<PAGE> 1
As filed with the Securities and Exchange Commission on
August 30, 1996
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMMUNITY FINANCIAL HOLDING CORPORATION
(Exact name of Registrant as Specified in its Charter)
NEW JERSEY 52-1712224
------------------------ -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
222 Haddon Avenue, Westmont, New Jersey 08108
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(Address of Principal Executive Offices) (Zip Code)
THE COMMUNITY NATIONAL BANK 401(K) PLAN
-----------------------------------------
(Full Title of the Plan)
ROBERT T. PLUESE, CHAIRMAN OF THE BOARD
COMMUNITY FINANCIAL HOLDING CORPORATION
222 HADDON AVENUE
WESTMONT, NEW JERSEY 08108
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(Name and address of Agent for Service)
(609) 869-7900
----------------------------------------------------------------
(Telephone Number, including Area Code, of Agent for Service)
--------------------------
Copies To:
SUSAN E. PENDERY, ESQUIRE
Earp, Cohn, Leone & Pendery, A Professional Corporation
222 Haddon Avenue
Westmont, New Jersey 08108
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Proposed Maximum
Proposed Maximum Aggregate
Title of Securities to Amount to be Offering Price Offering Price Amount of
be Registered Registered (1) per Share (2) (2) Registra-tion Fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 10,000 $12.50 $125,000 $100.00
value $5.00 per share
==============================================================================================================
</TABLE>
(1) The Community National Bank 401(K) Plan (the "Plan") permits Plan
participants to use employee contributions made by Plan participants
to purchase shares of the Registrant's Common Stock acquired in the
open market. The number of shares covered by this registration
statement represents a three-year estimate of the number of shares
which may be issuable based on the estimated aggregate amount of
employee and employer contributions to the Plan during such three-year
period, based on the average of the bid and ask prices reported for a
share of the Registrant's Common Stock on August 27, 1996. In
addition, pursuant to Rule 416(c) promulgated under the Securities Act
of 1933, as amended (the "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) The proposed maximum aggregate offering price, calculated solely for
the purpose of determining the registration fee, has been computed
pursuant to Rule 457(h) under the Act, on the basis of the average of
the bid and asked price reported for a share of Community Financial
Holding Corporation Common Stock on August 27, 1996.
PART I. INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of the
instructions to SEC Form S-8 constituting the Section 10(a) Prospectus will be
sent or given to participants in the Plan as specified by Rule 428(b)(1) of the
Act. In accordance with the instructions to Part I of the Form S-8, such
documents have not been filed with the Commission either as part of this
registration statement or as prospectuses or prospectus supplements pursuant to
Rule 424 of the Act.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Registrant's latest Annual Report on Form 10-K for the year ended
December 31, 1995, and all other reports filed by the Registrant or the Plan
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), since December 31, 1995, the description of the
Registrant's capital stock as included in the Registrant's Registration
Statement on Form 8-A filed pursuant to Section 12(g) of the Exchange Act, as
amended from time to time, are incorporated herein
<PAGE> 3
by reference. All reports and documents filed by the Registrant or the Plan
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent
to the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated herein by reference and to be part hereof from the
date of filing of such reports and documents. Any statement or information
contained in a report or document incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement or information contained herein (or in any other subsequently filed
report or document which also is incorporated by reference herein) modifies or
supersedes such statement or information. Any such statement or information so
modified shall not be deemed to constitute a part hereof, except as so
modified, and any statement so superseded shall not be deemed to constitute a
part hereof.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Section 3-5 of the New Jersey Business Corporation Act authorizes and
permits, subject to the conditions and limitations set forth therein,
indemnification of officers, directors and other persons. Pursuant to this
statutory provision, the Registrant's Certificate of Incorporation provides,
within such limits, for broad indemnification of such persons when acting on
behalf of the Registrant, or who, at the request of the Registrant, served in
the capacity of officer or director of any other enterprise. In addition, the
Registrant has purchased insurance to indemnify officers and directors against
liabilities that may result from such capacities and from their actions
thereas. The indemnification thus provided may protect officers and directors
from liabilities arising under the Act.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
4.1 Certificate of Incorporation of the Registrant, as amended previously
filed with the Securities and Exchange Commission on May 6, 1994, as
Exhibit 3.1 to the Registrant's Registration Statement on Form S-1,
No. 33-78696, (the "S-1 Registration Statement"), incorporated herein
by reference.
<PAGE> 4
4.2 By-Laws of the Registrant, as amended previously filed with the
Securities and Exchange Commission on May 6, 1994 as Exhibit 3.2 to
the S-1 Registration Statement, and incorporated herein by reference.
4.3 The Community National Bank 401(K) Plan, as amended (filed herewith).
5 In lieu of an opinion concerning compliance with the requirements of
the Employee Retirement Income Security Act of 1974, as amended, or a
determination letter of the Internal Revenue Service ("IRS") that the
Plan is qualified under Section 401 of the Internal Revenue Code, as
amended, the Registrant hereby undertakes that (i) its wholly-owned
subsidiary, Community National Bank of New Jersey, N.A., will submit
or has submitted the Plan and any amendment thereto to the ("IRS") in
a timely manner and (ii) it has caused or will cause Community
National Bank of New Jersey, N.A., to make all changes required by the
IRS in order to qualify the Plan.
23.1 Consent of KPMG Peat Marwick, L.L.P. (filed herewith).
Item 9. Undertakings.
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:
(i) To include any prospectus required by Section
10(a)(3) of the Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (1)(i) and (ii)
above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
<PAGE> 5
(2) That, for the purpose of determining any
liability under the Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an annual report by the Plan pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act 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 Securities Act and will be governed
by the final adjudication of such issue.
<PAGE> 6
SIGNATURES
The Registrant. Pursuant to the requirements of the Act, 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 Township of Westmont, State of New Jersey, on July 17,
1996.
COMMUNITY FINANCIAL HOLDING CORPORATION
By: /s/Gerard M. Banmiller
-------------------------------
Gerard M. Banmiller, President
and Chief Executive Officer
Pursuant to the requirements of the Act, this registration statement has been
signed by the following persons in the capacities and on the dates indicated.
/s/Gerard M. Banmiller /s/Robert T. Pluese
------------------------------ ------------------------------
GERARD M. BANMILLER, ROBERT T. PLUESE, Director and
Director, President and Chairman of the Board
Chief Executive Officer Dated: July 17, 1996
Dated: July 17, 1996
/s/Kevin L. Kutcher
------------------------------ ------------------------------
KEVIN L. KUTCHER, Executive MICHAEL G. BRENNAN, Director
Vice President, Dated: July ___, 1996
Treasurer and Secretary,
Chief Financial and Chief
Accounting Officer
Dated: July 17, 1996
/s/Letitia G. Colombi /s/Gerard J. DeFelicis
------------------------------ ------------------------------
LETITIA G. COLOMBI, Director GERARD J. DeFELICIS, Director
Dated: July 17, 1996 Dated: July 17, 1996
/s/Joseph A. Riggs, Sr., M.D. /s/Doris Damm
------------------------------ ------------------------------
JOSEPH A. RIGGS, SR., DORIS DAMM, Director
M.D., Director Dated: July 17, 1996
Dated: July 17, 1996
/s/Marvin Samson /s/Frank B. Smith
------------------------------ ------------------------------
MARVIN SAMSON, FRANK B. SMITH, Director
Director Dated: July 17, 1996
Dated: July 17, 1996
/s/Elizabeth Burns
------------------------------
ELIZABETH BURNS, Director
Dated: July 17, 1996
[Signatures Continued on Next Page]
<PAGE> 7
[Signatures Continued from Previous Page]
Pursuant to the requirements of the Act, the Trustees of the Plan have signed
this registration statement on behalf of the Plan, in the Township of Westmont,
State of New Jersey, on July 17, 1996.
THE COMMUNITY NATIONAL BANK 401(K) PLAN
By:/s/Robert T. Pluese By:/s/Gerard M. Banmiller
------------------------------ ----------------------------------
Robert T. Pluese, Plan Trustee Gerard M. Banmiller, Plan Trustee
By:/s/Kevin L. Kutcher
------------------------------
Kevin L. Kutcher, Plan Trustee
<PAGE> 8
COMMUNITY FINANCIAL HOLDING CORPORATION
INDEX TO EXHIBITS FILED WITH
FORM S-8 REGISTRATION STATEMENT
Exhibit No. Description
4.1 Certificate of Incorporation of the Registrant, as
amended previously filed with the Securities and
Exchange Commission on May 6, 1994, as Exhibit 3.1 to
the Registrant's Registration Statement on Form S-1,
No. 33-78696, (the "S-1 Registration Statement"),
incorporated herein by reference.
4.2 By-Laws of the Registrant, as amended previously
filed with the Securities and Exchange Commission on
May 6, 1994 as Exhibit 3.2 to the S-1 Registration
Statement, and incorporated herein by reference.
4.3 The Community National Bank 401(K) Plan, as amended
(filed herewith).
5 In lieu of an opinion concerning compliance with the
requirements of the Employee Retirement Income
Security Act of 1974, as amended, or a determination
letter of the Internal Revenue Service ("IRS") that
the Plan is qualified under Section 401 of the
Internal Revenue Code, as amended, the Registrant
hereby undertakes that (i) its wholly-owned
subsidiary, Community National Bank of New Jersey,
N.A., will submit or has submitted the Plan and any
amendment thereto to the ("IRS") in a timely manner
and (ii) it has caused or will cause Community
National Bank of New Jersey, N.A., to make all
changes required by the IRS in order to qualify the
Plan.
23.1 Consent of KPMG Peat Marwick, L.L.P. (filed
herewith).
<PAGE> 1
Exhibit 4.3
THE COMMUNITY NATIONAL BANK
401(K) PLAN
THIS AGREEMENT, hereby made and entered into this _____ day of
___________________, 19__, by and between Community National Bank of New Jersey
(herein referred to as the "Employer") and ____________________________,
___________________________ and ____________________________ (herein referred
to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer desires to recognize the contribution
made to its successful operation by its employees and to reward such
contribution by means of a 401(k) Profit Sharing Plan for those employees who
shall qualify as Participants hereunder;
NOW, THEREFORE, effective January 1, 1991, (hereinafter called
the "Effective Date"), the Employer hereby establishes a 401(k) Profit Sharing
Plan and creates this trust (which plan and trust are hereinafter called the
"Plan") for the exclusive benefit of the Participants and their Beneficiaries,
and the Trustee hereby accepts the Plan on the following terms:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
1.2 "Administrator" means the person designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the Employer.
1.3 "Affiliated Employer" means the Employer and any corporation which
is a member of a controlled group of corporations (as defined in Code Section
414(b)) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section 414(c))
with the Employer; any organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in Code Section 414(m)) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant, the
value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the provisions
of Section 2.2.
1.5 "Anniversary Date" means December 31st.
<PAGE> 2
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.8 "Compensation" with respect to any Participant means total
compensation paid by the Employer for a Plan Year. Amounts contributed by the
Employer under the within Plan, except for an Employee's Compensation that is
deferred pursuant to Section 4.2, and any non-taxable fringe benefits provided
by the Employer shall not be considered as Compensation.
For a Participant's initial year of participation,
Compensation shall be recognized for the entire Plan Year.
Compensation in excess of $200,000 shall be disregarded. Such
amount shall be adjusted at the same time and in such manner as permitted under
Code Section 415(d). In applying this limitation, the family group of a Highly
Compensated Participant who is subject to the Family Member aggregation rules
of Code Section 414(q)(6) because such Participant is either a "five percent
owner" of the Employer or one of the ten (10) Highly Compensated Employees paid
the greatest "415 Compensation" during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have not attained
age nineteen (19) before the close of the year. If, as a result of the
application of such rules the adjusted $200,000 limitation is exceeded, then
the limitation shall be prorated among the affected Family Members in
proportion to each such Family Member's Compensation prior to the application
of this limitation.
1.9 "Contract" or "Policy" means a life insurance policy or annuity
contract (group or individual) issued by the insurer as elected.
1.10 "Deferred Compensation" with respect to any Participant means
that portion of the Participant's total Compensation which has been contributed
to the Plan in accordance with the Participant's deferral election pursuant to
Section 4.2.
1.11 "Early Retirement Date" means the first day of the month (prior
to the Normal Retirement Date) coinciding with or following the date on which a
Participant or Former Participant attains age 60 and has completed at least 5
Years of Service with the Employer (Early Retirement Age). A Participant shall
become fully Vested upon satisfying this requirement if still employed at his
Early Retirement Age.
2
<PAGE> 3
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who thereafter
reaches the age requirement contained herein shall be entitled to receive his
benefits under this Plan.
1.12 "Elective Contribution" means the Employer's contributions to the
Plan that are made pursuant to the Participant's deferral election provided in
Section 4.2. In addition, any Employer Qualified Non-Elective Contribution
made pursuant to Section 4.1(c) and Section 4.6 shall be considered an Elective
Contribution for purposes of the Plan. Any such contributions deemed to be
Elective Contributions shall be subject to the requirements of Sections 4.2(b)
and 4.2(c) and shall further be required to satisfy the discrimination
requirements of Regulation 1.401(k)-1(b)(3), the provisions of which are
specifically incorporated herein by reference.
1.13 "Eligible Employee" means any Employee.
Employees of Affiliated Employers shall not be eligible to
participate in this Plan unless such Affiliated Employers have specifically
adopted this Plan in writing.
1.14 "Employee" means any person who is employed by the Employer or
Affiliated Employer, but excludes any person who is an independent contractor.
Employee shall include Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do not constitute
more than 20% of the recipient's non-highly compensated work force.
1.15 "Employer" means Community National Bank of New Jersey and any
Participating Employer (as defined in Section 10.1) which shall adopt this
Plan; any successor which shall maintain this Plan; and any predecessor which
has maintained this Plan. The Employer is a corporation, with principal
offices in the State of New Jersey.
1.16 "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of the aggregate amount of the Employer matching contributions
made pursuant to Section 4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on behalf of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a).
1.17 "Excess Contributions" means, with respect to a Plan Year, the
excess of Elective Contributions made on behalf of Highly Compensated
Participants for the Plan Year over the maximum amount of such contributions
permitted under Section 4.5(a). Excess
3
<PAGE> 4
Contributions shall be treated as an "annual addition" pursuant to Section
4.9(b).
1.18 "Excess Deferred Compensation" means, with respect to any taxable
year of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an
"annual addition" pursuant to Section 4.9(b).
1.19 "Family Member" means, with respect to an affected Participant,
such Participant's spouse, such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
1.20 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct
or indirect, with respect to any monies or other property of the Plan or has
any authority or responsibility to do so, or (c) has any discretionary
authority or discretionary responsibility in the administration of the Plan,
including, but not limited to, the Trustee, the Employer and its representative
body, and the Administrator.
1.21 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1st of each year and ending the following December 31st.
1.22 "Forfeiture" means that portion of a Participant's Account that is
not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of
a Participant's Account, or
(b) the last day of the Plan Year in which the
Participant incurs five (5) consecutive 1-Year Breaks in
Service.
Furthermore, for purposes of paragraph (a) above, in the case
of a Terminated Participant whose Vested benefit is zero, such Terminated
Participant shall be deemed to have received a distribution of his Vested
benefit upon his termination of employment. Restoration of such amounts shall
occur pursuant to Section 6.4. In addition, the term Forfeiture shall also
include amounts deemed to be Forfeitures pursuant to any other provision of
this Plan.
4
<PAGE> 5
1.23 "Former Participant" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.24 "415 Compensation" means compensation as defined in Section
4.9(d).
1.25 "414(s) Compensation" with respect to any Employee means his
Deferred Compensation plus "415 Compensation" paid during a Plan Year. The
amount of "414(s) Compensation" with respect to any Employee shall include
"414(s) Compensation" during the entire twelve (12) month period ending on the
last day of such Plan Year.
"414(s) Compensation" in excess of $200,000 shall be
disregarded. Such amount shall be adjusted at the same time and in such manner
as permitted under Code Section 415(d).
1.26 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the
"determination year" or "look-back year" were "five percent
owners" as defined in Section 1.32(c).
(b) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess
of $75,000.
(c) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess of $50,000
and were in the Top Paid Group of Employees for the Plan Year.
(d) Employees who during the "look-back year" were
officers of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) and
received "415 Compensation" during the look-back year" from
the Employer greater than 50 percent of the limit in effect
under Code Section 415(b)(1)(A) for any such Plan Year. The
number of officers shall be limited to the lesser of (i) 50
employees; or (ii) the greater of 3 employees or 10 percent of
all employees. For the purpose of determining the number of
officers, Employees described in Section 1.54(a), (b), (c) and
(d) shall be excluded, but such Employees shall still be
considered for the purpose of identifying the particular
Employees who are officers. If the Employer does not have at
least one officer whose annual "415 Compensation" is in excess
of 50 percent of the Code Section 415(b)(1)(A) limit,
5
<PAGE> 6
then the highest paid officer of the Employer will be treated
as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the
100 Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d)
above when these paragraphs are modified to substitute
"determination year" for "look-back year".
The "determination year" shall be the Plan Year for which
testing is being performed, and the "look-back year" shall be the immediately
preceding twelve-month period.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would otherwise be
excluded from a Participant's gross income by reason of the application of Code
Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of Employer
contributions made pursuant to a salary reduction agreement, by including
amounts that would otherwise be excluded from a Participant's gross income by
reason of the application of Code Section 403(b). Additionally, the dollar
threshold amounts specified in (b) and (c) above shall be adjusted at such time
and in such manner as is provided in Regulations. In the case of such an
adjustment, the dollar limits which shall be applied are those for the calendar
year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees
who are non-resident aliens and who received no earned income (within the
meaning of Code Section 911(d)(2)) from the Employer constituting United States
source income within the meaning of Code Section 861(a)(3) shall not be treated
as Employees. Additionally, all Affiliated Employers shall be taken into
account as a single employer and Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) shall be considered Employees unless such
Leased Employees are covered by a plan described in Code Section 414(n)(5) and
are not covered in any qualified plan maintained by the Employer. The
exclusion of Leased Employees for this purpose shall be applied on a uniform
and consistent basis for all of the Employer's retirement plans. Highly
Compensated Former Employees shall be treated as Highly Compensated Employees
without regard to whether they performed services during the "determination
year".
1.27 "Highly Compensated Former Employee" means a former Employee who
had a separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year" after attaining age 55. Notwithstanding the foregoing, an
Employee who separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year (or year
preceding the separation year) or any year after the Employee
6
<PAGE> 7
attains age 55 (or the last year ending before the Employee's 55th birthday),
the Employee either received "415 Compensation" in excess of $50,000 or was a
"five percent owner". For purposes of this Section, "determination year", "415
Compensation" and "five percent owner" shall be determined in accordance with
Section 1.26. Highly Compensated Former Employees shall be treated as Highly
Compensated Employees. The method set forth in this Section for determining who
is a "Highly Compensated Former Employee" shall be applied on a uniform and
consistent basis for all purposes for which the Code Section 414(q) definition
is applicable.
1.28 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.29 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2)
each hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than performance of
duties (such as vacation, holidays, sickness, jury duty, disability, lay-off,
military duty or leave of absence) during the applicable computation period;
(3) each hour for which back pay is awarded or agreed to by the Employer
without regard to mitigation of damages. These hours will 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. The same Hours of Service shall not be credited both under
(1) or (2), as the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of
Service are required to be credited to an Employee on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs in a single computation period); (ii) an hour for which an
Employee is directly or indirectly paid, or entitled to payment, on account of
a period during which no duties are performed is not required to be credited to
the Employee if such payment is made or due under a plan maintained solely for
the purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be
made by or due from the Employer regardless of whether such payment is made by
or due from the Employer directly, or indirectly through, among others, a trust
fund, or insurer, to which the employer contributes or pays premiums and
regardless of whether contributions made or due to the trust fund, insurer, or
other
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entity are for the benefit of particular Employees or are in behalf of a group
of Employees in the aggregate.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for purposes of accrued
benefits, a 1-Year Break in Service, and employment commencement date (or
reemployment commencement date). In addition, Hours of Service will be
credited for employment with other Affiliated Employers. The provisions of
Department of Labor regulations 2530.200b-2(b) and (c) are incorporated herein
by reference.
1.30 "Income" means the income allocable to "excess amounts" which
shall equal the sum of the allocable gain or loss for the "applicable
computation period" and the allocable gain or loss for the period between the
end of the "applicable computation period" and the date of distribution ("gap
period"). The income allocable to "excess amounts" for the "applicable
computation period" and the "gap period" is calculated separately and is
determined by multiplying the income for the "applicable computation period" or
the "gap period" by a fraction. The numerator of the fraction is the "excess
amount" for the "applicable computation period". The denominator of the
fraction is the total "account balance" attributable to "Employer
contributions" as of the end of the "applicable computation period" or the "gap
period", reduced by the gain allocable to such total amount for the "applicable
computation period" or the "gap period" and increased by the loss allocable to
such total amount for the "applicable computation period" or the "gap period".
The provisions of this Section shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess
amounts";
(2) "taxable year of the Participant" for "applicable
computation period";
(3) "Deferred Compensation" for "Employer
contributions"; and
(4) "Participant's Elective Account" for "account
balance".
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amount";
(2) "Plan Year" for "applicable computation period";
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(3) "Elective Contributions" for "Employer
contributions"; and
(4) "Participant's Elective Account" for "account
balance".
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess
amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer matching contributions made pursuant to
Section 4.1(b) and any qualified non-elective
contributions or elective deferrals taken into
account pursuant to Section 4.7(c)" for "Employer
contributions"; and
(4) "Participant's Account" for "account balance".
In lieu of the "fractional method" described above, a "safe
harbor method" may be used to calculate the allocable Income for the "gap
period". Under such "safe harbor method", allocable Income for the "gap
period" shall be deemed to equal ten percent (10%) of the Income allocable to
"excess amounts" for the "applicable computation period" multiplied by the
number of calendar months in the "gap period". For purposes of determining the
number of calendar months in the "gap period", a distribution occurring on or
before the fifteenth day of the month shall be treated as having been made on
the last day of the preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the first day of the next
subsequent month.
Income allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the Participant
shall be calculated from the first day of the taxable year of the Participant
to the date on which the distribution is made pursuant to either the
"fractional method" or the "safe harbor method".
1.31 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
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1.32 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, any Employee or former
Employee (as well as each of his Beneficiaries) is considered a Key Employee if
he, at any time during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in one of the
following categories:
(a) an officer of the Employer (as that term is
defined within the meaning of the Regulations under Code
Section 416) having annual "415 Compensation" greater than 50
percent of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater than
the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent interest
and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than five
percent (5%) of the outstanding stock of the Employer or stock
possessing more than five percent (5%) of the total combined
voting power of all stock of the Employer or, in the case of
an unincorporated business, any person who owns more than five
percent (5%) of the capital or profits interest in the
Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more than
$150,000. "One percent owner" means any person who owns (or
is considered as owning within the meaning of Code Section
318) more than one percent (1%) of the outstanding stock of
the Employer or stock possessing more than one percent (1%) of
the total combined voting power of all stock of the Employer
or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits
interest in the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be treated as
separate employers. However, in determining whether an
individual has "415 Compensation" of more than
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<PAGE> 11
$150,000, "415 Compensation" from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o) shall
be taken into account.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would otherwise be
excluded from a Participant's gross income by reason of the application of Code
Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of Employer
contributions made pursuant to a salary reduction agreement, by including
amounts that would otherwise be excluded from a Participant's gross income by
reason of the application of Code Section 403(b).
1.33 "Late Retirement Date" means the first day of the month
coinciding with or next following a Participant's actual Retirement Date after
having reached his Normal Retirement Date.
1.34 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or
for the recipient and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full time basis for a period of at least
one year, and such services are of a type historically performed by employees
in the business field of the recipient employer. Contributions or benefits
provided a Leased Employee by the leasing organization which are attributable
to 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:
(a) such employee is covered by a money purchase
pension plan providing:
(1) a non-integrated employer contribution rate of at
least 10% of compensation, as defined in Code
Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction
agreement which are excludable from the
employee's gross income under Code Sections 125,
402(a)(8), 402(h) or 403(b);
(2) immediate participation; and
(3) full and immediate vesting.
(b) Leased Employees do not constitute more than 20%
of the recipient's non-highly compensated work force.
1.35 "Non-Elective Contribution" means the Employer's contributions
to the Plan excluding, however, contributions made
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pursuant to the Participant's deferral election provided for in Section 4.2 and
any Qualified Non-Elective Contribution.
1.36 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.37 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.38 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant's Normal Retirement Age (65th
birthday). A Participant shall become fully Vested in his Account upon
attaining his Normal Retirement Age.
1.39 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary
cessation from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan
Years beginning after December 31, 1984, an absence from work for any period by
reason of the Employee's pregnancy, birth of the Employee's child, placement of
a child with the Employee in connection with the adoption of such child, or any
absence for the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of Service shall be
credited for the computation period in which the absence from work begins, only
if credit therefore is necessary to prevent the Employee from incurring a
1-Year Break in Service, or, in any other case, in the immediately following
computation period. The Hours of Service credited for a "maternity or
paternity leave of absence" shall be those which would normally have been
credited but for such absence, or, in any case in which the Administrator is
unable to determine such hours normally credited, eight (8) Hours of Service
per day. The total Hours of Service required to be credited for a "maternity
or paternity leave of absence" shall not exceed 501.
1.40 "Participant" means any Eligible Employee who participates in the
Plan as provided in Sections 3.2 and 3.3, and has not for any reason become
ineligible to participate further in the Plan.
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1.41 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer's Non-Elective
Contributions.
A separate accounting shall be maintained with respect to that
portion of the Participant's Account attributable to Employer matching
contributions made pursuant to Section 4.1(b) and Employer discretionary
contributions made pursuant to Section 4.1(d).
1.42 "Participant's Combined Account" means the total aggregate amount
of each Participant's Elective Account and Participant's Account.
1.43 "Participant's Elective Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest in the Plan and Trust resulting from the Employer's Elective
Contributions. A separate accounting shall be maintained with respect to that
portion of the Participant's Elective Account attributable to Elective
Contributions pursuant to Section 4.2 and any Employer Qualified Non-Elective
Contributions.
1.44 "Plan" means this instrument, including all amendments thereto.
1.45 "Plan Year" means the Plan's accounting year of twelve (12)
months commencing on January 1st of each year and ending the following December
31st.
1.46 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to Section 4.1(c) and Section
4.6. Such contributions shall be considered an Elective Contribution for the
purposes of the Plan and used to satisfy the "Actual Deferral Percentage"
tests.
In addition, the Employer's contributions to the Plan that are
made pursuant to Section 4.8(g) which are used to satisfy the "Actual
Contribution Percentage" tests shall be considered Qualified Non-Elective
Contributions and be subject to the provisions of Sections 4.2(b) and 4.2(c).
1.47 "Regulation" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or his delegate, and as amended from time to
time.
1.48 "Retired Participant" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.49 "Retirement Date" means the date as of which a Participant
retires for reasons other than Total and Permanent
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<PAGE> 14
Disability, whether such retirement occurs on a Participant's Normal Retirement
Date, Early or Late Retirement Date (see Section 6.1).
1.50 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.51 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death,
Total and Permanent Disability or retirement.
1.52 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.53 "Top Heavy Plan Year" means a Plan Year during which the Plan is
a Top Heavy Plan.
1.54 "Top Paid Group" means the top 20 percent of Employees who
performed services for the Employer during the applicable year, ranked
according to the amount of "415 Compensation" (determined for this purpose in
accordance with Section 1.26) received from the Employer during such year. All
Affiliated Employers shall be taken into account as a single employer, and
Leased Employees within the meaning of Code Sections 414(n)(2) and 414(o)(2)
shall be considered Employees unless such Leased Employees are covered by a
plan described in Code Section 414(n)(5) and are not covered in any qualified
plan maintained by the Employer. Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section 911(d)(2)) from
the Employer constituting United States source income within the meaning of
Code Section 861(a)(3) shall not be treated as Employees. Additionally, for
the purpose of determining the number of active Employees in any year, the
following additional Employees shall also be excluded; however, such Employees
shall still be considered for the purpose of identifying the particular
Employees in the Top Paid Group:
(a) Employees with less than six (6) months of
service;
(b) Employees who normally work less than 17 1/2
hours per week;
(c) Employees who normally work less than six (6)
months during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only employees who are not covered under such
agreements, then Employees
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<PAGE> 15
covered by such agreements shall be excluded from both the total number of
active Employees as well as from the identification of particular Employees in
the Top Paid Group.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.55 "Total and Permanent Disability" means a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing his usual and customary
employment with the Employer. The disability of a Participant shall be
determined by a licensed physician chosen by the Administrator. The
determination shall be applied uniformly to all Participants.
1.56 "Trustee" means the person or entity named as trustee herein or
in any separate trust forming a part of this Plan, and any successors.
1.57 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.58 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.59 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least
1000 Hours of Service.
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service. The participation computation period beginning
after a 1-Year Break in Service shall be measured from the date on which an
Employee again performs an Hour of Service. The participation computation
period shall shift to the Plan Year which includes the anniversary of the date
on which the Employee first performed an Hour of Service. An Employee who is
credited with the required Hours of Service in both the initial computation
period (or the computation period beginning after a 1-Year Break in Service)
and the Plan Year which includes the anniversary of the date on which the
Employee first performed an Hour of Service, shall be credited with two (2)
Years of Service for purposes of eligibility to participate.
For vesting purposes, the computation period shall be the Plan
Year, including periods prior to the Effective Date of the Plan.
For all other purposes, the computation period shall be the
Plan Year.
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Years of Service with any Affiliated Employer shall be
recognized.
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the
special vesting requirements of Code Section 416(b) pursuant to Section 6.4 of
the Plan and the special minimum allocation requirements of Code Section 416(c)
pursuant to Section 4.4 of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan
Year in which, as of the Determination Date, (1) the Present
Value of Accrued Benefits of Key Employees and (2) the sum of
the Aggregate Accounts of Key Employees under this Plan and
all plans of an Aggregation Group, exceeds sixty percent (60%)
of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Key and Non-Key Employees under this Plan and
all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan
Year, but such Participant was a Key Employee for any prior
Plan Year, such Participant's Present Value of Accrued Benefit
and/or Aggregate Account balance shall not be taken into
account for purposes of determining whether this Plan is a Top
Heavy or Super Top Heavy Plan (or whether any Aggregation
Group which includes this Plan is a Top Heavy Group). In
addition, if a Participant or Former Participant has not
performed any services for any Employer maintaining the Plan
at any time during the five year period ending on the
Determination Date, any accrued benefit for such Participant
or Former Participant shall not be taken into account for the
purposes of determining whether this Plan is a Top Heavy or
Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for
any Plan Year in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2) the
sum of the Aggregate Accounts of Key Employees under this Plan
and all plans of an Aggregation Group, exceeds ninety percent
(90%) of the Present Value of Accrued Benefits and the
Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
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(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) his Participant's Combined Account balance as of
the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date;
(2) an adjustment for any contributions due as of
the Determination Date. Such adjustment shall be the
amount of any contributions actually made after the
valuation date but due on or before the Determination
Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any
contributions made after the Determination Date that
are allocated as of a date in that first Plan Year;
(3) any Plan distributions made within the Plan Year
that includes the Determination Date or within the
four (4) preceding Plan Years. However, in the case
of distributions made after the valuation date and
prior to the Determination Date, such distributions
are not included as distributions for top heavy
purposes to the extent that such distributions are
already included in the Participant's Aggregate
Account balance as of the valuation date.
Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to
January 1, 1984, and distributions under a terminated
plan which if it had not been terminated would have
been required to be included in an Aggregation Group,
will be counted. Further, distributions from the
Plan (including the cash value of life insurance
policies) of a Participant's account balance because
of death shall be treated as a distribution for the
purposes of this paragraph;
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified voluntary employee contributions
shall not be considered to be a part of the
Participant's aggregate Account balance;
(5) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated
by the Employee and made from a plan maintained by
one employer to a plan maintained by another
employer), if this Plan provides the rollovers or
plan-to-plan transfers, it shall always consider such
rollovers or plan-to-plan
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<PAGE> 18
transfers as a distribution for the purposes of this
Section;
(6) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by
the Employee or made to a plan maintained by the same
employer), if this Plan provides the rollover or
plan-to-plan transfer, it shall not be counted as a
distribution for purposes of this Section. If this
Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such
rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance, irrespective
of the date on which such rollover or plan-to-plan
transfer is accepted.
(7) For the purposes of determining whether two
employers are to be treated as the same employer in
(5) and (6) above, all employers aggregated under
Code Section 414(b), (c), (m) and (o) are treated as
the same employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of
the Employer in which a Key Employee is a participant
in the Plan Year containing the Determination Date or
any of the four preceding Plan Years, and each other
plan of the Employer which enables any plan in which
a Key Employee participates to meet the requirements
of Code Sections 401(a)(4) or 410, will be required
to be aggregated. Such group shall be known as a
Required Aggregation Group.
In the case of a Required Aggregation Group, each
plan in the group will be considered a Top Heavy Plan
if the Required Aggregation Group is a Top Heavy
Group. No plan in the Required Aggregation Group
will be considered a Top Heavy Plan if the Required
Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan not required to be
included in the Required Aggregation Group, provided
the resulting group, taken as a whole, would continue
to satisfy the provisions of Code
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Sections 401(a)(4) and 410. Such group shall be known
as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in
the Permissive Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is
not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar
year shall be aggregated in order to determine
whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any
terminated plan of the Employer if it was maintained
within the last five (5) years ending on the
Determination Date.
(e) "Determination Date" means (a) the last day of
the preceding Plan Year, or (b) in the case of the first Plan
Year, the last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of
a defined benefit plan, the Present Value of accrued Benefit
for a Participant other than a Key Employee, shall be as
determined using the single accrual method used for all plans
of the Employer and Affiliated Employers, or if no such single
method exists, using a method which results in benefits
accruing not more rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C). The determination
of the Present Value of Accrued Benefit shall be determined as
of the most recent valuation date that falls within or ends
with the 12-month period ending on the Determination Date
except as provided in Code Section 416 and the Regulations
thereunder for the first and second plan years of a defined
benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included in the
group, and
(2) the Aggregate Accounts of Key Employees under
all defined contribution plans included in the group, exceeds
sixty percent (60%) of a similar sum determined for all
Participants.
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2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and
remove the Trustee and the Administrator from time to time as
it deems necessary for the proper administration of the Plan
to assure that the Plan is being operated for the exclusive
benefit of the Participants and their Beneficiaries in
accordance with the terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy
and method", i.e., it shall determine whether the Plan has a
short run need for liquidity (e.g., to pay benefits) or
whether liquidity is a long run goal and investment growth
(and stability of same) is a more current need, or shall
appoint a qualified person to do so. The Employer or its
delegate shall communicate such needs and goals to the
Trustee, who shall coordinate such Plan needs with its
investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive
to the Trustee as to investment of the Trust Funds. Such
"funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I
of the Act.
(c) The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties
have been delegated or allocated by it under the provisions of
this Plan or pursuant to procedures established hereunder.
This requirement may be satisfied by formal periodic review by
the Employer or by a qualified person specifically designated
by the Employer, through day-to-day conduct and evaluation, or
through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator. Any person so appointed shall signify
his acceptance by filing written acceptance with the Employer. An
Administrator may resign by delivering his written resignation to the Employer
or be removed by the Employer by delivery of written notice of removal, to take
effect at a date specified therein, or upon delivery to the Administrator if no
date is specified.
The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to this
position. If the Employer does not appoint an Administrator, the Employer will
function as the Administrator.
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2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such
delegation is made by the Employer, the Administrators may allocate the
responsibilities among themselves, in which event the Administrators shall
notify the Employer and the Trustee in writing of such action and specify the
responsibilities of each Administrator. The Trustee thereafter shall accept
and rely upon any documents executed by the appropriate Administrator until
such time as the Employer or the Administrators file with the Trustee a written
revocation of such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Administrator
shall administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and to determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Any such determination by the Administrator shall be conclusive
and binding upon all persons. The Administrator may establish procedures,
correct any defect, supply any information, or reconcile any inconsistency in
such manner and to such extent as shall be deemed necessary or advisable to
carry out the purpose of the Plan; provided, however, that any procedure,
discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied and
shall be consistent with the intent that the Plan shall continue to be deemed a
qualified plan under the terms of Code Section 401(a), and shall comply with
the terms of the Act and all regulations issued pursuant thereto. The
Administrator shall have all powers necessary or appropriate to accomplish his
duties under this Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited to, the
following:
(a) the discretion to determine all questions
relating to the eligibility of Employees to participate or
remain a Participant hereunder and to receive benefits under
the Plan;
(b) to compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which any
Participant shall be entitled hereunder;
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(c) to authorize and direct the Trustee with respect
to all nondiscretionary or otherwise directed disbursements
from the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to
make and publish such rules for regulation of the Plan as are
consistent with the terms hereof;
(f) to determine the size and type of any Contract
to be purchased from any insurer, and to designate the insurer
from which such Contract shall be purchased;
(g) to compute and certify to the Employer and to
the Trustee from time to time the sums of money necessary or
desirable to be contributed to the Plan;
(h) to consult with the Employer and the Trustee
regarding the short and long-term liquidity needs of the Plan
in order that the Trustee can exercise any investment
discretion in a manner designed to accomplish specific
objectives;
(i) to prepare and implement a procedure to notify
Eligible Employees that they may elect to have a portion of
their Compensation deferred or paid to them in cash;
(j) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and other persons as
the Administrator or the Trustee deems necessary or desirable in connection
with the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the
Employer shall supply full and timely information to the
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<PAGE> 23
Administrator on all matters relating to the Compensation of all Participants,
their Hours of Service, their Years of Service, their retirement, death,
disability, or termination of employment, and such other pertinent facts as the
Administrator may require; and the Administrator shall advise the Trustee of
such of the foregoing facts as may be pertinent to the Trustee's duties under
the Plan. The Administrator may rely upon such information as is supplied by
the Employer and shall have no duty or responsibility to verify such
information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Administrator, including, but not limited
to, fees of accountants, counsel, and other specialists and their agents, and
other costs of administering the Plan. Until paid, the expenses shall
constitute a liability of the Trust Fund. However, the Employer may reimburse
the Trust Fund for any administration expense incurred. Any administration
expense paid to the Trust Fund as a reimbursement shall not be considered an
Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed with the
Administrator on forms supplied by the Employer. Written notice of the
disposition of a claim shall be furnished to the claimant within 90 days after
the application is filed. In the event the claim is denied, the reasons for
the denial shall be specifically set forth in the notice in language calculated
to be understood by the claimant, pertinent provisions of the Plan shall be
cited, and, where appropriate, an explanation as to how the claimant can
perfect the claim will be provided. In addition, the claimant shall be
furnished with an explanation of the Plan's claims review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to
Section 2.12 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator (on a form which
may be obtained from the
23
<PAGE> 24
Administrator) a request for a hearing. Such request, together with a written
statement of the reasons why the claimant believes his claim should be allowed,
shall be filed with the Administrator no later than 60 days after receipt of
the written notification provided for in Section 2.12. The Administrator shall
then conduct a hearing within the next 60 days, at which the claimant may be
represented by an attorney or any other representative of his choosing and at
which the claimant shall have an opportunity to submit written and oral
evidence and arguments in support of his claim. At the hearing (or prior
thereto upon 5 business days written notice to the Administrator) the claimant
or his representative shall have an opportunity to review all documents in the
possession of the Administrator which are pertinent to the claim at issue and
its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who was employed on January 1, 1991
shall be eligible to participate and shall enter the Plan as of the first day
of such Plan Year. Any other Eligible Employee who has completed one (1) Year
of Service and has attained age 21 shall be eligible to participate hereunder
as of the date he has satisfied such requirements. The Employer shall give
each prospective Eligible Employee written notice of his eligibility to
participate in the Plan prior to the close of the Plan Year in which he first
becomes an Eligible Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each Eligible
Employee shall make application to the Employer for participation in the Plan
and agree to the terms hereof. Upon the acceptance of any benefits under this
Plan, such Employee shall automatically be
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<PAGE> 25
deemed to have made application and shall be bound by the terms and conditions
of the Plan and all amendments hereto.
3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as
of the first day of the month coinciding with or next following the date on
which such Employee met the eligibility requirements of Section 3.1, provided
said Employee was still employed as of such date (or if not employed on such
date, as of the date of rehire if a 1-Year Break in Service has not occurred).
3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. Such
determination shall be subject to review per Section 2.13.
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a
classification of an Eligible Employee to an ineligible
Employee, such Former Participant shall continue to vest in
his interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his
Participant's Account shall be forfeited or distributed
pursuant to the terms of the Plan. Additionally, his interest
in the Plan shall continue to share in the earnings of the
Trust Fund.
(b) In the event a Participant is no longer a member
of an eligible class of Employees and becomes ineligible to
participate but has not incurred a 1-Year Break in Service,
such Employee will participate immediately upon returning to
an eligible class of Employees. If such Participant incurs a
1-Year Break in Service, eligibility will be determined under
the break in service rules of the Plan.
(c) In the event an Employee who is not a member of
an eligible class of Employees becomes a member of an eligible
class, such Employee will participate immediately if such
Employee has satisfied the minimum age and service
requirements and would have otherwise previously become a
Participant.
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<PAGE> 26
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission
is not made until after a contribution by his Employer for the year has been
made, the Employer shall make a subsequent contribution with respect to the
omitted Employee in the amount which the said Employer would have contributed
with respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part in any
taxable year under applicable provisions of the Code.
3.7 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been
included as a Participant in the Plan is erroneously included and discovery of
such incorrect inclusion is not made until after a contribution for the year
has been made, the Employer shall not be entitled to recover the contribution
made with respect to the ineligible person regardless of whether or not a
deduction is allowable with respect to such contribution. In such event, the
amount contributed with respect to the ineligible person shall constitute a
Forfeiture (except for Deferred Compensation which shall be distributed to the
ineligible person) for the Plan Year in which the discovery is made.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan. The election not to
participate must be communicated to the Employer, in writing, at least thirty
(30) days before the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction
elections of all Participants made pursuant to Section 4.2(a),
which amount shall be deemed an Employer's Elective
Contribution.
(b) On behalf of each Participant who is eligible to
share in matching contributions for the Plan Year, a matching
contribution equal to 50% of each such Participant's Deferred
Compensation, which amount shall be deemed an Employer's
Non-Elective Contribution.
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<PAGE> 27
Except, however, in applying the matching
percentage specified above, only salary reductions up to 10%
of Compensation shall be considered.
(c) On behalf of each Participant who is
eligible to share in the Qualified Non-Elective Contribution
for the Plan Year, a discretionary Qualified Non-Elective
Contribution equal to a percentage of each eligible
individual's Compensation, the exact percentage to be
determined each year by the Employer. The Employer's
Qualified Non-Elective Contribution shall be deemed an
Employer's Elective Contribution.
(d) A discretionary amount, which amount shall be
deemed an Employer's Non-Elective Contribution.
(e) Notwithstanding the foregoing, however, the
Employer's contributions for any Plan Year shall not exceed
the maximum amount allowable as a deduction to the Employer
under the provisions of Code Section 404. All contributions
by the Employer shall be made in cash or in such property as
is acceptable to the Trustee.
(f) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer shall
make a contribution even if it exceeds the amount which is
deductible under Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer his
Compensation which would have been received in the Plan Year,
but for the deferral election, by up to 10%. A deferral
election (or modification of an earlier election) may not be
made with respect to Compensation which is currently available
on or before the date the Participant executed such election
or, if later, the latest of the date the Employer adopts this
cash or deferred arrangement, or the date such arrangement
first became effective.
The amount by which Compensation is reduced shall be
that Participant's Deferred Compensation and be treated as an
Employer Elective Contribution and allocated to that
Participant's Elective Account.
(b) The balance in each Participant's Elective
Account shall be fully Vested at all times and shall not be
subject to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective
Account may not be distributable earlier than:
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<PAGE> 28
(1) a Participant's termination of employment, Total
and Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the
existence at the time of Plan termination of another
defined contribution plan (other than an employee
stock ownership plan as defined in Code Section
4975(e)(7)) or the establishment of a successor
defined contribution plan (other than an employee
stock ownership plan as defined in Code Section
4975(e)(7)) by the Employer or an Affiliated Employer
within the period ending twelve months after
distribution of all assets from the Plan maintained
by the Employer;
(4) the date of disposition by the Employer to an
entity that is not an Affiliated Employer 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
with respect to a Participant who continues
employment with the corporation acquiring such
assets;
(5) the date of disposition by the Employer or an
Affiliated Employer who maintains the Plan of its
interest in a subsidiary (within the meaning of Code
Section 409(d)(3)) to an entity which is not an
Affiliated Employer but only with respect to a
Participant who continues employment with such
subsidiary; or
(6) the proven financial hardship of a Participant,
subject to the limitations of Section 6.11.
(d) In any Plan Year, a Participant's Deferred
Compensation made under this Plan and all other plans,
contracts or arrangements of the Employer maintaining this
Plan shall not exceed, during any taxable year, the limitation
imposed by Code Section 402(g), as in effect at the beginning
of such taxable year. This dollar limitation shall be
adjusted annually pursuant to the method provided in Code
Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a
hardship distribution pursuant to Regulation
1.401(k)-1(d)(2)(iii)(B) from any other plan maintained
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<PAGE> 29
by the Employer, then such Participant shall not be permitted
to elect to have Deferred Compensation contributed to the Plan
on his behalf for a period of twelve (12) months following the
receipt of the distribution. Furthermore, the dollar
limitation under Code Section 402(g) shall be reduced, with
respect to the Participant's taxable year following the
taxable year in which the hardship distribution was made, by
the amount of such Participant's Deferred Compensation, if
any, pursuant to this Plan (and any other plan maintained by
the Employer) for the taxable year of the hardship
distribution.
(f) If a Participant's Deferred Compensation under
this Plan together with any elective deferrals (as defined in
Regulation 1.402(g)-1(b)) under another qualified cash or
deferred arrangement (as defined in Code Section 401(k)), a
simplified employee pension (as defined in Code Section
408(k)), a salary reduction arrangement (within the meaning of
Code Section 3121(a)(5)(D)), a deferred compensation plan
under Code Section 457, or a trust described in Code Section
501(c)(18) cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the
method provided in Code Section 15(d) pursuant to Regulations)
for such Participant's taxable year, the Participant may, not
later than March 1 following the close of his taxable year,
notify the Administrator in writing of such excess and request
that his Deferred Compensation under this Plan be reduced by
an amount specified by the Participant. In such event, the
Administrator may direct the Trustee to distribute such excess
amount (and any Income allocable to such excess amount) to the
Participant not later than the first April 15th following the
close of the Participant's taxable year. Any distribution of
less than the entire amount of Excess Deferred Compensation
and Income shall be treated as a pro rata distribution of
Excess Deferred Compensation and Income. The amount
distributed shall not exceed the Participant's Deferred
Compensation under the Plan for the taxable year. Any
distribution on or before the last day of the Participant's
taxable year must satisfy each of the following conditions:
(1) the Participant shall designate the distribution
as Excess Deferred Compensation;
(2) the distribution must be made after the date on
which the Plan received the Excess Deferred
Compensation; and
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<PAGE> 30
(3) the Plan must designate the distribution as a
distribution of Excess Deferred Compensation.
(g) Notwithstanding Section 4.2(f) above, a
Participant's Excess Deferred Compensation shall be reduced,
but not below zero, by any distribution of Excess
Contributions pursuant to Section 4.6(a) for the Plan Year
beginning with or within the taxable year of the Participant.
(h) At Normal Retirement Date, or such other date
when the Participant shall be entitled to receive benefits,
the fair market value of the Participant's Elective Account
shall be used to provide additional benefits to the
Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to
this Section may be segregated into a separate account for
each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan
association, money market certificate, or other short-term
debt security acceptable to the Trustee until such time as the
allocations pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall
implement the salary reduction elections provided for herein
in accordance with the following:
(1) A Participant may commence making elective
deferrals to the Plan only after first satisfying the
eligibility and participation requirements specified
in Article III. However, the Participant must make
his initial salary deferral election within a
reasonable time, not to exceed thirty (30) days,
after entering the Plan pursuant to Section 3.3. If
the Participant fails to make an initial salary
deferral election within such time, then such
Participant may thereafter make an election in
accordance with the rules governing modifications.
The Participant shall make such an election by
entering into a written salary reduction agreement
with the Employer and filing such agreement with the
Administrator. Such election shall initially be
effective beginning with the pay period following the
acceptance of the salary reduction agreement by the
Administrator, shall not have retroactive effect and
shall remain in force until revoked.
(2) A Participant may modify a prior election at any
time during the Plan Year and concurrently make
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<PAGE> 31
a new election by filing a written notice with the
Administrator within a reasonable time before the pay
period for which such modification is to be
effective. Any modification shall not have
retroactive effect and shall remain in force until
revoked.
(3) A Participant may elect to prospectively revoke
his salary reduction agreement in its entirety at any
time during the Plan Year by providing the
Administrator with thirty (30) days written notice of
such revocation (or upon such shorter notice period
as may be acceptable to the Administrator). Such
revocation shall become effective as of the beginning
of the first pay period coincident with or next
following the expiration of the notice period.
Furthermore, the termination of the Participant's
employment, or the cessation of participation for any
reason, shall be deemed to revoke any salary
reduction agreement then in effect, effective
immediately following the close of the pay period
within which such termination or cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time prescribed by law,
including extensions of time, for the filing of the Employer's federal income
tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated through
payroll deductions shall be paid to the Trustee as of the earliest date on
which such contributions can reasonably be segregated from the Employer's
general assets, but in any event within ninety (90) days from the date on which
such amounts would otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are incorporated
herein by reference. Furthermore, any additional Employer contributions which
are allocable to the Participant's Elective Account for a Plan Year shall be
paid to the Plan no later than the twelve-month period immediately following
the close of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain
an account in the name of each Participant to which the
Administrator shall credit as of each Anniversary Date all
amounts allocated to each such Participant as set forth
herein.
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<PAGE> 32
(b) The Employer shall provide the Administrator
with all information required by the Administrator to make a
proper allocation of the Employer's contributions for each
Plan Year. Within a reasonable period of time after the date
of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(a), to each
Participant's Elective Account in an amount equal to
each such Participant's Deferred Compensation for the
year.
(2) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(b), to each
Participant's Account in accordance with Section
4.1(b).
Any Participant actively employed during the Plan
Year shall be eligible to share in the matching
contribution for the Plan Year.
(3) With respect to the Employer's Qualified
Non-Elective Contribution made pursuant to Section
4.1(c), to each Participant's Elective Account in
accordance with Section 4.1(c).
Any Participant actively employed during the Plan
Year shall be eligible to share in the Qualified
Non-Elective Contribution for the Plan Year.
(4) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(d), to each
Participant's Account in the same proportion that
each such Participant's Compensation for the year
bears to the total Compensation of all Participants
for such year.
Only Participants who have completed a Year of
Service during the Plan Year and are actively
employed on the last day of the Plan Year shall be
eligible to share in the discretionary contribution
for the year.
(c) As of each Anniversary Date any amounts which
became Forfeitures since the last Anniversary Date shall first
be made available to reinstate previously forfeited account
balances of Former Participants, if any, in accordance with
Section 6.4(e). The remaining Forfeitures, if any, shall be
allocated to Participants' Accounts in the following manner:
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<PAGE> 33
(1) Forfeitures attributable to Employer matching
contributions made pursuant to Section 4.1(b) shall
be allocated among the Participants' Accounts in the
same proportion that each such Participant's
Compensation for the year bears to the total
Compensation of all Participants for the year.
Except, however, Participants who are not eligible to
share in matching contributions for a Plan Year shall
not share in Plan Forfeitures attributable to
Employer matching contributions for that year, unless
required pursuant to Section 4.4(k).
(2) Forfeitures attributable to Employer
discretionary contributions made pursuant to Section
4.1(d) shall be allocated among the Participants'
Accounts of Participants otherwise eligible to share
in the allocation of discretionary contributions for
the year in the same proportion that each such
Participant's Compensation for the year bears to the
total Compensation of all such Participants for the
year.
Provided, however, that in the event the allocation
of Forfeitures provided herein shall cause the "annual
addition" (as defined in Section 4.9) to any Participant's
Account to exceed the amount allowable by the Code, the excess
shall be reallocated in accordance with Section 4.10.
(d) For any Top Heavy Plan Year, Non-Key Employees
not otherwise eligible to share in the allocation of
contributions and Forfeitures as provided above, shall receive
the minimum allocation provided for in Section 4.4(i) if
eligible pursuant to the provisions of Section 4.4(k).
(e) Notwithstanding the foregoing, Participants who
are not actively employed on the last day of the Plan Year due
to Total and Permanent Disability or death shall share in the
allocation of contributions and Forfeitures for that Plan
Year.
(f) Participants who are not actively employed on
the last day of the Plan Year due to Retirement (Early, Normal
or Late) shall share in the allocation of contributions and
Forfeitures for that Plan Year only if otherwise eligible in
accordance with this Section.
(g) As of each Anniversary Date or other valuation
date, before allocation of Employer contributions and
Forfeitures, any earnings or losses (net appreciation or
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<PAGE> 34
net depreciation) of the Trust Fund shall be allocated in the
same proportion that each Participant's and Former
Participant's nonsegregated accounts bear to the total of all
Participants' and Former Participants' nonsegregated accounts
as of such date.
(h) Participants' accounts shall be debited for any
insurance or annuity premiums paid, if any, and credited with
any dividends received on insurance contracts.
(i) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan
Year, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each
Non-Key Employee shall be equal to at least three percent (3%)
of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each
Non-Key Employee in any defined contribution plan included
with this plan in a Required Aggregation Group). However, if
(i) the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each Key
Employee for such Top Heavy Plan Year is less than three
percent (3%) of each Key Employee's "415 Compensation" and
(ii) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet the
requirements of Code Section 401(a)(4) or 410, the sum of the
Employer's contributions and Forfeitures allocated to the
Participant's Combined Account of each Non-Key Employee shall
be equal to the largest percentage allocated to the
Participant's Combined Account of any Key Employee. However,
in determining whether a Non-Key Employee has received the
required minimum allocation, such Non-Key Employee's Deferred
Compensation and matching contributions needed to satisfy the
"Actual Contribution Percentage" tests pursuant to Section
4.7(a) shall not be taken into account.
However, no such minimum allocation shall be required
in this Plan for any Non-Key Employee who participates in
another defined contribution plan subject to Code Section 412
providing such benefits included with this Plan in a Required
Aggregation Group.
(j) For purposes of the minimum allocations set
forth above, the percentage allocated to the Participant's
Combined Account of any Key Employee shall be equal to the
ratio of the sum of the Employer's contributions and
Forfeitures allocated on behalf of such Key Employee divided
by the "415 Compensation" for such Key Employee.
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<PAGE> 35
(k) For any Top Heavy Plan Year, the minimum
allocations set forth above shall be allocated to the
Participant's Combined Account of all Non-Key Employees who
are Participants and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who
have (1) failed to complete a Year of Service; and (2)
declined to make mandatory contributions (if required) or, in
the case of a cash or deferred arrangement, elective
contributions to the Plan.
(l) In lieu of the above, if a Non-Key Employee
participates in this Plan and a defined benefit pension plan
included in a Required Aggregation Group which is top heavy, a
minimum allocation of five percent (5%) of "415 Compensation"
shall be provided under this Plan.
The extra minimum allocation (required by Section
4.9(n) to provide higher limitations) will not be provided.
(m) For the purposes of this Section, "415
Compensation" shall be limited to $200,000 (unless adjusted in
such manner as permitted under Code Section 415(d)).
(n) Notwithstanding anything herein to the contrary,
Participants who terminated employment for any reason during
the Plan Year shall share in the salary reduction
contributions made by the Employer for the year of termination
without regard to the Hours of Service credited.
(o) If a Former Participant is reemployed after five
(5) consecutive 1-Year Breaks in Service, then separate
accounts shall be maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his status in the Plan
attributable to post-break service.
(p) Notwithstanding anything to the contrary, for
Plan Years beginning after December 31, 1989, if this is a
Plan that would otherwise fail to meet the requirements of
Code Sections 401(a)(26), 410(b)(1) or 410(b)(2)(A)(i) and the
Regulations thereunder because Employer contributions have not
been allocated to a sufficient number or percentage of
Participants for a Plan Year, then the following rules shall
apply:
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<PAGE> 36
(1) The group of Participants eligible to share in
the Employer's contribution and Forfeitures for the
Plan Year shall be expanded to include the minimum
number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable
test specified above. The specific Participants who
shall become eligible under the terms of this
paragraph shall be those who are actively employed on
the last day of the Plan Year and, when compared to
similarly situated Participants, have completed the
greatest number of Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the
applicable test is still not satisfied, then the
group of Participants eligible to share in the
Employer's contribution and Forfeitures for the Plan
Year shall be further expanded to include the minimum
number of Participants who are not actively employed
on the last day of the Plan Year as are necessary to
satisfy the applicable test. The specific
Participants who shall become eligible to share shall
be those Participants, when compared to similarly
situated Participants, who have completed the
greatest number of Hours of Service in the Plan Year
before terminating employment.
(3) Nothing in this Section shall permit the
reduction of a Participant's accrued benefit.
Therefore any amounts that have previously been
allocated to Participants may not be reallocated to
satisfy these requirements. In such event, the
Employer shall make an additional contribution equal
to the amount such affected Participants would have
received had they been included in the allocations,
even if it exceeds the amount which would be
deductible under Code Section 404. Any adjustment to
the allocations pursuant to this paragraph shall be
considered a retroactive amendment adopted by the
last day of the Plan Year.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year,
the annual allocation derived from Employer Elective
Contributions to a Participant's Elective Account shall
satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than
the "Actual Deferral Percentage" of the
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<PAGE> 37
Non-Highly Compensated Participant group multiplied
by 1.25, or
(2) The excess of the "Actual Deferral Percentage"
for the Highly Compensated Participant group over the
"Actual Deferral Percentage" for the Non-Highly
Compensated Participant group shall not be more than
two percentage points. Additionally, the "Actual
Deferral Percentage" for the Highly Compensated
Participant group shall not exceed the "Actual
Deferral Percentage" for the Non-Highly Compensated
Participant group multiplied by 2. The provisions of
Code Section 401(k)(3) and Regulation 1.401(k)-1(b)
are incorporated herein by reference.
However, in order to prevent the multiple use of the
alternative method described in (2) above and in Code
Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals
pursuant to Section 4.2 and to make Employee
contributions or to receive matching contributions
under this Plan or under any other plan maintained by
the Employer or an Affiliated Employer shall have his
actual contribution ratio reduced pursuant to
Regulation 1.401(m)-2, the provisions of which are
incorporated herein by reference.
(b) For the purposes of this Section "Actual
Deferral Percentage" means, with respect to the Highly
Compensated Participant group and Non-Highly Compensated
Participant group for a Plan Year, the average of the ratios,
calculated separately for each Participant in such group, of
the amount of Employer Elective Contributions allocated to
each Participant's Elective Account for such Plan Year, to
such Participant's "414(s) Compensation" for such Plan Year.
The actual deferral ratio for each Participant and the "Actual
Deferral Percentage" for each group shall be calculated to the
nearest one-hundredth of one percent. Employer Elective
Contributions allocated to each Non-Highly Compensated
Participant's Elective Account shall be reduced by Excess
Deferred Compensation to the extent such excess amounts are
made under this Plan or any other plan maintained by the
Employer.
(c) For the purpose of determining the actual
deferral ratio of a Highly Compensated Employee who is subject
to the Family Member aggregation rules of Code Section
414(q)(6) because such Participant is either a "five percent
owner" of the Employer or one of the ten
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<PAGE> 38
(10) Highly Compensated Employees paid the greatest "415
Compensation" during the year, the following shall apply:
(1) The combined actual deferral ratio for the
family group (which shall be treated as one Highly
Compensated Participant) shall be determined by
aggregating Employer Elective Contributions and
"414(s) Compensation" of all eligible Family Members
(including Highly Compensated Participants).
However, in applying the $200,000 limit to "414(s)
Compensation", Family Members shall include only the
affected Employee's spouse and any lineal descendants
who have not attained age 19 before the close of the
Plan Year. Notwithstanding the foregoing, with
respect to Plan Years beginning prior to January 1,
1990, compliance with the Regulations then in effect
shall be deemed to be compliance with this paragraph.
(2) The Employer Elective Contributions and "414(s)
Compensation" of all Family Members shall be
disregarded for purposes of determining the Actual
Deferral Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be aggregated as
a member of more than one family group in a plan, all
Participants who are members of those family groups
that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and
(2) above.
(d) For the purposes of Sections 4.5(a) and 4.6, a
Highly Compensated Participant and a Non-Highly Compensated
Participant shall include any Employee eligible to make a
deferral election pursuant to Section 4.2, whether or not such
deferral election was made or suspended pursuant to Section
4.2.
(e) For the purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k), if two or more plans
which include cash or deferred arrangements are considered one
plan for the purposes of Code Section 401(a)(4) or 410(b)
(other than Code Section 410(b)(2)(A)(ii)), the cash or
deferred arrangements included in such plans shall be treated
as one arrangement. In addition, two or more cash or deferred
arrangements may be considered as a single arrangement for
purposes of determining whether or not such arrangements
satisfy Code Sections 401(a)(4), 410(b) and
38
<PAGE> 39
401(k). In such a case, the cash or deferred arrangements
included in such plans and the plans including such
arrangements shall be treated as one arrangement and as one
plan for purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k). For Plan Years beginning after December 31,
1989, plans may be aggregated under this paragraph (e) only if
they have the same plan year.
Notwithstanding the above, an employee stock
ownership plan described in Code Section 4975(e)(7) may not be
combined with this Plan for purposes of determining whether
the employee stock ownership plan or this Plan satisfies this
Section and Code Sections 401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly
Compensated Participant is a Participant under two or more
cash or deferred arrangements (other than a cash or deferred
arrangement which is part of an employee stock ownership plan
as defined in Code Section 4975(e)(7)) of the Employer or an
Affiliated Employer, all such cash or deferred arrangements
shall be treated as one cash or deferred arrangement for the
purpose of determining the actual deferral ratio with respect
to such Highly Compensated Participant. However, if the cash
or deferred arrangements have different Plan Years, this
paragraph shall be applied by treating all cash or deferred
arrangements ending with or within the same calendar year as a
single arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's
Elective Contributions made pursuant to Section 4.4 do not satisfy one of the
tests set forth in Section 4.5(a), the Administrator shall adjust Excess
Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third
month following the end of each Plan Year, the Highly
Compensated Participant having the highest actual deferral
ratio shall have his portion of Excess Contributions
distributed to him until one of the tests set forth in Section
4.5(a) is satisfied, or until his actual deferral ratio equals
the actual deferral ratio of the Highly Compensated
Participant having the second highest actual deferral ratio.
This process shall continue until one of the tests set forth
in Section 4.5(a) is satisfied. For each Highly Compensated
Participant, the amount of Excess Contributions is equal to
the Elective Contributions on behalf of such Highly
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<PAGE> 40
Compensated Participant (determined prior to the application
of this paragraph) minus the amount determined by multiplying
the Highly Compensated Participant's actual deferral ratio
(determined after application of this paragraph) by his
"414(s) Compensation". However, in determining the amount of
Excess Contributions to be distributed with respect to an
affected Highly Compensated Participant as determined herein,
such amount shall be reduced by any Excess Deferred
Compensation previously distributed to such affected Highly
Compensated Participant for his taxable year ending with or
within such Plan Year.
(1) With respect to the distribution of Excess
Contributions pursuant to (a) above, such
distribution:
(i) may be postponed but not later than the
close of the Plan Year following the Plan
Year to which they are allocable;
(ii) shall be made first from unmatched
Deferred Compensation and, thereafter,
simultaneously from Deferred Compensation
which is matched and matching contributions
which relate to such Deferred Compensation.
However, any such matching contributions
which are not Vested shall be forfeited in
lieu of being distributed;
(iii) shall be made from Qualified
Non-Elective Contributions only to the extent
that Excess Contributions exceed the balance
in the Participant's Elective Account
attributable to Deferred Compensation;
(iv) shall be adjusted for Income; and
(v) shall be designated by the Employer as a
distribution of Excess Contributions (and
Income).
(2) Any distribution of less than the entire amount
of Excess Contributions shall be treated as a pro
rata distribution of Excess Contributions and Income.
(3) If the determination and correction of Excess
Contributions of a Highly Compensated Participant
whose actual deferral ratio is determined under the
family aggregation rules, then the actual deferral
ratio shall be reduced as required herein, and the
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<PAGE> 41
Excess Contributions for the family unit shall be
allocated among the Family Members in proportion to
the Elective Contributions of each Family Member that
were combined to determine the group actual deferral
ratio. Notwithstanding the foregoing, with respect
to Plan Years beginning prior to January 1, 1990,
compliance with the Regulations then in effect shall
be deemed to be compliance with this paragraph.
(b) Within twelve (12) months after the end of the
Plan Year, the Employer may make a special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the
tests set forth in Section 4.5(a). Such contribution shall be
allocated to the Participant's Elective Account of each
Non-Highly Compensated Participant in the same proportion that
each Non-Highly Compensated Participant's Compensation for the
year bears to the total Compensation of all Non-Highly
Compensated Participants.
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the
Highly Compensated Participant group shall not exceed the
greater of:
(1) 125 percent of such percentage for the
Non-Highly Compensated Participant group; or
(2) the lesser of 200 percent of such percentage for
the Non-Highly Compensated Participant group, or such
percentage for the Non-Highly Compensated Participant
group plus 2 percentage points. However, to prevent
the multiple use of the alternative method described
in this paragraph and Code Section 401(m)(9)(A), any
Highly Compensated Participant eligible to make
elective deferrals pursuant to Section 4.2 or any
other cash or deferred arrangement maintained by the
Employer or an Affiliated Employer and to make
Employee contributions or to receive matching
contributions under this Plan or under any other plan
maintained by the Employer or an Affiliated Employer
shall have his actual contribution ratio reduced
pursuant to Regulation 1.401(m)-2. The provisions of
Code Section 401(m) and Regulations 1.401(m)-1(b) and
1.401(m)-2 are incorporated herein by reference.
(b) For the purposes of this Section and Section
4.8, "Actual Contribution Percentage" for a Plan Year
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<PAGE> 42
means, with respect to the Highly Compensated Participant
group and Non-Highly Compensated Participant group, the
average of the ratios (calculated separately for each
Participant in each group) of:
(1) the sum of Employer matching contributions made
pursuant to Section 4.1(b) on behalf of each such
Participant for such Plan Year; to
(2) the Participant's "414(s) Compensation" for such
Plan Year.
(c) For purposes of determining the "Actual
Contribution Percentage" and the amount of Excess Aggregate
Contributions pursuant to Section 4.8(d), only Employer
matching contributions contributed to the Plan prior to the
end of the succeeding Plan Year shall be considered. In
addition, the Administrator may elect to take into account,
with respect to Employees eligible to have Employer matching
contributions pursuant to Section 4.1(b) allocated to their
accounts, elective deferrals (as defined in Regulation
1.402(g)-1(b)) and qualified non-elective contributions (as
defined in Code Section 401(m)(4)(C)) contributed to any plan
maintained by the Employer. Such elective deferrals and
qualified non-elective contributions shall be treated as
Employer matching contributions subject to Regulation
1.401(m)-1(b)(2) which is incorporated herein by reference.
However, the Plan Year must be the same as the plan year of
the plan to which the elective deferrals and the qualified
non-elective contributions are made.
(d) For the purpose of determining the actual
contribution ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code Section
414(q)(6) because such Employee is either a "five percent
owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(1) The combined actual contribution ratio for the
family group (which shall be treated as one Highly
Compensated Participant) shall be determined by
aggregating Employer matching contributions made
pursuant to Section 4.1(b) and "414(s) Compensation"
of all eligible Family Members (including Highly
Compensated Participants). However, in applying the
$200,000 limit to "414(s) Compensation", Family
Members shall include only the affected Employee's
spouse and any lineal descendants who have not
attained age 19 before the close of the Plan Year.
Notwithstanding the
42
<PAGE> 43
foregoing, with respect to Plan Years beginning prior
to January 1, 1990, compliance with the Regulations
then in effect shall be deemed to be compliance with
this paragraph.
(2) The Employer matching contributions made
pursuant to Section 4.1(b) and "414(s) Compensation"
of all Family Members shall be disregarded for
purposes of determining the "Actual Contribution
Percentage" of the Non-Highly Compensated Participant
group except to the extent taken into account in
paragraph (1) above.
(3) If a Participant is required to be aggregated as
a member of more than one family group in a plan, all
Participants who are members of those family groups
that include the Participant are aggregated as one
family group in accordance with paragraphs (1) and
(2) above.
(e) For purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(m), if two or more plans of the
Employer to which matching contributions, Employee
contributions, or both, are made are treated as one plan for
purposes of Code Sections 401(a)(4) or 410(b) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii)),
such plans shall be treated as one plan. In addition, two or
more plans of the Employer to which matching contributions,
Employee contributions, or both, are made may be considered as
a single plan for purposes of determining whether or not such
plans satisfy Code Sections 401(a)(4), 410(b) and 401(m). In
such a case, the aggregated plans must satisfy this Section
and Code Sections 401(a)(4), 410(b) and 401(m) as though such
aggregated plans were a single plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated under this
paragraph (e) only if they have the same plan year.
Notwithstanding the above, an employee stock
ownership plan described in Code Section 4975(e)(7) may not be
aggregated with this Plan for purposes of determining whether
the employee stock ownership plan or this Plan satisfies this
Section and Code Sections 401(a)(4), 410(b) and 401(m).
(f) If a Highly Compensated Participant is a
participant under two or more plans (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7))
which are maintained by the Employer or an Affiliated Employer
to which matching contributions, Employee contributions, or
both, are made, all such
43
<PAGE> 44
contributions on behalf of such Highly Compensated Participant
shall be aggregated for purposes of determining such Highly
Compensated Participant's actual contribution ratio. However,
if the plans have different plan years, this paragraph shall
be applied by treating all plans ending with or within the
same calendar year as a single plan.
(g) For purposes of Sections 4.7(a) and 4.8, a
Highly Compensated Participant and Non-Highly Compensated
Participant shall include any Employee eligible to have
Employer matching contributions pursuant to Section 4.1(b)
(whether or not a deferral election was made or suspended
pursuant to Section 4.2(e)) allocated to his account for the
Plan Year.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that the "Actual Contribution
Percentage" for the Highly Compensated Participant group
exceeds the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group pursuant to Section
4.7(a), the Administrator (on or before the fifteenth day of
the third month following the end of the Plan Year, but in no
event later than the close of the following Plan Year) shall
direct the Trustee to distribute to the Highly Compensated
Participant having the highest actual contribution ratio, his
Vested portion of Excess Aggregate Contributions (and Income
allocable to such contributions) or, if forfeitable, forfeit
such non-Vested Excess Aggregate Contributions (and Income
allocable to such Forfeitures) until either one of the tests
set forth in Section 4.7(a) is satisfied, or until his actual
contribution ratio equals the actual contribution ratio of the
Highly Compensated Participant having the second highest
actual contribution ratio. This process shall continue until
one of the tests set forth in Section 4.7(a) is satisfied.
The distribution and/or Forfeiture of Excess Aggregate
Contributions shall be made in the following order:
(1) Employer matching contributions distributed
and/or forfeited pursuant to Section 4.6(a)(1);
(2) Remaining Employer matching contributions.
(b) Any distribution and/or Forfeiture of less than
the entire amount of Excess Aggregate Contributions (and
Income) shall be treated as a pro rata distribution and/or
Forfeiture of Excess Aggregate Contributions and Income.
Distribution of Excess Aggregate Contributions shall be
designated by the Employer as a distribution of
44
<PAGE> 45
Excess Aggregate Contributions (and Income). Forfeitures of
Excess Aggregate Contributions shall be treated in accordance
with Section 4.4. However, no such Forfeiture may be
allocated to a Highly Compensated Participant whose
contributions are reduced pursuant to this Section.
(c) Excess Aggregate Contributions, including
forfeited matching contributions, shall be treated as Employer
contributions for purposes of Code Sections 404 and 415 even
if distributed from the Plan.
(d) For each Highly Compensated Participant, the
amount of Excess Aggregate Contributions is equal to the total
Employer matching contributions made pursuant to Section
4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section
4.7(c) on behalf of the Highly Compensated Participant
(determined prior to the application of this paragraph) minus
the amount determined by multiplying the Highly Compensated
Participant's actual contribution ratio (determined after
application of this paragraph) by his "414(s) Compensation".
The actual contribution ratio must be rounded to the nearest
one-hundredth of one percent. In no case shall the amount of
Excess Aggregate Contribution with respect to any Highly
Compensated Participant exceed the amount of Employer matching
contributions made pursuant to Section 4.1(b) and any
qualified non-elective contributions or elective deferrals
taken into account pursuant to Section 4.7(c) on behalf of
such Highly Compensated Participant for such Plan Year.
(e) The determination of the amount of Excess
Aggregate Contributions with respect to any Plan Year shall be
made after first determining the Excess Contributions, if any,
to be treated as voluntary Employee contributions due to
recharacterization for the plan year of any other qualified
cash or deferred arrangement (as defined in Code Section
401(k)) maintained by the Employer that ends with or within
the Plan Year.
(f) If the determination and correction of Excess
Aggregate Contributions of a Highly Compensated Participant
whose actual contribution ratio is determined under the family
aggregation rules, then the actual contribution ratio shall be
reduced and the Excess Aggregate Contributions for the family
unit shall be allocated among the Family Members in proportion
to the sum of Employer matching contributions made pursuant to
Section 4.1(b) and any qualified non-elective contributions or
elective deferrals taken into account
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<PAGE> 46
pursuant to Section 4.7(c) of each Family Member that were
combined to determine the group actual contribution ratio.
Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1990, compliance with the
Regulations then in effect shall be deemed to be compliance
with this paragraph.
(g) Notwithstanding the above, within twelve (12)
months after the end of the Plan Year, the Employer may make a
special Qualified Non-Elective Contribution on behalf of
Non-Highly Compensated Participants in an amount sufficient to
satisfy one of the tests set forth in Section 4.7(a). Such
contribution shall be allocated to the Participant's Elective
Account of each Non-Highly Compensated Participant in the same
proportion that each Non-Highly Compensated Participant's
Compensation for the year bears to the total Compensation of
all Non-Highly Compensated Participants. A separate
accounting shall be maintained for the purpose of excluding
such contributions from the "Actual Deferral Percentage" tests
pursuant to Section 4.5(a).
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum
"annual additions" credited to a Participant's accounts for
any "limitation year" shall equal the lesser of: (1) $30,000
(or, if greater, one-fourth of the dollar limitation in effect
under Code Section 415(b)(1)(A)) or (2) twenty-five percent
(25%) of the Participant's "415 Compensation" for such
"limitation year".
(b) For purposes of applying the limitations of Code
Section 415, "annual additions" means the sum credited to a
Participant's accounts for any "limitation year" of (1)
Employer contributions, (2) Employee contributions, (3)
forfeitures, (4) amounts allocated, after March 31, 1984, to
an individual medical account, as defined in Code Section
415(l)(2) which is part of a pension or annuity plan
maintained by the Employer and (5) amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable
to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit plan (as defined in Code
Section 419(e)) maintained by the Employer. Except, however,
the "415 Compensation" percentage limitation referred to in
paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition", or
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<PAGE> 47
(2) any amount otherwise treated as an "annual addition" under
Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code
Section 415, the transfer of funds from one qualified plan to
another is not an "annual addition". In addition, the
following are not Employee contributions for the purposes of
Section 4.9(b)(2): (1) rollover contributions (as defined in
Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3));
(2) repayments of loans made to a Participant from the Plan;
(3) repayments of distributions received by an Employee
pursuant to Code Section 411(a)(7)(B) (cash-outs); (4)
repayments of distributions received by an Employee pursuant
to Code Section 411(a)(3)(D) (mandatory contributions); and
(5) Employee contributions to a simplified employee pension
excludable from gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of
Code Section 415, "415 Compensation" shall include the
Participant's wages, salaries, fees for professional service
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 an Employer
maintaining the Plan to the extent that the amounts are
includable 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, reimbursements, and
expense allowances, and in the case of a Participant who is an
Employee within the meaning of Code Section 401(c)(1) and the
regulations thereunder, the Participant's earned income (as
described in Code Section 401(c)(2) and the regulations
thereunder)) paid during the "limitation year".
"415 Compensation" shall exclude (1)(A) contributions
made by the Employer to a plan of deferred compensation to the
extent that, before the application of the Code Section 415
limitations to the Plan, the contributions are not includable
in the gross income of the Employee for the taxable year in
which contributed, (B) contributions made by the Employer to a
plan of deferred compensation to the extent that all or a
portion of such contributions are recharacterized as a
voluntary Employee contribution, (C) Employer contributions
made on behalf of an Employee to a simplified employee pension
plan described in Code Section 408(k) to the extent such
contributions are excludable from the Employee's gross income,
(D) any distributions from a plan of deferred
47
<PAGE> 48
compensation regardless of whether such amounts are includable
in the gross income of the Employee when distributed except
any amounts received by an Employee pursuant to an unfunded
non-qualified plan to the extent such amounts are includable
in the gross income of the Employee; (2) amounts realized from
the exercise of a non-qualified stock option or when
restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a
substantial risk of forfeiture; (3) amounts realized from the
sale, exchange or other disposition of stock acquired under a
qualified stock option; and (4) other amounts which receive
special tax benefits, such as premiums for group term life
insurance (but only to the extent that the premiums are not
includable in the gross income of the Employee), or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of any
annuity contract described in Code Section 403(b) (whether or
not the contributions are excludable from the gross income of
the Employee). For the purposes of this Section, the
determination of "415 Compensation" shall be made by not
including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of
Code Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of
Employer contributions made pursuant to a salary reduction
agreement, Code Section 403(b).
(e) For purposes of applying the limitations of Code
Section 415, the "limitation year" shall be the Plan Year.
(f) The dollar limitation under Code Section
415(b)(1)(A) stated in paragraph (a)(1) above shall be
adjusted annually as provided in Code Section 415(d) pursuant
to the Regulations. The adjusted limitation is effective as
of January 1st of each calendar year and is applicable to
"limitation years" ending with or within that calendar year.
(g) For the purpose of this Section, all qualified
defined benefit plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined
benefit plan, and all qualified defined contribution plans
(whether terminated or not) ever maintained by the Employer
shall be treated as one defined contribution plan.
(h) For the purpose of this Section, if the Employer
is a member of a controlled group of corporations, trades or
businesses under common control (as defined by Code Section
1563(a) or Code Section
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<PAGE> 49
414(b) and (c) as modified by Code Section 415(h)), is a
member of an affiliated service group (as defined by Code
Section 414(m)), or is a member of a group of entities
required to be aggregated pursuant to Regulations under Code
Section 414(o), all Employees of such Employers shall be
considered to be employed by a single Employer.
(i) For the purpose of this Section, if this Plan is
a Code Section 413(c) plan, all Employers of a Participant who
maintain this Plan will be considered to be a single Employer.
(j)(1) If a Participant participates in more than
one defined contribution plan maintained by the Employer which
have different Anniversary Dates, the maximum "annual
additions" under this Plan shall equal the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's accounts
during the "limitation year".
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined
contribution plan not subject to Code Section 412 maintained
by the Employer which have the same Anniversary Date, "annual
additions" will be credited to the Participant's accounts
under the defined contribution plan subject to Code Section
412 prior to crediting "annual additions" to the Participant's
accounts under the defined contribution plan not subject to
Code Section 412.
(3) If a Participant participates in more than one
defined contribution plan not subject to Code Section
412 maintained by the Employer which have the same
Anniversary Date, the maximum "annual additions"
under this Plan shall equal the product of (A) the
maximum "annual additions" for the "limitation year"
minus any "annual additions" previously credited
under subparagraphs (1) or (2) above, multiplied by
(B) a fraction (i) the numerator of which is the
"annual additions" which would be credited to such
Participant's accounts under this Plan without regard
to the limitations of Code Section 415 and (ii) the
denominator of which is such "annual additions" for
all plans described in this subparagraph.
(k) If an Employee is (or has been) a Participant in
one or more defined benefit plans and one or more defined
contribution plans maintained by the Employer, the sum of the
defined benefit plan fraction and the
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<PAGE> 50
defined contribution plan fraction for any "limitation year"
may not exceed 1.0.
(l) The defined benefit plan fraction for any
"limitation year" is a fraction, the numerator of which is the
sum of the Participant's projected annual benefits under all
the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is
the lesser of 125 percent of the dollar limitation determined
for the "limitation year" under Code Sections 415(b) and (d)
or 140 percent of the highest average compensation, including
any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first "limitation year"
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual
benefits under such plans which the Participant had accrued as
of the close of the last "limitation year" beginning before
January 1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements
of Code Section 415 for all "limitation years" beginning
before January 1, 1987.
(m) The defined contribution plan fraction for any
"limitation year" is 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 Code Section 419(e), and individual medical
accounts, as defined in Code Section 415(l)(2), maintained by
the Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior
"limitation years" of service with the Employer (regardless of
whether a defined contribution plan was maintained by the
Employer). The maximum aggregate amount in any "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
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<PAGE> 51
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 (1) the excess
of the sum of the fractions over 1.0 times (2) the denominator
of this fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated
using the fractions as they would be computed as of the end of
the last "limitation year" beginning before January 1, 1987,
and disregarding any changes in the terms and conditions of
the Plan made after May 6, 1986, but using the Code Section
415 limitation applicable to the first "limitation year"
beginning on or after January 1, 1987. The annual addition
for any "limitation year" beginning before January 1, 1987
shall not be recomputed to treat all Employee contributions as
annual additions.
(n) Notwithstanding the foregoing, for any
"limitation year" in which the Plan is a Top Heavy Plan, 100%
shall be substituted for 125% in Sections 4.9(l) and 4.9(m)
unless the extra minimum allocation is being provided pursuant
to Section 4.4. However, for any "limitation year" in which
the Plan is a Super Top Heavy Plan, 100% shall be substituted
for 125% in any event.
(o) If the sum of the defined benefit plan fraction
and the defined contribution plan fraction shall exceed 1.0 in
any "limitation year" for any Participant in this Plan, the
Administrator shall limit, to the extent necessary, the
"annual additions" to such Participant's accounts for such
"limitation year". If, after limiting the "annual additions"
to such Participant's accounts for the "limitation year", the
sum of the defined benefit plan fraction and the defined
contribution plan fraction still exceed 1.0, the Administrator
shall then adjust the numerator of the defined benefit plan
fraction so that the sum of both fractions shall not exceed
1.0 in any "limitation year" for such Participant.
(p) Notwithstanding anything contained in this
Section to the contrary, the limitations, adjustments and
other requirements prescribed in this Section shall at all
times comply with the provisions of Code Section and
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<PAGE> 52
the Regulations thereunder, the terms of which are
specifically incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of
Forfeitures, a reasonable error in estimating a Participant's
Compensation or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual
additions" under this Plan would cause the maximum "annual
additions" to be exceeded for any Participant, the
Administrator shall (1) return any voluntary Employee
contributions credited for the "limitation year" to the extent
that the return would reduce the "excess amount" in the
Participant's accounts (2) hold any "excess amount" remaining
after the return of any voluntary Employee contributions in a
"Section 415 suspense account" (3) use the "Section 415
suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to reduce Employer
contributions for that Participant if that Participant is
covered by the Plan as of the end of the "limitation year", or
if the Participant is not so covered, allocate and reallocate
the "Section 415 suspense account" in the next "limitation
year" (and succeeding "limitation years" if necessary) to all
Participants in the Plan before any Employer or Employee
contributions which would constitute "annual additions" are
made to the Plan for such "limitation year" (4) reduce
Employer contributions to the Plan for such "limitation year"
by the amount of the "Section 415 suspense account" allocated
and reallocated during such "limitation year".
(b) For purposes of this Article, "excess amount"
for any Participant for a "limitation year" shall mean the
excess, if any, of (1) the "annual additions" which would be
credited to his account under the terms of the Plan without
regard to the limitations of Code Section 415 over (2) the
maximum "annual additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415
suspense account" shall mean an unallocated account equal to
the sum of "excess amounts" for all Participants in the Plan
during the "limitation year". The "Section 415 suspense
account" shall not share in any earnings or losses of the
Trust Fund.
(d) The Plan may not distribute "excess amounts",
other than voluntary Employee contributions, to Participants
or Former Participants.
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<PAGE> 53
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed necessary by the
Administrator, herein called "valuation date", to determine the net worth of
the assets comprising the Trust Fund as it exists on the "valuation date" prior
to taking into consideration any contribution to be allocated for that Plan
Year. In determining such net worth, the Trustee shall value the assets
comprising the Trust Fund at their fair market value as of the "valuation date"
and shall deduct all expenses for which the Trustee has not yet obtained
reimbursement from the Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the
Trust Fund which are listed on a registered stock exchange, the Administrator
shall direct the Trustee to value the same at the prices they were last traded
on such exchange preceding the close of business on the "valuation date". If
such securities were not traded on the "valuation date", or if the exchange on
which they are traded was not open for business on the "valuation date", then
the securities shall be valued at the prices at which they were last traded
prior to the "valuation date". Any unlisted security held in the Trust Fund
shall be valued at its bid price next preceding the close of business on the
"valuation date", which bid price shall be obtained from a registered broker or
an investment banker. In determining the fair market value of assets other
than securities for which trading or bid prices can be obtained, the Trustee
may appraise such assets itself, or in its discretion, employ one or more
appraisers for that purpose and rely on the values established by such
appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on his Normal Retirement Date or
Early Retirement Date. Upon such Normal Retirement Date or Early Retirement
Date, all amounts credited to such Participant's Combined Account shall become
distributable. However, a Participant may postpone the termination of his
employment with the Employer to a later date, in which event the participation
of such Participant in the Plan, including the right to receive allocations
pursuant to Section 4.4, shall continue until his Late Retirement Date. Upon a
Participant's Retirement Date, or as soon thereafter as is practicable, the
Trustee shall
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<PAGE> 54
distribute all amounts credited to such Participant's Combined Account in
accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his
Retirement Date or other termination of his employment, all
amounts credited to such Participant's Combined Account shall
become fully Vested. The Administrator shall direct the
Trustee, in accordance with the provisions of Sections 6.6 and
6.7, to distribute the value of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the
Administrator shall direct the Trustee, in accordance with the
provisions of Sections 6.6 and 6.7, to distribute any
remaining amounts credited to the accounts of a deceased
Former Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason
of an outstanding loan to the Participant or Former
Participant shall be taken into account in determining the
amount of the death benefit.
(d) The Administrator may require such proper proof
of death and such evidence of the right of any person to
receive payment of the value of the account of a deceased
Participant or Former Participant as the Administrator may
deem desirable. The Administrator's determination of death
and of the right of any person to receive payment shall be
conclusive.
(e) The Beneficiary of the death benefit payable
pursuant to this Section shall be the Participant's spouse.
Except, however, the Participant may designate a Beneficiary
other than his spouse if:
(1) the spouse has waived the right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and
there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides
otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
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<PAGE> 55
In such event, the designation of a Beneficiary shall
be made on a form satisfactory to the Administrator. A
Participant may at any time revoke his designation of a
Beneficiary or change his Beneficiary by filing written notice
of such revocation or change with the Administrator. However,
the Participant's spouse must again consent in writing to any
change in Beneficiary unless the original consent acknowledged
that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected
to relinquish such right. In the event no valid designation
of Beneficiary exists at the time of the Participant's death,
the death benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to waive
any rights to the death benefit must be in writing, must
acknowledge the effect of such waiver, and be witnessed by a
Plan representative or a notary public. Further, the spouse's
consent must be irrevocable and must acknowledge the specific
nonspouse Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability
prior to his Retirement Date or other termination of his employment, all
amounts credited to such Participant's Combined Account shall become fully
Vested. In the event of a Participant's Total and Permanent Disability, the
Trustee, in accordance with the provisions of Sections 6.5 and 6.7, shall
distribute to such Participant all amounts credited to such Participant's
Combined Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date coinciding
with or subsequent to the termination of a Participant's
employment for any reason other than death, Total and
Permanent Disability or retirement, the Administrator may
direct the Trustee to segregate the amount of the Vested
portion of such Terminated Participant's Combined Account and
invest the aggregate amount thereof in a separate, federally
insured savings account, certificate of deposit, common or
collective trust fund of a bank or a deferred annuity. In the
event the Vested portion of a Participant's Combined Account
is not segregated, the amount shall remain in a separate
account for the Terminated Participant and share in
allocations pursuant to Section 4.4 until such time as a
distribution is made to the Terminated Participant.
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<PAGE> 56
In the event that the amount of the Vested portion of
the Terminated Participant's Combined Account equals or
exceeds the fair market value of any insurance Contracts, the
Trustee, when so directed by the Administrator and agreed to
by the Terminated Participant, shall assign, transfer, and set
over to such Terminated Participant all Contracts on his life
in such form or with such endorsements so that the settlement
options and forms of payment are consistent with the
provisions of Section 6.5. In the event that the Terminated
Participant's Vested portion does not at least equal the fair
market value of the Contracts, if any, the Terminated
Participant may pay over to the Trustee the sum needed to make
the distribution equal to the value of the Contracts being
assigned or transferred, or the Trustee, pursuant to the
Participant's election, may borrow the cash value of the
Contracts from the insurer so that the value of the Contracts
is equal to the Vested portion of the Terminated Participant's
Account and then assign the Contracts to the Terminated
Participant.
Distribution of the funds due to a Terminated
Participant shall be made on the occurrence of an event which
would result in the distribution had the Terminated
Participant remained in the employ of the Employer (upon the
Participant's death, Total and Permanent Disability, Early or
Normal Retirement). However, at the election of the
Participant, the Administrator shall direct the Trustee to
cause the entire Vested portion of the Terminated
Participant's Combined Account to be payable to such
Terminated Participant on or after the Anniversary Date
coinciding with or next following termination of employment.
Any distribution under this paragraph shall be made in a
manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and
consent requirements of Code Section 411(a)(11) and the
Regulations thereunder. If the value of a Terminated
Participant's Vested benefit derived from Employer and
Employee contributions does not exceed $3,500 and has never
exceeded $3,500 at the time of any prior distribution, the
Administrator shall direct the Trustee to cause the entire
Vested benefit to be paid to such Participant in a single lump
sum.
For purposes of this Section 6.4, if the value of a
Terminated Participant's Vested benefit is zero, the
Terminated Participant shall be deemed to have received a
distribution of such Vested benefit.
(b) The Vested portion of any Participant's Account
shall be a percentage of the total amount credited to his
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<PAGE> 57
Participant's Account determined on the basis of the
Participant's number of Years of Service according to the
following schedule:
<TABLE>
<CAPTION>
Vesting Schedule
Years of Service Percentage
<S> <C>
2 20 %
3 40 %
4 60 %
5 80 %
6 100 %
</TABLE>
(c) Notwithstanding the vesting schedule above, upon
the complete discontinuance of the Employer's contributions to
the Plan or upon any full or partial termination of the Plan,
all amounts credited to the account of any affected
Participant shall become 100% Vested and shall not thereafter
be subject to Forfeiture.
(d) The computation of a Participant's
nonforfeitable percentage of his interest in the Plan shall
not be reduced as the result of any direct or indirect
amendment to this Plan. For this purpose, the Plan shall be
treated as having been amended if the Plan provides for an
automatic change in vesting due to a change in top heavy
status. In the event that the Plan is amended to change or
modify any vesting schedule, a Participant with at least three
(3) Years of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage
computed under the Plan without regard to such amendment. If
a Participant fails to make such election, then such
Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption
date of the amendment and shall end 60 days after the latest
of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice
of the amendment from the Employer or Administrator.
(e)(1) If any Former Participant shall be reemployed
by the Employer before a 1-Year Break in Service occurs, he
shall continue to participate in the Plan in the same manner
as if such termination had not occurred.
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<PAGE> 58
(2) If any Former Participant shall be reemployed by
the Employer before five (5) consecutive 1-Year
Breaks in Service, and such Former Participant had
received, or was deemed to have received, a
distribution of his entire Vested interest prior to
his reemployment, his forfeited account shall be
reinstated only if he repays the full amount dis-
tributed to him before the earlier of five (5) years
after the first date on which the Participant is
subsequently reemployed by the Employer or the close
of the first period of five (5) consecutive 1-Year
Breaks in Service commencing after the distribution,
or in the event of a deemed distribution, upon the
reemployment of such Former Participant. If a
distribution occurs for any reason other than a
separation from service, the time for repayment may
not end earlier than five (5) years after the date of
distribution. In the event the Former Participant
does repay the full amount distributed to him, or in
the event of a deemed distribution, the undistributed
portion of the Participant's Account must be restored
in full, unadjusted by any gains or losses occurring
subsequent to the Anniversary Date or other valuation
date coinciding with or preceding his termination.
The source for such reinstatement shall first be any
Forfeitures occurring during the year. If such
source is insufficient, then the Employer shall
contribute an amount which is sufficient to restore
any such forfeited Accounts provided, however, that
if a discretionary contribution is made for such year
pursuant to Section 4.1(d), such contribution shall
first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with
Section 4.4.
(3) If any Former Participant is reemployed after a
1-Year Break in Service has occurred, Years of
Service shall include Years of Service prior to his
1-Year Break in Service subject to the following
rules:
(i) If a Former Participant has a 1-Year
Break in Service, his pre-break and
post-break service shall be used for
computing Years of Service for eligibility
and for vesting purposes only after he has
been employed for one (1) Year of Service
following the date of his reemployment with
the Employer;
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<PAGE> 59
(ii) Any Former Participant who under the
Plan does not have a nonforfeitable right to
any interest in the Plan resulting from
Employer contributions shall lose credits
otherwise allowable under (i) above if his
con- secutive 1-Year Breaks in Service equal
or exceed the greater of (A) five (5) or (B)
the aggregate number of his pre-break Years
of Service;
(iii) After five (5) consecutive 1-Year
Breaks in Service, a Former Participant's
Vested Account balance attributable to
pre-break service shall not be increased as a
result of post-break service;
(iv) If a Former Participant who has not had
his Years of Service before a 1-Year Break in
Service disregarded pursuant to (ii) above
completes one (1) Year of Service for
eligibility purposes following his
reemployment with the Employer, he shall
participate in the Plan retroactively from
his date of reemployment;
(v) If a Former Participant who has not had
his Years of Service before a 1-Year Break in
Service disregarded pursuant to (ii) above
completes a Year of Service (a 1-Year Break
in Service previously occurred, but
employment had not terminated), he shall
participate in the Plan retroactively from
the first day of the Plan Year during which
he completes one (1) Year of Service.
(f) In determining Years of Service for purposes of
vesting under the Plan, Years of Service prior to the vesting
computation period in which an Employee attained his
eighteenth birthday shall be excluded.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of
the Participant, shall direct the Trustee to distribute to a
Participant or his Beneficiary any amount to which he is
entitled under the Plan in one or more of the following
methods:
(1) One lump-sum payment in cash or in property;
(2) Payments over a period certain in monthly,
quarterly, semiannual, or annual cash
installments.
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<PAGE> 60
In order to provide such installment payments, the
Administrator may (A) segregate the aggregate amount
thereof in a separate, federally insured savings
account, certificate of deposit in a bank or savings
and loan association, money market certificate or
other liquid short-term security or (B) purchase a
nontransferable annuity contract for a term certain
(with no life contingencies) providing for such
payment. The period over which such payment is to be
made shall not extend beyond the Participant's life
expectancy (or the life expectancy of the Participant
and his designated Beneficiary).
(b) Any distribution to a Participant who has a
benefit which exceeds, or has ever exceeded, $3,500 at the
time of any prior distribution shall require such
Participant's consent if such distribution commences prior to
the later of his Normal Retirement Age or age with regard to
this required consent:
(1) The Participant must be informed of his right to
defer receipt of the distribution. If a participant
fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.
However, any election to defer the receipt of
benefits shall not apply with respect to
distributions which are required under Section
6.5(c).
(2) Notice of the rights specified under this
paragraph shall be provided no less than 30 days and
no more than 90 days before the first day on which
all events have occurred which entitle the
Participant to such benefit.
(3) Written consent of the Participant to the
distribution must not be made before the Participant
receives the notice and must not be made more than 90
days before the first day on which all events have
occurred which entitle the Participant to such
benefit.
(4) No consent shall be valid if a significant
detriment is imposed under the Plan on any
Participant who does not consent to the distribution.
(c) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits shall
be made in accordance with the following requirements and
shall otherwise comply with Code Section
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<PAGE> 61
401(a)(9) and the Regulations thereunder (including Regulation
1.401(a)(9)-2), the provisions of which are incorporated
herein by reference:
(1) A Participant's benefits shall be distributed to
him not later than April 1st of the calendar year
following the later of (i) the calendar year in which
the Participant attains age 70 1/2 or (ii) the
calendar year in which the Participant retires,
provided, however, that this clause (ii) shall not
apply in the case of a Participant who is a "five (5)
percent owner" at any time during the five (5) Plan
Year period ending in the calendar year in which he
attains age 70 1/2 or, in the case of a Participant
who becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer
apply and the required beginning date shall be the
April 1st of the calendar year following the calendar
year in which such subsequent Plan Year ends.
Alternatively, distributions to a Participant must
begin no later than the applicable April 1st as
determined under the preceding sentence and must be
made over a period certain measured by the life
expectancy of the Participant (or the life
expectancies of the Participant and his designated
Beneficiary) in accordance with Regulations.
Notwithstanding the foregoing, clause (ii) above
shall not apply to any Participant unless the
Participant had attained age 70 1/2 before January 1,
1988 and was not a "five (5) percent owner" at any
time during the Plan Year ending with or within the
calendar year in which the Participant attained age
66 1/2 or any subsequent Plan Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with
the incidental death benefit requirements of Code
Section 401(a)(9)(G) and the Regulations thereunder.
(d) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse may, at
the election of the Participant or the Participant's spouse,
be redetermined in accordance with Regulations. The election,
once made, shall be irrevocable. If no election is made by
the time distributions must commence, then the life expectancy
of the Participant and the Participant's spouse shall not be
subject to recalculation. Life expectancy and joint and last
survivor expectancy shall be computed using the return
multiples in Tables V and VI of Regulation 1.72-9.
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<PAGE> 62
(e) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of
any annuity Contract purchased and distributed to a
Participant or spouse shall comply with all of the
requirements of the Plan.
(f) If a distribution is made at a time when
a Participant is not fully Vested in his
Participant's Account and the Participant may
increase the Vested percentage in such account:
(1) a separate account shall be established for the
Participant's interest in the Plan as of the time of
the distribution; and
(2) at any relevant time, the Participant's Vested
portion of the separate account shall be equal to an
amount ("X") determined by the formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested
percentage at the relevant time, AB is the account
balance at the relevant time, D is the amount of
distribution, and R is the ratio of the account
balance at the relevant time to the account balance
after distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a)(1) The death benefit payable pursuant to Section
6.2 shall be paid to the Participant's Beneficiary within a
reasonable time after the Participant's death by either of the
following methods, as elected by the Participant (or if no
election has been made prior to the Participant's death, by
his Beneficiary) subject, however, to the rules specified in
Section 6.6(b):
(i) One lump-sum payment in cash or in
property;
(ii) Payment in monthly, quarterly,
semi-annual, or annual cash installments over
a period to be determined by the Participant
or his Beneficiary. After periodic
installments commence, the Beneficiary shall
have the right to direct the Trustee to
reduce the period over which such periodic
installments shall be made, and the Trustee
shall adjust the cash amount of such periodic
installments accordingly.
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<PAGE> 63
(2) In the event the death benefit payable pursuant
to Section 6.2 is payable in installments, then, upon
the death of the Participant, the Administrator may
direct the Trustee to segregate the death benefit
into a separate account, and the Trustee shall invest
such segregated account separately, and the funds
accumulated in such account shall be used for the
payment of the installments.
(b) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant shall
be made in accordance with the following requirements and
shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder. If it is determined pursuant to
Regulations that the distribution of a Participant's interest
has begun and the Participant dies before his entire interest
has been distributed to him, the remaining portion of such
interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 6.5 as of
his date of death. If a Participant dies before he has begun
to receive any distributions of his interest under the Plan or
before distributions are deemed to have begun pursuant to
Regulations, then his death benefit shall be distributed to
his Beneficiaries by December 31st of the calendar year in
which the fifth anniversary of his date of death occurs.
However, the 5-year distribution requirement of the
preceding paragraph shall not apply to any portion of the
deceased Participant's interest which is payable to or for the
benefit of a designated Beneficiary. In such event, such
portion may, at the election of the Participant (or the
Participant's designated Beneficiary), be distributed over a
period not extending beyond the life expectancy of such
designated Beneficiary provided such distribution begins not
later than December 31st of the calendar year immediately
following the calendar year in which the Participant died.
However, in the event the Participant's spouse (determined as
of the date of the Participant's death) is his Beneficiary,
the requirement that distributions commence within one year of
a Participant's death shall not apply. In lieu thereof,
distributions must commence on or before the later of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December
31st of the calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies before
distributions to such spouse begin, then the 5-year
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<PAGE> 64
distribution requirement of this Section shall apply as if the
spouse was the Participant.
(c) For purposes of Section 6.6(b), the election by
a designated Beneficiary to be excepted from the 5-year
distribution requirement must be made no later than December
31st of the calendar year following the calendar year of the
Participant's death. Except, however, with respect to a
designated Beneficiary who is the Participant's surviving
spouse, the election must be made by the earlier of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died or, if later, the
calendar year in which the Participant would have attained age
70 1/2; or (2) December 31st of the calendar year which
contains the fifth anniversary of the date of the
Participant's death. An election by a designated Beneficiary
must be in writing and shall be irrevocable as of the last day
of the election period stated herein. In the absence of an
election by the Participant or a designated Beneficiary, the
5-year distribution requirement shall apply.
(d) For purposes of this Section, the life
expectancy of a Participant and a Participant's spouse may, at
the election of the Participant or the Participant's spouse,
be redetermined in accordance with Regulations. The election,
once made, shall be irrevocable. If no election is made by
the time distributions must commence, then the life expectancy
of the Participant and the Participant's spouse shall not be
subject to recalculation. Life expectancy and joint and last
survivor expectancy shall be computed using the return
multiples in Tables V and VI of Regulation 1.72-9.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the
Trustee is to make a distribution or to commence a series of payments on or as
of an Anniversary Date, the distribution or series of payments may be made or
begun on such date or as soon thereafter as is practicable, but in no event
later than 180 days after the Anniversary Date. However, unless a Former
Participant elects in writing to defer the receipt of benefits (such election
may not result in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of the Plan
Year in which the latest of the following events occurs: (a) the date on which
the Participant attains the earlier of age 65 or the Normal Retirement Age
specified herein; (b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or (c) the date the Participant terminates
his service with the Employer.
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6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom
the Beneficiary maintains his residence, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors Act, if such
is permitted by the laws of the state in which said Beneficiary resides. Such
a payment to the legal guardian, custodian or parent of a minor Beneficiary
shall fully discharge the Trustee, Employer, and Plan from further liability on
account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at the later of
the Participant's attainment of age 62 or his Normal Retirement Age, remain
unpaid solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a
Forfeiture pursuant to the Plan. In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such benefit shall be
restored.
6.10 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the age of
60 years, the Administrator, at the election of the Participant, shall direct
the Trustee to distribute all or a portion of the amount then credited to the
accounts maintained on behalf of the Participant. However, no distribution
from the Participant's Account shall occur prior to 100% vesting. In the event
that the Administrator makes such a distribution, the Participant shall
continue to be eligible to participate in the Plan on the same basis as any
other Employee. Any distribution made pursuant to this Section shall be made
in a manner consistent with Section 6.5, including, but not limited to, all
notice and consent requirements of Code Section 411(a)(11) and the Regulations
thereunder.
Notwithstanding the above, pre-retirement distributions from a
Participant's Elective Account shall not be permitted prior to the Participant
attaining age 59 1/2 except as otherwise permitted under the terms of the Plan.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the
Participant, shall direct the Trustee to distribute to any
Participant in any one Plan Year up to the lesser of
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100% of his Participant's Elective Account valued as of the
last Anniversary Date or other valuation date or the amount
necessary to satisfy the immediate and heavy financial need of
the Participant. Any distribution made pursuant to this
Section shall be deemed to be made as of the first day of the
Plan Year or, if later, the valuation date immediately
preceding the date of distribution, and the Participant's
Elective Account shall be reduced accordingly. The
determination of whether an immediate and heavy financial need
exists shall be based on all relevant facts and circumstances.
A need shall not be disqualified because it was reasonably
foreseeable or voluntarily incurred. Withdrawal under this
Section shall be authorized if the distribution is on account
of:
(1) Medical expenses described in Code Section
213(d) incurred by the Participant, his spouse, or
any of his dependents (as defined in Code Section
152);
(2) The purchase (excluding mortgage payments) of a
principal residence for the Participant;
(3) Funeral expenses for a member of the
Participant's family;
(4) Payment of tuition for the next semester or
quarter of post-secondary education for the
Participant, his spouse, children, or dependents; or
(5) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the Participant's
principal residence.
(b) No distribution shall be made pursuant to this
Section unless the Administrator determines, based upon all
relevant facts and circumstances, that the amount to be
distributed is not in excess of the amount required to relieve
the financial need and that such need cannot be satisfied from
other resources reasonably available to the Participant. For
this purpose, the Participant's resources shall be deemed to
include those assets of his spouse and minor children that are
reasonably available to the Participant. A distribution may
be treated as necessary to satisfy a financial need if the
Administrator relies upon the Participant's representation
that the need cannot be relieved:
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(1) Through reimbursement or compensation by
insurance or otherwise;
(2) By reasonable liquidation of the Participant's
assets, to the extent such liquidation would not
itself cause an immediate and heavy financial need;
(3) By cessation of elective deferrals under the
Plan; or
(4) By other distributions or loans from the Plan or
any other qualified retirement plan, or by borrowing
from commercial sources on reasonable commercial
terms.
(c) Notwithstanding the above, distributions from
the Participant's Elective Account pursuant to this Section
shall be limited solely to the Participant's Deferred
Compensation.
(d) Any distribution made pursuant to this Section
shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code
Section 411(a)(11) and the Regulations thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections,
provided to a Participant in this Plan shall be subject to the rights afforded
to any "alternate payee" under a "qualified domestic relations order."
Furthermore, a distribution to an "alternate payee" shall be permitted if such
distribution is authorized by a "qualified domestic relations order," even if
the affected Participant has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee," "qualified
domestic relations order" and "earliest retirement age" shall have the meaning
set forth under Code Section 414(p).
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of
responsibilities:
(a) Consistent with the "funding policy and method"
determined by the Employer, to invest, manage, and control the
Plan assets subject, however, to the direction of an
Investment Manager if the Trustee should
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appoint such manager as to all or a portion of the assets of
the Plan;
(b) At the direction of the Administrator, to pay
benefits required under the Plan to be paid to Participants,
or, in the event of their death, to their Beneficiaries;
(c) To maintain records of receipts and
disbursements and furnish to the Employer and/or Administrator
for each Plan Year a written annual report per Section 7.7;
and
(d) If there shall be more than one Trustee, they
shall act by a majority of their number, but may authorize one
or more of them to sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust
Fund to keep the Trust Fund invested without distinction
between principal and income and in such securities or
property, real or personal, wherever situated, as the Trustee
shall deem advisable, including, but not limited to, stocks,
common or preferred, bonds and other evidences of indebtedness
or ownership, and real estate or any interest therein. The
Trustee shall at all times in making investments of the Trust
Fund consider, among other factors, the short and long-term
financial needs of the Plan on the basis of information
furnished by the Employer. In making such investments, the
Trustee shall not be restricted to securities or other
property of the character expressly authorized by the
applicable law for trust investments; however, the Trustee
shall give due regard to any limitations imposed by the Code
or the Act so that at all times the Plan may qualify as a
qualified Profit Sharing Plan and Trust.
(b) The Trustee may employ a bank or trust company
pursuant to the terms of its usual and customary bank agency
agreement, under which the duties of such bank or trust
company shall be of a custodial, clerical and record-keeping
nature.
(c) At the election of each Participant, the
Trustee, at the direction of the Administrator, shall apply
for, own, and pay premiums on Contracts on the lives of the
Participants. If a life insurance Policy is to be purchased
for a Participant, the aggregate premium for ordinary life
insurance for each Participant must be less than 50% of the
aggregate of the contributions and
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Forfeitures to the credit of the Participant at any particular
time. If term insurance is purchased with such contributions,
the aggregate premium must be less than 25% of the aggregate
contributions and Forfeitures allocated to a Participant's
Combined Account. If both term insurance and ordinary life
insurance are purchased with such contributions, the amount
expended for term insurance plus one-half (1/2) of the premium
for ordinary life insurance may not in the aggregate exceed
25% of the aggregate contributions and Forfeitures allocated
to a Participant's Combined Account. The Trustee must convert
the entire value of the life insurance Contracts at or before
retirement into cash or provide for a periodic income so that
no portion of such value may be used to continue life
insurance protection beyond retirement, or distribute the
Contracts to the Participant. In the event of any conflict
between the terms of this Plan and the terms of any insurance
Contract purchased hereunder, the Plan provisions shall
control.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other provisions of the
Plan, shall have the following powers and authorities, to be exercised in the
Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or
other property and to retain the same. In conjunction with
the purchase of securities, margin accounts may be opened and
maintained;
(b) To sell, exchange, convey, transfer, grant
options to purchase, or otherwise dispose of any securities or
other property held by the Trustee, by private contract or at
public auction. No person dealing with the Trustee shall be
bound to see to the application of the purchase money or to
inquire into the validity, expediency, or propriety of any
such sale or other disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of
attorney with or without power of substitution; to exercise
any conversion privileges, subscription rights or other
options, and to make any payments incidental thereto; to
oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting corporate
securities, and to delegate discretionary powers, and to pay
any assessments or charges in connection therewith; and
generally to
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exercise any of the powers of an owner with respect to stocks,
bonds, securities, or other property;
(d) To cause any securities or other property to be
registered in the Trustee's own name or in the name of one or
more of the Trustee's nominees, and to hold any investments in
bearer form, but the books and records of the Trustee shall at
all times show that all such investments are part of the Trust
Fund;
(e) To borrow or raise money for the purposes of the
Plan in such amount, and upon such terms and conditions, as
the Trustee shall deem advisable; and for any sum so borrowed,
to issue a promissory note as Trustee, and to secure the
repayment thereof by pledging all, or any part, of the Trust
Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any
borrowing;
(f) To keep such portion of the Trust Fund in cash
or cash balances as the Trustee may, from time to time, deem
to be in the best interests of the Plan, without liability for
interest thereon;
(g) To accept and retain for such time as the
Trustee may deem advisable any securities or other property
received or acquired as Trustee hereunder, whether or not such
securities or other property would normally be purchased as
investments hereunder;
(h) To make, execute, acknowledge, and deliver any
and all documents of transfer and conveyance and any and all
other instruments that may be necessary or appropriate to
carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration
any claims, debts, or damages due or owing to or from the Plan,
to commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;
(j) To employ suitable agents and counsel and to pay
their reasonable expenses and compensation, and such agent or
counsel may or may not be agent or counsel for the Employer;
(k) To apply for and procure from responsible
insurance companies, to be selected by the Administrator, as
an investment of the Trust Fund such annuity, or other
Contracts (on the life of any Participant) as the
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Administrator shall deem proper; to exercise, at any time or
from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect,
receive, and settle for the proceeds of all such annuity or
other Contracts as and when entitled to do so under the
provisions thereof;
(l) To invest funds of the Trust in time deposits or
savings accounts bearing a reasonable rate of interest in the
Trustee's bank;
(m) To invest in Treasury Bills and other forms of
United States government obligations;
(n) To sell, purchase and acquire put or call
options if the options are traded on and purchased through a
national securities exchange registered under the Securities
Exchange Act of 1934, as amended, or, if the options are not
traded on a national securities exchange, are guaranteed by a
member firm of the New York Stock Exchange;
(o) To deposit monies in federally insured savings
accounts or certificates of deposit in banks or savings and
loan associations;
(p) To pool all or any of the Trust Fund, from time
to time, with assets belonging to any other qualified employee
pension benefit trust created by the Employer or an affiliated
company of the Employer, and to commingle such assets and make
joint or common investments and carry joint accounts on behalf
of this Plan and such other trust or trusts, allocating undi-
vided shares or interests in such investments or accounts or
any pooled assets of the two or more trusts in accordance with
their respective interests;
(q) To do all such acts and exercise all such rights
and privileges, although not specifically mentioned herein, as
the Trustee may deem necessary to carry out the purposes of
the Plan.
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion,
make loans to Participants and Beneficiaries under the
following circumstances: (1) loans shall be made available to
all Participants and Beneficiaries on a reasonably equivalent
basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount
made available to other Participants and Beneficiaries; (3)
loans shall bear a
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reasonable rate of interest; (4) loans shall be adequately
secured; and (5) shall provide for repayment over a reasonable
period of time.
(b) Loans shall not be granted to any Participant or
his Beneficiary that provide for a repayment period extending
beyond such Participant's Normal Retirement Date.
(c) Loans made pursuant to this Section (when added
to the outstanding balance of all other loans made by the Plan
to the Participant) shall be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the
highest outstanding balance of loans from the Plan to
the Participant during the one year period ending on
the day before the date on which such loan is made,
over the outstanding balance of loans from the Plan
to the Participant on the date on which such loan was
made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant
under the Plan.
(d) Loans shall provide for level amortization with
payments to be made not less frequently than quarterly over a
period not to exceed five (5) years. However, loans used to
acquire any dwelling unit which, within a reasonable time, is
to be used (determined at the time the loan is made) as a
principal residence of the Participant shall provide for
periodic repayment over a reasonable period of time that may
exceed five (5) years.
(e) Any loans granted or renewed on or after the
last day of the first Plan Year beginning after December 31,
1988 shall be made pursuant to a Participant loan program.
Such loan program shall be established in writing and must
include, but need not be limited to, the following:
(1) the identity of the person or positions
authorized to administer the Participant loan
program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or
denied;
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(4) limitations, if any, on the types and amounts of
loans offered;
(5) the procedure under the program for determining
a reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the steps
that will be taken to preserve Plan assets.
Such Participant loan program shall be
contained in a separate written document which, when properly
executed, is hereby incorporated by reference and made a part
of the Plan. Furthermore, such Participant loan program may
be modified or amended in writing from time to time without
the necessity of amending this Section.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from
time to time, in accordance with the terms of the Plan, make payments out of
the Trust Fund. The Trustee shall not be responsible in any way for the
application of such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as
shall from time to time be agreed upon in writing by the Employer and the
Trustee. An individual serving as Trustee who already receives full-time pay
from the Employer shall not receive compensation from the Plan. In addition,
the Trustee shall be reimbursed for any reasonable expenses, including
reasonable counsel fees incurred by it as Trustee. Such compensation and
expenses shall be paid from the Trust Fund unless paid or advanced by the
Employer. All taxes of any kind and all kinds whatsoever that may be levied or
assessed under existing or future laws upon, or in respect of, the Trust Fund
or the income thereof, shall be paid from the Trust Fund.
7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer's contribution for each Plan Year,
the Trustee shall furnish to the Employer and Administrator a written statement
of account with respect to the Plan Year for which such contribution was made
setting forth:
(a) the net income, or loss, of the Trust Fund;
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(b) the gains, or losses, realized by the Trust Fund
upon sales or other disposition of the assets;
(c) the increase, or decrease, in the value of the
Trust Fund;
(d) all payments and distributions made from the
Trust Fund; and
(e) such further information as the Trustee and/or
Administrator deems appropriate. The Employer, forthwith upon
its receipt of each such statement of account, shall
acknowledge receipt thereof in writing and advise the Trustee
and/or Administrator of its approval or disapproval thereof.
Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof
shall be deemed an approval thereof. The approval by the
Employer of any statement of account shall be binding as to
all matters embraced therein as between the Employer and the
Trustee to the same extent as if the account of the Trustee
had been settled by judgment or decree in an action for a
judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were
parties; provided, however, that nothing herein contained
shall deprive the Trustee of its right to have its accounts
judicially settled if the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for any
Plan Year, the Administrator shall direct the Trustee to
engage on behalf of all Participants an independent qualified
public accountant for that purpose. Such accountant shall,
after an audit of the books and records of the Plan in
accordance with generally accepted auditing standards, within
a reasonable period after the close of the Plan Year, furnish
to the Administrator and the Trustee a report of his audit
setting forth his opinion as to whether any statements,
schedules or lists that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report,
are presented fairly in conformity with generally accepted
accounting principles applied consistently. All auditing and
accounting fees shall be an expense of and may, at the
election of the Administrator, be paid from the Trust Fund.
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(b) If some or all of the information necessary to
enable the Administrator to comply with Act Section 103 is
maintained by a bank, insurance company, or similar
institution, regulated and supervised and subject to periodic
examination by a state or federal agency, it shall transmit
and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one
hundred twenty (120) days after the end of the Plan Year or by
such other date as may be prescribed under regulations of the
Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering
to the Employer, at least thirty (30) days before its
effective date, a written notice of his resignation.
(b) The Employer may remove the Trustee by mailing
by registered or certified mail, addressed to such Trustee at
his last known address, at least thirty (30) days before its
effective date, a written notice of his removal.
(c) Upon the death, resignation, incapacity, or
removal of any Trustee, a successor may be appointed by the
Employer; and such successor, upon accepting such appointment
in writing and delivering same to the Employer, shall, without
further act, become vested with all the estate, rights,
powers, discretion, and duties of his predecessor with like
respect as if he were originally named as a Trustee herein.
Until such a successor is appointed, the remaining Trustee or
Trustees shall have full authority to act under the terms of
the Plan.
(d) The Employer may designate one or more
successors prior to the death, resignation, incapacity, or
removal of a Trustee. In the event a successor is so
designated by the Employer and accepts such designation, the
successor shall, without further act, become vested with all
the estate, rights, powers, discretion, and duties of his
predecessor with the like effect as if he were originally
named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve
as such, he shall furnish to the Employer and Administrator a
written statement of account with respect to the portion of
the Plan Year during which he served as Trustee. This
statement shall be either (i) included as
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part of the annual statement of account for the Plan Year
required under Section 7.7 or (ii) set forth in a special
statement. Any such special statement of account should be
rendered to the Employer no later than the due date of the
annual statement of account for the Plan Year. The procedures
set forth in Section 7.7 for the approval by the Employer of
annual statements of account shall apply to any special
statement of account rendered hereunder and approval by the
Employer of any such special statement in the manner provided
in Section 7.7 shall have the same effect upon the statement
as the Employer's approval of an annual statement of account.
No successor to the Trustee shall have any duty or
responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account
required by Section 7.7 and this subparagraph.
7.10 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold qualifying
Employer securities" and "qualifying Employer real property," as those terms
are defined in the Act, provided, however, that the Trustee shall not be
permitted to acquire any qualifying Employer securities or qualifying Employer
real property if, immediately after the acquisition of such securities or
property, the fair market value of all qualifying Employer securities and
qualifying Employer real property held by the Trustee hereunder should amount
to more than 100% of the fair market value of all the assets in the Trust Fund.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to
amend the Plan, subject to the limitations of this Section.
However, any amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may only be
made with the Trustee's and Administrator's written consent.
Any such amendment shall become effective as provided therein
upon its execution. The Trustee shall not be required to
execute any such amendment unless the Trust provisions
contained herein are a part of the Plan and the amendment
affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if
it authorizes or permits any part of the Trust Fund (other
than such part as is required to pay taxes and administration
expenses) to be used for or diverted to any purpose other than
for the exclusive benefit of the
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Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any
Participant; or causes or permits any portion of the Trust
Fund to revert to or become property of the Employer.
(c) Except as permitted by Regulations, no Plan
amendment or transaction having the effect of a Plan amendment
(such as a merger, plan transfer or similar transaction) shall
be effective if it eliminates or reduces any "Section
411(d)(6) protected benefit" or adds or modifies conditions
relating to "Section 411(d)(6) protected benefits" the result
of which is a further restriction on such benefit unless such
protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date effective date of
the amendment. "Section 411(d)(6) protected benefits" are
benefits described in Code Section 411(d)(6)(A), early
retirement benefits and retirement-type subsidies, and
optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon any
full or partial termination, all amounts credited to the
affected Participants' Combined Accounts shall become 100%
Vested as provided in Section 6.4 and shall not thereafter be
subject to forfeiture, and all unallocated amounts shall be
allocated to the accounts of all Participants in accordance
with the provisions hereof.
(b) Upon the full termination of the Plan, the
Employer shall direct the distribution of the assets of the
Trust Fund to Participants in a manner which is consistent
with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash or in
property or through the purchase of irrevocable
nontransferable deferred commitments from an insurer. Except
as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its
assets and/or liabilities may be transferred to any other plan and trust only
if the benefits which would be received by a Participant of this Plan, in the
event of a termination of the plan immediately after such transfer, merger or
consolidation, are at
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least equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation, and such
transfer, merger or consolidation does not otherwise result in the elimination
or reduction of any "Section 411(d)(6) protected benefits" in accordance with
Section 8.1(c).
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between
the Employer and any Participant or to be a consideration or an inducement for
the employment of any Participant or Employee. Nothing contained in this Plan
shall be deemed to give any Participant or Employee the right to be retained in
the service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect
which such discharge shall have upon him as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no
benefit which shall be payable out of the Trust Fund to any
person (including a Participant or his Beneficiary) shall be
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any
attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be void; and no
such benefit shall in any manner be liable for, or subject to,
the debts, contracts, liabilities, engagements, or torts of
any such person, nor shall it be subject to attachment or
legal process for or against such person, and the same shall
not be recognized by the Trustee, except to such extent as may
be required by law.
(b) This provision shall not apply to the extent a
Participant or Beneficiary is indebted to the Plan, as a
result of a loan from the Plan. At the time a distribution is
to be made to or for a Participant's or Beneficiary's benefit,
such proportion of the amount distributed as shall equal such
loan indebtedness shall be paid by the Trustee to the Trustee
or the Administrator, at the direction of the Administrator,
to apply against or discharge such loan indebtedness. Prior
to making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such
loan indebtedness is to be so paid in whole or part from his
Participant's Combined Account. If the Participant or
Beneficiary does not
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agree that the loan indebtedness is a valid claim against his
Vested Participant's Combined Account, he shall be entitled to
a review of the validity of the claim in accordance with
procedures provided in Sections 2.12 and 2.13.
(c) This provision shall not apply to a "qualified
domestic relations order" defined in Code Section 414(p), and
those other domestic relations orders permitted to be so
treated by the Administrator under the provisions of the
Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified
status of domestic relations orders and to administer
distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order",
a former spouse of a Participant shall be treated as the
spouse or surviving spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according
to the Act and the laws of the State of New Jersey, other than its laws
respecting choice of law, to the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine
or neuter gender, they shall be construed as though they were also used in
another gender in all cases where they would so apply, and whenever any words
are used herein in the singular or plural form, they shall be construed as
though they were also used in the other form in all cases where they would so
apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which the Trustee or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee or Administrator, they shall be entitled to be
reimbursed from the Trust Fund for any and all costs, attorney's fees, and
other expenses pertaining thereto incurred by them for which they shall have
become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible by
operation of the Plan or of the Trust, by termination of
either, by power of revocation or amendment, by the happening
of any contingency, by collateral arrangement
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or by any other means, for any part of the corpus or income of
any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes
other than the exclusive benefit of Participants, Retired
Participants, or their Beneficiaries.
(b) In the event the Employer shall make an
excessive contribution under a mistake of fact pursuant to Act
Section 403(c)(2)(A), the Employer may demand repayment of
such excessive contribution at any time within one (1) year
following the time of payment and the Trustees shall return
such amount to the Employer within the one (1) year period.
Earnings of the Plan attributable to the excess contributions
may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded in an amount
not less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Act Section 412(a)(2)), and the bond shall be
in a form approved by the Secretary of Labor. Notwithstanding anything in the
Plan to the contrary, the cost of such bonds shall be an expense of and may, at
the election of the Administrator, be paid from the Trust Fund or by the
Employer.
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors,
shall be responsible for the validity of any Contract issued hereunder or for
the failure on the part of the insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have
any responsibility for the validity of this Plan or for the
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tax or legal aspects of this Plan. The insurer shall be protected and held
harmless in acting in accordance with any written direction of the Trustee, and
shall have no duty to see to the application of any funds paid to the Trustee,
nor be required to question any actions directed by the Trustee. Regardless of
any provision of this Plan, the insurer shall not be required to take or permit
any action or allow any benefit or privilege contrary to the terms of any
Contract which it issues hereunder, or the rules of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such Participant or
Beneficiary in accordance with the provisions of the Plan, shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the Trustee
and the Employer, either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a condition precedent to
such payment, to execute a receipt and release thereof in such form as shall be
determined by the Trustee or Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted
or required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2)
the Administrator and (3) the Trustee. The named Fiduciaries shall have only
those specific powers, duties, responsibilities, and obligations as are
specifically given them under the Plan. In general, the Employer shall have
the sole responsibility for making the contributions provided for under Section
4.1; and shall have the sole authority to appoint and remove the Trustee and
the Administrator; to formulate the Plan's "funding policy and method"; and to
amend or terminate, in whole or in part, the Plan. The Administrator shall
have the sole responsibility for the administration of the Plan, which
responsibility is specifically described in the Plan. The Trustee shall have
the sole responsibility of management of the assets held under the Trust,
except those assets, the management of which has been assigned to an Investment
Manager, who shall be solely responsible for the management of the assets
assigned to it, all as specifically provided in the Plan. Each named Fiduciary
warrants that any directions given, information furnished, or action taken by
it shall be in accordance with the provisions of the Plan, authorizing or
providing for such direction, information or action. Furthermore, each named
Fiduciary may rely upon any such direction,
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information or action of another named Fiduciary as being proper under the
Plan, and is not required under the Plan to inquire into the propriety of any
such direction, information or action. It is intended under the Plan that each
named Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under the Plan. No named Fiduciary
shall guarantee the Trust Fund in any manner against investment loss or
depreciation in asset value. Any person or group may serve in more than one
Fiduciary capacity. In the furtherance of their responsibilities hereunder,
the "named Fiduciaries" shall be empowered to interpret the Plan and Trust and
to resolve ambiguities, inconsistencies and omissions, which findings shall be
binding, final and conclusive.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted
for convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan
receives an adverse determination with respect to its initial
qualification, then the Plan may return such contributions to
the Employer within one year after such determination,
provided the application for the determination is made by the
time prescribed by law for filing the Employer's return for
the taxable year in which the Plan was adopted, or such later
date as the Secretary of the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary,
except Sections 3.6, 3.7, and 4.1(f), any contribution by the
Employer to the Trust Fund is conditioned upon the
deductibility of the contribution by the Employer under the
Code and, to the extent any such deduction is disallowed, the
Employer may, within one (1) year following the disallowance
of the deduction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution
within one (1) year following the disallowance. Earnings of
the Plan attributable to the excess contribution may not be
returned to the Employer, but any losses attributable thereto
must reduce the amount so returned.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied
in a uniform, nondiscriminatory manner. In the event of
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any conflict between the terms of this Plan and any Contract purchased
hereunder, the Plan provisions shall control.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the
consent of the Employer and Trustee, any other corporation or entity, whether
an affiliate or subsidiary or not, may adopt this Plan and all of the
provisions hereof, and participate herein and be known as a Participating
Employer, by a properly executed document evidencing said intent and will of
such Participating Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be
required to use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to,
commingle, hold and invest as one Trust Fund all contributions
made by Participating Employers, as well as all increments
thereof. However, the assets of the Plan shall, on an ongoing
basis, be available to pay benefits to all Participants and
Beneficiaries under the Plan without regard to the Employer or
Participating Employer who contributed such assets.
(c) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an Employee
of the Employer or a Participating Employer, shall not affect
such Participant's rights under the Plan, and all amounts
credited to such Participant's Combined Account as well as his
accumulated service time with the transferor or predecessor,
and his length of participation in the Plan, shall continue to
his credit.
(d) All rights and values forfeited by termination
of employment shall inure only to the benefit of the
Participants of the Employer or Participating Employer by
which the forfeiting Participant was employed, except if the
Forfeiture is for an Employee whose Employer is an Affiliated
Employer, then said Forfeiture shall inure to the benefit of
the Participants of those Employers who are Affiliated
Employers. Should an Employee of one ("First") Employer be
transferred to an associated ("Second") Employer which is an
Affiliated Employer, such transfer shall not cause his account
balance (generated while an Employee of "First" Employer) in
any manner, or
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by any amount to be forfeited. Such Employee's Participant
Combined Account balance for all purposes of the Plan,
including length of service, shall be considered as though he
had always been employed by the "Second" Employer and as such
had received contributions, forfeitures, earnings or losses,
and appreciation or depreciation in value of assets totaling
amount so transferred.
(e) Any expenses of the Trust which are to be paid
by the Employer or borne by the Trust Fund shall be paid by
each Participating Employer in the same proportion that the
total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the
credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of
this Plan; provided, however, that with respect to all of its relations with
the Trustee and Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer as its
agent. Unless the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer as related to
its adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution subject to allocation during each Plan Year
shall be allocated only among those Participants of the Employer or
Participating Employer making the contribution, except if the contribution is
made by an Affiliated Employer, in which event such contribution shall be
allocated among all Participants of all Participating Employers who are
Affiliated Employers in accordance with the provisions of this Plan. On the
basis of the information furnished by the Administrator, the Trustee shall keep
separate books and records concerning the affairs of each Participating
Employer hereunder and as to the accounts and credits of the Employees of each
Participating Employer. The Trustee may,
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but need not, register Contracts so as to evidence that a particular
Participating Employer is the interested Employer hereunder, but in the event
of an Employee transfer from one Participating Employer to another, the
employing Employer shall immediately notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there
shall be a Participating Employer hereunder shall only be by the written action
of each and every Participating Employer and with the consent of the Trustee
where such consent is necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue
or revoke its participation in the Plan. At the time of any such
discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed shall be delivered to the Trustee. The Trustee
shall thereafter transfer, deliver and assign Contracts and other Trust Fund
assets allocable to the Participants of such Participating Employer to such new
Trustee as shall have been designated by such Participating Employer, in the
event that it has established a separate pension plan for its Employees
provided, however, that no such transfer shall be made if the result is the
elimination or reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c). If no successor is designated, the Trustee
shall retain such assets for the Employees of said Participating Employer
pursuant to the provisions of Article VII hereof. In no such event shall any
part of the corpus or income of the Trust as it relates to such Participating
Employer be used for or diverted for purposes other than for the exclusive
benefit of the Employees of such Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all
necessary rules or regulations, binding upon all Participating Employers and
all Participants, to effectuate the purpose of this Article.
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AMENDMENT NUMBER ONE TO
THE COMMUNITY NATIONAL BANK
401(K) PLAN
BY THIS AGREEMENT The Community National Bank 401(k) Plan (herein
called the "Plan") is hereby amended as follows, effective as of January 1,
1994:
1. Article IV is amended by the addition of the following new
Section:
DIRECTED INVESTMENT ACCOUNT
(a) The Administrator, in his sole discretion, may
determine that all Participants be permitted to direct the
Trustee as to the investment of all or a portion of the Vested
interest in any one or more of their individual account
balances. If such authorization is given, Participants may,
subject to a procedure established by the Administrator and
applied in a uniform nondiscriminatory manner, direct the
Trustee in writing to invest the Vested portion of their
account in specific assets, specific funds or other
investments permitted under the Plan and the directed
investment procedure. That portion of the Vested account of
any Participant so directing will thereupon be considered a
Directed Investment Account, which shall not share in Trust
Fund earnings.
(b) A separate Directed Investment Account shall be
established for each Participant who has directed an
investment. Transfers between the Participant's regular
account and his Directed Investment Account shall be charged
and credited as the case may be to each account. The Directed
Investment Account shall not share in Trust Fund earnings, but
it shall be charged or credited as appropriate with the net
earnings, gains, losses and expenses as well as any
appreciation or depreciation in market value during each Plan
Year attributable to such account.
2. Section 7.3 is amended by the addition of the following new
subsection:
(r) Directed Investment Account. The powers granted
to the Trustee shall be
<PAGE> 87
exercised in the sole fiduciary discretion of the Trustee.
However, if Participants are so empowered by the
Administrator, each Participant may direct the Trustee to
separate and keep separate all or a portion of his Vested
account; and further each Participant is authorized and
empowered, in his sole and absolute discretion, to give
directions to the Trustee pursuant to the procedure
established by the Administrator and in such form as the
Trustee may require concerning the investment of the
Participant's Directed Investment Account. The Trustee shall
comply as promptly as practicable with directions given by the
Participant hereunder. The Trustee may refuse to comply with
any direction from the Participant in the event the Trustee,
in its sole and absolute discretion, deems such directions
improper by virtue of applicable law. The Trustee shall not
be responsible or liable for any loss or expense which may
result from the Trustee's refusal or failure to comply with
any directions from the Participant. Any costs and expenses
related to compliance with the Participant's directions shall
be borne by the Participant's Directed Investment Account.
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AMENDMENT NUMBER TWO TO
THE COMMUNITY NATIONAL BANK
401(K) PLAN
BY THIS AGREEMENT, The Community National Bank 401(k) Plan (herein
referred to as the "Plan") is hereby amended as follows, effective as of
January 1, 1996, except as otherwise provided:
1. Article 4 is amended by the addition of the following Section:
TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts
may be transferred from other qualified plans by Employees,
provided that the trust from which such funds are transferred
permits the transfer to be made and the transfer will not
jeopardize the tax exempt status of the Plan or Trust or
create adverse tax consequences for the Employer. The amounts
transferred shall be set up in a separate account herein
referred to as a "Participant's Rollover Account." Such
account shall be fully Vested at all times and shall not be
subject to Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account
shall be held by the Trustee pursuant to the provisions of
this Plan and may not be withdrawn by, or distributed to the
Participant, in whole or in part, except as provided in
paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including
Regulation 1.411(d)-4), amounts attributable to elective
contributions (as defined in Regulation 1.401(k)-1(g)(3)),
including amounts treated as elective contributions, which are
transferred from another qualified plan in a plan-to-plan
transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d).
(d) At Normal Retirement Date, or such other date
when the Participant or his Beneficiary shall be entitled to
receive benefits, the fair market value of the Participant's
Rollover Account shall be used to provide additional benefits
to the Participant or his Beneficiary. Any
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distributions of amounts held in a Participant's Rollover
Account shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code
Section 411(a)(11) and the Regulations thereunder.
Furthermore, such amounts shall be considered as part of a
Participant's benefit in determining whether an involuntary
cash-out of benefits without Participant consent may be made.
(e) The Administrator may direct that employee
transfers made after a valuation date be segregated into a
separate account for each Participant in a federally insured
savings account, certificate of deposit in a bank or savings
and loan association, money market certificate, or other short
term debt security acceptable to the Trustee until such time
as the allocations pursuant to this Plan have been made, at
which time they may remain segregated or be invested as part
of the general Trust Fund, to be determined by the
Administrator.
(f) For purposes of this Section, the term
"qualified plan" shall mean any tax qualified plan under Code
Section 401(a). The term "amounts transferred from other
qualified plans" shall mean: (i) amounts transferred to this
Plan directly from another qualified plan; (ii) distributions
from another qualified plan which are eligible rollover
distributions and which are either transferred by the Employee
to this Plan within sixty (60) days following his receipt
thereof or are transferred pursuant to a direct rollover;
(iii) amounts transferred to this Plan from a conduit
individual retirement account provided that the conduit indi-
vidual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by
another qualified plan as a lump-sum distribution (B) were
eligible for tax-free rollover to a qualified plan and (C)
were deposited in such conduit individual retirement account
within sixty (60) days of receipt thereof and other than
earnings on said assets; and (iv) amounts distributed to the
Employee from a conduit individual
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retirement account meeting the requirements of clause (iii)
above, and transferred by the Employee to this Plan within
sixty (60) days of his receipt thereof from such conduit
individual retirement account.
(g) Prior to accepting any transfers to which this
Section applies, the Administrator may require the Employee to
establish that the amounts to be transferred to this Plan meet
the requirements of this Section and may also require the
Employee to provide an opinion of counsel satisfactory to the
Employer that the amounts to be transferred meet the
requirements of this Section.
(h) Notwithstanding anything herein to the contrary,
a transfer directly to this Plan from another qualified plan
(or a transaction having the effect of such a transfer) shall
only be permitted if it will not result in the elimination or
reduction of any "Section 411(d)(6) protected benefit" as
described in Section 8.1.
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<PAGE> 1
Exhibit 23.1
The Board of Directors
of Community Financial Holding Corporation:
We consent to incorporation by reference in the registration statement
on Form S-8 of Community Financial Holding Corporation (the Corporation) of our
report dated February 29, 1996, relating to the consolidated balance sheets of
the Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the years in the three- year period ended December 31, 1995, which report
appears in the December 31, 1995 annual report on Form 10-K of the Corporation.
KPMG PEAT MARWICK, L.L.P.
/s/ KPMG Peat Marwick, L.L.P.
Philadelphia, PA
August 30, 1996
