<PAGE> 1
As filed with the Securities and Exchange Commission on October 6, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FRANKLIN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Tennessee 62-1376024
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
230 Public Square, Franklin, Tennessee 37064
(Address of Principal Executive Offices) (Zip Code)
DEFINED CONTRIBUTION PLAN AND TRUST
(Full Title of the Plan)
Richard E. Herrington, President
Franklin Financial Corporation
230 Public Square
Franklin, Tennessee 37064
(615) 790-2265
----------------------
(Name, address, telephone number, including
area code, of agent for service)
----------------------
Copies Requested to:
Robert T. Molinet, Esq.
Smith, Gambrell & Russell, LLP
1230 Peachtree Street, N.E., Suite 3100
Atlanta, Georgia 30309
(404) 815-3643
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered(1) Registered(2) Share(3) Price(3) Registration Fee
--------------------- --------------- ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
Shares of no par value
Common Stock and 500,000 $6.94 $3,470,000 $1,024
interests of parti- Shares
cipation in the Plan
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended (the "Securities Act"), this Registration Statement also covers an
indeterminate amount of interests to be offered or sold pursuant to the employee
benefit plan described herein.
(2) This Registration Statement also relates to such indeterminate number of
additional shares of Common Stock of the Registrant as may be issuable as a
result of stock splits, stock dividends or similar transactions.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
================================================================================
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are hereby incorporated by reference into
this Registration Statement, and all documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities and Exchange
Act of 1934, prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing such
documents:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997;
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1998;
3. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1998; and
4. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A as filed with the
Commission on April 30, 1998.
ITEM 4. DESCRIPTION OF SECURITIES.
No response is required to this item.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
No response is required to this item.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company's Bylaws provide that in actions other than in the right of
the Company, the Company indemnifies directors and officers of the Company
against costs, charges, expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with any action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interest of the Company.
The indemnification provisions contained in the Company's Bylaws are
substantially coextensive with the provisions of Sections 48-18-501 to 48-18-509
of the Tennessee Business Corporation Act, which sets forth the applicable
terms, conditions and limitations governing the indemnification of officers,
directors and other persons.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
No response to this item is required.
II-1
<PAGE> 3
ITEM 8. EXHIBITS.
The following exhibits are filed with this Registration Statement.
(a) The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C>
4.1 Registrant's Defined Contribution Plan and Trust, as amended.
4.2 Defined Contribution Plan and Trust Adoption Agreement.
5.1 Opinion of Smith, Gambrell & Russell, LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Heathcott & Mullaly, P.C.
23.3 Consent of Smith, Gambrell & Russell, LLP (contained in their
opinion filed as Exhibit 5.1).
24.1 Powers of Attorney (contained on the signature page to this
Registration Statement).
</TABLE>
(b) The Company has submitted the Plan to the Internal Revenue
Service (the "IRS") and has made such changes required by the IRS in order to
qualify the Plan. The Registrant undertakes that it will cause any amendments to
the Plan to be submitted to the IRS in a timely manner and will make all changes
required by the IRS to qualify the Plan, as so amended.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement to include any additional or changed information on the plan
of distribution;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, to treat each such amendment as a new
registration statement of the securities offered, and the offering of
such securities at that time shall be the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's Annual Report pursuant to
II-2
<PAGE> 4
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Franklin, State of
Tennessee, on this 15th day of September, 1998.
FRANKLIN FINANCIAL CORPORATION
By: /s/ Richard E. Herrington
---------------------------------------
Richard E. Herrington
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gordon E. Inman and Richard E. Herrington
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him, in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith,
including a Registration Statement filed under Rule 462(b) of the Securities Act
of 1933, as amended, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises as fully and to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Herrington President, Chief September 15, 1998
- ------------------------------ Executive Officer and
Richard E. Herrington Director (Principal
Executive and Financial
Officer)
/s/ Lisa Musgrove Principal Accounting September 15, 1998
- ------------------------------ Officer
Lisa Musgrove
/s/ Gordon E. Inman Chairman of the Board September 15, 1998
- ------------------------------
Gordon E. Inman
/s/ Charles R. Lanier Director September 15, 1998
- ------------------------------
Charles R. Lanier
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ D. Wilson Overton Director September 15, 1998
- ------------------------------
D. Wilson Overton
/s/ Edward M. Richey Director September 15, 1998
- ------------------------------
Edward M. Richey
/s/ Edward P. Silva Director September 15, 1998
- ------------------------------
Edward P. Silva
</TABLE>
The Plan. Pursuant to the requirements of the Securities Act of 1933,
as amended, the trustees have duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Franklin, State of Tennessee, on the 15th day of September, 1998.
FRANKLIN FINANCIAL CORPORATION
PROFIT-SHARING PLAN AND TRUST
By: /s/ Gordon E. Inman
----------------------------------------
Gordon E. Inman, Trustee
By: /s/ Richard E. Herrington
----------------------------------------
Richard E. Herrington, Trustee
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ -------------------------------------------------------
<S> <C>
4.1 Registrant's Defined Contribution Plan and Trust, as amended.
4.2 Defined Contribution Plan and Trust Adoption Agreement.
5.1 Opinion of Smith, Gambrell & Russell, LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Heathcott & Mullaly, P.C.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
REGIONAL PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
SPONSORED BY
LBMC EMPLOYEE BENEFITS GROUP, LLC
BRENTWOOD, TENNESSEE
BASIC PLAN DOCUMENT #R1
FEBRUARY 1993
<PAGE> 2
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
<TABLE>
<CAPTION>
PARAGRAPH PAGE
- --------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS
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.........................................2
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..........................................5
1.14 Defined Benefit Plan.............................................6
1.15 Defined Benefit (Plan) Fraction..................................6
1.16 Defined Contribution Dollar Limitation...........................6
1.17 Defined Contribution Plan........................................6
1.18 Defined Contribution (Plan) Fraction.............................6
1.19 Designated Beneficiary...........................................7
1.20 Disability.......................................................7
1.21 Distribution Calendar Year.......................................7
1.22 Early Retirement Age.............................................7
1.23 Earned Income....................................................7
1.24 Effective Date...................................................7
1.25 Election Period..................................................8
1.26 Elective Deferral................................................8
1.27 Eligible Participant.............................................8
1.28 Employee.........................................................8
1.29 Employer.........................................................8
1.30 Entry Date.......................................................8
1.31 Excess Aggregate Contributions...................................9
1.32 Excess Amount....................................................9
1.33 Excess Contribution..............................................9
1.34 Excess Elective Deferrals........................................9
</TABLE>
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<TABLE>
<S> <C> <C>
1.35 Family Member....................................................9
1.36 First Distribution Calendar Year.................................9
1.37 Fund.............................................................9
1.38 Hardship.........................................................9
1.39 Highest Average Compensation....................................10
1.40 Highly Compensated Employee.....................................10
1.41 Hour Of Service.................................................10
1.42 Key Employee....................................................12
1.43 Leased Employee.................................................12
1.44 Limitation Year.................................................12
1.45 Master Or Prototype Plan........................................12
1.46 Matching Contribution...........................................12
1.47 Maximum Permissible Amount......................................12
1.48 Net Profit......................................................13
1.49 Normal Retirement Age...........................................13
1.50 Owner-Employee..................................................13
1.51 Paired Plans....................................................13
1.52 Participant.....................................................13
1.53 Participant's Benefit...........................................13
1.54 Permissive Aggregation Group....................................13
1.55 Plan............................................................13
1.56 Plan Administrator..............................................13
1.57 Plan Year.......................................................13
1.58 Present Value...................................................14
1.59 Projected Annual Benefit........................................14
1.60 Qualified Deferred Compensation Plan............................14
1.61 Qualified Domestic Relations Order..............................14
1.62 Qualified Early retirement Age..................................14
1.63 Qualified Joint and Survivor Annuity............................14
1.64 Qualified Matching contribution.................................15
1.65 Qualified Non-Elective Contributions............................15
1.66 Qualified Voluntary Contribution................................15
1.67 Regional Prototype Plan.........................................15
1.68 Required Aggregation Group......................................15
1.69 Required Beginning Date.........................................15
1.70 Rollover Contribution...........................................15
1.71 Salary Savings Agreement........................................16
1.72 Self-Employed Individual........................................16
1.73 Service.........................................................16
1.74 Shareholder Employee............................................16
1.75 Simplified Employee Pension Plan................................16
1.76 Sponsor.........................................................16
1.77 Spouse (Surviving Spouse).......................................16
1.78 Super Top-Heavy Plan............................................16
1.79 Taxable wage Base...............................................16
1.80 Top-Heavy Determination Date....................................16
</TABLE>
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<TABLE>
<S> <C> <C>
1.81 Top-Heavy Plan..................................................17
1.82 Top-Heavy Ratio.................................................17
1.83 Top-Paid Group..................................................19
1.84 Transfer Contribution...........................................19
1.85 Trustee.........................................................19
1.86 Valuation Date..................................................19
1.87 Vested Account Balance..........................................19
1.88 Voluntary Contribution..........................................20
1.89 Welfare Benefit Fund............................................20
1.90 Year of Service.................................................20
ARTICLE II
ELIGIBILITY REQUIREMENTS
2.1 Participation...................................................21
2.2 Change In Classification Of Employment..........................21
2.3 Computation Period..............................................21
2.4 Employment Rights...............................................21
2.5 Service With Controlled Groups..................................21
2.6 Owner-Employees.................................................22
2.7 Leased Employees................................................22
2.8 Thrift Plans....................................................23
ARTICLE III
EMPLOYER CONTRIBUTIONS
3.1 Amount..........................................................24
3.2 Expenses And Fees...............................................24
3.3 Responsibility For Contributions................................24
3.4 Return Of Contributions.........................................24
ARTICLE IV
EMPLOYEE CONTRIBUTIONS
4.1 Voluntary Contributions.........................................25
4.2 Qualified Voluntary Contributions...............................25
4.3 Rollover Contribution...........................................25
4.4 Transfer Contribution...........................................26
4.5 Employer Approval Of Transfer Contributions.....................26
4.6 Elective Deferrals..............................................26
4.7 Required Voluntary Contributions................................27
4.8 Direct Rollover Of Benefits.....................................27
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE V
PARTICIPANT ACCOUNTS
5.1 Separate Accounts...............................................28
5.2 Adjustments To Participant Accounts.............................28
5.3 Allocating Employer Contributions...............................29
5.4 Allocating Investment Earnings And Losses.......................29
5.5 Participant Statements..........................................30
ARTICLE VI
RETIREMENT BENEFITS AND DISTRIBUTIONS
6.1 Normal Retirement Benefits......................................31
6.2 Early Retirement Benefits.......................................31
6.3 Benefits On Termination Of Employment...........................31
6.4 Restrictions On Immediate Distributions.........................33
6.5 Normal Form Of Payment..........................................34
6.6 Commencement Of Benefits........................................34
6.7 Claims Procedures...............................................34
6.8 In-Service Withdrawals..........................................35
6.9 Hardship Withdrawal.............................................36
ARTICLE VII
DISTRIBUTION REQUIREMENTS
7.1 Joint And Survivor Annuity Requirements.........................38
7.2 Minimum Distribution Requirements...............................38
7.3 Limits On Distribution Periods..................................38
7.4 Required Distributions On Or After The
Required Beginning Date................................38
7.5 Required Beginning Date.........................................39
7.6 Transitional Rule...............................................40
7.7 Designation Of Beneficiary For Death Benefit....................42
7.8 Nonexistence Of Beneficiary.....................................42
7.9 Distribution Beginning Before Death.............................42
7.10 Distribution Beginning After Death..............................42
7.11 Distribution Of Excess Elective Deferrals.......................43
7.12 Distributions Of Excess Contributions...........................44
7.13 Distribution Of Excess Aggregate Contributions..................44
</TABLE>
<PAGE> 6
<TABLE>
ARTICLE VIII
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
<S> <C> <C>
8.1 Applicability Of Provisions.....................................46
8.2 Payment Of Qualified Joint And Survivor Annuity.................46
8.3 Payment of Qualified Pre-Retirement
Survivor Annuity.......................................46
8.4 Qualified Election..............................................46
8.5 Notice Requirements For Qualified Joint
And Survivor Annuity...................................47
8.6 Notice Requirements For Qualified Pre-
Retirement Survivor Annuity............................47
8.7 Special Safe-Harbor Exception For
Certain Profit-Sharing Plans...........................48
8.8 Transitional Joint And Survivor
Annuity Rules..........................................49
8.9 Automatic Joint And Survivor Annuity
And Early Survivor Annuity.............................49
8.10 Annuity Contract................................................50
ARTICLE IX
VESTING
9.1 Employee Contributions..........................................51
9.2 Employer Contributions..........................................51
9.3 Computation Period..............................................51
9.4 Requalification Prior To Five Consecutive
One-Year Breaks In Service.............................51
9.5 Requalification After Five Consecutive
One-Year Breaks In Service.............................51
9.6 Calculating Vested Interest.....................................52
9.7 Forfeitures.....................................................52
9.8 Amendment Of Vesting Schedule...................................52
9.9 Service With Controlled Groups..................................53
9.10 Application Of Prior Vesting Rules..............................53
ARTICLE X
LIMITATIONS ON ALLOCATIONS AND
ANTIDISCRIMINATION TESTING
10.1 Participation In This Plan Only.................................54
10.2 Disposition Of Excess Annual Additions..........................54
</TABLE>
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<TABLE>
<S> <C> <C>
10.3 Participation In This Plan And Another
Regional Prototype Defined Contribution
Plan, Welfare Benefit Fund, Or Individual
Medical Account Maintained By The Employer.............55
10.4 Disposition Of Excess Annual Additions
Under Two Plans........................................56
10.5 Participation In This Plan And Another
Defined Contribution Plan Which Is Not
A Regional Prototype Plan..............................56
10.6 Participation In This Plan And A Defined
Benefit Plan...........................................57
10.7 Limitations On Allocations......................................57
10.8 Average Deferral Percentage (ADP) Test..........................57
10.9 Special Rules Relating To Application
Of ADP Test............................................57
10.10 Recharacterization..............................................58
10.11 Average Contribution Percentage (ACP) Test......................59
10.12 Special Rules Relating To Application
Of ACP Test............................................59
ARTICLE XI
ADMINISTRATION
11.1 Plan Administrator..............................................61
11.2 Trustee.........................................................61
11.3 Administrative Fees And Expenses................................62
11.4 Division Of Duties And Indemnification..........................62
ARTICLE XII
TRUST FUND ACCOUNT
12.1 The Fund........................................................64
12.2 Control Of Plan Assets..........................................64
12.3 Exclusive Benefit Rules.........................................64
12.4 Assignment And Alienation Of Benefits...........................64
12.5 Determination Of Qualified Domestic
Relations Order (QDRO).................................64
ARTICLE XIII
INVESTMENTS
13.1 Fiduciary Standards.............................................66
13.2 Trustee Appointment.............................................66
</TABLE>
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<TABLE>
<S> <C> <C>
13.3 Investment Alternatives Of The Trustee..........................66
13.4 Participant Loans...............................................67
13.5 Insurance Policies..............................................69
13.6 Employer Investment Direction...................................70
13.7 Employee Investment Direction...................................71
ARTICLE XIV
TOP-HEAVY PROVISIONS
14.1 Applicability Of Rules..........................................72
14.2 Minimum Contribution............................................72
14.3 Minimum Vesting.................................................73
ARTICLE XV
AMENDMENT AND TERMINATION
15.1 Amendment By Sponsor............................................74
15.2 Amendment By Employer...........................................74
15.3 Termination.....................................................74
15.4 Qualification Of Employer's Plan................................75
15.5 Mergers And Consolidations......................................75
15.6 Resignation And Removal.........................................75
15.7 Qualification Of Prototype......................................75
ARTICLE XVI
GOVERNING LAW.................................................................76
</TABLE>
<PAGE> 9
REGIONAL PROTOTYPE DEFINED CONTRIBUTION
PLAN AND TRUST
SPONSORED BY
LBMC EMPLOYEE BENEFITS GROUP, LLC
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
<PAGE> 10
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.
1.3 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 March31, 1984 to an individual medical
account, as defined in Code Section 415(1)(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.
2
<PAGE> 11
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.
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
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<PAGE> 12
which the Employer is required to furnish the Employee a
written 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 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 Ins defined in Code Section 22(e)(3)] is the
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<PAGE> 13
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 Ins 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) Ins 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 thereunder 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 beginning before January 1, 1990, the
applicable annual Compensation limit is $200,000.
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.
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<PAGE> 14
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.
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
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<PAGE> 15
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)(l)(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(1)(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
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.
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<PAGE> 16
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.
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
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<PAGE> 17
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.
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 414(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
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<PAGE> 18
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).
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 Participants death, the First Distribution Calendar Year is the calendar
year immediately preceding the calendar year which contains the Participants
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.
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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.
(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 ss.l.414(q)-lT,
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 ss.l.414(q)-lT, 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
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vacation, holiday, illness, in-capacity (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
dam-ages, 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 he, 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 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 Ins 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.
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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 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
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(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 401(h) or
Code Section 419A(f)(2)] which is otherwise treated as an Annual Addition under
Code Section 415(1)(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.
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.
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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 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 and all other relevant
factors used the plan will remain constant for all the current
Limitation Year to determine benefits under 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.
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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
(b) the first day of the 120th month beginning before the
Participant attains 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
de-termination 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.
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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.
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 Participants 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.
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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. These plans are considered
for contribution limitation and Top-Heavy testing purposes.
1.76 SPONSOR. LBMC Employee Benefits Group, LLC 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
Per-missive 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
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<PAGE> 27
Defined Benefit Plan which during the 5-year period ending on
the Determination Date(s) has or has had accrued benefits, the
Top-Heavy Ratio for this Plan alone, or for the Required or
Permissive Aggregation Group as appropriate, is a fraction,
(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
within or ends with the 12-month period ending on the
Determination
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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 Employee 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
411(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.
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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 pan 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), (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.
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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 401(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 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.
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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 414(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:
(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:
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<PAGE> 32
(a) a non-integrated Employer contribution rate of at least 10% of
Compensation, Ins 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 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.
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<PAGE> 33
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)- l(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
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.
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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 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 40t(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,
(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):
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(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 or'
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 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.
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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
ensure that the Plan will meet one of the antidiscrimination tests under Code
Section 401(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.
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.
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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 414(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 otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.
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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.
(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
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(d) the Participant's proportionate share of any investment
earnings 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. 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
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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.
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.
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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 $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
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
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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 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 5 consecutive l-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 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.
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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 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 Qualified Voluntary Contributions.
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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, semi-annual 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:
(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:
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<PAGE> 45
(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 Employer 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 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 safe-harbor 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, birthrate, 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[I-(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
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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 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
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<PAGE> 47
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 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:
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<PAGE> 48
(a) A separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
(b) At 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.
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ARTICLE VII
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 under
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.
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.
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(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 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:
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(1) Non-5-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 5-percent owner as
defined in Code Section 416(i) (determined in accordance with
Code Section 416 but without regard to whether the Plan is
Top-Heavy) at any time during the Plan Year ending with or
within the calendar year in which such Owner attains age 66
1/2 or any subsequent Plan Year.
(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 5-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.
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(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 December31, 1983, the Employee, or the
beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in 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
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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, 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.
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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 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.
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(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.
(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
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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 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 pro-rata 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).
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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 optional
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.
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 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
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(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 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 con-sent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision shall
be valid unless the Participant has received notice as provided in 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 applicable 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 tile Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
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(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 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 he
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 redetermined.
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 Surviving 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 Participant'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.
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(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:
(1) begins to receive payments under the Plan on or after
Normal Retirement Age, or
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(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
Qualified 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.
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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 requalifies 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 REQUALIFICATION 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 reemployment 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 REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE. If
such Participant is not fully vested upon reemployment, 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 computing the Participant's vested portion of the new account, all
pre-break and post-break Service shall be counted. However, 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 requalification hereunder.
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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
one-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
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
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(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 414(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.
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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(1)(2), maintained by the adopting Employer, which
provides an Annual Addition as defined in 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 file 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.
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(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 Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary.
(4) If a suspense account is in existence at any time
daring 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(1)(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
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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 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, pursuant 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(1)(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, unless the Employer provides other limitations in the
Adoption Agreement.
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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 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
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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.
(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
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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.
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
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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, 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
Non-Elective Contributions or Qualified Matching
Contributions, or both, used in such test.
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(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.
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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,
(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
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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 judgment 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 judgment 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 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.
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(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 in
the conduct of an enterprise of a like character with like
aims.
(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.
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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 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.
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(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.
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
18-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. This will only allow payouts
to alternate payee(s) and not the Participant.
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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 invested 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
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,
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(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 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.
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(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
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,
notwithstanding any other provision of this Plan, the portion
of the Participant's Vested Account Balance used as a security
interest held by the Plan by reason of a loan outstanding to
the Participant shall be taken into account for purposes of
determining the amount of the account balance payable at the
time of death or distribution, but only if the reduction is
used as repayment of the loan. 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
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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 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 profit-sharing 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
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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 investment 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 he 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
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
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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 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.
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(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 beneficiaries
for any loss resulting from action taken at the direction of
the Participant.
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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 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.
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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 l(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.
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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 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
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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.
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
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<PAGE> 89
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.
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<PAGE> 90
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.
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<PAGE> 91
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.
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<PAGE> 92
MODEL AMENDMENT
REVENUE PROCEDURE 9347
(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.
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<PAGE> 1
EXHIBIT 4.2
PLAN #003
STANDARDIZED
ADOPTION AGREEMENT
REGIONAL
PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
PLAN AND TRUST
SPONSORED BY
LBMC EMPLOYEE BENEFITS GROUP, LLC
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:
FRANKLIN NATIONAL BANK
230 PUBLIC SQUARE
FRANKLIN, TN 37064
(b) TELEPHONE NUMBER: (615)790-2265
(c) TAX ID NUMBER: 62-1376027
(d) FORM OF BUSINESS:
[ ] (i) Sole Proprietor
[ ] (ii) Partnership
[X] (iii) Corporation
-1-
<PAGE> 2
[ ] (iv) "S" Corporation (formerly known as
Subchapter S)
[ ] (v) Other:
(e) NAME(S) OF INDIVIDUAL(S) AUTHORIZED TO ISSUE
INSTRUCTIONS TO THE TRUSTEE/CUSTODIAN:
(f) NAME OF PLAN: FRANKLIN FINANCIAL EMPLOYEES RETIREMENT SAVINGS
PLAN
(g) THREE DIGIT PLAN NUMBER
FOR ANNUAL RETURN/REPORT: 001
2. EFFECTIVE DATE
(a) This is a new Plan having an effective date of .
(b) This is an amended Plan.
The effective date of the original Plan was MARCH 1, 1990.
The effective date of the amended Plan is JANUARY 1, 1998.
(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:
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<PAGE> 3
[X] (1) Plan Year.
[ ] (2) Employer's Taxable Year.
[ ] (3) Calendar Year.
Compensation shall be determined on the basis of the
following safe-harbor definition of Compensation in
IRS Regulation Section 1.414(s)-1(c):
[X] (4) Code Section 6041 and 6051
Compensation,
[ ] (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) Maximum Compensation
For purposes of the Plan, Compensation shall be
limited to $_______, the maximum amount which will be
considered for Plan purposes. [If an amount is
specified, it will limit the amount of contributions
allowed on behalf of higher compensated Employees.
Completion of this section is not intended to
coordinate with the $200,000 limit of Code Section
415(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.
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<PAGE> 4
(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:
<TABLE>
<CAPTION>
Type of Contribution(s) Entry Date(s)
----------------------- -------------
<S> <C>
For Discretionary Profit-Sharing Contributions
under 7(e), (f) and (g) VI*
-------------
For all other contributions (Option (i) not
available for these contributions) VI*
-------------
</TABLE>
*EMPLOYEES HIRED BETWEEN 10/01/97 AND 12/31/97 WILL ENTER THE PLAN
EFFECTIVE 01/01/98.
(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 shall be
applied to all Employees covered under the Plan as follows:
[X] (i) 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.
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<PAGE> 5
[ ] (iii) 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).
[ ] (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.
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(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 [X] are [ ] are not applicable. If not
applicable, the survivor annuity shall be % (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 1.63]
[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).
[ ] (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
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<PAGE> 7
Indicate Valuation Date(s) to be used by specifying option
from list above:
<TABLE>
<CAPTION>
Type of Contribution(s) Valuation Date(s)
----------------------- -----------------
<S> <C>
After-Tax Voluntary Contributions [Section 6]
-----
Elective Deferrals [Section 7(b)] V
-----
Matching Contributions [Section 7(c)] V
-----
Qualified Non-Elective Contributions [Section 7(d)] V
-----
Non-Elective Contributions [Section 7(e), (f), (g)] V
-----
Minimum Top-Heavy Contributions [Section 7(i)]
-----
</TABLE>
(l) "Year of Service"
(i) For Eligibility Purposes: The 12-consecutive month
period during which an Employee is credited with 0
(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 * (not more than 1,000) Hours of Service. (For
Plan Years beginning in 1990 and thereafter, if a
number greater than 501 is specified, it will be
deemed to be 501.)
(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 3 MONTHS
[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).
*500 HOURS FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS;
0 HOURS FOR EMPLOYER MATCHING CONTRIBUTIONS
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<PAGE> 8
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 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 21 (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:
[X] (i) No exceptions.
[ ] (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.
(d) Employees on Effective Date:
[ ] (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.
[ ] (iii) Employees employed on the Plan's Effective
Date do not have to satisfy the age
requirements specified above.
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<PAGE> 9
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:
[X] (i) Not Applicable.
[ ] (ii) The Plan shall have an Early Retirement Age
of _____ (not less than 55) and completion
of _____ Years of Service.
6. EMPLOYEE CONTRIBUTIONS [ARTICLE IV]
[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,
[ ] (ii) On the Anniversary Date of the Plan
and on the first day of the seventh
month of the Plan Year,
[X] (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.
[ ] (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.
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<PAGE> 10
[ ] (ii) A percentage determined by the
Employee on his or her enrollment
form.
[ ] (d) If necessary to pass the Average Deferral Percentage
Test, Participants [ ] may [ ] may not have Elective
Deferrals recharacterized 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 III 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.
[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.
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<PAGE> 11
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 [X] next
valuation period [ ] second valuation period
following termination. [ ] third valuation
period following termination.
[ ] (iii) for a period of month(s) (not to exceed
12 months).
[X] (c) Matching Employer Contribution [See paragraphs (h) and (i)]:
[X] (i) PERCENTAGE MATCH: The Employer shall
contribute and allocate to each eligible
Participant's account an amount equal to
50*% 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 6*%
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 %.
[ ] (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. 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 % 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.
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<PAGE> 12
*EMPLOYER MATCHING CONTRIBUTIONS SHALL BE MADE IN THE FORM OF EMPLOYER
STOCK
[ ] (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.
[ ] (vi) 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 denominator of which is the Compensation
of all Participants eligible to receive such
an allocation. The Employer shall set such
discretionary contribution prior to the end
of the Plan Year.
[ ] (vii) QUALIFIED MATCH: Employer Matching
Contributions will be treated as Qualified
Matching Contributions to the extent
specified below:
[ ] (A) All Matching Contributions.
[ ] (B) None.
[ ] (C) % of the Employer's
Matching Contribution.
[ ] (D) up to xxx % 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
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<PAGE> 13
(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 [X]
valuation period [ ] 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.
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
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<PAGE> 14
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 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(d)(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 (h) and (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 SSTWB, the excess percentage
is 5.4%.
NOTE: Only one plan maintained by the Employer may be integrated
with Social Security.
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<PAGE> 15
(h) Allocation of Excess Amounts (Annual Additions)
In the event that the allocation formula above results in an
Excess Amount, such excess shall be:
[ ] (i) placed in a suspense account accruing no
gains or losses for the benefit of the
Participant.
[X] (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:
[ ] (i) all eligible Participants.
[X] (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.
[X] (iii) a combination of the ADP and ACP of the
affected Highly Compensated Employees.
8. ALLOCATIONS TO TERMINATED EMPLOYEES [PARAGRAPH 5.3]
(a) For Plan Years beginning prior to 1990:
[ ] (i) For Plan Years beginning prior to 1990, the
Employer will not allocate Employer related
contributions to any Participant who
terminates employment during the Plan Year.
[ ] (ii) The Employer will allocate Employer related
contributions to Employees who terminate
during the Plan Year as a result of:
[ ] (1) Retirement.
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<PAGE> 16
[ ] (2) Disability.
[ ] (3) Death.
[ ] (4) Other termination provided that the
Participant has completed a Year of Service.
[ ] (5) Other termination.
(b) For Plan Years beginning in 1990 and thereafter, the Employer
will allocate Employer related contributions to any
Participant who is credited with more than 500 Hours of
Service or is employed on the last day of the Plan Year
without regard to the number of Hours of Service.
The Employer will also allocate Employer related contributions
to any Participant who terminates during the Plan Year without
accruing the necessary Hours of Service if they terminate as a
result of:
[X] (i) Retirement.
[X] (ii) Disability.
[X] (iii) Death.
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.
[ ] (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.
[ ] only those Participants
eligible for an allocation
of matching contributions
in the current year.
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<PAGE> 17
[2] Amounts attributable to Employer
Matching contributions will be
allocated to:
[ ] all eligible Participants.
[ ] only those Participants
eligible for allocations of
matching contributions in
the current year.
[ ] (iii) Forfeitures shall be applied to reduce the
Employer's contribution for such Plan Year.
[X] (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).
(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.
[3] (ii) Additional Employer contribution.
[2] (iii) Income or gain to the Plan.
-17-
<PAGE> 18
(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
[ ] (a) The Employer may permit a Participant to elect to
defer to the Plan, an amount not to exceed % 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
Participants.
[X] (b) Not Applicable.
11. LIMITATIONS ON ALLOCATIONS [ARTICLE X]
[X] This is the only Plan the Employer maintains or ever
maintained; therefore, this section is not applicable.
[ ] 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) if you maintain Paired Plan #R1001 (Regional Prototype
Profit-Sharing Plan) or #R1002 (Regional Prototype Money Purchase
Plan).
(a) The minimum contribution required under paragraph 14.2 of
Basic Plan Document #R1 shall be made to:
[ ] (i) This Plan.
[ ] (ii) Paired Plan # .
-18-
<PAGE> 19
NOTE: If you maintain Defined Contribution Paired Plan #R1002 it is
suggested that you list that Plan number above.
Complete (b), (c) and (d) only if you maintain or ever maintained
another qualified plan (other than Paired Plan #R1001 or #R1002),
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.
(b) 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.
(c) 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.
(d) The minimum contribution or benefit required under Code
Section 416 relating to Top- Heavy Plans shall be satisfied
by:
[ ] (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.
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.
-19-
<PAGE> 20
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 Agreement] 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.
(b) Vesting Schedules:
NOTE: The vesting schedules below only apply to a Participant who
has at least one Hour of Service during or after the 1989 Plan
Year. If applicable, Participants who separated from Service
prior to the 1989 Plan Year will remain under the vesting
schedule as in effect in the Plan prior to amendment for the
Tax Reform Act of 1986.
-20-
<PAGE> 21
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
(i) Full and immediate vesting.
Years of Service
1 2 3 4 5 6 7
-- -- -- -- -- -- --
(ii) __% 100%
(iii) 0% 0% 100%
(iv) __% 20% 40% 60% 80% 100%
(v) __% __% 20% 40% 60% 80% 100%
(vi) 10% 20% 30% 40% 60% 80% 100%
(vii) __% __% __% __% 100%
(viii) __% __% __% __% ___% ___% 100%
</TABLE>
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 III.
above.
[ ] Contributions other than those which are fully
vested when contributed will vest as provided below:
<TABLE>
<CAPTION>
Vesting
Option Selected Type Of Employer Contribution
<S> <C>
_____ 7(c) Employer Match Salary Savings
_____ 7(c) Employer Match on Employee Voluntary
_____ 7(e) Employer Discretionary
_____ 7(f) & (g) Employer Discretionary - Integrated
</TABLE>
(c) Service disregarded for Vesting:
[X] (i) Not Applicable. All Service shall be
considered.
[ ] (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.
-21-
<PAGE> 22
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 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 [ ] are not permitted.
16. PARTICIPANT LOANS
Participant loans, as provided for in paragraph 13.4 of the Basic Plan
Document #R1, [X] are [ ] are not permitted. If permitted, repayments
of principal and interest shall be repaid to [ ] the Participant's
segregated account or [X] 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.
18. EMPLOYER INVESTMENT DIRECTION
The Employer investment direction provisions, as set forth in paragraph
13.6 of the Basic Plan Document #R1, [X] shall [ ] 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.
-22-
<PAGE> 23
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):
[ ] (i) All Contributions.
[X] (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.
[X] (ix) Rollover Contributions.
[X] (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.
(b) A Participant who has not separated from Service [ ] may [X]
may not obtain a distribution of his or her vested Employer
contributions. Distribution can only be made if the
Participant is 100% vested.
(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
-23-
<PAGE> 24
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.
[ ] (iii) As soon as administratively feasible,
following the date on which a distribution
is requested or is otherwise payable.
[X] (iv) As soon as administratively feasible, after
the close of the Plan Year during which the
Participant incurs 1 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:
[X] (vi) As soon as administratively feasible,
following the close of the valuation period
during which a distribution is requested or
is otherwise payable.
[ ] (vii) As soon as administratively feasible
following the close of the Plan Year during
which a distribution is requested or is
otherwise payable.
[ ] (viii) As soon as administratively feasible,
following the date on which a distribution
is requested or is otherwise payable.
(b) Optional Forms of Payment:
[ ] (i) Lump Sum.
[X] (ii) Installment Payments.
[ ] (iii) Life Annuity*.
[ ] (iv) Life Annuity Term Certain*.
Life Annuity with payments guaranteed for
years (not to exceed 20 years, specify all
applicable).
-24-
<PAGE> 25
[ ] (v) Joint and [ ] 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) [ ] shall
[X] 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.
[ ] who is recalculated shall be determined by the
Participant.
-25-
<PAGE> 26
22. SIGNATURES
(a) EMPLOYER:
Name and address of Employer if different than specified in
Section 1 above.
This agreement and the corresponding provisions of the Plan
and Trust Basic Plan Document #R1 were adopted by the Employer
the 31st day of March, 1998.
Signed for the Employer by: J. MYERS JONES
Title: PRESIDENT
Signature: /s/ J. Myers Jones
THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE
THE ADOPTION AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS
PLAN.
Employer's Reliance: An Employer who maintains or has ever
maintained or who later adopts any Plan [including, after
December 31, 1985, a Welfare Benefit Fund, as defined in Code
Section 419(e) which provides post-retirement medical benefits
allocated to separate accounts for Key Employees, as defined
in Section 419A(d)(3)] or an individual medical account, as
defined in Code Section 415(l)(2), in addition to this Plan
(other than Paired Plan #R1001 or #R1002) may not rely on the
notification letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is
qualified under Section 401 of the Code. If the Employer who
adopts or maintains multiple Plans or who may not rely on this
notification letter pursuant to the preceding sentence, wishes
to obtain reliance that such Plan(s) are qualified,
application for a determination letter should be made to the
appropriate Key District Director of Internal Revenue. The
Employer understands that its failure to properly complete the
Adoption Agreement may result in disqualification of its plan.
This Adoption Agreement may only be used in conjunction with
Basic Plan Document #R1.
-26-
<PAGE> 27
(b) TRUSTEE:
Name of Trustee:
GORDON E. INMAN, RICHARD E. HERRINGTON
The Employer's Plan as contained herein was accepted by the
Trustee(s) the 31st day of March, 1998 .
Signed for the Trustee by:
Title:
Signature: /s/ Gordon E. Inman /s/ Richard E. Herrington
(c) SPONSOR:
The Employer's Agreement and the corresponding provisions of
the Plan and Trust/Custodial Account Basic Plan Document #R1
were accepted by the Sponsor the 30th day of March, 1998.
Signed for the Sponsor by: JOHN K. KOPRA
Title: VICE PRESIDENT
Signature: /s/ John K. Kopra
-27-
<PAGE> 1
EXHIBIT 5.1
SMITH, GAMBRELL & RUSSELL, LLP
ATTORNEYS AT LAW
Telephone SUITE 3100, PROMENADE II WEBSITE
(404) 815-3500 1230 PEACHTREE STREET, N.E. WWW.SGRATL.COM
Facsimile ATLANTA, GEORGIA 30309-3592
(404) 815-3509
--------
ESTABLISHED 1893
September 30, 1998
Franklin Financial Corporation
230 Public Square
Franklin, Tennessee 37064
RE: Franklin Financial Corporation
Registration Statement on Form S-8
500,000 Shares of no par value
Common Stock
Defined Benefit Plan and Trust
Ladies and Gentlemen:
We have acted as counsel for Franklin Financial Corporation (the
"Company") in connection with the registration of 500,000 shares of its no par
value Common Stock (the "Shares") reserved to the Company's Defined Benefit Plan
and Trust, as amended (the "Plan"), pursuant to a Registration Statement on Form
S-8 (the "Registration Statement") to be filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, covering the
Shares.
In connection therewith, we have examined the following:
(1) The Charter of the Company, certified by the Secretary of
State of the State of Tennessee;
(2) The Bylaws of the Company, certified as complete and correct
by the Secretary of the Company;
(3) The minute book of the Company, certified as correct and
complete by the Secretary of the Company; and
(4) The Registration Statement, including all exhibits thereto.
<PAGE> 2
Franklin Financial Corporation
September 30, 1998
Page Two
Based upon such examination and upon examination of such other
instruments and records as we have deemed necessary, we are of the opinion that
the Shares covered by the Registration Statement have been legally authorized
and when issued in accordance with the terms described in said Registration
Statement, will be validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the
aforementioned Registration Statement on Form S-8 and to the reference to this
firm under the caption "Legal Matters" in the Prospectus. In giving this
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Sincerely,
SMITH, GAMBRELL & RUSSELL, LLP
/s/ Robert T. Molinet
Robert T. Molinet
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Franklin Financial Corporation on Form S-8 of our report dated
February 16, 1998, appearing in the Annual Report on Form 10-KSB of Franklin
Financial Corporation for the year ended December 31, 1997. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
/S/ DELOITTE & TOUCHE LLP
Nashville, Tennessee
October 1, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement, relating to 500,000 shares of common stock of Franklin Financial
Corporation, on Form S-8 of our report dated March 13, 1997, included in
Franklin Financial Corporation's Annual Report on Form 10-KSB for the year ended
December 31, 1997, and to all references to our Firm included in this
Registration Statement and related Prospectus.
/S/ HEATHCOTT & MULLALY, P.C.
Brentwood, Tennessee
October 2, 1998
