Trustee, the Employer shall
appoint a successor trustee. Upon failure of the Employer to appoint, or
the failure of the effectiveness of the appointment by the Employer of,
a successor trustee by the effective date of the resignation or removal,
the Trustee may apply to any court of competent jurisdiction for the
appointment of a successor.
Promptly after receipt by the Trustee of notice of the effectiveness of
the appointment of the successor trustee: (a) the Trustee shall deliver
to the successor trustee such records as may be reasonably requested to
enable the successor trustee to properly administer the Trust Fund and
all property of the Trust after deducting therefrom such amounts as the
Trustee deems necessary to provide for expenses, taxes, compensation or
other amounts due to or by the Trustee not paid by the Employer prior to
the delivery; and (b) except if the second Trustee is removed or
resigns, the Plan will no longer be considered a prototype plan.
10.12.4 Upon resignation or removal of the Trustee, the Trustee shall
have the right to a settlement of its account, which settlement shall be
made, at the Trustee's option, either by an agreement of settlement
between the Trustee and the Employer or by a judicial settlement in an
action instituted by the Trustee. The Employer shall bear the cost of
any such judicial settlement, including reasonable attorneys fees.
10.12.5 The Trustee shall not be obligated to transfer Trust assets
until the Trustee is provided assurance by the Employer satisfactory to
the Trustee that all fees and expenses reasonably anticipated will be
paid.
10.12.6 Upon settlement of the account and transfer of the Trust Fund
to the successor trustee, all rights and privileges under the Trust
Agreement shall vest in the successor trustee and all responsibility and
liability of the Trustee with respect to the Trust and assets thereof
shall, except as otherwise required by ERISA, terminate subject only to
the requirement that the Trustee execute all necessary documents to
transfer the Trust assets to the successor trustee.
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10.13 Group Trust
10.13.1 If elected by the Employer in the Adoption Agreement, the
Trustee shall be the Trustee for this Plan and for each other qualified
plan specified in the Adoption Agreement; provided, however, that such
other qualified plan is in effect pursuant to an Adoption Agreement
under this Prototype Plan. Any reference to Trustee and to the Trust
Fund in this Plan shall mean the Trustee as the trustee of a Group Trust
consisting of the assets of each such plan. The Plan and each other
qualified plan specified in the Adoption Agreement shall be deemed to
join in and adopt the Trust as the trust for each such plan. By
executing the Adoption Agreement, the Trustee accepts designation as
Trustee of this Group Trust.
10.13.2 The Trustee shall establish and maintain such accounting
records for each of the Plans as shall be necessary to reflect the
interest in the Group Trust applicable at any time or from time to time
to each Plan. No part of the corpus or income of the Group Trust
allocable to an individual Plan may be used for or diverted to any
purposes other than for the exclusive benefit of Participants and their
Beneficiaries entitled to benefits under that Plan. The allocable
interest of a Plan in the Group Trust may not be assigned.
ARTICLE XI
PLAN AMENDMENT OR TERMINATION
11.1 Prototype Plan Amendment
11.1.1 The mass submitter, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and any successor thereto, may amend any part of the
Prototype Plan. For purposes of sponsoring organization amendments, the
mass submitter shall be recognized as the agent of the sponsoring
organization. If the sponsoring organization does not adopt the
amendments made by the mass submitter, it will no longer be identical to
or a minor modifier of the mass submitter plan.
11.1.2 An Employer shall have the right at any. time, by an instrument
in writing, effective retroactively or otherwise, to (A) change the
choice of options in the Adoption Agreement, in whole or in part; (B)
add overriding language in the Adoption Agreement when such language is
needed to satisfy Code Section 415 or Code Section 416 because of the
required aggregation of multiple plans; and (C) add certain model
amendments published by the Internal Revenue Service which specifically
provide that their adoption will not cause the Plan to be treated as
individually designed. No such amendment, however, shall have any of the
effects specified in Section 11.2.1. If the adopting Employer amends the
Plan or nonelective portions of the Adoption Agreement except as
previously provided, it will no longer participate in the Prototype
Plan, but will be considered to have an individually designed plan for
purposes of qualification under Code Section 401 (a). In the event the
Employer is switching from an individually designed plan or from one
prototype plan to another, a list of the Section "411 (d)(6) protected
benefits" that must be preserved may be attached, and such a list would
not be considered an amendment to the plan.
11.1.3 This Plan will be recognized as a Prototype Plan by the Sponsor
only by complying with the registration requirements as specified in the
Adoption Agreement.
11.2 Plan Amendment
11.2.1 Except as provided in Section 11.2.2, no amendment pursuant to
Section 11.1 shall:
(A) authorize any part of the Trust Fund to be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or
their Beneficiaries;
(B) decrease the accrued benefits of any Participant or his or her
Beneficiary under the Plan; An amendment which has the effect of (1)
eliminating or reducing an Early Retirement benefit or a retirement-type
subsidy, or (2) eliminating an optional form of benefit payment, with
respect to benefits attributable to service before the amendment shall
be treated as reducing accrued benefits. In the case of a retirement-
type subsidy, the preceding sentence shall apply only with respect to a
Participant who satisfies (either before or after the amendment) the
preamendment conditions for the subsidy. In general, a retirement-type
subsidy is a subsidy that continues after retirement, but does not
include a qualified disability benefit, a medical benefit, a social
security supplement, a death benefit (including life insurance), or a
plant shutdown benefit (that does not continue after retirement age).
(C) reduce the vested percentage of any Participant determined without
regard to such amendment as of the later of the date such amendment is
adopted or the date it becomes effective;
(D) eliminate an optional form of benefit distribution with respect to
benefits attributable to service before the amendment; or
(E) change the vesting schedule, or in any way amend the Plan to either
directly or indirectly affect the computation of a Participant's vested
percentage, unless each Participant having not less than 3 years of
Vesting Service is permitted to elect, within a reasonable period
specified by the Administrator after the adoption of such amendment, to
have his or her vested percentage computed without regard to such
amendment
For Participants who do not have at least one Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "5 Years of Vesting Service" for" 3
Years of Vesting Service" where such language appears. The period during
which the election may be made shall commence with the date the
amendment is adopted and shall end on the later of:
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(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; or
(iii) 60 days after the Participant is issued written notice by the
Administrator.
11.2.2 Anything contained in this Section 11.2 to the contrary
notwithstanding, a Participant's benefit may be reduced to the extent
permitted under Code Section 412(c)(8).
11.3 Right of the Employer to Terminate Plan
11.3.1 The Employer intends and expects that from year to year it will
be able to and will deem it advisable to continue this Plan in effect
and to make contributions as herein provided. The Employer reserves the
right, however, to terminate the Plan with respect to its Employees at
any time by an instrument in writing delivered to the Administrator and
the Trustee, or to completely discontinue its contributions thereto at
any time.
11.3.2 The Plan will also terminate: (A) if the Employer is a sole
proprietorship, upon the death of the sole proprietor; (B) if the
Employer is a partnership, upon termination of the partnership; (C) if
the Employer is judicially declared bankrupt or insolvent; (D) upon the
sale or other disposition of all or substantially all of the assets of
the business; or (E) upon any other termination of the business. Any
successor to or purchaser of the Employer's trade or business, after any
event specified in the prior sentence, may continue the Plan, in which
case the successor or purchaser will thereafter be considered the
Employer for purposes of the Plan. Such a successor or purchaser shall
execute an appropriate Adoption Agreement if and when requested by the
Administrator.
11.3.3 Anything contained herein to the contrary notwithstanding, if
the Employer fails to attain or retain qualification of the Plan under
Code Section 401(a), the Plan will not participate in this Prototype
Plan and will, instead, be considered an individually designed plan for
purposes of such qualification.
11.4 Effect of Partial or Complete Termination or Complete
Discontinuance of Contributions
11.4.1 Determination of Date of Complete or Partial Termination. The
date of complete or partial termination shall be established by the
Administrator in accordance with the directions of the Employer (if then
in existence) in accordance with applicable law.
11.4.2 Effect of Termination.
(A) As of the date of a partial termination of the Plan:
(i) the accrued benefit of each affected Participant, to the extent
funded, shall become nonforfeitable;
(ii) no affected Participant shall be granted credit based on Hours of
Service after such date;
(iii) Compensation paid to affected Participants after such date shall
not be taken into account; and
(iv) no contributions by affected Participants shall be required or
permitted.
(B) As of the date of the complete termination of the Plan or of a
complete discontinuance of contributions:
(i) the accrued benefit of each affected Participant to the extent
funded, shall become nonforfeitable;
(ii) no affected Participant shall be granted credit based on Hours of
Service after such date;
(iii) Compensation paid after such date shall not be taken into
account;
(iv) no contributions by affected Participants shall be required or
permitted;
(v) no Eligible Employee shall become a Participant after such date;
and
(vi) except as may otherwise be required by applicable law, all
obligations of the Employer and Participating Affiliates to fund the
Plan shall terminate.
(C) All other provisions of the Plan shall remain in effect unless
otherwise amended.
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Upon the complete discontinuance of profit-sharing contributions under
the Plan, at the Employer's election, either the Trust Fund shall
continue to be held and distributed as if the Plan had not been
terminated (in which case such Plan shall continue to be subject to all
requirements under Title I of ERISA, and qualification requirements
under the Code) or any and all assets remaining in the Trust Fund as of
the date of such termination or discontinuance, together with any
earnings subsequently accruing thereon, shall be distributed by the
Trustee to the Participants at the Administrator's direction. Upon the
complete termination of the Plan, the Trust Fund shall be distributed to
Participants within one year after the date of termination. If the Plan
does not offer an annuity option (purchased from a commercial provider)
and if the Employer or any Affiliate does not maintain another Defined
Contribution Plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7)), the Participant's benefit may,
without the Participant's consent, be distributed to the Participant.
However, if any Affiliate maintains another Defined Contribution Plan
(other than an employee stock ownership plan as defined in Code Section
4975(e)(7)), then the Participant's Account(s) will be transferred,
without the Participant's consent, to the other plan if the Participant
does not consent to an immediate distribution. Distributions shall be
made in compliance with the applicable provisions, including
restrictions, of Articles VI and VII. The Trust Fund shall continue in
effect until all distributions therefrom are complete. Upon the
completion of such distributions, the Trustee shall be relieved from all
further liability with respect to all amounts so paid or distributed.
11.5 Bankruptcy
In the event that the Employer shall at any time be judicially declared
bankrupt or insolvent without any provisions being made for the
continuation of this Plan, the Plan shall be completely terminated in
accordance with this Article XI.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Exclusive Benefit of Participants
Notwithstanding anything in the Plan to the contrary, the Trust Fund
shall be held for the benefit of all persons who shall be entitled to
receive payments under the Plan. Subject to Section 3.10, it shall be
prohibited at any time for any part of the Trust Fund (other than such
part as is required to pay expenses) to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants or their
Beneficiaries.
12.2 Plan Not a Contract of Employment
The Plan is not a contract of Employment, and the terms of Employment of
any Employee shall not be affected in any way by the Plan or related
instruments except as specifically provided therein.
12.2 Action by Employer
Any action by an Employer which is a corporation shall be taken by the
board of directors of the corporation or any person or persons duly
empowered to exercise the powers of the corporation with respect to the
Plan. In the case of an Employer which is a partnership, action shall be
taken by any general partner of the partnership, and in the case of an
Employer which is a sole proprietorship, action shall be taken by the
sole proprietor.
12.4 Source of Benefits
Benefits under the Plan shall be paid or provided for solely from the
Trust Fund, and neither the Employer, any Participating Affiliate, the
Trustee, the Administrator, nor any Investment Manager or insurance
company shall assume any liability under the Plan therefor.
12.5 Benefits Not Assignable
Benefits provided under the Plan may not be assigned or alienated,
either voluntarily or involuntarily. In the event that a Participant or
Beneficiary becomes individually liable with respect to any expenses
listed in Section 8.5, the provision of Section 401(a)(3) of the Code
shall be applicable with respect to any claim the Plan may have against
the Participant or Beneficiary individually with respect to such
expenses. The preceding sentence shall also apply to the creation,
assignment or recognition of a right to any benefit payable with respect
to a Participant pursuant to a "domestic relations order" (as defined in
Code Section 414(p)) unless such order is determined by the
Administrator to be a "qualified domestic relations order" (as defined
in Code Section 414(p)) or, in the case of a "domestic relations order"
entered before January 1, 1985, if either payment of benefits pursuant
to the order has commenced as of that date or the Administrator decides
to treat such order as a qualified domestic relations order" within the
meaning of Code Section 414(p) even if it does not otherwise qualify as
such.
12.6 Domestic Relations Orders
Any other provision of the Plan to the contrary notwithstanding, the
Administrator shall have all powers necessary with respect to the Plan
for the proper operation of Code Section 414(p) with respect to
"qualified domestic relations orders" (or "domestic relations order"
treated as such) referred to in Section 12.5, including, but not limited
to, the power to establish all necessary or appropriate procedures, to
authorize the establishment of new accounts with such assets and subject
to such investment control by the Administrator as the Administrator may
deem appropriate, and the Administrator may decide upon and direct
appropriate distributions therefrom.
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12.7 Claims Procedure
In the event that a claim by a Participant, Beneficiary, or other person
for benefits under the Plan is denied, the Administrator will so notify
the claimant, giving the reasons for the denial. This notice will also
refer to the specific provisions of the Plan on which the denial was
based, will specify whether any additional information is needed from
the Participant or Beneficiary and will explain the review procedure.
Within 60 days after receiving the denial, the claimant may submit,
directly or through a duly authorized representative, a written request
for reconsideration of the application to the Administrator. Documents
or records relied on by the claimant should be filed with the request.
The person making the request may review relevant documents and submit
issues and additional comments in writing.
The Administrator will review the claim within 60 days (or 120 days if a
hearing is held because special circumstances exist) and provide a
written response to the appeal. The response will explain the reasons
for the decision and will refer to the Plan provisions on which the
decision is based. The decision of the Administrator is the final one
under this claims procedure.
12.8 Records and Documents; Errors
Participants and Beneficiaries must supply the Administrator with such
personal history data as may be required by the Administrator in the
operation of the Plan. Proof of age, when required, must be established
by evidence satisfactory to the Administrator, and the records of the
Employer and Participating Affiliates concerning length of service and
compensation may be accepted by the Administrator as conclusive for the
purposes of the Plan. Should any error in the records maintained under
the Plan result in any Participant or Beneficiary receiving from the
Plan more or less than he or she would have been entitled to receive had
the records been correct, the Administrator, in its discretion, may
correct such error and, as far as practicable, may adjust benefits in
such manner that the aggregate value of the benefit under the Plan shall
be the amount to which such Participant or Beneficiary was properly
entitled.
12.9 Benefits Payable to Minors, Incompetents and Others
In the event any benefit is payable to a minor or to a Participant or
Beneficiary declared incompetent by a court having jurisdiction over
such matters and a guardian, committee, conservator or other legal
representative of the estate of such a person is appointed, benefits to
which he or she is entitled shall be paid to the legally appointed
person. The receipt by any such person to whom any such payment on
behalf of any Participant or Beneficiary is made shall be a sufficient
discharge therefor.
12.10 Plan Merger or Transfer of Assets
12.10.1 The merger or consolidation of the Employer with any other
person, or the transfer of the assets of the Employer to any other
person, or the merger of the Plan with any other plan shall not
constitute a termination of the Plan if provision is made for the
continuation of the Plan.
12.10.2 The Plan may not merge or consolidate with, or transfer any
assets or liabilities to, any other plan, unless each Participant would
(if the Plan had then terminated) receive a benefit immediately after
the merger, consolidation or transfer which is equal to or greater than
the benefit he or she would have been entitled to receive immediately
before the merger, consolidation or transfer (if the Plan had then
terminated). Any merger or consolidation shall not constitute a
termination of a Plan or require the acceleration of vesting of
Participants' Account Balances.
12.11.1 Participating Affiliates
12.11.1 With the consent of the Employer and by duly authorized
action, any Affiliate may adopt the Plan. Such Affiliate shall determine
the classes of its Employees who shall be Eligible Employees and the
amount of its contribution to the Plan on behalf of such Employees.
12.11.2 With the consent of the Employer and by duly authorized
action, a Participating Affiliate may terminate its participation in the
Plan or withdraw from the Plan. Any such withdrawal shall be deemed an
adoption by such Participating Affiliate of a plan and trust identical
to the Plan and the Trust, except that all references to the Employer
shall be deemed to refer to such Participating Affiliate. At such time
and in such manner as the Employer directs, the assets of the Trust
allocable to Employees of such Participating Affiliate shall be
transferred to the trust deemed adopted by such Participating Affiliate.
12.11.4 A Participating Affiliate shall have no power with respect to
the Plan except as specifically provided herein.
12.12 Controlling Law
The Plan is intended to qualify under Code Section 401 (a) and to comply
with ERISA, and its terms shall be interpreted accordingly. Otherwise,
to the extent not preempted by ERISA, the laws of the State of New York
shall control the interpretation and performance of the terms of the
Plan.
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12.13 Singular and Plural and Article and Section References
As used in the Plan, the singular includes the plural, and the plural
includes the singular, unless qualified by the context. Titles of
Articles and Sections of the Plan are for convenience of reference only
and are to be disregarded in applying the provisions of the Plan. Any
reference in this Prototype Plan to an Article or Section is to the
Article or Section 50 specified of the Prototype Plan, unless otherwise
indicated.
47
<PAGE>
August 27, 1998
The Commerce Group, Inc.
211 Main Street
Webster, MA 01570
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-8 (the
"Registration Statement") which The Commerce Group, Inc. (the
"Company") is filing concurrently herewith the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to an indeterminate number of shares of
common stock, $0.50 par value per share (the "Common Stock"), issuable
pursuant to the Company's 401(k) Plan.
I have acted a legal counsel for the Company in connection with
adoption of the Plan, I am familiar with the Company's Articles of
Organization and By-laws, both as amended to date, and have examined
such other documents as I deemed necessary for this opinion. Based
upon the foregoing, I am of the opinion that when issued and paid for
in compliance with the terms of the Plan, the shares of Common Stock
referred to the above will be duly and validly issued, fully paid and
non-assessable.
I understand that this opinion letter is to be used in connection with
the Registration Statement and hereby consent to the filing of this
opinion letter with and as a part of the Registration Statement and of
any amendments thereto. It is understood that this opinion letter is
to be used in connection with the offer and sale of the aforesaid
shares only while the Registration Statement, as it may be amended from
time to time as contemplated by Section 10(a)(3) of the Securities Act,
is effective under the Securities Act.
Very truly yours,
Regan P. Remillard, Esquire
General Counsel
The Commerce Group, Inc.
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in this Registration
Statement (Form S-8) pertaining to The Commerce Group, Inc. 401(k)
Salary Savings Plan of our report dated January 23, 1998, with respect
to the consolidated financial statements of The Commerce Group, Inc. and
Subsidiaries incorporated by reference in its Annual Report (Form 10-K)
for the year ended December 31, 1997 and the related financial statement
schedules included therein, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
August 27, 1998
Boston, Massachusetts
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of The Commerce Group, Inc. (the "Company") on Form S-8 of our
report dated January 24, 1997, on our audits of the consolidated
financial statements and our audits of the consolidated financial
statement schedules of The Commerce Group, Inc. as of December 31, 1996
and for the years ended December 31, 1996 and 1995 which reports are
included or incorporated by reference in the Annual Report on Form 10-K
of the Company for the year ended December 31, 1997.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 27, 1998
<PAGE>
