EXHIBIT 4.1
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REGIONAL PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
Sponsored By
BASIC PLAN DOCUMENT #R1
FEBRUARY 1993
COPYRIGHT 1993 THE MCKAY HOCHMAN COMPANY, INC.
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES.
UNAUTHORIZED USE, DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF
ELECTRONIC MEANS, IS PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT
OF THE AUTHOR
TABLE OF CONTENTS
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PARAGRAPH PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
1.1 Actual Deferral Percentage . . . . . . . . . . . . . 1
1.2 Adoption Agreement . . . . . . . . . . . . . . . . . 1
1.3 Aggregate Limit . . . . . . . . . . . . . . . . . . . 2
1.4 Annual Additions . . . . . . . . . . . . . . . . . . 2
1.5 Annuity Starting Date . . . . . . . . . . . . . . . . 2
1.6 Applicable Calendar Year . . . . . . . . . . . . . . 3
1.7 Applicable Life Expectancy . . . . . . . . . . . . . 3
1.8 Average Contribution Percentage (ACP) . . . . . . . . 3
1.9 Average Deferral Percentage (ADP) . . . . . . . . . . 3
1.10 Break In Service . . . . . . . . . . . . . . . . . . 3
1.11 Code . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Compensation . . . . . . . . . . . . . . . . . . . . 3
1.13 Contribution Percentage . . . . . . . . . . . . . . . 6
1.14 Defined Benefit Plan . . . . . . . . . . . . . . . . 7
1.15 Defined Benefit (Plan) Fraction . . . . . . . . . . . 7
1.16 Defined Contribution Dollar Limitation . . . . . . . 7
1.17 Defined Contribution Plan . . . . . . . . . . . . . . 7
1.18 Defined Contribution (Plan) Fraction . . . . . . . . 7
1.19 Designated Beneficiary . . . . . . . . . . . . . . . 8
1.20 Disability . . . . . . . . . . . . . . . . . . . . . 8
1.21 Distribution Calendar Year . . . . . . . . . . . . . 8
1.22 Early Retirement Age . . . . . . . . . . . . . . . . 8
1.23 Earned Income . . . . . . . . . . . . . . . . . . . . 8
1.24 Effective Date . . . . . . . . . . . . . . . . . . . 9
1.25 Election Period . . . . . . . . . . . . . . . . . . . 9
1.26 Elective Deferral . . . . . . . . . . . . . . . . . . 9
1.27 Eligible Participant . . . . . . . . . . . . . . . . 9
1.28 Employee . . . . . . . . . . . . . . . . . . . . . . 9
1.29 Employer . . . . . . . . . . . . . . . . . . . . . . 10
1.30 Entry Date . . . . . . . . . . . . . . . . . . . . . 10
1.31 Excess Aggregate Contributions . . . . . . . . . . . 10
1.32 Excess Amount . . . . . . . . . . . . . . . . . . . . 10
1.33 Excess Contribution . . . . . . . . . . . . . . . . . 10
1.34 Excess Elective Deferrals . . . . . . . . . . . . . . 11
1.35 Family Member . . . . . . . . . . . . . . . . . . . . 11
1.36 First Distribution Calendar Year . . . . . . . . . . 11
1.37 Fund . . . . . . . . . . . . . . . . . . . . . . . . 11
1.38 Hardship . . . . . . . . . . . . . . . . . . . . . . 11
1.39 Highest Average Compensation . . . . . . . . . . . . 11
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1.40 Highly Compensated Employee . . . . . . . . . . . . . 11
1.41 Hour Of Service . . . . . . . . . . . . . . . . . . . 12
1.42 Key Employee . . . . . . . . . . . . . . . . . . . . 13
1.43 Leased Employee . . . . . . . . . . . . . . . . . . . 14
1.44 Limitation Year . . . . . . . . . . . . . . . . . . . 14
1.45 Master Or Prototype Plan . . . . . . . . . . . . . . 14
1.47 Maximum Permissible Amount . . . . . . . . . . . . . 14
1.48 Net Profit . . . . . . . . . . . . . . . . . . . . . 15
1.49 Normal Retirement Age . . . . . . . . . . . . . . . . 15
1.50 Owner-Employee . . . . . . . . . . . . . . . . . . . 15
1.51 Paired Plans . . . . . . . . . . . . . . . . . . . . 15
1.52 Participant . . . . . . . . . . . . . . . . . . . . . 15
1.53 Participant's Benefit . . . . . . . . . . . . . . . . 15
1.54 Permissive Aggregation Group . . . . . . . . . . . . 15
1.55 Plan . . . . . . . . . . . . . . . . . . . . . . . . 15
1.56 Plan Administrator . . . . . . . . . . . . . . . . . 15
1.57 Plan Year . . . . . . . . . . . . . . . . . . . . . . 15
1.58 Present Value . . . . . . . . . . . . . . . . . . . . 15
1.59 Projected Annual Benefit . . . . . . . . . . . . . . 16
1.60 Qualified Deferred Compensation Plan . . . . . . . . 16
1.61 Qualified Domestic Relations Order . . . . . . . . 16
1.62 Qualified Early Retirement Age . . . . . . . . . . . 16
1.63 Qualified Joint And Survivor Annuity . . . . . . . . 17
1.64 Qualified Matching Contribution . . . . . . . . . . . 17
1.65 Qualified Non-Elective Contributions . . . . . . . . 17
1.66 Qualified Voluntary Contribution . . . . . . . . . . 17
1.67 Regional Prototype Plan . . . . . . . . . . . . . . . 17
1.68 Required Aggregation Group . . . . . . . . . . . . . 17
1.69 Required Beginning Date . . . . . . . . . . . . . . . 17
1.70 Rollover Contribution . . . . . . . . . . . . . . . . 18
1.71 Salary Savings Agreement . . . . . . . . . . . . . . 18
1.72 Self-Employed Individual . . . . . . . . . . . . . . 18
1.73 Service . . . . . . . . . . . . . . . . . . . . . . . 18
1.74 Shareholder Employee . . . . . . . . . . . . . . . . 18
1.75 Simplified Employee Pension Plan . . . . . . . . . . 18
1.76 Sponsor . . . . . . . . . . . . . . . . . . . . . . . 19
1.77 Spouse (Surviving Spouse . . . . . . . . . . . . . . 19
1.78 Super Top-Heavy Plan . . . . . . . . . . . . . . . . 19
1.79 Taxable Wage Base . . . . . . . . . . . . . . . . . . 19
1.80 Top-Heavy Determination Date . . . . . . . . . . . . 19
1.81 Top-Heavy Plan . . . . . . . . . . . . . . . . . . . 19
1.82 Top-Heavy Ratio . . . . . . . . . . . . . . . . . . . 19
1.83 Top-Paid Group . . . . . . . . . . . . . . . . . . . 21
1.84 Transfer Contribution . . . . . . . . . . . . . . . . 21
1.85 Trustee . . . . . . . . . . . . . . . . . . . . . . . 22
1.86 Valuation Date . . . . . . . . . . . . . . . . . . . 22
1.87 Vested Account Balance . . . . . . . . . . . . . . . 22
1.88 Voluntary Contribution . . . . . . . . . . . . . . . 22
1.89 Welfare Benefit Fund . . . . . . . . . . . . . . . . 22
1.90 Year Of Service . . . . . . . . . . . . . . . . . . . 23
ARTICLE II ELIGIBILITY REQUIREMENTS . . . . . . . . . . . . . . 23
ii
2.1 Participation . . . . . . . . . . . . . . . . . . . . 23
2.2 Change In Classification Of Employment . . . . . . . 23
2.3 Computation Period . . . . . . . . . . . . . . . . . 23
2.4 Employment Rights . . . . . . . . . . . . . . . . . . 24
2.5 Service With Controlled Groups . . . . . . . . . . . 24
2.6 Owner-Employees . . . . . . . . . . . . . . . . . . . 24
2.7 Leased Employees . . . . . . . . . . . . . . . . . . 25
2.8 Thrift Plans . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . 26
3.1 Amount . . . . . . . . . . . . . . . . . . . . . . . 26
3.2 Expenses And Fees . . . . . . . . . . . . . . . . . . 26
3.3 Responsibility For Contributions . . . . . . . . . . 26
3.4 Return of Contributions . . . . . . . . . . . . . . . 26
ARTICLE IV EMPLOYEE CONTRIBUTIONS . . . . . . . . . . . . . . . 27
4.1 Voluntary Contributions . . . . . . . . . . . . . . . 27
4.2 Qualified Voluntary Contributions . . . . . . . . . . 27
4.4 Transfer Contribution . . . . . . . . . . . . . . . . 28
4.5 Employer Approval Of Transfer Contributions . . . . . 29
4.6 Elective Deferrals . . . . . . . . . . . . . . . . . 29
4.7 Required Voluntary Contributions . . . . . . . . . . 30
4.8 Direct Rollover Of Benefits . . . . . . . . . . . . . 30
ARTICLE V PARTICIPANT ACCOUNTS . . . . . . . . . . . . . . . . 30
5.1 Separate Accounts . . . . . . . . . . . . . . . . . . 30
5.2 Adjustments To Participant Accounts . . . . . . . . . 31
5.3 Allocating Employer Contributions . . . . . . . . . . 31
5.4 Allocating Investment Earnings And Losses . . . . . . 32
5.5 Participant Statements . . . . . . . . . . . . . . . 33
ARTICLE VI RETIREMENT BENEFITS AND DISTRIBUTIONS . . . . . . . . 33
6.1 Normal Retirement Benefits . . . . . . . . . . . . . 33
6.2 Early Retirement Benefits . . . . . . . . . . . . . . 33
6.3 Benefits On Termination Of Employment . . . . . . . . 33
6.4 Restrictions On Immediate Distributions . . . . . . . 35
6.5 Normal Form Of Payment . . . . . . . . . . . . . . . 36
6.6 Commencement Of Benefits . . . . . . . . . . . . . . 36
6.7 Claims Procedures . . . . . . . . . . . . . . . . . . 37
6.8 In-Service Withdrawals . . . . . . . . . . . . . . . 38
6.9 Hardship Withdrawal . . . . . . . . . . . . . . . . . 39
ARTICLE VII A DISTRIBUTION REQUIREMENTS . . . . . . . . . . . . . 41
7.1 Joint And Survivor Annuity Requirements . . . . . . . 41
7.2 Minimum Distribution Requirements . . . . . . . . . . 41
7.3 Limits On Distribution Periods . . . . . . . . . . . 41
7.4 Required Distributions on or after the required
beginning date. . . . . . . . . . . . . . . . . . . . 42
7.5 Required Beginning Date . . . . . . . . . . . . . . . 43
7.6 Transitional Rule . . . . . . . . . . . . . . . . . . 44
7.7 Designation Of Beneficiary For Death Benefit . . . . 45
7.8 Nonexistence Of Beneficiary . . . . . . . . . . . . . 45
7.9 Distribution Beginning Before Death . . . . . . . . . 46
7.10 Distribution Beginning After Death . . . . . . . . . 46
7.11 Distribution Of Excess Elective Deferrals . . . . . . 47
7.12 Distributions of Excess Contributions . . . . . . . . 48
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7.13 Distribution Of Excess Aggregate Contributions . . . 48
ARTICLE VIII JOINT AND SURVIVOR ANNUITY REQUIREMENTS . . . . . 49
8.1 Applicability Of Provisions . . . . . . . . . . . . . 49
8.2 Payment Of Qualified Joint And Survivor Annuity . . . 49
8.3 Payment Of Qualified Pre-Retirement Survivor Annuity 50
8.4 Qualified Election . . . . . . . . . . . . . . . . . 50
8.5 Notice Requirements For Qualified Joint And Survivor
Annuity . . . . . . . . . . . . . . . . . . . . . . . 51
8.6 Notice Requirements For Qualified Pre-Retirement
Survivor Annuity . . . . . . . . . . . . . . . . . . 51
8.7 Special Safe-Harbor Exception For Certain Profit-
Sharing Plans . . . . . . . . . . . . . . . . . . . . 52
8.8 Transitional Joint And Survivor Annuity Rules . . . . 53
8.9 Automatic Joint And Survivor Annuity And Early
Survivor Annuity . . . . . . . . . . . . . . . . . . 53
8.10 Annuity Contracts . . . . . . . . . . . . . . . . . . 54
ARTICLE IX VESTING . . . . . . . . . . . . . . . . . . . . . . . 55
9.1 Employee Contributions . . . . . . . . . . . . . . . 55
9.2 Employer Contributions . . . . . . . . . . . . . . . 55
9.3 Computation Period . . . . . . . . . . . . . . . . . 55
9.4 Re qualification Prior To Five Consecutive One-Year
Breaks In Service . . . . . . . . . . . . . . . . . . 55
9.5 Re qualification After Five Consecutive One-Year
Breaks In Service . . . . . . . . . . . . . . . . . . 55
9.6 Calculating Vested Interest . . . . . . . . . . . . . 56
9.7 Forfeitures . . . . . . . . . . . . . . . . . . . . . 56
9.8 Amendment Of Vesting Schedule . . . . . . . . . . . . 56
9.9 Service With Controlled Groups . . . . . . . . . . . 57
9.10 Application Of Prior Vesting Rules . . . . . . . . . 57
ARTICLE X LIMITATIONS ON ALLOCATIONS AND ANTIDISCRIMINATION
TESTING . . . . . . . . . . . . . . . . . . . . . . . 57
10.1 Participation In This Plan Only . . . . . . . . . . . 57
10.2 Disposition Of Excess Annual Additions . . . . . . . 58
10.3 Participation In This Plan And Another Regional
Prototype Defined Contribution Plan, Welfare Benefit
Fund, Or Individual Medical Account Maintained By The
Employer . . . . . . . . . . . . . . . . . . . . . . 59
10.4 Disposition Of Excess Annual Additions Under Two
Plans . . . . . . . . . . . . . . . . . . . . . . . . 60
10.5 Participation In This Plan And Another Defined
Contribution Plan Which Is Not A Regional Prototype
Plan . . . . . . . . . . . . . . . . . . . . . . . . 60
10.6 Participation In This Plan And A Defined Benefit
Plan . . . . . . . . . . . . . . . . . . . . . . . . 61
10.7 Limitations On Allocations . . . . . . . . . . . . . 61
10.8 Average Deferral Percentage (ADP) Test . . . . . . . 61
10.9 Special Rules Relating To Application Of ADP Test . . 61
10.10 Recharacterization . . . . . . . . . . . . . . . . . 63
10.11 Average Contribution Percentage (ACP) Test . . . . . 63
10.12 Special Rules Relating To Application Of ACP Test . . 64
iv
ARTICLE XI ADMINISTRATION . . . . . . . . . . . . . . . . . . . 65
11.1 Plan Administrator . . . . . . . . . . . . . . . . . 65
11.2 Trustee . . . . . . . . . . . . . . . . . . . . . . . 66
11.3 Administrative Fees and Expenses. . . . . . . . . . . 67
11.4 Division of Dates and Indemnification . . . . . . . . 67
ARTICLE XII TRUST FUND ACCOUNT . . . . . . . . . . . . . . . . . 68
12.1 The Fund . . . . . . . . . . . . . . . . . . . . . . 68
12.2 Control Of Plan Assets . . . . . . . . . . . . . . . 69
12.3 Exclusive Benefit Rules . . . . . . . . . . . . . . . 69
12.4 Assignment And Alienation Of Benefits . . . . . . . . 69
12.5 Determination Of Qualified Domestic Relations Order
(QDRO) . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XIII INVESTMENTS . . . . . . . . . . . . . . . . . . . 71
13.1 Fiduciary Standards . . . . . . . . . . . . . . . . . 71
13.2 Trustee Appointment . . . . . . . . . . . . . . . . . 71
13.3 Investment Alternatives Of The Trustee . . . . . . . 71
13.4 Participant Loans . . . . . . . . . . . . . . . . . . 72
13.5 Insurance Policies . . . . . . . . . . . . . . . . . 74
13.6 Employer Investment Direction . . . . . . . . . . . . 76
13.7 Employee Investment Direction . . . . . . . . . . . . 77
ARTICLE XIV TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . 78
14.1 Applicability Of Rules . . . . . . . . . . . . . . . 78
14.2 Minimum Contribution . . . . . . . . . . . . . . . . 78
14.3 Minimum Vesting . . . . . . . . . . . . . . . . . . . 79
ARTICLE XV AMENDMENT AND TERMINATION . . . . . . . . . . . . . . 79
15.1 Amendment By Sponsor . . . . . . . . . . . . . . . . 79
15.2 Amendment By Employer . . . . . . . . . . . . . . . . 79
15.3 Termination . . . . . . . . . . . . . . . . . . . . . 80
15.4 Qualification Of Employer's Plan . . . . . . . . . . 80
15.5 Mergers And Consolidations . . . . . . . . . . . . . 81
15.6 Resignation And Removal . . . . . . . . . . . . . . . 81
15.7 Qualification Of Prototype . . . . . . . . . . . . . 81
ARTICLE XVI GOVERNING LAW . . . . . . . . . . . . . . . . . . . . 82
v
REGIONAL PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
Sponsored By
The Sponsor hereby establishes the following Regional Prototype
Defined Contribution Plan and Trust for use by those of its adopting
Employers who qualify and wish to provide a qualified retirement
program for its Employees. Any Plan and Trust Account established
hereunder shall be administered for the exclusive benefit of
Participants and their beneficiaries under the following terms and
conditions:
ARTICLE I
DEFINITIONS
1.1 Actual Deferral Percentage The ratio (expressed as a
percentage and calculated separately for each Participant) of:
(a) the amount of Employer contributions [as defined at (c) and
(d)] actually paid over to the Fund on behalf of such
Participant for the Plan Year to
(b) the Participant's Compensation for such Plan Year.
Compensation will only include amounts for the period during
which the Employee was eligible to participate.
Employer contributions on behalf of any Participant shall include:
(c) any Elective Deferrals made pursuant to the Participant's
deferral election, including Excess Elective Deferrals, but
excluding Elective Deferrals that are taken into account in
the Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Elective
Deferrals) or are returned as excess Annual Additions; and
(d) at the election of the Employer, Qualified Non-Elective
Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee who
would be a Participant but for the failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
1.2 Adoption Agreement The document attached to this Plan by which an
Employer elects to establish a qualified retirement plan and trust
account under the terms of this Regional Prototype Defined
Contribution Plan and Trust.
1
1.3 Aggregate Limit The sum of:
(a) 125 percent of the greater of the ADP of the non-Highly
Compensated Employees for the Plan Year or the ACP of non-
Highly Compensated Employees under the Plan subject to Code
Section 401(m) for the Plan Year beginning with or within
the Plan Year of the cash or deferred arrangement as
described in Code Section 401(k) or Code Section
402(h)(1)(B) and
(b) the lesser of 200% or two plus the lesser of such ADP or
ACP.
Alternatively, the Aggregate Limit may be expressed by substituting
the word "lesser" for the word "greater" where it appears in the first
line of sub-paragraph (a) and substituting the word "greater" for the
word "lesser" where it appears for the second time in the first line
of sub-paragraph (b).
1.4 Annual Additions The sum of the following amounts credited to a
Participant's account for the Limitation Year:
(a) Employer Contributions,
(b) Employee Contributions (under Article IV),
(c) forfeitures, and
(d) amounts allocated after March 31, 1984 to an individual
medical account, as defined in Code Section 415(l)(2), which
is part of a pension or annuity plan maintained by the
Employer (these amounts are treated as Annual Additions to a
Defined Contribution Plan though they arise under a Defined
Benefit Plan), and
(e) amounts derived from contributions paid or accrued after
1985, in taxable years ending after 1985, which are either
attributable to post-retirement medical benefits, allocated
to the account of a Key Employee, or a Welfare Benefit Fund
maintained by the Employer are also treated as Annual
Additions to a Defined Contribution Plan. For purposes of
this paragraph, an Employee is a Key Employee if he or she
meets the requirements of paragraph 1.42 at any time during
the Plan Year or any preceding Plan Year. Welfare Benefit
Fund is defined at paragraph 1.89.
Excess amounts applied in a Limitation Year to reduce Employer
contributions will be considered Annual Additions for such Limitation
Year, pursuant to the provisions of Article X.
1.5 Annuity Starting Date The first day of the first period for
which an amount is paid as an annuity or in any other form.
2
1.6 Applicable Calendar Year The first Distribution Calendar Year,
and in the event of the recalculation of life expectancy, such
succeeding calendar year. If payments commence in accordance with
paragraph 7.4(e) before the Required Beginning Date, the Applicable
Calendar Year is the year such payments commence. If distribution is
in the form of an immediate annuity purchased after the Participant's
death with the Participant's remaining interest, the Applicable
Calendar Year is the year of purchase.
1.7 Applicable Life Expectancy Used in determining the required
minimum distribution. The life expectancy (or joint and last survivor
expectancy) calculated using the attained age of the Participant (or
Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar year reduced by one
for each calendar year which has elapsed since the date life
expectancy was first calculated. If life expectancy is being
recalculated, the Applicable Life Expectancy shall be the life
expectancy as so recalculated. The life expectancy of a non-Spouse
Beneficiary may not be recalculated.
1.8 Average Contribution Percentage (ACP) The average of the Actual
Contribution Percentages for each Highly Compensated Employee and for
each non-Highly Compensated Employee.
1.9 Average Deferral Percentage (ADP) The average of the Percentages
for each Highly Compensated Employee and for each non-Highly
Compensated Employee.
1.10 Break In Service A 12-consecutive month period during which an
Employee fails to complete more than 500 Hours of Service.
1.11 Code The Internal Revenue Code of 1986, including any
amendments.
1.12 Compensation The Employer may select one of the following three
safe-harbor definitions of Compensation in the Adoption Agreement.
Compensation shall only include amounts earned while a Participant if
Plan Year is chosen as the applicable computation period.
(a) CODE SECTION 3401(A) WAGES. Compensation is defined as
wages within the meaning of Code Section 3401(a) for the purposes
of Federal income tax withholding at the source but determined
without regard to any rules that limit the remuneration included
in wages based on the nature or location of the employment or the
services performed [such as the exception for agricultural labor
in Code Section 3401(a)(2)].
(b) CODE SECTION 6041 AND 6051 WAGES. Compensation is defined
as wages as defined in Code Section 3401(a) and all other
payments of Compensation to an Employee by the Employer (in
the course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a written
3
statement under Code Section 6041(d) and 6051(a)(3).
Compensation must be determined without regard to any rules
under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed [such as the exception
for agricultural labor in Code Section 3401(a)(2)].
(c) CODE SECTION 415 COMPENSATION. For purposes of applying the
limitations of Article X and Top-Heavy Minimums, the
definition of Compensation shall be Code Section 415
Compensation defined as follows: a Participant's Earned
Income, wages, salaries, and fees for professional services
and other amounts received (without regard to whether or not
an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are
includible in gross income [including, but not limited to,
commissions paid salesmen, Compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements
or other expense allowances under a nonaccountable plan (as
described in Regulation 1.62-2(c)], and excluding the
following:
1. Employer contributions to a plan of deferred
compensation which are not includible in the Employee's
gross income for the taxable year in which contributed,
or Employer contributions under a Simplified Employee
Pension Plan or any distributions from a plan of
deferred compensation,
2. Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely transferable
or is no longer subject to a substantial risk of
forfeiture,
3. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
4. other amounts which received special tax benefits, or
contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity contract described in Code
Section 403(b) (whether or not the contributions are
actually excludible from the gross income of the
Employee).
For purposes of applying the limitations of Article X and Top-Heavy
Minimums, the definition of Compensation shall be Code Section 415
Compensation described in this paragraph 1.12(c). Also, for purposes
4
of applying the limitations of Article X, Compensation for a
Limitation Year is the Compensation actually paid or made available
during such Limitation Year. Notwithstanding the preceding sentence,
Compensation for a Participant in a defined contribution plan who is
permanently and totally disabled [as defined in Code Section 22(e)(3)]
is the Compensation such Participant would have received for the
Limitation Year if the Participant had been paid at the rate of
Compensation paid immediately before becoming permanently and totally
disabled. Such imputed Compensation for the disabled Participant may
be taken into account only if the Participant is not a Highly
Compensated Employee [as defined in Code Section 414(q)] and
contributions made on behalf of such Participant are nonforfeitable
when made.
If the Employer fails to pick the applicable period in the Adoption
Agreement, the Plan Year shall be used. Unless otherwise specified by
the Employer in the Adoption Agreement, Compensation shall be
determined as provided in Code Section 3401(a) [as defined in this
paragraph 1.12(a)]. In nonstandardized Adoption Agreements 004, 005
and 006, the Employer may choose to eliminate or exclude categories of
Compensation which do not violate the provisions of Code Sections
401(a)(4), 414(s) the regulations hereunder and Revenue Procedure 89-
65.
Beginning with 1989 Plan Years, the annual Compensation of each
Participant which may be taken into account for determining all
benefits provided under the Plan (including benefits under Article
XIV) for any year shall not exceed $200,000, as adjusted under Code
Section 415(d). In determining the Compensation of a Participant for
purposes of this limitation, the rules of Code Section 414(q)(6) shall
apply, except in applying such rules, the term "family" shall include
only the Spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the end of the Plan
year. If, as a result of the application of such rules the adjusted
$200,000 limitation 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 section prior to
the application of this limitation.
If a Plan has a Plan Year that contains fewer than 12 calendar months,
then the annual Compensation limit for that period is an amount equal
to the $200,000 as adjusted for the calendar year in which the
Compensation period begins, multiplied by a fraction the numerator of
which is the number of full months in the Short Plan Year and the
denominator of which is 12. If Compensation for any prior Plan Year
is taken into account in determining an Employee's contributions or
benefits for the current year, the Compensation for such prior year is
subject to the applicable annual Compensation limit in effect for that
prior year. For this purpose, for years A beginning before January 1,
1990, the applicable annual Compensation limit is $200,000.
5
Compensation shall not include deferred Compensation other than
contributions through a salary reduction agreement to a cash or
deferred plan under Code Section 401(k), a Simplified Employee Pension
Plan under Code Section 402(h)(1)(B), a cafeteria plan under Code
Section 125 or a tax-deferred annuity under Code Section 403(b).
Unless elected otherwise by the Employer in the Adoption Agreement,
these deferred amounts will be considered as Compensation for Plan
purposes. These deferred amounts are not counted as Compensation for
purposes of Articles X and XIV. When applicable to a Self-Employed
Individual, Compensation shall mean Earned Income.
1.13 CONTRIBUTION PERCENTAGE The ratio (expressed as a percentage and
calculated separately for each Participant) of:
(a) the Participant's Contribution Percentage Amounts [as
defined at (c)-(f)] for the Plan Year, to
(b) the Participant's Compensation for the Plan Year.
Compensation will only include amounts for the period during
which the Employee was eligible to participate.
Contribution Percentage Amounts on behalf of any Participant shall
include:
(c) the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test)
made under the Plan on behalf of the Participant for the
Plan Year,
(d) forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which
shall be taken into account in the year in which such
forfeiture is allocated,
(e) at the election of the Employer, Qualified Non-Elective
Contributions, and
(f) the Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is
met before the Elective Deferrals are used in the ACP test
and continues to be met following the exclusion of those
Elective Deferrals that are used to meet the ACP test.
Contribution Percentage Amounts shall not include Matching
Contributions, whether or not Qualified, that are forfeited either to
correct Excess Aggregate Contributions, or because the contributions
to which they relate are Excess Deferrals, Excess Contributions, or
Excess Aggregate Contributions.
6
1.14 DEFINED BENEFIT PLAN A Plan under which a Participant's benefit
is determined by a formula contained in the Plan and no individual
accounts are maintained for Participants.
1.15 DEFINED BENEFIT (PLAN) FRACTION A fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under
all the Defined Benefit Plans (whether or not terminated) maintained
by the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under Code Sections 415(b) and (d) or 140 percent of the Highest
Average Compensation, including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a Participant as of
the first day of the first Limitation Year beginning after December
31, 1986, in one or more Defined Benefit Plans maintained by the
Employer 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 Section 415 for all Limitation Years beginning before
January 1, 1987.
1.16 DEFINED CONTRIBUTION DOLLAR LIMITATION Thirty thousand dollars
($30,000) or if greater, one-fourth of the defined benefit dollar
limitation set forth in Code Section 415(b)(1)(A) as in effect for the
Limitation Year.
1.17 DEFINED CONTRIBUTION PLAN A Plan under which individual accounts
are maintained for each Participant to which all contributions,
forfeitures, investment income and gains or losses, and expenses are
credited or deducted. A Participant's benefit under such Plan is
based solely on the fair market value of his or her account balance.
1.18 DEFINED CONTRIBUTION (PLAN) FRACTION A Fraction, the numerator
of which is the sum of the Annual Additions to the Participant's
account under all the Defined Contribution Plans (whether or not
terminated) maintained by the Employer for the current and all prior
Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible Employee contributions to all Defined
Benefit Plans, whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all Welfare Benefit Funds, as
defined in paragraph 1.89 and individual medical accounts, as defined
in Code Section 415(l)(2), maintained by the Employer), and the
denominator of which is the sum of the maximum aggregate amounts for
the current and all prior Limitation Years of service with the
Employer (regardless of whether a Defined Contribution Plan was
maintained by the Employer). The maximum aggregate amount in the
Limitation Year is the lesser of 125 percent of the dollar limitation
7
determined under Code Sections 415(b) and (d) in effect under Code
Section 415(c)(1)(A) or 35 percent of the Participant's Compensation
for such year.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more Defined Contribution Plans maintained by the Employer which were
in existence on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the Defined Benefit Fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (a) the excess of the
sum of the fractions over 1.0 times (b) the denominator of this
fraction will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 6, 1986, but using the Section
415 limitation applicable to the first Limitation Year beginning on or
after January 1, 1987. The Annual Addition for any Limitation Year
beginning before January 1, 1987, shall not be re-computed to treat
all Employee Contributions as Annual Additions.
1.19 DESIGNATED BENEFICIARY The individual who is designated as the
beneficiary under the Plan in accordance with Code Section 401(a)(9)
and the regulations thereunder.
1.20 DISABILITY An illness or injury of a potentially permanent
nature, expected to last for a continuous period of not less than 12
months, certified by a physician selected by or satisfactory to the
Employer which prevents the Employee from engaging in any occupation
for wage or profit for which the Employee is reasonably fitted by
training, education or experience.
1.21 DISTRIBUTION CALENDAR YEAR A calendar year for which a minimum
distribution is required.
1.22 EARLY RETIREMENT AGE The age set by the Employer in the Adoption
Agreement (but not less than 55), which is the earliest age at which a
Participant may retire and receive his or her benefits under the Plan.
1.23 EARNED INCOME Net earnings from self-employment in the trade or
business with respect to which the Plan is established, determined
without regard to items not included in gross income and the
deductions allocable to such items, provided that personal services of
the individual are a material income-producing factor. Earned income
shall be reduced by contributions made by an Employer to a qualified
plan to the extent deductible under Code Section 404. For tax years
beginning after 1989, net earnings shall be determined taking into
account the deduction for one-half of self-employment taxes allowed to
the Employer under Code Section 164(f) to the extent deductible.
8
1.24 EFFECTIVE DATE The date on which the Employer's retirement plan
or amendment to such plan becomes effective. For amendments
reflecting statutory and regulatory changes post Tax Reform Act of
1986, the Effective Date will be the earlier of the date upon which
such amendment is first administratively applied or the first day of
the Plan Year following the date of adoption of such amendment.
1.25 ELECTION PERIOD The period which begins on the first day of the
Plan Year in which the Participant attains age 35 and ends on the date
of the Participant's death. If a Participant separates from Service
prior to the first day of the Plan Year in which age 35 is attained,
the Election Period shall begin on the date of separation, with
respect to the account balance as of the date of separation.
1.26 ELECTIVE DEFERRAL Employer contributions made to the Plan at the
election of the Participant, in lieu of cash Compensation. Elective
Deferrals shall also include contributions made pursuant to a Salary
Savings Agreement or other deferral mechanism, such as a cash option
contribution. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on
behalf of such 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 deferred arrangement
as described in Code Section 402(h)(1)(B), any eligible deferred
compensation plan under Code Section 457, any plan as described under
Code Section 501(c)(18), and any Employer contributions made on the
behalf of a Participant for the purchase of an annuity contract under
Code Section 403(b) pursuant to a Salary Savings Agreement. Elective
Deferrals shall not include any deferrals properly distributed as
Excess Annual Additions.
1.27 ELIGIBLE PARTICIPANT Any Employee who is eligible to make a
Voluntary Contribution, or an Elective Deferral (if the Employer takes
such contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including
forfeitures) or a Qualified Matching Contribution. If a Voluntary
Contribution or Elective Deferral is required as a condition of
participation in the Plan, any Employee who would be a Participant in
the Plan if such Employee made such a contribution shall be treated as
an Eligible Participant even though no Voluntary Contributions or
Elective Deferrals are made.
1.28 EMPLOYEE Any person employed by the Employer (including Self-
Employed Individuals and partners), all Employees of a member of an
affiliated service group [as defined in Code Section 414(m)],
Employees of a controlled group of corporations [as defined in Code
Section 414(b)], all Employees of any incorporated or unincorporated
trade or business which is under common control [as defined in Code
Section 414(c)], leased Employees [as defined in Code Section 414(n)]
and any Employee required to be aggregated by Code Section 414(o).
All such Employees shall be treated as employed by a single Employer.
9
1.29 EMPLOYER The Self-Employed Individual, partnership, corporation
or other organization which adopts this Plan including any firm that
succeeds the Employer and adopting this Plan. For purposes of Article
X, Limitations shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations [as defined in Code
Section 414(b) as modified by Code Section 415(h)], all commonly
controlled trades or businesses [as defined in Code Section 414(c) as
modified by Code Section 415(h)] or affiliated service groups [as
defined in Code Section 414(m)] of which the adopting Employer is a
part, and other entities required to be aggregated with the Employer
pursuant to Regulations under Code Section 4 14(o).
1.30 ENTRY DATE The date on which an Employee commences participation
in the Plan as determined by the Employer in the Adoption Agreement.
Unless the Employer specifies otherwise in the Adoption Agreement,
Entry into the Plan shall be on the first day of the Plan Year or the
first day of the seventh month of the Plan Year coinciding with or
following the date on which an Employee meets the eligibility
requirements.
1.31 EXCESS AGGREGATE CONTRIBUTIONS The excess, with respect to any
Plan Year, of:
(a) The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess
Elective Deferrals pursuant to paragraph 1.34 and then determining
Excess Contributions pursuant to paragraph 1.33.
1.32 EXCESS AMOUNT The excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
1.33 EXCESS CONTRIBUTION With respect to any Plan Year, the excess
of:
(a) The aggregate amount of Employer contributions actually
taken into account in computing the ADP of Highly
Compensated Employees for such Plan Year, over
(b) The maximum amount of such contributions permitted by the
ADP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of the ADPs,
beginning with the highest of such percentages).
10
1.34 EXCESS ELECTIVE DEFERRALS Those Elective Deferrals that are
includible in a Participant's gross income under Code Section 402(g)
to the extent such Participant's Elective Deferrals for a taxable year
exceed the dollar limitation under such Code Section. Excess Elective
Deferrals shall be treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first April 15
following the close of the Participant's taxable year.
1.35 FAMILY MEMBER The Employee's Spouse, any lineal descendants and
ascendants and the Spouse of such lineal descendants and ascendants.
1.36 FIRST DISTRIBUTION CALENDAR YEAR 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 paragraph 7.10.
1.37 FUND All contributions received by the Trustee under this Plan
and Trust Account, investments thereof and earnings and appreciation
thereon.
1.38 HARDSHIP An immediate and heavy financial need of the Employee
where such Employee lacks other available resources.
1.39 HIGHEST AVERAGE COMPENSATION The average compensation for the
three consecutive Years of Service with the Employer that produces the
highest average. A Year of Service with the Employer is the 12-
consecutive month period defined in the Adoption Agreement.
1.40 HIGHLY COMPENSATED EMPLOYEE Any Employee who performs service
for the Employer during the determination year and who, during the
immediate prior year:
(a) received Compensation from the Employer in excess of $75,000
[as adjusted pursuant to Code Section 415(d)]; or
(b) received Compensation from the Employer in excess of $50,000
[as adjusted pursuant to Code Section 415(d)] and was a
member of the Top-Paid Group for such year; or
(c) was an officer of the Employer and received Compensation
during such year that is greater than 50 percent of the
dollar limitation in effect under Code Section 415(b)(1)(A).
Notwithstanding (a), (b) and (c), an Employee who was not Highly
Compensated during the preceding Plan Year shall not be treated as a
Highly Compensated Employee with respect to the current Plan Year
unless such Employee is a member of the 100 Employees paid the
greatest Compensation during the year for which such determination is
being made.
11
(d) Employees who are five percent (5%) Owners at any time
during the immediate prior year or determination year.
Highly Compensated Employee includes Highly Compensated active
Employees and Highly Compensated former Employees.
For purposes of determining those employees that are to be treated as
Highly Compensated for a determination year, an Employer maintaining a
fiscal year Plan may elect to make the look-back year calculation as
defined in Section 1.414(q)-it, Q&A 14(b) of the Treasury Regulations
for a determination year on the basis of the calendar year ending with
or within the applicable determination year. For purposes of this
election, a determination year that is shorter than twelve (12)
months, the look-back year calculation may be made based upon the
calendar year ending with or within the twelve-month period ending
with the end of the applicable determination year. Where such
election is made, the employer shall make its determination year
calculation pursuant to the provisions of Treasury Regulation Section
1.414(q)-1T, Q&A 14(b).
1.41 HOUR OF SERVICE
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
These hours shall be credited to the Employee for the
computation period in which the duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence. No more than 501 Hours of Service shall be
credited under this paragraph for any single continuous
period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be
calculated and credited pursuant to Department of Labor
Regulations Section 2530.200b-2 which are incorporated
herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.
The same Hours of Service shall not be credited both under
paragraph (a) or paragraph (b), as the case may be, and
under this paragraph (c). These hours shall be credited to
the Employee for the computation period or periods to which
the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made.
(d) Hours of Service shall be credited for employment with the
Employer and with other members of an affiliated service
12
group [as defined in Code Section 414(m)], a controlled
group of corporations [as defined in Code Section 414(b)],
or a group of trades or businesses under common control [as
defined in Code Section 414(c)] of which the adopting
Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to Code Section 414(o)
and the regulations thereunder. Hours of Service shall also
be credited for any individual considered an Employee for
purposes of this Plan under Code Section 414(n) or Code
Section 414(o) and the regulations thereunder.
(e) Solely for purposes of determining whether a Break in
Service, as defined in paragraph 1.10, for participation and
vesting purposes has occurred in a computation period, an
individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such
individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day
of such absence. For purposes of this paragraph, an absence
from work for maternity or paternity reasons means an
absence by reason of the pregnancy of the individual, by
reason of a birth of a child of the individual, by reason of
the placement of a child with the individual in connection
with the adoption of such child by such individual, or for
purposes of caring for such child for a period beginning
immediately following such birth or placement. The Hours of
Service credited under this paragraph shall be credited 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. No more than 501 hours will be credited under this
paragraph.
(f) Unless specified otherwise in the Adoption Agreement, Hours
of Service shall be determined on the basis of the actual
hours for which an Employee is paid or entitled to pay.
1.42 KEY EMPLOYEE Any Employee or former Employee (and the
beneficiaries of such employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual Compensation exceeds 50% of the dollar limitation
under Code Section 415(b)(1)(A) (the defined benefit maximum annual
benefit), an owner (or considered an owner under Code Section 318) of
one of the ten largest interests in the employer if such individual's
Compensation exceeds 100% of the dollar limitation under Code Section
415(c)(1)(A), a 5% owner of the Employer, or a 1% owner of the
Employer who has an annual Compensation of more than $150,000. For
purposes of determining who is a Key Employee, annual Compensation
shall mean Compensation as defined for Article X, but including
amounts deferred through a salary reduction agreement to a cash or
deferred plan under Code Section 401(k), a Simplified Employee Pension
13
Plan under Code Section 408(k), a cafeteria plan under Code Section
125 or a tax-deferred annuity under Code Section 403(b). The
determination period is the Plan Year containing the Determination
Date and the four preceding Plan Years. The determination of who is a
Key Employee will be made in accordance with Code Section 416(i)(1)
and the regulations thereunder.
1.43 LEASED EMPLOYEE Any person (other than an Employee of the
recipient) who, pursuant to an agreement between the recipient and any
other person ("leasing organization"), has performed services for the
recipient [or for the recipient and related persons determined in
accordance with Code Section 414(n)(6)] on a substantially full-time
basis for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of the
recipient Employer.
1.44 LIMITATION YEAR The calendar year or such other 12-consecutive
month period designated by the Employer in the Adoption Agreement for
purposes of determining the maximum Annual Addition to a Participant's
account. All qualified plans maintained by the Employer must use the
same Limitation Year. If the Limitation Year is amended to a
different 12-consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year in which the amendment is
made.
1.45 MASTER OR PROTOTYPE PLAN A plan, the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
1.46 MATCHING CONTRIBUTION An Employer contribution made to this or
any other defined contribution plan on behalf of a Participant on
account of an Employee Voluntary Contribution made by such
Participant, or on account of a Participant's Elective Deferral, under
a Plan maintained by the Employer.
1.47 MAXIMUM PERMISSIBLE AMOUNT The maximum Annual Addition that may
be contributed or allocated to a Participant's account under the plan
for any Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation, or
(b) 25% of the Participant's Compensation for the Limitation
Year. The Compensation limitation referred to in (b) shall
not apply to any contribution for medical benefits [within
the meaning of Code Section 40 1(h) or Code Section
419A(f)(2)] which is otherwise treated as an Annual Addition
under Code Section 415(l)(1) or 419(d)(2). If a short
Limitation Year is created because of an amendment changing
the Limitation Year to a different 12-consecutive month
period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Limitation multiplied by the
number of months in the short Limitation Year divided by 12.
14
1.48 NET PROFIT The current and accumulated operating earnings of the
Employer before Federal and State income taxes, excluding nonrecurring
or unusual items of income, and before contributions to this and any
other qualified plan of the Employer. Alternatively, the Employer may
fix another definition in the Adoption Agreement.
1.49 NORMAL RETIREMENT AGE The age, set by the Employer in the
Adoption Agreement, at which a Participant may retire and receive his
or her benefits under the Plan.
1.50 OWNER-EMPLOYEE A sole proprietor, or a partner owning more than
10% of either the capital or profits interest of the partnership.
1.51 PAIRED PLANS Two or more Plans maintained by the Sponsor
designed so that a single or any combination of Plans adopted by an
Employer will meet the antidiscrimination rules, the contribution and
benefit limitations, and the Top-Heavy provisions of the Code.
1.52 PARTICIPANT Any Employee who has met the eligibility
requirements and is participating in the Plan.
1.53 PARTICIPANT'S BENEFIT 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. A special exception exists
for the second distribution Calendar Year. For purposes of this
paragraph, if any portion of the minimum distribution for the First
Distribution Calendar Year is made in the second Distribution Calendar
Year on or before the Required Beginning Date, the amount of the
minimum distribution made in the second distribution calendar year
shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
1.54 PERMISSIVE AGGREGATION GROUP Used for Top-Heavy testing
purposes, it is the Required Aggregation Group of plans plus any other
plan or plans of the Employer which, when considered as a group with
the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
1.55 PLAN The Employer's qualified retirement plan as embodied herein
and in the Adoption Agreement.
1.56 PLAN ADMINISTRATOR The Employer.
1.57 PLAN YEAR The 12-consecutive month period designated by the
Employer in the Adoption Agreement.
1.58 PRESENT VALUE Used for Top-Heavy test and determination
purposes, when determining the Present Value of accrued benefits, with
15
respect to any Defined Benefit Plan maintained by the Employer,
interest and mortality rates shall be determined in accordance with
the provisions of the respective plan. If applicable, interest and
mortality assumptions will be specified in the section of the Adoption
Agreement entitled "Limitations on Allocations".
1.59 PROJECTED ANNUAL BENEFIT Used to test the maximum benefit which
may be obtained from a combination of retirement plans, it is the
annual retirement benefit (adjusted to an actuarial equivalent
straight life annuity if such benefit is expressed in a form other
than a straight life annuity or Qualified Joint and Survivor Annuity)
to which the Participant would be entitled under the terms of a
Defined Benefit Plan or plans, assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the plan (or current age, if later),
and
(b) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine
benefits under the plan will remain constant for all future
Limitation Years.
1.60 QUALIFIED DEFERRED COMPENSATION PLAN Any pension, profit-
sharing, stock bonus, or other plan which meets the requirements of
Code Section 401 and includes a trust exempt from tax under Code
Section 501(a) or any annuity plan described in Code Section 403(a).
An Eligible Retirement Plan is an individual retirement account (IRA)
as described in Code Section 408(a), an individual retirement annuity
(IRA) as described in Code Section 408(b), an annuity plan as
described in Code Section 403(a), or a qualified trust as described in
Code Section 401(a), which accepts Eligible Rollover Distributions.
However in the case of an Eligible Rollover Distribution to a
Surviving Spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
1.61 QUALIFIED DOMESTIC RELATIONS ORDER A QDRO is a signed Domestic
Relations Order issued by a State Court which creates, recognizes or
assigns to an alternate payee(s) the right to receive all or part of a
Participant's Plan benefit and which meets the requirements of Code
Section 414(p). An alternate payee is a Spouse, former Spouse, child,
or other dependent who is treated as a beneficiary under the Plan as a
result of the QDRO.
1.62 QUALIFIED EARLY RETIREMENT AGE Qualified Early Retirement Age is
the latest of:
(a) the earliest date, under the Plan, on which the Participant
may elect to receive retirement benefits, or
16
(b) the first day of the 120th month beginning before the
Participant attains A Normal Retirement Age, or
(c) the date the Participant begins participation.
1.63 QUALIFIED JOINT AND SURVIVOR ANNUITY An immediate annuity for
the life of the Participant with a survivor annuity for the life of
the Participant's Spouse which is at least one-half of but not more
than the amount of the annuity payable during the joint lives of the
Participant and the Participant's Spouse. The exact amount of the
Survivor Annuity is to be specified by the Employer in the Adoption
Agreement. If not designated by the Employer, the Survivor Annuity
will be one-half of the amount paid to the Participant during his or
her lifetime. The Qualified Joint and Survivor Annuity will be the
amount of benefit which can be provided by the Participant's Vested
Account Balance.
1.64 QUALIFIED MATCHING CONTRIBUTION Matching Contributions which
when made are subject to the distribution and nonforfeitability
requirements under Code Section 401(k).
1.65 QUALIFIED NON-ELECTIVE CONTRIBUTIONS Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by
the Employer and allocated to Participants' accounts that the
Participants may not elect to receive in cash until distributed from
the Plan; that are nonforfeitable when made; and that are
distributable only in accordance with the distribution provisions that
are applicable to Elective Deferrals and Qualified Matching
Contributions.
1.66 QUALIFIED VOLUNTARY CONTRIBUTION A tax-deductible voluntary
Employee contribution. Qualified Voluntary Contributions are not
permitted in this Plan.
1.67 REGIONAL PROTOTYPE PLAN A plan, the form of which is subject to
a favorable notification letter from the Internal Revenue Service.
1.68 REQUIRED AGGREGATION GROUP Used for Top-Heavy testing purposes,
it consists of:
(a) each qualified plan of the Employer in which at least one
Key Employee participates or participated at any time during
the determination period (regardless of whether the plan has
terminated), and
(b) any other qualified plan of the Employer which enables a
plan described in (a) to meet the requirements of Code
Sections 401(a)(4) or 410.
1.69 REQUIRED BEGINNING DATE The date on which a Participant is
required to take his or her first minimum distribution under the Plan.
The rules are set forth at paragraph 7.5.
17
1.70 ROLLOVER CONTRIBUTION A contribution made by a Participant of an
amount distributed to such Participant from another Qualified Deferred
Compensation Plan in accordance with Code Sections 402(a)(5), (6), and
(7).
An Eligible Rollover Distribution is any distribution of all or any
portion of the balance to the credit of the Participant except that an
Eligible Rollover Distribution does not include:
(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 Participant or
the joint lives (or joint life expectancies) of the
Participant and the Participant'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); and
(c) the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Employer
securities).
A Direct Rollover is a payment by the plan to the Eligible Retirement
Plan specified by the Participant.
1.71 SALARY SAVINGS AGREEMENT An agreement between the Employer and a
participating Employee where the Employee authorizes the Employer to
withhold a specified amount or percentage of his or her Compensation
for deposit to the Plan on behalf of such Employee.
1.72 SELF-EMPLOYED INDIVIDUAL An individual who has Earned Income for
the taxable year from the trade or business for which the Plan is
established including an individual who would have had Earned Income
but for the fact that the trade or business had no Net Profit for the
taxable year.
1.73 SERVICE The period of current or prior employment with the
Employer. If the Employer maintains a plan of a predecessor employer,
Service for such predecessor shall be treated as Service for the
Employer.
1.74 SHAREHOLDER EMPLOYEE An Employee or Officer who owns [or is
considered as owning within the meaning of Code Section 318(a)(1)], on
any day during the taxable year of an electing small business
corporation (S Corporation), more than 5% of such corporation's
outstanding stock.
1.75 SIMPLIFIED EMPLOYEE PENSION PLAN An individual retirement
account which meets the requirements of Code Section 408(k), and to
which the Employer makes contributions pursuant to a written formula.
18
These plans are considered for contribution limitation and Top-Heavy
testing purposes.
1.76 SPONSOR __________________ or any successor(s) or assign(s).
1.77 SPOUSE (SURVIVING SPOUSE) The Spouse, or Surviving Spouse of the
Participant, provided that a former Spouse will be treated as the
Spouse or Surviving Spouse and a current Spouse will not be treated as
the Spouse or Surviving Spouse to the extent provided under a
Qualified Domestic Relations Order as described in Code Section
414(p).
1.78 SUPER TOP-HEAVY PLAN A Plan under which the Top-Heavy Ratio [as
defined at paragraph 1.81] exceeds 90%.
1.79 TAXABLE WAGE BASE For plans with an allocation formula which
takes into account the Employer's contribution under the Federal
Insurance Contributions Act (FICA), the maximum amount of earnings
which may be considered wages for such Plan Year under the Social
Security Act [Code Section 3121(a)(1)], or the amount selected by the
Employer in the sub-section of the Adoption Agreement entitled
"Taxable Wage Base".
1.80 TOP-HEAVY DETERMINATION DATE For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that year.
1.81 TOP-HEAVY PLAN For any Plan Year beginning after 1983, the
Employer's Plan is top-heavy if any of the following conditions exist:
(a) If the Top-Heavy Ratio for the Employer's Plan exceeds 60%
and this Plan is not part of any Required Aggregation Group
or Permissive Aggregation Group of Plans.
(b) If the Employer's plan is a part of a Required Aggregation
Group of plans but not part of a Permissive Aggregation
Group and the Top-Heavy Ratio for the group of plans exceeds
60%.
(c) If the Employer's plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of plans
and the Top-Heavy Ratio for the Permissive Aggregation
Group exceeds 60%.
1.82 TOP-HEAVY RATIO
(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 5-year period ending on the Determination
Date(s) has or has had accrued benefits, the Top-Heavy Ratio
19
for this Plan alone, or for the Required or Permissive
Aggregation Group as appropriate, is a fraction,
(1) the numerator of which is the sum of the account
balances of all Key Employees as of the Determination
Date(s) [including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)], and
(2) the denominator of which is the sum of all account
balances [including any part of any account balance
distributed in the 5-year period ending on the
Determination Date(s)], both computed in accordance
with Code Section 416 and the regulations thereunder.
Both the numerator and denominator of the Top-Heavy Ratio
are increased to reflect any contribution not actually made
as of the Determination Date, but which is required to be
taken into account on that date under Code Section 416 and
the regulations thereunder.
(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 5-year period ending on the
Determination Date(s) has or has had any accrued benefits,
the Top-Heavy Ratio for any Required or Permissive
Aggregation Group as appropriate is a fraction,
(1) the numerator of which is the sum of account balances
under the aggregated Defined Contribution Plan or Plans
for all Key Employees, determined in accordance with
(a) above, and the Present Value of accrued benefits
under the aggregated Defined Benefit Plan or Plans for
all Key Employees as of the Determination Date(s), and
(2) the denominator of which is the sum of the account
balances under the aggregated Defined Contribution Plan
or Plans for all Participants, determined in accordance
with (a) above, and the Present Value of accrued
benefits under the Defined Benefit Plan or Plans for
all Participants as of the Determination Date(s), all
determined in accordance with Code Section 416 and the
regulations thereunder. The accrued benefits under a
Defined Benefit Plan in both the numerator and
denominator of the Top Heavy Ratio are increased for
any distribution of an accrued benefit made in the 5-
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
20
within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416
and the regulations thereunder for the first and second plan
years of a Defined Benefit Plan. The account balances and
accrued benefits of a participant (1) who is not a Key
Employee but who was a Key Employee in a prior year, or (2)
who has not been credited with at least one hour of service
with any Employer maintaining the Plan at any time during
the 5-year period ending on the Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio, and
the extent to which distributions, rollovers, and transfers
are taken into account will be made in accordance with Code
Section 416 and the Regulations thereunder. Qualified
Voluntary 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.
The accrued benefit of a Participant other than a Key Em-
ployee shall be determined under (1) the method, if any,
that uniformly applies for accrual purposes under all
Defined Benefit Plans maintained by the Employer, or (2) if
there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the
fractional rule of Code Section 41 l(b)(1)(C).
1.83 TOP-PAID GROUP The group consisting of the top 20% of Employees
when ranked on the basis of Compensation paid during such year. For
purposes of determining the number of Employees in the group (but not
who is in it), the following Employees shall be excluded:
(a) Employees who have not completed 6 months of Service.
(b) Employees who normally work less than 17-1/2 hours per week.
(c) Employees who normally do not work more than 6 months during
any year.
(d) Employees who have not attained age 21.
(e) Employees included in a collective bargaining unit, covered
by an agreement between employee representatives and the
Employer, where retirement benefits were the subject of good
faith bargaining and provided that 90% or more of the
Employer's Employees are covered by the agreement.
(f) Employees who are nonresident aliens and who receive no
earned income which constitutes income from sources within
the United States.
1.84 TRANSFER CONTRIBUTION A non-taxable transfer of a Participant's
benefit directly from a Qualified Deferred Compensation Plan to this
Plan.
21
1.85 TRUSTEE Shall be the individual, individuals or institution
appointed by the Employer to serve as Trustee of the Plan. In the
event the Employer does not name an individual, individuals or
institution to serve as Trustee of the Plan, the Employer will be
deemed to be the Trustee.
1.86 VALUATION DATE The last day of the Plan Year or such other date
as agreed to by the Employer and the Trustee on which Participant
accounts are revalued in accordance with Article V hereof. For Top-
Heavy purposes, the date selected by the Employer as of which the Top-
Heavy Ratio is calculated.
1.87 VESTED ACCOUNT BALANCE The aggregate value of the Participant's
vested account balances derived from Employer and Employee
contributions (including Rollovers), whether vested before or upon
death, including the proceeds of insurance contracts, if any, on the
Participant's life. The provisions of Article VIII shall apply to a
Participant who is vested in amounts attributable to Employer
contributions, Employee contributions (or both) at the time of death
or distribution.
For purposes of paragraph 8.7, Vested Account Balance shall mean, in
the case of a money purchase pension plan, the Participant's separate
account balance attributable solely to Qualified Voluntary
Contributions. For profit-sharing plans the above definition shall
apply.
1.88 VOLUNTARY CONTRIBUTION An Employee contribution by or on behalf
of a Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate account
to which earnings and losses are allocated. For Plan Years beginning
after the Plan Year in which this Plan is adopted (or restated) by the
Employer, Voluntary Contributions are only permitted in Standardized
Adoption Agreement 003 or Nonstandardized Adoption Agreement 006
whether or not the Employer utilizes the salary deferral provisions.
Voluntary Contributions for Plan Years beginning after 1986, together
with any Matching Contributions as defined in Code Section 401(m),
will be limited so as to meet the nondiscrimination test of Code
Section 401(m).
1.89 WELFARE BENEFIT FUND Any fund that is part of a plan of the
Employer, or has the effect of a plan, through which the Employer
provides welfare benefits to Employees or their beneficiaries. For
these purposes, Welfare Benefit means any benefit other than those
with respect to which Code Section 83(h) (relating to transfers of
property in connection with the performance of services), Code Section
404 (relating to deductions for contributions to an Employee's trust
or annuity and Compensation under a deferred payment plan), Code
Section 404A (relating to certain foreign deferred compensation plans)
apply. A "Fund" is any social club, voluntary employee benefit
association, supplemental unemployment benefit trust or qualified
group legal service organization described in Code Section 501(c)(7),
22
(9), (17) or (20); any trust, corporation, or other organization not
exempt from income tax, or to the extent provided in regulations, any
account held for an Employer by any person.
1.90 YEAR OF SERVICE A 12-consecutive month period during which an
Employee is credited with not less than 1,000 (or such lesser number
as specified by the Employer in the Adoption Agreement) Hours of
Service.
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 PARTICIPATION Employees who meet the eligibility requirements in
the Adoption Agreement on the Effective Date of the Plan shall become
Participants as of the Effective Date of the Plan. If so elected in
the Adoption Agreement, all Employees employed on the Effective Date
of the Plan may participate, even if they have not satisfied the
Plan's specified eligibility requirements. Other Employees shall
become Participants on the Entry Date coinciding with or immediately
following the date on which they meet the eligibility requirements.
Depending on the Plan's eligibility requirements, the entry date may
actually be earlier than the date on which the Employee satisfies the
eligibility requirements. The Employee must satisfy the eligibility
requirements specified in the Adoption Agreement and be employed on
the Entry Date to become a Participant in the Plan. In the event an
Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall
participate immediately if such Employee has satisfied the minimum age
and service requirements and would have previously become a
Participant had he or she been in the eligible class. Employees may
waive participation in the Plan. However, this is only permitted if
the Employer's adoption is on Nonstandardized Adoption Agreement 004,
005 or 006, and the Plan will meet the minimum coverage requirements
in Code Section 410(b) and the minimum participation requirements of
Code Section 401(a)(26). [To the extent so provided by regulations, a
partner (or other employee) waiving participation in the Plan may
cause Code Section 40 1(k) and the regulations thereunder to apply.] A
former Participant shall again become a Participant upon returning to
the employ of the Employer at the next Entry Date or if earlier, the
next Valuation Date. For this purpose, Participant's Compensation and
Service shall be considered from date of rehire.
2.2 CHANGE IN CLASSIFICATION OF EMPLOYMENT In the event a
Participant becomes ineligible to participate because he or she is no
longer a member of an eligible class of Employees, such Employee shall
participate upon his or her return to an eligible class of Employees.
2.3 COMPUTATION PERIOD To determine Years of Service and Breaks in
Service for purposes of eligibility, the 12-consecutive month period
shall commence on the date on which an Employee first performs an Hour
23
of Service for the Employer and each anniversary thereof, such that
the succeeding 12-consecutive month period commences with the
employee's first anniversary of employment and so on. If, however,
the period so specified is one year or less, the succeeding 12-
consecutive month period shall commence on the first day of the Plan
Year prior to the anniversary of the date they first performed an Hour
of Service regardless of whether the Employee is entitled to be
credited with 1,000 (or such lesser number as specified by the
Employer in the Adoption Agreement) Hours of Service during their
first employment year.
2.4 EMPLOYMENT RIGHTS Participation in the Plan shall not confer
upon a Participant any employment rights, nor shall it interfere with
the Employer's right to terminate the employment of any Employee at
any time.
2.5 SERVICE WITH CONTROLLED GROUPS All Years of Service with other
members of a controlled group of corporations [as defined in Code
Section 414(b)], trades or businesses under common control [as defined
in Code Section 4 14(c)], or members of an affiliated service group
[as defined in Code Section 414(m)] shall be credited for purposes of
determining an Employee's eligibility to participate.
2.6 OWNER-EMPLOYEES If this Plan provides contributions or benefits
for one or more Owner-Employees who control both the business for
which this Plan is established and one or more other trades or
businesses, this Plan and the Plan established for other trades or
businesses must, when looked at as a single Plan, satisfy Code
Sections 401(a) and (d) for the Employees of this and all other trades
or businesses.
If the Plan provides contributions or benefits for one or more Owner-
Employees who control one or more other trades or businesses, the
Employees of the other trades or businesses must be included in a Plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled, and the
individual controls a trade or business, then the contributions or
benefits of the Employees under the plan of the trades or businesses
which are controlled must be as favorable as those provided for him or
her under the most favorable plan of the trade or business which is
not controlled.
For purposes of the preceding sentences, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees
together:
24
(a) own the entire interest in an unincorporated trade or
business, or
(b) in the case of a partnership, own more than 50% of either
the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
2.7 LEASED EMPLOYEES Any Leased Employee shall be treated as an
Employee of the recipient Employer; however, contributions or benefits
provided by the leasing organization which are attributable to
services 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 such Employee is covered by
a money purchase pension plan providing:
(a) a non-integrated Employer contribution rate of at least 10%
of Compensation, [as defined in Code Section 415(c)(3) but
including amounts contributed by the Employer pursuant to a
salary reduction agreement, which are excludible from the
Employee's gross income under a cafeteria plan covered by
Code Section 125, a cash or deferred profit-sharing plan
under Code Section 401(k), a Simplified Employee Pension
Plan under Code Section 408(k) and a tax-sheltered annuity
under Code Section 403(b)],
(b) immediate participation, and
(c) full and immediate vesting.
This exclusion is only available if Leased Employees do not constitute
more than twenty percent (20%) of the recipient's non-highly
compensated work force.
2.8 THRIFT PLANS If the Employer makes an election in Adoption
Agreements 003 or 006 to require Voluntary Contributions to
participate in this Plan, the Employer shall notify each eligible
Employee in writing of his or her eligibility for participation at
least 30 days prior to the appropriate Entry Date. The Employee shall
indicate his or her intention to join the Plan by authorizing the
Employer to withhold a percentage of his or her Compensation as
provided in the Plan. Such authorization shall be returned to the
Employer at least 10 days prior to the Employee's Entry Date. The
Employee may decline participation by so indicating on the enrollment
form or by failure to return the enrollment form to the Employer prior
to the Employee's Entry Date. If the Employee declines to
participate, such Employee shall be given the opportunity to join the
25
Plan on the next Entry Date. The taking of a Hardship Withdrawal
under the provisions of paragraph 6.9 will impact the Participant's
ability to make these contributions.
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 AMOUNT The Employer intends to make periodic contributions to
the Plan in accordance with the formula or formulas selected in the
Adoption Agreement. However, the Employer's contribution for any Plan
Year shall be subject to the limitations on allocations contained in
Article X. A Participant may elect to waive an Employer contribution
on his or her behalf for a given Plan Year. However, a Participant
may only make this election if the Employer's adoption is on
Nonstandardized Adoption Agreement 004, 005 or 006. [In the event a
partner in a partnership makes this election, in accordance with
Proposed Regulations Section 1.401(k)-1(a)(6), the Plan will be deemed
to constitute a cash or deferred arrangement with respect to the
partners. Thus, contributions made on behalf of any partners may be
limited to $7,000 indexed as set forth in Code Section 402(g)]. Any
waiver made pursuant to this paragraph will be made prior to the time
such Participant accrues a benefit for that Plan Year.
3.2 EXPENSES AND FEES The Employer shall also be authorized to
reimburse the Fund for all expenses and fees incurred in the
administration of the Plan or Trust Account and paid out of the assets
of the Fund. Such expenses shall include, but shall not be limited
to, fees for professional services, printing and postage. Brokerage
Commissions may not be reimbursed.
3.3 RESPONSIBILITY FOR CONTRIBUTIONS Neither the Trustee nor the
Sponsor shall be required to determine if the Employer has made a
contribution or if the amount contributed is in accordance with the
Adoption Agreement or the Code. The Employer shall have sole
responsibility in this regard. The Trustee shall be accountable
solely for contributions actually received by it.
3.4 RETURN OF CONTRIBUTIONS Contributions made to the Fund by the
Employer shall be irrevocable except as provided below:
(a) Any contribution forwarded to the Trustee because of a
mistake of fact, provided that the contribution is returned
to the Employer within one year of the contribution.
(b) In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under
the Internal Revenue Code, any contribution made incident to
that initial qualification by the Employer must be returned
to the Employer within one year after the date the initial
qualification is denied, but only if the application for the
26
qualification is made by the time prescribed by law for
filing the Employer's return for the taxable year in which
the Plan is adopted, or such later date as the Secretary of
the Treasury may prescribe.
(c) Contributions forwarded to the Trustee are presumed to
be deductible and are conditioned on their
deductibility. Contributions which are determined to
not be deductible will be returned to the Employer.
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 VOLUNTARY CONTRIBUTIONS An Employee may make Voluntary
Contributions to the Plan established hereunder if so authorized by
the Employer in a uniform and nondiscriminatory manner. Such
contributions are subject to the limitations on Annual Additions and
are subject to antidiscrimination testing. Voluntary Contributions
are permitted A only in Adoption-Agreements 003 and 006.
4.2 QUALIFIED VOLUNTARY CONTRIBUTIONS A Participant may no longer
make Qualified Voluntary Contributions to the Plan. Such amounts
already contributed may remain in the Trust Fund Account until
distributed to the Participant.
4.3 ROLLOVER CONTRIBUTION Unless provided otherwise in the Adoption
Agreement, a Participant may make a Rollover Contribution to any
Defined Contribution Plan established hereunder of all or any part of
an amount distributed or distributable to him or her from a Qualified
Deferred Compensation Plan provided:
(a) the amount distributed to the Participant is deposited to
the Plan no later than the sixtieth day after such
distribution was received by the Participant,
(b) the amount distributed is not one of a series of
substantially equal periodic payments made for the life (or
life expectancy) of the Participant or the joint lives (or
joint life expectancies) of the Participant and the
Participant's Designated Beneficiary, or for a specified
period of ten years or more;
(c) the amount distributed is not required under section
401(a)(9) of the Code;
(d) if the amount distributed included property such property is
rolled over, or if sold the proceeds of such property may be
rolled over,
27
(e) the amount distributed is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
In addition, if the Adoption Agreement allows Rollover Contributions,
the Plan will also accept any Eligible Rollover Distribution (as
defined at paragraph 1.70) directly to the Plan.
Rollover Contributions, which relate to distributions prior to January
1, 1993, must be made in accordance with paragraphs (a) through (e)
and additionally meet the requirements of paragraph (f):
(f) The distribution from the Qualified Deferred Compensation
Plan, constituted the Participant's entire interest in such
Plan and was distributed within one taxable year to the
Participant:
(1) on account of separation from Service, a Plan
termination, or in the case of a profit-sharing or
stock bonus plan, a complete discontinuance of
contributions under such plan within the meaning of
Section 402(a)(6)(A) of the Code, or
(2) in one or more distributions which constitute a
qualified lump sum distribution within the meaning of
Code Section 402(e)(4)(A), determined without reference
to subparagraphs (B) and (H).
Such Rollover Contribution may also be made through an Individual
Retirement Account qualified under Code Section 408 where the IRA was
used as a conduit from the Qualified Deferred Compensation Plan, the
Rollover Contribution is made in accordance with the rules provided
under paragraphs (a) through (e) and the Rollover Contribution does
not include any regular IRA contributions, or earnings thereon, which
the Participant may have made to the IRA. Rollover Contributions,
which relate to distributions prior to January 1, 1993, may be made
through an IRA in accordance with paragraphs (a) through (f) and
additional requirements as provided in the previous sentence. The
Trustee shall not be held responsible for determining the tax-free
status of any Rollover Contribution made under this Plan.
4.4 TRANSFER CONTRIBUTION Unless provided otherwise in the Adoption
Agreement a Participant may, subject to the provisions of paragraph
4.5, also arrange for the direct transfer of his or her benefit from a
Qualified Deferred Compensation Plan to this Plan. For accounting and
record keeping purposes, Transfer Contributions shall be treated in
the same manner as Rollover Contributions.
In the event the Employer accepts a Transfer Contribution from a Plan
in which the Employee was directing the investments of his or her
account, the Employer may continue to permit the Employee to direct
28
his or her investments in accordance with paragraph 13.7 with respect
only to such Transfer Contribution. Notwithstanding the above, the
Employer may refuse to accept such Transfer Contributions.
4.5 EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS The Employer
maintaining a Safe-Harbor Profit-Sharing Plan in accordance with the
provisions of paragraph 8.7, acting in a nondiscriminatory manner, may
in its sole discretion refuse to allow Transfer Contributions to its
profit-sharing plan, if such contributions are directly or indirectly
being transferred from a defined benefit plan, a money purchase
pension plan (including a target benefit plan), a stock bonus plan, or
another profit-sharing plan which would otherwise provide for a life
annuity form of payment to the Participant.
4.6 ELECTIVE DEFERRALS A Participant may enter into a Elective
Deferrals Agreement with the Employer authorizing the Employer to
withhold a portion of such Participant's Compensation not to exceed
$7,000 per calendar year as adjusted for inflation or, if lesser, the
percentage of Compensation specified in the Adoption Agreement and to
deposit such amount to the Plan. No Participant shall be permitted to
have Elective Deferrals 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. Thus, the $7,000 limit may be
reduced if a Participant contributes pre-tax contributions to
qualified plans of this or other Employers. Any such contribution
shall be credited to the Employee's Elective Deferrals Account.
Unless otherwise specified in the Adoption Agreement, a Participant
may amend his or her Elective Deferrals Agreement to increase,
decrease or terminate the percentage upon 30 days written notice to
the Employer. If a Participant terminates his or her agreement, such
Participant shall not be permitted to put a new Elective Deferrals
Agreement into effect until the first pay period in the next Plan
Year, unless otherwise stated in the Adoption Agreement. The Employer
may also amend or terminate said agreement on written notice to the
Participant. If a Participant has not authorized the Employer to
withhold at the maximum rate and desires to increase the total
withheld for a Plan Year, such Participant may authorize the Employer
upon 30 days notice to withhold a supplemental amount up to 100% of
his or her Compensation for one or more pay periods. In no event may
the sum of the amounts withheld under the Elective Deferrals Agreement
plus the supplemental withholding exceed 25% of a Participant's
Compensation for a Plan Year. The Employer may also recharacterize as
after-tax Voluntary Contributions, all or any portion of amounts
previously withheld under any Elective Deferrals Agreement within the
Plan Year as provided for at paragraph 10.10. This may be done to
insure that the Plan will meet one of the antidiscrimination tests
under Code Section 40 1(k). Elective Deferrals shall be deposited in
the Trust within 30 days after being withheld from the Participant's
pay. Elective Deferrals are permitted only in Standardized Adoption
Agreement 003, Nonstandardized Adoption Agreement 006, and
Standardized Adoption Agreement 009.
29
4.7 REQUIRED VOLUNTARY CONTRIBUTIONS If the Employer makes a thrift
election in the Adoption Agreement, each eligible Participant shall be
required to make Voluntary Contributions to the Plan for credit to his
or her account as provided in the Adoption Agreement. Such Voluntary
Contributions shall be withheld from the Employee's Compensation and
shall be transmitted by the Employer to the Trustee as agreed between
the Employer and Trustee. A Participant may discontinue participation
or change his or her Voluntary Contribution percentage by so advising
the Employer at least 10 days prior to the date on which such
discontinuance or change is to be effective. If a Participant
discontinues his or her Voluntary Contributions, such Participant may
not again authorize Voluntary Contributions for a period of one year
from the date of discontinuance. A Participant may voluntarily change
his or her Voluntary Contribution percentage once during any Plan Year
and may also agree to have a reduction in his or her contribution, if
required to satisfy the requirements of the ACP test. Voluntary
Contributions are permitted only in Standardized Adoption Agreement
003 and Nonstandardized Adoption Agreement 006.
4.8 DIRECT ROLLOVER OF BENEFITS Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Participant's
election under this paragraph, for distributions made on or after
January 1, 1993, a Participant 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 Participant in a Direct Rollover. Any portion
of a distribution which is not paid directly to an Eligible Retirement
Plan shall be distributed to the Participant. For purposes of this
paragraph, a Surviving Spouse or a Spouse or former Spouse who is an
alternate payee under a Qualified Domestic Relations Order as defined
in Code Section 4 14(p), will be permitted to elect to have any
Eligible Rollover Distribution paid directly to an individual
retirement account (IRA) or an individual retirement annuity (IRA).
The Plan provisions A otherwise applicable to distributions continue
to apply to Rollover and Transfer Contributions.
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 SEPARATE ACCOUNTS The Employer shall establish a separate
bookkeeping account for each Participant showing the total value of
his or her interest in the Fund. Each Participant's account shall be
separated for bookkeeping purposes into the following sub-accounts:
(a) Employer Contributions.
(1) Matching Contributions.
(2) Qualified Matching Contributions.
30
(3) Qualified Non-Elective Contributions.
(4) Discretionary Contributions.
(5) Elective Deferrals.
(b) Voluntary Contributions (and additional amounts including,
required contributions and if applicable, either repayments
of loans previously defaulted on and treated as "deemed
distributions" on which a tax report has been issued, and
amounts paid out upon a separation from service which have
been included in income and which are repaid after being re-
hired by the Employer).
(c) Qualified Voluntary Contributions (if the Plan previously
accepted these).
(d) Rollover Contributions.
(e) Transfer Contributions.
5.2 ADJUSTMENTS TO PARTICIPANT ACCOUNTS As of each Valuation Date of
the Plan, the Employer shall add to each account:
(a) the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,
(b) any Elective Deferrals, Voluntary, Rollover or Transfer
Contributions made by the Participant.
(c) any repayment of amounts previously paid out to a
Participant upon a separation from Service and repaid by the
Participant since the last Valuation Date, and
(d) the Participant's proportionate share of any investment
earnings A and increase in the fair market value of the Fund
since the last Valuation Date, as determined at paragraph
5.4.
The Employer shall deduct from each account:
(e) any withdrawals or payments made from the Participant's
account since the last Valuation Date, and
(f) the Participant's proportionate share of any decrease in the
fair market value of the Fund since the last Valuation Date,
as determined at paragraph 5.4.
5.3 ALLOCATING EMPLOYER CONTRIBUTIONS The Employer's contribution
shall be allocated to Participants in accordance with the allocation
formula selected by the Employer in the Adoption Agreement, and the
minimum contribution and allocation requirements for Top-Heavy Plans.
31
Beginning with the 1990 Plan Year and thereafter, for plans on
Standardized Adoption Agreements 001, 002, 003, 007, 008 and 009,
Participants who are credited with more than 500 Hours of Service or
are employed on the last day of the Plan Year must receive a full
allocation of Employer contributions. In Nonstandardized Adoption
Agreements 004, 005, and 006, Employer contributions shall be
allocated to the accounts of Participants employed by the Employer on
the last day of the Plan Year unless indicated otherwise in the
Adoption Agreement. In the case of a non-Top-Heavy, Nonstandardized
Plan, Participants must also have completed a Year of Service unless
otherwise specified in the Adoption Agreement. For Nonstandardized
Adoption Agreements 004, 005, and 006, the Employer may only apply the
last day of the Plan Year and Year of Service requirements, if the
Plan satisfies the requirements of Code Sections 401(a)(26) and 410(b)
and the regulations thereunder including the exception for 401(k)
plans. If, when applying the last day and Year of Service
requirements, the Plan fails to satisfy the aforementioned
requirements, additional Participants will be eligible to receive an
allocation of Employer Contributions until the requirements are
satisfied. Participants who are credited with a Year of Service, but
not employed at Plan Year end, are the first category of additional
Participants eligible to receive an allocation. If the requirements
are still not satisfied, Participants credited with more than 500
Hours of Service and employed at Plan Year end are the next category
of Participants eligible to receive an allocation. Finally, if
necessary to satisfy the said requirements, any Participant credited
with more than 500 Hours of Service will be eligible for an allocation
of Employer Contributions.
5.4 ALLOCATING INVESTMENT EARNINGS AND LOSSES A Participant's share
of investment earnings and any increase or decrease in the fair market
value of the Fund shall be based on the proportionate value of all
active accounts (other than accounts with segregated investments) as
of the last Valuation Date less withdrawals since the last Valuation
Date. If Employer and/or Employee contributions are made monthly,
quarterly, or on some other systematic basis, the adjusted value of
such accounts for allocation of investment income and gains or losses
shall include one-half the Employer contributions for such period.
If Employer and/or Employee contributions are not made on a systematic
basis, it is assumed that they are made at the end of the valuation
period and therefore will not receive an allocation of investment
earnings and gains or losses for such period.
Alternatively, at the Plan Administrator's option, all Employer
contributions will be credited with an allocation of the actual
investment earnings and gains and losses from the actual date of
deposit of each such contribution until the end of the period.
Accounts with segregated investments shall receive only the income or
loss on such segregated investments. In no event shall the selection
of a method of allocating gains and losses be used to discriminate in
favor of the Highly Compensated Employees.
32
5.5 PARTICIPANT STATEMENTS Upon completing the allocations described
above for the Valuation Date coinciding with the end of the Plan Year,
the Employer shall prepare a statement for each Participant showing
the additions to and subtractions from his or her account since the
last such statement and the fair market value of his or her account as
of the current Valuation Date. Employers so choosing may prepare
Participant statements for each Valuation Date.
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 NORMAL RETIREMENT BENEFITS A Participant shall be entitled to
receive the balance held in his or her account from Employer
contributions upon attaining Normal Retirement Age or at such earlier
dates as the provisions of this Article VI may allow. If the
Participant elects to continue working past his or her Normal
Retirement Age, he or she will continue as an active Plan Participant
and no distribution shall be made to such Participant until his or her
actual retirement date unless the employer elects otherwise in the
Adoption Agreement, or a minimum distribution is required by law.
Settlement shall be made in the normal form, or if elected in one of
the optional forms of payment provided below.
6.2 EARLY RETIREMENT BENEFITS If the Employer so provides in the
Adoption Agreement, an Early Retirement benefit will be available to
individuals who meet the age and Service requirements. An individual
who meets the Early Retirement Age requirements and separates from
Service, will become fully vested, regardless of any vesting schedule
which otherwise might apply. If a Participant separates from Service
before satisfying the age requirements, but after having satisfied the
Service requirement, the Participant will be entitled to elect an
Early Retirement benefit upon satisfaction of the age requirement.
6.3 BENEFITS ON TERMINATION OF EMPLOYMENT
(a) If a Participant terminates employment prior to Normal
Retirement Age, such Participant shall be entitled to
receive the vested balance held in his or her account
payable at Normal Retirement Age in the normal form, or if
elected, in one of the optional forms of payment provided
hereunder. If applicable, the Early Retirement Benefit
provisions may be elected. Notwithstanding the preceding
sentence, a former Participant may, if allowed in the
Adoption Agreement, make application to the Employer
requesting early payment of any deferred vested and
nonforfeitable benefit due.
(b) If a Participant terminates employment, and the value of
that Participant's Vested Account Balance derived from
Employer and Employee contributions is not greater than
33
$3,500, the Participant may receive a lump sum distribution
of the value of the entire vested portion of such account
balance and the non-vested portion will be treated as a
forfeiture. The Employer shall continue to follow their
consistent policy, as may be established, regarding
immediate cash-outs of Vested Account Balances of $3,500 or
less. For purposes of this article, if the value of a
Participant's Vested Account Balance is zero, the
Participant shall be deemed to have received a distribution
of such Vested Account Balance A immediately following
termination. Likewise, if the Participant is reemployed
prior to incurring 5 consecutive 1-year Breaks in Service
they will be deemed to have immediately repaid such
distribution. For Plan Years prior to 1989, a Participant's
Vested Account Balance shall not include Qualified Voluntary
Contributions. Notwithstanding the above, if the Employer
maintains or has maintained a policy of not distributing any
amounts until the Participant's Normal Retirement Age, the
Employer can continue to uniformly apply such policy.
(c) If a Participant terminates Service with a Vested Account
Balance derived from Employer and Employee contributions in
excess of $3,500, and elects (with his or her Spouse's
consent) to receive 100% of the value of his or A her Vested
Account Balance in a lump sum, the non-vested portion will
be treated as a forfeiture. Except as provided at paragraph
6.4(c), the Participant (and his or her Spouse) must consent
to any distribution, when the Vested Account Balance
described above exceeds $3,500 or if at the time of any
prior distribution it exceeded $3,500. For purposes of this
paragraph, a Participant's Vested Account Balance shall not
include Qualified Voluntary Contributions, for Plan Years
beginning prior to 1989.
(d) Distribution of less than 100% of the Participant's Vested
Account Balance shall only be permitted if the Participant
is fully vested upon termination of employment.
(e) If a Participant who is not 100% vested receives or is
deemed to receive a distribution pursuant to this paragraph,
and such Participant's non-vested benefit is forfeited
hereunder, and if such Participant resumes employment
covered under this Plan, the Participant shall have the
right to repay to the Plan the full amount of the
distribution attributable to Employer contributions on or
before the earlier of the date that the Participant incurs S
consecutive 1-year Breaks in Service following the date of
distribution or five years after the first date on which the
Participant is subsequently reemployed. In such event, the
Participant's forfeiture shall be restored to his or her
account as of the Valuation Date at the end of the Plan Year
following the date on which repayment of the distribution is
34
received. Restoration of the forfeiture amount shall be
accomplished in accordance with the procedure selected by
the Employer in the Adoption Agreement.
(f) A Participant shall also have the option, to postpone
payment of his or her Plan benefits until the first day of
April following the calendar year in which he or she attains
age 70-1/2. Any balance of a Participant's account
resulting from his or her Employee contributions not
previously withdrawn, if any, may be withdrawn by the
Participant immediately following separation from Service.
(g) If a Participant ceases to be an active Employee as a result
of a Disability as defined at paragraph 1.20, such
Participant shall be able to make an application for a
disability retirement benefit payment. The Participant's
account balance will be deemed "immediately distributable"
as set forth in paragraph 6.4, and will be fully vested
pursuant to paragraph 9.2.
6.4 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS
(a) An account balance is immediately distributable if any part
of the account balance could be distributed to the
Participant (or Surviving Spouse) before the Participant
attains (or would have attained whether or not deceased) the
later of the Normal Retirement Age or age 62.
(b) If the value of a Participant's Vested Account Balance
derived from Employer and Employee Contributions exceeds (or
at the time of any prior distribution exceeded) $3,500, and
the account balance is immediately distributable, the
Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must
consent to any distribution of such account balance. The
consent of the Participant and the Spouse shall be obtained
in writing within the 90-day period ending on the annuity
starting date, which is the first day of the first period
for which an amount is paid as an annuity or any other form.
The Plan Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any distribution
until the Participant's account balance is no longer
immediately distributable. Such notification shall include
a general description of the material features, and an
explanation of the relative values of, the optional forms of
benefit available under the plan in a manner that would
satisfy the notice requirements of Code Section 417(a)(3),
and shall be provided no less than 30 days and no more than
90 days prior to the annuity starting date.
(c) Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of
35
a qualified Joint and Survivor Annuity while the account
balance is immediately distributable. Furthermore, if
payment in the form of a Qualified Joint and Survivor
Annuity is not required with respect to the Participant
pursuant to paragraph 8.7 of the Plan, only the Participant
need consent to the distribution of an account balance that
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.
(d) For purposes of determining the applicability of the
foregoing consent requirements to distributions made before
the first day of the first Plan Year beginning after 1988,
the Participant's Vested Account Balance shall not include
amounts attributable to A Qualified Voluntary Contributions.
6.5 NORMAL FORM OF PAYMENT The normal form of payment for a profit
sharing plan satisfying the requirements of paragraph 8.7 hereof shall
be a lump sum with no option for annuity payments. For all other
plans, the normal form of payment hereunder shall be a Qualified Joint
and Survivor Annuity as provided under Article VIII. A Participant
whose Vested Account Balance derived from Employer and Employee
contributions exceeds $3,500, or if at the time of any prior
distribution it exceeds $3,500, shall (with the consent of his or her
Spouse) have the right to receive his or her benefit in a lump sum or
in monthly, quarterly, semiannual or annual payments from the Fund
over any period not extending beyond the life expectancy of the
Participant and his or her Beneficiary. For purposes of this
paragraph, a Participant's Vested Account Balance shall not include
Qualified Voluntary Contributions, for Plan Years beginning prior to
1989. The normal form of payment shall be automatic, unless the
Participant files a written request with the Employer prior to the
date on which the benefit is automatically payable, electing a lump
sum or installment payment option. No amendment to the Plan may
eliminate one of the optional distribution forms listed above.
6.6 COMMENCEMENT OF BENEFITS
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the
close of the Plan Year in which the latest of the following
events occurs:
36
(1) the Participant attains age 65 (or normal retirement
age if earlier),
(2) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or
(3) the Participant terminates Service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant
and Spouse (if necessary) to consent to a distribution while
a benefit is immediately distributable, within the meaning
of paragraph 6.4 hereof, shall be deemed an election to
defer commencement of payment of any benefit sufficient to
satisfy this paragraph.
(c) Unless the Employer provides otherwise in the Adoption
Agreement, distributions of benefits will be made within 60
days following the close of the Plan Year during which a
distribution is requested or otherwise becomes payable.
6.7 CLAIMS PROCEDURES Upon retirement, death, or other severance of
employment, the Participant or his or her representative may make
application to the Employer requesting payment of benefits due and the
manner of payment. If no application for benefits is made, the
Employer shall automatically pay any vested benefit due hereunder in
the normal form at the time prescribed at paragraph 6.6. If an
application for benefits is made, the Employer shall accept, reject,
or modify such request and shall notify the Participant in writing
setting forth the response of the Employer and in the case of a denial
or modification the Employer shall:
(a) state the specific reason or reasons for the denial,
(b) provide specific reference to pertinent Plan provisions on
which the denial is based,
(c) provide a description of any additional material or
information necessary for the Participant or his
representative to perfect the claim and an explanation of
why such material or information is necessary, and
(d) explain the Plan's claim review procedure as contained in
this Plan.
In the event the request is rejected or modified, the Participant or
his representative may within 60 days following receipt by the
Participant or representative of such rejection or modification,
submit a written request for review by the Employer of its initial
decision. Within 60 days following such request for review, the Em-
ployer shall render its final decision in writing to the Participant
or representative stating specific reasons for such decision. If the
Participant or representative is not satisfied with the Employer's
37
final decision, the Participant or representative can institute an
action in a federal court of competent jurisdiction; for this purpose,
process would be served on the Employer.
6.8 IN-SERVICE WITHDRAWALS An Employee may withdraw all or any part
of the fair market value of his or her Mandatory Contributions,
Voluntary Contributions, Qualified Voluntary Contributions or Rollover
Contributions, upon written request to the Employer. Transfer
Contributions, which originate from a Plan meeting the safe-harbor
provisions of paragraph 8.7, may also be withdrawn by an Employee upon
written request to the Employer. Transfer Contributions not meeting
the safeharbor provisions may only be withdrawn upon retirement,
death, Disability, termination or termination of the Plan, and will be
subject to Spousal consent requirements contained in Code Sections
411(a)(11) and 417. No such withdrawals are permitted from a money
purchase plan until the Participant reaches Normal Retirement Age.
Such request shall include the Participant's address, social security
number, birthdate, and amount of the withdrawal. If at the time a
distribution of Qualified Voluntary Contributions is received the
Participant has not attained age 59-1/2 and is not disabled, as
defined at Code Section 22(e)(3), the Participant will be subject to a
federal income tax penalty, unless the distribution is rolled over to
a qualified plan or individual retirement plan within 60 days of the
date of distribution. A Participant may withdraw all or any part of
the fair market value of his or her pre-1987 Voluntary Contributions
with or without withdrawing the earnings attributable thereto. Post-
1986 Voluntary Contributions may only be withdrawn along with a
portion of the earnings thereon. The amount of the earnings to be
withdrawn is determined by using the formula: DA[1-(V + V + E)], where
DA is the distribution amount, V is the amount of Voluntary
Contributions and V + E is the amount of Voluntary Contributions plus
the earnings attributable thereto. A Participant withdrawing his or
her other contributions prior to attaining age 59-1/2, will be subject
to a federal tax penalty to the extent that the withdrawn amounts are
includible in income. Unless the Employer provides otherwise in the
Adoption Agreement, any Participant in a profit-sharing plan who is
100% fully vested in his or her Employer contributions may withdraw
all or any part of the fair market value of any of such contributions
that have been in the account at least two years, plus the investment
earnings thereon, without separation from Service. Such Employer
contributions may not have been used to satisfy the antidiscrimination
test of Code Section 401(k). Such distributions shall not be eligible
for redeposit to the Fund. A withdrawal under this paragraph shall
not prohibit such Participant from sharing in any future Employer
Contribution he or she would otherwise be eligible to share in. A
request to withdraw amounts pursuant to this paragraph must if
applicable, be consented to by the Participant's Spouse. The consent
shall comply with the requirements of paragraph 6.4 relating to
immediate distributions. Elective Deferrals, Qualified Non-elective
Contributions, and Qualified Matching Contributions, and income
allocable to each are not distributable to a Participant or his or her
Beneficiary or Beneficiaries, in accordance with such Participant's or
38
Beneficiary's or Beneficiaries' election, earlier than upon separation
from Service, death, or Disability. Such amounts may also be
distributed upon:
(a) Termination of the Plan without the establishment of another
Defined Contribution Plan.
(b) The disposition by a corporation to an unrelated corporation
of substantially all of the assets [within the meaning of
Code Section 409(d)(2)] used in a trade or business of such
corporation if such corporation continues to maintain this
Plan after the disposition, but only with respect to
Employees who continue employment with the corporation
acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary [within the
meaning of Code Section 409(d)(3)] if such corporation
continues to maintain this plan, but only with respect to
Employees who continue employment with such subsidiary.
(d) The attainment of age 59-1/2.
(e) The Hardship of the Participant as described in paragraph
6.9.
All distributions that may be made pursuant to one or more of the
foregoing distributable events are subject to the Spousal and
Participant consent requirements, if applicable, contained in Code
Sections 401(a)(11) and 417.
6.9 HARDSHIP WITHDRAWAL If permitted by the Employer in the Adoption
Agreement, a Participant in a profit-sharing plan may request a
hardship withdrawal prior to attaining age 59-1/2. If the Participant
has not attained age 59-1/2, the Participant may be subject to a
federal income tax penalty. Such request shall be in writing to the
Employer who shall have sole authority to authorize a hardship
withdrawal, pursuant to the rules below. Hardship withdrawals may
include Elective Deferrals and any earnings accrued and credited
thereon as of the last day of the Plan Year ending before July 1, 1989
and Employer related contributions, including but not limited to
Employer Matching Contributions, plus the investment earnings thereon
to the extent vested. Qualified Matching Contributions, Qualified
Non-Elective Contributions and Elective Deferrals reclassified as
Voluntary Contributions, plus the investment earnings thereon are only
available for a Hardship Withdrawal prior to age 59-1/2 to the extent
that they were credited to the Participant's Account as of the last
day of the Plan Year ending prior to July 1, 1989. The Plan
Administrator may limit withdrawals to Elective Deferrals and the
earnings thereon as stipulated above. Hardship withdrawals are
subject to the Spousal consent requirements contained in Code Sections
39
401(a)(11) and 417. Only the following reasons are valid to obtain
hardship withdrawal:
(a) medical expenses [within the meaning of Code Section 213(d)]
of the Participant, his or her Spouse, children and other
dependents,
(b) the purchase (excluding mortgage payments) of the principal
residence for the Participant,
(c) payment of tuition and related educational expenses for the
next twelve (12) months of post-secondary education for the
Participant, his or her Spouse, children or other
dependents, or
(d) the need to prevent eviction of the Employee from or a
foreclosure on the mortgage of, the Employee's principal
residence.
Furthermore, for Plans on Adoption Agreements 003 and 006, the
following conditions must be met in order for a withdrawal to be
authorized:
(e) the Participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans
under all plans maintained by the Employer,
(f) all plans maintained by the Employer provide that the
Employee's Elective Deferrals and Voluntary
Contributions will be suspended for twelve months after
the receipt of the Hardship distribution,
(g) the distribution is not in excess of the amount of the
immediate and heavy financial need [(a) through (d)]
above, and
(h) all plans maintained by the Employer provide that an
Employee may only make Elective Deferrals for the
Employee's taxable year immediately following the
taxable year of the hardship distribution of the
applicable limit under Code Section 402(g) for such
taxable year, less the amount of such Employee's pre-
tax contributions for the taxable year of the hardship
distribution.
If a distribution is made from any Plan at a time when a Participant
has a nonforfeitable right to less than 100% of the account balance
derived from Employer contributions and the Participant may increase
the nonforfeitable percentage in the account:
(a) A separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
40
(b) AL any relevant time the Participant's nonforfeitable
portion of the separate account will be equal to an amount
("X") determined by the formula:
X = P[AB + (R X D)] - (R X D)
For purposes of applying the formula: "P" is the nonforfeitable
percentage at the relevant time, "AB" is the account balance at the
relevant time, "D" is the amount of the distribution and "R" is the
ratio of the account balance at the relevant time to the account
balance after distribution.
ARTICLE VII
A DISTRIBUTION REQUIREMENTS
7.1 JOINT AND SURVIVOR ANNUITY REQUIREMENTS All distributions made
under the terms of this Plan must comply with the provisions of
Article VIII including, if applicable, the safe harbor provisions
thereunder.
7.2 MINIMUM DISTRIBUTION REQUIREMENTS All distributions required un-
der this Article shall be determined and made in accordance with the
minimum distribution requirements of Code Section 401(a)(9) and the
regulations thereunder, including the minimum distribution incidental
benefit rules found at Regulations Section 1.401(a)(9)-2. The entire
interest of a Participant must be distributed or begin to be
distributed no later than the Participant's Required Beginning Date.
Life expectancy and joint and last survivor life expectancy are
computed by using the expected return multiples found in Tables V and
VI of Regulations Section 1.72-9.
7.3 LIMITS ON DISTRIBUTION PERIODS 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 a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a Designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of
the participant, or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated
Beneficiary.
41
7.4 Required Distributions On Or After The Required Beginning Date
(a) If a participant's benefit is to be distributed over (1) 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 (2) a period not extending beyond the life
expectancy of the Designated Beneficiary, the amount
required to be distributed for each calendar year, beginning
with distributions for the First Distribution Calendar Year,
must at least equal the quotient obtained by dividing the
Participant's benefit by the Applicable Life Expectancy.
(b) For calendar years beginning before 1989, if the
Participant's Spouse is not the Designated Beneficiary, the
method of distribution selected must have assured that at
least 50% of the Present Value of the amount available for
distribution was to be paid within the life expectancy of
the Participant.
(c) For calendar years beginning after 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 (1) the Applicable Life Expectancy or (2) if
the Participant's Spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth
in Q&A-4 of Regulations Section 1.401(a)(9)-2.
Distributions after the death of the Participant shall be
distributed using the Applicable Life Expectancy as the
relevant divisor without regard to Regulations Section
1.401(a)(9)-2.
(d) 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 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.
(e) 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
regulations thereunder.
(f) For purposes of determining the amount of the required
distribution for each Distribution Calendar Year, the
account balance to be used is the account balance determined
as of the last valuation preceding the Distribution Calendar
Year. This balance will be increased by the amount of any
42
contributions or forfeitures allocated to the account
balance after the valuation date in such preceding calendar
year. Such balance will also be decreased by distributions
made after the Valuation Date in such preceding Calendar
Year.
(g) For purposes of subparagraph 7.4(f), 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.
7.5 Required Beginning Date
(a) General Rule. The Required Beginning Date of a Participant
is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70-1/2.
(b) Transitional Rules. The Required Beginning Date of a
Participant who attained age 70-1/2 before 1988, shall be
determined in accordance with (1) or (2) below:
(1) Non-S-percent owners. The Required Beginning Date of a
Participant 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. The Required
Beginning Date of a Participant who is not a 5-percent
owner, who attains age 70-1/2 during 1988 and who has
not retired as of 1989, is April 1, 1990.
(2) 5-percent owners. The Required Beginning Date of a
Participant who is a 5-percent owner during any year
beginning after 1979, is the first day of April
following the later of:
(i) the calendar year in which the Participant attains
age 70-1/2, or
(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.
(c) A Participant is treated as a 5-percent owner for purposes
of this Paragraph if such Participant is a S-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
43
or within the calendar year in which such Owner attains age
66-1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under
this paragraph, they must continue to be distributed, even
if the Participant ceases to be a 5-percent owner in a
subsequent year.
7.6 TRANSITIONAL RULE
(a) Notwithstanding the other requirements of this article and
subject to the requirements of Article VIII, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a S-percent owner, may be made in
accordance with all of the following requirements
(regardless of when such distribution commences):
(i) The distribution by the trust is one which would not
have disqualified such trust under Code Section
401(a)(9) as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the employee whose interest
in the trust is being distributed or, if the employee
is deceased, by a beneficiary of such employee.
(iii) Such designation was in writing, was signed by the
employee or the beneficiary, and was made before
January 1, 1984.
(iv) The Employee has accrued a benefit under the Plan as of
December 31, 1983.
(v) The method of distribution designated by the Employee
or the beneficiary specifies the time at which
distribution will commence, the period over which
distributions will be made, and in the case of any
distribution upon the Employee's death, the
beneficiaries of the Employee listed in order of
priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with
respect to the distributions to be made upon the death of
the Employee.
(c) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
beneficiary, to whom such distribution is being made, will
be presumed to have designated the method of distribution
44
under which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in sub-paragraphs (a)(i) and
(a)(v) above.
(d) If a designation is revoked, any subsequent distribution
must satisfy the requirements of Code Section 401(a)(9) and
the Regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Plan must distribute by the end of the calendar year
following the calendar year in which the revocation occurs
the total amount not yet distributed which would have been
required to have been distributed to satisfy Code Section
401(a)(9) and the Regulations thereunder, but for the Tax
Equity and Fiscal Responsibility Act Section 242(b)(2)
election. For calendar years beginning after December 31,
1988, such distributions must meet the minimum distribution
incidental benefit requirements in Regulations Section
1.401(a)(9)-2. Any changes in the designation will be
considered to be a revocation of the designation. However,
the mere substitution or addition of another beneficiary
(one not named in the designation) under the designation
will not be considered to be a revocation of the
designation, so long as such substitution or addition does
not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example,
by altering the relevant measuring life). In the case in
which an amount is transferred or rolled over from one plan
to another plan, the rules in Q&A J-2 and Q&A J-3 of
Regulations Section 1.401(a)(9)-2 shall apply.
7.7 DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT Each Participant
shall file a written designation of beneficiary with the Employer upon
qualifying for participation in this Plan. Such designation shall
remain in force until revoked by the Participant by filing a new
beneficiary form with the Employer. The Participant may elect to have
a portion of his or her account balance invested in an insurance
contract. If an insurance contract is purchased under the Plan, the
Trustee must be named as Beneficiary under the terms of the contract.
However, the Participant shall designate a Beneficiary to receive the
proceeds of the contract after settlement is received by the Trustee.
Under a profit-sharing plan satisfying the requirements of paragraph
8.7 hereof, the Designated Beneficiary shall be the Participant's
Surviving Spouse, if any, unless such Spouse properly consents
otherwise.
7.8 NONEXISTENCE OF BENEFICIARY Any portion of the amount payable
hereunder which is not disposed of because of the Participant's or
former Participant's failure to designate a beneficiary, or because
all of the Designated Beneficiaries are deceased, shall be paid to his
or her Spouse. If the Participant had no Spouse at the time of death,
45
payment shall be made to the personal representative of his or her
estate in a lump sum.
7.9 DISTRIBUTION BEGINNING BEFORE DEATH If the Participant dies
after distribution of his or her 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.
7.10 DISTRIBUTION BEGINNING AFTER DEATH If the Participant dies
before distribution of his or her 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 (a) or (b) below:
(a) If any portion of the Participant's interest is payable to a
Designated Beneficiary, distributions may be made over the
life or over a period certain not greater than the life
expectancy of the Designated Beneficiary commencing on or
before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(b) If the Designated Beneficiary is the Participant's Surviving
Spouse, the date distributions are required to begin in
accordance with (a) above shall not be earlier than the
later of (1) December 31 of the calendar year immediately
following the calendar year in which the participant died,
or (2) 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 paragraph
by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the
earlier of (1) December 31 of the calendar year in which distributions
would be required to begin under this section, or (2) December 31 of
the calendar year which contains the fifth anniversary of the date of
death of the participant. If the Participant has no Designated
Beneficiary, or if the Designated Beneficiary does not elect a method
of distribution, then distribution of the Participant's entire
interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
For purposes of this paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin, the provisions
of this paragraph with the exception of paragraph (b) therein, shall
be applied as if the Surviving Spouse were the Participant. For the
purposes of this paragraph and paragraph 7.9, distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date (or, if the preceding sentence is applicable,
the date distribution is required to begin to the Surviving Spouse).
If distribution in the form of an annuity described in paragraph
46
7.4(e) irrevocably commences to the Participant before the Required
Beginning Date, the date distribution is considered to begin is the
date distribution actually commences.
For purposes of paragraph 7.9 and this paragraph, if an amount is
payable to either a minor or an individual who has been declared
incompetent, the benefits shall be paid to the legally appointed
guardian for the benefit of said minor or incompetent individual,
unless the court which appointed the guardian has ordered otherwise.
7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
(a) Notwithstanding any other provision of the Plan, Excess
Elective Deferrals plus any income and minus any loss
allocable thereto, shall be distributed no later than April
15, 1988, and each April 15 thereafter, to Participants to
whose accounts Excess Elective Deferrals were allocated for
the preceding taxable year, and who claim Excess Elective
Deferrals for such taxable year. Excess Elective Deferrals
shall be treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first April
15th following the close of the Participant's taxable year.
A Participant is deemed to notify the Plan Administrator of
any Excess Elective Deferrals that arise by taking into
account only those Elective Deferrals made to this Plan and
any other plans of this Employer. Furthermore, a
Participant who participates in another plan allowing
Elective Deferrals may assign to this Plan any Excess
Elective Deferrals made during a taxable year of the
Participant, by notifying the Plan Administrator of the
amount of the Excess Elective Deferrals to be assigned.
(b) The Participant's claim shall be in writing; shall be
submitted to the Plan Administrator not later than March 1
of each year; shall specify the amount of the Participant's
Excess Elective Deferrals for the preceding taxable year;
and 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) [Simplified Employee Pensions], or 403(b)
[annuity programs for public schools and charitable
organizations] will exceed the $7,000 limit as adjusted
under Code Section 415(d) imposed on the Participant by Code
Section 402(g) for the year in which the deferral occurred.
(c) Excess Elective Deferrals shall be adjusted for any income
or loss up to the end of the taxable year, during which such
excess was deferred. Income or loss will be calculated
under the method used to calculate investment earnings and
losses elsewhere in the Plan.
47
(d) If the Participant receives a return of his or her Elective
Deferrals, the amount of such contributions which are
returned must be brought into the Employee's taxable income.
7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS
(a) Notwithstanding any other provision 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 to Highly
Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each of
such Employees. Excess Contributions shall be allocated to
Participants who are subject to the Family Member
aggregation rules of Code Section 414(q)(6) in the manner
prescribed by the regulations thereunder.
(b) Excess Contributions (including the amounts recharacterized)
shall be treated as Annual Additions under the Plan.
(c) Excess Contributions shall be adjusted for any income or
loss up to the end of the Plan Year. Income or loss will be
calculated under the method used to calculate investment
earnings and losses elsewhere in the Plan.
(d) Excess Contributions shall be distributed from the
Participant's Contribution account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the
Plan Year. Excess Contributions shall be distributed from
the Participant's Qualified Non-Elective Contribution
account only to the extent that such Excess Contributions
exceed the balance in the Participant's Elective Deferral
account and Qualified Matching Contribution account.
7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss
allocable thereto, shall be forfeited, if forfeitable, or if
not forfeitable, distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding
Plan Year. Excess Aggregate Contributions shall be
allocated to Participants who are subject to the Family
48
Member aggregation rules of Code Section 414(q)(6) in the
manner prescribed by the regulations. 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 shall be
treated as Annual Additions under the plan.
(b) Excess Aggregate Contributions shall be adjusted for any
income or loss up to the end of the Plan Year. The income
or loss allocable to Excess Aggregate Contributions is the
sum of income or loss for the Plan Year allocable to the
Participant's Voluntary Contribution account, Matching
Contribution account, (if any, and if all amounts therein
are not used in the ADP test) and, if applicable, Qualified
Non-Elective Contribution account and Elective Deferral
account. Income or loss will be calculated under the method
used to calculate investment earnings and losses elsewhere
in the Plan.
(c) Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts of non-Highly Compensated
Employees or applied to reduce Employer contributions, as
elected by the employer in the Adoption Agreement.
(d) Excess Aggregate Contributions shall be forfeited if such
amount is not vested. If vested, such excess shall be
distributed on a prorata basis from the Participant's
Voluntary Contribution account (and, if applicable, the
Participant's Qualified Non-Elective Contribution account or
Elective Deferral account, or both).
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
8.1 APPLICABILITY OF PROVISIONS The provisions of this Article shall
apply to any Participant who is credited with at least one Hour of
Service with the Employer on or after August 23, 1984 and such other
Participants as provided in paragraph 8.8.
8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY Unless an op-
tional form of benefit is selected pursuant to a Qualified Election
within the 90-day period ending on the Annuity Starting Date, a
married Participant's Vested Account Balance will be paid in the form
of a Qualified Joint and Survivor Annuity and an unmarried
Participant's Vested Account Balance will be paid in the form of a
life annuity. The Participant may elect to have such annuity
distributed upon attaining Early Retirement Age under the Plan.
49
8.3 PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY Unless an
optional form of benefit has been selected within the Election Period
pursuant to a Qualified Election, if a Participant dies before
benefits have commenced then one-half of the Participant's Vested
Account Balance shall be paid to the Surviving Spouse in the form of a
life annuity. The Surviving Spouse may elect to have such annuity
distributed within a reasonable period after the Participant's death.
A Participant who does not meet the age A 35 requirement set forth in
the Election Period as of the end of any current Plan Year may make a
special qualified election to waive the qualified Pre-retirement
Survivor Annuity for the period beginning on the date of such election
and ending on the first day of the Plan Year in which the Participant
will attain age 35. Such election shall not be valid unless the
Participant receives a written explanation of the Qualified Pre-
retirement Survivor Annuity in such terms as are comparable to the
explanation required under paragraph 8.5. Qualified Pre-retirement
Survivor Annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains age 35.
Any new waiver on or after such date shall be subject to the full
requirements of this Article.
8.4 QUALIFIED ELECTION A waiver of a Qualified Joint and Survivor
Annuity or a qualified pre-retirement survivor annuity. Any waiver of
a Qualified Joint and Survivor Annuity or a qualified pre-retirement
survivor annuity shall not be effective unless:
(a) the Participant's Spouse consents in writing to the
election;
(b) the election designates a specific beneficiary, including
any class of beneficiaries or any contingent beneficiaries,
which may not be changed without spousal consent (or the
Spouse expressly permits designations by the Participant
without any further spousal consent);
(c) the Spouse's consent acknowledges the effect of the
election; and
(d) the Spouse's consent is witnessed by a Plan representative
or notary public.
Additionally, a Participant's waiver of the Qualified Joint and
Survivor Annuity shall not be effective unless the election designates
a form of benefit payment which may not be changed without spousal
consent (or the Spouse expressly permits designations by the
Participant without any further spousal consent). If it is
established to the satisfaction of the Plan Administrator that there
is no Spouse or that the Spouse cannot be located, a waiver will be
deemed a Qualified Election. Any consent by a Spouse obtained under
this provision (or establishment that the consent of a Spouse may not
be obtained) shall be effective only with respect to such Spouse. A
50
consent that permits designations by the Participant without any
requirement of further consent by such Spouse, must acknowledge that
the Spouse has the right to limit consent to a specific beneficiary,
and a specific form of benefit where applicable, and that the Spouse
voluntarily elects to relinquish either or both of such rights. A re-
vocation of a prior waiver may be made by a Participant without the
consent of the Spouse at any time before the commencement of benefits.
The number of revocations shall not be limited. No consent obtained
under this provision shall be valid unless the Participant has
received notice as provided in paragraphs 8.5 and 8.6 below.
8.5 NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY In
the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall, no less than 30 days and no more than 90 days
prior to the Annuity Starting date, provide each Participant a written
explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(b) the Participant's right to make and the effect of an
election to waive the qualified Joint and Survivor Annuity
form of benefit;
(c) the rights of a Participant's Spouse; and
(d) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor
Annuity.
8.6 NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY
In the case of a qualified pre-retirement survivor annuity as
described in paragraph 8.3, the Plan Administrator shall provide each
Participant within the applicable period for such Participant a
written explanation of the qualified pre-retirement survivor annuity
in such terms and in such manner as would be comparable to the
explanation provided for meeting the requirements of paragraph 8.5 ap-
plicable to a Qualified Joint and Survivor Annuity. The applicable
period for a Participant is whichever of the following periods ends
last:
(a) the period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
(b) a reasonable period ending after the individual becomes a
Participant;
(c) a reasonable period ending after this Article first applies
to the Participant. Notwithstanding the foregoing, notice
must be provided within a reasonable period ending after
51
separation from Service in the case of a Participant who
separates from Service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable period
ending after the events described in (b) and (c) is the end of the
two-year period beginning one year prior to the date the applicable
event occurs, and ending one-year after that date. In the case of a
Participant who separates from Service before the Plan Year in which
age 35 is attained, notice shall be provided within the two-year
period beginning one year prior to separation and ending one year
after separation. If such a Participant subsequently returns to
employment with the Employer, the applicable period for such
Participant shall be re-determined.
8.7 SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLANS
(a) To the extent that the following conditions are met, the
Qualified Joint and Survivor Annuity requirements of this
Article VIII shall be inapplicable to a Participant in a
profit-sharing plan, and to any distribution, made on or
after the first day of the first plan year beginning after
1988, from or under a separate account attributable solely
to Qualified Voluntary contributions, as maintained on
behalf of a Participant in a money purchase pension plan,
(including a target benefit plan) if the following
conditions are satisfied:
(1) the Participant does not or cannot elect payments in
the form of a life annuity; and
(2) on the death of a Participant, the Participant's Vested
Account Balance will be paid to the Participant's Sur-
viving Spouse, but if there is no Surviving Spouse, or
if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Par-
ticipant's Designated Beneficiary.
The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within the 90-day period following the
date of the Participant's death. The account balance shall be
adjusted for gains or losses occurring after the Participant's death
in accordance with the provisions of the Plan governing the adjustment
of account balances for other types of distributions. These safe-
harbor rules shall not be operative with respect to a Participant in a
profit-sharing plan if that Plan is a direct or indirect transferee of
a Defined Benefit Plan, money purchase plan, a target benefit 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, and would therefore have a Qualified Joint and Survivor
Annuity as its normal form of benefit.
52
(b) The Participant may waive the spousal death benefit
described in this paragraph at any time provided that no
such waiver shall be effective unless it satisfies the
conditions (described in paragraph 8.4) that would apply to
the Participant's waiver of the Qualified Pre-Retirement
Survivor Annuity.
(c) If this paragraph 8.7 is operative, then all other
provisions of this Article other than paragraph 8.8 are
inoperative.
8.8 TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES Special transition
rules apply to Participants who were not receiving benefits on August
23, 1984.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits
prescribed by the previous paragraphs of this Article, must
be given the opportunity to elect to have the prior
paragraphs of this Article apply if such Participant is
credited with at least one Hour of Service under this Plan
or a predecessor Plan in a Plan Year beginning on or after
January 1, 1976 and such Participant had at least 10 Years
of Service for vesting purposes when he or she separated
from Service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service
under this Plan or a predecessor Plan on or after September
2, 1974, and who is not otherwise credited with any Service
in a Plan Year beginning on or after January 1, 1976, must
be given the opportunity to have his or her benefits paid in
accordance with paragraph 8.9.
(c) The respective opportunities to elect [as described in (a)
and (b) above] must be afforded to the appropriate
Participants during the period commencing on August 23, 1984
and ending on the date benefits would otherwise commence to
said Participants.
8.9 AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY
Any Participant who has elected pursuant to paragraph 8.8(b) and any
Participant who does not elect under paragraph 8.8(a) or who meets the
requirements of paragraph 8.8(a), except that such Participant does
not have at least 10 years of vesting Service when he or she separates
from Service, shall have his or her benefits distributed in accordance
with all of the following requirements if benefits would have been
payable in the form of a life annuity.
(a) Automatic Joint and Survivor Annuity. If benefits in the
form of a life annuity become payable to a married
Participant who:
53
(1) begins to receive payments under the Plan on or after
Normal Retirement Age, or
(2) dies on or after Normal Retirement Age while still
working for the Employer, or
(3) begins to receive payments on or after the Qualified
Early Retirement Age, or
(4) separates from Service on or after attaining Normal
Retirement (or the Qualified Early Retirement Age) and
after satisfying the eligibility requirements for the
payment of benefits under the Plan and thereafter dies
before beginning to receive such benefits, then such
benefits will be received under this Plan in the form
of a Qualified Joint and Survivor Annuity, unless the
Participant has elected otherwise during the Election
Period. The Election Period must begin at least 6
months before the Participant attains Qualified Early
Retirement Age and end not more than 90 days before the
commencement of benefits. Any election hereunder will
be in writing and may be changed by the Participant at
any time.
(b) Election of Early Survivor Annuity. A Participant who is
employed after attaining the Qualified Early Retirement Age
will be given the opportunity to elect, during the Election
Period, to have a survivor annuity payable on death. If the
Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have
been made to the Spouse under the Qualified Joint and
Survivor Annuity if the Participant had retired on the day
before his or her death. Any election under this provision
will be in writing and may be changed by the Participant at
any time. The Election Period begins on the later of:
(1) the 90th day before the Participant attains the Quali-
fied Early Retirement Age, or
(2) the date on which participation begins, and ends on the
date the Participant terminates employment.
8.10 ANNUITY CONTRACTS Any annuity contract distributed under this
Plan must be nontransferable. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse shall
comply with the requirements of this Plan.
54
ARTICLE IX
VESTING
9.1 EMPLOYEE CONTRIBUTIONS A Participant shall always have a 100%
vested and nonforfeitable interest in his or her Elective Deferrals,
Voluntary Contributions, Qualified Voluntary Contributions, Rollover
Contributions, and Transfer Contributions plus the earnings thereon.
No forfeiture of Employer related contributions (including any minimum
contributions made under paragraph 14.2 hereof) will occur solely as a
result of an Employee's withdrawal of any Employee contributions.
9.2 EMPLOYER CONTRIBUTIONS A Participant shall acquire a vested and
nonforfeitable interest in his or her account attributable to Employer
contributions in accordance with the table selected in the Adoption
Agreement, provided that if a Participant is not already fully vested,
he or she shall become so upon attaining Normal Retirement Age, Early
Retirement Age, on death prior to normal retirement, on retirement due
to Disability, or on termination of the Plan.
9.3 COMPUTATION PERIOD The computation period for purposes of
determining Years of Service and Breaks in Service for purposes of
computing a Participant's nonforfeitable right to his or her account
balance derived from Employer contributions shall be determined by the
Employer in the Adoption Agreement. If the Employer provides for
other than full and immediate vesting and does not designate
otherwise, the computation period will be the Plan Year. In the event
a former Participant with no vested interest in his or her Employer
contribution account re-qualifies for participation in the Plan after
incurring a Break in Service, such Participant shall be credited for
vesting with all pre-break and post-break Service.
9.4 RE QUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN
SERVICE The account balance of such Participant shall consist of any
undistributed amount in his or her account as of the date of re-
employment plus any future contributions added to such account plus
the investment earnings on the account. The Vested Account Balance of
such Participant shall be determined by multiplying the Participant's
account balance (adjusted to include any distribution or redeposit
made under paragraph 6.3) by such Participant's vested percentage.
All Service of the Participant, both prior to and following the break,
shall be counted when computing the Participant's vested percentage.
9.5 RE QUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN
SERVICE If such Participant is not fully vested upon re-employment, a
new account shall be established for such Participant to separate his
or her deferred vested and nonforfeitable account, if any, from the
account to which new allocations will be made. The Participant's
deferred account to the extent remaining shall be fully vested and
shall continue to share in earnings and losses of the Fund. When com-
puting the Participant's vested portion of the new account, all pre-
break and post-break Service shall be counted. However,
55
notwithstanding this provision, no such former Participant who has had
five consecutive one-year Breaks in Service shall acquire a larger
vested and nonforfeitable interest in his or her prior account balance
as a result of re-qualification hereunder.
9.6 CALCULATING VESTED INTEREST A Participant's vested and
nonforfeitable interest shall be calculated by multiplying the fair
market value of his or her account attributable to Employer
contributions on the Valuation Date preceding distribution by the
decimal equivalent of the vested percentage as of his or her
termination date. The amount attributable to Employer contributions
for purposes of the calculation includes amounts previously paid out
pursuant to paragraph 6.3 and not repaid. The Participant's vested
and nonforfeitable interest, once calculated above, shall be reduced
to reflect those amounts previously paid out to the Participant and
not repaid by the Participant. The Participant's vested and
nonforfeitable interest so determined shall continue to share in the
investment earnings and any increase or decrease in the fair market
value of the Fund up to the Valuation Date preceding or coinciding
with payment.
9.7 FORFEITURES Any balance in the account of a Participant who has
separated from Service to which he or she is not entitled under the
foregoing provisions, shall be forfeited and applied as provided in
the Adoption Agreement. If not specified otherwise in the Adoption
Agreement, forfeitures will be allocated to Participants in the same
manner as the Employer's contribution. A forfeiture may only occur if
the Participant has received a distribution from the Plan or if the
Participant has incurred five consecutive 1-year Breaks in Service.
Forfeitures shall inure only to the accounts of Participants of the
adopting Employer's plan. If not specified otherwise in the Adoption
Agreement, forfeitures shall be allocated at the end of the Plan Year
during which the former Participant incurs five consecutive one-year
Breaks in Service. Furthermore, a Highly Compensated Employee's
Matching Contributions may be forfeited, even if vested, if the
contributions to which they relate are Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions.
9.8 AMENDMENT OF VESTING SCHEDULE No amendment to the Plan shall
have the effect of decreasing a Participant's vested interest
determined without regard to such amendment as of the later of the
date such amendment is adopted or the date it becomes effective.
Further, if the vesting schedule of the Plan is amended, or the Plan
is amended in any way that directly or indirectly affects the
computation of any Participant's nonforfeitable percentage, or if the
Plan is deemed amended by an automatic change to or from a Top-Heavy
vesting schedule, each Participant with at least three Years of
Service with the Employer may elect, within a reasonable period after
the adoption of the amendment or change, to have his or her
nonforfeitable percentage computed under the Plan without regard to
such amendment or change. For Participants who do not have at least
one Hour of Service in any Plan Year beginning after 1988, the
56
preceding sentence shall be applied by substituting "Five Years of
Service" for "Three Years of Service" where such language appears.
The period during which the election may be made shall commence with
the date the amendment is adopted or deemed to be made and shall end
on the later of:
(a) 60 days after the amendment is adopted;
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant is issued written notice of
the amendment by the Employer or the Trustee. If the
Trustee is asked to so notify, the Fund will be charged for
the costs thereof unless the Employer pays the charges as
permitted in paragraph 11.3.
No amendment to the Plan shall be effective to the extent that it has
the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's account
balance may be reduced to the extent permitted under section 412(c)(8)
of the Code (relating to financial hardships). For purposes of this
paragraph, a Plan amendment which has the effect of decreasing a
Participant's account balance or eliminating an optional form of
benefit, with respect to benefits attributable to service before the
amendment shall be treated as reducing an accrued benefit.
9.9 SERVICE WITH CONTROLLED GROUPS All Years of Service with other
members of a controlled group of corporations [as defined in Code
Section 4 14(b)], trades or businesses under common control [as
defined in Code Section 414(c)], or members of an affiliated service
group [as defined in Code Section 414(m)] shall be considered for
purposes of determining a Participant's nonforfeitable percentage.
9.10 APPLICATION OF PRIOR VESTING RULES This Article reflects the
vesting rules in effect after amendment for the Tax Reform Act of
1986. Any Participant who separated from Service prior to rendering
an Hour of Service in the 1989 Plan Year, will continue to have his or
her vesting governed by the Plan's prior vesting rules, including, if
applicable, the "rules of parity" which would allow for certain Years
of Service to be disregarded.
ARTICLE X
LIMITATIONS ON ALLOCATIONS
AND ANTIDISCRIMINATION TESTING
10.1 PARTICIPATION IN THIS PLAN ONLY If the Participant does not
participate in and has never participated in another qualified plan, a
Welfare Benefit Fund (as defined in paragraph 1.89) or an individual
medical account, as defined in Code Section 415(l)(2), maintained by
the adopting Employer, which provides an Annual Addition as defined in
57
paragraph 1.4, the amount of Annual Additions which may be credited to
the Participant's account for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's account
would cause the Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount contributed or allocated will
be reduced so that the Annual Additions for the Limitation Year will
equal the Maximum Permissible Amount. Prior to determining the
Participant's actual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimate of the Participant's
Compensation for the Limitation Year, uniformly determined for all
Participants similarly situated. As soon as is administratively
feasible after the end of the Limitation Year, the Maximum Permissible
Amount for the Limitation Year will be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS If pursuant to paragraph
10.1 or as a result of the allocation of forfeitures, there is an
Excess Amount, the excess will be disposed of under one of the
following methods as determined in the Adoption Agreement. If no
election is made in the Adoption Agreement then method "(a)" below
shall apply.
(a) Suspense Account Method
(1) Any nondeductible Employee Voluntary, Required
Voluntary Contributions and unmatched Elective
Deferrals to the extent they would reduce the Excess
Amount will be returned to the Participant. To the
extent necessary to reduce the Excess Amount, non-
Highly Compensated Employees will have all Elective
Deferrals returned whether or not there was a
corresponding match.
(2) If after the application of paragraph (1) an Excess
Amount still exists, and the Participant is covered by
the Plan at the end of the Limitation Year, the Excess
Amount in the Participant's account will be used to
reduce Employer contributions (including any allocation
of forfeitures) for such Participant in the next
Limitation Year, and each succeeding Limitation Year if
necessary.
(3) If after the application of paragraph (1) an Excess
Amount still exists, and the Participant is not covered
by the Plan at the end of the Limitation Year, the
Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to
reduce future Employer contributions (including
allocation of any forfeitures) for all remaining
58
Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary.
(4) If a suspense account is in existence at any time
during the Limitation Year pursuant to this paragraph,
it will not participate in the allocation of investment
gains and losses. If a suspense account is in
existence at any time during a particular Limitation
Year, all amounts in the suspense account must be
allocated and reallocated to Participants' accounts
before any Employer contributions or any Employee or
Voluntary Contributions may be made to the Plan for
that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
(b) Spillover Method
(1) Any nondeductible Employee Voluntary, Required
Voluntary Contributions and unmatched Elective
Deferrals to the extent they would reduce the Excess
Amount will be returned to the Participant. To the
extent necessary to reduce the Excess Amount, non
Highly Compensated Employees will have all Elective
Deferrals returned whether or not there was a
corresponding match.
(2) Any Excess Amount which would be allocated to the
account of an individual Participant under the Plan's
allocation formula will be reallocated to other
Participants in the same manner as other Employer
contributions. No such reallocation shall be made to
the extent that it will result in an Excess Amount
being created in such Participant's own account.
(3) To the extent that amounts cannot be reallocated under
(1) above, the suspense account provisions of (a) above
will apply.
10.3 PARTICIPATION IN THIS PLAN AND ANOTHER REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN, WELFARE BENEFIT FUND, OR INDIVIDUAL MEDICAL ACCOUNT
MAINTAINED BY THE EMPLOYER The Annual Additions which may be credited
to a Participant's account under this Plan for any Limitation Year
will not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to a Participant's account under the other Regional
Prototype Defined Contribution plans and Welfare Benefit Funds and
individual medical accounts as defined in Code Section 415(l)(2),
maintained by the Employer, which provide an Annual Addition as
defined in paragraph 1.4, for the same Limitation Year. If the Annual
Additions, with respect to the Participant under other Defined
Contribution Plans and Welfare Benefit Funds maintained by the
Employer, are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or allocated
59
to the Participant's account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the
amount contributed or allocated will be reduced so that the Annual
Additions under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount. If the Annual Additions with
respect to the Participant under such other Defined Contribution Plans
and Welfare Benefit Funds in the aggregate are equal to or greater
than the Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant's account under this Plan for the
Limitation Year. Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described
in paragraph 10.1. As soon as administratively feasible after the end
of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the Participant's
actual Compensation for the Limitation Year.
10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS If, pur-
suant to paragraph 10.3 or as a result of forfeitures, a Participant's
Annual Additions under this Plan and such other plans would result in
an Excess Amount for a Limitation Year, the Excess Amount will be
deemed to consist of the Annual Additions last allocated except that
Annual Additions attributable to a Welfare Benefit Fund or an
individual medical account as defined in Code Section 415(l)(2) will
be deemed to have been allocated first regardless of the actual
allocation date. If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an allocation
date of another plan, the Excess Amount attributed to this Plan will
be the product of:
(a) the total Excess Amount allocated as of such date, times
(b) the ratio of:
(1) the Annual Additions allocated to the Participant for
the Limitation Year as of such date under the Plan, to
(2) the total Annual Additions allocated to the Participant
for the Limitation Year as of such date under this and
all the other qualified Master or Prototype Defined
Contribution Plans.
Any Excess Amount attributed to this Plan will be disposed of in the
manner described in paragraph 10.2.
10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED CONTRIBUTION PLAN
WHICH IS NOT A REGIONAL PROTOTYPE PLAN If the Participant is covered
under another qualified Defined Contribution Plan maintained by the
Employer which is not a Regional Prototype Plan, Annual Additions
which may be credited to the Participant's account under this Plan for
any Limitation Year will be limited in accordance with paragraphs 10.3
and 10.4 as though the other plan were a Master or Prototype Plan,
60
unless the Employer provides other limitations in the Adoption
Agreement.
10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN If the
Employer maintains, or at any time maintained, a qualified Defined
Benefit Plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction will not exceed 1.0 in any Limitation Year. For any
Plan Year during which the Plan is Top-Heavy, the Defined Benefit and
Defined Contribution Plan Fractions shall be calculated in accordance
with Code Section 416(h). The Annual Additions which may be credited
to the Participant's account under this Plan for any Limitation Year
will be limited in accordance with the provisions set forth in the
Adoption Agreement.
10.7 LIMITATIONS ON ALLOCATIONS In any Plan Year in which the Top-
Heavy Ratio exceeds 90% (i.e., the Plan becomes Super Top-Heavy), the
denominators of the Defined Benefit Fraction (as defined in paragraph
1.15) and Defined Contribution Fraction (as defined in paragraph 1.18)
shall be computed using 100% of the dollar limitation instead of 125%.
10.8 AVERAGE DEFERRAL PERCENTAGE (ADP) TEST With respect to any Plan
Year, the Average Deferral Percentage for Participants who are Highly
Compensated Employees and the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees must satisfy one
of the following tests:
(a) Basic Test - The Average Deferral Percentage for
Participants who are Highly Compensated Employees for the
Plan Year is not more than 1.25 times the Average Deferral
Percentage for Participants who are non-Highly Compensated
Employees for the same Plan Year, or
(b) Alternative Test - The Average Deferral Percentage for
Participants who are Highly Compensated Employees for the
Plan Year does not exceed the Average Deferral Percentage
for Participants who are non-Highly Compensated Employees
for the same Plan Year by more than 2 percentage points
provided that the Average Deferral Percentage for
Participants who are Highly Compensated Employees is not
more than 2.0 times the Average Deferral Percentage for
Participants who are non-Highly Compensated Employees.
10.9 SPECIAL RULES RELATING TO APPLICATION OF ADP TEST
(a) The Actual Deferral Percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified Non-
Elective Contributions or Qualified Matching Contributions,
or both, if treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her accounts under two or
more arrangements described in Code Section 401(k), that are
61
maintained by the Employer, shall be determined as if such
Elective Deferrals (and, if applicable, such Qualified Non-
Elective 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.
(b) In the event that this Plan satisfies the requirements of
Code Sections 401(k), 401(a)(4), or 410(b), only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such Code Sections
only if aggregated with this Plan, then this Section shall
be applied by determining the Actual Deferral Percentage of
Employees as if all such plans were a single plan. For Plan
Years beginning after 1989, plans may be aggregated in order
to satisfy Code Section 401(k) only if they have the same
Plan Year.
(c) For purposes of determining the Actual Deferral Percentage
of a Participant who is a 5-percent owner or one of the ten
most highest-paid Highly Compensated Employees, the Elective
Deferrals (and Qualified Non-Elective Contributions or
Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and
Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Non-Elective
Contributions and Qualified Matching Contributions, or both)
for the Plan Year of Family Members as defined in paragraph
1.35 of this Plan. Family Members, with respect to such
Highly Compensated Employees, shall be disregarded as
separate Employees in determining the ADP both for
Participants who are non-Highly Compensated Employees and
for Participants who are Highly Compensated Employees. In
the event of repeal of the family aggregation rules under
Code Section 414(q)(6), all applications of such rules under
this Plan will cease as of the effective date of such
repeal.
(d) For purposes of determining the ADP test, Elective
Deferrals, Qualified Non-Elective Contributions and
Qualified Matching Contributions must be made before the
last day of the twelve-month period immediately following
the Plan Year to which contributions relate.
(e) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount of
Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
62
(f) The determination and treatment of the Actual Deferral
Percentage amounts of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary
of the Treasury.
10.10 RECHARACTERIZATION If the Employer allows for Voluntary
Contributions in the Adoption Agreement, a Participant may treat his
or her Excess Contributions as an amount distributed to the
Participant and then contributed by the Participant to the Plan.
Recharacterized amounts will remain nonforfeitable and subject to the
same distribution requirements as Elective Deferrals. Amounts may not
be recharacterized by a Highly Compensated Employee to the extent that
such amount in combination with other Employee Contributions made by
that Employee would exceed any stated limit under the Plan on
Voluntary Contributions. Recharacterization must occur no later than
two and one-half months after the last day of the Plan Year in which
such Excess Contributions arose and is deemed to occur no earlier than
the date the last Highly Compensated Employee is informed in writing
of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for the
Participant's tax year in which the Participant would have received
them in cash.
10.11 AVERAGE CONTRIBUTION PERCENTAGE (ACP) TEST If the Employer
makes Matching Contributions or if the Plan allows Employees to make
Voluntary Contributions the Plan must meet additional
nondiscrimination requirements provided under Code Section 401(m). If
Employee Contributions (including any Elective Deferrals
recharacterized as Voluntary Contributions) are made pursuant to this
Plan, then in addition to the ADP test referenced in paragraph 10.8,
the Average Contribution Percentage test is also applicable. The
Average Contribution Percentage for Participants who are Highly
Compensated Employees for each Plan Year and the Average Contribution
Percentage for Participants who are Non-Highly Compensated Employees,
for the same Plan Year must satisfy one of the following tests:
(a) The Average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the Average Contribution Percentage for Participants
who are non-Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average
Contribution Percentage for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by
two (2), provided that the Average Contribution Percentage
for Participants who are Highly Compensated Employees does
not exceed the Average Contribution Percentage for
Participants who are non-Highly Compensated Employees by
more than two (2) percentage points.
63
10.12 SPECIAL RULES RELATING TO APPLICATION OF ACP TEST
(a) If one or more Highly Compensated Employees participate in
both a cash or deferred arrangement and a plan subject to
the ACP test maintained by the Employer and the sum of the
ADP and ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the
ADP or ACP of those Highly Compensated Employees who also
participate in a cash or deferred arrangement will be
reduced (beginning with such Highly Compensated Employee
whose ACP is the highest) as set forth in the Adoption
Agreement so that the limit is not exceeded. The amount by
which each Highly Compensated Employee's Contribution
Percentage Amounts is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections
required to meet the ADP and ACP tests. Multiple use does
not occur if both the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and ACP
of the non-Highly Compensated Employees.
(b) For purposes of this Article, the Contribution Percentage
for any Participant who is a Highly Compensated Employee and
who is eligible to have Contribution Percentage Amounts
allocated to his or her 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,
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.
(c) In the event that this Plan satisfies the requirements of
Code Sections 401(a)(4), 401(m), 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 Percentage of
Employees as if all such plans were a single plan. For Plan
Years beginning after 1989, plans may be aggregated in order
to satisfy Code Section 401(m) only if the aggregated plans
have the same Plan Year.
(d) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten
most highest-paid, Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of Family Members
as defined in paragraph 1.35 of this Plan. Family Members,
64
with respect to Highly Compensated Employees, shall be
disregarded as separate Employees in determining the
Contribution Percentage both for Participants who are non-
Highly Compensated Employees and for Participants who are
Highly Compensated Employees. In the event of repeal of the
family aggregation rules under Code Section 414(q)(6), all
applications of such rules under this Plan will cease as of
the effective date of such repeal.
(e) For purposes of determining the Contribution Percentage
test, Employee Contributions are considered to have been
made in the Plan Year in which contributed to the trust.
Matching Contributions and Qualified Non-Elective
Contributions will be considered made for a Plan Year if
made no later than the end of the twelve-month period
beginning on the day after the close of the Plan Year.
(f) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount of
Qualified NonElective Contributions or Qualified Matching
Contributions, or both, used in such test.
(g) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(h) Qualified Matching Contributions and Qualified Non-Elective
Contributions used to satisfy the ADP test may not be used
to satisfy the ACP test.
ARTICLE XI
ADMINISTRATION
11.1 PLAN ADMINISTRATOR The Employer shall be the named fiduciary
and Plan Administrator. These duties shall include:
(a) appointing the Plan's attorney, accountant, actuary,
custodian or-any-other party needed to administer the Plan
or the Fund,
(b) directing the Trustee or custodian with respect to payments
from the Fund,
(c) communicating with Employees regarding their participation
and benefits under the Plan, including the administration of
all claims procedures,
65
(d) filing any returns and reports with the Internal Revenue
Service, Department of Labor, or any other governmental
agency,
(e) reviewing and approving any financial reports, investment
reviews, or other reports prepared by any party appointed by
the Employer under paragraph (a),
(f) establishing a funding policy and investment objectives
consistent with the purposes of the Plan and the Employee
Retirement Income Security Act of 1974, and
(g) construing and resolving any question of Plan
interpretation. The Plan Administrator's interpretation of
Plan provisions including eligibility and benefits under the
Plan is final, and unless it can be shown to be arbitrary
and capricious will not be subject to "de novo" review.
11.2 TRUSTEE The Trustee shall be responsible for the administration
of investments held in the Fund. These duties shall include:
(a) receiving contributions under the terms of the Plan,
(b) making distributions from the Fund in accordance with
written instructions received from an authorized
representative of the Employer,
(c) keeping accurate records reflecting its administration of
the Fund and making such records available to the Employer
for review and audit. Within 90 days after each Plan Year,
and within 90 days after its removal or resignation, the
Trustee shall file with the Employer an accounting of its
administration of the Fund during such year or from the end
of the preceding Plan Year to the date of removal or
resignation. Such accounting shall include a statement of
cash receipts and disbursements since the date of its last
accounting and shall contain an asset list showing the fair
market value of investments held in the Fund as of the end
of the Plan Year. The value of marketable investments shall
be determined using the most recent price quoted on a
national securities exchange or over the counter market.
The value of non-marketable investments shall be determined
in the sole judgement of the Trustee which determination
shall be binding and conclusive. The value of investments
in securities or obligations of the Employer in which there
is no market shall be determined in the sole judgement of
the Employer and the Trustee shall have no responsibility
with respect to the valuation of such assets. The Employer
shall review the Trustee's accounting and notify the Trustee
in the event of its disapproval of the report within 90 -
days, providing the Trustee with a written description of
the items in question. The Trustee shall have 60 days to
66
provide the Employer with a written explanation of the items
in question. If the Employer again disapproves, the Trustee
shall file its accounting in a court of competent
jurisdiction for audit and adjudication, and
(d) employing such agents, attorneys or other professionals as
the Trustee may deem necessary or advisable in the
performance of its duties.
The Trustee's duties shall be limited to those described above. The
Employer shall be responsible for any other administrative duties
required under the Plan or by applicable law.
11.3 ADMINISTRATIVE FEES AND EXPENSES All reasonable costs, charges
and expenses incurred by the Trustee in connection with the
administration of the Fund and all reasonable costs, charges and
expenses incurred by the Plan Administrator in connection with the
administration of the Plan (including fees for legal services rendered
to the Trustee or Plan Administrator) may be paid by the Employer, but
if not paid by the Employer when due, shall be paid from the Fund.
Such reasonable compensation to an institutional Trustee as may be
agreed upon from time to time between the Employer and the Trustee and
such reasonable compensation to the Plan Administrator as may be
agreed upon from time to time between the Employer and Plan
Administrator may be paid by the Employer, but if not paid by the
Employer when due shall be paid by the Fund. The Trustee shall have
the right to liquidate trust assets to cover its fees.
Notwithstanding the foregoing, no compensation other than
reimbursement for expenses shall be paid to a Trustee or Plan
Administrator who is the Employer or a full-time Employee of the
Employer. In the event any part of the Trust Account becomes subject
to tax, all taxes incurred will be paid from the Fund unless the Plan
Administrator advises the Trustee not to pay such tax.
11.4 DIVISION OF DUTIES AND INDEMNIFICATION
(a) The Trustee shall have the authority and discretion to
manage and govern the Fund to the extent provided in this
instrument, but does not guarantee the Fund in any manner
against investment loss or depreciation in asset value, or
guarantee the adequacy of the Fund to meet and discharge all
or any liabilities of the Plan.
(b) The Trustee shall not be liable for the making, retention or
sale of any investment or reinvestment made by it, as herein
provided, or for any loss to, or diminution of the Fund, or
for any other loss or damage which may result from the
discharge of its duties hereunder except to the extent it is
judicially determined that the Trustee has failed to
exercise the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use
67
in the conduct of an enterprise of a like character with
like alms.
(c) The Employer warrants that all directions issued to the
Trustee by it or the Plan Administrator will be in
accordance with the terms of the Plan and not contrary to
the provisions of the Employee Retirement Income Security
Act of 1974 and Regulations issued thereunder.
(d) The Trustee shall not be answerable for any action taken
pursuant to any direction, consent, certificate, or other
paper or document on the belief that the same is genuine and
signed by the proper person. All directions by the Employer
or the Plan Administrator shall be in writing. The Employer
shall deliver to the Trustee certificates evidencing the
individual or individuals authorized to act as set forth in
the Adoption Agreement or as the Employer may subsequently
inform the Trustee in writing and shall deliver to the
Trustee specimens of their signatures.
(e) The duties and obligations of the Trustee shall be limited
to those expressly imposed upon it by this instrument or
subsequently agreed upon by the parties. Responsibility for
administrative duties required under the Plan or applicable
law not expressly imposed upon or agreed to by the Trustee
shall rest solely with the Employer.
(f) The Trustee shall be indemnified and saved harmless by the
Employer from and against any and all liability to which the
Trustee may be subjected, including all expenses reasonably
incurred in its defense, for any action or failure to act
resulting from compliance with the instructions of the
Employer, the employees or agents of the Employer, the Plan
Administrator, or any other fiduciary to the Plan, and for
any liability arising from the actions or nonactions of any
predecessor trustee, custodian or other fiduciaries of the
Plan.
(g) The Trustee shall not be responsible in any way for the
application of any payments it is directed to make or for
the adequacy of the Fund to meet and discharge any and all
liabilities under the Plan.
ARTICLE XII
TRUST FUND ACCOUNT
12.1 THE FUND The Fund shall consist of all contributions made under
Article III and Article IV of the Plan and the investment thereof and
earnings thereon. All contributions and the earnings thereon less
68
payments made under the terms of the Plan, shall constitute the Fund.
The Fund shall be administered as provided in this document.
12.2 CONTROL OF PLAN ASSETS The assets of the Fund or evidence of
ownership shall be held by the Trustee under the terms of the Plan and
Trust Account. If the assets represent amounts transferred from
another trustee or custodian under a former plan, the Trustee named
hereunder shall not be responsible for the propriety of any investment
under the former plan.
12.3 EXCLUSIVE BENEFIT RULES No part of the Fund shall be used for,
or diverted to, purposes other than for the exclusive benefit of
Participants, former Participants with a vested interest, and the
beneficiary or beneficiaries of a deceased Participant having a vested
interest in the Fund at the death of the Participant.
12.4 ASSIGNMENT AND ALIENATION OF BENEFITS No right or claim to, or
interest in, any part of the Fund, or any payment from the Fund, shall
be assignable, transferable, or subject to sale, mortgage, pledge,
hypothecation, commutation, anticipation, garnishment, attachment,
execution, or levy of any kind. The Trustee shall not recognize any
attempt to assign, transfer, sell, mortgage, pledge, hypothecate,
commute, or anticipate the same, except to' the extent required by
law. The preceding sentences shall also apply to the creation,
assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a Qualified Domestic Relations
Order, as defined in Code Section 414(p), or any domestic relations
order entered before January 1, 1985 which the Plan attorney and Plan
Administrator deem to be qualified.
12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) A
domestic relations order shall specifically state all of the following
in order to be deemed a Qualified Domestic Relations Order ("QDRO"):
(a) The name and last known mailing address (if any) of the
Participant and of each alternate payee covered by the
domestic relations order. However, if the domestic
relations order does not specify the current mailing address
of the alternate payee, but the Plan Administrator has
independent knowledge of that address, the domestic
relations order may still be a valid QDROs.
(b) The dollar amount or percentage of the Participant's benefit
to be paid by the Plan to each alternate payee, or the
manner in which the amount or percentage will be determined.
(c) The number of payments or period for which the domestic
relations order applies.
(d) The specific plan (by name) to which the domestic relations
order applies.
69
A domestic relations order shall not be deemed a QDRO if it requires
the Plan to provide:
(e) any type or form of benefit, or any option not already
provided for in the Plan;
(f) increased benefits, or benefits in excess of the
Participant's vested rights;
(g) payment of a benefit earlier than allowed by the Plan's
earliest retirement provisions or in the case of a profit-
sharing plan, prior to the allowability of in-service
withdrawals, or
(h) payment of benefits to an alternate payee which are required
to be paid to another alternate payee under another QDRO.
Promptly, upon receipt of a domestic relations order ("Order") which
may or may not be "Qualified", the Plan Administrator shall notify the
Participant and any alternate payee(s) named in the Order of such
receipt, and include a copy of this paragraph 12.5. The Plan
Administrator shall then forward the Order to the Plan's legal counsel
for an opinion as to whether or not the Order is in fact "Qualified"
as defined in Code Section 414(p). Within a reasonable time after
receipt of the Order, not to exceed 60 days, the Plan's legal counsel
shall make a determination as to its "Qualified" status and the
Participant and any alternate payee(s) shall be promptly notified in
writing of the determination.
If the "Qualified" status of the Order is in question, there will be a
delay in any payout to any payee including the Participant, until the
status is resolved. In such event, the Plan Administrator shall
segregate the amount that would have been payable to the alternate
payee(s) if the Order had been deemed a QDRO. If the Order is not
Qualified, or the status is not resolved (for example, it has been
sent back to the Court for clarification or modification) within 18
months beginning with the date the first payment would have to be made
under the Order, the Plan Administrator shall pay the segregated
amounts plus interest to the person(s) who would have been entitled to
the benefits had there been no Order. If a determination as to the
Qualified status of the Order is made after the 1 8-month period
described above, then the Order shall only be applied on a prospective
basis. If the Order is determined to be a QDRO, the Participant and
alternate payee(s) shall again be notified promptly after such
determination. Once an Order is deemed a QDRO, the Plan Administrator
shall pay to the alternate payee(s) all the amounts due under the
QDRO, including segregated amounts plus interest which may have
accrued during a dispute as to the Order's qualification.
Unless specified otherwise in the Adoption Agreement, the earliest
retirement age with regard to the Participant against whom the order
is entered shall be the date the order is determined to be qualified.
70
This will only allow payouts to alternate payee(s) and not the
Participant.
ARTICLE XIII
INVESTMENTS
13.1 FIDUCIARY STANDARDS The Trustee shall invest and reinvest
principal and income in the same Fund in accordance with the
investment objectives established by the Employer, provided that:
(a) such investments are prudent under the Employee Retirement
Income Security Act of 1974 and the regulations promulgated
thereunder,
(b) such investments are sufficiently diversified or otherwise
insured or guaranteed to minimize the risk of large losses,
and
(c) such investments are similar to those which would be
purchased by another professional money manager for a like
plan with similar investment objectives.
13.2 TRUSTEE APPOINTMENT Shall be appointed by the Employer in
accordance with paragraph 1.85.
13.3 INVESTMENT ALTERNATIVES OF THE TRUSTEE The Trustee shall
implement an investment program based on the Employer's investment
objectives and the Employee Retirement Income Security Act of 1974.
In addition to powers given by law, the Trustee may:
(a) invest the Fund in any form of property, including common
and preferred stocks, exchange traded put and call options,
bonds, money market instruments, mutual funds (including
funds for which the Trustee or its affiliates serve as
investment advisor), savings accounts, certificates of
deposit, Treasury bills, insurance policies and contracts,
or in any other property, real or personal, having a ready
market. The Trustee may invest in time deposits (including,
if applicable, its own or those of affiliates) which bear a
reasonable interest rate. No portion of any Qualified
Voluntary Contribution, or the earnings thereon, may be in-
vested in life insurance contracts or, as with any
Participant-directed investment, in tangible personal
property characterized by the IRS as a collectible, other
than U.S. Government or State issued gold and silver coins,
(b) transfer any assets of the Fund to a group or collective
trust established to permit the pooling of funds of separate
pension and profit-sharing trusts, provided the Internal
Revenue Service has ruled such group or collective trust to
be qualified under Code Section 401(a) and exempt under Code
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Section 501(a) or to any other common, collective, or
commingled trust fund. Such commingling of assets of the
Fund with assets of other qualified trusts is specifically
authorized, and to the extent of the investment of the Fund
in such a group or collective trust, the terms of the
instrument establishing the group or collective trust shall
be a part hereof as though set forth herein,
(c) invest up to 100% of the Fund in the common stock, debt
obligations, or any other security issued by the Employer or
by an affiliate of the Employer within the limitations
provided under Sections 406, 407, and 408 of the Employee
Retirement Income Security Act of 1974 and further provided
that such investment does not constitute a prohibited
transaction under Code Section 4975. Any such investment in
Employer securities shall only be made upon written
direction of the Employer who shall be solely responsible
for propriety of such investment,
(d) hold cash uninvested and deposit same with any banking or
savings institution,
(e) join in or oppose the reorganization, recapitalization,
consolidation, sale or merger of corporations or properties,
including those in which it is interested as Trustee, upon
such terms as it deems wise,
(f) hold investments in nominee or bearer form,
(g) vote proxies and, if appropriate, pass them on to any
investment manager which may have directed the investment in
the equity giving rise to the proxy,
(h) exercise all ownership rights with respect to assets held in
the Fund.
13.4 PARTICIPANT LOANS If permitted by the Employer in the Adoption
Agreement, a Plan Participant may make application to the Employer
requesting a loan from the Fund. The Employer shall have the sole
right to approve or disapprove a Participant's application provided
that loans shall be made available to all Participants on a reasonably
equivalent basis. Loans shall not be made available to Highly
Compensated Employees [as defined in Code Section 414(q)] in an amount
greater than the amount made available to other Employees. Any loan
granted under the Plan shall be made subject to the following rules:
(a) No loan, when aggregated with any outstanding Participant
loan(s), shall exceed the lesser of (i) $50,000 reduced by
the excess, if any, of the highest outstanding balance of
loans during the one year period ending on the day before
the loan is made, over the outstanding balance of loans from
the Plan on the date the loan is made or (ii) one-half of
72
the fair market value of a Participant's Vested Account
Balance built up from Employer Contributions, Voluntary
Contributions, and Rollover Contributions. If the
Participant's Vested Account Balance is $20,000 or less, the
maximum loan shall not exceed the lesser of $10,000 or 100%
of the Participant's Vested Account Balance. For the
purpose of the above limitation, all loans from all plans of
the Employer and other members of a group of employers
described in Code Sections 414(b), 414(c), and 414(m) are
aggregated. An assignment or pledge of any portion of the
Participant's interest in the Plan and a loan, pledge, or
assignment with respect to any insurance contract purchased
under the Plan, will be treated as a loan under this
paragraph.
(b) All applications must be made on forms provided by the
Employer and must be signed by the Participant.
(c) Any loan shall bear interest at a rate reasonable at the
time of application, considering the purpose of the loan and
the rate being charged by representative commercial banks in
the local area for a similar loan unless the Employer sets
forth a different method for determining loan interest rates
in its loan procedures. The loan agreement shall also
provide that the payment of principal and interest be
amortized in level payments not less frequently than
quarterly.
(d) The term of such loan shall not exceed five years except in
the case of a loan for the purpose of acquiring any house,
apartment condominium, or mobile home (not used on a
transient basis) which is used or is to be used within a
reasonable time as the principal residence of the
Participant. The term of such loan shall be determined by
the Employer considering the maturity dates quoted by
representative commercial banks in the local area for a
similar loan.
(e) The principal and interest paid by a Participant on his or
her loan shall be credited to the Fund in the same manner as
for any other Plan investment. If elected in the Adoption
Agreement, loans may be treated as segregated investments of
the individual Participants. This provision is not
available if its election will result in discrimination in
operation of the Plan.
(f) If a Participant's loan application is approved by the
Employer, such Participant shall be required to sign a note,
loan agreement, and assignment of one-half of his or her
interest in the Fund as collateral for the loan. The
Participant, except in the case of a profit-sharing plan
satisfying the requirements of paragraph 8.7 must obtain the
73
consent of his or her Spouse, if any, within the 90 day
period before the time his or her account balance is used as
security for the loan. A new consent is required if the
account balance is used for any renegotiation, extension,
renewal or other revision of the loan, including an increase
in the amount thereof. The consent must be written, must
acknowledge the effect of the loan, and must be witnessed by
a plan representative or notary public. Such consent shall
subsequently be binding with respect to the consenting
Spouse or any subsequent Spouse.
(g) If a valid Spousal consent has been obtained, then, notwith-
standing any other provision of this Plan, the portion of
the Participant's Vested Account Balance used as a security
interest held by the Plan by reason of a loan outstanding to
the Participant shall be taken into account for purposes of
determining the amount of the account balance payable at the
time of death or distribution, but only if the reduction is
used as repayment of the loan. If less than 100% of the
Participant's vested account balance (determined without
regard to the preceding sentence) is payable to the
Surviving Spouse, then the account balance shall be adjusted
by first reducing the Vested Account Balance by the amount
of the security used as repayment of the loan, and then
determining the benefit payable to the Surviving Spouse.
(h) The Employer may also require additional collateral in order
to adequately secure the loan.
(i) A Participant's loan shall immediately become due and
payable if such Participant terminates employment for any
reason or fails to make a principal and/or interest payment
as provided in the loan agreement. If such Participant
terminates employment, the Employer shall immediately
request payment of principal and interest on the loan. If
the Participant refuses payment following termination, the
Employer shall reduce the Participant's Vested Account
Balance by the remaining principal and interest on his or
her loan. If the Participant's Vested Account Balance is
less than the amount due, the Employer shall take whatever
steps are necessary to collect the balance due directly from
the Participant. However, no foreclosure on the
Participant's note or attachment of the Participant's
account balance will occur until a distributable event
occurs in the Plan.
13.5 INSURANCE POLICIES If permitted by the Employer in the Adoption
Agreement, Employees may elect the purchase of life insurance policies
under the Plan. If elected, the maximum annual premium for a whole
life policy shall not exceed 50% of the aggregate Employer
contributions allocated to the account of a Participant. For profit-
sharing plans the 50% test need only be applied against Employer
74
contributions allocated in the last two years. Whole life policies
are policies with both nondecreasing death benefits and nonincreasing
premiums. The maximum annual premium for term contracts or universal
life policies and all other policies which are not whole life shall
not exceed 25% of aggregate Employer contributions allocated to the
account of a Participant. The two year rule for profitsharing plans
again applies. The maximum annual premiums for a Participant with
both a whole life and a term contract or universal life policies shall
be limited to one-half of the whole life premium, plus the term
premium, but shall not exceed 25% of the aggregate Employer
contributions allocated to the account of a Participant, subject to
the two year rule for profit-sharing plans. Any policies purchased
under this Plan shall be held subject to the following rules:
(a) The Trustee shall be applicant and owner of any policies
issued.
(b) All policies or contracts purchased, shall be endorsed as
nontransferable, and must provide that proceeds will be
payable to the Trustee; however, the Trustee shall be
required to pay over all proceeds of the contracts to the
Participant's Designated Beneficiary in accordance with the
distribution provisions of this Plan. Under no
circumstances shall the Trust retain any part of the
proceeds.
(c) Each Participant shall be entitled to designate a
beneficiary under the terms of any contract issued; however,
such designation will be given to the Trustee which must be
the named beneficiary on any policy. Such designation shall
remain in-force, until revoked by the Participant, by filing
a new beneficiary designation form with the Trustee. A
Participant's Spouse will be the Designated Beneficiary of
the proceeds in all circumstances unless a Qualified
Election has been made in accordance with paragraph 8.4.
The beneficiary of a deceased Participant shall receive in
addition to the proceeds of the Participant's policy or
policies, the amount credited to such Participant's invest-
ment account.
(d) A Participant who is uninsurable or insurable at substandard
rates, may elect to receive a reduced amount of insurance,
if available, or may waive the purchase of any insurance.
(e) All dividends or other returns received on any policy
purchased, shall be applied to reduce the next premium due
on such policy, or if no further premium is due, such amount
shall be credited to the Fund as part of the account of the
Participant for whom the policy is held.
(f) If Employer contributions are inadequate to pay all premiums
on all insurance policies, the Trustee may, at the option of
75
the Employer, utilize other amounts remaining in each
Participant's account to pay the premiums on his or her
respective policy or policies, allow the policies to lapse,
reduce the policies to a level at which they may be
maintained, or borrow against the policies on a prorated
basis, provided that the borrowing does not discriminate in
favor of the policies on the lives of officers,
shareholders, and Highly Compensated Employees.
(g) On retirement or termination of employment of a Participant,
the Employer shall direct the Trustee to cash surrender the
Participant's policy and credit the proceeds to his or her
account for distribution under the terms of the Plan.
However, before so doing, the Trustee shall first offer to
transfer ownership of the policy to the Participant in
exchange for payment by the Participant of the cash value of
the policy at the time of transfer. Such payment shall be
credited to the Participant's account for distribution under
the terms of the Plan. All distributions resulting from the
application of this paragraph shall be subject to the Joint
and Survivor Annuity Rules of Article VIII, if applicable.
(h) The Employer shall be solely responsible to see that these
insurance provisions are administered properly and that if
there is any conflict between the provisions of this Plan
and any insurance contracts issued that the terms of this
Plan will control.
13.6 EMPLOYER INVESTMENT DIRECTION If approved by the Employer in the
Adoption Agreement, the Employer shall have the right to direct the
Trustee with respect to investments of the Fund, may appoint an
investment manager (registered as an investment advisor under the
Investment Advisors Act of 1940) to direct investments, or may give
the Trustee sole investment management responsibility. The Employer
may purchase and sell interests in a registered investment company
(i.e., mutual funds) for which the Sponsor, its parent, affiliates, or
successors, may serve as investment advisor and receive compensation
from the registered investment company for its services as investment
advisor. The Employer shall advise the Trustee in writing regarding
the retention of investment powers, the appointment of an investment
manager, or the delegation of investment powers to the Trustee. Any
investment directive shall be made in writing by the Employer or
investment manager, as the case may be. In the absence of such
written directive, the Trustee shall automatically invest the
available cash in its discretion in an appropriate interim investment
until specific investment directions are received. Such instructions
regarding the delegation of investment responsibility shall remain in
force until revoked or amended in writing. The Trustee shall not be
responsible for the propriety of any directed investment made and
shall not be required to consult with or advise the Employer regarding
the investment quality of any directed investment held hereunder. If
the Employer fails to designate an investment manager, the Trustee
76
shall have full investment authority. If the Employer does not issue
investment directions, the Trustee shall have authority to invest the
Fund in its sole discretion. While the Employer may direct the
Trustee with respect to Plan investments, the Employer may not:
(a) borrow from the Fund or pledge any of the assets of the Fund
as security for a loan,
(b) buy property or assets from or sell property or assets to
the Fund,
(c) charge any fee for services rendered to the Fund, or
(d) receive any services from the Fund on a preferential basis.
13.7 EMPLOYEE INVESTMENT DIRECTION If approved by the Employer in the
Adoption Agreement, Participants shall be given the option to direct
the investment of their personal contributions and their share of the
Employer's contribution among alternative investment funds established
as part of the overall Fund, unless otherwise specified by the
Employer in the Adoption Agreement. Such investment funds shall be
under the full control of the Trustee. If investments outside the
Trustee's control are allowed, Participants may not direct that
investments be made in collectibles, other than U.S. Government or
State issued gold and silver coins. In this connection, a
Participant's right to direct the investment of any contribution shall
apply only to selection of the desired fund. The following rules
shall apply to the administration of such funds.
(a) At the time an Employee becomes eligible for the Plan, he or
she shall complete an investment designation form stating
the percentage of his or her contributions to be invested in
the available funds.
(b) A Participant may change his or her election with respect to
future contributions by filing a new investment designation
form with the Employer in accordance with the procedures
established by the Plan Administrator.
(c) A Participant may elect to transfer all or part of his or
her balance from one investment fund to another by filing an
investment designation form with the Employer in accordance
with the procedures established by the Plan Administrator.
(d) The Employer shall be responsible when transmitting Employee
and Employer contributions to show the dollar amount to be
credited to each investment fund for each Employee.
(e) Except as otherwise provided in the Plan, neither the
Trustee, nor the Employer, nor any fiduciary of the Plan
shall be liable to the Participant or any of his or her
77
beneficiaries for any loss resulting from action taken at
the direction of the Participant.
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 APPLICABILITY OF RULES If the Plan is or becomes Top-Heavy in
any Plan Year beginning after December 31, 1983, the provisions of
this Article will supersede any conflicting provisions in the Plan or
Adoption Agreement.
14.2 MINIMUM CONTRIBUTION Notwithstanding any other provision in the
Employer's Plan, for any Plan Year in which the Plan is Top-Heavy or
Super Top-Heavy, the aggregate Employer contributions and forfeitures
allocated on behalf of any - Participant (without regard to any Social
Security contribution) under this Plan and any other Defined
Contribution Plan of the Employer shall be the lesser of 3% of such
Participant's Compensation or the largest percentage of Employer
contributions and forfeitures, as a percentage of the first $200,000,
as adjusted under Code Section 415(d), of the Key Employee's
Compensation, allocated on behalf of any Key Employee for that year.
Each Participant who is employed by the Employer on the last day of
the Plan Year shall be entitled to receive an allocation of the
Employer's minimum contribution for such Plan Year. The minimum
allocation applies even though under other Plan provisions the
Participant would not otherwise be entitled to receive an allocation,
or would have received a lesser allocation for the year because the
Participant fails to make Voluntary Contributions to the Plan, the
Participant's Compensation is less than a stated amount, or the
Participant fails to complete 1,000 Hours of Service (or such lesser
number designated by the Employer in the Adoption Agreement) during
the Plan Year. A Paired profit-sharing plan designated to provide the
minimum Top-Heavy contribution must do so regardless of profits. An
Employer may make the minimum Top-Heavy contribution available to all
Participants or just non-Key Employees. Unless the Employer specifies
otherwise in the Adoption Agreement, the minimum Top-Heavy
contribution will be allocated to the accounts of all eligible
Participants even if they are Key Employees.
For purposes of computing the minimum allocation, Compensation shall
mean Compensation as defined in paragraph 1.12(c) of the Plan.
The Top-Heavy minimum contribution does not apply to any Participant
to the extent the Participant is covered under any other plan(s) of
the Employer and the Employer has provided in the Adoption Agreement
that the minimum allocation or benefit requirements applicable to Top-
Heavy Plans will be met in the other plan(s).
If a Key Employee makes an Elective Deferral or has an allocation of
Matching contributions made to his or her account, a Top-Heavy minimum
78
will be required for all non-Key Employees who are Participants.
However, neither Elective Deferrals by nor Matching Contributions to
non-Key Employees may be taken into account for purposes of satisfying
the Top-Heavy minimum contribution requirement.
14.3 MINIMUM VESTING For any Plan Year in which this Plan is Top-
Heavy, the minimum vesting schedule elected by, or deemed elected by,
the Employer in the Adoption Agreement will automatically apply to the
Plan. If the vesting schedule selected by the Employer in the
Adoption Agreement is less liberal than the allowable schedule, the
schedule will be automatically modified. If the vesting schedule
under the Plan shifts in or out of the Top-Heavy schedule for any Plan
Year, such shift is an amendment to the vesting schedule and the
election in paragraph 9.8 of the Plan applies. The minimum vesting
schedule applies to all accrued benefits within the meaning of Code
Section 41 1(a)(7) except those attributable to Employee
contributions, including, benefits accrued before the effective date
of Code Section 416 and benefits accrued before the Plan became Top-
Heavy. Further, no reduction in vested benefits may occur in the
event the Plan's status as Top-Heavy changes for any Plan Year.
However, this paragraph does not apply to the account balances of any
Employee who does not have an Hour of Service after the Plan initially
becomes Top-Heavy and such Employee's account balance attributable to
Employer contributions and forfeitures will be determined without
regard to this paragraph.
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 AMENDMENT BY SPONSOR The Sponsor of this Regional Prototype may
amend any or all provisions of this Plan and Trust Account at any time
without obtaining the approval or consent of any Employer which has
adopted this Plan and Trust Account provided that no amendment shall
authorize or permit any part of the corpus or income of the Fund to be
used for or diverted to purposes other than for the exclusive benefit
of Participants and their beneficiaries, or eliminate an optional form
of distribution. In the case of a mass-submitted plan, the mass-
submitter shall amend the Plan on behalf of the Sponsor.
15.2 AMENDMENT BY EMPLOYER The Employer may amend any option in the
Adoption Agreement, and may include language as permitted in the
Adoption Agreement,
(a) to satisfy Code Section 415,
(b) to avoid duplication of minimums under Code Section 416
because of the required aggregation of multiple plans,
The Employer may add certain model amendments published by the
Internal Revenue Service which specifically provide that their
79
adoption will not cause the Plan to be treated as individually
designed.
An Employer that has adopted a Standardized Regional Prototype Plan
(Adoption Agreements 001, 002, 003, 007, or 008) may amend the trust
document provided such amendment merely involves the specifications of
the names of the Plan, Employer, Trustee, Plan Administrator and other
fiduciaries, the Trust year or the name of any pooled Trust in which
the Plan's Trust will participate.
An Employer that has adopted a Nonstandardized Regional Prototype Plan
(Adoption Agreement 004, 005 or 006) will not be considered to have an
individually designed plan merely because the Employer amends
administrative provisions of the Trust document (such as provisions
relating to investments and duties of Trustees) so long as the amended
provisions are not in conflict with any other provision of the Plan
and do not cause the plan to fail to qualify under Code Section
401(a).
If the Employer amends the Plan and Trust Account other than as
provided above, the Employer's Plan shall no longer participate in
this Prototype Plan and will be considered an individually designed
plan for which the Employer must obtain a separate determination
letter.
15.3 TERMINATION Employers shall have the right to terminate their
Plans upon 60 days notice in writing to the Trustee. If the Plan is
terminated, partially terminated, or if there is a complete
discontinuance of contributions under a profit-sharing plan
maintained by the Employer, all amounts credited to the accounts of
Participants shall vest and become nonforfeitable. In the event of
termination, the Employer shall direct the Trustee with respect to the
distribution of accounts to or for the exclusive benefit of
Participants or their beneficiaries. In the event of a partial
termination, only those who are affected by such partial termination
shall be fully vested. In the event of termination, the Trustee shall
dispose of the Fund in accordance with the written directions of the
Plan Administrator, provided that no liquidation of assets and payment
of benefits, (or provision therefore), shall actually be made by the
Trustee until after it is established by the Employer in a manner
satisfactory to the Trustee, that the applicable requirements, if any,
of the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code governing the termination of employee benefit
plans, have been or are being, complied with, or that appropriate
authorizations, waivers, exemptions, or variances have been, or are
being obtained.
15.4 QUALIFICATION OF EMPLOYER'S PLAN If the adopting Employer fails
to attain or retain Internal Revenue Service qualification, such
Employer's Plan shall no longer participate in this Regional Prototype
Plan and will be considered an individually designed plan.
80
15.5 MERGERS AND CONSOLIDATIONS
(a) In the case of any merger or consolidation of the Employer's
Plan with, or transfer of assets or liabilities of the
Employer's Plan to, any other plan, Participants in the
Employer's Plan shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer
which are equal to or greater than the benefits they would
have been entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
(b) In the event that the Trustee is an institution, that
corporation into which the Trustee or any successor trustee
may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to
which the Trustee or any successor trustee may be a party,
or any corporation to which all or substantially all the
trust business of the Trustee or any successor trustee may
be transferred, shall be the successor of such Trustee
without the filing of any instrument or performance of any
further act, before any court.
15.6 RESIGNATION AND REMOVAL The Trustee may resign by written notice
to the Employer or may be removed by written notice from the Employer.
Either such notification shall be effective 60 days after delivery.
The Employer may discontinue its participation in this Prototype Plan
and Trust Account effective upon 60 days written notice to the
Sponsor. In such event the Employer shall, prior to the effective
date thereof, amend the Plan to eliminate any reference to this
Prototype Plan and Trust Account and appoint a successor trustee or
arrange for another funding agent. The Trustee shall deliver the Fund
to its successor on the effective date of the resignation or removal,
or as soon thereafter as practicable, provided that this shall not
waive any lien the Trustee, if an institution, may have upon the Fund
for its compensation or expenses. If the Employer fails to appoint a
successor trustee with the said 60 days, or such longer period as the
Trustee may specify in writing, the Employer shall be deemed the
successor trustee. The Employer must then obtain its own
determination letter.
15.7 QUALIFICATION OF PROTOTYPE The Sponsor intends that this
Regional Prototype Plan will meet the requirements of the Code as a
qualified Prototype Retirement Plan and Trust Account. Should the
Commissioner of Internal Revenue or any delegate of the Commissioner
at any time determine that the Plan and Trust Account fails to meet
the requirements of the Code, the Sponsor will amend the Plan and
Trust Account to maintain its qualified status.
81
ARTICLE XVI
GOVERNING LAW
Construction, validity and administration of the Regional Prototype
Retirement Plan and Trust, and any Employer Plan and Trust as embodied
in the Regional Prototype document and accompanying Adoption
Agreement, shall be governed by Federal law to the extent applicable
and to the extent not applicable by the laws of the State/Commonwealth
in which the principal office of the Employer is located.
82
PART I - SECTION 401(a)(17) LIMITATION
[MAY BE ADOPTED BY DEFINED CONTRIBUTION
AND DEFINED BENEFIT PLANS]
In addition to other applicable limitations Set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA '93 annual compensation limit. The OBRA '93
annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living in
effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period)
beginning in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual compensation limit will
be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual compensation limit set forth
in this provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current
Plan Year, the Compensation for that prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year
beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
83
MODEL AMENDMENT
REVENUE PROCEDURE 93-47
(This model amendment allows Participants receiving distribution from
safe-harbored profit sharing plans to waive the 30-day period required
under the Unemployment Compensation Act of 1992. Non-safe harbored
plans must still provide notice not less than 30 days and not more
than 90 days prior to the distribution.)
If a distribution is one to which Section 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence
less than 30 days after the notice required under Section 1.411(a)-
11(c) of the Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable,
a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
84
NONSTANDARDIZED
ADOPTION AGREEMENT
REGIONAL
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST
The Employer named below hereby establishes a Cash or Deferred Profit-
Sharing Plan for eligible Employees as provided in this Adoption
Agreement and the accompanying Regional Prototype Plan and Trust Basic
Plan Document #R1.
1. EMPLOYER INFORMATION
NOTE: If multiple Employers are adopting the Plan,
complete this section based on the lead Employer.
Additional Employers may adopt this Plan by
attaching executed signature pages to the back of
the Employer's Adoption Agreement.
(a) NAME AND ADDRESS:
SM&P Utility Resources, Inc.
518 Herriman Court
Noblesville, IN 46060
(b) TELEPHONE NUMBER: (317) 773-8886
(c) TAX ID NUMBER: 35-1892948
(d) FORM OF BUSINESS:
[ ] (i) Sole Proprietor
[ ] (ii) Partnership
[X] (iii) Corporation
[ ] (iv) "S" Corporation (formerly known as Subchapter S)
[ ] (v) Other:
(e) NAME(S) OF INDIVIDUAL(S) AUTHORIZED TO ISSUE
INSTRUCTIONS TO THE TRUSTEE:
Ed Hawes
1
(f) NAME OF PLAN: EMPLOYEES' PROFIT-SHARING AND SALARY
DEFERRAL PLAN OF SM&P UTILITY RESOURCES, INC.
(g) THREE DIGIT PLAN NUMBER
FOR ANNUAL RETURN/REPORT: 002
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of JANUARY 1.
1994.
(b) This is an amended Plan.
The effective date of the original Plan was ___________
The effective date of the amended Plan is _____________
(c) If different from above, the Effective Date for the Plan's
Elective Deferral provisions shall be ____________.
3. DEFINITIONS
(a) "Collective or Commingled Funds"
[X] (i) Not Applicable - Non-Institutional Trustee.
[ ] (ii) Investment in collective or commingled funds as
permitted at paragraph 13.3(b) of the Basic Plan
Document #R1 shall only be made to the following
specifically named fund(s):
Funds made available after the execution of this Adoption
Agreement will be listed on schedules attached to the end of this
Adoption Agreement.
(b) "Compensation" [paragraph 1.12]
(i) Compensation Measurement Period Compensation shall be
determined on the basis of the:
[X] (1) Plan Year.
[ ] (2) Employer's Taxable Year.
[ ] (3) Calendar Year.
Compensation shall be determined on the basis of the
following safeharbor definition of Compensation in IRS
Regulation Section 1.414(s)-1(c):
[ ] (4) Code Section 6041 and 6051 Compensation,
2
[X] (5) Code Section 3401(a) Compensation, or
[ ] (6) Code Section 415 Compensation.
(ii) Application of Salary Savings Agreements:
Compensation shall exclude Employer contributions made
pursuant to a Salary Savings Agreement under:
[ ] (1) Not applicable, no such agreement exists.
[X] (2) Not applicable, no Employer contributions
made pursuant to a Salary Savings
Agreement shall be excluded.
[ ] (3) A Cash or Deferred Profit-Sharing Plan under
Code Section 401(k) or Simplified Employee
Pension under Code Section 402(h)(1)(B).
[ ] (4) A flexible benefit plan under Code Section
125.
[ ] (5) A tax deferred annuity under Code Section
403(b).
(iii)Exclusions From Compensation:
(1) overtime.
(2) bonuses.
(3) commissions.
(4) _______________________
Type of Contribution(s) Exclusion(s)
----------------------- ------------
Elective Deferrals [Section 7(b)] ________
Matching Contributions [Section 7(c)] ________
Qualified Non-Elective Contributions
[Section 7(d)] and Non-Elective Contributions
[Section 7(e)]
(iv) Maximum Compensation:
For purposes of the Plan, Compensation shall be limited
to $________, the maximum amount which will be con-
sidered for Plan purposes. [If an amount is specified,
it will limit the amount of contributions allowed on
3
behalf of higher compensated Employees. Completion of
this section is not intended to coordinate with the
$200,000 of Code Section 4 15(d), thus the amount
should be less than the $200,000 limit as adjusted for
cost-of-living increases.]
(c) "Entry Date" [paragraph 1.30]
(i) The first day of the Plan Year during which an Employee
meets the eligibility requirements.
(ii) The first day of the Plan Year nearest the date on
which an Employee meets the eligibility requirements.
(iii) The earlier of the first day of the Plan Year or the
first day of the seventh month of the Plan Year
coinciding with or following the date on which an
Employee meets the eligibility requirements.
(iv) The first day of the Plan Year following the date on
which the Employee meets the eligibility requirements.
If this election is made, the Service requirement at
4(a)(ii) may not exceed 1/2 year and the age
requirement at 4(b)(ii) may not exceed 20-1/2.
(v) The first day of the month coinciding with or following
the date on which an Employee meets the eligibility
requirements.
(vi) The first day of the Plan Year, or the first day of the
fourth month, or the first day of the seventh month or
the first day of the tenth month, of the Plan Year
coinciding with or following the date on which an
Employee meets the eligibility requirements.
Indicate Entry Date(s) to be used by specifying option from
list above:
Type of Contribution(s) Entry Date(s)
----------------------- -------------
For Discretionary Profit-Sharing
Contributions under 7(e), (f) and (g) iii
For all other contributions (Option (i)
not available for these contributions) iii
(d) "Hour of Service" [paragraph 1.41]
Shall be determined on the basis of the method selected
below. Only one method may be selected. The method selected
4
shall be applied to all Employees covered under the Plan as
follows:
[X] (i) FOR NON-SALARIED EMPLOYEES: On the basis of
actual hours for which an Employee is paid or
entitled to payment.
[ ] (ii) On the basis of days worked.
An Employee shall be credited with ten (10) Hours
of Service if under paragraph 1.41 of the Basic
Plan Document #R1 such Employee would be credited
with at least one (1) Hour of Service during the
day.
[X] (iii) For Salaried Employees: On the basis of weeks
worked. An Employee shall be credited with forty-
five (45) Hours of Service if under paragraph 1.41
of the Basic Plan Document #R1 such Employee would
be credited with at least one (1) Hour. of Service
during the week.
[ ] (iv) On the basis of semi-monthly payroll periods.
An Employee shall be credited with ninety-five
(95) Hours of Service if under paragraph 1.41 of
the Basic Plan Document #R1 such Employee would be
credited with at least one (1) Hour of Service
during the semi-monthly payroll period.
[ ] (v) On the basis of months worked.
An Employee shall be credited with one-hundred-
ninety (190) Hours of Service if under paragraph
1.41 of the Basic Plan Document #R1 such Employee
would be credited with at least one (1) Hour of
Service during the month.
(e) "Limitation Year" [paragraph 1.44]
The 12-consecutive month period commencing on JANUARY 1 and
ending on DECEMBER 31.
If applicable, the Limitation Year will be a short
Limitation Year commencing on ___________ and ending on
_________. Thereafter, the Limitation Year shall end on the
date last specified above.
(f) "Net Profit"
[X] (i) Not applicable (profits will not be required for
any contributions to the Plan).
5
[ ] (ii) As defined in paragraph 1.48 of the Basic Plan
Document #R1.
[ ] (iii) Shall be defined as:
_____________________________________________________
(Only use if definition in paragraph 1.48 of the Basic
Plan Document #R1 is to be superseded.)
(g) "Plan Year" [paragraph 1.57]
The 12-consecutive month period commencing on JANUARY 1 and
ending on DECEMBER 31.
If applicable, the Plan Year will be a short Plan Year
commencing on _____ and ending on _______. Thereafter, the
Plan Year shall end on the date last specified above.
(h) "Qualified Early Retirement Age"
For purposes of making distributions under the provisions of
a Qualified Domestic Relations Order, the Plan's Qualified
Early Retirement Age with regard to the Participant against
whom the order is entered [X] shall [ ] shall not be the
date the order is determined to be qualified. If "shall" is
elected, this will only allow payout to the alternate
payee(s).
(i) "Qualified Joint and Survivor Annuity"
The safe-harbor provisions of paragraph 8.7 of the Basic
Plan Document #R1 [ ] are [X] are not applicable. If not
applicable, the survivor annuity shall be 50% (50%, 66-2/3%,
75% or 100%) of the annuity payable during the lives of the
Participant and Spouse. if no answer is specified, 50% will
be used.
(j) "Taxable Wage Base" [paragraph 1.79]
[X] (i) Not Applicable - Plan is not integrated with
Social Security.
[ ] (ii) The maximum earnings considered wages for such
Plan Year under Code Section 3121(a).
[ ] (iii) ___% (not more than 100%) of the amount considered
wages for such Plan Year under Code Section
3121(a).
6
[ ] (iv) $________, provided that such amount is not in
excess of the amount determined under paragraph
3(j)(ii) above.
[ ] (v) For the 1989 Plan Year $10,000. For all subsequent
Plan Years, 20% of the maximum earnings considered
wages for such Plan Year under Code Section
3121(a).
NOTE: Using less than the maximum at (ii) may
result in a change in the allocation formula
in Section 7.
(k) "Valuation Date(s)"
Allocations to Participant Accounts will be done in
accordance with Article V of the Basic Plan Document #R1:
(i) Daily (v) Quarterly
(ii) Weekly (vi) Semi-Annually
(iii) Monthly (vii) Annually
(iv) Bi-Monthly
Indicate Valuation Date(s) to be used by specifying option
from list above:
Type of Contribution(s) Valuation Date(s)
----------------------- -----------------
After-Tax Voluntary Contributions
[Section 6] i___
Elective Deferrals [Section 7(b)] i___
Matching Contributions [Section 7(c)] i___
Qualified Non-Elective Contributions i___
[Section 7(d)]
Non-Elective Contributions
[Section 7(e), (f) and (g)] i___
Minimum Top-Heavy Contributions
[Section 7(i)] i___
7
(1) "Year of Service"
(i) For Eligibility Purposes: The 12-consecutive month
period during which an Employee is credited with 1
(not more than 1,000) Hours of Service.
(ii) For Allocation Accrual Purposes: The 12-consecutive
month period during which an Employee is credited with
1000 (not more than 1,000) Hours of Service.
(iii) For Vesting Purposes: The 12-consecutive month period
during which an Employee is credited with 1000 (not
more than 1,000) Hours of Service.
4. ELIGIBILITY REQUIREMENTS [Article II]
(a) Service:
(i) For Elective Deferrals, and Required Voluntary
Contributions or Employer Contributions [unless
specified otherwise at (ii) below]:
[ ] (1) The Plan shall have no service requirement.
[X] (2) The Plan shall cover only Employees having
completed at least .5 [not more than three (3)]
Years of Service. If more than one (1) is
specified, for Plan Years beginning in 1989 and
later, the answer will be deemed to be one (1).
(ii) For contributions [not covered at (i) above] specify the
Service requirements below:
Service
Type of Contribution Requirement
-------------------- -----------
Employer Matching _______
Qualified Non-Elective _______
Discretionary Profit-Sharing _______
Required Voluntary _______
Not more than three (3) years may be specified. If more
than two (2) years is specified, for Plan Years
beginning in 1989 and later, the requirement will be
deemed to be two (2) years.
NOTE: If the eligibility period selected is or includes
a fractional year, an Employee will not be
8
required to complete any specified number of Hours
of Service to receive credit for such period.
Participants will be eligible for Top-Heavy
minimum contributions after the period in (i)
above, assuming they satisfy the other
requirements of this Section 4.
(b) Age:
[ ] (i) The Plan shall have no minimum age requirement.
[X] (ii) The Plan shall cover only Employees having
attained age 20.5 (not more than age 21).
(c) Classification:
The Plan shall cover all Employees who have met the age and
service requirements with the following exceptions:
[ ] (i) No exceptions.
[X] (ii) The Plan shall exclude Employees included in a
unit of Employees covered by a collective
bargaining agreement between the Employer and
Employee Representatives, if retirement benefits
were the subject of good faith bargaining. For
this purpose, the term "Employee Representative"
does not include any organization more than half
of whose members are Employees who are owners,
officers, or executives of the Employer.
[ ] (iii) The Plan shall exclude Employees who are
nonresident aliens and who receive no earned
income from the Employer which constitutes income
from sources within the United States.
[ ] (iv) The Plan shall exclude from participation any
classification of Employees determined as follows:
(d) Employees on Effective Date:
[X] (i) Not Applicable. All Employees will be required to
satisfy both the age and Service requirements
specified above:
[ ] (ii) Employees employed on the Plan's Effective Date
do not have to satisfy the Service requirements
specified above at [ ] (a)(i), [ ] (a)(ii), [ ]
both.
9
[ ] (iii) Employees employed on the Plan's Effective Date
do not have to satisfy the age requirements
specified above.
5. RETIREMENT AGES
(a) Normal Retirement Age:
If the Employer imposes a requirement that Employees retire
upon reaching a specified age, the Normal Retirement Age
selected below may not exceed the Employer imposed mandatory
retirement age.
[X] (i) Normal Retirement Age shall be 65 (not to exceed
age 65).
[ ] (ii) Normal Retirement Age shall be the later of
attaining age ___ (not to exceed age 65) or the
___ (not to exceed the 5th) anniversary of the
first day of the first Plan Year in which the
Participant commenced participation in the Plan.
(b) Early Retirement Age:
[ ] (i) Not Applicable.
[X] (ii) The Plan shall have an Early Retirement Age of 55
(not less than 55) and completion of 5 Years of
Service.
6. EMPLOYEE CONTRIBUTIONS
[X] (a) Participants shall be permitted to make Elective
Deferrals in any amount from 1% up to 15 of their
Compensation.
If (a) is applicable, Participants shall be permitted
to amend their Salary Savings Agreements to change the
contribution percentage as provided below:
[ ] (i) On the Anniversary Date of the Plan,
[X] (ii) On the Anniversary Date of the Plan and on
the first day of the seventh month of the
Plan Year,
[ ] (iii) On the Anniversary Date of the Plan and on
the first day following any Valuation Date,
or
[ ] (iv) Upon 30 days notice to the Employer.
10
[ ] (b) Participants shall be permitted to make after tax
Voluntary Contributions.
[ ] (c) Participants shall be required to make after tax
Voluntary Contributions as follows (Thrift Savings
Plan):
[ ] (i) ____% of Compensation.
[ ] (ii) A percentage determined by the Employee on
his or her enrollment form.
[X] (d) If necessary to pass the Average Deferral Percentage
Test, Participants [ ] may [X] may not have Elective
Deferrals re-characterized as Voluntary Contributions.
NOTE: The Average Deferral Percentage Test will apply to
contributions under (a) above. The Average
Contribution Percentage Test will apply to
contributions under (b) and (c) above, and may
apply to (a).
7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF
NOTE: The Employer shall make contributions to the Plan in
accordance with the formula or formulas selected below.
The Employer's contribution shall be subject to the
limitations contained in Articles Ill and X. For this
purpose, a contribution for a Plan Year shall be
limited for the Limitation Year which ends with or
within such Plan Year. Also, the integrated allocation
formulas below are for Plan Years beginning in 1989 and
later. The Employer's allocation for earlier years
shall be as specified in its Plan prior to amendment
for the Tax Reform Act of 1986.
(a) Profits Requirement:
(i) Current or Accumulated Net Profits are required for:
[ ] (A) Matching Contributions.
[ ] (B) Qualified Non-Elective Contributions.
[ ] (C) discretionary contributions.
(ii) No Net Profits are required for:
[X] (A) Matching Contributions.
[X] (B) Qualified Non-Elective Contributions.
11
[X] (C) discretionary contributions.
NOTE: Elective Deferrals can always be contributed
regardless of profits.
[X] (b) Salary Savings Agreement:
The Employer shall contribute and allocate to each
Participant's account an amount equal to the amount withheld
from the Compensation of such Participant pursuant to his or
her Salary Savings Agreement. If applicable, the, maximum
percentage is specified in Section 6 above.
An Employee who has terminated his or her election under the
Salary Savings Agreement other than for hardship reasons may
not make another Elective Deferral:
[ ] (i) until the first day of the next Plan Year.
[ ] (ii) until the first day of the [ ] next valuation
period. [ ] second valuation period following
termination. [ ] third valuation period
following termination.
[X] (iii) for a period of 6 month(s) (not to exceed 12
months), on the next following January 1 or
July 1.
[X] (c) Matching Employer Contribution [See paragraphs (h) and (i)]:
[ ] (i) PERCENTAGE MATCH: The Employer shall contribute
and allocate to each eligible Participant's
account an amount equal to __ % of the amount
contributed and allocated in accordance with
paragraph 7(b) above and (if checked) __% of [ ]
the amount of Voluntary Contributions made in
accordance with paragraph 4.1 of the Basic Plan
Document #R1. The Employer shall not match
Participant Elective Deferrals as provided above
in excess of $______ or in excess of ___% of the
Participant's Compensation or if applicable,
Voluntary Contributions in excess of $______ or in
excess of ___% of the Participant's Compensation.
In no event will the match on both Elective
Deferrals and Voluntary Contributions exceed a
combined amount of $_____ or ____%.
[X] (ii) DISCRETIONARY MATCH: The Employer shall
contribute and allocate to each eligible
Participant's account a percentage of the
Participant's Elective Deferral contributed and
allocated in accordance with paragraph 7(b) above.
12
The Employer shall set such percentage prior to
the end of the Plan Year. The Employer shall not
match Participant Elective Deferrals in excess of
$_____ or in excess of 6.0% of the Participant's
Compensation.
[ ] (iii) TIERED MATCH: The Employer shall contribute and
allocate to each Participant's account an amount
equal to ___% of the first ___% of the
Participant's Compensation, to the extent
deferred.
___% of the next ___% of the Participant's
Compensation, to the extent deferred.
___% of the next ___% of the Participant's
Compensation, to the extent deferred.
NOTE: Percentages specified in (iii) above may not
increase as the percentage of Participant's
contribution increases.
[ ] (iv) FLAT DOLLAR MATCH: The Employer shall contribute
and allocate to each Participant's account $_____
if the Participant defers at least 1% of
Compensation.
[ ] (v) PERCENTAGE OF COMPENSATION MATCH: The Employer
shall contribute and allocate to each
Participant's account ____% of Compensation if the
Participant defers at least 1% of Compensation.
[ ] (v) PROPORTIONATE COMPENSATION MATCH: The Employer
shall contribute and allocate to each Participant
who defers at least 1% of Compensation, an amount
determined by multiplying such Employer Matching
Contribution by a fraction the numerator of which
is the Participant's Compensation and the denom-
inator of which is the Compensation of all Par-
ticipants eligible to receive such an allocation.
The Employer shall set such discretionary contri-
bution prior to the end of the Plan Year.
[X] (vii) Qualified Match: Employer Matching Contributions
will be treated as Qualified Matching Contribu-
tions to the extent specified below:
[ ] (A) All Matching Contributions.
[X] (B) None.
13
[ ] (C) ____% of the Employer's Matching
Contribution.
[ ] (D) Up to ____% of each Participant's
Compensation.
[ ] (E) The amount necessary to meet the [ ] Average
Deferral Percentage (ADP) Test, [ ] Average
Contribution Percentage (ACP) Test, [ ] Both
the ADP and ACP Tests.
(viii) Matching Contribution Computation Period: The time
period upon which matching contributions will be based
shall be
[ ] (A) weekly
[ ] (B) bi-weekly
[ ] (C) semi-monthly
[ ] (D) monthly
[ ] (E) quarterly
[ ] (F) semi-annually
[X] (G) annually
(ix) ELIGIBILITY FOR MATCH: Employer Matching Contributions,
whether or not Qualified, will only be made on Employee
Contributions not withdrawn prior to the end of the [ ]
valuation period [X] Plan Year.
[ ] (d) Qualified Non-Elective Employer Contribution - [See
paragraphs (h) and (i)] These contributions are fully vested
when contributed.
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation
as a percentage of the Compensation of all eligible
Employees. This part of the Employer's contribution and the
allocation thereof shall be unrelated to any Employee
contributions made hereunder. The amount of Qualified non-
Elective Contributions taken into account for purposes of
meeting the ADP or ACP test requirements is:
[ ] (i) All such Qualified non-Elective Contributions.
[ ] (ii) The amount necessary to meet [ ] the ADP test,
[ ] the ACP test, [ ] Both the ADP and ACP
tests.
14
Qualified non-Elective Contributions will be made to:
[ ] (iii) All Employees eligible to participate.
[ ] (iv) Only non-Highly Compensated Employees eligible to
participate.
[X] (e) Additional Employer Contribution Other Than Qualified Non-
Elective Contributions - Non-Integrated [See paragraphs (h)
and (i)]
The Employer shall have the right to make an additional
discretionary contribution which shall be allocated to each
eligible Employee in proportion to his or her Compensation
as a percentage of the Compensation of all eligible
Employees. This part of the Employer's contribution and the
allocation thereof shall be unrelated to any Employee
contributions made hereunder.
[ ] (f) Additional Employer Contribution Integrated Allocation
Formula [See paragraphs (h) and (i)]
The Employer shall have the right to make an additional
discretionary contribution. The Employer's contribution for
the Plan Year plus any forfeitures shall be allocated to the
accounts of eligible Participants as follows:
(i) First, to the extent contributions and forfeitures are
sufficient, all Participants will receive an allocation
equal to 3% of their Compensation.
(ii) Next, any remaining Employer Contributions and
forfeitures will be allocated to Participants who have
Compensation in excess of the Taxable Wage Base (excess
Compensation). Each such Participant will receive an
allocation in the ratio that his or her excess
compensation bears to the excess Compensation of all
Participants. Participants may only receive an
allocation of 3% of excess Compensation.
(iii) Next, any remaining Employer contributions and
forfeitures will be allocated to all Participants in
the ratio that their Compensation plus excess
Compensation bears to the total Compensation plus
excess Compensation of all Participants. Participants
may only receive an allocation of up to 2.7% of their
Compensation plus excess Compensation, under this
allocation method. If the Taxable Wage Base defined
at Section 3(j) is less than or equal to the greater
of $10,000 or 20% of the maximum, the 2.7% need not be
reduced. If the amount specified is greater than the
greater of $10,000 or 20% of the maximum Taxable Wage
15
Base, but not more than 80%, 2.7% must be reduced to
1.3%. If the amount specified is greater than 80% but
less than 100% of the maximum Taxable Wage Base, the
2.7% must be reduced to 2.4%.
NOTE: If the Plan is not Top-Heavy or if the Top-Heavy
minimum contribution or benefit is provided under
another Plan [see Section 11(c)(ii)] covering the
same Employees, sub-paragraphs (i) and (ii) above
may be disregarded and 5.7%, 4.3% or 5.4% may be
substituted for 2.7%, 1.3% or 2.4% where it
appears in (iii) above.
(iv) Next, any remaining Employer contributions and
forfeitures will be allocated to all Participants
(whether or not they received an allocation under
the preceding paragraphs) in the ratio that each
Participant's Compensation bears to all
Participants' Compensation.
[ ] (g) Additional Employer Contribution-Alternative Integrated
Allocation Formula. [See paragraph (i)]
The Employer shall have the right to make an additional
discretionary contribution. To the extent that such
contributions are sufficient, they shall be allocated as
follows:
______% of each eligible Participant's Compensation plus
____% of Compensation in excess of the Taxable Wage Base
defined at Section 3(j) hereof. The percentage on excess
compensation may not exceed the lesser of (i) the amount
first specified in this paragraph or (ii) the greater of
5.7% or the percentage rate of tax under Code Section
3111(a) as in effect on the first day of the Plan Year
attributable to the Old Age (OA) portion of the OASDI
provisions of the Social Security Act. If the Employer
specifies a Taxable Wage Base in Section 3(j) which is lower
than the Taxable Wage Base for Social Security purposes
(SSTWB) in effect as of the first day of the Plan Year, the
percentage contributed with respect to excess Compensation
must be adjusted. If the Plan's Taxable Wage Base is greater
than the larger of $10,000 or 20% of the SSTWB but not more
than 80% of the SSTWB, the excess percentage is 4.3%. If the
Plan's Taxable Wage Base is greater than 80% of the SSTWB
but less than 100% of the SSTW.B, the excess percentage is
5.4%.
NOTE: Only one plan maintained by the Employer may be
integrated with Social Security.
16
(h) Allocation of Excess Amounts (Annual Additions)
In the event that the allocation formula above results in an
Excess Amount, such excess shall be:
[X] (i) placed in a suspense account accruing no gains or
losses for the benefit of the Participant.
[ ] (ii) reallocated as additional Employer contributions to all
other Participants to the extent that they do not have
any Excess Amount.
(i) Minimum Employer Contribution Under Top-Heavy Plans:
For any Plan Year during which the Plan is Top-Heavy, the sum of
the contributions and forfeitures as allocated to eligible
Employees under paragraphs 7(d), 7(e), 7(f), 7(g) and 9 of this
Adoption Agreement shall not be less than the amount required
under paragraph 14.2 of the Basic Plan document #R1. Top-Heavy
minimums will be allocated to:
[X] (i) all eligible Participants.
[ ] (ii) only eligible non-Key Employees who are Participants.
(j) Return of Excess Contributions and/or Excess Aggregate
Contributions:
In the event that one or more Highly Compensated Employees are
subject to both the ADP and ACP tests and the sum of such tests
exceeds the Aggregate Limit, the limit will be satisfied by
reducing the:
[ ] (i) the ADP of the affected Highly Compensated
Employees.
[ ] (ii) the ACP of the affected Highly Compensated
Employees.
[ ] (iii) a combination of the ADP and ACP of the affected
Highly Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES [paragraph 5.3]
[ ] (a) The Employer will not allocate Employer related
contributions to Employees who terminate during a Plan
Year, unless required to satisfy the requirements of
Code Section 401(a)(26) and 410(b). (These requirements
are effective for 1989 and subsequent Plan Years.)
[X] (b) The Employer will allocate Employer matching and other
related contributions as indicated below to Employees
who terminate during the Plan Year as a result of:
17
Matching Other
------- -----
[X] [X] (i) Retirement.
[X] [X] (ii) Disability.
[X] [X] (iii) Death.
[ ] [ ] (iv) Other termination of
employment provided that the
participant has completed a
Year of Service as defined for
Allocation Accrual Purposes.
[ ] [ ] (v) Other termination of
employment even though the
Participant has not completed
a Year of Service.
[ ] [ ] (vi) Termination of employment (for
any reason) provided that the
Participant had completed a
Year of Service for Allocation
Accrual Purposes.
9. ALLOCATION OF FORFEITURES
NOTE: Subsections (a), (b) and (c) below apply to forfeitures
of amounts other than Excess Aggregate Contributions.
(a) Allocation Alternatives:
[ ] (i) Not Applicable. All contributions are always fully
vested.
[X] (ii) Forfeitures shall be allocated to Participants in
the same manner as the Employer's contribution.
If allocation to other Participants is selected, the
allocation shall be as follows:
[1] Amount attributable to Employer discretionary
contributions and Top-Heavy minimums will be
allocated to:
[ ] all eligible Participants under the Plan.
[X] only those Participants eligible for an
allocation of Employer contributions in the
current year.
18
[ ] only those Participants eligible for an
allocation of matching contributions in the
current year.
[2] Amounts attributable to Employer Matching
contributions will be allocated to:
[ ] all eligible Participants.
[X] only those Participants eligible for
allocations of matching contributions in the
current year.
[X] (iii) Forfeitures attributable to discretionary
Employer contributions and Top-Heavy minimums
shall be applied to reduce the discretionary
Employer contribution for such Plan Year; and
forfeitures attributable to Employer Matching
contributions shall be applied to reduce
Employer Matching contributions for such Plan
Year. This provision begins with Plan Years
beginning January 1, 1995.
[ ] (iv) Forfeitures shall be applied to offset
administrative expenses of the Plan. If
forfeitures exceed these expenses, (iii) above
shall apply.
(b) Date for Reallocation:
NOTE: If no distribution has been made to a former
Participant, sub-section (i) below will apply to
such Participant even if the Employer elects (ii),
(iii) or (iv) below as its normal administrative
policy.
[ ] (i) Forfeitures shall be reallocated at the end
of the Plan Year during which the former
Participant incurs his or her fifth
consecutive one year Break In Service.
[ ] (ii) Forfeitures will be reallocated immediately
(as of the next Valuation Date).
[X] (iii) Forfeitures shall be reallocated at the end
of the Plan Year during which the former
Employee incurs his or her 1... (1st, 2nd,
3rd, or 4th) consecutive one year Break In
Service.
[ ] (iv) Forfeitures will be reallocated immediately
(as of the Plan Year end).
19
(c) Restoration of Forfeitures:
If amounts are forfeited prior to five consecutive 1-year
Breaks in Service, the Funds for restoration of account
balances will be obtained from the following resources in
the order indicated (fill in the appropriate number):
[1] (i) Current year's forfeitures.
[2] (ii) Additional Employer contribution.
[3] (iii) Income or gain to the Plan.
(d) Forfeitures of Excess Aggregate Contributions shall be:
[X] (i) Applied to reduce Employer contributions.
[ ] (ii) Allocated, after all other forfeitures under the
Plan, to the Matching Contribution account of each
non-highly compensated Participant who made
Elective Deferrals or Voluntary Contributions in
the ratio which each such Participant's
Compensation for the Plan Year bears to the total
Compensation of all Participants for such Plan
Year. Such forfeitures cannot be allocated to the
account of any Highly Compensated Employee.
Forfeitures of Excess Aggregate Contributions will be so
applied at the end of the Plan Year in which they occur.
10. CASH OPTION
[X] (a) The Employer may permit a Participant to elect to defer
to the Plan, an amount not to exceed 100% of any
Employer paid cash bonus made for such Participant for
any year. A Participant must file an election to defer
such contribution at least fifteen (15) days prior to
the end of the Plan Year. If the Employee fails to
make such an election, the entire Employer paid cash
bonus to which the Participant would be entitled shall
be paid as cash and not to the Plan. Amounts deferred
under this section shall be treated for all purposes as
Elective Deferrals. Notwithstanding the above, the
election to defer must be made before the bonus is made
available to the Participant.
[ ] (b) Not Applicable.
11. LIMITATIONS ON ALLOCATIONS [Article X]
[ ] This is the only Plan the Employer maintains or ever
maintained; therefore, this section is not applicable.
20
[X] The Employer does maintain or has maintained another Plan
(including a Welfare Benefit Fund or an individual medical
account [as defined in Code Section 415(l)(2)], under which
amounts are treated as Annual Additions) and has completed
the proper sections below.
Complete (a), (b) and (c) only if the Employer maintains or
ever maintained another qualified plan, including a Welfare
Benefit Fund or an individual medical account [as defined in
Code Section 415(l)(2)] in which any Participant in this
Plan is (or was) a participant or could possibly become a
participant.
(a) If the Participant is covered under another qualified
Defined Contribution Plan maintained by the Employer, other
than a Regional Prototype Plan:
[ ] (i) the provisions of Article X of the Basic Plan
Document #R1 will apply, as if the other plan were
a Regional Prototype Plan.
[ ] (ii) Attach provisions stating the method under which
the plans will limit total Annual Additions to the
Maximum Permissible Amount, and will properly
reduce any Excess Amounts, in a manner that
precludes Employer discretion.
(b) If a Participant is or ever has been a participant in a
Defined Benefit Plan maintained by the Employer:
Attach provisions which will satisfy the 1.0 limitation of
Code Section 415(e). Such language must preclude Employer
discretion. The Employer must also specify the interest and
mortality assumptions used in determining Present Value in
the Defined Benefit Plan.
(c) The minimum contribution or benefit required under Code
Section 416 relating to Top-Heavy Plans shall be satisfied
by:
[X] (i) this Plan.
[ ] (ii) ____________________________________
(Name of other qualified plan of the Employer).
[ ] (iii) Attach provisions stating the method under which
the minimum contribution and benefit provisions
of Code Section 416 will be satisfied. If a
Defined Benefit Plan is or was maintained, an
attachment must be provided showing interest and
mortality assumptions used in the Top-Heavy Ratio.
21
12. VESTING [Article IX]
Employees shall have a fully vested and nonforfeitable interest
in any Employer contribution and the investment earnings thereon
made in accordance with paragraphs (select one or more options)
[ ] 7(c), [ ] 7(e), [ ] 7(f), [ ] 7(g) and [ ] 7.(i) hereof.
Contributions under paragraph 7(b), 7(c)(vii) and 7(d) are always
fully vested. If one or more of the foregoing options are not
selected, such Employer contributions shall be subject to the
vesting table selected by the Employer.
Each Participant shall acquire a vested and nonforfeitable
percentage in his or her account balance attributable to Employer
contributions and the earnings thereon under the procedures
selected below except with respect to any Plan Year during which
the Plan is Top-Heavy, in which case the Two-twenty vesting
schedule [option (b)(iv)] shall automatically apply unless the
Employer has already elected a faster vesting schedule. If the
Plan is switched to option (b)(iv), because of its Top-Heavy
status, that vesting schedule will remain in effect even if the
Plan later becomes non-Top-Heavy until the Employer executes an
amendment of this Adoption Agreement indicating otherwise.
(a) Computation Period:
The computation period for purposes of determining Years of
Service and Breaks in Service for purposes of computing a
Participant's nonforfeitable right to his or her account
balance derived from Employer contributions:
[ ] (i) shall not be applicable since Participants are
always fully vested,
[ ] (ii) shall commence on the date on which an Employee
first performs an Hour of Service for the Employer
and each subsequent 12-consecutive month period
shall commence on the anniversary thereof, or
[X] (iii) shall commence on the first day of the Plan Year
during which an Employee first performs an Hour of
Service for the Employer and each subsequent
12-consecutive month period shall commence on the
anniversary thereof.
A Participant shall receive credit for a Year of Service if he or
she completes at least 1,000 Hours of Service [or if lesser, the
number of hours specified at 3(l)(iii) of this Adoption Agree-
ment] at any time during the 12-consecutive month computation
period. Consequently, a Year of Service may be earned prior to
the end of the 12-consecutive month computation period and the
Participant need not be employed at the end of the 12-consecutive
month computation period to receive credit for a Year of Service.
22
(b) Vesting Schedules:
(i) Full and immediate vesting.
YEARS OF SERVICE
----------------
1 2 3 4 5 6 7
--- --- --- --- --- --- ---
(ii) __% 100%
(iii) __% __% 100%
(iv) __% 20% 40% 60% 80% 100%
(v) 0% 0% 20% 40% 60% 80% 100%
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) 20% 40% 60% 80% 100%
(viii) __% __% __% __% __% __% 100%
NOTE: The percentages selected for schedule (viii) may not be
less for any year than the percentages shown at
schedule (v).
[X] All contributions other than those which are fully
vested when contributed will vest under schedule v
above.
[X] All contributions other than those which are fully
vested when contributed will vest under schedule vii
above. This schedule shall be effective for
Participants employed after September 30, 1994.
[ ] Contributions other than those which are fully vested
when contributed will vest as provided below:
Vesting
Option Selected Type Of Employer Contribution
--------------- -----------------------------
______________ 7(c) Employer Match on
Salary Savings
______________ 7(c) Employer Match on
Employee Voluntary
______________ 7(e) Employer Discretionary
______________ 7(f) & (g) Employer
Discretionary-Integrated
(c) Service disregarded for Vesting:
[X] (i) Not Applicable. All Service shall be considered.
23
[ ] (ii) Service prior to the Effective Date of this Plan or a
predecessor plan shall be disregarded when computing a
Participant's vested and nonforfeitable interest.
[ ] (iii) Service prior to a Participant having attained age 18
shall be disregarded when computing a Participant's
vested and nonforfeitable interest.
13. SERVICE WITH PREDECESSOR ORGANIZATION
For purposes of satisfying the Service requirements for
eligibility, Hours of Service shall include Service with the
following predecessor organization(s):
(These hours will also be used for vesting purposes.)
14. ROLLOVER/TRANSFER CONTRIBUTIONS
(a) Rollover Contributions, as described at paragraph 4.3 of the
Basic Plan Document #R1, [X] shall [ ] shall not be
permitted. If permitted, Employees [X] may [ ] may not make
Rollover Contributions prior to meeting the eligibility
requirements for participation in the Plan.
(b) Transfer Contributions, as described at paragraph 4.4 of the
Basic Plan Document #R1 [X] shall [ ] shall not be
permitted. If permitted, Employees [X] may [ ] may not make
Transfer Contributions prior to meeting the eligibility
requirements for participation in the Plan.
NOTE: Even if available, the Employer may refuse to
accept such contributions if its Plan meets the
safe-harbor rules of paragraph 8.7 of the Basic
Plan Document #R1.
15. HARDSHIP WITHDRAWALS
Hardship withdrawals, as provided for in paragraph 6.9 of the Basic
Plan Document #R1, [X] are [X] are not permitted. Hardship withdrawals
may only be made from Elective Deferrals.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.4 of the Basic Plan
Document #R1, [ ] are [X] are not permitted. If permitted, repayments
of principal and interest shall be repaid to [ ] the Participant's
segregated account or [ ] the general Fund.
17. INSURANCE POLICIES
The insurance provisions of paragraph 13.5 of the Basic Plan Document
#R1 [ ] shall [X] shall not be applicable.
24
18. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in
paragraph 13.6 of the Basic Plan Document #R1, [ ] shall [X] shall not
be applicable.
19. EMPLOYEE INVESTMENT DIRECTION
(a) The Employee investment direction provisions, as set forth
in paragraph 13.7 of the Basic Plan Document #R1, [X] shall
[ ] shall not be applicable. If applicable, Participants may
direct their investments:
[X] (i) among funds offered by the Trustee.
[ ] (ii) among any allowable investments.
(b) Participants may direct the following kinds of contributions
and the earnings thereon (check all applicable):
[X] (i) All Contributions
[ ] (ii) Elective Deferrals
[ ] (iii) Employee Voluntary Contributions (after-tax)
[ ] (iv) Employee Mandatory Contributions (after-tax)
[ ] (v) Employer Qualified Matching Contributions
[ ] (vi) Other Employer Matching Contributions
[ ] (vii) Employer Qualified Non-Elective Contributions
[ ] (viii) Employer Discretionary Contributions
[ ] (ix) Rollover Contributions
[ ] (x) Transfer Contributions
[ ] (xi) All of above which are checked, but only to the
extent that the Participant is vested in those
contributions.
20. EARLY PAYMENT OPTION
(a) A Participant who separates from Service prior to
retirement, death or Disability [X] may [ ] may not make
application to the Employer requesting an early payment of
his or her vested account balance.
25
(b) Except as provided at Section 15 of this Adoption Agreement,
a Participant who has not separated from Service [ ] may
[X] may not obtain a distribution of his or her Vested
Account Balance.
(c) A Participant who has attained the Plan's Normal Retirement
Age and who has not separated from Service [ ] may [X] may
not receive a distribution of his or her vested account
balance.
NOTE: If the Participant has had the right to withdraw his or
her account balance in the past, this right may not be
taken away. Notwithstanding the above, to the contrary,
required minimum distributions will be paid. For timing
of distribution see item 21(a) below.
21. DISTRIBUTION OPTIONS
(a) Timing of Distributions:
In cases of termination for other than death, Disability or
retirement, benefits shall be paid:
[ ] (i) As soon as administratively feasible, following
the close of the valuation period during which a
distribution is requested or is otherwise payable.
[ ] (ii) As soon as administratively feasible following the
close of the Plan Year during which a distribution
is requested or is otherwise payable.
[X] (iii) As soon as administratively feasible, following
the date on which a distribution is requested or
is otherwise payable.
[ ] (iv) As soon as administratively feasible, after the
close of the Plan Year during which the Partici-
pant incurs ___ consecutive one-year Breaks in
Service.
[ ] (v) Only after the Participant has achieved the Plan's
Normal Retirement Age, or Early Retirement Age, if
applicable.
In cases of death, Disability or retirement, benefits shall
be paid:
[ ] (vi) As soon as administratively feasible, following
the close of the valuation period during which a
distribution is requested or is otherwise
payable.
26
[ ] (vii) As soon as administratively feasible following
the close of the Plan Year during which a distri-
bution is requested or is otherwise payable.
[X] (viii) As soon as administratively feasible, following
the date on which a distribution is requested or
is otherwise payable.
(b) Optional Forms of Payment:
[X] (i) Lump Sum.
[X] (ii) Installment Payments.
[X] (iii) Life Annuity*.
[ ] (iv) Life Annuity Term Certain*.
Life Annuity with payments guaranteed for UP TO 20
years (not to exceed 20 years, specify all
applicable).
[X] (v) Joint and [X] 50%, [ ] 66-2/3%, [ ] 75% or [ ]
100% survivor annuity* (specify all applicable).
[ ] (vi) Other form(s) specified:
*Not available in Plan meeting provisions of paragraph
8.7 of Basic Plan Document #R1.
(c) Recalculation of Life Expectancy:
In determining required distributions under the Plan,
Participants and/or their Spouse (Surviving Spouse) [X]
shall [ ] shall not have the right to have their life
expectancy recalculated.
If "shall",
[ ] only the Participant shall be recalculated.
[ ] both the Participant and Spouse shall be recalculated.
[X] who is recalculated shall be determined by the
Participant.
22. SIGNATURES:
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
27
This agreement and the corresponding provisions of the Plan
and Trust Basic Plan Document #R1 were adopted by the
Employer the _______ day of ___________, 1995.
Signed for the Employer by: MARK T. MCNULTY
Title: VICE PRESIDENT/GENERAL MANAGER
Signature: /s/ Mark T. McNulty
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY
COMPLETE THE ADOPTION AGREEMENT MAY RESULT IN
DISQUALIFICATION OF ITS PLAN.
Employer's Reliance: The adopting Employer may not rely on a
notification letter issued by the National Office of the
Internal Revenue Service as evidence that the Plan is
qualified under Code Section 401. In order to obtain
reliance with respect to Plan qualification, the Employer
must apply to the appropriate Key District Office for a
determination letter.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #R1.
(b) TRUSTEE:
Name of Trustee:
MARK T. MCNULTY
The Employer's Plan as contained herein was accepted by the
Trustee(s) the _____day of _________, 1995.
Signed for the Trustee by: MARK T. MCNULTY
Title: TRUSTEE
Signature: /s/ Mark T. McNulty
-------------------
Signed for the Trustee by: DANIEL S. BAKER
Title: TRUSTEE
Signature: /s/ Daniel S. Baker
-------------------
28
