<PAGE> 1
As filed with the Securities and Exchange Commission on December 3, 1997
Registration No. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
OPTIMUMCARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-0218003
- ----------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30011 Ivy Glenn Drive, Suite 219, Laguna Niguel, California 92677
-----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
OPTIMUMCARE CORPORATION 401(k) SAVINGS PLAN
-------------------------------------------
(Full title of the plan)
Edward A. Johnson
3001 Ivy Glenn Drive, Suite 219
Laguna Niguel, California 92677
---------------------------------------
(Name and address of agent for service)
(714) 495-1100
-------------------------------------------------------------
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================
Proposed
maximum Proposed maximum
Title of securities Amount to be offering prices aggregate offering Amount of
to be registered registered(1) per share(2) price registration fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 100,000 shs. $1.25 $125,000.00 $37.88
$.001 par value
=====================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) of 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) Based upon the average of the bid and asked prices as of December 1, 1997
for purposes of computing the registration fee on 100,000 shares not yet
granted in accordance with Rules 457(h) and 457(c).
<PAGE> 2
CROSS-REFERENCE SHEET
REQUIRED BY RULE 404(c)
<TABLE>
<CAPTION>
Part I. Information Required in the Section 10(a) Prospectus.
Item No. Caption in Prospectus
- -------- ---------------------
<S> <C>
1. Plan Information.................................... Information about the OptimumCare Corporation
401(k) Savings Plan; Summary of the Plan;
Federal Income Tax Consequences; Restrictions on
Resale
2. Registrant Information and Employee Plan
Annual Information.................................. Available Information; Incorporation of Certain
Documents by Reference; The Company
</TABLE>
2
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company incorporates by reference into this Registration Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
3. The description of the Company's Common Stock, $.001 par value,
contained in the Company's Registration Statement on Form S-18 filed under the
Securities Act of 1933, as amended, Registration No. 33-16313-LA, including any
amendments or reports filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all of the securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated by reference herein
as set forth above shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
Inapplicable.
Item 6. Indemnification of Directors and Officers.
DELAWARE STATUTES
Section 145 of the Delaware General Corporation Law, as amended,
provides for the indemnification of the Company's officers, directors, employees
and agents under certain circumstances as follows:
3
<PAGE> 4
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
4
<PAGE> 5
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLES OF INCORPORATION
Article VII of the Company's Certificate of Incorporation provides for
the indemnification of the Company's directors under certain circumstances as
follows:
To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or may hereafter be amended, a director of this
corporation shall not be liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
5
<PAGE> 6
BYLAWS
The Company's Bylaws provide for the indemnification of the Company's
directors, officers, employees, or agents under certain circumstances as
follows:
7.1 Authorization For Indemnification. The Corporation shall indemnify,
in the manner and to the full extent permitted by law, any person (or the
estate, heirs, executors, or administrators of any person) who was or is a party
to, or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
7.2 Advance of Expenses. Costs and expenses (including attorneys' fees)
incurred by or on behalf of a director or officer in defending or investigating
any action, suit, proceeding or investigation may be paid by the Corporation in
advance of the final disposition of such matter, if such director or officer
shall undertake in writing to repay any such advances in the event that it is
ultimately determined that he is not entitled to indemnification. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board deems appropriate. Notwithstanding the
foregoing, no advance shall be made by the Corporation if a determination is
reasonably and promptly made by the Board by a majority vote of a quorum of
disinterested directors, or (if such a quorum is not obtainable or, even if
obtainable, a quorum of disinterested directors so directs) by independent legal
counsel in a written opinion, or by the stockholders, that, based upon the facts
known to the Board or counsel at the time such determination is made, (a) the
director, officer, employee or agent acted in bad faith or deliberately breached
his duty to the Corporation or its stockholders, and (b) as a result of such
actions by the director, officer, employee or agent, it is more likely than not
that it will ultimately be determined that such director, officer, employee or
agent is not entitled to indemnification.
7.3 Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or as a member of any committee or similar
body against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article or applicable law.
7.4 Non-exclusivity. The right of indemnity and advancement of expenses
provided herein shall not be deemed exclusive of any other rights to which any
person seeking indemnification or advancement of expenses from the Corporation
may be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office. Any agreement for
indemnification of or advancement of expenses to any director, officer, employee
or other person may provide rights of indemnification or advancement of expenses
which are broader or otherwise different from those set forth herein.
6
<PAGE> 7
Item 7. Exemption from Registration Claimed.
Inapplicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
4.1 Specimen of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-18, File No. 33-16313-LA.)
4.2 Restated Certificate of Incorporation. (Incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1989.)
4.3 Bylaws of the Company. (Incorporated by reference to the Company's Registration
Statement on Form S-18, File No. 33-16313-LA.)
5.1 Opinion of Bruck & Perry re: legality of shares.
23.1 Consent of Bruck & Perry.
23.2 Consent of Ernst & Young LLP.
99 OptimumCare Corporation 401(k) Savings Plan.
</TABLE>
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes to file during any
period in which offers or sales of the securities 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 or
any material change to such information set forth in the Registration Statement.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (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.
C. The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. 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
7
<PAGE> 8
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.
8
<PAGE> 9
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 Laguna Niguel, State of California, on November 12,
1997.
OPTIMUMCARE CORPORATION,
a Delaware corporation
By: /s/ EDWARD A. JOHNSON
-------------------------------------
Edward A. Johnson, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ EDWARD A. JOHNSON
- ----------------------------- President, Chief Executive Officer, Principal November 12, 1997
EDWARD A. JOHNSON Financial Officer* and Director
/s/ MICHAEL S. CALLISON
- ----------------------------- Director November 3, 1997
MICHAEL S. CALLISON
/s/ GARY L. DREHER
- ----------------------------- Director November 3, 1997
GARY L. DREHER
/s/ JON E. JENETT
- ----------------------------- Director November 4, 1997
JON E. JENETT
</TABLE>
* The Principal Financial Officer is also the Principal Accounting Officer.
The Plan
Pursuant to the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the employee benefit plan) have duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Laguna Niguel, State of California, on
November 12, 1997.
OPTIMUMCARE CORPORATION 401(k) SAVINGS PLAN
By: OptimumCare Corporation, Plan Administrator
By: /s/ EDWARD A. JOHNSON
--------------------------------------
Edward A. Johnson, President
9
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
4.1 Specimen of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-18, File No. 33-16313-LA.)
4.2 Restated Certificate of Incorporation. (Incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1989.)
4.3 Bylaws of the Company. (Incorporated by reference to the Company's Registration
Statement on Form S-18, File No. 33-16313-LA.)
5.1 Opinion of Bruck & Perry re: legality of shares.
23.1 Consent of Bruck & Perry.
23.2 Consent of Ernst & Young LLP.
99 OptimumCare Corporation 401(k) Savings Plan.
</TABLE>
10
<PAGE> 1
EXHIBIT 5.1
[BRUCK & PERRY LETTERHEAD]
FILE NO.
64570.01
November 21, 1997
OptimumCare Corporation
30011 Ivy Glenn Drive, Suite 219
Laguna Niguel, CA 92677
Re: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
As counsel for OptimumCare Corporation, a Delaware corporation (the
"Company"), we have examined its Restated Certificate of Incorporation, Bylaws
and such other corporate records, documents and proceedings, and such questions
of law as we have deemed relevant for the purpose of this opinion. We have also,
as such counsel, examined the Registration Statement on Form S-8 of the Company
as filed with the Securities and Exchange Commission, covering the registration
under the Securities Act of 1933, as amended, of a total of 100,000 shares of
$.001 par value common stock to be issued in connection with the OptimumCare
Corporation 401(k) Savings Plan ("Common Stock"), including the exhibits filed
therewith and the form of Prospectus (the "Prospectus") to be used in connection
with the Registration Statement, and any amendments thereto (collectively, the
"Registration Statement").
Upon the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly existing in
good standing under the laws of the State of Delaware, with all requisite power
to conduct the business described in the Registration Statement.
2. The Company has an authorized capitalization as set forth in Part II,
Item 3 of the Registration Statement.
3. The shares of the Company's Common Stock registered pursuant to the
Registration Statement have been duly and validly authorized and, subject to the
payment therefor pursuant to the terms contemplated in the final Prospectus,
such shares of Common Stock will be duly and validly issued as fully paid and
non-assessable securities of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/
<PAGE> 1
EXHIBIT 23.1
CONSENT OF BRUCK & PERRY
With regard to the Form S-8 Registration Statement pertaining to the
OptimumCare Corporation 401(k) Savings Plan to be filed with the Securities and
Exchange Commission by OptimumCare Corporation, a Delaware corporation, we
hereby consent to the use of our name under the section entitled "Legal Matters"
in the Prospectus which is a part of said Form S-8 Registration Statement.
/s/ BRUCK & PERRY
- -----------------------------
BRUCK & PERRY,
A Professional Corporation
Newport Beach, California
November 21, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-8 No. 333_______ pertaining to the OptimumCare
Corporation 401(k) Savings Plan and to the incorporation by reference therein of
our report dated March 21, 1997, with respect to the consolidated financial
statements and schedule of OptimumCare Corporation included in its Annual Report
(Form 10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
--------------------------------
Ernst & Young LLP
Orange County, California
November 21, 1997
<PAGE> 1
EXHIBIT 99
Defined Contribution Plan 7.7
OPTIMUMCARE
401(k) SAVINGS PLAN
Restated January 1, 1997
<PAGE> 2
TABLE OF CONTENTS
INTRODUCTION
ARTICLE I FORMAT AND DEFINITIONS
Section 1.01 - Format
Section 1.02 - Definitions
ARTICLE II PARTICIPATION
Section 2.01 - Active Participant
Section 2.02 - Inactive Participant
Section 2.03 - Cessation of Participation
ARTICLE III CONTRIBUTIONS
Section 3.01 - Employer Contributions Section 3.01A- Rollover Contributions
Section 3.02 - Forfeitures
Section 3.03 - Allocation
Section 3.04 - Contribution Limitation
Section 3.05 - Excess Amounts
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
Section 4.01 - Investment of Contributions
Section 4.01A- Investment in Qualifying Employer Securities
Section 4.01B- Limitation on Investment in Qualifying Employer Securities by
Some Participants
ARTICLE V BENEFITS
Section 5.01 - Retirement Benefits
Section 5.02 - Death Benefits
Section 5.03 - Vested Benefits
Section 5.04 - When Benefits Start
Section 5.05 - Withdrawal Privileges
Section 5.06 - Loans to Participants
-i-
<PAGE> 3
ARTICLE VI DISTRIBUTION OF BENEFITS
Section 6.01 - Automatic Forms of Distribution
Section 6.02 - Optional Forms of Distribution and Distribution Requirements
Section 6.02A- Distributions in Qualifying Employer Securities
Section 6.03 - Election Procedures
Section 6.04 - Notice Requirements
ARTICLE VII TERMINATION OF PLAN
ARTICLE VIII ADMINISTRATION OF PLAN
Section 8.01 - Administration
Section 8.02 - Records
Section 8.03 - Information Available
Section 8.04 - Claim and Appeal Procedures
Section 8.05 - Unclaimed Vested Account Procedure
Section 8.06 - Delegation of Authority
ARTICLE IX GENERAL PROVISIONS
Section 9.01 - Amendments
Section 9.02 - Direct Rollovers
Section 9.03 - Mergers and Direct Transfers
Section 9.04 - Provisions Relating to the Insurer and Other Parties
Section 9.05 - Employment Status
Section 9.06 - Rights to Plan Assets
Section 9.07 - Beneficiary
Section 9.08 - Nonalienation of Benefits
Section 9.09 - Construction
Section 9.10 - Legal Actions
Section 9.11 ---Small Amounts
Section 9.12 - Word Usage
Section 9.13 - Transfers Between Plans
Section 9.14 - Qualification of Plan
ARTICLE X TOP-HEAVY PLAN REQUIREMENTS
Section 10.01 - Application
Section 10.02 - Definitions
Section 10.03 - Modification of Vesting Requirements
Section 10.04 - Modification of Contributions
Section 10.05 - Modification of Contribution Limitation
PLAN EXECUTION
-ii-
<PAGE> 4
INTRODUCTION
The Primary Employer previously established a 401(k) savings plan on January 1,
1997.
The Primary Employer is of the opinion that the plan should be changed. It
believes that the best means to accomplish these changes is to completely
restate the Plan's terms, provisions and conditions. The restatement, effective
January 1, 1997, is set forth in this document and is substituted in lieu of the
prior document.
It is intended that the restated 401(k) savings plan qualify as a profit sharing
plan under the Internal Revenue Code of 1986, including any later amendments to
the Code. The Employer agrees to operate the plan according to the terms,
provisions and conditions set forth in this document.
ARTICLE I - FORMAT AND DEFINITIONS
SECTION 1.01 - FORMAT
Words and phrases defined in the DEFINITIONS SECTION of Article 1 shall have
that defined meaning when used in this Plan, unless the context clearly
indicates otherwise.
These words and phrases have an initial capital letter to aid in identifying
them as defined terms.
SECTION 1.02 - DEFINITIONS
ACCOUNT means, for a Participant, his share of the Investment Fund. Separate
accounting records are kept for those parts of his Account that result from:
(a) Elective Deferral Contributions.
(b) Matching Contributions.
(c) Other Employer Contributions.
(d) Rollover Contributions.
If the Participant's Vesting Percentage is less than 100% as to any of the
Employer Contributions, a separate accounting record will be kept for any part
of his Account resulting from such Employer Contributions and, if there has been
a prior Forfeiture Date, from such Contributions made before a prior Forfeiture
Date.
-1-
<PAGE> 5
A Participant's Account shall be reduced by any distribution of his Vested
Account and by any Forfeitures. A Participant's Account will participate in the
earnings credited, expenses charged and any appreciation or depreciation of the
Investment Fund. His Account is subject to any minimum guarantees applicable
under the Group Contract or other investment arrangement.
ACCRUAL COMPUTATION PERIOD means a 12-consecutive month period ending on the
last day of each Plan Year, including corresponding 12-consecutive month periods
before January 1, 1997.
ACTIVE PARTICIPANT means an Eligible Employee who is actively participating in
the Plan according to the provisions in the ACTIVE PARTICIPANT SECTION of
Article II.
AFFILIATED SERVICE GROUP means any group of corporations, partnerships or other
organizations of which the Employer is a part and which is affiliated within the
meaning of Code Section 414(m) and regulations thereunder. Such a group includes
at least two organizations one of which is either a service organization (that
is, an organization the principal business of which is performing services), or
an organization the principal business of which is performing management
functions on a regular and continuing basis. Such service is of a type
historically performed by employees. In the case of a management organization,
the Affiliated Service Group shall include organizations related, within the
meaning of Code Section 144(a)(3), to either the management organization or the
organization for which it performs management functions. The term Controlled
Group, as it is used in this Plan, shall include the term Affiliated Service
Group.
ANNUAL COMPENSATION means, on any given date, the Employee's Compensation Year
ending on or before the given date.
ANNUITY STARTING DATE means, for a Participant, the first day of the first
payable as an annuity or any other form.
BENEFICIARY means the person or persons named by a Participant to receive any
benefits under this Plan upon the Participant's death. (See the BENEFICIARY
SECTION of Article IX.)
CLAIMANT means any person who has made a claim for benefits under this Plan.
(See the CLAIM AND APPEAL PROCEDURES SECTION of Article VIII.
CODE means the Internal Revenue Code of 1986, as amended.
COMPENSATION means, except as modified in this definition, the total earnings
paid or made available to an Employee by the Employer during any specified
period.
"Earnings" in this definition means Compensation as defined in the CONTRIBUTION
LIMITATION SECTION of Article III.
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Compensation shall also include elective contributions. Elective contributions
are amounts excludable from the Employee's gross income under Code Sections 125,
402(e)(3), 402(h) or 403(b), and contributed by the Employer, at the Employee's
election, to a Code Section 401(k) arrangement, a simplified employee pension,
cafeteria plan or tax-sheltered annuity. Elective contributions also include
Compensation deferred under a Code Section 457 plan maintained by the Employer
and Employee contributions "picked up" by a governmental entity and, pursuant to
Code Section 414(h)(2), treated as Employer contributions.
For purposes of the EXCESS AMOUNTS SECTION of Article III, the Employer may
elect to use an alternative nondiscriminatory definition of Compensation in
accordance with the regulations under Code Section 414(s). For purposes of
determining the amount of Elective Deferral Contributions, Compensation shall
exclude reimbursements or other expense allowances, fringe benefits (cash and
noncash), moving expenses, deferred compensation and welfare benefits.
For Plan Years beginning after December 31, 1988, and before January 1, 1994,
the annual Compensation of each Participant taken into account for determining
all benefits provided under the Plan for any year shall not exceed $200,000. For
Plan Years beginning on or after January 1, 1994, the annual Compensation of
each Participant taken into account for determining all benefits provided under
the Plan for any year shall not exceed $150,000.
The $200,000 limit shall be adjusted by the Secretary at the same time and in
the same manner as under Code Section 415(d). The $150,000 limit shall be
adjusted by the Commissioner for increases in the cost of living in accordance
with Code Section 401 (a)(17)(B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which pay is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the 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.
In determining the Compensation of a Participant for purposes of the annual
compensation limit, the rules of Code Section 414(q)(6) shall apply, except that
in applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the application of such
rules the adjusted annual compensation limit is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity) the limitation shall be prorated
among the affected individuals in proportion to each such individual's
Compensation as determined under this definition prior to the application of
this limitation.
If Compensation for any prior determination period is taken into account in
determining a Participant's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the annual
compensation limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1989, which are used to determine
benefits in Plan Years beginning after December 31, 1988 and before January 1,
1994, the annual compensation limit is $200,000. For this purpose, for
determination
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periods beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, which are used to determine benefits in Plan Years
beginning on or after January 1, 1994, the annual compensation limit is
$150,000.
Compensation means, for an Employee who is a Leased Employee, the Employee's
Compensation for the services he performs for the Employer, determined in the
same manner as the Compensation of Employees who are not Leased Employees,
regardless of whether such Compensation would be received directly from the
Employer or from the leasing organization.
COMPENSATION YEAR means each one-year period ending on the last day of the Plan
Year, including corresponding periods before January 1, 1997.
CONTINGENT ANNUITANT means an individual named by the Participant to receive a
lifetime benefit after the Participant's death in accordance with a survivorship
life annuity.
CONTRIBUTIONS means Elective Deferral Contributions, Matching Contributions,
Discretionary Contributions, Rollover Contributions, as set out in Article III,
unless the context clearly indicates otherwise.
CONTROLLED GROUP means any group of corporations, trades or businesses of which
the Employer is a part that are under common control. A Controlled Group
includes any group of corporations, trades or businesses, whether or not
incorporated, which is either a parent- subsidiary group, a brother-sister
group, or a combined group within the meaning of Code Section 414(b), Code
Section 414(c) and regulations thereunder and, for purposes of determining
contribution limitations under the CONTRIBUTION LIMITATION SECTION of Article
III, as modified by Code Section 415(h) and, for the purpose of identifying
Leased Employees, as modified by Code Section 144(a)(3). The term Controlled
Group, as it is used in this Plan, shall include the term Affiliated Service
Group and any other employer required to be aggregated with the Employer under
Code Section 414(o) and the regulations thereunder.
DIRECT ROLLOVER means a payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
DISCRETIONARY CONTRIBUTIONS means discretionary contributions made by the
Employer to fund this Plan. (See the EMPLOYER CONTRIBUTIONS SECTION of Article
III.)
DISTRIBUTE means 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 Distributes with regard
to the interest of the spouse or former spouse.
ELECTIVE DEFERRAL CONTRIBUTIONS means Contributions made by the Employer to fund
this Plan in accordance with a qualified cash or deferred arrangement as
described in Code Section 401(k). (See the EMPLOYER CONTRIBUTIONS SECTION of
Article III.)
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ELIGIBILITY BREAK IN SERVICE means an Eligibility Computation Period in which an
Employee is credited with 500 or fewer Hours-of-Service. An Employee incurs an
Eligibility Break in Service on the last day of an Eligibility Computation
Period in which he has an Eligibility Break in Service.
ELIGIBILITY COMPUTATION PERIOD means a 12-consecutive month period. The first
Eligibility Computation Period begins on an Employee's Employment Commencement
Date. Later Eligibility Computation Periods shall be 12-consecutive month
periods ending on the last day of each Plan Year that begins after his
Employment Commencement Date.
To determine an Eligibility Computation Period after an Eligibility Break in
Service, the Plan shall use the 12-consecutive month period beginning on an
Employee's Reemployment Commencement Date as if his Reemployment Commencement
Date were his Employment Commencement Date.
ELIGIBILITY SERVICE means one year of service for each Eligibility Computation
Period that has ended and in which an Employee is credited with at least 1,000
Hours-of-Service.
However, Eligibility Service is modified as follows:
Period of Military Duty included:
A Period of Military Duty shall be included as service with the Employer
to the extent it has not already been credited. For purposes of crediting
Hours-of-Service during the Period of Military Duty, an Hour-of-Service shall be
credited (without regard to the 501 Hour-of-Service limitation) for each hour an
Employee would normally have been scheduled to work for the Employer during such
period.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while
both that firm and the Employer were members of the Controlled Group shall be
included as service with the Employer.
ELIGIBLE EMPLOYEE means any Employee of the Employer.
ELIGIBLE RETIREMENT PLAN means 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 Distribute'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.
ELIGIBLE ROLLOVER DISTRIBUTION means any distribution of all or any portion of
the balance to the credit of the Distribute, except that an Eligible Rollover
Distribution does not include:
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(a) 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 Distribute or the joint lives (or joint life expectancies) of
the Distribute and the Distribute's designated Beneficiary, or for a specified
period of ten years or more.
(b) Any distribution to the extent such distribution is required under
Code Section 401(a)(9).
(c) The portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
EMPLOYEE means an individual who is employed by the Employer or any other
employer required to be aggregated with the Employer under Code Sections 414(b),
(c), (m) or (o). A Controlled Group member is required to be aggregated with the
Employer.
The term Employee shall also include any Leased Employee deemed to be an
employee of any employer described in the preceding paragraph as provided in
Code Sections 414(n)or 414(0).
EMPLOYER means the Primary Employer. This will also include any successor
corporation or firm of the Employer which shall, by written agreement, assume
the obligations of this Plan or any predecessor corporation or firm of the
Employer (absorbed by the Employer, or of which the Employer was once a part)
which became a predecessor because of a change of name, merger, purchase of
stock or purchase of assets and which maintained this Plan.
EMPLOYER CONTRIBUTIONS means Elective Deferral Contributions, Matching
Contributions, Discretionary Contributions, as set out in Article Ill, unless
the context clearly indicates otherwise.
EMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service.
ENTRY DATE means the date an Employee first enters the Plan as an Active
Participant. (See the ACTIVE PARTICIPANT SECTION of Article II.)
FAMILY MEMBER means an individual described in Code Section 414(q)(6)(B).
FISCAL YEAR means the Primary Employer's taxable year. The last day of the
Fiscal Year is December 31.
FORFEITURE means the part, if any, of a Participant's Account that is forfeited.
(See the FORFEITURES SECTION of Article III.)
FORFEITURE DATE means, as to a Participant, the last day of five consecutive
one-year Periods of Severance.
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This is the date on which the Participant's Nonvested Account will be forfeited
unless an earlier forfeiture occurs as provided in the FORFEITURES SECTION of
Article III.
GROUP CONTRACT means the group annuity contract or contracts into which the
Primary Employer enters with the Insurer for the investment of Contributions and
the payment of benefits under this Plan. The term Group Contract as it is used
in this Plan is deemed to include the plural unless the context clearly
indicates otherwise.
HIGHLY COMPENSATED EMPLOYEE means a highly compensated active Employee or a
highly compensated former Employee.
A highly compensated active Employee means any Employee who performs service for
the Employer during the determination year and who, during the look-back year
is:
(a) An Employee who is a 5% owner, as defined in Section
416(i)(1)(B)(i), at any time during the determination year or the look-back
year.
(b) An Employee who receives compensation in excess of $75,000 (indexed
in accordance with Section 415(d)) during the look-back year.
(c) An Employee who receives compensation in excess of $50,000 (indexed
in accordance with Section 415(d)) during the look-back year and is a member of
the top-paid group for the look-back year.
(d) An Employee who is an officer, within the meaning of Section 416(i),
during the look-back year and who receives compensation in the look-back year
greater than 50% of the dollar limitation in effect under Section 415(b)(1)(A)
for the calendar year in which the look-back year begins. The number of officers
is limited to 50 (or, if lesser, the greater of 3 employees or 10% of employees)
excluding those employees who may be excluded in determining the top-paid group.
(e) An Employee who is both described in paragraph b, c or d above when
these paragraphs are modified to substitute the determination year for the
look-back year and one of the 100 Employees who receive the most compensation
from the Employer during the determination year.
If no officer has satisfied the compensation requirement of (c) above during
either a determination year or look-back year, the highest paid officer for such
year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The look-back
year shall be the twelve-month period immediately preceding the determination
year.
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A highly compensated former Employee means any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the Employer during the determination year, and was a
highly compensated active Employee for either the separation year or any
determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5 percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most highly compensated
Employees ranked on the basis of compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten highly
compensated Employee shall be aggregated. In such case, the family member and 5
percent 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 percent owner or top-ten highly compensated Employee. For purposes
of this definition, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such lineal
ascendants and descendants.
Compensation is compensation within the meaning of Code Section 415(c)(3),
including elective or salary reduction contributions to a cafeteria plan, cash
or deferred arrangement or tax-sheltered annuity. The top-paid group consists of
the top 20% of employees ranked on the basis of compensation received during the
year.
Employers aggregated under Section 414(b), (c), (m) or (o) are treated as a
single Employer.
HOUR-OF-SERVICE means, for the elapsed time method of crediting service in this
Plan, each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer. Hour-of-Service means, for the hours method
of crediting service in this Plan, the following:
(a) Each hour for which an Employee is paid, or entitled to payment, for
performing duties for the Employer during the applicable computation period.
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer because of a period of time in which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. Notwithstanding the preceding
provisions of this subparagraph (b), no credit will be given to the Employee
(1) for more than 501 Hours-of-Service under this subparagraph (b)
because of any single continuous period in which the Employee performs no duties
(whether or not such period occurs in a single computation period); or
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(2) for an Hour-of-Service for which the Employee is directly or
indirectly paid, or entitled to payment, because of a period in which no duties
are performed if such payment is made or due under a plan maintained solely for
the purpose of complying with applicable worker's or workmen's compensation, or
unemployment compensation or disability insurance laws; or
(3) for an Hour-of-Service for a payment which solely reimburses the
Employee for medical or medically related expenses incurred by him.
For purposes of this subparagraph (b), a payment shall be deemed to
be made by, or due from the Employer, regardless of whether such payment is made
by, or due from the Employer, directly or indirectly through, among others, a
trust fund or insurer, to which the Employer contributes or pays premiums and
regardless of whether contributions made or due to the trust fund, insurer or
other entity are for the benefit of particular employees or are on behalf of a
group of employees in the aggregate.
(c) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours-of-Service shall
not be credited under both subparagraph (a) or subparagraph (b) above (as the
case may be) and under this subparagraph (c). Crediting of Hours-of-Service for
back pay awarded or agreed to with respect to periods described in subparagraph
(b) above will be subject to the limitations set forth in that subparagraph.
The crediting of Hours-of-Service above shall be applied under the rules of
paragraphs (b) and (c) of the Department of Labor Regulation 2530.200b-2
(including any interpretations or opinions implementing said rules); which
rules, by this reference, are specifically incorporated in full within this
Plan. The reference to paragraph (b) applies to the special rule for determining
hours of service for reasons other than the performance of duties such as
payments calculated (or not calculated) on the basis of units of time and the
rule against double credit. The reference to paragraph (c) applies to the
crediting of hours of service to computation periods.
Hours-of-Service shall be credited for employment with any other employer
required to be aggregated with the Employer under Code Sections 414(b), (c), (m)
or (o) and the regulations thereunder for purposes of eligibility and vesting.
Hours-of-Service shall also be credited for any individual who is considered an
employee for purposes of this Plan pursuant to Code Section 414(n) or Code
Section 414(o) and the regulations thereunder.
Solely for purposes of determining whether a one-year break in service has
occurred for eligibility or vesting purposes, during a Parental Absence an
Employee shall be credited with the Hours-of-Service which otherwise would
normally have been credited to the Employee but for such absence, or in any case
in which such hours cannot be determined, eight Hours-of-Service per day of such
absence. The Hours-of-Service credited under this paragraph shall be credited in
the computation period in which the absence begins if the crediting is necessary
to prevent a break in service in that period; or in all other cases, in the
following computation period.
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INACTIVE PARTICIPANT means a former Active Participant who has an Account. (See
the INACTIVE PARTICIPANT SECTION of Article II.)
INSURER means Principal Mutual Life Insurance Company and any other insurance
company- named by the Trustee or Primary Employer.
INVESTMENT FUND means the total assets held for the purpose of providing
benefits for These funds result from Contributions made under the Plan.
INVESTMENT MANAGER means any fiduciary (other than a trustee or Named Fiduciary)
(a) who has the power to manage, acquire, or dispose of any assets of
the Plan; and
(b) who (1) is registered as an investment adviser under the Investment
Advisers Act of 1940, or (2) is a bank, as defined in the Investment Advisers
Act of 1940, or (3) is an insurance company qualified to perform services
described in subparagraph (a) above under the laws of more than one state; and
(c) who has acknowledged in writing being a fiduciary with respect to
the Plan.
LATE RETIREMENT DATE means the first day of any month which is after a
Participant's Normal Retirement Date and on which retirement benefits begin. If
a Participant continues to work for the Employer after his Normal Retirement
Date, his Late Retirement Date shall be the earliest first day of the month on
or after he ceases to be an Employee. An earlier or a later Retirement Date may
apply if the Participant so elects. An earlier Retirement Date may apply if the
Participant is age 70 1/2. (See the WHEN BENEFITS START SECTION of Article V.)
LEASED EMPLOYEE means any person (other than an employee of the recipient) who
pursuant to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with Code Section 414(n)(6)) on a
substantially full time basis for a period of at least one year, and such
services are of a type historically performed by employees in the business field
of the recipient employer. Contributions or benefits provided a Leased Employee
by the leasing organization which are attributable to service performed for the
recipient employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an employee of the recipient if:
(a) such employee is covered by a money purchase pension plan providing
(1) a nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Sections 125, 402(e)(3), 402(h) or
403(b), (2) immediate participation, and (3) full and immediate vesting and
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(b) Leased Employees do not constitute more than 20 percent of the
recipient's nonhighly compensated workforce.
LOAN ADMINISTRATOR means the person or positions authorized to administer the
Participant loan program.
The Loan Administrator is DIRECTOR HUMAN RESOURCES.
MATCHING CONTRIBUTIONS means matching contributions made by the Employer to fund
this Plan. (See the EMPLOYER CONTRIBUTIONS SECTION of Article III.)
MONTHLY DATE means each Yearly Date and the same day of each following month
during the Plan Year beginning on such Yearly Date.
NAMED FIDUCIARY means the person or persons who have authority to control and
manage the operation and administration of the Plan.
The Named Fiduciary is the Employer.
NonHIGHLY COMPENSATED EMPLOYEE means an Employee of the Employer who is neither
a Highly Compensated Employee nor a family member.
NonVESTED ACCOUNT means the part, if any, of a Participant's Account that is in
excess of his Vested Account.
NORMAL FORM means a single life annuity with installment refund.
NORMAL RETIREMENT AGE means the age at which the Participant's normal retirement
benefit becomes nonforfeitable. A Participant's Normal Retirement Age is 65.
NORMAL RETIREMENT DATE means the earliest first day of the month on or after the
date the Participant reaches his Normal Retirement Age. Unless otherwise
provided in this Plan, a Participant's retirement benefits shall begin on a
Participant's Normal Retirement Date if he has ceased to be an Employee on such
date and has a Vested Account. Even if the Participant is an Employee on his
Normal Retirement Date, he may choose to have his retirement benefit begin on
such date. (See the WHEN BENEFITS START SECTION of Article V.)
PARENTAL ABSENCE means an Employee's absence from work which begins on or after
the first Yearly Date after December 31, 1984,
(a) by reason of pregnancy of the Employee,
(b) by reason of birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in
connection with adoption of such child by such Employee, or
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(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
PARTICIPANT means either an Active Participant or an Inactive Participant.
PERIOD OF MILITARY DUTY means, for an Employee
(a) who served as a member of the armed forces of the United States, and
(b) who was reemployed by the Employer at a time when the Employee had a
right to reemployment in accordance with seniority rights as protected under
Section 2021 through 2026 of Title 38 of the U.S. Code, the period of time from
the date the Employee was first absent from active work for the Employer because
of such military duty to the date the Employee was reemployed.
PERIOD OF SERVICE means a period of time beginning on an Employee's Employment
Commencement Date or Reemployment Commencement Date (whichever applies) and
ending on his Severance from Service Date.
PERIOD OF SEVERANCE means a period of time beginning on an Employee's Severance
from Service Date and ending on the date he again performs an Hour-of-Service.
A one-year Period of Severance means a Period of Severance of 12 consecutive
months.
Solely for purposes of determining whether a one-year Period of Severance has
occurred for eligibility or vesting purposes, the 12-consecutive month period
beginning on the first anniversary of the first date of a Parental Absence shall
not be a one-year Period of Severance.
PLAN means the 401(k) savings plan of the Employer set forth in this document,
including any later amendments to it.
PLAN ADMINISTRATOR means the person or persons who administer the Plan.
The Plan Administrator is the Employer.
PLAN YEAR means a period beginning on a Yearly Date and ending on the day before
the next Yearly Date.
PRIMARY EMPLOYER means OPTIMUMCARE CORPORATION.
QUALIFIED JOINT AND SURVIVOR FORM means, for a Participant who has a spouse, an
immediate survivorship life annuity with installment refund, where the
survivorship percentage is 50% and the Contingent Annuitant is the Participant's
spouse. A former spouse will be treated as the spouse to the extent provided
under a qualified domestic relations order as described in Code Section 414(p).
If a Participant does not have a spouse, the Qualified Joint and Survivor Form
means the Normal Form.
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The amount of benefit payable under the Qualified Joint and Survivor Form shall
be the amount of benefit which may be provided by the Participant's Vested
Account.
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY means a single life annuity with
installment refund payable to the surviving spouse of a Participant who dies
before his Annuity Starting Date. A former spouse will be treated as the
surviving spouse to the extent provided under a qualified domestic relations
order as described in Code Section 414(p).
QUALIFYING EMPLOYER SECURITY means any instrument issued by the Employer and
meeting the requirements of Section 4975(e)(8) of the Code.
QUALIFYING EMPLOYER SECURITIES ACCOUNT means for a Participant, his share of
Qualifying Employer Securities.
QUARTERLY DATE means each Yearly Date and the third, sixth and ninth Monthly
Date after each Yearly Date which is within the same Plan Year.
REEMPLOYMENT COMMENCEMENT DATE means the date an Employee first performs an
Hour-of-Service following:
(a) an Eligibility Break in Service, for the hours method of crediting
service in this Plan, or
(b) a Period of Severance, for the elapsed time method of crediting
service in this Plan.
REENTRY DATE means the date a former Active Participant reenters the Plan. (See
the ACTIVE PARTICIPANT SECTION of Article II.)
RETIREMENT DATE means the date a retirement benefit will begin and is a
Participant's Normal or Late Retirement Date, as the case maybe.
ROLLOVER CONTRIBUTIONS means the Rollover Contributions which are made by or for
a Participant according to the provisions of the ROLLOVER CONTRIBUTIONS SECTION
of Article III.
SEMI-YEARLY DATE means each Yearly Date and the sixth Monthly Date after each
Yearly Date which is within the same Plan Year.
SEVERANCE FROM SERVICE DATE means the earlier of
a) the date on which an Employee quits, retires, dies or is discharged,
or
b) the first anniversary of the date an Employee begins a one-year
absence from service (with or without pay). This absence may be the result of
any combination of vacation, holiday, sickness, disability, leave of absence or
layoff.
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Solely to determine whether a one-year Period of Severance has occurred for
eligibility or vesting purposes for an Employee who is absent from service
beyond the first anniversary of the first day of a Parental Absence, Severance
from Service Date is the second anniversary of the first day of the Parental
Absence. The period between the first and second anniversaries of the first day
of the Parental Absence is not a Period of Service and is not a Period of
Severance.
TEFRA means the Tax Equity and Fiscal Responsibility Act of 1982.
TEFRA COMPLIANCE DATE means the date a plan is to comply with the provisions of
TEFRA. The TEFRA Compliance Date as used in this Plan is,
(a) for purposes of contribution limitations, Code Section 415,
(1) if the plan was in effect on July 1, 1982, the first day of the
first limitation year which begins after December 31, 1982, or
(2) if the plan was not in effect on July 1, 1982, the first day of
the first limitation year which ends after July 1, 1982.
(b) for all other purposes, the first Yearly Date after December 31,
1983.
TOTALLY AND PERMANENTLY DISABLED means that a Participant is disabled, as a
result of sickness or injury, to the extent that he is prevented from engaging
in any substantial gainful activity, and is eligible for and receives a
disability benefit under Title II of the Federal Social Security Act.
TRUST means an agreement of trust between the Primary Employer and Trustee
established for the purpose of holding and distributing the Trust Fund under the
provisions of the Plan. The Trust may provide for the investment of all or any
portion of the Trust Fund in the Group Contract.
TRUST FUND means the total funds held under the Trust for the purpose of
providing benefits for Participants. These funds result from Contributions made
under the Plan which are forwarded to the Trustee to be deposited in the Trust
Fund.
TRUSTEE means the trustee or trustees under the Trust. The term Trustee as it is
used in this Plan is deemed to include the plural unless the context clearly
indicates otherwise.
VALUATION DATE means for the purposes of the date on which the value of the
assets of the Trust is determined. The value of each Account which is maintained
under this Plan shall be determined on the Valuation Date. In each Plan Year,
the Valuation Date shall be the close of each business day.
VESTED ACCOUNT means the vested part of a Participant's Account. The
Participant's Vested Account is determined as follows. If the Participant's
Vesting Percentage is 100%, his Vested Account equals his Account.
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<PAGE> 18
If the Participant's Vesting Percentage is less than 100%, his Vested Account
equals the sum of (a) and (b) below:
(a) The part of the Participant's Account that results from Employer
Contributions made before a prior Forfeiture Date and all other Contributions
which were 100% vested when made.
(b) The balance of the Participant's Account in excess of the amount in
(a) above multiplied by his Vesting Percentage.
If the Participant has withdrawn any part of his Account resulting from Employer
Contributions, other than the vested Employer Contributions included in (a)
above, the amount determined under this subparagraph (b) shall be equal to P(AB
+ D) - D as defined below:
P The Participant's Vesting Percentage.
AB The balance of the Participant's Account in excess of the amount
in (a) above.
D The amount of withdrawal resulting from Employer Contributions,
other than the vested Employer Contributions included in (a)
above.
The Participant's Vested Account is nonforfeitable.
VESTING PERCENTAGE means the percentage used to determine the nonforfeitable
portion of a Participant's Account attributable to Employer Contributions which
were not 100% vested when made.
A Participant's Vesting Percentage is shown in the following schedule opposite
the number of whole years of his Vesting Service.
<TABLE>
<CAPTION>
VESTING SERVICE VESTING
(whole years) PERCENTAGE
--------------- ----------
<S> <C>
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
However, the Vesting Percentage for a Participant who is an Employee on or after
the earliest of (i) the date he reaches his Normal Retirement Age, (ii) the date
of his death, or (iii) the date he becomes Totally and Permanently Disabled,
shall be 100% on such date.
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<PAGE> 19
If the schedule used to determine a Participant's Vesting Percentage is changed,
the new schedule shall not apply to a Participant unless he is credited with an
Hour-of-Service on or after the date of the change and the Participant's
nonforfeitable percentage on the day before the date of the change is not
reduced under this Plan. The amendment provisions of the AMENDMENT SECTION of
Article IX regarding changes in the computation of the Vesting Percentage shall
apply.
VESTING SERVICE means an Employee's Period of Service.[f he has more than one
Period of Service or if all or a part of a Period of Service is not counted, his
Vesting Service shall be determined by adjusting his Employment Commencement
Date so that he has one continuous period of Vesting Service equal to the
aggregate of all his countable Periods of Service. This period of Vesting
Service shall be expressed as whole years and fractional parts of a year (to two
decimal places) on the basis that 365 days equal one year.
However, Vesting Service is modified as follows:
Period of Military Duty included:
A Period of Military Duty shall be included as service with the Employer to the
extent it has not already been credited.
Period of Severance included (service spanning rule):
A Period of Severance shall be deemed to be a Period of Service under either of
the following conditions:
(a) the Period of Severance immediately follows a period during which an
Employee is not absent from work and ends within 12 months; or
(b) the Period of Severance immediately follows a period during which an
Employee is absent from work for any reason other than quitting, being
discharged or retiring (such as a leave of absence or layoff) and ends within 12
months of the date he was first absent.
Controlled Group service included:
An Employee's service with a member firm of a Controlled Group while both that
firm and the Employer were members of the Controlled Group shall be included as
service with the Employer.
YEARLY DATE means January 1, 1997, and the same day of each following year.
YEARS OF SERVICE means an Employee's Vesting Service disregarding any
modifications which exclude service.
-16-
<PAGE> 20
ARTICLE II PARTICIPATION
SECTION 2.01 - ACTIVE PARTICIPANT
(a) An Employee shall first become an Active Participant (begin active
participation in the Plan) on the earliest Semi-yearly Date on or after January
1, 1997, on which he is an Eligible Employee and has met both of the eligibility
requirements set forth below. This date is his Entry Date.
(1) He has completed one year of Eligibility Service before his
Entry Date.
(2) He is age 21 or older.
If a person has been an Eligible Employee who has met all the eligibility
requirements above, but is not an Eligible Employee on the date which would have
been his Entry Date, he shall become an Active Participant on the date he again
becomes an Eligible Employee.
This date is his Entry Date.
(b) An Inactive Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again performs an
Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
Upon again becoming an Active Participant, he shall cease to be an Inactive
Participant.
(c) A former Participant shall again become an Active Participant
(resume active participation in the Plan) on the date he again performs an
Hour-of-Service as an Eligible Employee. This date is his Reentry Date.
There shall be no duplication of benefits for a Participant under this Plan
because of more than one period as an Active Participant.
SECTION 2.02 - INACTIVE PARTICIPANT
An Active Participant shall become an Inactive Participant (stop accruing
benefits under the Plan) on the earlier of the following:
(a) The date on which he ceases to be an Eligible Employee (on his
Retirement Date if the date he ceases to be an Eligible Employee occurs within
one month of his Retirement Date).
(b) The effective date of complete termination of the Plan.
SECTION 2.03 - CESSATION OF PARTICIPATION
A Participant shall cease to be a Participant on the date he is no longer an
Eligible Employee and his Account is zero.
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<PAGE> 21
ARTICLE III CONTRIBUTIONS
SECTION 3.01 - EMPLOYER CONTRIBUTIONS
Employer Contributions are conditioned on initial qualification of the Plan. If
the Plan is denied initial qualification, the provisions of the QUALIFICATION OF
PLAN SECTION of Article IX shall apply.
Employer Contributions for Plan Years which end on or after January 1, 1997,
maybe made without regard to current or accumulated net income, earnings, or
profits of the Employer. Notwithstanding the foregoing, the Plan shall continue
to be designed to qualify as a profit sharing plan for purposes of Code Sections
401(a), 402, 412, and 417. Such Contributions will be equal to the Employer
Contributions as described below:
(a) The amount of each Elective Deferral Contribution for a Participant
shall be equal to any percentage (not more than 15%) of his Compensation as
elected in his elective deferral agreement. An Employee who is eligible to
participate in the Plan may file an elective deferral agreement with the
Employer. The elective deferral agreement to start Elective Deferral
Contributions maybe effective on a Participant's Entry Date (Reentry Date, if
applicable) or any following Quarterly Date. The Participant shall make any
change or terminate the elective deferral agreement by filing a new elective
deferral agreement. A Participant's elective deferral agreement making a change
may be effective on any date an elective deferral agreement to start Elective
Deferral Contributions could be effective. A Participant's elective deferral
agreement to stop Elective Deferral Contributions may be effective on any date.
The elective deferral agreement must be in writing and completed before the
beginning of the pay period in which Elective Deferral Contributions are to
start, change or stop.
Elective Deferral Contributions are fully (100%) vested and nonforfeitable.
(b) The amount of each Matching Contribution for a Participant shall be
equal to 50% of the Elective Deferral Contributions made for him, disregarding
any Elective Deferral Contributions in excess of 4% of his Compensation.
At the end of the Plan Year, if the Employer so determines, the Employer may
make another Matching Contribution for a Participant eligible for an allocation
at the end of the Plan Year. If made, the amount of this Matching Contribution
for a Participant shall be equal to a percentage as determined by the Employer,
of the Elective Deferral Contributions made for him for the Plan Year, reduced
by the amount of the Matching Contributions made for him above. Total Matching
Contributions for a Participant for the Plan Year shall not exceed 100% of the
Elective Deferral Contributions for him for the Plan Year.
Matching Contributions are subject to the Vesting Percentage.
(c) The amount of each Discretionary Contribution shall be determined by
the Employer.
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<PAGE> 22
Discretionary Contributions are subject to the Vesting Percentage.
No Participant shall be permitted to have Elective Deferral Contributions, as
defined in the EXCESS AMOUNTS SECTION of Article III, made under this Plan, or
any other qualified plan maintained by the Employer, during any taxable year, in
excess of the dollar limitation contained in Code Section 402(g) in effect at
the beginning of such taxable year.
The Employer shall pay to the Insurer its Contributions used to determine the
Actual Deferral Percentage, as defined in the EXCESS AMOUNTS SECTION of Article
III, to the Plan for each Plan Year not later than the end of the twelve-month
period immediately following the Plan Year for which they are deemed to be paid.
Any such Contributions accumulated through payroll deductions shall be paid
within 90 days of the date withheld or the date it is first reasonably practical
for the Employer to do so, if earlier.
A portion of the Plan assets resulting from Employer Contributions (but not more
than the original amount of those Contributions and reduced proportionately for
losses, if applicable) may be returned if the Employer Contributions are made
because of a mistake of factor are more than the amount deductible under Code
Section 404 (excluding any amount which is not deductible because the Plan is
disqualified). The amount involved must be returned to the Employer within one
year after the date the Employer Contributions are made by mistake of fact or
the date the deduction is disallowed, whichever applies. Except as provided
under this paragraph and Articles Vll and IX, the assets of the Plan shall never
be used for the benefit of the Employer and are held for the exclusive purpose
of providing benefits to Participants and their Beneficiaries and for defraying
reasonable expenses of administering the Plan.
SECTION 3.01A - ROLLOVER CONTRIBUTIONS
A Rollover Contribution maybe made by or for an Eligible Employee if the
following conditions are met:
(a) The Contribution is a rollover contribution which the Code permits
to be transferred to a plan that meets the requirements of Code Section 401(a).
(b) If the Contribution is made by the Eligible Employee, it is made
within sixty days after he receives the distribution.
(c) The Eligible Employee furnishes evidence satisfactory to the Plan
Administrator that the proposed transfer is in fact a rollover contribution that
meets conditions (a) and (b) above.
The Rollover Contribution may be made by the Eligible Employee or the Eligible
Employee may direct the trustee or named fiduciary of another plan to transfer
the funds which would otherwise be a Rollover Contribution directly to this
Plan. Such transferred funds shall be called a Rollover Contribution. The
Contribution shall be made according to procedures setup by the Plan
Administrator.
-19-
<PAGE> 23
If the Eligible Employee is not an Active Participant at the time the Rollover
Contribution is made, he shall be deemed to be a Participant only for the
purposes of investment and distribution of the Rollover Contribution. He shall
not share in the allocation of Employer Contributions until the time he meets
all the requirements to become an Active Participant.
Rollover Contributions made by or for an Eligible Employee shall be credited to
his Account. The part of the Participant's Account resulting from Rollover
Contributions is fully (100%) vested and nonforfeitable at all times. A separate
accounting record shall be maintained for that part of his Rollover Contribution
which consists of voluntary contributions that were deducted from the
Participant's gross income for Federal income tax purposes.
SECTION 3.02 - FORFEITURES
The Nonvested Account of a Participant shall be forfeited as of the earlier of
the following: the date of the Participant's death, if prior to such date he had
ceased to be an Employee; or his Forfeiture Date. All or a part of a
Participant's Nonvested Account will be forfeited if, after he ceases to be an
Employee, he receives a distribution of his entire Vested Account or a
distribution of his Vested Account derived from Employer Contributions which
were not 100% vested when made according to the provisions of the VESTED
BENEFITS SECTION of Article V or the SMALL AMOUNTS SECTION of Article IX. If a
Participant's Vested Account is zero on the date he ceases to be an Employee, he
shall be deemed to have received a distribution of his entire Vested Account on
such date. The forfeiture will occur as of the date he receives the distribution
or on the date such provision became effective, if later. If he receives a
distribution of his entire Vested Account, his entire Nonvested Account will be
forfeited. If he receives a distribution of his Vested Account from Employer
Contributions which were not 100% vested when made, but less than his entire
Vested Account, the amount to be forfeited will be determined by multiplying his
Nonvested Account by a fraction. The numerator of the fraction is the amount of
the distribution derived from Employer Contributions which were not 100% vested
when made and the denominator of the fraction is his entire Vested Account
derived from such Employer Contributions on the date of distribution.
A Forfeiture shall also occur as described in the EXCESS AMOUNTS SECTION of
Article III.
Forfeitures may first be applied to pay administrative expenses under the Plan
which would otherwise be paid by the Employer.
Forfeitures not used to pay administrative expenses shall be applied to reduce
the earliest Employer Contributions made after the Forfeitures are determined.
Forfeitures shall be determined at least once during each taxable year of the
Employer. Upon their application, such Forfeitures shall be deemed to be
Employer Contributions.
Forfeitures of Matching Contributions which relate to excess amounts shall be
applied as provided in the EXCESS AMOUNTS SECTION of Article III.
-20-
<PAGE> 24
If a Participant again becomes an Eligible Employee after receiving a
distribution which caused his Nonvested Account to be forfeited, he shall have
the right to repay to the Plan the entire amount of the distribution he received
(excluding any amount of such distribution resulting from Contributions which
were 100% vested when made). The repayment must be made before the earlier of
the date five years after the date he again becomes an Eligible Employee or the
end of the first period of five consecutive one-year Periods of Severance which
begin after the date of the distribution.
If the Participant makes the repayment provided above, the Plan Administrator
shall restore to his Account an amount equal to his Nonvested Account which was
forfeited on the date of distribution, unadjusted for any investment gains or
losses. If the amount of the repayment is zero dollars because the Participant
was deemed to have received a distribution or the plan did not have repayment
provisions in effect on the date the distribution was made and he again performs
an Hour-of-Service as an Eligible Employee within the repayment period, the Plan
Administrator shall restore the Participant's Account as if he had made a
required repayment on the date he performed such Hour-of-Service. Restoration of
the Participant's Account shall include restoration of all Code Section
411(d)(6) protected benefits with respect to that restored Account, according to
applicable Treasury regulations. Provided, however, the Plan Administrator shall
not restore the Nonvested Account if a Forfeiture Date has occurred after the
date of the distribution and on or before the date of repayment and that
Forfeiture Date would result in a complete forfeiture of the amount the Plan
Administrator would otherwise restore.
The Plan Administrator shall restore the Participant's Account by the close of
the Plan Year following the Plan Year in which repayment is made. Permissible
sources for restoration are Forfeitures or Employer Contributions. The Employer
shall contribute, without regard to any requirement or condition of the EMPLOYER
CONTRIBUTIONS SECTION of Article III, such additional amount needed to make the
required restoration. The repaid and restored amounts are not included in the
Participant's Annual Addition, as CONTRIBUTION LIMITATION SECTION of Article
III.
SECTION 3.03 - ALLOCATION
The following Contributions for the Plan Year shall be allocated among all
eligible persons:
Matching Contributions made at the end of the Plan Year
Discretionary Contributions
The eligible persons are all Participants who had 1,000 or more Hours-of-Service
in the 'Accrual Computation Period that ends in the Plan Year and who are Active
Participants on the last day of the Plan Year. The amount allocated to such a
person shall be determined below and under Article X.
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<PAGE> 25
The following Contributions for each Plan Year shall be allocated to each
Participant Contributions were made under the EMPLOYER CONTRIBUTIONS SECTION of
Article III:
Elective Deferral Contributions
Matching Contributions made before the end of the Plan Year
These Contributions shall be allocated when made and credited to the
Participant's Account.
The following Contributions are allocated as of the last day of the Plan Year to
each eligible person for whom they are made and credited to his Account:
Matching Contributions made at the end of the Plan Year
Discretionary Contributions are allocated as of the last day of each Plan Year.
The amount allocated to each eligible person for the Plan Year shall be equal to
the Discretionary Contributions for the Plan Year, multiplied by the ratio of
(a) his Annual Compensation as of the last day of the Plan Year to (b) the total
of such compensation for all eligible persons.
This amount is credited to his Account.
In determining the amount of Employer Contributions to be allocated to a
Participant who is a Leased Employee, contributions and benefits provided by the
leasing organization which are attributable to services such Leased Employee
performs for the Employer shall be treated as provided by the Employer and there
shall be no duplication of those contributions or benefits under this Plan.
SECTION 3.04 - CONTRIBUTION LIMITATION
(a) For the purpose of determining the contribution limitation set forth
in this section, the following terms are defined:
Aggregate Annual Addition means, for a Participant with respect to any
Limitation Year, the sum of his Annual Additions under all defined contribution
plans of the Employer, as defined in this section, for such Limitation Year. The
nondeductible participant contributions which the Participant makes to a defined
benefit plan shall be treated as Annual Additions to a defined contribution
plan. The Contributions the Employer, as defined in this section, made for the
Participant for a Plan Year beginning on or after March 31, 1984, to an
individual medical benefit account, as defined in Code Section 415(1)(2), under
a pension or annuity plan of the Employer, as defined in this section, shall be
treated as Annual Addictions to a defined contribution plan. Also, amounts
derived from contributions paid or accrued after December 31, 1985, in Fiscal
Years ending after such date, which are attributable to post-retirement medical
benefits allocated to the separate account of a key employee, as defined in Code
Section 419A(d)(3), under a welfare benefit fund, as defined in Code Section
419(e), maintained by the Employer, as defined in this section, are treated as
Annual Additions to a defined contribution plan. The 25% of Compensation limit
under Maximum Permissible Amount does not apply to Annual Additions resulting
from contributions made to an individual medical account, as defined
-22-
<PAGE> 26
in Code Section 4 15(l)(2), or to Annual Additions resulting from contributions
for medical benefits, within the meaning of Code Section 419A, after separation
from service.
Annual Addition means the amount added to a Participant's account for any
Limitation Year which may not exceed the Maximum Permissible Amount. The Annual
Addition under any plan for a Participant with respect to any Limitation Year,
shall be equal to the sum of (1) and (2) below:
(1) Employer contributions and forfeitures credited to his account
for the Limitation Year.
(2) Participant contributions made by him for the Limitation Year.
Before the first Limitation Year beginning after December 31, 1986, the amount
under (2) above is the lesser of (i) 1/2 of his nondeductible participant
contributions made for the Limitation Year, or (ii) the amount, if any, of his
nondeductible participant contributions made for the Limitation Year which is in
excess of six percent of his Compensation, as defined in this section, for such
Limitation Year.
Compensation means all wages for Federal income tax withholding purposes, as
defined under Code Section 3401 (a) (for purposes of income tax withholding at
the source), disregarding any rules limiting the remuneration included as wages
based on the nature or location of the employment or the services performed.
Compensation also includes all other payments to an Employee in the course of
the Employer's trade or business, for which the Employer must furnish the
Employee a written statement under Code Sections 6041(d) and 6051(a)(3). The
"Wages, Tips and Other Compensation" box on Form W-2 satisfies this definition.
For any self-employed individual Compensation will mean earned income.
For purposes of applying the limitations of this section, Compensation for a
Limitation Year is the Compensation actually paid or made available during such
Limitation Year.
Defined Benefit Plan Fraction means, with respect to a Limitation Year for a
Participant who is or has been a participant in a defined benefit plan ever
maintained by the Employer, as defined in this section, the quotient, expressed
as a decimal, of:
(1) the Participant's Projected Annual Benefit under all such plans
as of the close of such Limitation Year, divided by
(2) on and after the TEFRA Compliance Date, the lesser of (i) or
(ii) below:
(i) 1.25 multiplied by the maximum dollar limitation which
applies to defined benefit plans determined for the Limitation Year under Code
Sections 415(b) or (d) or
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<PAGE> 27
(ii) 1.4 multiplied by the Participant's highest average
compensation as defined in the defined benefit plan(s), including any
adjustments under Code Section 415(b).
Before the TEFRA Compliance Date, this denominator is the Participant's
Projected Annual Benefit as of the close of the Limitation Year if the plan(s)
provided the maximum benefit allowable.
The Defined Benefit Plan Fraction shall be modified as follows:
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, as defined in this section, which were in existence
on May 6, 1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the Participant
had accrued as of the close of the last Limitation Year beginning before January
1, 1987, disregarding any changes in the terms and conditions of the plan after
May 5, 1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
for all Limitation Years beginning before January 1, 1987.
Defined Contribution Plan Fraction means, for a Participant with respect to a
Limitation Year, the quotient, expressed as a decimal, of
(1) the Participant's Aggregate Annual Additions for such Limitation
Year and all prior Limitation Years, under all defined contribution plans
(including the Aggregate Annual Additions attributable to nondeductible accounts
under defined benefit plans and attributable to all welfare benefit funds, as
defined in Code Section 419(e) and attributable to individual medical accounts,
as defined in Code Section 415(1)(2)) ever maintained by the Employer, as
defined in this section, divided by
(2) on and after the TEFRA Compliance Date, the sum of the amount
determined for the Limitation Year under (i) or (ii) below, whichever is less,
and the amounts determined in the same manner for all prior Limitation Years
during which he has been an Employee or an employee of a predecessor employer:
(i) 1.25 multiplied by the maximum permissible dollar amount for
each such Limitation Year, or
(ii) 1.4 multiplied by the maximum permissible percentage of the
Participant's Compensation, as defined in this section, for each such Limitation
Year.
Before the TEFRA Compliance Date, this denominator is the sum of the maximum
allowable amount of Annual Addition to his account(s) under all the plan(s) of
the Employer, as defined in this section, for each such Limitation Year.
The Defined Contribution Plan Fraction shall be modified as follows:
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<PAGE> 28
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 contribution
plans maintained by the Employer, as defined in this section, which were in
existence on May 6, 1986, the numerator of this fraction shall be adjusted if
the sum of the Defined Contribution Plan Fraction and Defined Benefit Plan
Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, the dollar amount determined below shall be permanently subtracted
from the numerator of this fraction. The dollar amount is equal to the excess of
the sum of the two fractions, before adjustment, over 1.0 multiplied by the
denominator of his Defined Contribution Plan Fraction. The adjustment is
calculated using his Defined Contribution Plan Fraction and Defined Benefit Plan
Fraction as they would be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes in the terms and
conditions of the plan made after May 5, 1986, but using the Code Section 415
limitations 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 employee contributions as Annual Additions.
For a plan that was in existence on July 1, 1982, for purposes of determining
the Defined Contribution Plan Fraction for any Limitation Year ending after
December 31, 1982, the Plan Administrator may elect, in accordance with the
provisions of Code Section 415, that the denominator for each Participant for
all Limitation Years ending before January 1, 1983, will be equal to
(1) the Defined Contribution Plan Fraction denominator which would
apply for the last Limitation Year ending in 1982 if an election under this
paragraph were not made, multiplied by
(2) a fraction, equal to (i) over (ii) below:
(i) the lesser of (A) $51,875, or (B) 1.4, multiplied by 25% of
the Participant's Compensation, as defined in this section, for the Limitation
Year ending in 1981;
(ii) the lesser of (A) $41,500, or (B) 25% of the Participant's
Compensation, as defined in this section, for the Limitation Year ending in
1981.
The election described above is applicable only if the plan administrators under
all defined contribution plans of the Employer, as defined in this section, also
elect to use the modified fraction.
Employer means any employer that adopts this plan and all controlled Group
members and any other entity required to be aggregated with the employer
pursuant to regulations under Code Section 414(o).
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<PAGE> 29
Limitation Year means the 12-consecutive month period within which it is
determined whether or not the limitations of Code Section 415 are exceeded.
Limitation Year means each 12-consecutive month period ending on December 31. If
the Limitation Year is other than the calendar year, execution of this Plan (or
any amendment to this Plan changing the Limitation Year) constitutes the
Employer's adoption of a written resolution electing the Limitation Year. If the
Limitation Year is changed, the new Limitation Year shall begin within the
current Limitation Year, creating a short Limitation Year.
Maximum Permissible Amount means, for a Participant with respect to any
Limitation Year, the lesser of (1) or (2) below:
(1) The greater of $30,000 or one-fourth of the maximum dollar
limitation which applies to defined benefit plans set forth in Code Section
415(b)(1)(A) as in effect for the Limitation Year. (Before the TEFRA Compliance
Date, $25,000 multiplied by the cost of living adjustment factor permitted by
Federal regulations.)
(2) 25% of his Compensation, as defined in this section, for such
Limitation Year.
The compensation limitation referred to in (2) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h) or
Code Section 419A(f)(2)) which is otherwise treated as an annual addition under
Code Section 41 5(1)(1) or Code Section 419A(d)(2).
If there is a short Limitation Year because of a change in Limitation Year, the
Maximum Permissible Amount will not exceed the maximum dollar limitation which
would otherwise apply multiplied by the following fraction:
Number of months in the short Limitation Year / 12
Projected Annual Benefit means a Participant's expected annual benefit under all
defined benefit plan(s) ever maintained by the Employer, as defined in this
section. The Projected Annual Benefit shall be determined assuming that the
Participant will continue employment until the later of current age or normal
retirement age under such plan(s), and that the Participant's compensation for
the current Limitation Year and all other relevant factors used to determine
benefits under such plan(s) will remain constant for all future Limitation
Years. Such expected annual benefit shall be adjusted to the actuarial
equivalent of a straight life annuity if expressed in a form other than a
straight life or qualified joint and survivor annuity.
(b) the Annual Addition under this Plan for a Participant during a
Limitation Year shall not be more than the Maximum Permissible Amount.
(c) Contributions which would otherwise be credited to the Participant's
Account shall be limited or reallocated to the extent necessary to meet the
restrictions of subparagraph (b) above for any Limitation Year in the following
order. Discretionary Contributions shall be reallocated in the same manner as
described in the ALLOCATION
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<PAGE> 30
SECTION of Article III to the remaining Participants to whom the limitations do
not apply for the Limitation Year. The Discretionary Contributions shall be
limited if there are no such remaining Participants. Elective Deferral
Contributions that are not the basis for Matching Contributions shall be
limited. Matching Contributions shall be limited to the extent necessary to
limit the Participant's Annual Addition under this Plan to his maximum amount.
If Matching Contributions are limited because of this limit, Elective Deferral
Contributions that are the basis for Matching Contributions shall be reduced in
proportion.
If, due to (i) an error in estimating a Participant's Compensation as defined in
this section, (ii) because the amount of the Forfeitures to be used to offset
Employer Contributions is more than the amount of the Employer Contributions due
for the remaining Participants, (iii) as a result of a reasonable error in
determining the amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any individual under the limits of
Code Section 415, or (iv) other limited facts and circumstances, a Participant's
Annual Addition is greater than the amount permitted in (b) above, such excess
amount shall be applied as follows. Elective Deferral Contributions will be
returned to the Participant. Elective Deferral Contributions which are not the
basis for Matching Contributions will be returned to the Participant. If an
excess still exists, Elective Deferral Contributions that are the basis for
Matching Contributions will be returned to the Participant. Matching
Contributions based on Elective Deferral Contributions which are returned shall
be forfeited. If after the return of Elective Deferral Contributions, an excess
amount still exists, and the Participant is an Active Participant as of the end
of the Limitation Year, the excess amount shall be used to offset Employer
Contributions for him in the next Limitation Year. If after the return of
Elective Deferral Contributions, an excess amount still exists, and the
Participant is not an Active Participant as of the end of the Limitation Year,
the excess amount will be held in a suspense account which will be used to
offset Employer Contributions for all Participants in the next Limitation Year.
No Employer Contributions that would be included in the next Limitation Year's
Annual Addition may be made before the total suspense account has been used.
(d) A Participant's Aggregate Annual Addition for a Limitation Year
shall not exceed the Maximum Permissible Amount.
If, for the Limitation Year, the Participant has an Annual Addition under more
than one defined contribution plan or a welfare benefit fund, as defined in Code
Section 4 19(e), or an individual medical account, as defined in Code Section 4
15(l)(2), maintained by the Employer, as defined in this section, and such plans
and welfare benefit funds and individual medical accounts do not otherwise limit
the Aggregate Annual Addition to the Maximum Permissible Amount, any reduction
necessary shall be made first to the profit sharing plans, then to all other
such plans and welfare benefit funds and individual medical accounts and, if
necessary, by reducing first those that were most recently allocated. Welfare
benefit funds and individual medical accounts shall be deemed to be allocated
first. However, elective deferral contributions shall be the last contributions
reduced before the welfare benefit fund or individual medical account is
reduced.
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If some of the Employer's defined contribution plans were not in existence on
July 1, 1982, and some were in existence on that date, the Maximum Permissible
Amount which is based on a dollar amount may differ for a Limitation Year. The
Aggregate Annual Addition for the Limitation Year in which the dollar limit
differs shall not exceed the lesser of (1) 25% of Compensation as defined in
this section, (2) $45,475, or (3) the greater of $30,000 or the sum of the
Annual Additions for such Limitation Year under all the plan(s) to which the
$45,475 amount applies.
(e) If a Participant is or has been a participant in both defined
benefit and defined contribution plans (including a welfare benefit fund or
individual medical account) ever maintained by the Employer, as defined in this
section, the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for any Limitation Year shall not exceed 1.0 (1.4
before the TEFRA Compliance Date).
After all other limitations set out in the plans and funds have been applied,
the following limitations shall apply so that the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction shall not
exceed 1.0 (1.4 before the TEFRA Compliance Date). The Projected Annual Benefit
shall be limited first. If the Participant's annual benefit(s) equal his
Projected Annual Benefit, as limited, then Annual Additions to the defined
contribution plan(s) shall be limited to the extent needed to reduce the sum to
1.0 (1.4). First, the voluntary contributions the Participant may make for the
Limitation Year shall be limited. Next, in the case of a profit sharing plan,
any forfeitures allocated to the Participant shall be reallocated to remaining
participants to the extent necessary to reduce the decimal to 1.0 (1.4). Last,
to the extent necessary, employer contributions for the Limitation Year shall be
reallocated or limited, and any required and optional employee contributions to
which such employer contributions were geared shall be reduced in proportion.
If, for the Limitation Year, the Participant has an Annual Addition under more
than one defined contribution plan or welfare benefit fund or individual medical
account maintained by the Employer, as defined in this section, any reduction
above shall be made first to the profit sharing plans, then to all other such
plans and welfare benefit plans and individual medical accounts and, if
necessary, by reducing first those that were most recently allocated. However,
elective deferral contributions shall be the last contributions reduced before
the welfare benefit fund or individual medical account is reduced. The annual
addition to the welfare benefit fund and individual medical account shall be
limited last.
SECTION 3.05 - EXCESS AMOUNTS
(a) For the purposes of this section, the following terms are defined:
Actual Deferral Percentage means the ratio (expressed as a percentage) of
Elective Deferral Contributions under this Plan on behalf of the Eligible
Participant for the Plan Year to the Eligible Participant's Compensation for the
Plan Year. In modification of the foregoing, Compensation shall be limited to
the Compensation received while an Active Participant. The Elective Deferral
Contributions used to determine the Actual Deferral Percentage shall include
Excess Elective Deferrals (other than Excess Elective Deferrals of Nonhighly
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Compensated Employees that arise solely from Elective Deferral Contributions
made under this Plan or any other plans of the Employer or a Controlled Group
Member), but shall exclude Elective Deferral Contributions that are used in
computing the Contribution Percentage (provided the Average Actual Deferral
Percentage test is satisfied both with and without exclusion of these Elective
Deferral Contributions). Under such rules as the Secretary of the Treasury shall
prescribe in Code Section 401(k)(3)(D), the Employer may elect to include
Qualified Nonelective Contributions and Qualified Matching Contributions under
this Plan in computing the Actual Deferral Percentage. For an Eligible
Participant for whom such Contributions on his behalf for the Plan Year are
zero, the percentage is zero.
Aggregate Limit means the greater of (1) or (2) below:
(1) The sum of
(i) 125 percent of the greater of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan Year or the
Average Contribution Percentage of Nonhighly Compensated Employees under the
Plan subject to Code Section 401(m) for the Plan Year beginning with or within
the Plan Year of the cash or deferred arrangement and
(ii) the lesser of 200% or two plus the lesser of such Average
Actual Deferral Percentage or Average Contribution Percentage.
(2) The sum of
(i) 125 percent of the lesser of the Average Actual Deferral
Percentage of the Nonhighly Compensated Employees for the Plan Year or the
Average Contribution Percentage of Nonhighly Compensated Employees under the
Plan subject to Code Section 401(m) for the Plan Year beginning with or within
the Plan Year of the cash or deferred arrangement and
(ii) the lesser of 200% or two plus the greater of such Average
Actual Deferral Percentage or Average Contribution Percentage.
Average Actual Deferral Percentage means the average (expressed as a percentage)
of the Actual Deferral Percentages of the Eligible Participants in a group.
Average Contribution Percentage means the average (expressed as a percentage) of
the Contribution Percentages of the Eligible Participants in a group.
Contribution Percentage means the ratio (expressed as a percentage) of the
Eligible Participant's Contribution Percentage Amounts to the Eligible
Participant's Compensation for the Plan Year. In modification of the foregoing,
Compensation shall be limited to the Compensation received while an Active
Participant. For an Eligible Participant for whom such Contribution Percentage
Amounts for the Plan Year are zero, the percentage is zero.
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Contribution Percentage Amounts means the sum of the Participant Contributions
and Matching Contributions (that are not Qualified Matching Contributions) under
this Plan on behalf of the Eligible Participant for the Plan Year. Such
Contribution Percentage Amounts shall not include Matching Contributions that
are forfeited either to correct Excess Aggregate Contributions or because the
Contributions to which they relate are Excess Elective Deferrals, Excess
Contributions or Excess Aggregate Contributions. Under such rules as the
Secretary of the Treasury shall prescribe in Code Section 401(k)(3)(D), the
Employer may elect to include Qualified Nonelective Contributions and Qualified
Matching Contributions under this Plan which were not used in computing the
Actual Deferral Percentage in computing the Contribution Percentage. The
Employer may also elect to use Elective Deferral Contributions in computing the
Contribution Percentage so long as the Average Actual Deferral Percentage test
is met before the Elective Deferral Contributions are used in the Average
Contribution Percentage test and continues to be met following the exclusion of
those Elective Deferral Contributions that are used to meet the Average
Contribution Percentage test.
Elective Deferral Contributions means employer contributions made on behalf of a
participant pursuant to an election to defer under any qualified cash or
deferred arrangement as described in Code Section 401(k), any simplified
employee pension cash or def erred 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
contract under Code section 403(m) Pursuant to a salary reduction agreement.
Elective Deferral Contributions shall not include any deferrals properly
distributed as excess Annual Additions.
Eligible Participant means, for purposes of the Actual Deferral Percentage, any
Employee who is eligible to make an Elective Deferral Contribution, and shall
include the following: any Employee who would be a plan participant if he chose
to make required contributions; any Employee who can make Elective Deferral
Contributions but who has changed the amount of his Elective Deferral
Contribution to 0%, or whose eligibility to make an Elective Deferral
Contribution is suspended because of a loan, distribution or hardship
withdrawal; and, any Employee who is not able to make an Elective Deferral
Contribution because of Code Section 415(c)(1) - Annual Additions limits. The
Actual Deferral Percentage for any such included Employee is zero.
Eligible Participant means, for purposes of the Average Contribution Percentage,
any Employee who is eligible to make a Participant Contribution or to receive a
Matching Contribution, and shall include the following: any Employee who would
be a plan participant if he chose to make required contributions; any Employee
who can make a Participant Contribution or receive a matching contribution but
who has made an election not to participate in the Plan; and any Employee who is
not able to make a Participant Contribution or receive a matching contribution
because of Code Section 415(c)(1) or 415(e) limits. The Average Contribution
Percentage for any such included Employee is zero.
Excess Aggregate Contributions means, with respect to any Plan Year, the excess
of:
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(1) The aggregate Contributions taken into account in computing the
numerator of the Contribution Percentage actually made on behalf of Highly
Compensated Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the
Average Contribution Percentage test (determined by reducing Contributions made
on behalf of Highly Compensated Employees in 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.
Excess Contributions means, with respect to any Plan Year, the excess of:
(1) The aggregate amount of Contributions actually taken into
account in computing the Actual Deferral Percentage of Highly Compensated
Employees for such Plan Year, over
(2) The maximum amount of such Contributions permitted by the Actual
Deferral Percentage 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).
A Participant's Excess Contributions for a Plan Year will be reduced by the
amount of Excess Elective Deferrals, if any, previously distributed to the
Participant for the taxable year ending in that Plan Year.
Excess Elective Deferrals means those Elective Deferral Contributions that are
includable in a Participant's gross income under Code Section 402(g) to the
extent such Participant's Elective Deferral Contributions for a taxable year
exceed the dollar limitation under such Code section. Excess Elective Deferrals
shall be treated as Annual Additions, as defined in the CONTRIBUTION LIMITATION
SECTION of Article III, under the Plan, unless such amounts are distributed no
later than the first April 15 following the close of the Participant's taxable
year.
Participant Contributions means contributions made to any plan by or on behalf
of a participant that are included in the participant's gross income in the year
in which made and that are maintained under a separate account to which earnings
and losses are allocated.
Matching Contributions means employer contributions made to this or any other
defined contribution plan, or to a contract described in Code Section 403(b), on
behalf of a participant on account of a Participant Contribution made by such
participant, or on account of a participant's Elective Deferral Contributions,
under a plan maintained by the employer. Qualified Matching Contributions means
Matching Contributions which are subject to the distribution and
nonforfeitability requirements under Code Section 401(k) when made.
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Qualified Nonelective Contributions means any employer contributions (other than
Matching Contributions) which an employee may not elect to have paid to him in
cash instead of being contributed to the plan and which are subject to the
distribution and nonforfeitability requirements under Code Section 401(k) when
made.
(b) A Participant may assign to this Plan any Excess Elective Deferrals
made during a taxable year by notifying the Plan Administrator in writing on or
before the first following March 1 of the amount of the Excess Elective
Deferrals to be assigned to the Plan. A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by taking into account
only those Elective Deferral Contributions made to this Plan and any other plans
of the Employer or a Controlled Group member and reducing such Excess Elective
Deferrals by the amount of Excess Contributions, if any, previously distributed
for the Plan Year beginning in that taxable year. The Participant's claim for
Excess Elective Deferrals shall be accompanied by the Participant's written
statement that if such amounts are not distributed, such Excess Elective
Deferrals, when added to amounts deferred under other plans or arrangements
described in Code Sections 401(k), 408(k) or 403(b), will exceed the limit
imposed on the Participant by Code Section 402(g) for the year in which the
deferral occurred. The Excess Elective Deferrals assigned to this Plan can not
exceed the Elective Deferral Contributions allocated under this Plan for such
taxable year.
Notwithstanding any other provisions of the Plan, Elective Deferral
Contributions in an amount equal to the Excess Elective Deferrals assigned to
this Plan, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose Account Excess
Elective Deferrals were assigned for the preceding year and who claims Excess
Elective Deferrals for such taxable year.
The income or loss allocable to such Excess Elective Deferrals shall be equal to
the income or loss allocable to the Participant's Elective Deferral
Contributions for the taxable year in which the excess occurred multiplied by a
fraction. The numerator of the fraction is the Excess Elective Deferrals. The
denominator of the fraction is the closing balance without regard to any income
or loss occurring during such taxable year (as of the end of such taxable year)
of the Participant's Account resulting from Elective Deferral Contributions.
Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Elective Deferrals, plus any
income and minus any loss allocable thereto, shall be forfeited. These
Forfeitures shall be used to offset the earliest Employer Contribution due after
the Forfeiture arises.
(c) As of the end of each Plan Year after Excess Elective Deferrals have
been determined, one of the following tests must be met
(1) The Average Actual Deferral Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year is not more than the
Average Actual Deferral Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 1.25.
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(2) The Average Actual Deferral Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year is not more than the
Average Actual Deferral Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 2 and the difference
between the Average Actual Deferral Percentages is not more than 2.
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
Deferral Contributions (and Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, if used in computing the Actual Deferral
Percentage) allocated to his account under two or more plans or arrangements
described in Code Section 401(k) that are maintained by the Employer or a
Controlled Group member shall be determined as if all such Elective Deferral
Contributions (and, if applicable, such Qualified Nonelective Contributions or
Qualified Matching Contributions, or both) were made under a single arrangement.
If a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans shall be treated as
separate if mandatorily disaggregated under the regulations under Code Section
401(k) or permissibly disaggregated as provided.
In the event that this Plan satisfies the requirements of Code Sections 401(m),
401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one
or more other plans satisfy the requirements of such Code sections only if
aggregated with this Plan, then this section shall be applied by determining the
Actual Deferral Percentage of employees as if all such plans were a single plan.
Plans may be aggregated in order to satisfy Code Section 401(k) only if they
have the same Plan Year.
For purposes of determining the Actual Deferral Percentage of an Eligible
Participant who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Elective Deferral Contributions (and Qualified
Nonelective Contributions or Qualified Matching Contributions, or both, if used
in computing the Actual Deferral Percentage) and Compensation of such Eligible
Participant include the Elective Deferral Contributions (and, if applicable,
Qualified Nonelective Contributions or Qualified Matching Contributions, or
both) and 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 Participants
who are Nonhighly Compensated Employees and for Participants who are Highly
Compensated Employees.
For purposes of determining the Actual Deferral Percentage, Elective Deferral
Contributions, Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the 12-month period
immediately following the Plan Year to which contributions relate.
The Employer shall maintain records sufficient to demonstrate satisfaction of
the Average Actual Deferral Percentage test and the amount of Qualified
Nonelective Contributions or Qualified Matching Contributions, or both, used in
such test.
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The determination and treatment of the Contributions used in computing the
Actual Deferral Percentage shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
If the Plan Administrator should determine during the Plan Year that neither of
the above tests is being met, the Plan Administrator may adjust the amount of
future Elective Deferral Contributions of the Highly Compensated Employees.
Notwithstanding any other provisions of this Plan, Excess Contributions, plus
any income and minus any loss allocable thereto, shall be distributed no later
than the last day of each Plan Year to Participants to whose Accounts such
Excess Contributions were allocated for the preceding Plan Year. If such excess
amounts are distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a ten (10) percent excise tax will be
imposed on the employer maintaining the plan with respect to such amounts. Such
distributions shall be made beginning with the Highly Compensated Employee(s)
who has the greatest Actual Deferral Percentage, reducing his Actual Deferral
Percentage to the next highest Actual Deferral Percentage level. Then, if
necessary, reducing the Actual Deferral Percentage of the Highly Compensated
Employees at the next highest level, and continuing in this manner until the
average Actual Deferral Percentage of the Highly Compensated Group satisfies the
Actual Deferral Percentage test. 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 Deferral Contributions (and amounts
treated as Elective Deferral Contributions) of each Family Member that is
combined to determine the combined Actual Deferral Percentage.
Excess Contributions shall be treated as Annual Additions, as defined in the
CONTRIBUTION LIMITATION SECTION of Article III, under the Plan.
The Excess Contributions shall be adjusted for income or loss. The income or
loss allocable to such Excess Contributions shall be equal to the income or loss
allocable to the Participant's Elective Deferral Contributions (and, if
applicable, Qualified Nonelective Contributions or Qualified Matching
Contributions, or both) for the Plan Year in which the excess occurred
multiplied by a fraction. The numerator of the fraction is the Excess
Contributions. The denominator of the fraction is the closing balance without
regard to any income or loss occurring during such Plan Year (as of the end of
such Plan Year) of the Participant's Account resulting from Elective Deferral
Contributions (and Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if used in computing the Actual Deferral Percentage).
Excess Contributions shall be distributed from the Participant's Account
resulting first from Elective Deferral Contributions not the basis for Matching
Contributions, then if necessary, from Elective Deferral Contributions which are
the basis for Matching Contributions. If such Excess Contributions exceed the
balance in the Participant's Account resulting from Elective Deferral
Contributions, the balance shall be distributed from the Participant's Account
resulting from Qualified Matching Contributions (if applicable) and Qualified
Nonelective Contributions, respectively.
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Any Matching Contributions which were based on the Elective Deferral
Contributions which are distributed as Excess Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited. These Forfeitures shall be
used to offset the earliest Employer Contribution due after the Forfeiture
arises.
(d) As of the end of each Plan Year, one of the following tests must be
met:
(1) The Average Contribution Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year is not more than the
Average Contribution Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 1.25.
(2) The Average Contribution Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year is not more than the
Average Contribution Percentage for Eligible Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 2 and the difference
between the Average Contribution Percentages is not more than 2.
If one or more Highly Compensated Employees participate in both a cash or
deferred arrangement and a plan subject to the Average Contribution Percentage
test maintained by the Employer or a Controlled Group member and the sum of the
Average Actual Deferral Percentage and Average Contribution Percentage of those
Highly Compensated Employees subject to either or both tests exceeds the
Aggregate Limit, then the Contribution Percentage of those Highly Compensated
Employees who also participate in a cash or deferred arrangement will be reduced
(beginning with such Highly Compensated Employees whose 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 Average Actual Deferral
Percentage and Average Contribution Percentage of the Highly Compensated
Employees are determined after any corrections required to meet the Average
Actual Deferral Percentage and Average Contribution Percentage tests. Multiple
use does not occur if either the Average Actual Deferral Percentage or Average
Contribution Percentage of the Highly Compensated Employees does not exceed 1.25
multiplied by the Average Actual Deferral Percentage and Average Contribution
Percentage of the Nonhighly Compensated Employees.
The Contribution Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Contribution
Percentage Amounts allocated to his account under two or more plans described in
Code Section 401(a) or arrangements described in Code Section 401(k) that are
maintained by the Employer or a Controlled Group member shall be determined as
if the total of such Contribution Percentage Amounts was made under each plan.
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. Notwithstanding the foregoing, certain plans shall be treated as
separate if mandatorily disaggregated under the regulations under Code Section
401(m) or permissibly disaggregated as provided.
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In the event that this Plan satisfies the requirements of Code Sections 401(m),
401(a)(4), or 410(b) only if aggregated with one or more other plans, or if one
or more other plans satisfy the requirements of such Code sections only if
aggregated with this Plan, then this section shall be applied by determining the
Contribution Percentages of Eligible Participants as if all such plans were a
single plan. Plans maybe aggregated in order to satisfy Code Section 401(m) only
if they have the same Plan Year.
For purposes of determining the Contribution Percentage of an Eligible
Participant who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include Contribution Percentage Amounts
and 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 employees who are
Nonhighly Compensated Employees and for employees who are Highly Compensated
Employees.
For purposes of determining the Contribution Percentage, Participant
Contributions are considered to have been made in the Plan Year in which
contributed to the Plan. Matching 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.
The Employer shall maintain records sufficient to demonstrate satisfaction of
the Average Contribution Percentage test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, used in such test.
The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as maybe prescribed by the
Secretary of the Treasury.
Notwithstanding any other provisions of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if not vested, or distributed, if vested, no later than the last day
of each Plan Year to Participants to whose Accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. If such Excess
Aggregate Contributions are distributed more than 2 1/2 months after the last
day of the Plan Year in which such excess amounts arose, a ten (10) percent
excise tax will be imposed on the employer maintaining the plan with respect to
those amounts. Excess Aggregate Contributions will be distributed beginning with
the Highly Compensated Employee(s) who has the greatest Contribution Percentage,
reducing his contribution percentage to the next highest level. Then, if
necessary, reducing the Contribution Percentage of the Highly Compensated
Employee at the next highest level, and continuing in this manner until the
Actual Contribution Percentage of the Highly Compensated Group satisfies the
Actual Contribution Percentage Test. 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 Employee and Matching
Contributions (or amounts treated as Matching Contributions) of each Family
Member that is combined to determine the combined Contribution Percentage.
Excess Aggregate Contributions shall be treated as
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Annual Additions, as defined in the CONTRIBUTION LIMITATION SECTION of Article
III, under the Plan.
The Excess Aggregate Contributions shall be adjusted for income or loss. The
income or loss allocable to such Excess Aggregate Contributions shall be equal
to the income or loss allocable to the Participant's Contribution Percentage
Amounts for the Plan Year in which the excess occurred multiplied by a fraction.
The numerator of the fraction is the Excess Aggregate Contributions. The
denominator of the fraction is the closing balance without regard to any income
or loss occurring during such Plan Year (as of the end of such Plan Year) of the
Participant's Account resulting from Contribution Percentage Amounts.
Excess Aggregate Contributions shall be distributed from the Participant's
Account resulting from Participant Contributions that are not required as a
condition of employment or participation or for obtaining additional benefits
from Employer Contributions. If such Excess Aggregate Contributions exceed the
balance in the Participant's Account resulting from such Participant
Contributions, the balance shall be forfeited, if not vested, or distributed, if
vested, on a pro-rata basis from the Participant's Account resulting from
Contribution Percentage Amounts. These Forfeitures shall be used to offset the
earliest Employer Contribution due after the Forfeiture arises.
ARTICLE IV INVESTMENT OF CONTRIBUTIONS
SECTION 4.01 - INVESTMENT OF CONTRIBUTIONS
All Contributions are forwarded by the Employer to the Insurer to be deposited
under the Group Contract or forwarded to the Trustee to be deposited in the
Trust Fund.
Investment of Contributions is governed by the provisions of the Trust, the
Group Contract and any other funding arrangement in which the Trust Fund is or
may be invested. To the extent permitted by the Trust, Group Contract or other
funding arrangement, the parties named below shall direct the Contributions to
any of the accounts available under the Trust or Group Contract and may request
the transfer of assets resulting from those Contributions between such accounts.
A Participant may not direct the Trustee to invest the Participant's Account in
collectibles. Collectibles means any work of art, rug or antique, metal or gem,
stamp or coin, alcoholic beverage or other tangible personal property specified
by the Secretary of Treasury. To the extent that a Participant does not direct
the investment of his Account, such Account shall be invested ratably in the
accounts available under the Trust or Group Contract in the same manner as the
undirected Accounts of all other Participants. The Vested Accounts of all
Inactive Participants may be segregated and invested separately from the
Accounts of all other Participants.
The Trust Fund shall be valued at current fair market value as of the last day
of the last calendar month ending in the Plan Year and, at the discretion of the
Trustee, maybe valued more frequently. The valuation shall take into
consideration investment earnings credited, expenses charged, payments made and
changes in the value of the assets held in the Trust Fund. The Account of a
Participant shall be credited with its share of the gains and losses
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of the Trust Fund. That part of a Participant's Account invested in a funding
arrangement which establishes an account or accounts for such Participant
thereunder shall be credited with the gain or loss from such account or
accounts. That part of a Participant's Account which is invested in other
funding arrangements shall be credited with a proportionate share of the gain or
loss of such investments. The share shall be determined by multiplying the gain
or loss of the investment by the ratio of the part of the Participant's Account
invested in such funding arrangement to the total of the Trust Fund invested in
such funding arrangement.
At least annually, the Named Fiduciary shall review all pertinent Employee
information and Plan data in order to establish the funding policy of the Plan
and to determine appropriate methods of carrying out the Plan's objectives. The
Named Fiduciary shall inform the Trustee and any Investment Manager of the
Plan's short-term and long-term financial needs so the investment policy can be
coordinated with the Plan's financial requirements.
(a) Employer Contributions other than Elective Deferral Contributions:
The Participant shall direct the investment of such Employer Contributions and
transfer of assets resulting from those Contributions.
(b) Elective Deferral Contributions: The Participant shall direct the
investment of Elective Deferral Contributions and transfer of assets resulting
from those Contributions.
(c) Rollover Contributions: The Participant shall direct the investment
of Rollover Contributions and transfer of assets resulting from those
Contributions.
However, the Named Fiduciary may delegate to the Investment Manager investment
discretion for Contributions and Plan assets which are not subject to
Participant direction.
SECTION 4.01A - INVESTMENT IN QUALIFYING EMPLOYER SECURITIES
Participants in the Plan shall be entitled to invest all or any portion of their
Account in Qualifying Employer Securities.
Once investment in Qualifying Employer Securities is made available to Eligible
Employees, then it shall continue to be available unless the Plan and Trust is
amended to disallow such available investment.
Participants shall be entitled to elect to have all or any portion of their
Account invested in Qualifying Employer Securities. In the absence of such
election, such Eligible Employees shall be deemed to have elected to have their
Accounts invested wholly in the Investment Funds. Once an election is made, it
shall be considered to continue until anew election is made.
If the securities of the Employer are not publicly traded and if no market or an
extremely thin market exists for the Qualifying Employer Securities, so that a
reasonable valuation may not be obtained from the market place, then such
Qualifying Employer Securities must be valued at least annually by an
independent appraiser who is not associated with the
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Employer, the Plan Administrator, the Trustee, or any person related to any
fiduciary under the Plan. The independent appraiser may be associated with a
person who is merely a contract administrator with respect to the Plan, but who
exercises no discretionary authority and is not a Plan fiduciary.
If there is a public market for Qualifying Employer Securities of the type held
by the Plan, then the Plan Administrator may use as the value of the shares the
price at which such shares traded in such market, or an average of the bid and
asked prices for such shares in such market, provided that such value is
representative of the fair market value of such shares in the opinion of the
Plan Administrator. If the Qualifying Employer Securities do not trade on the
annual valuation date or if the market is very thin on such date, then the Plan
Administrator may use the average of trade prices for a period of time ending on
such date, provided that such value is representative of the fair market value
of such shares in the opinion of the Plan Administrator. The value of a
Participant's Qualifying Employer Securities Account may be expressed in units.
For purposes of determining the annual valuation of the Plan and for reporting
to Participants and regulatory authorities, the assets of the Plan shall be
valued at least annually on the Valuation Date which corresponds to the last day
of the Plan Year. The fair market value of Qualifying Employer Securities shall
be determined on such a Valuation Date. The average of the bid and asked prices
of Qualifying Employer Securities as of the date of the transaction shall apply
for purposes of valuing distributions and other transactions of the Plan to the
extent such value is representative of the fair market value of such shares in
the opinion of the Plan Administrator.
All purchases of Qualifying Employer Securities shall be made at a price, or
prices, which, in the judgment of the Plan Administrator, do not exceed the fair
market value of such Qualifying Employer Securities.
In the event that the Trustee acquires shares of Qualifying Employer Securities
by purchase from a "disqualified person" as defined in Code Section 4975(e)(2),
in exchange for cash or other assets of the Trust, the terms of such purchase
shall contain the provision that in the event that there is a final
determination by the Internal Revenue Service or court of competent jurisdiction
that the fair market value of such shares of Qualifying Employer Security as of
the date of purchase was less than the purchase price paid by the Trustee, then
the seller shall pay or transfer, as the case maybe, to the Trustee an amount of
cash, shares of Qualifying Employer Security, or an combination thereof equal in
value to the difference between the purchase price and said fair market value
for all such shares. In the event that cash and/or shares of Qualifying Employer
Security are paid and/or transferred to the Trustee under this provision, shares
of Qualifying Employer Security shall be valued at their fair market value as of
the date of said purchase, and interest at a reasonable rate from the date of
purchase to the date of payment shall be paid by the seller on the amount of
cash paid.
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The Plan Administrator may direct the Trustee to sell, resell or otherwise
dispose of Qualifying Employer Securities to any person, including the Employer,
provided that any such sales to any disqualified person, including the Employer,
will be made at not less than the fair market value and no commission is
charged. Any such sale shall be made in conformance with Section 408(e) of
ERISA.
In the event the Plan Administrator directs the Trustee to dispose of any
Qualifying Employer Securities held as Trust Assets under circumstances which
require registration and/or qualification of the securities under applicable
Federal or state securities laws, then the Employer, at its own expense, will
take or cause to be taken any and all such action as maybe necessary or
appropriate to effect such registration and/or qualification.
SECTION 4.01B - LIMITATION ON INVESTMENT IN QUALIFYING EMPLOYER SECURITIES
BY SOME PARTICIPANTS
Participants who are directors, officers, 10% stockholders of the Employer, and
other persons subject to Section 16 of the Securities Exchange Act of 1934 (the
"1934 Act") will be permitted to change the level of investment in the
Qualifying Employer Securities Account only once every six months. Additionally,
Participants who are directors, officers, 10% stockholders of the Employer, and
other persons subject to Section 16 of the 1934 Act who cease participation in
the Qualifying Employer Securities Account, or who reduce their participation in
such account to a nominal level, may not participate (e.g., direct that
investments be made on their behalf) under the Qualifying Employer Securities
Account again for at least six months. Intra-plan transfers by such Participants
between the Qualifying Employer Securities Account and the other investment
accounts available under the Plan may only be made pursuant to an investment
election made during the period beginning on the third business day following
the date of release of annual or quarterly financial information by the Employer
and ending on the twelfth business day following such date. Subject to certain
limited exceptions, Participants who are directors, officers, 10% stockholders
of the Employer, and other persons subject to Section 16 of the 1934 Act making
withdrawals of investments under the Qualifying Employer Securities Account must
cease further purchases/investment under the Qualifying Employer Securities
Account for six months.
With respect to Participants who are directors, officers, 10% stockholders of
the Employer, and other persons subject to the 1934 Act, transactions under this
Plan are intended to comply with all applicable conditions of Rule 16 b-3 or its
successors under the 1934 Act. To the extent any provisions of the Plan or
action by the Plan Administrator fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Plan
Administrator.
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ARTICLE V BENEFITS
SECTION 5.01 - RETIREMENT BENEFITS
On a Participant's Retirement Date, his Vested Account shall be distributed to
him according to the distribution of benefits provisions of Article VI and the
provisions of the SMALL AMOUNTS SECTION of Article IX.
SECTION 5.02 - DEATH BENEFITS
If a Participant dies before his Annuity Starting Date, his Vested Account shall
be distributed according to the distribution of benefits provisions of Article
VI and the provisions of the SMALL AMOUNTS SECTION of Article IX.
SECTION 5.03 - VESTED BENEFITS
A Participant may receive a distribution of his Vested Account at any time after
he ceases to be an Employee, provided he has not again become an Employee. If
such amount is not payable under the provisions of the SMALL AMOUNTS SECTION of
Article IX, it will be distributed only if the Participant so elects. The
Participant's election shall be subject to the requirements in the ELECTION
PROCEDURES SECTION of Article VI for a qualified election of a retirement
benefit.
If a Participant does not receive an earlier distribution according to the
provisions of this section or the SMALL AMOUNTS SECTION of Article IX, upon his
Retirement Date or death, his Vested Account shall be applied according to the
provisions of the RETIREMENT BENEFITS SECTION or the DEATH BENEFITS SECTION of
Article V.
The Nonvested Account of a Participant who has ceased to be an Employee shall
remain a part of his Account until it becomes a Forfeiture; provided, however,
if the Participant again becomes an Employee so that his Vesting Percentage can
increase, the Nonvested Account may become a part of his Vested Account.
SECTION 5.04 - WHEN BENEFITS START
Benefits under the Plan begin when a Participant retires, dies or ceases to be
an Employee, whichever applies, as provided in the preceding sections of this
article. Benefits which begin before Normal Retirement Date for a Participant
who became Totally and Permanently Disabled when he was an Employee shall be
deemed to begin because he is Totally and Permanently Disabled. The start of
benefits is subject to the qualified election procedures of Article VI.
Unless otherwise elected, benefits shall begin before the sixtieth day following
the close of the Plan Year in which the latest date below occurs:
(a) The date the Participant attains age 65 or (Normal Retirement Age,
if earlier).
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(b) The tenth anniversary of the Participant's Entry Date.
(c) The date the Participant ceases to be an Employee.
Notwithstanding the foregoing, the failure of a Participant and spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of the ELECTION PROCEDURES SECTION of Article VI, shall be deemed to
be an election to defer commencement of payment of any benefit sufficient to
satisfy this section.
The Participant may elect to have his benefits begin after the latest date for
beginning benefits described above, subject to the provisions of this section.
The Participant shall make the election in writing and deliver the signed
statement of election to the Plan Administrator before Normal Retirement Date or
the date he ceases to be an Employee, if later. The election must describe the
form of distribution and the date the benefits will begin. The Participant shall
not elect a date for beginning benefits or a form of distribution that would
result in a benefit payable when he dies which would be more than incidental
within the meaning of governmental regulations.
Benefits shall begin by the Participant's Required Beginning Date, as defined in
the OPTIONAL FORMS OF DISTRIBUTION AND DISTRIBUTION REQUIREMENTS SECTION of
Article VI.
Contributions which are used to compute the Actual Deferral Percentage, as
defined in the EXCESS AMOUNTS SECTION of Article III, maybe distributed upon
disposition by the Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) used by the Employer in a trade or business
or disposition by the Employer of the Employer's interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) if the transferee corporation is
not a Controlled Group member, the Employee continues employment with the
transferee corporation and the transferor corporation continues to maintain the
Plan. Such distributions made after March 31, 1988, must be made in a single
sum.
SECTION 5.05 - WITHDRAWAL PRIVILEGES
A Participant who has attained age 59 1/2 may withdraw all or any portion of his
Vested Account which results from the following Contributions:
Elective Deferral Contributions
Matching Contributions
Discretionary Contributions
Rollover Contributions
A Participant may make only two such withdrawals in any 12-month period.
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A Participant may withdraw all or any portion of his Vested Account which
results from the following Contributions:
Elective Deferral Contributions
Matching Contributions
Discretionary Contributions
Rollover Contributions
in the event of hardship due to an immediate and heavy financial need.
Withdrawals from the Participant's Account resulting from Elective Deferral
Contributions shall be limited to the amount of the Participant's Elective
Deferral Contributions. Immediate and heavy financial need shall be limited to:
(i) expenses incurred or necessary for medical care, described in Code Section
213(d), of the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152); (ii) purchase (excluding mortgage
payments) of a principal residence for the Participant; (iii) payment of tuition
and related educational fees and the payment of room and board expenses for the
next 12 months of post-secondary education for the Participant, his spouse,
children or dependents; (iv) the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the Participant's
principal residence; or (v) any other distribution which is deemed by the
Commissioner of Internal Revenue to be made on account of immediate and heavy
financial need as provided in Treasury regulations. The Participant's request
for a withdrawal shall include his written statement that an immediate and heavy
financial need exists and explain its nature.
No withdrawal shall be allowed which is not necessary to satisfy such immediate
and heavy financial need. Such withdrawal shall be deemed necessary only if all
of the following requirements are met: (i) the distribution is not 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); (ii) the
Participant has obtained all distributions, other than hardship distributions,
and all nontaxable loans currently available under all plans maintained by the
Employer; (iii) the Plan, and all other plans maintained by the Employer,
provide that the Participant's elective contributions and employee contributions
will be suspended for at least 12 months after receipt of the hardship
distributions; and (iv) the Plan, and all other plans maintained by the
Employer, provide that the Participant may not make elective contributions 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
contributions for the taxable year of the hardship distribution. The Plan will
suspend elective contributions and employee contributions for 12 months and
limit elective deferrals as provided in the preceding sentence. A Participant
shall not cease to be an Eligible Participant, as defined in the EXCESS AMOUNTS
SECTION of Article III, merely because his elective contributions or employee
contributions are suspended.
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A request for withdrawal shall be in writing on a form furnished for that
purpose and delivered to the Plan Administrator before the withdrawal is to
occur. The Participant's request shall be subject to the requirements in the
ELECTION PROCEDURES SECTION of Article VI for a qualified election of a
retirement benefit payable in a form other than a Qualified Joint and Survivor
Form.
Amounts held in the Participant's Qualifying Employer Securities Account will
not be available for withdrawals.
A forfeiture shall not occur solely as a result of a withdrawal.
SECTION 5.06 - LOANS TO PARTICIPANTS
Loans shall be made available to all Participants on a reasonably equivalent
basis. For purposes of this section, Participant means any Participant or
Beneficiary who is a party-in-interest, within the meaning of Section 3(14) of
the Employee Retirement Income Security Act of 1974. Loans shall not be made to
highly compensated employees, as defined in Code Section 414(q), in an amount
greater than the amount made available to other Participants.
No loans will be made to any shareholder-employee or owner-employee. For
purposes of this requirement, a shareholder-employee means an employee or
officer of an electing small business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of Code Section 318(a)(1)), on any day
during the taxable year of such corporation, more than 5% of the outstanding
stock of the corporation.
A loan to a Participant shall be a Participant-directed investment of his
Account. No Account other than the borrowing Participant's Account shall share
in the interest paid on the loan or bear any expense or loss because of the
loan. A loan will not be made if in order to make the loan, the sale of
Qualifying Employer Securities would be required.
The number of outstanding loans shall be limited to one. No more than one loan
will be approved for any Participant in any 12-month period. The minimum amount
of any loan shall be $1,000.
Loans must be adequately secured and bear a reasonable rate of interest.
The amount of the loan shall not exceed the maximum amount that maybe treated as
a loan under Code Section 72(p) (rather than a distribution) to the Participant
and shall be equal to the lesser of (a) or (b) below:
(a) $50,000 reduced by the highest outstanding loan balance of loans
during the one-year period ending on the day before the new loan is made.
(b) The greater of (1) or (2), reduced by (3) below:
(1) One-half of the Participant's Vested Account.
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(2) $10,000.
(3) Any outstanding loan balance on the date the new loan is made.
For purposes of this maximum, a Participant's Vested Account does not include
any accumulated deductible employee contributions, as defined in Code Section
72(o)(5)(B), and all qualified employer plans, as defined in Code Section
72(p)(4), of the Employer and any Controlled Group member shall be treated as
one plan.
The foregoing notwithstanding, the amount of such loan shall not exceed 50% of
the amount of the Participant's Vested Account. For purposes of this maximum, a
Participant's Vested Account does not include any accumulated deductible
employee contributions, as defined in Code Section 72(o)(5)(B). No collateral
other than a portion of the Participant's Vested Account (as limited above)
shall be accepted. The Loan Administrator shall determine if the collateral is
adequate for the amount of the loan requested.
A Participant must obtain the consent of the Participant's spouse, if any, to
the use of the Vested Account as security for the loan. Spousal consent shall be
obtained no earlier than the beginning of the 90-day period that ends on the
date on which the loan to be so secured is made. The consent must be in writing,
must acknowledge the effect of the loan, and must be witnessed by a plan
representative or a notary public. Such consent shall thereafter be binding with
respect to that loan. A new consent shall be required if the Vested Account is
used for collateral upon renegotiation, extension, renewal, or other revision of
the loan.
If a valid spousal consent has been obtained in accordance with the above, 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 Vested Account 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 Account (determined without
regard to the preceding sentence) is payable to the surviving spouse, then the
Vested Account shall be adjusted by first reducing the Vested Account by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the surviving spouse.
Each loan shall bear a reasonable fixed rate of interest to be determined by the
Loan Administrator. In determining the interest rate, the Loan Administrator
shall take into consideration fixed interest rates currently being charged by
commercial lenders for loans of comparable risk on similar terms and for similar
durations, so that the interest will provide for a return commensurate with
rates currently charged by commercial lenders for loans made under similar
circumstances. The Loan Administrator shall not discriminate among the
Participants in the matter of interest rates in accordance with the current
appropriate standards.
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The loan shall by its terms require that 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. The period of
repayment for any loan shall be arrived at by mutual agreement between the Loan
Administrator and the Participant.
The Participant shall make a written application for a loan from the Plan on
forms provided by the Loan Administrator. The application must specify the
amount and duration requested. No loan will be approved unless the Participant
is creditworthy. The Participant must grant authority to the Loan Administrator
to investigate the Participant's creditworthiness so that the loan application
maybe properly considered.
Information contained in the application for the loan concerning the income,
liabilities, and assets of the Participant will be evaluated to determine
whether there is a reasonable expectation that the Participant will be able to
satisfy payments on the loan as due. Additionally, the Loan Administrator will
pursue any appropriate further investigations concerning the creditworthiness
and/or credit history of the Participant to determine whether a loan should be
approved.
Each loan shall be fully documented in the form of a promissory note signed by
the Participant for the face amount of the loan, together with interest
determined as specified above.
There will be an assignment of collateral to the Plan executed at the time the
loan is made.
In those cases where repayment through payroll deduction by the Employer is
available, installments are so payable, and a payroll deduction agreement will
be executed by the Participant at the time of making the loan. Where payroll
deduction is not available, payments are to be timely made.
Any payment that is not by payroll deduction shall be made payable to the
Employer or Trustee, as specified in the promissory note, and delivered to the
Loan Administrator, including prepayments and penalties, if any, and other
amounts due under the note.
The promissory note may provide for reasonable late payment penalties and/or
service fees. Any penalties or service fees shall be applied to all Participants
in a nondiscriminatory manner. If the promissory note so provides, such amounts
maybe assessed and collected from the Account of the Participant as part of the
loan balance.
Each loan may be paid prior to maturity, in part or in full, without penalty or
service fee, except as may be set out in the promissory note.
If any amount remains unpaid for more than 31 days after due, a default is
deemed to occur.
Upon default, the Plan has the right to pursue any remedy available by law to
satisfy the amount due, along with accrued interest, including the right to
enforce its claim against the security pledged and execute upon the collateral
as allowed by law.
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If any payment of principal or interest or penalty, or any portion thereof, is
not made for a period of 90 days after due, the entire principal balance whether
or not otherwise then due, shall become immediately due and payable without
demand or notice, and subject to collection or satisfaction by any lawful means,
including specifically but not limited to the right to enforce the claim against
the security pledged and to execute upon the collateral as allowed by law.
In the event of default, foreclosure on the note and attachment of security or
use of amounts pledged to satisfy the amount then due, will not occur until a
distributable event occurs in accordance with the Plan, and will not occur to an
extent greater than the amount then available upon any distributable event which
has occurred under the Plan.
All reasonable costs and expenses, including, but not limited to, attorneys'
fees, incurred by the Plan in connection with any default or in any proceeding
to enforce any provision of a promissory note or instrument by which a
promissory note for a Participant loan is secured, shall be assessed and
collected from the Account of the Participant as part of the loan balance.
If payroll deduction is being utilized, in the event that a Participant's
available payroll deduction amounts in any given month are insufficient to
satisfy the total amount due, there will be an increase in the amount taken
subsequently, sufficient to makeup the amount that is then due. If the
subsequent deduction is also insufficient to satisfy the amount due within 31
days, a default is deemed to occur as above. If any amount remains past due more
than 90 days, the entire principal amount, whether or not otherwise then due,
along with interest then accrued and any penalty amount then due, shall become
due and payable, as above.
If the Participant ceases to be a party-in-interest (as defined in this
section), the balance of the outstanding loan becomes due and payable, and the
Participant's Vested Account will be used as available for distribution(s) to
pay the outstanding loan. The Participant's Vested Account will not be used to
pay any amount due under the outstanding loan before the date which is 31 days
after the date he ceased to be an Employee, and the Participant may elect to
repay the outstanding loan with interest on the day of repayment. If no
distributable event has occurred under the Plan at the time that the
Participant's Vested Account would otherwise be used under this provision to pay
any amount due under the outstanding loan, this will not occur until the time,
or in excess of the extent to which, a distributable event occurs under the
Plan.
ARTICLE VI DISTRIBUTION OF BENEFITS
SECTION 6.01 - AUTOMATIC FORMS OF DISTRIBUTION
Unless a qualified election of an optional form of benefit has been made within
the election period (see the ELECTION PROCEDURES SECTION of Article VI), the
automatic form of benefit payable to or on behalf of a Participant is determined
as follows:
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(a) The automatic form of retirement benefit for a Participant who does
not die before his Annuity Starting Date shall be the Qualified Joint and
Survivor Form.
(b) The automatic form of death benefit for a Participant who dies
before his Annuity Starting Date shall be:
(1) A Qualified Preretirement Survivor Annuity for a Participant who
has a spouse to whom he has been continuously married throughout the one-year
period ending on the date of his death. The spouse may elect to start receiving
the death benefit on any first day of the month on or after the Participant dies
and before the date the Participant would have been age 70 1/2. If the spouse
dies before benefits start, the Participant's Vested Account, determined as of
the date of the spouse's death, shall be paid to the spouse's Beneficiary.
(2) A single-sum payment to the Participant's Beneficiary for a
Participant who does not have a spouse who is entitled to a Qualified
Preretirement Survivor Annuity.
Before a death benefit will be paid on account of the death of a Participant who
does not have a spouse who is entitled to a Qualified Preretirement Survivor
Annuity, it must be established to the satisfaction of a plan representative
that the Participant does not have such a spouse.
SECTION 6.02 - OPTIONAL FORMS OF DISTRIBUTION AND DISTRIBUTION
REQUIREMENTS
(a) For purposes of this section, the following terms are defined:
Applicable Life Expectancy means 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 so recalculated. The applicable calendar year shall be the first
Distribution Calendar Year, and if Life Expectancy is being recalculated such
succeeding calendar year.
Designated Beneficiary means the individual who is designated as the beneficiary
under the Plan in accordance with Code Section 401(a)(9) and the regulations
thereunder.
Distribution Calendar Year means 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 (e) below.
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Joint and Last Survivor Expectancy means joint and last survivor expectancy
computed by use of the expected return multiples in Table VI of section 1.72-9
of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse Beneficiary may not
be recalculated.
Life Expectancy means life expectancy computed by use of the expected return
multiples in Tables V of Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in (e)(2)(ii) below) by the time distributions are
required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse Beneficiary may not
be recalculated.
Participant's Benefit means:
(1) The Account Balance as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar Year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the Account balance as of the dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
(2) For purposes of (1) above, if any portion of the minimum
distribution for the first Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required Beginning Date, the amount
of the minimum distribution made in the second Distribution Calendar Year shall
be treated as if it had been made in the immediately preceding Distribution
Calendar Year.
Required Beginning Date means, for a Participant, the first day of April of the
calendar year following the calendar year in which the Participant attains age
70 1/2, unless otherwise provided in (1), (2) or (3) below:
(1) The Required Beginning Date for a Participant who attains age
70 1/2 before January 1, 1988, and who is not a 5-percent owner 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) The Required Beginning Date for a Participant who attains age
70 1/2 before January 1, 1988, and who is a 5-percent owner is the first day of
April of the calendar year following the later of
(i) the calendar year in which the Participant attains age
70 1/2, or
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(ii) the earlier of the calendar year with or within which ends
the Plan Year in which the Participant becomes a 5-percent owner, or the
calendar year in which the Participant retires.
(3) The Required Beginning Date of a Participant who is not a
5-percent owner and who attains age 70 1/2 during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
A Participant is treated as a 5-percent owner for purposes of this section if
such Participant is a 5-percent owner as defined in Code Section 416(i)
(determined in accordance with Code 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.
Once distributions have begun to a 5 percent owner under this section, they must
continue to be distributed, even if the Participant ceases to be a 5-percent
owner in a subsequent year.
(b) The optional forms of retirement benefit shall be the following: a
straight life annuity; single life annuities with certain periods of five, tenor
fifteen years; a single life annuity with installment refund; survivorship life
annuities with installment refund and survivorship percentages of 50, 66-2/3 or
100; fixed period annuities for any period of whole months which is not less
than 60 and does not exceed the Life Expectancy of the Participant and the named
Beneficiary as provided in (d) below where the Life Expectancy is not
recalculated; and a series of installments chosen by the Participant with a
minimum payment each year beginning with the year the Participant turns age 70
1/2. The payment for the first year in which a minimum payment is required will
be made by April 1 of the following calendar Year. The payment for the second
year and each successive year will be made by December 31 of that year. The
minimum payment will be based on a period equal to the Joint and Last Survivor
Expectancy of the Participant and the Participant's spouse, if any, as provided
in (d) below where the Joint and Last Survivor Expectancy is recalculated. The
balance of the Participant's Vested Account, if any, will be payable on the
Participant's death to his Beneficiary in a single sum. The Participant may also
elect to receive his Vested Account in a single-sum payment.
Election of an optional form is subject to the qualified election provisions of
Article VI.
Any annuity contract distributed shall be nontransferable. The terms of any
annuity contract purchased and distributed by the Plan to a Participant or
spouse shall comply with the requirements of this Plan.
(c) The optional forms of death benefit are a single-sum payment and any
annuity that is an optional form of retirement benefit. However, a series of
installments shall not be available if the Beneficiary is not the spouse of the
deceased Participant.
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(d) Subject to the AUTOMATIC FORMS OF DISTRIBUTION SECTION of Article
VI, joint and survivor annuity requirements, the requirements of this section
shall apply to any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this section apply to calendar years beginning
after December 31, 1984.
All distributions required under this section shall be determined and made in
accordance with the proposed regulations under Code Section 401(a)(9), including
the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2
of the proposed regulations.
The entire interest of a Participant must be distributed or begin to be
distributed no later than the Participant's Required Beginning Date.
As of the first Distribution Calendar Year, distributions, if not made in a
single sum, may only be made over one of the following periods (or combination
thereof):
(1) the life of the Participant,
(2) the life of the Participant and a Designated Beneficiary,
(3) a period certain not extending beyond the Life Expectancy of the
Participant, or
(4) a period certain not extending beyond the Joint and Last
Survivor Expectancy of the Participant and a Designated Beneficiary.
If the Participant's interest is to be distributed in other than a single sum,
the following minimum distribution rules shall apply on or after the Required
Beginning Date:
(5) Individual account:
(i) If a Participant's Benefit is to be distributed over,
a) a period not extending beyond the Life Expectancy of the
Participant or the Joint Life and Last Survivor Expectancy of the Participant
and the Participant's Designated Beneficiary, or
b) a period not extending beyond the Life Expectancy of the
Designated Beneficiary, the amount required to be distributed for each calendar
year beginning with the distributions for the first Distribution Calendar Year,
must be at least equal to the quotient obtained by dividing the Participant's
Benefit by the Applicable Life Expectancy.
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(ii) 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.
(iii) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with distributions for the first
Distribution Calendar Year shall not be less than the quotient obtained by
dividing the Participant's Benefit by the lesser of
a) the Applicable Life Expectancy or
b) if the Participant's spouse is not the Designated
Beneficiary, the applicable adivisor determined from the table set forth in Q&A
4 of Section 1.401(a)(9)-2 of the proposed regulations.
Distributions after the death of the Participant shall be distributed using the
Applicable Life Expectancy in (5)(i) above as the relevant divisor without
regard to proposed regulations section 1.401(a)(9)-2.
(iv) The minimum distribution required for the Participant's
first Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for the Distribution Calendar
Year for other calendar years, including the minimum distribution for the
Distribution Calendar Year in which the Participant's Required Beginning Date
occurs, must be made on or before December 31 of that Distribution Calendar
Year.
(6) Other forms:
(i) If the Participant's Benefit is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder shall
be made in accordance with the requirements of Code Section 401(a)(9) and the
proposed regulations thereunder.
(e) Death distribution provisions:
(1) Distribution beginning before death. If the Participant dies
after distribution of his interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the Participant's death.
(2) Distribution beginning after death. If the Participant dies
before distribution of his interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (i) or (ii)
below:
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(i) if any portion of the Participant's interest is payable to a
Designated Beneficiary, distributions may be made over the life or over a period
certain not greater than the Life Expectancy of the Designated Beneficiary
commencing on or before December 31 of the calendar year immediately following
the calendar year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to begin in accordance
with (i) above shall not be earlier than the later of
a) December 31 of the calendar year immediately following
the calendar year in which the Participant died and
b) December 31 of the calendar year in which the
Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to this (e)(2) by the time
of his death, the Participant's Designated Beneficiary must elect the method of
distribution no later than the earlier of
(iii) December 31 of the calendar year in which distributions
would be required to begin under this subparagraph, or
(iv) 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.
(3) For purposes of (e)(2) above, if the surviving spouse dies after
the Participant, but before payments to such spouse begin, the provisions of
(e)(2) above, with the exception of (e)(2)(ii) therein, shall be applied as if
the surviving spouse were the Participant.
(4) For purposes of this (e), any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving spouse if
the amount becomes payable to the surviving spouse when the child reaches the
age of majority.
(5) For purposes of this (e), distribution of a Participant's
interest is considered to begin on the Participant's Required Beginning Date (or
if (e)(3) above is applicable, the date distribution is required to begin to the
surviving spouse pursuant to (e)(2) above). If distribution in the form of an
annuity irrevocably commences to the Participant before the Required Beginning
Date, the date distribution is considered to begin is the date distribution
actually commences.
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SECTION 6.02A - DISTRIBUTIONS IN QUALIFYING EMPLOYER SECURITIES
In lieu of the distributions permitted under Section 6.02 above, any portion of
the Participant's Vested Account held in Qualifying Employer Securities maybe
distributed in kind. Fractional shares shall be paid in cash valued as of the
most recent Valuation Date; the distribution shall include any dividends (cash
or stock) on such whole shares or any additional shares received as a result of
a stock split or any other adjustment to such whole shares since the Valuation
Date preceding the date of distribution.
SECTION 6.03 - ELECTION PROCEDURES
The Participant, Beneficiary, or spouse shall make any election under this
section in writing. The Plan Administrator may require such individual to
complete and sign any necessary documents as to the provisions to be made. Any
election permitted under (a) and (b) below shall be subject to the qualified
election provisions of (c) below.
(a) Retirement Benefits. A Participant may elect his Beneficiary or
Contingent Annuitant and may elect to have retirement benefits distributed under
any of the optional forms of retirement benefit described in the OPTIONAL FORMS
OF DISTRIBUTION AND DISTRIBUTION REQUIREMENTS SECTION of Article VI.
(b) Death Benefits. A Participant may elect his Beneficiary and may
elect to have death benefits distributed under any of the optional forms of
death benefit described in the OPTIONAL FORMS OF DISTRIBUTION AND DISTRIBUTION
REQUIREMENTS SECTION of Article VI.
If the Participant has not elected an optional form of distribution for the
death benefit payable to his Beneficiary, the Beneficiary may, for his own
benefit, elect the form of distribution, in like manner as a Participant.
The Participant may waive the Qualified Preretirement Survivor Annuity by naming
someone other than his spouse as Beneficiary.
In lieu of the Qualified Preretirement Survivor Annuity described in the
AUTOMATIC FORMS OF DISTRIBUTION SECTION of Article VI, the spouse may, for his
own benefit, waive the Qualified Preretirement Survivor Annuity by electing to
have the benefit distributed under any of the optional forms of death benefit
described in the OPTIONAL FORMS OF DISTRIBUTION AND DISTRIBUTION REQUIREMENTS
SECTION of Article VI.
(c) Qualified Election. The Participant, Beneficiary or spouse may make
an election at any time during the election period. The Participant,
Beneficiary, or spouse may revoke the election made (or make a new election) at
any time and any number of times during the election period. An election is
effective only if it meets the consent requirements below.
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The election period as to retirement benefits is the 90-day period ending on the
Annuity Starting Date. An election to waive the Qualified Joint and Survivor
Form may not be made before the date he is provided with the notice of the
ability to waive the Qualified Joint and Survivor Form. If the Participant
elects the series of installments, he may elect on any later date to have the
balance of his Vested Account paid under any of the optional forms of retirement
benefit available under the Plan. His election period for this election is the
90- day period ending on the Annuity Starting Date for the optional form of
retirement benefit elected.
A Participant may make an election as to death benefits at any time before he
dies. The spouse's election period begins on the date the Participant dies and
ends on the date benefits begin. The Beneficiary's election period begins on the
date the Participant dies and ends on the date benefits begin. An election to
waive the Qualified Preretirement Survivor Annuity may not be made by the
Participant before the date he is provided with the notice of the ability to
waive the Qualified Preretirement Survivor Annuity. A Participant's election to
waive the Qualified Preretirement Survivor Annuity which is made before the
first day of the Plan Year in which he reaches age 35 shall become invalid on
such date. An election made by a Participant after he ceases to be an Employee
will not become invalid on the first day of the Plan Year in which he reaches
age 35 with respect to death benefits from that part of his Account resulting
from Contributions made before he ceased to be an Employee.
If the Participant's Vested Account has at any time exceeded $3,500, any benefit
which is (1) immediately distributable or (2) payable in a form other than a
Qualified Joint and Survivor Form or a Qualified Preretirement Survivor Annuity
requires the consent of the Participant and the Participant's spouse (or where
either the Participant or spouse has died, the survivor). The consent of the
Participant or spouse to a benefit which is immediately distributable must not
be made before the date the Participant or spouse is provided with the notice of
the ability to defer the distribution. Such consent shall be made in writing.
The consent shall not be made more than 90 days before the Annuity Starting
Date. Spousal consent is not required for a benefit which is immediately
distributable in a Qualified Joint and Survivor Form. Furthermore, if spousal
consent is not required because the Participant is electing an optional form of
retirement benefit that is not a life annuity pursuant to(d) below, only the
Participant need consent to the distribution of a benefit payable in a form that
is not a life annuity and which 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. In addition, upon termination of this Plan if the Plan does not
offer an annuity option (purchased from a commercial provider), the
Participant's Account balance may, without the Participant's consent, be
distributed to the Participant or transferred to another defined contribution
plan (other than an employee stock ownership plan as defined in Code Section
4975(e)(7)) within the same Controlled Group. A benefit is immediately
distributable if any part of the benefit could be distributed to the Participant
(or surviving spouse) before the Participant attains (or would have attained if
not deceased) the older of Normal Retirement Age or age 62. If the Qualified
Joint and Survivor Form is waived, the spouse has the right to consent only to a
specific Beneficiary or a specific form of benefit. The spouse can relinquish
one or both such rights. Such consent shall be made in writing. The consent
shall not be made more than 90 days before the Annuity Starting Date. If the
Qualified Preretirement Survivor
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Annuity is waived, the spouse has the right to limit consent only to a specific
Beneficiary. Such consent shall be in writing. The spouse's consent shall be
witnessed by a plan representative or notary public. The spouse's consent must
acknowledge the effect of the election, including that the spouse had the right
to limit consent only to a specific Beneficiary or a specific form of benefit,
if applicable, and that the relinquishment of one or both such rights was
voluntary. Unless the consent of the spouse expressly permits designations by
the Participant without a requirement of further consent by the spouse, the
spouse's consent must be limited to the form of benefit, if applicable, and the
Beneficiary (including any Contingent Annuitant), class of Beneficiaries, or
contingent Beneficiary named in the election. Spousal consent is not required,
however, if the Participant establishes to the satisfaction of the plan
representative that the consent of the spouse cannot be obtained because there
is no spouse or the spouse cannot be located. A spouse's consent under this
paragraph shall not be valid with respect to any other spouse. A Participant may
revoke a prior election without the consent of the spouse. Any new election will
require a new spousal consent, unless the consent of the spouse expressly
permits such election by the Participant without further consent by the spouse.
A spouse's consent may be revoked at any time within the Participant's election
period.
(d) Special Rule for Profit Sharing Plan. As provided in the preceding
provisions of the Plan, if a Participant has a spouse to whom he has been
continuously married throughout the one-year period ending on the date of his
death, the Participant's Vested Account shall be paid to such spouse. However,
if there is no such spouse or if the surviving spouse has already consented in a
manner conforming to the qualified election requirements in (c) above, the
Vested Account shall be payable to the Participant's Beneficiary in the event of
the Participant's death.
The Participant may waive the spousal death benefit described above at any time
provided that no such waiver shall be effective unless it satisfies the
conditions of (c) above (other than the notification requirement referred to
therein) that would apply to the Participant's waiver of the Qualified
Preretirement Survivor Annuity.
Because this is a profit sharing plan which pays death benefits as described
above, this subsection (d) applies if the following condition is met with
respect to the Participant, this Plan is not a direct or indirect transferee
after December 31, 1984, of a defined benefit plan, money purchase plan
(including a target plan), stock bonus plan or profit sharing plan which is
subject to the survivor annuity requirements of Code Section 401(a)(11) and Code
Section 417. If the above condition is met, spousal consent is not required for
electing a benefit payable in a form that is not a life annuity. If the above
condition is not met, the consent requirements of this article shall be
operative.
SECTION 6.04 - NOTICE REQUIREMENTS
(a) Optional forms of retirement benefit. The Plan Administrator shall
furnish to the Participant and the Participant's spouse a written explanation of
the optional forms of retirement benefit in the OPTIONAL FORMS OF DISTRIBUTION
AND DISTRIBUTION REQUIREMENTS SECTION of Article VI, including the material
features and relative values of these options, in a manner that would satisfy
the notice requirements of Code Section
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417(a)(3) and the right of the Participant and the Participant's spouse to defer
distribution until the benefit is no longer immediately distributable. The Plan
Administrator shall furnish the written explanation by a method reasonably
calculated to reach the attention of the Participant and the Participant's
spouse no less than 30 days and no more than 90 days before the Annuity Starting
Date.
(b) Qualified Joint and Survivor Form. The Plan Administrator shall
furnish to the Participant a written explanation of the following: the terms and
conditions of the Qualified Joint and Survivor Form; the Participant's right to
make, and the effect of, an election to waive the Qualified Joint and Survivor
Form; the rights of the Participant's spouse; and the right to revoke an
election and the effect of such a revocation. The Plan Administrator shall
furnish the written explanation by a method reasonably calculated to reach the
attention of the Participant no less than 30 days and no more than 90 days
before the Annuity Starting Date.
After the written explanation is given, a Participant or spouse may make written
request for additional information. The written explanation must be personally
delivered or mailed (first class mail, postage prepaid) to the Participant or
spouse within 30 days from the date of the written request. The Plan
Administrator does not need to comply with more than one such request by a
Participant or spouse.
The Plan Administrator's explanation shall be written in nontechnical language
and will explain the terms and conditions of the Qualified Joint and Survivor
Form and the financial effect upon the Participant's benefit (in terms of
dollars per benefit payment) of electing not to have benefits distributed in
accordance with the Qualified Joint and Survivor Form.
(c) Qualified Preretirement Survivor Annuity. As required by the Code
and Federal regulation, the Plan Administrator shall furnish to the Participant
a written explanation of the following: the terms and conditions of the
Qualified Preretirement Survivor Annuity the Participant's right to make, and
the effect of, an election to waive the Qualified Preretirement Survivor
Annuity; the rights of the Participant's spouse; and the right to revoke an
election and the effect of such a revocation. The Plan Administrator shall
furnish the written explanation by a method reasonably calculated to reach the
attention of the Participant within the applicable period. The applicable period
for a Participant is whichever of the following periods ends last:
(1) the period beginning one year before the date the individual
becomes a Participant and ending one year after such date; or
(2) the period beginning one year before the date the Participant's
spouse is first entitled to a Qualified Preretirement Survivor Annuity and
ending one year after such date.
If such notice is given before 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,
an additional notice shall be given within such period. If a Participant ceases
to be an Employee before attaining age 35, an
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additional notice shall be given within the period beginning one year before the
date he ceases to be an Employee and ending one year after such date.
After the written explanation is given, a Participant or spouse may make written
request for additional information. The written explanation must be personally
delivered or mailed (first class mail, postage prepaid) to the Participant or
spouse within 30 days from the date of the written request. The Plan
Administrator does not need to comply with more than one such request by a
Participant or spouse.
The Plan Administrator's explanation shall be written in nontechnical language
and will explain the terms and conditions of the Qualified Preretirement
Survivor Annuity and the financial effect upon the spouse's benefit (in terms of
dollars per benefit payment) of electing not to have benefits distributed in
accordance with the Qualified Preretirement Survivor Annuity.
ARTICLE VII TERMINATION OF PLAN
The Employer expects to continue the Plan indefinitely but reserves the right to
terminate the Plan in whole or in part at any time upon giving written notice to
all parties concerned. Complete discontinuance of Contributions under the Plan
constitutes complete termination of Plan.
The Account of each Participant shall be fully (100%) vested and nonforfeitable
as of the effective date of complete termination of Plan. The Account of each
Participant who is included in the group of Participants deemed to be affected
by the partial termination of the Plan shall be fully (100%) vested and
nonforfeitable as of the effective date of the partial Plan termination. The
Participant's Account shall continue to participate in the earnings credited,
expenses charged and any appreciation or depreciation of the Investment Fund
until the Vested Account is distributed. A distribution under this article will
be a retirement benefit and shall be distributed to the Participant according to
the provisions of Article VI.
A Participant's Account which does not result from Contributions which are used
to compute the Actual Deferral Percentage, as defined in the EXCESS AMOUNTS
SECTION of Article III, may be distributed to the Participant after the
effective date of the complete or partial Plan termination. A Participant's
Account resulting from Contributions which are used to compute such percentage
may be distributed upon termination of the Plan without the establishment or
maintenance of another defined contribution plan, other than an employee stock
ownership plan (as defined in Code Section 4975(e) or Code Section 409) or a
simplified employee pension plan (as defined in Code Section 408(W). Such a
distribution made after March 31, 1988, must be in a single sum.
Upon complete termination of Plan, no more Employees shall become Participants
and no more Contributions shall be made.
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The assets of this Plan shall not be paid to the Employer at any time, except
that, after the satisfaction of all liabilities under the Plan, any assets
remaining may be paid to the Employer. The payment may not be made if it would
contravene any provision of law.
ARTICLE VIII ADMINISTRATION OF PLAN
SECTION 8.01 - ADMINISTRATION
Subject to the provisions of this article, the Plan Administrator has complete
control of the administration of the Plan. The Plan Administrator has all the
powers necessary for it to properly carry out its administrative duties. Not in
limitation, but in amplification of the foregoing, the Plan Administrator has
the power to construe the Plan, including ambiguous provisions, and to determine
all questions that may arise under the Plan, including all questions relating to
the eligibility of Employees to participate in the Plan and the amount of
benefit to which any Participant, Beneficiary, spouse or Contingent Annuitant
may become entitled. The Plan Administrator's decisions upon all matters within
the scope of its authority shall be final.
Unless otherwise set out in the Plan or Group Contract, the Plan Administrator
may delegate record keeping and other duties which are necessary for the
administration of the Plan to any person or firm which agrees to accept such
duties. The Plan Administrator shall be entitled to rely upon all tables,
valuations, certificates and reports furnished by the consultant or actuary
appointed by the Plan Administrator and upon all opinions given by any counsel
selected or approved by the Plan Administrator.
The Plan Administrator shall receive all claims for benefits by Participants,
former Participants, Beneficiaries, spouses, and Contingent Annuitants. The Plan
Administrator shall determine all facts necessary to establish the right of any
Claimant to benefits and the amount of those benefits under the provisions of
the Plan. The Plan Administrator may establish rules and procedures to be
followed by Claimants in filing claims for benefits, in furnishing and verifying
proofs necessary to determine age, and in any other matters required to
administer the Plan.
Each Participant shall be entitled to direct the Trustee as to the exercise of
all voting powers over shares allocated to his Account with respect to any
corporate matter which involves the voting of such shares allocated to the
Participant's Account with respect to the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such similar transaction as maybe prescribed in the Treasury
Regulations.
In the event that a tender offer is made for some or all of the shares of the
Employer, each Participant shall have the right to direct whether those shares
allocated to his Account, whether or not vested, shall be tendered. This right
shall be exercised in the manner set forth herein. In the absence of a written
directive from or election by a Participant to the Plan Administrator, the Plan
Administrator shall direct the Trustee not to tender such shares. Because the
choice is to be given to the Participants, the Plan Administrator and the
Trustee
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shall not have fiduciary responsibility with respect to the decision to tender
or not or whether to tender all of such shares or only a portion thereof.
In order to facilitate the decision of Participants whether to tender their
shares in a tender offer (or how many shares to tender), the Plan Administrator
shall provide election forms for the Participants, whereby they may elect to
tender or not and whereby they may elect to tender all or a portion of such
shares. Unless otherwise limited by Federal securities law, such election maybe
made or changed at any time prior to the date before the expiration date of the
tender offer (with extensions); any election or change in election must be
received by the Plan Administrator, or designated representative of the Plan
Administrator, on or before the day preceding the expiration date of the tender
offer (with extension, if any). The Plan Administrator may develop procedures to
facilitate Participants' choices, such as the use of facsimile transmissions for
the Employees located in areas physically remote from the Plan Administrator.
The election shall be binding on the Plan Administrator and the Trustee. The
Plan Administrator shall make every effort to distribute the notice of the
tender, election forms and other communications related to the tender offer to
all Participants as soon as practicable following the announcement of the tender
offer, including mailing such notice and form to Participants and posting such
notice in places designed to be reviewed by Participants.
As to shares which are not allocated to the Accounts of any Participant, all
such shares (in the aggregate) shall be tendered or not as the majority of the
shares held by Participants and directed by Participants are tendered or not.
The Plan Administrator shall direct the Trustee to tender all such unallocated
shares or not, in accordance with the elections of the Participants having an
allocation of the majority of the shares under the Plan.
SECTION 8.02 - RECORDS
All acts and determinations of the Plan Administrator shall be duly recorded.
All these records, together with other documents necessary for the
administration of the Plan, shall be preserved in the Plan Administrator's
custody.
Writing (handwriting, typing, printing), photostating, photographing,
microfilming, magnetic impulse, mechanical or electrical recording or other
forms of data compilation shall be acceptable means of keeping records.
SECTION 8.03 - INFORMATION AVAILABLE
Any Participant in the Plan or any Beneficiary may examine copies of the Plan
description, latest annual report, any bargaining agreement, this Plan, the
Group Contract or any other instrument under which the Plan was established or
is operated. The Plan Administrator shall maintain all of the items listed in
this section in its office, or in such other place or places as it may designate
in order to comply with governmental regulations. These items may be examined
during reasonable business hours. Upon the written request of a Participant or
Beneficiary receiving benefits under the Plan, the Plan Administrator will
furnish him with a copy of any of these items. The Plan Administrator may make a
reasonable charge to the requesting person for the copy.
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SECTION 8.04 - CLAIM AND APPEAL PROCEDURES
A Claimant must submit any required forms and pertinent information when making
a claim for benefits under the Plan.
If a claim for benefits under the Plan is denied, the Plan Administrator shall
provide adequate written notice to the Claimant whose claim for benefits under
the Plan has been denied. The notice must be furnished within 90 days of the
date that the claim is received by the Plan Administrator. The Claimant shall be
notified in writing within this initial 90- day period if special circumstances
require an extension of time needed to process the claim and the date by which
the Plan Administrator's decision is expected to be rendered. The written notice
shall be furnished no later than 180 days after the date the claim was received
by the Plan Administrator.
The Plan Administrator's notice to the Claimant shall specify the reason for the
denial; specify references to pertinent Plan provisions on which denial is
based; describe any additional material and information needed for the Claimant
to perfect his claim for benefits; explain why the material and information is
needed; inform the Claimant that arty appeal he wishes to make must be made in
writing to the Plan Administrator within 60 days after receipt of the Plan
Administrator's notice of denial of benefits and that failure to make the
written appeal within such 60-day period shall render the Plan Administrator's
determination of such denial final, binding and conclusive.
If the Claimant appeals to the Plan Administrator, the Claimant, or his
authorized representative, may submit in writing whatever issues and comments
the Claimant, or his representative, feels are pertinent. The Claimant, or his
authorized representative may review pertinent Plan documents. The Plan
Administrator shall reexamine all facts related to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances. The Plan Administrator shall advise the Claimant of its decision
within 60 days of his written request for review, unless special circumstances
(such as a hearing) would make rendering a decision within the 60-day limit
unfeasible. The Claimant must be notified within the 60-day limit if an
extension is necessary. The Plan Administrator shall render a decision on a
claim for benefits no later than 120 days after the request for review is
received.
SECTION 8.05 - UNCLAIMED VESTED ACCOUNT PROCEDURE
At the time the Participant's Vested Account is distributable to the
Participant, spouse or Beneficiary without his consent according to the
provisions of Article VI or Article IX, the Plan Administrator, by certified or
registered mail addressed to his last known address and in accordance with the
notice requirements of Article VI, will notify him of his entitlement to a
benefit. If the Participant, spouse or Beneficiary fails to claim the Vested
Account or make his whereabouts known in writing within six months from the date
of mailing the notice, the Plan Administrator may treat such unclaimed Vested
Account as a forfeiture and apply it according to the forfeiture provisions of
Article Ill. If Article III contains no forfeiture provisions, such amount will
be applied to reduce the earliest Employer Contributions due after the
forfeiture arises.
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If a Participant's Vested Account is forfeited according to the provisions of
the above paragraph and the Participant, his spouse or his Beneficiary at any
time make a claim for benefits, the forfeited Vested Account shall be
reinstated, unadjusted for any gains or losses occurring after the date it was
forfeited. The reinstated Vested Account shall then be distributed to the
Participant, spouse or Beneficiary according to the preceding provisions of the
Plan.
SECTION 8.06 - DELEGATION OF AUTHORITY
All or any part of the administrative duties and responsibilities under this
article maybe delegated by the Plan Administrator to a retirement committee. The
duties and responsibilities of the retirement committee shall beset out in a
separate written agreement.
ARTICLE IX GENERAL PROVISIONS
SECTION 9.01 - AMENDMENTS
The Employer may amend this Plan at any time, including any remedial retroactive
changes (within the specified period of time as may be determined by Internal
Revenue Service regulations) to comply with the requirements of any law or
regulation issued by any governmental agency to which the Employer is subject.
An amendment may not diminish or adversely affect any accrued interest or
benefit of Participants or their Beneficiaries or eliminate an optional form of
distribution with respect to benefits attributable to service before the
amendment nor allow reversion or diversion of Plan assets to the Employer at any
time, except as may be necessary to comply with the requirements of any law or
regulation issued by any governmental agency to which the Employer is subject.
No amendment to this Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. However, a Participant's
Account may be reduced to the extent permitted under Code Section 412(c)(8). For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account or eliminating an optional form of benefit, with respect
to benefits attributable to service before the amendment shall be treated as
reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of the later of the
date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such Employee's
employer-derived accrued benefit will not be less than his percentage computed
under the Plan without regard to such amendment.
An amendment shall not decrease a Participant's vested interest in the Plan. If
an amendment to the Plan, or a deemed amendment in the case of a change in
top-heavy status of the Plan as provided in the MODIFICATION OF VESTING
REQUIREMENTS SECTION of Article X, changes the computation of the percentage
used to determine that portion of a Participant's Account attributable to
Employer Contributions which is nonforfeitable (whether directly or indirectly),
each Participant or former Participant:
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(a) who has completed at least three Years of Service on the date the
election period described below ends (five Years of Service if the Participant
does not have at least one Hour-of-Service in a Plan Year beginning after
December 31, 1988) and
(b) whose nonforfeitable percentage will be determined on any date after
the date of the change may elect, during the election period, to have the
nonforfeitable percentage of his Account that results from Employer
Contributions determined without regard to the amendment. This election may not
be revoked. An election does not need to be provided for any Participant or
former Participant whose nonforfeitable percentage, determined according to the
Plan provisions as changed, cannot at any time be less than the percentage
determined without regard to such change. The election period shall begin no
later than the date the Plan amendment is adopted, or deemed adopted in the case
of a change in the top-heavy status of the Plan, and end no earlier than the
sixtieth day after the latest of the date the amendment is adopted (deemed
adopted) or becomes effective, or the date the Participant is issued written
notice of the amendment (deemed amendment) by the Employer or the Plan
Administrator.
SECTION 9.02 - DIRECT ROLLOVERS
This section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distribute's election under this section, a Distribute may elect, at the
time and in the manner prescribed by the Plan Administrator, to have any portion
of an Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan, specified by the Distribute, in a Direct Rollover.
SECTION 9.03 - MERGERS AND DIRECT TRANSFERS
The Plan may not be merged or consolidated with, nor have its assets or
liabilities transferred to, any other retirement plan, unless each Participant
in the plan would (if the plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit the Participant would have been entitled to receive immediately
before the merger, consolidation or transfer (if this Plan had then terminated).
The Employer may enter into merger agreements or direct transfer of assets
agreements with the employers under other retirement plans which are qualifiable
under Code Section 401(a), including an elective transfer, and may accept the
direct transfer of plan assets, or may transfer plan assets, as a party to any
such agreement. The Employer shall not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan if such action
would result in a defined benefit feature being maintained under this Plan.
The Plan may accept a direct transfer of plan assets on behalf of an Eligible
Employee. If the Eligible Employee is not an Active Participant when the
transfer is made, the Eligible Employee shall be deemed to be an Active
Participant only for the purpose of investment and distribution of the
transferred assets. Employer Contributions shall not be made for or allocated to
the Eligible Employee, until the time he meets all of the requirements to become
an Active Participant.
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The Plan shall hold, administer and distribute the transferred assets as a part
of the Plan. The Plan shall maintain a separate account for the benefit of the
Employee on whose behalf the Plan accepted the transfer in order to reflect the
value of the transferred assets. Unless a transfer of assets to the Plan is an
elective transfer, the Plan shall apply the optional forms of benefit
protections described in the AMENDMENTS SECTION of Article IX to all transferred
assets. A transfer is elective if: (1) the transfer is voluntary, under a fully
informed election by the Participant (2) the Participant has an alternative that
retains his Code Section 411(d)(6) protected benefits (including an option to
leave his benefit in the transferor plan, if that plan is not terminating); (3)
if the transferor plan is subject to Code Sections 401(a)(11) and 417, the
transfer satisfies the applicable spousal consent requirements of the Code; (4)
the notice requirements under Code Section 417, requiring a written explanation
with respect to an election not to receive benefits in the form of a qualified
joint and survivor annuity, are met with respect to the Participant and spousal
transfer election; (5) the Participant has a right to immediate distribution
from the transferor plan under provisions in the plan not inconsistent with Code
Section 401(a); (6) the transferred benefit is equal to the Participant's entire
nonforfeitable accrued benefit under the transferor plan, calculated to be at
least the greater of the single sum distribution provided by the transferor plan
(if any) or the present value of the Participant's accrued benefit under the
transferor plan payable at the plan's normal retirement age and calculated using
an interest rate subject to the restrictions of Code Section 417(e) and subject
to the overall limitations of Code Section 415; (7) the Participant has a 100%
nonforfeitable interest in the transferred benefit; and (8) the transfer
otherwise satisfies applicable Treasury regulations.
SECTION 9.04 - PROVISIONS RELATING TO THE INSURER AND OTHER PARTIES
The obligations of an Insurer shall be governed solely by the provisions of the
Group Contract. The Insurer shall not be required to perform any act not
provided in or contrary to the provisions of the Group Contract. (See the
CONSTRUCTION SECTION of this article.)
Any issuer or distributor of investment contracts or securities is governed
solely by the terms of its policies, written investment contract, prospectuses,
security instruments, and any other written agreements entered into with the
Trustee.
Such Insurer, issuer or distributor is not a party to the Plan, nor bound in any
way by the Plan provisions. Such parties shall not be required to look to the
terms of this Plan, nor to determine whether the Employer, the Plan
Administrator, the Trustee, or the Named Fiduciary have the authority to act in
any particular manner or to make any contract or agreement.
Until notice of any amendment or termination of this Plan or a change in Trustee
has been received by the Insurer at its home office or an issuer or distributor
at their principal address, they are and shall be fully protected in assuming
that the Plan has not been amended or terminated and in dealing with any party
acting as Trustee according to the latest information which they have received
at their home office or principal address.
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SECTION 9.05 - EMPLOYMENT STATUS
Nothing contained in this Plan gives an Employee the right to be retained in the
Employer's employ or to interfere with the Employer's right to discharge any
Employee.
SECTION 9.06 - RIGHTS TO PLAN ASSETS
No Employee shall have any right to or interest in any assets of the Plan upon
termination of his employment or otherwise except as specifically provided under
this Plan, and then only to the extent of the benefits payable to such Employee
in accordance with Plan provisions.
Any final payment or distribution to a Participant or his legal representative
or to any Beneficiaries, spouse or Contingent Annuitant of such Participant
under the Plan provisions shall be in full satisfaction of all claims against
the Plan, the Named Fiduciary, the Plan Administrator, the Trustee, the Insurer,
and the Employer arising under or by virtue of the Plan.
SECTION 9.07 - BENEFICIARY
Each Participant may name a Beneficiary to receive any death benefit (other than
any income payable to a Contingent Annuitant) that may arise out of his
participation in the Plan. The Participant may change his Beneficiary from time
to time. Unless a qualified election has been made, for purposes of distributing
any death benefits before Retirement Date, the Beneficiary of a Participant who
has a spouse who is entitled to a Qualified Preretirement Survivor Annuity shall
be the Participant's spouse. The Participant's Beneficiary designation and any
change of Beneficiary shall be subject to the provisions of the ELECTION
PROCEDURES SECTION of Article VI. It is the responsibility of the Participant to
give written notice to the Insurer of the name of the Beneficiary on a form
furnished for that purpose.
With the Employer's consent, the Plan Administrator may maintain records of
Beneficiary designations for Participants before their Retirement Dates. In that
event, the written designations made by Participants shall be filed with the
Plan Administrator. If a Participant dies before his Retirement Date, the Plan
Administrator shall certify to the Insurer the Beneficiary designation on its
records for the Participant.
If, at the death of a Participant, there is no Beneficiary named or surviving,
any death benefit under the Group Contract shall be paid under the applicable
provisions of the Group Contract.
SECTION 9.08 - NONALIENATION OF BENEFITS
Benefits payable under the Plan are not subject to the claims of any creditor of
any Participant, Beneficiary, spouse or Contingent Annuitant. A Participant,
Beneficiary, spouse or Contingent Annuitant does not have any rights to
alienate, anticipate, commute, pledge, encumber or assign any of such benefits,
except in the case of a loan as provided in the
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LOANS TO PARTICIPANTS SECTION of Article V. The preceding sentences shall also
apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant according to a domestic relations order,
unless such order is determined by the Plan Administrator to be a qualified
domestic relations order, as defined in Code Section 414(p), or any domestic
relations order entered before January 1, 1985.
SECTION 9.09 - CONSTRUCTION
The validity of the Plan or any of its provisions is determined under and
construed according to Federal law and, to the extent permissible, according to
the laws of the state in which the Employer has its principal office. In case
any provision of this Plan is held illegal or invalid for any reason, such
determination shall not affect the remaining provisions of this Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included.
In the event of any conflict between the provisions of the Plan and the terms of
any contractor policy issued hereunder, the provisions of the Plan control the
operation and administration of the Plan.
SECTION 9.10 - LEGAL ACTIONS
The Plan, the Plan Administrator, the Trustee and the Named Fiduciary are the
necessary parties to any action or proceeding involving the assets held with
respect to the Plan or administration of the Plan or Trust. No person employed
by the Employer, no Participant, former Participant or their Beneficiaries or
any other person having or claiming to have an interest in the Plan is entitled
to any notice of process. A final judgment entered in any such action or
proceeding shall be binding and conclusive on all persons having or claiming to
have an interest in the Plan.
SECTION 9.11 - SMALL AMOUNTS
If the Vested Account of a Participant has never exceeded $3,500, the entire
Vested Account shall be payable in a single sum as of the earliest of his
Retirement Date, the date he dies, or the date he ceases to be an Employee for
any other reason. This is a small amounts payment. If a small amount is payable
as of the date the Participant dies, the small amounts payment shall be made to
the Participant's Beneficiary (spouse if the death benefit is payable to the
spouse). If a small amounts payment is payable while the Participant is living,
the small amounts payment shall be made to the Participant. The small amounts
payment is in full settlement of all benefits otherwise payable.
No other small amounts payments shall be made.
SECTION 9.12 - WORD USAGE
The masculine gender, where used in this Plan, shall include the feminine gender
and the singular words as used in this Plan may include the plural, unless the
context indicates otherwise.
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SECTION 9.13 - TRANSFERS BETWEEN PLANS
If an Employee previously participated in another plan of the Employer which
credited service under the elapsed time method for any purpose which under this
Plan is determined using the hours method, then the Employee's service shall be
equal to the sum of (a), (b) and (c) below:
(a) The number of whole years of service credited to him under the other
plan as of the date he became an Eligible Employee under this Plan.
(b) One year or a part of a year of service for the applicable service
period in which he became an Eligible Employee if he is credited with the
required number of Hours- of-Service. If the Employer does not have sufficient
records to determine the Employee's actual Hours-of-Service in that part of the
service period before the date he became an Eligible Employee, the
Hours-of-Service shall be determined using an equivalency. For any month in
which he would be required to be credited with one Hour-of-Service, the Employee
shall be deemed for purposes of this section to be credited with 190 Hours-of-
Service.
(c) The Employee's service determined under this Plan using the hours
method after the end of the applicable service period in which he became an
Eligible Employee.
If an Employee previously participated in another plan of the Employer which
credited service under the hours method for any purpose which under this Plan is
determined using the elapsed time method, then the Employee's service shall be
equal to the sum of (d), (e) and (f) below:
(d) The number of whole years of service credited to him under the other
plan as of the beginning of the applicable service period under that plan in
which he became an Eligible Employee under this Plan.
(e) The greater of (1) the service that would be credited to him for
that entire service period using the elapsed time method or (2) the service
credited to him under the other plan as of the date he became an Eligible
Employee under this Plan.
(f) The Employee's service determined under this Plan using the elapsed
time method after the end of the applicable service period under the other plan
in which he became an Eligible Employee.
Any modification of service contained in this Plan shall be applicable to the
service determined pursuant to this section.
If the Employee previously participated in the plan of a Controlled Group member
which credited service under a different method than is used in this Plan, for
purposes of determining eligibility and vesting the provisions above shall apply
as though the plan of the Controlled Group member were a plan of the Employer.
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SECTION 9.14 - QUALIFICATION OF PLAN
The Employer intends to apply for an advance determination letter from the
Internal Revenue Service for the initial qualification of the Plan, and the
determination of exempt status of the Trust.
If this Plan is denied initial qualification, it will terminate. The Employer
shall give written notice to the Trustee and Insurer of the denial in sufficient
time so the assets resulting from Contributions which were conditioned on
initial qualification of the Plan may be returned within one year after the date
of denial, 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. The Employer shall notify the Insurer that the Group Contract is to
be terminated. The Plan assets which result from Employer Contributions shall be
returned to the Employer. The Trustee, the Plan Administrator and the Named
Fiduciary shall then be discharged from all obligations under the Plan and the
Insurer shall be discharged from all oblations under the Group Contract. A
Participant or Beneficiary shall not have any right or claim to the assets or to
any benefit under this Plan before the Internal Revenue Service determines that
the Plan and Trust qualify under the provisions of Code Section 401(a).
ARTICLE X TOP-HEAVY PLAN REQUIREMENTS
SECTION 10.01 - APPLICATION
The provisions of this article shall supersede all other provisions in the Plan
to the contrary.
For the purpose of applying the Top-heavy Plan requirements of this article, all
members of the Controlled Group shall be treated as one Employer. The term
Employer as used in this article shall be deemed to include all members of the
Controlled Group unless the term as used clearly indicates only the Employer is
meant.
The accrued benefit or account of a participant which results from deductible
voluntary contributions shall not be included for any purpose under this
article.
The minimum vesting and contribution provisions of the MODIFICATION OF VESTING
REQUIREMENTS and MODIFICATION OF CONTRIBUTIONS SECTIONS of Article X shall not
apply to any Employee who is included in a group of Employees covered by a
collective bargaining agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers, including the Employer, if there is evidence that retirement benefits
were the subject of good faith bargaining between such representatives. For this
purpose, the term "employee representatives" does not include any organization
more than half of whose members are employees who are owners, officers, or
executives.
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SECTION 10.02 - DEFINITIONS
The following terms are defined for purposes of this article.
Aggregation Group means
(a) each of the Employer's retirement plans in which a Key Employee is a
participant during the Year containing the Determination Date or one of the four
preceding Years,
(b) each of the Employer's other retirement plans which allows the
plan(s) described in (a) above to meet the nondiscrimination requirement of Code
Section 401(a)(4) or the minimum coverage requirement of Code Section 410, and
(c) any of the Employer's other retirement plans not included in (a) or
(b) above which the Employer desires to include as part of the Aggregation
Group. Such a retirement plan shall be included only if the Aggregation Group
would continue to satisfy the requirements of Code Section 401(a)(4) and Code
Section 410.
The plans in (a) and (b) above constitute the "required" Aggregation Group. The
plans in (a), (b) and (c) above constitute the "permissive" Aggregation Group.
Compensation means, as to an Employee for any period, compensation as defined in
the CONTRIBUTION LIMITATION SECTION of Article III. For purposes of determining
who is a Key Employee, Compensation shall include, in addition to compensation
as defined in the CONTRIBUTION LIMITATION SECTION of Article III, elective
contributions. Elective contributions are amounts which are excludable from the
Employee's gross income under Code Sections 125, 402(e)(3), 402(h) or 403(b),
and contributed by the Employer, at the Employee's election, to a Code Section
401(k) arrangement, a simplified employee pension, cafeteria plan or
tax-sheltered annuity.
For purposes of Compensation as defined in this section, Compensation shall be
limited in the same manner and in the same time as the Compensation defined in
the DEFINITION SECTION of Article I.
Determination Date means as to this Plan for any Year, the last day of the
preceding Year. However, if there is no preceding Year, the Determination Date
is the last day of such Year.
Key Employee means any Employee or former Employee (including Beneficiaries of
deceased Employees) who at any time during the determination period was:
(a) one of the Employer's officers (subject to the maximum below) whose
Compensation (as defined in this section) for the Year exceeds 50 percent of the
dollar limitation under Code Section 415(b)(1)(A),
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(b) one of the ten Employees who owns (or is considered to own, under
Code Section 318) more than a half percent ownership interest and one of the
largest interests in the Employer during any Year of the determination period if
such person's Compensation (as defined in this section) for the Year exceeds the
dollar limitation under Code Section 415(c)(1)(A),
(c) a five-percent owner of the Employer, or
(d) a one-percent owner of the Employer whose Compensation (as defined
in this section) for the Year is more than $150,000.
Each member of the Controlled Group shall be treated as a separate employer for
purposes of determining ownership in the Employer.
The determination period is the Year containing the Determination Date and the
four preceding Years. If the Employer has fewer than 30 Employees, no more than
three Employees shall be treated as Key Employees because they are officers. If
the Employer has between 30 and 500 Employees, no more than ten percent of the
Employer's Employees (if not an integer, increased to the next integer) shall be
treated as Key Employees because they are officers. In no event will more than
50 Employees be treated as Key Employees because they are officers if the
Employer has 500 or more Employees. The number of Employees for any Plan Year is
the greatest number of Employees during the determination period. Officers who
are employees described in Code Section 414(q)(8) shall be excluded. If the
Employer has more than the maximum number of officers to be treated as Key
Employees, the officers shall be ranked by amount of annual Compensation (as
defined in this section), and those with the greater amount of annual
Compensation during the determination period shall be treated as Key Employees.
To determine the ten Employees owning the largest interests in the Employer, if
more than one Employee has the same ownership interest, the Employee(s) having
the greater annual Compensation shall be treated as owning the larger
interest(s). The determination of who is a Key Employee shall be made according
to Code Section 416(i)(1) and the regulations thereunder.
Nonkey Employee means a person who is a nonkey employee within the meaning of
Code Section 416 and regulations thereunder.
Present Value means the present value of a Participant's accrued benefit under a
defined benefit plan as of his normal retirement age (attained age if later) or,
if the plan provides nonproportional subsidies, the age at which the benefit is
most valuable. The accrued benefit of any Employee (other than a Key Employee)
shall be determined under the method which is used for accrual purposes for all
plans of the Employer or if there is no one method which is used for accrual
purposes for all plans of the Employer, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under Code Section 411(b)(1)(C).
For purposes of establishing Present Value, any benefit shall be discounted only
for 7.5% interest and mortality according to the 1971 Group Annuity Table (Male)
without the 7% margin but with projection by Scale E from 1971 to the later of
(a) 1974, or (b) the year determined by adding the age to 1920, and wherein for
females the male age six years younger is used. If the Present Value of accrued
benefits is determined for a participant
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under more than one defined benefit plan included in the Aggregation Group, all
such plans shall use the same actuarial assumptions to determine the Present
Value.
Top-heavy Plan means a plan which is a top-heavy plan for any plan year
beginning after December 31, 1983. This Plan shall be a Top-heavy Plan if:
(a) the Top-heavy Ratio for this Plan alone exceeds 60 percent and this
Plan is not part of any required Aggregation Group or permissive Aggregation
Group.
(b) this Plan is a part of a required Aggregation Group, but not part of
a permissive Aggregation Group, and the Top-heavy Ratio for the required
Aggregation Group exceeds 60 percent.
(c) this Plan is a part of a required Aggregation Group and part of a
permissive Aggregation Group and the Top-heavy Ratio for the permissive
Aggregation Group exceeds 60 percent.
Top-heavy Ratio means the ratio calculated below for this Plan or for the
Aggregation Group.
(a) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer has not
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 and the denominator
of which is the sum of all account balances of all employees as of the
determination date. Both the numerator and denominator of the Top-heavy Ratio
are adjusted for any distribution of an account balance (including those made
from terminated plan(s) of the Employer which would have been part of the
required Aggregation Group had such plan(s) not been terminated) made in the
five-year period ending on the determination date. Both the numerator and
denominator of the Top-heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be taken
into account on that date under Code Section 416 and the regulations thereunder.
(b) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer maintains or
has maintained one or more defined benefit plans which during the five-year
period ending on the determination date has or has had 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 the account balances under
the defined contribution plan(s) of all Key Employees and the Present Value of
accrued benefits under the defined benefit plan(s) for all Key Employees, and
the denominator of which is the sum of the account balances under the defined
contribution plan(s) for all employees and the Present Value of accrued benefits
under the defined benefit plans for all employees. Both the numerator and
denominator of the Top- heavy Ratio are adjusted for any distribution of an
account balance or an accrued benefit (including those made from terminated
plan(s) of the Employer which would have been part
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of the required Aggregation Group had such plan(s) not been terminated) made in
the five-year period ending on the determination date.
(c) For purposes of (a) and (b) 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 and the regulations
thereunder for the first and second plan years of a defined benefit plan. The
account balances and accrued benefits of an employee who is not a Key Employee
but who was a Key Employee in a prior year will be disregarded, The calculation
of the Top-heavy Ratio and the extent to which distributions, rollovers anti
transfers during the five-year period ending on the determination date are to be
taken into account, shall be determined according to the provisions of Code
Section 416 and regulations thereunder. The account balances and accrued
benefits of an individual who has performed no service for the Employer during
the five-year period ending on the determination date shall be excluded from the
Top-heavy Ratio until the time the individual again performs service for the
Employer. Deductible employee contributions 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.
Account, as used in this definition, means the value of an employee's account
under one of the Employer's retirement plans on the latest valuation date. In
the case of a money purchase plan or target benefit plan, such value shall be
adjusted to include any contributions made for or by the employee after the
valuation date and on or before such determination date or due to be made as of
such determination date but not yet forwarded to the insurer or trustee. In the
case of a profit sharing plan, such value shall be adjusted to include any
contributions made for or by the employee after the valuation date and on or
before such determination date. During the first Year of any profit sharing plan
such adjustment in value shall include contributions made after such
determination date that are allocated as of a date in such Year. The
nondeductible employee contributions which an employee makes under a defined
benefit plan of the Employer shall be treated as if they were contributions
under a separate defined contribution plan.
Valuation Date means, as to this Plan, the last day of the last calendar month
ending in a Year.
Year means the Plan Year unless another year is specified by the Employer in a
separate written resolution in accordance with regulations issued by the
Secretary of the Treasury or his delegate.
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SECTION 10.03 - MODIFICATION OF VESTING REQUIREMENTS
If a Participant's Vesting Percentage determined under Article I is not at least
as great as his Vesting Percentage would be if it were determined under a
schedule permitted in Code Section 416, the following shall apply. During any
Year in which the Plan is a Top-heavy Plan, the Participant's Vesting Percentage
shall be the greater of the Vesting Percentage determined under Article I or the
schedule below.
<TABLE>
<CAPTION>
VESTING SERVICE NONFORFEITABLE
(whole years) PERCENTAGE
--------------- --------------
<S> <C>
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
The schedule above shall not apply to Participants who are not credited with an
Hour-of-Service after the Plan first becomes a Top-heavy Plan. The Vesting
Percentage determined above applies to all of the Participant's Account
resulting from Employer Contributions, including Contributions the Employer
makes before the TEFRA Compliance Date or when the Plan is not a Top-heavy Plan.
If, in a later Year, this Plan is not a Top-heavy Plan, a Participant's Vesting
Percentage shall be determined under Article I. A Participant's Vesting
Percentage determined under either Article I or the schedule above shall never
be reduced and the election procedures of the AMENDMENTS SECTION of Article IX
shall apply when changing to or from the schedule as though the automatic change
were the result of an amendment.
The part of the Participant's Vested Account resulting from the minimum
contributions required pursuant to the MODIFICATION OF CONTRIBUTIONS SECTION of
Article X shall not be forfeited because of a period of reemployment after
benefit payments have begun.
SECTION 10.04 - MODIFICATION OF CONTRIBUTIONS
During any Year in which this Plan is a Top-heavy Plan, the Employer shall make
a minimum contribution or allocation on the last day of the Year for each person
who is a Nonkey Employee on that day and who either was or could have been an
Active Participant during the Year. A Nonkey Employee is not required to have a
minimum number of hours- of-service or minimum amount of Compensation, or to
have had any Elective Deferral Contributions made for him in order to be
entitled to this minimum. The minimum contribution or allocation for such person
shall be equal to the lesser of (a) or (b) below:
(a) Three percent of such person's Compensation (as defined in this
article).
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(b) The "highest percentage" of Compensation (as defined in this
article) for such Year at which the Employer's contributions are made for or
allocated to any Key Employee. The highest percentage shall be determined by
dividing the Employer Contributions made for or allocated to each Key Employee
during such Year by the amount of his Compensation (as defined in this article),
which is not more than the maximum set out above, and selecting the greatest
quotient (expressed as a percentage). To determine the highest percentage, all
of the Employer's defined contribution plans within the Aggregation Group shall
be treated as one plan. The provisions of this paragraph shall not apply if this
Plan and a defined benefit plan of the Employer are required to be included in
the Aggregation Group and this Plan enables the defined benefit plan to meet the
requirements of Code Section 401(a)(4) or Code Section 410.
If the Employer's contributions and allocations otherwise required under the
defined contribution plan(s) are at least equal to the minimum above, no
additional contribution or reallocation shall be required. If the Employer's
contributions and allocations are less than the minimum above and Employer
Contributions under this Plan are allocated to Participants, any Employer
Contributions (other than those which are allocated on the basis of the amount
made for such person) shall be reallocated to provide the minimum. The remaining
Contributions shall be allocated as provided in the preceding articles of this
Plan taking into account any amount which was reallocated to provide the
minimum. If the Employer's total contributions and allocations are less than the
minimum above after any reallocation provided above, the Employer shall
contribute the difference for the Year.
The minimum contribution or allocation applies to all of the Employer's defined
contribution plans in the aggregate which are Top-heavy Plans. If an additional
contribution or allocation is required to meet the minimum above, it shall be
provided in this Plan.
A minimum allocation under a profit sharing plan shall be made without regard to
whether or not the Employer has profits.
If a person who is otherwise entitled to a minimum contribution or allocation
above is also covered under a defined benefit plan of the Employer's which is a
Top-heavy Plan during that same Year, the minimum benefits for him shall not be
duplicated. The defined benefit plan shall provide an annual benefit for him on,
or adjusted to, a straight life basis of the lesser of (c) two percent of his
average pay multiplied by his years of service or (d) twenty percent of his
average pay. Average pay and years of service shall have the meaning set forth
in such defined benefit plan for this purpose.
For purposes of this section, any employer contribution made according to a
salary reduction or similar arrangement shall not apply before the first Yearly
Date in 1985. On and after the first Yearly Date in 1989, any such employer
contributions and employer contributions which are matching contributions, as
defined in Code Section 401(m), shall not apply in determining if the minimum
contribution requirement has been met, but shall apply in determining the
minimum contribution required. Forfeitures credited to a Participant's Account
are treated as employer contributions.
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The requirements of this section shall be met without regard to contributions
under Chapter 2 of the Code (relating to tax on self-employment), Chapter 21 of
the Code (relating to Federal Insurance Contributions Act), Title II of the
Social Security Actor any other Federal or state law.
SECTION 10.05 - MODIFICATION OF CONTRIBUTION LIMITATION
If the provisions of subsection (e) of the CONTRIBUTION LIMITATION SECTION of
Article III are applicable for any Limitation Year during which this Plan is a
Top-heavy Plan, the benefit limitations shall be modified. The definitions of
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction in the
CONTRIBUTION LIMITATION SECTION of Article III shall be modified by substituting
"1.0" in lieu of "1.25". The optional denominator for determining the Defined
Contribution Plan Fraction shall be modified by substituting "$41,500" in lieu
of "$51,875". In addition, an adjustment shall be made to the numerator of the
Defined Contribution Plan Fraction. The adjustment is a reduction of that
numerator similar to the modification of the Defined Contribution Plan Fraction
described in the CONTRIBUTION LIMITATION SECTION of Article III, and shall be
made with respect to the last Plan Year beginning before January 1, 1984.
The modifications in the paragraph above shall not apply with respect to a
Participant so long as employer contributions, forfeitures or nondeductible
employee contributions are not credited to his account under this or any of the
Employer's other defined contribution plans and benefits do not accrue for such
Participant under the Employer's defined benefit plan(s), until the sum of his
Defined Contribution and Defined Benefit Plan Fractions is less than 1.0.
By executing this Plan, the Primary Employer acknowledges having counseled to
the extent necessary with selected legal and tax advisors regarding the Plan's
legal and tax implications.
Executed this _____ day of ________________, 19___.
OPTIMUMCARE CORPORATION
By: _______________________________________________
_______________________________________________
Title
PLAN EXECUTION
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