<PAGE>
As filed with the Securities and Exchange Commission
on August 18, 1998
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________
TRO LEARNING, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3660532
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1721 Moon Lake Boulevard, Suite 555
Hoffman Estates, Illinois 60194
(847) 781-7800
(Address, including ZIP code, and telephone number, including area code,
of registrant's principal executive offices)
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
(Full title of plan)
ANDREW N. PETERSON
SENIOR VICE PRESIDENT,
CHIEF FINANCIAL OFFICER
AND TREASURER
1721 MOON LAKE BOULEVARD
SUITE 555
HOFFMAN ESTATES, ILLINOIS 60194
(847) 781-7800
(Name, address, including ZIP code, and
telephone number, including area code,
of agent for service)
COPY TO:
LELAND E. HUTCHINSON, ESQ.
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60601
(312) 558-7336
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered (1) registered (1) price per share (2) offering price (1) registration fee
<S> <C> <C> <C> <C>
Common Stock, 200,000 shs. $9.50 $1,900,000.00 $560.50
par value
$.01 per share
==========================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(2) Calculated pursuant to Rule 457(h) of the Securities Act of 1933, as
amended, based upon the average of the bid and ask price of the Common
Stock of TRO Learning, Inc. on the Nasdaq National Market on August 14,
1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Securities and
Exchange Commission (the "Commission") by TRO Learning, Inc. (the "Company")
and by the TRO Learning, Inc. 401(K) Plan (the "Plan") are incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K as filed with the
Commission (file number 000-20842) on January 15, 1998 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), containing audited
financial statements for the Company's latest fiscal year.
(b) The Plan's Annual Report on Form 11-K as filed with the
Commission (file number 000-20842) on under the Exchange Act, containing
audited financial statements for the Plan's latest fiscal year.
(c) All other reports filed by the Company with the Commission
(file number 000-20842) pursuant to Section 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year covered by the Annual Report on Form
10-K referenced above.
(d) The description of the Company's Common Stock, par value $.01
per share (the "Common Stock"), which is contained in the registration
statement on Form 8-A (file number 0-20842) filed with the Commission on
November 12, 1992 under the Exchange Act, including any subsequent amendment
or any report filed for the purpose of updating such description.
All documents filed by the Company and the Plan pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after 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 are deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the respective dates of filing of such documents (such documents,
and the documents enumerated above, being hereinafter referred to as
"Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed
to be modified or superseded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other subsequently
filed Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
II-1
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated under the laws of the State of
Delaware. Section 145 of the Delaware Law ("Section 145") provides that a
Delaware corporation may indemnify any persons who are, or are threatened to
be made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person was an officer, director, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action or
proceeding, if he acted in good faith and in a manner he reasonably believed
to be in or not appeared to the best interests of the corporation, and, with
respect to any criminal action, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify any persons who
are, or are threatened to be made, a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of
the fact that such person was a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include defense or
settlement of such action or suit, provided such person acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests except that no indemnification is permitted
without judicial approval if the officer or director is adjudged to be liable
to the corporation. Where an officer or director is successful on the merits
or otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses which such officer or director has
actually and reasonably incurred.
The Company's Bylaws provide for the indemnification of directors
and officers of the Company to the fullest extent permitted by Delaware law.
The Company has entered into indemnification agreements with its directors
and executive officers which provide indemnification to the full extent
permitted by the Company's By-Laws. Such agreements also provide for the
advancement to indemnified persons of litigation costs and expenses.
The Company's Certificate of Incorporation provides that to the
fullest extent permitted by the Delaware Law, a director of the Company shall
not be liable to the Company or its stockholders for a breach of fiduciary
duty as a director.
II-2
<PAGE>
The Company maintains directors' and officers' liability insurance
which insures the directors and officers of the Company and its subsidiaries
against damages, judgments, settlements and costs incurred by reason of
certain acts committed by such persons in their capacities as officers and
directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
4.01 Restated Certificate of Incorporation of the Company filed as Exhibit
3.01 to the Company's registration statement on Form S-1 (file number
33-54296) (the "Registration Statement") and hereby incorporated by
reference).
4.02 By-laws of the Company (filed as Exhibit 3.02 to the Registration
Statement and hereby incorporated by reference).
4.03 Specimen Common Stock Certificate of the Company (filed as Exhibit
4.02 to the Registration Statement and hereby incorporated by
reference).
*4.04 TRO Learning, Inc. Savings/Retirement Plan.
*5.01 Undertaking re: Submission of Plan.
*23.01 Consent of PricewaterhouseCoopers LLP
*23.02 Consent of Arthur Andersen LLP
24.01 Powers of Attorney (included on signature page).
</TABLE>
_____________________
* Filed herewith.
II-3
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The 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 Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this
Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
PROVIDED, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-8 and 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 this Registration Statement.
(2) That, for purposes of determining any liability under the
Securities 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.
(b) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing
II-4
<PAGE>
provisions, or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or
controlling person of the Company 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 Company 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Hoffman Estates, State of Illinois, on August
18, 1998.
TRO LEARNING, INC.
By: /s/ William R. Roach
------------------------------
William R. Roach
POWER OF ATTORNEY
The undersigned directors and executive officers of TRO Learning,
Inc. do hereby constitute and appoint Andrew N. Peterson and Mary Jo Murphy,
and each of them, with full power of substitution, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our name
and behalf in our capacities as directors and officers, and to execute any
and all instruments for us and in our names in the capacities indicated below
which such person may deem necessary or advisable to enable TRO Learning,
Inc. to comply with the Securities Act of 1933, as amended (the "Securities
Act"), and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement,
including specifically, but not limited to, power and authority to sign for
us, or any of us, in the capacities indicated below, any and all amendments
(including pre-effective and post-effective amendments) hereto; and we do
hereby ratify and confirm all that such person or persons shall do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on August 18, 1998.
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SIGNATURE TITLE
/s/ William R. Roach Chairman of the Board, President,
- ------------------------------ Chief Executive Officer and
William R. Roach Director (Principal Executive Officer)
/s/ Andrew N. Peterson Senior Vice President, Chief
- ------------------------------ Financial Officer, Treasurer and
Andrew Peterson Secretary (Principal Financial
Officer and Chief Accounting Officer)
/s/ Jack R. Borsting Director
- ------------------------------
Jack R. Borsting
/s/ Tony Christianson Director
- ------------------------------
Tony J. Christianson
/s/ Vernon B. Lewis, Jr. Director
- ------------------------------
Vernon B. Lewis
/s/ John L. Krakauer Director
- ------------------------------
John L. Krakauer
/s/ John Patience Director
- ------------------------------
John Patience
</TABLE>
II-6
<PAGE>
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the Plan administrator has duly caused this Registration Statement
to be signed on its behalf by the undersigned hereunto duly authorized in the
City of Hoffman Estates, State of Illinois on August 18, 1998.
TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
By: /s/ William R. Roach
------------------------------
Name: William R. Roach
Its: Trustee
II-7
<PAGE>
INDEX TO EXHIBITS TO REGISTRATION STATEMENT ON FORM S-8
<TABLE>
<CAPTION>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
4.01 Restated Certificate of Incorporation of the Company filed as
Exhibit 3.01 to the Company's registration statement on Form S-1
(file number 33-54296) (the "Registration Statement") and hereby
incorporated by reference).
4.02 By-laws of the Company (filed as Exhibit 3.02 to the Registration
Statement and hereby incorporated by reference).
4.03 Specimen Common Stock Certificate of the Company (filed as
Exhibit 4.02 to the Registration Statement and hereby
incorporated by reference).
*4.04 TRO Learning, Inc. Savings/Retirement Plan.
*5.01 Undertaking re: Submission of Plan.
*23.01 Consent of PricewaterhouseCoopers LLP
*23.02 Consent of Arthur Andersen LLP
24.01 Powers of Attorney (included on signature page).
</TABLE>
_____________________
* Filed herewith.
<PAGE>
EXHIBIT 4.04
FORM OF TRO LEARNING, INC.
SAVINGS/RETIREMENT PLAN
<PAGE>
Plan #002
401(k) PLAN SCUDDER [LOGO]
ADOPTION AGREEMENT
The undersigned (the "Employer") establishes or amends the (Sponsor
automatically inserts employer's name) 401(k) Plan, by completing this
Adoption Agreement adopting or amending the plan in the form of the Prototype
401(k) Plan attached.
I. ELIGIBILITY
A. To become a Participant who is eligible to make a salary reduction election
and/or to receive allocations of Deferred Cash Contributions, AN EMPLOYEE
NEED NOT COMPLETE ANY PERIOD OF SERVICE
/X/ or, if this box is checked, AN EMPLOYEE MUST COMPLETE 1/4 YEAR OF
SERVICE, (insert no more than "1").
B. An Employee who meets the above requirements for eligibility to make a
salary reduction election and/or to receive allocations of Deferred Cash
Contributions shall become such an eligible Participant ON THE FIRST DAY
THE REQUIREMENTS ARE MET
/X/ or, if this box is checked, ON THE FIRST DAY OF THE NEXT MONTH
/ / or, if this box is checked, ON THE FIRST DAY OF THE NEXT PAY PERIOD
/ / or, if this box is checked, ON THE FIRST DAY OF THE NEXT QUARTER OF
THE PLAN YEAR.
C. To become a Participant who is eligible to receive allocations of Employer
Matching Contributions and/or Employer Profit Sharing Contributions, AN
EMPLOYEE MUST COMPLETE 1 YEAR OF SERVICE
/X/ or, if this box is checked, AN EMPLOYEE MUST COMPLETE 1/4 YEAR(S) OF
SERVICE, (insert "2" or less; select more than 1 only if the Employer
selects full and immediate vesting in Section V.A. and B. below; insert
"0" for no waiting period).
D. An Employee who meets the above requirements for eligibility to receive
allocations of Employer Matching Contributions and/or Employer Profit
Sharing Contributions shall become such an eligible Participant ON THE FIRST
DAY THE REQUIREMENTS ARE MET
/X/ or, if this box is checked, ON THE FIRST DAY OF THE NEXT MONTH
/ / or, if this box is checked, ON THE FIRST DAY OF THE NEXT PAY PERIOD
/ / or, if this box is checked, ON THE FIRST DAY OF THE NEXT QUARTER OF
THE PLAN YEAR.
E. The number of Hours of Service required to have a Year of Service is 1000
/ / or, if this box is checked, _____ (insert less than "1000"). However,
if the Year(s) of Service selected in Section I.A. or I.C. above is or
includes a fractional year, an Employee is not required to complete any
specified number of Hours of Service to receive eligibility credit for
such fractional year.
F. For purposes of calculating periods of Service, the Employer shall calculate
periods of Service based on an actual count of the Hours of Service an
Employee performs
/ / or, if this box is checked, AN EMPLOYEE SHALL BE CREDITED WITH 45
HOURS OF SERVICE FOR EACH WEEK DURING WHICH THE EMPLOYEE PERFORMS AN
ACTUAL HOUR OF SERVICE.
G. Before an Employee may become a Participant, THE EMPLOYEE NEED NOT ATTAIN
ANY MINIMUM AGE
/ / or, if this box is checked, AN EMPLOYEE MUST BE AT LEAST _____ (insert
"21" or less) YEARS OF AGE.
H. For purposes of determining the Employees that are entitled to become
Participants and which organizations and/or entities constitute the
Employer, "EMPLOYER" SHALL INCLUDE ALL ORGANIZATIONS AND ENTITIES
AGGREGATED WITH THE ADOPTING ORGANIZATIONS OR ENTITY PURSUANT TO THE
PROVISIONS OF CODE SECTION 414
1
<PAGE>
/ / or, if this box is checked, "EMPLOYER" SHALL INCLUDE THE ADOPTING
ORGANIZATION OR ENTITY AND THE FOLLOWING ADDITIONAL ORGANIZATIONS OR
ENTITIES:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
1. All Employees are entitled to be PARTICIPANTS EXCEPT (one or more may be
selected):
/X/ NON-RESIDENT ALIENS WHO RECEIVE NO EARNED INCOME FROM THE EMPLOYER
WHICH CONSTITUTES INCOME FROM SOURCES WITHIN THE UNITED STATES;
/ / INDIVIDUALS COVERED BY A COLLECTIVE BARGAINING CONTRACT WHICH MEETS THE
REQUIREMENTS SPECIFIED IN THE PLAN;
/ / SALARIED EMPLOYEES;
/ / HOURLY-PAID EMPLOYEES;
/ / PIECE-RATE EMPLOYEES;
/ / EMPLOYEES PAID BY COMMISSION;
/ / EMPLOYEES COVERED BY ANOTHER RETIREMENT PLAN TO WHICH THE EMPLOYER IS
REQUIRED TO CONTRIBUTE; AND
/ / EMPLOYEES IN THE FOLLOWING NON-DISCRIMINATORY CLASSIFICATION:
----------
-----------------------------------------------------------------------
NOTE: IF EMPLOYEES ARE EXCLUDED FORM THE PLAN UNDER ONE OR MORE OF THE
CLASSIFICATIONS ABOVE (NOT INCLUDING THE FIRST TWO CLASSIFICATIONS), THE PLAN
MUST SATISFY ON A CONTINUING BASIS THE COVERAGE, NONDISCRIMINATION, AND
PARTICIPATION REQUIREMENTS OF CODE SECTIONS 410(b), 401(a)(4), AND 401(a)(26).
II. SALARY REDUCTIONS AND DEFERRED CASH CONTRIBUTIONS
For each Plan Year, the Employer will make the following contribution to the
Trust on behalf of each eligible Participant:
Select and Complete if /XX/(A) A SALARY REDUCTION CONTRIBUTION EQUAL TO
Salary Reduction Con- THE PORTION OF THE COMPENSATION OTHERWISE
tributions are Desired PAYABLE TO THE PARTICIPANT THAT THE
PARTICIPANT HAS ELECTED TO CONTRIBUTE TO THE
TRUST. THE PARTICIPANT'S ELECTION SHALL
SPECIFY THE AMOUNT OF THE COMPENSATION TO
BE CONTRIBUTED, WHICH AMOUNT SHALL BE NOT
LESS THAN 1% (INSERT "0" OR MORE, BUT NOT
MORE THAN THE NEXT CHOSEN NUMBER) AND NOT
MORE THAN 20% (INSERT "20" OR LESS, BUT NOT
LESS THAN THE PREVIOUSLY CHOSEN NUMBER) OF
THE PARTICIPANT'S COMPENSATION FOR THE PLAN
YEAR.
Select and Complete if /XX/(B) A DEFERRED CASH CONTRIBUTION EQUAL TO THAT
Deferred Cash Contri- PORTION OF THE DEFERRED CASH ALLOCATION
butions are Desired FOR THE PLAN YEAR WHICH THE ELIGIBLE
PARTICIPANT HAS NOT ELECTED TO RECEIVE IN
CASH. THE DEFERRED CASH ALLOCATION
FOR THIS PURPOSE SHALL BE AN AMOUNT EQUAL
TO THE PERCENTAGE OF THE ELIGIBLE
PARTICIPANT'S COMPENSATION AS IS DETERMINED
BY THE EMPLOYER FOR EACH PLAN YEAR (WHICH
PERCENTAGE SHALL BE THE SAME FOR EACH
PARTICIPANT)
/ / or, if the box is checked, _____% OF THE
ELIGIBLE PARTICIPANT'S COMPENSATION.
III. PROFIT SHARING CONTRIBUTIONS
For each Plan Year, THE EMPLOYER WILL NOT MAKE AN EMPLOYER PROFIT SHARING
CONTRIBUTION
Select if Profit Sharing /XX/ or, if this box is checked, THE
Contributions are Desired EMPLOYER WILL MAKE AN EMPLOYER PROFIT
SHARING CONTRIBUTION EQUAL TO THE
AMOUNT, IF ANY, DETERMINED BY THE
EMPLOYER FOR EACH PLAN YEAR.
IV. MATCHING CONTRIBUTIONS
A. For each Plan Year, THE EMPLOYER WILL NOT MAKE AN EMPLOYER MATCHING
CONTRIBUTION
Select and Complete if /XX/ or, if this box is checked, THE EMPLOYER
Employer Matching Contri- WILL MAKE AN EMPLOYER MATCHING
butions are Desired CONTRIBUTION ON BEHALF OF EACH
PARTICIPANT WHO, PURSUANT TO SECTION VI
BELOW, IS ELIGIBLE TO RECEIVE AN
ALLOCATION; SUCH CONTRIBUTION SHALL BE
EQUAL TO THE PERCENTAGE INDICATED IN (B)
BELOW OF AGGREGATE:
Select One or More if /XX/ (i) SALARY REDUCTION CONTRIBUTIONS
Employer Matching / / (ii) DEFERRED CASH CONTRIBUTIONS
Contributions have been / / (iii) NONDEDUCTIBLE VOLUNTARY
Selected CONTRIBUTIONS
2
<PAGE>
B. THE EMPLOYER MATCHING CONTRIBUTION MADE ON BEHALF OF EACH PARTICIPANT
SHALL BE EQUAL TO A PERCENTAGE OF THE PARTICIPANT'S CONTRIBUTIONS SELECTED
IN (A) ABOVE; WHICH PERCENTAGE SHALL BE EQUAL TO AT LEAST:
/X/ (i) ___________%
/ / (ii) THE SUM OF __________% OF SUCH CONTRIBUTIONS
WHICH ARE NOT IN EXCESS OF _______________% OF
THE PARTICIPANT'S COMPENSATION PLUS ___________%
OF SUCH CONTRIBUTIONS WHICH ARE IN EXCESS OF
____________% OF THE PARTICIPANT'S COMPENSATION,
BUT NOT IN EXCESS OF ____% OF THE PARTICIPANT'S
COMPENSATION.
/ / (iii) THE SUM OF __________% OF SUCH CONTRIBUTIONS
WHICH ARE NOT IN EXCESS OF _________ DOLLARS,
PLUS __________% OF SUCH CONTRIBUTIONS WHICH ARE
IN EXCESS OF __________ DOLLARS, BUT NOT IN
EXCESS OF ________ DOLLARS.
NOTE: IF (ii) OR (iii) ABOVE ARE COMPLETED WITH THE SECOND MATCHING
PERCENTAGE (FOLLOWING THE WORD "PLUS") GREATER THAN THE FIRST MATCHING
PERCENTAGE (FOLLOWING THE WORDS "THE SUM OF"), THE IRS MAY DEEM THE PLAN TO
BE DISCRIMINATORY UNDER CODE SECTION 401(a)(4).
C. THE EMPLOYER WILL MAKE EMPLOYER MATCHING CONTRIBUTIONS REGARDLESS OF THE
DOLLAR AMOUNT OR PERCENT OF THE PARTICIPANT'S AGGREGATE CONTRIBUTION
INDICATED IN (A) ABOVE
/ / or, if this box is checked, THE EMPLOYER SHALL
MAKE AN EMPLOYER MATCHING CONTRIBUTION ON BEHALF
OF A PARTICIPANT BUT ONLY OF THE PARTICIPANT'S
AGGREGATE CONTRIBUTIONS INDICATED IN (A) ABOVE
EQUAL OR EXCEED ______ (INSERT "$0", A HIGHER
DOLLAR AMOUNT OR A PERCENTAGE WHICH IS NOT IN
EXCESS OF THE NEXT CHOSEN NUMBER) OF SUCH
PARTICIPANT'S COMPENSATION AND THEN ONLY TO THE
EXTENT THAT THE AGGREGATE AMOUNT OF THE
CONTRIBUTIONS DESIGNATED IN A.(i), A.(ii) OR
A.(iii) WHICH ARE ALLOCATED TO THE PARTICIPANT'S
ACCOUNT FOR SUCH PLAN YEAR DOES NOT EXCEED ______
(INSERT A PERCENTAGE OR DOLLAR AMOUNT) OF THE
PARTICIPANT'S COMPENSATION.
V. VESTING OF EMPLOYER CONTRIBUTIONS
NOTE: MAKE SELECTIONS IN SECTION V. ONLY IF EMPLOYER PROFIT SHARING
CONTRIBUTIONS AND/OR EMPLOYER MATCHING CONTRIBUTIONS HAVE BEEN SELECTED.
A. Employer Profit Sharing Contributions shall be IMMEDIATELY VESTED AND
NONFORFEITABLE.
Select One if / / (1) or, if this box is checked, VESTED AT THE RATE
Desired, and SPECIFIED IN COLUMN 1 BELOW.
Complete, if / / (2) or, if this box is checked, VESTED AT THE
Necessary RATE SPECIFIED IN COLUMN 2 BELOW.
/ / (3) or, if this box is checked, VESTED AT THE
RATE SPECIFIED IN COLUMN 3 BELOW.
/X/ (4) or, if this box is checked, VESTED AT THE
RATE SPECIFIED IN COLUMN 4 BELOW WHICH RATE
SHALL, IF A GRADED RATE IS SPECIFIED, BE AT
LEAST AS RAPID AS THE RATE SPECIFIED IN COLUMN
2 BELOW OR, IF A CLIFF RATE IS SPECIFIED, BE
AT LEAST AS RAPID AS THE RATE SPECIFIED IN
COLUMN 3 BELOW.
VESTING TABLE
<TABLE>
<CAPTION>
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4
--------- ---------- --------- ----------
VESTING TOP-HEAVY 7-YEAR 5-YEAR PERCENTAGE
YEARS VESTING RATE GRADED RATE CLIFF RATE ELECTED
<S> <C> <C> <C> <C>
1 0% 0% 0% 20
-------
2 20% 0% 0% 40
-------
3 40% 20% 0% 60
-------
4 60% 40% 0% 80
-------
5 80% 60% 100% 100
-------
6 100% 80% 100%
-------
7 100% 100% 100%
-------
</TABLE>
NOTE: EMPLOYER PROFIT SHARING CONTRIBUTIONS MUST BE IMMEDIATELY VESTED AND
NONFORFEITABLE IF THE EMPLOYER MAKES THE ELECTION IN SECTION I.C. ABOVE AND
REQUIRES EMPLOYEES TO COMPLETE MORE THAN ONE YEAR OF SERVICE.
B. Employer Matching Contributions shall be IMMEDIATELY VESTED AND
NONFORFEITABLE.
/ / (1) or, if this box is checked, VESTED AT THE RATE
SPECIFIED IN COLUMN 1 BELOW.
/ / (2) or, if this box is checked, VESTED AT THE
RATE SPECIFIED IN COLUMN 2 BELOW.
/ / (3) or, if this box is checked, VESTED AT THE
RATE SPECIFIED IN COLUMN 3 BELOW.
/X/ (4) or, if this box is checked, VESTED AT THE
RATE SPECIFIED IN COLUMN 4 BELOW WHICH RATE
SHALL, IF A GRADED RATE IS SPECIFIED, BE AT
LEAST AS RAPID AS THE RATE SPECIFIED IN COLUMN
2 BELOW OR, IF A CLIFF RATE IS SPECIFIED, BE
AT LEAST AS RAPID AS THE RATE SPECIFIED IN
COLUMN 3 BELOW.
3
<PAGE>
VESTING TABLE
<TABLE>
<CAPTION>
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4
--------- ---------- --------- ----------
VESTING TOP-HEAVY 7-YEAR 5-YEAR PERCENTAGE
YEARS VESTING RATE GRADED RATE CLIFF RATE ELECTED
<S> <C> <C> <C> <C>
1 0% 0% 0% 20
-------
2 20% 0% 0% 40
-------
3 40% 20% 0% 60
-------
4 60% 40% 0% 80
-------
5 80% 60% 100% 100
-------
6 100% 80% 100%
-------
7 100% 100% 100%
-------
</TABLE>
NOTE: EMPLOYER PROFIT MATCHING CONTRIBUTIONS MUST BE IMMEDIATELY VESTED AND
NONFORFEITABLE IF THE EMPLOYER MAKES THE ELECTION IN SECTION I.C. ABOVE AND
REQUIRES EMPLOYEES TO COMPLETE MORE THAN ONE YEAR OF SERVICE.
C. The following Service will be included in determining Vesting Years only
if checked below:
/ / (1) Service before the Employer maintained this
Plan or a predecessor plan.
/ / (2) Service before the first Plan Year during
which a Participant attained age 18.
/ / (3) Service after five consecutive One-Year Breaks
in Service (this inclusion shall apply only
for the purpose of computing the vested
percentage of Employer Profit Sharing
Contributions and Employer Matching
Contributions made before such period).
/ / (4) Service before January 1, 1971, unless
the Participant has completed three or more
Vesting Years after December 31, 1970.
/ / (5) Service before the first Plan Year to which
ERISA is applicable, if this Plan is a
continuation of an earlier plan which would
have disregarded such service.
D. Vesting Years and One-year Breaks in Service for the purpose of vesting
shall be measured ON THE 12-CONSECUTIVE-MONTH PERIOD BEGINNING ON THE
PARTICIPANT'S INITIAL DATE OF EMPLOYMENT OR AN ANNIVERSARY OF THAT DATE.
/ / or, if this box is checked, on the Plan Year.
E. The Participant will have a Vesting Year only if the Participant completes
the number of Hours of Service SPECIFIED IN SECTION I.E. ABOVE.
/ / or, if this box is checked, IF THE PARTICIPANT EITHER COMPLETES THE
NUMBER OF HOURS OF SERVICE SPECIFIED IN SECTION I.E. OR RECEIVES AN
ALLOCATION OF THE EMPLOYER PROFIT SHARING CONTRIBUTION FOR THE PLAN
YEAR, OR BOTH.
NOTE: YOU MAY MAKE THIS ELECTION ONLY OF YOU CHECKED THE BOX ON SECTION V.D.
DIRECTLY ABOVE.
F. If the Plan becomes a Top Heavy Plan but thereafter ceases to be a Top
Heavy Plan, THE VESTING SCHEDULE IN EFFECT WHILE THE PLAN WAS A TOP HEAVY
PLAN WILL CONTINUE TO BE IN EFFECT FOR ALL EXISTING AND FUTURE
PARTICIPANTS.
/ / or, if this box is checked, THE VESTING SCHEDULE SELECTED IN SECTIONS
V.A. OR B. ABOVE, AS THE CASE MAY BE, WILL APPLY FOR ALL PLAN YEARS
DURING WHICH THE PLAN IS NOT A TOP HEAVY PLAN.
VI. ALLOCATIONS OF EMPLOYER CONTRIBUTIONS
A. A Participant who has terminated Service during a Plan Year and is not
employed on the LAST DAY OF SUCH PLAN YEAR SHALL RECEIVE ANY DEFERRED CASH
ALLOCATION MADE PURSUANT TO SECTION II.B. ABOVE AND SHALL SHARE IN ANY
ALLOCATION OF EMPLOYER PROFIT SHARING CONTRIBUTIONS, EMPLOYER MATCHING
CONTRIBUTIONS AND/OR REALLOCATED FORFEITURES PURSUANT TO SECTIONS III.
AND IV. ABOVE FOR SUCH PLAN YEAR.
/XX/ or, if this box is checked, SHALL RECEIVE ANY DEFERRED CASH
ALLOCATION MADE PURSUANT TO SECTION II.B. ABOVE AND SHALL SHARE IN ANY
ALLOCATION OF EMPLOYER PROFIT SHARING CONTRIBUTIONS, EMPLOYER MATCHING
CONTRIBUTIONS AND/OR REALLOCATED FORFEITURES PURSUANT TO SECTIONS III.
AND IV. ABOVE ONLY IF SUCH PARTICIPANT COMPLETES 501 (INSERT "501" OR
LESS) HOURS OF SERVICE DURING SUCH PLAN YEAR.
NOTE: YOU MAY MAKE THIS ELECTION ONLY IF YOU CHECKED THE BOX IN SECTION V.D.
ABOVE.
4
<PAGE>
B. An otherwise eligible Participant who is a Highly Compensated Employee for
a given Plan Year SHALL RECEIVE AN ALLOCATION OF ANY EMPLOYER PROFIT SHARING
CONTRIBUTIONS MADE PURSUANT TO SECTION III. ABOVE AND ANY REALLOCATED
FORFEITURES
/ / or, if this box is checked, SHALL NOT RECEIVE AN ALLOCATION OF ANY
EMPLOYER PROFIT SHARING CONTRIBUTIONS MADE PURSUANT TO SECTION III.
ABOVE AND ANY REALLOCATED FORFEITURES.
C. An otherwise eligible Participant who is a Highly Compensated Employee for
a given Plan Year SHALL RECEIVE AN ALLOCATION OF ANY EMPLOYER MATCHING
CONTRIBUTIONS MADE PURSUANT TO SECTION III.B. ABOVE AND ANY REALLOCATED
FORFEITURES
/ / or, if this box is checked, SHALL NOT RECEIVE AN ALLOCATION OF ANY
EMPLOYER MATCHING CONTRIBUTIONS MADE PURSUANT TO IV. ABOVE AND ANY
REALLOCATED FORFEITURES.
D. Any required minimum Top-Heavy allocations will be made FIRST FROM THIS PLAN
/ / or, if this box is checked, FIRST FROM THE ________________________
PLAN (insert name of another qualified retirement plan maintained by the
Employer).
E. For any Plan Year for which the Plan is a Top Heavy Plan, MINIMUM
ALLOCATIONS SHALL BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 23.03
/ / or, if this box is checked, because the Employer maintains at least
one other qualified retirement plan, MINIMUM ALLOCATIONS SHALL BE MADE
AT THE FOLLOWING RATE OF COMPENSATION: _____% (insert "3" or more).
NOTES: THE EMPLOYER MAY NOT MAKE AN ELECTION IN SECTION VI.A. ABOVE, IF
DISCRIMINATION IN FAVOR OF HIGHLY COMPENSATED EMPLOYEES WILL RESULT.
ONLY CONSIDER CHECKING THE BOX IN SECTION VI.D. IF THE EMPLOYER SPONSORS TWO
OR MORE TAX-QUALIFIED RETIREMENT PLANS AND EITHER (1) ONE OF THOSE PLANS IS A
DEFINED BENEFIT PLAN OR (2) THE PLANS DO NOT HAVE IDENTICAL ELIGIBILITY
REQUIREMENTS.
VII. REALLOCATION OF FORFEITURES
Any forfeiture which results from a Participant's termination of Service
SHALL BE REALLOCATED AS IF IT WERE A CONTRIBUTION OF THE SAME TYPE (i.e.,
Employer Profit Sharing Contribution or Employer Matching Contribution) FOR
THE PLAN YEAR FOLLOWING THE PLAN YEAR IN WHICH SUCH FORFEITURE OCCURS
/ / or, if this box is checked, such forfeiture SHALL BE DEEMED TO BE AN
EMPLOYER MATCHING CONTRIBUTION, AND APPLIED TO REDUCE THE AGGREGATE AMOUNT
THE EMPLOYER MUST CONTRIBUTE IN EMPLOYER MATCHING CONTRIBUTIONS FOR THE PLAN
YEAR DURING WHICH THE FORFEITURE OCCURS.
VIII. COMPENSATION
A. "Compensation" for purposes of allocating Employer Profit Sharing
Contributions, shall include the following:
(i) A PARTICIPANT'S SALARY REDUCTION CONTRIBUTIONS, DEFERRED CASH
CONTRIBUTIONS (WHICH THE PARTICIPANT DID NOT ELECT TO TAKE IN CASH) AND
OTHER AMOUNTS WHICH ARE EXCLUDED FROM AN EMPLOYEE'S GROSS INCOME PURSUANT
TO CODE SECTION 125, 402(a)(8), 402(h)(1)(B), AND 403(b).
/ / or, if this box is checked, SHALL NOT INCLUDE A PARTICIPANT'S
SALARY REDUCTION CONTRIBUTIONS, DEFERRED CASH CONTRIBUTIONS, (WHICH
THE PARTICIPANT DID NOT ELECT TO TAKE IN CASH) AND OTHER AMOUNTS
WHICH ARE EXCLUDED FROM AN EMPLOYEE'S GROSS INCOME PURSUANT TO CODE
SECTIONS 125, 402(a)(8), 402(h)(1)(B), AND 403(b);
(ii) AMOUNTS PAID DURING THE PLAN YEAR BY THE EMPLOYER TO THE EMPLOYEE
WHILE THE EMPLOYEE WAS A PARTICIPANT
/ / or, if this box is checked, "Compensation" SHALL INCLUDE AMOUNTS PAID
BY THE EMPLOYER TO THE EMPLOYEE DURING THE ENTIRE PLAN YEAR IN WHICH
AN EMPLOYEE BECAME A PARTICIPANT WHETHER OR NOT SUCH AN EMPLOYEE WAS
A PARTICIPANT FOR THE ENTIRE PLAN YEAR,
(iii) ALL FORM W-2 COMPENSATION
/XX/ or, if this box is checked, ALL FORM W-2 COMPENSATION EXCEPT
THE ITEMS CHECKED BELOW:
/XX/ BONUSES
/XX/ COMMISSIONS
/XX/ OVERTIME PAYMENTS
/XX/ OTHER (specify) nonrecoverable draws and recoverable
-------------------------------------
draws that were not recovered.
------------------------------
NOTE: IF ONE OR MORE OF THE ABOVE ARE CHOSEN, THE EXCLUSION MUST NOT RESULT
IN DISCRIMINATION IN FAVOR OF HIGHLY COMPENSATED EMPLOYEES.
5
<PAGE>
B. For the purposes of the nondiscrimination tests contained in Article VI,
COMPENSATION SHALL INCLUDE PARTICIPANTS' SALARY REDUCTION CONTRIBUTIONS,
DEFERRED CASH CONTRIBUTIONS (WHICH THE PARTICIPANTS DO NOT ELECT TO TAKE IN
CASH) AND OTHER AMOUNTS WHICH ARE EXCLUDED FROM EMPLOYEE'S GROSS INCOME
PURSUANT TO CODE SECTIONS 125, 402(a)(8), 402(h)(1)(B), AND 403(b)
/ / or, if this box is checked, SHALL NOT INCLUDE PARTICIPANTS' SALARY
REDUCTION CONTRIBUTIONS, DEFERRED CASH CONTRIBUTIONS (WHICH THE
PARTICIPANTS DO NOT ELECT TO TAKE IN CASH) AND OTHER AMOUNTS WHICH ARE
EXCLUDED FROM AN EMPLOYEE'S GROSS INCOME PURSUANT TO CODE SECTIONS 125,
402(a)(8), 402(h)(1)(B), AND 403(b).
NOTE: PARTICIPANTS' SALARY REDUCTION CONTRIBUTIONS, DEFERRED CASH
CONTRIBUTIONS (WHICH THE PARTICIPANTS DO NOT ELECT TO TAKE IN CASH) AND
OTHER AMOUNTS WHICH ARE EXCLUDED FROM AN EMPLOYEE'S GROSS INCOME
PURSUANT TO CODE SECTIONS 125, 402(a)(8), 402(h)(1)(B), AND 403(b) ARE
NOT CONSIDERED COMPENSATION FOR PURPOSES OF DETERMINING THE EMPLOYER'S
PERMISSIBLE DEDUCTION UNDER CODE SECTION 404 OR FOR PURPOSES OF APPLYING
THE LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS UNDER ARTICLE V
OF THE PLAN AND CODE SECTION 415.
IX. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date SHALL BE AGE 59 1/2
/X/ or, if this box is checked, AGE 65
------
(insert more than 59 1/2 but not more than 65).
X. HARDSHIP WITHDRAWALS
Withdrawals by Participants from their respective Salary Reduction
Contribution Accounts and/or Deferred Cash Contribution Accounts in cases
of hardship SHALL NOT BE PERMITTED
/X/ or, if this box is checked, SHALL BE PERMITTED.
XI. NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS
Nondeductible Voluntary Contributions by a Participant ARE NOT PERMITTED
/ / or, if this box is checked, ARE PERMITTED.
XII. INVESTMENT
Investment decisions SHALL BE MADE BY THE PARTICIPANT
/ / or, if this box is checked, BY THE ADMINISTRATOR.
XIII. LOANS
Loans to a Participant ARE NOT PERMITTED
/X/ or, if this box is checked, ARE PERMITTED.
XIV. EFFECTIVE DATE
The Effective Date of this Plan or Amendment SHALL BE THE FIRST day of the
Employer's fiscal year during which the Plan is ADOPTED OR AMENDED
/X/ or, if this box is checked, January 1, 1994 .
-------------------
(insert date)
XV. PLAN AND LIMITATION YEARS
A. The Plan Year SHALL BE THE SAME AS THE FISCAL YEAR OF THE EMPLOYER
/X/ or, if this box is checked, SHALL END ON THE LAST DAY OF THE MONTH OF
December .
------------
B. The Limitation Year SHALL BE THE PLAN YEAR
/ / or, if this box is checked, SHALL BE THE 12-CONSECUTIVE MONTH PERIOD
ENDING ON THE LAST DAY OF THE MONTH OF .
-------------------------------
XVI. AMENDMENT
Execution of this Adoption Agreement IS NOT AN AMENDMENT TO AN EXISTING
PLAN
/XX/ or, if this box is checked, IS AN AMENDMENT TO AN EXISTING PLAN.
6
<PAGE>
XVII. CALCULATION OF TOP-HEAVY RATIO
If the Employer has maintained or now or subsequently maintains one
or more defined benefit plans, then for purposes of calculating the Top-Heavy
Ratio, Present Value shall be based upon THE INTEREST RATE AND MORTALITY
TABLE EMPLOYED AS OF THE DATE IN QUESTION FOR SUCH PURPOSE AS SPECIFIED IN
THE MOST RECENTLY ADOPTED OR AMENDED DEFINED BENEFIT PLAN MAINTAINED BY THE
EMPLOYER
/ / or, if this box is checked, THE INTEREST RATE AND MORTALITY TABLE
SPECIFIED BELOW.
Interest Rate: ________________%
Mortality Table: ________________________________________________
XVIII. APPOINTMENT OF TRUSTEES
The Employer hereby designates the following Trustee(s) under the
Trust:
Complete Sharon Fierro, Chief Financial Officer
-----------------------------------------------------, Trustee
William R. Roach, President and Chairman
-----------------------------------------------------, Trustee
-----------------------------------------------------, Trustee
XIX. LIMITATION ON ALLOCATIONS
This section applies only for an Employer who maintains or has ever
maintained: another qualified retirement plan (other than a plan which the
Employer amended into the Prototype 401(k) Plan) in which any Participant in
this Plan is or was a participant or could possibly become a participant, a
welfare benefit fund (as defined in Code Section 419(e)), or an individual
medical account (as defined in Code Section 415(I)(2)) under which amounts
are treated as annual additions with respect to any Participant in this Plan.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan, THE PROVISIONS OF ARTICLE V. OF THE PLAN WILL
APPLY AS IF THE OTHER PLAN WERE A MASTER OR PROTOTYPE PLAN
/ / or, if this box is checked, THE ATTACHED RIDER DESCRIBES THE
METHOD BY WHICH THE PLANS WILL LIMIT TOTAL ANNUAL ADDITIONS TO
THE MAXIMUM PERMISSIBLE AMOUNT DESCRIBED IN SECTION 5.05 OF THE
PLAN AND REDUCE ANY EXCESS AMOUNT IN A MANNER THAT PRECLUDES
EMPLOYER DISCRETION.
B. If the Participant is, or has ever been, a participant in a defined
benefit plan maintained by the Employer, THE PROVISIONS OF ARTICLE
V. OF THE PLAN WILL APPLY
/ / or, if this box is checked, THE ATTACHED RIDER DESCRIBES THE
METHOD BY WHICH THE PLANS INVOLVED WILL SATISFY THE 1.0
LIMITATION DESCRIBED IN SECTION 5.04 OF THE PLAN AND REDUCE ANY
EXCESS AMOUNT IN A MANNER THAT PRECLUDES EMPLOYER DISCRETION.
XX. SIGNATURES
The Employer (1) covenants and agrees that whenever a Participant makes a
contribution the Employer shall ascertain that the Participant has received a
copy of the current prospectus relating to any Designated Investment or other
investment in which such contribution is to be invested where required by any
state or federal law, and (2) by remitting any contribution to the Trustee
the Employer shall be deemed to represent that the Employer has received a
current prospectus of any investment in which it is to be invested where
required by any state or federal law.
An Employer adopting this Plan may not rely on the opinion letter issued by
the National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Code Section 401. An Employer who wishes to obtain
such reliance should apply for a determination letter from the appropriate
Key District Director of the Internal Revenue Service to obtain reliance that
the plan is qualified.
This Adoption Agreement may be used only in conjunction with basic plan
document #02. Failure to properly complete this Adoption Agreement may result
in the disqualification of the Plan.
All inquiries regarding this Plan should be made to Scudder Investor
Services, Inc. by calling 1-800-323-6105, or by writing to Scudder Investor
Services, Inc., Group Retirement Plans Department, 175 Federal Street,
Boston, MA 02110. Scudder Investor Services, Inc. will notify each adopting
Employer of any amendments made to, or of the discontinuance or abandonment
of, this Plan.
7
<PAGE>
- -------------------------------- Trustee(s) Signature(s):
Signature of Employer
The Roach Organization, Inc. By: /s/ Sharon Fierro
- ------------------------------- ---------------------------
Print Name of Employer
4660 W. 77th Street /s/ William R. Roach
- ------------------------------- ---------------------------
Street Address
Edina MN 55435
- ------------------------------- ---------------------------
City State Zip
41-1646390
- -------------------------------
Employer Tax Identification
Number
October 31
- ------------------------------- ---------------------------
Employer's Fiscal Year Loan Trustee
(612) 832-1341
- ------------------------------- Note: If you elected to permit loans to
Employer's Telephone Number Participants in Section XII. above,
you may wish to designate a Loan Trustee.
- -------------------------------
Date
160 /s/ [ILLEGIBLE]
- ------------------------------- ------------------------------
Expected Number of Participants Accepted by Scudder Investor
Services, Inc.
VP Retirement Plans
11/19/93
8
<PAGE>
[TRO LOGO]
September 29, 1997
VIA FACSIMILE AND MAIL
Mr. Scott Gieseceke
Scudder Trust Company
Compass Department
5 Industrial Way
Salem, NH 03079-2838
Re: Addition of Trustee to TRO Learning, Inc.
401(k) Savings and Retirement Plan #424
Dear Scott:
Please be advised that TRO Learning wishes to add an additional trustee
to the above referenced Plan. At the present time, your records should
reflect Andrew N. Peterson and William R. Roach as Trustees, and Patricia
Hawver as Plan Administrator.
This letter serves as TRO's authorization for you to add Patricia Hawver
as a Trustee of the Plan, bringing the total number of Trustees to three. In
addition to this appointment, she will continue to perform the duties of Plan
Administrator.
Please instate the change effective as of this date. Thank you.
Sincerely,
/s/Patricia A. Hlavacek
Patricia A. Hlavacek
Assistant Secretary
cc William R. Roach
Andrew N. Peterson
Patricia Hawver
<PAGE>
[LOGO]
SCUDDER
401(k) PLAN
- -------------------------------------------------------------------------------
PROTOTYPE PLAN DOCUMENT
AN IRS-APPROVED PLAN
<PAGE>
SCUDDER 401(K) PLAN
BASIC PLAN DOCUMENT #02
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. INTRODUCTION ................................................ 1
ARTICLE II. DEFINITIONS ................................................. 1
2.01 "Account" .................................................... 1
2.02 "Act" ........................................................ 1
2.03 "Administrator" .............................................. 1
2.04 "Adoption Agreement" ......................................... 1
2.05 "Annuity Starting Date" ...................................... 1
2.06 "Applicable Life Expectancy" ................................. 1
2.07 "Beneficiary" ................................................ 1
2.08 "Code" ....................................................... 1
2.09 "Compensation" ............................................... 1
2.10 "Deductible Voluntary Contribution Account" .................. 1
2.11 "Deferred Cash Allocation" ................................... 1
2.12 "Deferred Cash Contribution Account" ......................... 1
2.13 "Deferred Cash Contributions" ................................ 1
2.14 "Designated Investment" ...................................... 1
2.15 "Designation of Beneficiary" or "Designation" ................ 1
2.16 "Disability" ................................................. 1
2.17 "Distributee" ................................................ 1
2.18 "Distributor" ................................................ 1
2.19 "Earned Income" .............................................. 1
2.20 "Effective Date" ............................................. 1
2.21 "Employee" ................................................... 1
2.22 "Employer" ................................................... 1
2.23 "Employer Contributions" ..................................... 1
2.24 "Employer Profit Sharing Contribution Account" ............... 1
2.25 "Employer Profit Sharing Contributions" ...................... 1
2.26 "Employer Matching Contribution Account" ..................... 1
2.27 "Employer Matching Contributions" ............................ 2
2.28 "Family Member" .............................................. 2
2.29 "First Required Distribution Year" ........................... 2
2.30 "Highly Compensated Employee" ................................ 2
2.31 "Highly Compensated Participant .............................. 2
2.32 "Hour of Service" ............................................ 2
2.33 "Loan Trustee" ............................................... 3
2.34 "Nondeductible Voluntary Contribution Account" ............... 3
2.35 "Nondeductible Voluntary Contributions" ...................... 3
2.36 "Non-Highly Compensated Employee" ............................ 3
-i-
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2.37 "Non-Highly Compensated Participant .......................... 3
2.38 "Normal Retirement Date" or "Normal Retirement Age" .......... 3
2.39 "One-Year Break in Service" .................................. 3
2.40 "Owner-Employee" ............................................. 3
2.41 "Participant" ................................................ 3
2.42 "Plan" ....................................................... 3
2.43 "Plan Year" .................................................. 3
2.44 "Prototype 401(k) Plan" ...................................... 3
2.45 "Rollover Account" ........................................... 3
2.46 "Rollover Contributions" ..................................... 3
2.47 "Salary Reduction Contribution Account" ...................... 3
2.48 "Salary Reduction Contribution" .............................. 3
2.49 "Self-Employed Individual" ................................... 3
2.50 "Service" .................................................... 3
2.51 "Sponsor" .................................................... 3
2.52 "Spouse" ..................................................... 3
2.53 "Trust" ...................................................... 3
2.54 "Trust Fund" ................................................. 3
2.55 "Trustee" .................................................... 3
2.56 "Valuation Date" ............................................. 3
2.57 "Vesting Years" .............................................. 3
2.58 "Year" ....................................................... 3
2.59 "Year of Service" ............................................ 3
ARTICLE III. ELIGIBILITY .................................................. 4
3.01 Entry ........................................................ 4
3.02 Interrupted Service .......................................... 4
3.03 Transfer to Eligible Class ................................... 4
3.04 Determination by Administrator ............................... 4
ARTICLE IV. CONTRIBUTIONS ................................................ 4
4.01 Salary Reduction Contributions ............................... 4
4.02 Deferred Cash Contributions .................................. 4
4.03 Employer Profit Sharing Contributions ........................ 4
4.04 Employer Matching Contributions .............................. 4
4.05 Nondeductible Voluntary Contributions ........................ 5
4.06 Rollover Contributions ....................................... 5
4.07 Transfers from Other Qualified Plans ......................... 5
4.08 Limitations on Contributions ................................. 5
4.09 Deductible Voluntary Contributions ........................... 5
ARTICLE V. CODE SECTION 415 LIMITATIONS ON ALLOCATIONS .................. 5
5.01 Employers Maintaining No Other Plan .......................... 5
5.02 Employers Maintaining Other Master or Prototype
Defined Contribution Plans ................................... 6
5.03 Employers Maintaining Other Defined
Contribution Plans ........................................... 6
5.04 Employers Maintaining Defined Benefit Plans .................. 6
5.05 Definitions .................................................. 6
ARTICLE VI. LIMITATIONS ON DEFERRALS, MATCHING ALLOCATIONS
AND VOLUNTARY CONTRIBUTIONS .................................. 7
6.01 Purpose of Article and Primacy of Tests ...................... 7
6.02 Definitions .................................................. 7
</TABLE>
-ii-
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<TABLE>
PAGE
<S> <C> <C>
6.03 Dollar Cap on Salary Reduction Contributions .............. 8
6.04 Corrective Procedure When Dollar Cap Exceeded ............. 8
6.05 Discrimination Testing of Salary
Reduction Contributions ................................... 8
6.06 Corrective Procedure When Discriminatory Salary
Reduction Contributions are Made .......................... 8
6.07 Discrimination Testing of Employer Matching
Contributions and Nondeductible Voluntary Contributions ... 9
6.08 Corrective Procedure When Discriminatory Matching
or Voluntary Contributions are Made ....................... 10
ARTICLE VII. TIME AND MANNER OF MAKING CONTRIBUTIONS ................... 11
7.01 Manner .................................................... 11
7.02 Time ...................................................... 11
7.03 Separate Accounts ......................................... 11
ARTICLE VIII. VESTING ................................................... 11
8.01 When Vested ............................................... 11
8.02 Employer Profit Sharing Contribution and Employer
Matching Contribution Forfeitures ......................... 12
ARTICLE IX. DISTRIBUTIONS UPON DEATH .................................. 12
9.01 Distributions at Death .................................... 12
9.02 Children as Beneficiaries ................................. 13
9.03 Nonconsensual Distributions to Beneficiaries .............. 13
ARTICLE X. OTHER DISTRIBUTIONS ....................................... 13
10.01 Timing of Normal Distributions ............................ 13
10.02 Normal Form and Optional Times and Forms of Distribution .. 13
10.03 Required Minimum Distributions ............................ 13
10.04 Nonconsensual Distributions ............................... 13
10.05 Distribution of Participant Contribution Accounts ......... 13
10.06 Special One-Time Distribution Election .................... 14
10.07 Distribution on Account of Plan Termination ............... 14
ARTICLE XI. DISTRIBUTION ON HARDSHIP................................... 14
11.01 Hardship Distribution ..................................... 14
11.02 Hardship Defined .......................................... 14
11.03 Manner of Distribution .................................... 14
ARTICLE XII. LOANS ..................................................... 14
12.01 Availability of Loans ..................................... 14
12.02 Spousal Consent Required .................................. 14
12.03 Equivalent Basis .......................................... 14
12.04 Limitation on Amount ...................................... 14
12.05 Maximum Term .............................................. 15
12.06 Promissory Note ........................................... 15
12.07 Adequate Security ......................................... 15
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12.08 Repayment ................................................. 15
12.09 Interes .................................................. 15
12.10 Level Amortization ........................................ 15
12.11 Repayment ................................................. 15
12.12 Accounting ................................................ 15
12.13 Precedence ................................................ 15
ARTICLE XIII. TRUST PROVISIONS .......................................... 15
13.01 Manner of Investment ...................................... 15
13.02 Investment Decision ....................................... 15
13.03 Investment Powers ......................................... 15
13.04 Appointment of Investment Manager ......................... 16
13.05 Trustee: Number, Qualifications and Majority Action ....... 16
13.06 Change of Trustee ......................................... 16
13.07 Valuation ................................................. 16
13.08 Registration .............................................. 16
13.09 Certifications and Instructions ........................... 16
13.10 Accounts and Approval ..................................... 16
13.11 Taxes ..................................................... 17
13.12 Employment of Counsel ..................................... 17
13.13 Compensation of Trustee ................................... 17
13.14 Limitation of Trustee's Liability ......................... 17
13.15 Successor Trustee ......................................... 17
13.16 Enforcement of Provisions ................................. 17
13.17 Voting .................................................... 17
13.18 Applicability to Loan Trustee ............................. 17
ARTICLE XIV. ADMINISTRATION ............................................ 17
14.01 Appointment of Administrator .............................. 17
14.02 Named Fiduciaries ......................................... 17
14.03 Allocation of Responsibilities ............................ 17
14.04 More Than One Administrator ............................... 17
14.05 No Compensation ........................................... 17
14.06 Record of Acts ............................................ 17
14.07 Bond ...................................................... 17
14.08 Agent for Service of Legal Process ........................ 17
14.09 Rules ..................................................... 18
14.10 Delegation ................................................ 18
14.11 Claims Procedure .......................................... 18
ARTICLE XV. FEES AND EXPENSES ......................................... 18
ARTICLE XVI. BENEFIT RECIPIENT INCOMPETENT OR DIFFICULT
TO ASCERTAIN OR LOCATE .................................... 18
16.01 Incompetency .............................................. 18
16.02 Difficulty to Ascertain or Locate ......................... 18
ARTICLE XVII. DESIGNATION OF BENEFICIARY ................................ 18
ARTICLE XVIII. SPENDTHRIFT PROVISION AND DISTRIBUTIONS
PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS ........... 18
18.01 General Spendthrift Rule .................................. 18
18.02 Account Division and Distribution Pursuant to Qualified
Domestic Relations Orders ................................. 18
ARTICLE XIX. NECESSITY OF QUALIFICATION ................................ 18
-iv-
<PAGE>
ARTICLE XX. AMENDMENT AND TERMINATION ................................. 18
20.01 Amendment of Termination by the Employer .................. 18
20.02 Delegation ............................................... 18
20.03 Distribution of Accounts Upon Termination ................. 19
ARTICLE XXI. TRANSFERS ................................................. 19
ARTICLE XXII. OWNER-EMPLOYEER PROVISIONS ................................ 19
22.01 Purpose of Section ........................................ 19
22.02 Control ................................................... 19
22.03 Limitations ............................................... 19
ARTICLE XXIII. TOP-HEAVY PROVISIONS ...................................... 19
23.01 Purpose of Section ....................................... 19
23.02 Definitions .............................................. 19
23.03 Minimum Allocation ........................................ 20
23.04 Nonforfeitability of Minimum Allocation ................... 20
23.05 Limitation on Compensation ................................ 20
23.06 Minimum Vesting Schedule ................................. 20
23.07 Effect on Code Section 415 Limitations .................... 20
23.08 Termination of Top-Heavy Status ........................... 20
ARTICLE XXIV. SPECIAL DISTRIBUTION RULES ................................ 20
24.01 Special Distribution Rules for Certain Participants ....... 20
24.02 Definitions ............................................... 20
24.03 Distributions upon Death .................................. 21
24.04 Timing of Annuity Payments and Normal Distributions ....... 22
24.05 Form of Distribution and Optional Times
for Commencement of Distribution .......................... 22
24.06 Elections for Former Participants ......................... 22
24.07 Election Period for Certain Elections
by Separated Participants ................................. 22
24.08 Benefit Form for Certain Former Participants .............. 22
24.09 Notice of Waivability of Qualified Preretirement
Survivor Annuity .......................................... 23
24.10 Notice of Waivability of Qualified Joint
and Survivor Annuity ...................................... 23
ARTICLE XXV. MISCELLANEOUS ............................................. 23
25.01 Misrepresentation ......................................... 23
25.02 No Enlargement of Plan Rights ............................. 23
25.03 No Enlargement of Employment Rights ....................... 23
25.04 Written Orders ............................................ 23
25.05 No Release from Liability ................................. 23
25.06 Discretionary Actions ..................................... 23
25.07 Headings .................................................. 23
25.08 Applicable Law ............................................ 23
25.09 No Reversion .............................................. 23
25.10 Notices ................................................... 23
25.11 Conflict .................................................. 23
</TABLE>
-v-
<PAGE>
SCUDDER
BASIC PLAN DOCUMENT #02
PROTOTYPE 4O1(K) PLAN
ARTICLE I.
INTRODUCTION
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement and the following provisions (the "Prototype 401(k) Plan")
for the exclusive benefit of its Employees and their Beneficiaries.
ARTICLE II.
DEFINITIONS
Where the following words and phrases appear in this Plan, they shall
have the respective meanings set forth below, unless their context clearly
indicates a contrary meaning. The singular herein shall include the plural,
and vice versa, and the masculine gender shall include the feminine gender,
and vice versa, where the context requires.
2.01 "ACCOUNT" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's Salary
Reduction Contribution Account, Deferred Cash Contribution Account, Employer
Profit Sharing Contribution Account, Employer Matching Contribution Account,
Nondeductible Voluntary Contribution Account, Deductible Voluntary
Contribution Account, Rollover Account, and any transfer account established
pursuant to Section 4.07 hereof with respect to funds transferred on the
Participant's behalf.
2.02 "ACT" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2.03 "ADMINISTRATOR" shall mean the person or persons specified in
Section 14.01 hereof.
2.04 "ADOPTION AGREEMENT" shall mean the agreement by which the
Employer has most recently adopted or amended the Plan.
2.05 "ANNUITY STARTING DATE" shall mean the first day of the first
period for which an amount is paid to a Participant (other than loan(s) or
withdrawal(s)) from the Trust (whether or not such distributions are received
in the form of an annuity).
2.06 "APPLICABLE LIFE EXPECTANCY" shall mean the life expectancy of the
Participant or the joint life and last survivor expectancy of the Participant
or the joint life and last survivor expectancy of the Participant and
Beneficiary calculated using the return multiples specified in Section 1.72-9
of the Treasury Regulations. Unless the Participant elects otherwise, life
expectancies for the First Required Distribution Year shall be calculated
using the attained age of the Participant and, if applicable, the Beneficiary
as of his or her birthdate in the First Distribution Calendar Year. Life
expectancies for subsequent calendar years shall be determined by reducing
the life expectancy calculated for the First Required Distribution Year by
one for each calendar year that has elapsed. The Participant may elect prior
to the last day of his or her First Required Distribution Year to have his or
her life expectancy and, if the Participant's Beneficiary is his or her
Spouse, the life expectancy of such Beneficiary, recalculated annually. If a
Participant elects recalculation, life expectancies for a calendar year shall
be determined using the attained age of the Participant and, if applicable,
his or her Beneficiary, in such calendar year.
With respect to a Beneficiary who is entitled to receive a distribution
after the death of a Participant, "Applicable Life Expectancy" shall mean the
life expectancy of the Beneficiary calculated using the return multiples
specified in Section 1.72-9 of the Treasury Regulations as of the
Beneficiary's birthdate in the calendar year in which distributions are
required to commence and be reduced by one for each subsequent calendar year.
If the Beneficiary is the Participant's Spouse, he or she may elect prior to
the time distributions are required to commence to have his or her life
expectancy recalculated annually. If a Spouse so elects, his or life
expectancy for a Distribution Calendar Year shall be determined as of his or
her birthdate in such Distribution Calendar Year.
2.07 "BENEFICIARY" shall mean any person or legal representative
effectively designated by the Participant as a person entitled to receive
benefits on or after the death of a Participant.
2.08 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.09 "COMPENSATION" shall mean:
(a) except as provided in subsection (b) and subject to the limitation
of subsection (c), the amounts paid during the Plan Year by the Employer to
the Employee for services rendered as reportable to the Federal Government on
the Employee's Form W-2 (or Federal income tax purposes plus that which would
have been reportable if not for the application of the salary
reduction/cash-or-deferred provisions of Code Sections 125, 402(a)(8),
402(h)(l)(B), and 403(b), including, except for purposes of Section II of the
Adoption Agreement, Deferred Cash Allocations which the Participant elected
to take in cash. If so specified in the Adoption Agreement, (i) for purposes
of allocating Employer Profit Sharing Contributions, Compensation shall not
include (A) amounts paid to the Employee during a period during which the
Employee was not a Participant and/or (B) bonuses, commissions, overtime
payments or such other form of compensation specified in the Adoption
Agreement, and/or (ii) for the purposes of allocating Employer Profit Sharing
Contributions and/or Article VI below, Compensation shall not include the
Participant's Salary Reduction Contributions, Deferred Cash Contributions and
other amounts which would have been reportable on the Employee's Form W-2 but
for the application of the salary reduction/cash-or-deferred provisions of
Code Sections 125, 402(a)(8), 402(b)(l)(B), and 403(b). In the case of a
Self-Employed Individual, the above determination of Compensation shall be
made on the basis of the Self-Employed Individual's Earned Income.
(b) If this Plan is adopted, (i) as an amendment to an existing plan,
(ii) to remove a disqualifying provision which results from a change in the
qualification requirements of the Code made by the Tax Reform Act of 1986 and
such other legislation as set forth in Section 1.401(b)-1(b)92(ii) of the
regulations under Code Section 401(b), and (iii) within the remedial
amendment period applicable to such disqualifying provision, then for Plan
Years beginning before the date such amendment is adopted, "Compensation"
shall, subject to the limitation of subsection (c), mean compensation as
defined under the terms of the plan prior to its amendment.
(c) For Plan Years beginning on or after January 1, 1989, Compensation
taken into account under the Plan for any year shall not exceed $200,000, as
adjusted for increases in the cost of living at the same time and in the same
manner as under Code Section 415(d). For purposes of applying this
limitation, the rules of Code Section 414(g)(6) shall apply except that the
term "family" shall include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before the close
of the year. If, as a result of the application of such family aggregation
rules the adjusted $200,000 limitation is exceeded, then the limitation shall
be prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this Section prior to the
application of this limitation.
2.10 "DEDUCTIBLE VOLUNTARY CONTRIBUTION ACCOUNT" shall mean the separate
account maintained pursuant to Section 7.03(f) hereof for any deductible
voluntary contributions under Code Section 219 (that the Participant made for
1986 or earlier calendar years) and the income, expenses, gains and losses
attributable thereto.
2.11 "DEFERRED CASH ALLOCATION" shall mean the contribution payable by
the Employer to the Trust on behalf of a Participant subject to the
Participant's right to elect to receive all or a portion of such contribution
in cash in lieu of having it contributed to the Trust on his or her behalf.
2.12 "DEFERRED CASH CONTRIBUTION ACCOUNT" shall mean the separate
account maintained pursuant to Section 7.03(b) hereof for Deferred Cash
Contributions allocated to the Participant and income, expenses, gains and
losses attributable thereto.
2.13 "DEFERRED CASH CONTRIBUTIONS" shall mean contributions to the Trust
by the Employer in accordance with Section 4.02 hereof and which Participants
have not elected to receive in cash.
2.14 "DESIGNATED INVESTMENT" shall mean a regulated investment company
or a collective investment trust for which Scudder, Stevens & Clark, Inc.,
its successor or any of its affiliates, acts as investment adviser or a
collective investment trust administered by the Trustee as trustee for the
collective investment of assets of employee pension or profit sharing trusts,
and which is designated by both Scudder Fund Distributors, Inc. or its
successors and the Plan Administrator, as eligible for investment under the
Plan.
2.15 "DESIGNATION OF BENEFICIARY" or "DESIGNATION" shall mean the
document executed by a Participant under Article XVII.
2.16 "DISABILITY" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or last for a continuous
period of 12 months or more, as certified by a licensed physician selected by
the Participant and approved by the Employer.
2.17 "DISTRIBUTEE" shall mean the Beneficiary or other person entitled
to receive the undistributed portion of the Participant's Account under Article
IX because of death or under Article XVI because of incompetency or inability
to ascertain or locate such individual.
2.18 "DISTRIBUTOR" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.19 "EARNED INCOME" shall mean the net earnings from self-employment in
the trade or business with respect to which the Plan is established, for
which personal services of the Owner-Employee or Self-Employed Individual are
a material income-producing factor. Net earnings will be determined without
regard to items not included in gross income and the deductions allocable to
such items, except that, for taxable years beginning after December 31, 1989,
net earnings shall be determined with regard to the deduction allowed by Code
Section 164(f). Net earnings are reduced by contributions by the Employer to
a qualified plan, including this Plan, to the extent deductible under Code
Section 404.
2.20 "EFFECTIVE DATE" shall mean the date specified by the Employer in
the Adoption Agreement.
2.21 "EMPLOYEE" shall mean an individual who performs services in the
business of the Employer in any capacity (including any individual deemed to
be an employee of the Employer under Code Section 414(n) or (o)).
2.22 "EMPLOYER" shall mean the organization or other entity named as
such in the Adoption Agreement and any successor organization or entity which
adopts the Plan. Unless the adopting organization or entity elects otherwise
in the Adoption Agreement, any two or more organizations or entities which
are members of (a) a controlled group of corporations (as defined under Code
Section 414(b)) which includes the adopter, (b) a group of trades or
businesses (whether or not incorporated) which are under common control (as
defined under Code Section 414(c)) which includes the adopter, or (c) an
affiliated service group (as defined under Code Section 414(m)) which
includes the adopter, will be considered to be the Employer for the purposes
of the Plan. Similarly, any other organization or entity which is required to
be aggregated with the adopter pursuant to Code Section 414(o) and the
regulations thereunder will be considered to be the Employer for the purposes
of the Plan.
2.23 "EMPLOYER CONTRIBUTIONS" shall mean the sum of Employer Profit
Sharing Contributions, Employer Matching Contributions, Salary Reduction
Contributions and Deferred Cash Contributions.
2.24 "EMPLOYER PROFIT SHARING CONTRIBUTION ACCOUNT" shall mean the
separate account maintained pursuant to Section 7.03(c) hereof for Employer
Profit Sharing Contributions allocated to the Participant and income,
expenses, gains and losses attributable thereto.
2.25 "EMPLOYER PROFIT SHARING CONTRIBUTIONS" shall mean contributions to
the Trust by the Employer in accordance with Section 4.03 hereof.
2.26 "EMPLOYER MATCHING CONTRIBUTION ACCOUNT" shall mean the separate
account maintained pursuant to Section 7.03(d) hereof for Employer Matching
Contributions allocated to the Participant and the income, expenses, gains
and losses attributable thereto.
1
<PAGE>
2.27 "EMPLOYER MATCHING CONTRIBUTIONS" shall mean the contributions made
to the Trust by the Employer in accordance with Section 4.04 hereof as
matching contributions.
2.28 "FAMILY MEMBER" shall mean, with respect to a particular Employee,
any individual who is a spouse, lineal ascendant, lineal descendent, or a
spouse of a lineal ascendant or descendent of the Employee. "Family Member"
as used in this Plan refers to an individual who is, or was during the Plan
Year in question, an Employee.
2.29 "FIRST REQUIRED DISTRIBUTION YEAR" shall mean:
(a) in the case of a Participant whose date of birth is July 1,
1917 or a later date, the calendar year during which the Participant attains
age 70 1/2;
(b) in the case of a Participant (i) whose date of birth is June
30, 1917 or an earlier date and (ii) who is not, and has not been at any time
since the calendar year during which he or she attained age 65 1/2, a "5%
owner" (as defined in Code Section 416(i)(1)(B)(i)) of the Employer, the
calendar year during which occurs the later of the Participant's separation
from Service or the Participant's attainment of age 70 1/2, provided that if
the Participant continues in Service after he or she attains age 70 1/2 and
later becomes a "5% owner" (as defined in Code Section 416(i)(1)(B)(i)),
subsection (d) below will apply);
(c) in the case of a Participant (i) whose date of birth is June 30,
1917 or an earlier date and (ii) who is, or has been at sometime since the
calendar year during which he or she attained age 65 1/2, a "5% owner" (as
defined in Code Section 416(i)(1)(B)(i)) of the Employer, the calendar year
during which the Participant attains age 70 1/2; and
(d) in the case of a Participant (i) whose date of birth is June 30,
1917 or an earlier date, (ii) who, on December 31 of the calendar year during
which he or she attained age 70 1/2, satisfied the requirements of subsection
(b) above; (iii) who has remained in the Service of the Employer after the
end of the calendar year during which he or she attained age 70 1/2, and (iv)
who became a "5% owner" (as defined in Code Section 416(i)(1)(B)(i)) of the
Employer during a calendar year subsequent to the one during which he or she
attained age 70 1/2, the calendar year during which occurs the earlier of the
Participant's separation from Service or attainments of the status of a "5%
owner" (as defined in Code Section 416(i)(1)(B)(i)).
2.30 "HIGHLY COMPENSATED EMPLOYEE" shall mean:
(a) any Employee who at any time in the preceding Plan Year or current
Plan Year was a 5-percent owner of the Employer (as defined in Code Section
416(i)(1));
(b) any Employee who, in the preceding Plan Year:
(i) earned more than $75,000 (as adjusted by the Secretary of the
Treasury to reflect rises in the cost of living in accordance with Code
Section 415(d)) in annual compensation;
(ii) was an officer and earned more than 50% of the dollar
limitation plan in effect for that Plan Year under Code Section
4.15(b)(1)(A); or
(iii) earned more than $50,000 (as adjusted by the Secretary of the
Treasury to reflect rises in the cost of living in accordance with Code
Section 415(d)) in annual compensation and was among the top 20% of Employees
when ranked on the basis of compensation paid during the Plan Year (for
purposes of calculating the top 20% of Employees when ranked on the basis of
compensation paid during the Plan Year, from the total number of Employees
there shall be excluded: (A) Employees with less than 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 months per year, (D) except as
provided in Treasury Regulations, Employees covered by a collective
bargaining agreement, (E) Employees who have not attained 21 years of age,
and (F) Employees who are nonresident aliens and who receive no earned income
from the Employer that constitutes income from sources within the United
States);
(c) any Employee not described in paragraph (b) above but who, in the
current Plan Year, (i) is described in clause (i), (ii) or (iii) of paragraph
(b), and (ii) is among the 100 most highly compensated Employees; and
(d) any former Employee who has separated from Service but who was a
Highly Compensated Employee as described in paragraph (a), (b) or (c) above
when he separated from Service or at any time after he attained age 55.
For purposes of this Section, "compensation" shall mean the amount paid
during the Plan Year by the Employer to the Employee for services rendered
(regardless of whether the individual was a Participant at the time) as
reportable to the Federal Government for the purpose of withholding federal
income taxes and increased by an amount to which Code Sections 125, 402(a)(8),
402(h)(l)(B) or 403(b) apply. Also for purposes of this Section, no more than
50 Employees or, if lesser, the greater of 3 Employees or 10% of Employees
shall be treated as officers; however, if no officer has compensation in
excess of the applicable stated dollar amount above in any Plan Year, the
officer with the highest compensation shall be treated as described in
paragraph (b) or (c), as applicable. Finally, all interpretative questions
concerning whether an individual constitutes a Highly Compensated Employee
shall be resolved in a manner consistent with Department of Treasury and
Internal Revenue Service interpretation of Code Section 414(q).
2.31 "HIGHLY COMPENSATED PARTICIPANT" shall mean a Highly Compensated
Employee who is, or was during the Plan Year in question, an active
Participant.
2.32 "HOUR OF SERVICE" shall mean each hour credited to an individual in
the applicable computation period (a 12-consecutive month period) pursuant to
subsection (a) or (b) below, as the case may be.
(a) If the Employer has so selected in the Adoption Agreement, Hours of
Service shall be credited on the basis of weeks of employment and the rules
in paragraphs (i) through (iii) below shall apply as modified by paragraphs
(iv) and (v) below.
(i) Each individual shall be credited with 45 Hours of Service
for each week in which the individual would be credited with at least one
hour of service under Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by reference. In the case of a week
which extends into two computation periods, the Hours of Service for such
week shall be allocated between the two computation periods on a pro rata
basis.
(ii) In the case of a payment made or due to an individual which
is not calculated on the basis of units of time, the number of Hours of
Service to be credited shall be equal to the amount of the payment divided by
the individual's most recent hourly rate of compensation as determined under
Section 2530.200b-2 of the Department of Labor Regulations,
(iii) No more than five hundred one (501) Hours of Service shall be
credited under this Section for any single continuous period (whether or not
such period occurs in a single computation period) during which no duties or
services are performed for the Employer (or any other corporation during a
time when such corporation was related to the Employer within the meaning of
Code Section 414), but for which the individual is paid.
(iv) The following hours shall be considered to be hours of
service for which an individual would be credited under Section 2530.200b-2
of the Department of Labor Regulations for the purposes of subsection (a)(i)
of this Section:
(A) An hour for which an individual is paid, or entitled to
payment, for the performance of duties or services for the Employer (or any
other corporation during a time when such corporation was related to the
Employer within the meaning of Code Section 414).
(B) An hour for which an individual is paid, or entitled to
payment, by the Employer (or any other corporation during a time when such
corporation was related to the Employer within the meaning of Code Section
414) on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including Disability), layoff, jury
duty, military duty or leave of absence (unless such payment is made or due
solely to comply with applicable workman's compensation, unemployment
compensation or disability insurance laws or solely as reimbursement for the
Employee's medical expenses).
(C) An hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer (or any other
corporation during a time when such corporation was related to the Employer
within the meaning of Code Section 414). The same hours shall not be
considered both under paragraph (iv)(A) or paragraph (iv)(B), as the case may
be, and under this paragraph (iv)(C). Such hours shall be treated under
paragraphs (i) through (iii) as occurring in 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.
(v) Solely for the purpose of determining whether a One-Year Break
in Service has occurred, an individual shall be credited with any Hours of
Service which would otherwise have been credited to such individual but for
such absence from work during a Plan Year which commences after December 31,
1984 because of: such individual's pregnancy, birth of a child of the
individual, placement of an adopted child with the individual, or caring of a
natural or an adopted child for a period beginning immediately following
birth or placement.
Hours of Service shall be credited to an individual pursuant to this
paragraph in the manner indicated in paragraphs (i) through (iii) above for
the computation period during which such absence begins, if the individual
would otherwise have suffered a One-Year Break in Service and, in all other
cases, in the next following computation period. No more than 501 Hours of
Service shall be credited under this paragraph by reason of any one placement
or pregnancy. Notwithstanding any implication of this paragraph (v) to the
contrary, no credit shall be given pursuant to this paragraph (v) unless the
individual makes a timely, written filing with the Administrator which
establishes valid reasons for the absence and enumerates the days for which
there was such an absence.
(b) If the Employer has NOT selected in the Adoption Agreement to have
Hours of Service credited on the basis of weeks of employment, Hours of
Service shall mean:
(i) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties are
performed;
(ii) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this subsection shall be calculated and
credited pursuant to section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference;
(iii) Solely for the purpose of determining whether a One-Year Break
in Service has occurred, each hour which normally would have been credited to
an Employee (or in any case in which such hours cannot be determined, eight
hours per day of such absence) but for an absence from work during a Plan
Year which commences after December 31, 1984 because of such individual's
pregnancy, birth of a child of the individual, placement of an adopted child
with the individual, or caring for an adopted or a natural child following
placement or birth. Hours of Service shall be credited to an individual
pursuant to this paragraph for the computation period during which such
absence begins if the individual would otherwise have suffered a One-Year
Break in Service, and in all other cases, in the immediately following
computation period. No more than 501 Hours of Service shall be credited under
this paragraph by reason of any one placement or pregnancy. Notwithstanding
any implication of this paragraph (iii) to the contrary, no credit shall be
given under this paragraph (iii) unless the individual makes a timely,
written filing with the Administrator
2
<PAGE>
which establishes valid reasons for the absence and enumerates the days for
which there was such an absence;
(iv) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (i), (ii) or (iii), as the
case may be, and under this paragraph (iv). These hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made.
Where the Employer maintains the plan of a predecessor employer, service
for such predecessor employer shall be treated as Service of the Employer.
Where the Employer does not maintain the plan of a predecessor employer,
employment by a predecessor employer, upon the written election of the
Employer made in a uniform and non-discriminatory manner, shall be treated as
Service for the Employer, provided that the Employer may only make such an
election if he has adopted this Plan as a nonstandardized plan.
If the Employer is a member of (a) a controlled group of corporations
(as defined under Code Section 414(b)), (b) a group of trades or businesses
(whether or not incorporated) which are under common control (as defined
under Code Section 414(c)), or (c) an affiliated service group (as defined
under Code Section 414(m)), all service of an Employee for any member of such
a group, or for any other entity required to be aggregated with the employer
pursuant to Code Section 414(o) and the regulations thereunder, shall be
treated as if it were Service for the Employer for purposes of this Section.
In addition, except as provided below, service of any individual who is
considered a leased employee of the Employer under Code Section 414(n)(2)
shall be treated as if it were Service for the Employer for purposes of this
Section. However, qualified plan contributions or benefits provided by the
leasing organization which are attributable to services performed for the
Employer shall be treated as provided by the Employer. The provisions of this
paragraph shall not apply to any leased employee.
(a) With respect to services performed prior to January 1, 1987, if
such individual was covered by a money purchase pension plan maintained by
the leasing organization providing:
(i) a non-integrated employer contribution rate of at least
7 1/2% of compensation,
(ii) immediate participation, and
(iii) full and immediate vesting, and
(b) with respect to services performed after December 31, 1986, if
such individual:
(i) is covered by a money purchase pension plan maintained by
the leasing organization providing:
(A) a non-integrated employer contribution rate of at
least 10% of compensation (as defined in Code Section 415(c)(3), but
including amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income under Code
Section 125, 402(a)(8), 402(h), or 403(b).
(B) immediate participation for leasing organization
employees who earn more than $1,000 in a year (other than employees who
perform substantially all their services for the organization), and
(C) full and immediate vesting, and
(ii) is a member of a group of leased employees which in the
aggregate does not constitute more than 20% of the Employer's non-highly
compensated work force (within the meaning of Code Section 414(n)(5)(C)(ii)).
For purposes of this Section, the term "leased employee" means any
person who is not an Employee and who, pursuant to an agreement between the
recipient and any other person, has performed services for the Employer (or
for the Employer 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 Employer.
2.33 "LOAN TRUSTEE" shall mean the Trustee or, if the Employer has
specified otherwise in the Adoption Agreement, the individual or individuals
so appointed to act as trustee solely for the purpose of administering the
provisions of Article XII and holding the Trust assets to the extent that
they are invested in loans pursuant to such Section.
2.34 "NONDEDUCTIBLE VOLUNTARY CONTRIBUTION ACCOUNTS" shall mean the
separate account maintained pursuant to the Section 7.03(e) hereof for
Nondeductible Voluntary Contributions made by the Participant and the income,
expenses, gains and losses attributable thereto.
2.35 "NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS" shall mean all
contributions by Participants which are not deductible voluntary
contributions under Code Section 219, Rollover Contributions, or
contributions of accumulated deductible employee contributions (as defined in
Code Section 72(o)(5)).
2.36 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean an employee who is
neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
2.37 "NON-HIGHLY COMPENSATED PARTICIPANT" shall mean a Non-Highly
Compensated Employee who is, or was during the Plan Year in question, an
active Participant.
2.38 "NORMAL RETIREMENT DATE" or "NORMAL RETIREMENT AGE" shall mean the
date selected by the Employer in the Adoption Agreement.
2.39 "ONE-YEAR BREAK IN SERVICE" shall mean a 12-consecutive-month
period in which an Employee does not complete more than 500 Hours of Service
unless the number of Hours of Service specified in the Adoption Agreement for
purposes of determining a Year of Service is less than 501, in which case a
12-consecutive-month period in which an Employee has fewer than that number
of Hours of Service shall be a One-Year Break in Service. The computation
period over which One-Year-Breaks in Service shall be measured shall be the
same computation period over which Years of Service are measured.
2.40 "OWNER-EMPLOYEE" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than 10%
of either the capital or profits interest of a partnership adopting this Plan
as the Employer. Solely for the purposes of Article XII hereof,
Owner-Employee shall also mean an Employee or officer who owns (or is
considered as owning within the meaning of Code Section 318(a)(1)) on any day
during the Year, more than 5% of the Employer if the Employer is an electing
small business corporation.
2.41 "PARTICIPANT" shall mean an Employee who is eligible to participate
in the Plan under Article III (other than, if this Plan is adopted as
nonstandardized plan, a Self-Employed Individual who elects not to be a
Participant in the Plan) and who has not, since becoming a Participant, died,
retired, otherwise terminated employment with the Employer or transferred
from an eligible class to a class of Employees ineligible to participate in
the Plan. For Purposes of Article XII, "Participant" shall include
Beneficiaries and former Participants.
2.42 "PLAN" shall mean the 401(k) Plan and Adoption Agreement.
2.43 "PLAN YEAR" shall mean the fiscal year of the Employer or a
different 12-consecutive-month period as specified in the Adoption Agreement.
2.44 "PROTOTYPE 401(k) PLAN" shall mean these Articles I to XXV.
2.45 "ROLLOVER ACCOUNTS" shall mean the separate account maintained
pursuant to Section 7.03(g) hereof for any Rollover Contributions (as
described in Section 4.06 hereof) made by the Participant and the income,
expenses, gains and losses attributable thereto.
2.46 "ROLLOVER CONTRIBUTION" shall mean contributions made to the Trust
by participants in accordance with Section 4.06 hereof.
2.47 "SALARY REDUCTION CONTRIBUTION ACCOUNT" shall mean the separate
account maintained pursuant to Section 7.03(a) hereof for Salary Reduction
Contributions made on behalf of the Participant and the income expenses,
gains and losses attributable thereto.
2.48 "SALARY REDUCTION CONTRIBUTIONS" shall mean contributions made to
the Trust by the Employer in accordance with Section 4.01 hereof as a result
of the election by Participants to contribute part of their Compensation.
Salary Reduction Contributions shall be allocated to the Salary Reduction
Accounts of eligible Participants.
2.49 "SELF-EMPLOYED INDIVIDUAL" shall mean an Employee who has Earned
Income for the taxable year from the trade or business for which the Plan is
established or would have had earned income but for the fact that the trade
or business had no net profits for such year.
2.50 "SERVICE" shall mean employment by the Employer and, if the
Employer is maintaining the plan of a predecessor employer, or if the
Employer is not maintaining the plan of a predecessor employer but has so
elected in the manner described in Section 2.31 above, employment by such
predecessor employer.
2.51 "SPONSOR" shall mean any of the organizations (a) which have
requested a favorable opinion letter from the National Office of the Internal
Revenue Service for this Plan or (b) to which a favorable opinion letter for
this Plan has been issued by the National Office of the Internal Revenue
Service.
2.52 "SPOUSE" shall mean the spouse or surviving spouse of the
Participant, provided that a former spouse will be treated as the Spouse and
a current spouse will not be treated as the Spouse to the extent provided
under a qualified domestic relations order (as defined in Code Section
414(p)).
2.53 "TRUST" shall mean the trust established under Article XIII of this
Plan for investment of Trust assets.
2.54 "TRUST FUND" shall mean the contributions to the Trust and any
assets into which such contributions shall be invested or reinvested in
accordance with Sections 13.01 and 13.03 of this Plan.
2.55 "TRUSTEE" shall mean the person or persons, including any successor
or successors thereto, named in the Adoption Agreement to act as trustee of
the Trust and hold the Trust assets in accordance with Article XIII hereof.
2.56 "VALUATION DATE" shall mean the last day of each Plan Year and such
other date(s) as may be designated by the Administrator from time to time.
2.57 "VESTING YEARS" shall be measured on the 12-consecutive-month
computation period specified in the Adoption Agreement. A Participant will
have a Vesting Year during any such computation period if the Participant
completes the number of Hours of Service selected in the Adoption Agreement
for purposes of computing a Year of Service and/or, if the Employer has so
specified in the Adoption Agreement and the computation period is a Plan
Year, if the Participant shares in the allocation of the Employer Profit
Sharing Contribution for the Plan Year. When determining Vesting Years,
unless the Employer has otherwise specified in the Adoption Agreement, there
shall be excluded: (a) if this Plan is a continuation of an earlier plan
which would have disregarded such service, Service before the first Plan Year
to which the Act is applicable; (b) for the purpose of computing a
Participant's vested interest in his or her Accounts to the extent that the
Account is attributable to Employer Contributions made for a period of
employment which preceded a break in Service, Service after a One-Year Break
in Service, where the One-Year Break in Service was completed before the
commencement of the first Plan Year commencing after December 31, 1984 or, in
all other cases, Service after five consecutive One-Year Breaks in Service;
(c) Service before the first Plan Year in which the Participant attained age
18; (d) Service before the Employer maintained this Plan or a predecessor
plan, and (e) Service before January 1, 1971, unless the Participant has
completed at least three Vesting Years after December 31, 1970. For the
purposes of subsection (a) above, service disregarded under a prior plan
includes service credits lost because of a separation or failure to complete
a required period of service within a specified period of time, such lost
service credits may have resulted in the loss of prior vesting or benefit
accrual, or the denial of eligibility to participants.
2.58 "YEAR" shall mean the fiscal year of the Employer.
2.59 "YEAR OF SERVICE" shall mean a 12-consecutive-month period,
beginning on an Employer's initial date of employment or an anniversary
thereof during which the Employee completes the number of Hours of Service
specified in the Adoption Agreement. The initial date of employment is the
first
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day on which the Employee performs an Hour of Service.
ARTICLE III.
ELIGIBILITY
3.01 ENTRY. Each Employee of the Employer, who on the Effective Date of
this Plan meets the conditions specified in the Adoption Agreement, shall
become eligible to participate in the Plan commencing with the Effective
Date. Each other Employee of the Employer, including future Employees, shall
become eligible to participate in the Plan when the eligibility requirements
specified in the Adoption Agreement are met. For the purposes of this Plan's
eligibility requirements, the exclusion concerning Employees who are covered
by collective bargaining agreements applies to individuals who are covered by
a collective bargaining contract between the Employer and Employee
Representatives if contract negotiations considered retirement benefits in
good faith, unless such contract specifically provides for participation in
the Plan. For the purposes of this Section, "Employee Representatives" shall
mean the representatives of an employee organization which engages in
collective bargaining negotiations with the Employer provided that, owners,
officers, and executives of the Employer do not comprise more than 50% of the
employee organization's membership.
3.02 INTERRUPTED SERVICE. All Years of Service with the Employer are
counted towards eligibility except that if the Employer has specified in the
Adoption Agreement that more than one Year of Service is required before
becoming a Participant who is eligible to receive allocations of Employer
Matching Contributions and/or Employer Profit Sharing Contributions, and if
the individual has a One-Year Break in Service before satisfying the relevant
eligibility requirement. Service before such break will not be taken into
account for purposes of determining when the individual is eligible to begin
receiving allocations of Employer Matching Contributions and/or Employer
Profit Sharing Contributions once the individual returns to the employ of the
Employer. A former Participant shall become a Participant immediately upon
return to the employ of the Employer as a member of an eligible class of
Employees.
3.03 TRANSFER TO ELIGIBLE CLASS. 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 shall participate immediately if such Employee has satisfied the
minimum age and Service requirements and would have previously become a
Participant had he or she been a member of an eligible class throughout the
period of employ with the Employer.
3.04 DETERMINATION BY ADMINISTRATOR. Eligibility shall be determined by
the Administrator and the Administrator shall notify each Employee upon his or
her admission as a Participant in the Plan.
ARTICLE IV.
CONTRIBUTIONS
4.01 SALARY REDUCTION CONTRIBUTIONS. If selected by the Employer in the
Adoption Agreement, the Employer will make a Salary Reduction Contribution
(for allocation to the eligible Participant's Salary Reduction Account) on
behalf of each eligible Participant who both (y) has elected to have a
portion of the Compensation which would otherwise have been paid to him or
her for the Plan Year contributed to the Trust and (z) has received
Compensation during the Plan Year. With respect to such elective
contributions, the following provisions shall apply:
(a) during the two-week period commencing immediately prior to the first
day of a given Plan Year, all Participants that the Administrator expects
will be eligible to elect to have Salary Reduction Contributions made on
their respective behalves shall be afforded an opportunity to make an
election to commence having Salary Reduction Contributions made on their
respective behalves;
(b) in addition to the period discussed in subsection (a), continuing
Participants shall be given opportunities to elect to commence having Salary
Reduction Contributions made on their respective behalves at such time or
times as the Administrator elects;
(c) such elections may only be made on a prospective basis and pursuant
to written, salary reduction agreements between Participants and the Employer;
(d) an Employee who becomes eligible to have Salary Reduction
Contributions made on his or her behalf as of a date other than the first day
of a Plan Year shall be given an opportunity to so elect during the two-week
period immediately prior to the date as of which he or she becomes eligible,
provided that, if the Employee becomes eligible to have Salary Reduction
Contributions made on his or her behalf immediately upon becoming an
Employee, the Employee shall be given an opportunity to elect to have Salary
Reduction Contributions made on his or her behalf during the two-week period
immediately following his or her initial date of eligibility;
(e) each such written, salary reduction agreement shall be in such form
and subject to such rules as the Administrator may prescribe, and the
agreement shall specify the amount of Compensation that the Participant
desires to contribute (but in no event may such contribution exceed the
percentage of Compensation specified in the Adoption Agreement);
(f) a salary reduction agreement may be amended or terminated
prospectively during the Plan Year at such times and in such manner as
permitted by rules prescribed by the Administrator; provided, however, that
during the two-week period commencing immediately prior to the first day of
each Plan Year and at such other time or times as the Administrator shall
elect, each eligible Participant (who is expected to continue to be eligible
to have Salary Reduction Elections made on his behalf) shall be afforded an
opportunity to amend or terminate his or her salary reduction agreement.
The Salary Reduction Contribution made for a Participant shall be in an
amount equal to the amount specified in the eligible Participant's salary
reduction agreement; provided, however, that an otherwise acceptable Salary
Reduction Contribution for an eligible Participant may be reduced to the
extent necessary to comply with the limitations of Section 4.08 hereof and
shall be reduced to the extent necessary to comply with the limitations of
Articles V and VI hereof. Any amount which cannot be contributed to the Trust
because of those limitations shall be paid to the Participant in cash and
such payment shall be subject to federal income and other tax withholding by
the Employer.
4.02 DEFERRED CASH CONTRIBUTIONS. If selected by the Employer in the
Adoption Agreement, the Employer will make a Deferred Cash Contribution in an
amount equal to the Deferred Cash Allocation specified in the Adoption
Agreement, as expressed as a percentage of the eligible Participant's
Compensation. If the Employer has specified in the Adoption Agreement that a
minimum number of Hours of Service are necessary to receive a Deferred Cash
Allocation for a Plan Year in which the Plan is not a Top-Heavy Plan (within
the meaning of Section 23.02(b) hereof). Participants and former
Participants, as the case may be, who fail to complete the required number of
Hours of Service during such a Plan Year shall not share in the allocation.
Unless the Employer has specified otherwise in the Adoption Agreement,
Participants eligible to receive Deferred Cash Allocations shall include each
Participant and former Participant who was employed by the Employer during
the Plan Year as an Employee who was eligible to participate in the Plan. If
the Employer has so specified in the Adoption Agreement, Deferred Cash
Allocations shall not be made on behalf of a former Participant who ceased to
be a Participant before the date as of which the Deferred Cash Allocation is
made and allocated.
With respect to eligible Participants' elections not to have amounts
contributed, the following provisions shall apply:
(a) each eligible Participant shall be afforded a reasonable opportunity
to elect not to have Deferred Cash Allocations contributed to the Trust on
his or her behalf at least once during each Plan Year and at such other time
or times as the Administrator elects;
(b) such elections may only be made pursuant to written agreements
between Participants and the Employer;
(c) each such written agreement shall be in such form and subject to such
rules as the Administrator may prescribe, and the election shall specify the
amount of the Deferred Cash Allocation that the Participant desires to receive
in cash; and
(d) the amount which an eligible Participant has elected to receive in
cash pursuant to such an election shall be paid to the Participant by the
Employer no later than the last day on which the Deferred Cash Contributions
for the Plan Year in question must be paid to the Trust under Section 7.02
hereof.
Notwithstanding the above, the Deferred Cash Contribution otherwise to
be made for a Participant may be reduced to the extent necessary to comply
with the limitations of Section 4.08 hereof and shall be reduced to the
extent necessary to comply with the limitations of Articles V and VI hereof.
Any amount which cannot be contributed to the Trust because of those
limitations shall be paid to the Participant in cash and such payment shall
be subject to federal income and other tax withholding by the Employer.
4.03 EMPLOYER PROFIT SHARING CONTRIBUTIONS. If selected by the employer
in the Adoption Agreement, for each Plan Year, the Employer will contribute
as (an) Employer Profit Sharing Contribution(s) the amount determined by it,
in its discretion. Employer Profit Sharing contributions, plus any
forfeitures under Section 8.02 hereof, for a Plan Year shall be allocated as
of a Valuation Date during the relevant Plan Year.
(a) Unless the Employer has specified otherwise in the Adoption Agreement,
each Employer Profit Sharing Contribution and forfeiture shall be allocated
among the Employer Profit Sharing Contribution Accounts of all Participants
and former Participants who were employed by the Employer during the Plan Year.
If the Employer has specified in the Adoption Agreement that former
Participants who were employed by the Employer during the Plan Year but who
are not employed on the last day of the Plan Year must have completed a minimum
number of Hours of Service to receive an allocation of Employer Profit Sharing
Contributions for such Plan Year, such former Participants who fail to complete
the required number of Hours of Service during such a Plan Year shall not
receive an allocation of Employer Profit Sharing Contributions or forfeitures.
(b) If the Employer has so specified in the Adoption Agreement, Employer
Profit Sharing Contributions and forfeitures shall not be allocated to the
accounts of Highly Compensated Participants.
Employer Profit Sharing Contributions and forfeitures shall be allocated
to Participants entitled to share in the allocation of Employer Profit Sharing
Contributions and forfeitures for that Plan Year in proportion to their
Compensation for such Plan Year.
4.04 EMPLOYER MATCHING CONTRIBUTIONS. If selected by the Employer in the
Adoption Agreement, the Employer will make an Employer Matching Contribution
(for allocation together with forfeitures under Section 8.02 below) to the
Participant's Employer Matching Contribution Account for each eligible
Participant for each Plan Year that a contribution within one or more of the
contribution categories selected by the Employer in the Adoption Agreement
(i.e., Salary Reduction Contributions, Deferred Cash Contributions, or
Nondeductible Voluntary Contributions) is allocated to the eligible
Participant's Account. The Employer Matching Contribution made for an
eligible Participant shall be in an amount equal to at least the percentage
specified in the applicable section of the Adoption Agreement multiplied by
the aggregate selected contributions (i.e., Salary Reduction Contributions,
Deferred Cash Contributions (not taken in cash) and/or Nondeductible
Voluntary Contributions) allocated to the eligible Participant's Account for
the Plan Year, but only to the extent that the total of such selected
contributions does not exceed the percentage of the Participant's
Compensation or the dollar amount specified in the Adoption Agreement.
Notwithstanding any implication of the preceding sentence to the contrary,
the Employer Matching Contribution otherwise to be made for a Participant may
be reduced to the extent necessary to comply with the limitations of Section
4.08 hereof and shall be reduced to the extent necessary to comply with the
limitations of Articles V and VI hereof. Any amount which cannot be
contributed to the Trust because of these limitations will be retained by the
Employer, and the Employer shall have no obligation to contribute such amount
to the Trust.
Unless the Employer has specified otherwise in the Adoption Agreement,
Employees eligible to
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receive Employer Matching Contributions shall include all Participants and
former Participants who were employed by the Employer during the Plan Year as
Employees who were eligible to participate in the Plan. If the Employer has
specified in the Adoption Agreement that former Participants who were
employed by the Employer during the Plan Year but who are not employed on the
last day of the Plan Year must have completed a minimum number of Hours of
Service to receive an allocation of Employer Matching Contributions for such
Plan Year, the Employer shall not make contributions on behalf of such former
Participants who fail to complete the required number of Hours of Service
during such a Plan Year.
4.05 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. If, in the Adoption Agreement,
the Employer has specified that Participants may make Nondeductible Voluntary
Contributions, a Participant may make such contributions to his or her
Account; provided, however, that a Participant's right to make such
contribution(s) shall be subject to the conditions and limitations specified
below:
(a) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions, plus any nondeductible voluntary contributions he or she makes
under any other qualified retirement plan maintained by the Employer, shall
not exceed 10% of his or her Compensation (disregarding any exclusions from
Compensation specified by the Employer in the Adoption Agreement and
including any amounts to which Code Section 125, 402(a)(8), 402(h)(1)(B) or
403(b) applies) for the period in which he or she has been a Participant in
the Plan.
(b) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions shall not cause the Annual Addition (as defined in Section
5.05(a) hereof) to his or her Account to exceed the limitations set forth in
Article V.
(c) A Participant's Nondeductible Voluntary Contributions shall be
allocated to his or her Nondeductible Voluntary Contribution Account under
Section 7.03(e) hereof.
4.06 ROLLOVER CONTRIBUTIONS. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express request
of an Employee wishing to make such Rollover Contribution, provided that the
Trustee consents if the contribution includes property other than cash. A
Rollover Contribution shall only be a contribution which is a "rollover
amount" within the meaning of Code Section 402(a)(5) or a "rollover
contribution" within the meaning of Code Section 408(d)(3)(A)(ii) and which
satisfies all other applicable Code Sections. Each Rollover Contribution made
by an Employee shall be allocated to his or her Rollover Account pursuant to
Section 7.03(g) hereof. Such Rollover Account shall be invested by the
Trustee as part of the Trust Fund, pursuant to Article XIII hereafter.
The Administrator may, in its discretion, accept accumulated deductible
employee contributions (as defined in Code Section 72(a)(5)) that were
distributed from a qualified retirement plan and rolled over pursuant to Code
Sections 402(a)(5), 402(a)(7), 403(a)(4), or 408(d)(3). The rolled over
amount will be added to the Participant's Deductible Voluntary Contribution
Account.
4.07 TRANSFERS FROM OTHER QUALIFIED PLANS. The Administrator may, in its
discretion, direct the Trustee to accept the transfer of any assets held for
a Participant's benefit under a qualified retirement plan of a former
employer of such Participant. Such a transfer shall be made directly between
the trustee or custodian of the former Employer's plan and the Trustee in the
form of cash or its equivalent, and shall be accompanied by written
instruction showing separately the portion of the transfer attributable to
contributions by the former employer and by the Participant respectively.
Separate written instructions delivered to the Administrator shall identify
the portion of the transferred funds, if any, attributable to any period
during which the Participant participated in defined benefit plan, money
purchase pension plan (including a target benefit plan), stock bonus plan or
profit sharing plan which would otherwise have provided a life annuity form
of payment to the Participant. The Administrator shall be entitled to rely on
all inclusions and commissions in such written instructions with respect to
character of the transferred funds. To the extent that the amount transferred
is attributable to contributions by the former employer, it shall be
maintained in a separate transfer account. To the extent that the amount
transferred is attributable to contributions by the Participant, it shall be
maintained in the Participant's Nondeductible Voluntary Contribution Account
or Deductible Voluntary Contribution Account as is appropriate.
4.08 LIMITATIONS ON CONTRIBUTIONS. During a Plan Year, Employer Profit
Sharing Contributions and Employer Matching Contributions may not, in the
aggregate, exceed (a) 15% (or such larger percentage as may be permitted by
the Code as a current deduction to the Employer with respect to any Plan
Year) of the total Compensation (disregarding any exclusion from Compensation
specified by the Employer in the Adoption Agreement) paid to, or accrued by
the Employer for, Participants for that Plan Year, less (b) any amounts
contributed as Salary Reduction Contributions and Deferred Cash
Contributions, plus (c) any unused pre-'87 credit carryovers. For this
purpose, a "pre-'87 credit carryover" is the amount by which Employer
Contributions for a previous Plan Year which commenced before January 1, 1987
were less than 15% of the total Compensation (disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement) paid or
accrued by the Employer to Participants for such Plan Year, but such unused
pre-'87 credit carryover shall in no event permit the Employer Contributions
for a Plan Year to exceed 25% (or such larger percentage as may be permitted
by the Code as a deduction to the Employer) of the total Compensation
(disregarding any exclusion from Compensation specified by the Employer in
the Adoption Agreement) paid or accrued by the Employer to Participants for
the Plan Year in question.
4.09 DEDUCTIBLE VOLUNTARY CONTRIBUTIONS. This Plan will not accept
deductible voluntary contributions for taxable years beginning after December
31, 1986. Deductible voluntary contributions made in prior taxable years
shall be maintained in the Participant's Deductible Voluntary Contribution
Account and shall share in the gains and losses of the Trust Fund in
accordance with Section 7.03(f). No part of a Participant's Deductible
Voluntary Contribution Account may be used to purchase life insurance. A
Participant may withdraw all or a portion of his or her Deductible Voluntary
Contribution Account in accordance with Section 10.05(b).
ARTICLE V.
CODE SECTION 415
LIMITATIONS ON ALLOCATIONS
5.01 EMPLOYERS MAINTAINING NO OTHER PLAN.
(a) If a Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund (as defined
in Code Section 419(e)), or an individual medical account (as defined in Code
Section 415(l)(2)) maintained by the Employer, the amount of the Annual
Addition which may be credited to the Participant's Account for any
Limitation Year shall not exceed the lesser of the Maximum Permissible Amount
or any other limitation contained in the Plan.
(b) If the Employer Contribution (including any forfeitures) that
would otherwise be allocated to a Participant's Account would cause the
Annual Addition for the Limitation Year to exceed the Maximum Permissible
Amount, the amount allocated will be reduced so that any Excess Amount shall
be eliminated and, consequently, the Annual Addition for the Limitation Year
will equal the Maximum Permissible Amount.
(i) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly determined for
all Participants similarly situated.
(ii) As soon as is administratively feasible after the end of
each Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of Participants' actual Compensation for the
Limitation Year.
(c) If the allocation of forfeitures or the use by the Employer of
the estimation described in Section 5.01(b)(i) above results in an Excess
Amount, such Excess Amount shall be eliminated pursuant to the following
procedure:
(i) The portion of the Excess Amount consisting of Nondeductible
Voluntary Contributions which are a part of the Annual Addition (as defined
in Section 5.05(a)) shall be returned to the Participant as soon as
administratively feasible;
(ii) If after the application of subparagraph (i) an Excess
Amount still exists and the Participant is covered by the Plan at the end of
a Limitation Year, the Excess Amount in the Participant's Account will be
used to reduce Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) If after the application of subparagraph (i) an Excess
Amount still exists and the Participant is not covered by the Plan at the end
of a Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce
proportionately future Employer Contributions (including any allocation of
forfeitures) for all remaining Participants in the next Limitation Year, and
each succeeding Limitation Year, if necessary. If a suspense account is in
existence at any time during a Limitation Year pursuant to this subparagraph,
it will not participate in the allocation of the Trust's investment gains and
losses. In the event of termination of the Plan, the suspense account shall
revert to the Employer to the extent it may not then be allocated to any
Participant's Account.
(iv) If a suspense account is in existence at any time during a
particular Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participants's Accounts before any Employer
Contributions or Nondeductible Voluntary Contribution may be made to the Plan
for that Limitation Year.
(d) Notwithstanding any other provision in subsections (a) through
(c), the Employer shall not contribute any amount that would cause an
allocation to the suspense account as of the date the contribution is
allocated.
5.02 EMPLOYERS MAINTAINING OTHER MASTER OR PROTOTYPE DEFINED CONTRIBUTION
PLANS.
(a) This Section applies if, in addition to this Plan, a Participant
is covered under another qualified Master or Prototype defined contribution
plan, a welfare benefit fund (as defined in Code Section 419(e)), or an
individual medical account (as defined in Code Section 415(l)(2)) maintained
by the Employer during any Limitation Year. The Annual Addition which may be
allocated to any Participant's Account for any such Limitation Year shall not
exceed the Maximum Permissible Amount, reduced by the sum of any portion of
the Annual Addition credited to the Participant's account under such other
plans, welfare benefit funds, and individual medical accounts for the same
Limitation Year.
(b) If the Annual Addition with respect to a Participant under other
defined contribution plans, welfare benefit funds, and individual medical
accounts maintained by the Employer of what would be portions of the Annual
Addition (if the allocations were made under the Plan) are less than the
Maximum Permissible Amount and the Employer Contribution that would otherwise
be contributed or allocated to the Participant's Account under this Plan
would cause the Annual Addition for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
Annual Addition under all such plans and funds for the Limitation Year will
equal the Maximum Permissible Amount.
(c) If the Annual Addition with respect to the Participant under such
other defined contribution plans, welfare benefit funds, and individual
medical accounts in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to the
Participant's Account under this Plan for the Limitation Year.
(d) Prior to determining the Participant's actual Compensation for
the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in Section 5.01(b)(i)
provided the Employer complies with the provisions of Section 5.01(b)(ii).
(e) If, pursuant to Section 5.02(d) or as a result of the allocation
of forfeitures, a Participant's Annual Addition under this Plan and such
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Participant's annual additions under such other defined contributions plans,
welfare benefit funds, and individual medical accounts would result in an
Excess Amount for a Limitation Year, the Excess Amount will be deemed to
consist of the annual additions last allocated, except that annual additions
attributable to a welfare benefit fund or individual medical account will be
deemed to have been allocated first regardless of the actual allocation date.
(f) If an Excess Amount was allocated to a Participant under this Plan
on a date which coincides with the date an allocation was made under another
plan, the Excess Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date, multiplied
by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
(B) the total Annual Addition allocations to the Participant
for the Limitation Year as of such date under this and all the other
qualified Master or Prototype defined contribution plans maintained by the
Employer.
(g) Any Excess Amount attributed to the Plan will be disposed in the
manner described in Section 5.01.
5.03 EMPLOYERS MAINTAINING OTHER DEFINED CONTRIBUTION PLANS. If a
Participant is covered under another qualified defined contribution plan
which is not a Master or Prototype plan, the Annual Addition credited to the
Participant's Account under this Plan for any Limitation Year will be limited
in accordance with the provisions of Section 5.02 above as though the plan
were a Master or Prototype Plan, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.04 EMPLOYERS MAINTAINING DEFINED BENEFIT PLANS. If the Employer
maintains, or at any time maintained, a qualified defined benefit plan
covering any Participant in this Plan, the sum of the Participant's Defined
Benefit Plan Fraction and Defined Contribution Plan Fraction will not exceed
1.0 in any Limitation Year. The Annual Addition which may be credited to the
Participant's Account under this Plan for any Limitation Year will be limited
in accordance with the provisions of Section 5.02 above, unless the Employer
provides other limitations pursuant to the Adoption Agreement.
5.05 DEFINITIONS. For purposes of this Article, the following terms
shall be defined as follows:
(a) ANNUAL ADDITION. With respect to any Participant, the "Annual
Addition" shall be the sum of the following amounts credited to a
Participant's Account for the Limitation Year.
(i) Employer Contributions;
(ii) forfeitures; and
(iii) for Limitation Years commencing after December 31, 1986,
Nondeductible Voluntary Contributions; and
(iv) for Limitation Years commencing before January 1, 1987, the
lesser of
(A) one-half (1/2) the allocated Nondeductible Voluntary
Contributions or
(B) the amount of allocated Nondeductible Voluntary
Contributions in excess of 6% of the Participant's Compensation for the
Limitation Year.
For the purposes of calculating the amount of Employer Contributions
credited to a Participant's Account, Excess Deferrals distributed on or
before the April 15 deadline described in Section 6.04 below shall not be
considered to be amounts credited to the Participant's Account and Excess
401(k) Contributions distributed to the Participant pursuant to Section 6.06
below, and Excess Matching/Voluntary Contributions distributed to, or
forfeited by, the Participant pursuant to Section 6.08 below shall be
considered to be amounts credited to a Participant's Account.
Any Excess Amount applied under Section 5.01(c) (ii) or (iii) or Section
5.02(e) hereof in a Limitation Year to reduce Employer Contributions will be
considered part of the Annual Addition for such Limitation Year. Amounts
allocated, after March 31, 1984, to an individual medical account (as defined
in Code Section 415(l)(1)) which is part of a pension or an annuity plan
maintained by the Employer, are treated as part of the Annual Addition. Also,
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 Section 23.02(a) hereof) under a welfare benefit fund
(as defined in Code Section 419(e)) maintained by the Employer, are treated
as part of the Annual Addition but only for the purpose of determining
whether the dollar limitation portion of the definition of Maximum
Permissible Amounts has been exceeded; see subsection (j)(i) below.
(b) COMPENSATION. For the purposes of this Article, a Participant's
"Compensation" shall include any earned income, wages, salaries, and fees for
professional services and other amounts received for personal services
actually rendered in the course of employment with the Employer maintaining
the Plan (including, but not limited to commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(i) Employer contributions to a plan of deferred compensation
which are not includible in the Participant's gross income for the taxable
year in which contributed, or Employer contributions under a simplified
employee pension plan, or any distributions from a plan of deferred
compensation;
(ii) Amounts realized from the exercise of a non-qualified stock
option, or when property transferred to the Participant in connection with
the performance of services either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under an incentive stock option; and
(iv) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Code Section
403(b) (whether or not the amounts are actually excludable from the gross
income of the Participant).
For purposes of applying the limitations of this Article, Compensation
for a Limitation Year is the Compensation actually paid or includible in
gross income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant
in a defined contribution plan who is permanently and totally disabled (as
defined in Code Section 22(e)(3)) is the Compensation such Participant would
have received for the Limitation Year if the Participant was paid at the rate
of Compensation paid immediately before becoming permanently and totally
disabled; such imputed compensation for the disabled Participant may be taken
into account only if the Participant is not a Highly Compensated Employee,
and contributions made on behalf of such a Participant are nonforfeitable
when made.
(c) DEFINED BENEFIT FRACTION. The "Defined Benefit Fraction" shall be
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% of the dollar limitation in effect for the Limitation Year
under Code Section 415(b)(1)(A) or 140% of the Participant's Highest Average
Compensation (including any adjustments required by 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% of the sum of the annual benefits under such plans which the
Participant had accrued as of the end 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.
(d) DEFINED CONTRIBUTION DOLLAR LIMITATION. The "Defined Contribution
Dollar Limitation" shall be the greater of: (i) $30,000; or (ii) one-fourth
(1/4) of the defined benefit dollar limitation set forth in Code Section
415(b)(i) as in effect for the Limitation Year.
(e) DEFINED CONTRIBUTION FRACTION. The "Defined Contribution Fraction"
shall be 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)), 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 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% of the dollar
limitation in effect under Code Section 415(c)(1)(A) or 35% of the
Participant's Compensation for such year.
If the Participant 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 Defined Contribution 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:
(i) the excess of the sum of the fractions over 1.0, multiplied by
(ii) the denominator of this Defined Contribution 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 (disregarding any
changes in the terms and conditions of the Plan made after May 5, 1986 but
using the Code Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987). This adjustment also will be made if
at the end of the last Limitation Year beginning before January 1, 1984, the
sum of the fractions exceeds 1.0 because of accruals or additions that were
made before the limitations of this Section 5 became effective to any plans
of the Employer in existence on July 1, 1982. For purposes of this paragraph,
a Master or Prototype plan with an opinion letter issued before January 1,
1983, which was adopted by the Employer on or before September 30, 1983, is
treated as a plan in existence on July 1, 1982.
(f) EMPLOYER. "Employer" means the Employer that adopts this Plan and
all members of (i) a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)), (ii) commonly controlled
trades or business (whether or not incorporated) (as defined in Code Section
414(c) as modified by Code Section 415(h)), or (iii) affiliated service
groups (as defined in Code Section 414(m)) of which the Employer is a part
and (iv) any other entity required to be aggregated with the employer
pursuant to Code Section 414(o) and the regulations thereunder.
(g) EXCESS AMOUNT. The "Excess Amount" is the excess of what would
otherwise be a Participant's Annual Addition for the Limitation Year over the
Maximum Permissible Amount. If at the end of a Limitation Year when the
Maximum Permissible Amount is determined on the basis of the Participant's
actual Compensation for the year, an Excess Amount results, the Excess Amount
will be deemed to consist of the portion of the Annual Addition last
allocated, except that the portion of the Annual Addition attributable to a
welfare benefit fund will be deemed to have been allocated first regardless
of the actual allocation date.
6
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ARTICLE VI.
LIMITATIONS ON DEFERRALS, MATCHING ALLOCATIONS AND VOLUNTARY CONTRIBUTIONS.
6.01 PURPOSE OF ARTICLE AND PRIMACY OF TESTS. This Article attempts
to ensure that Participants do not make excessive Salary Reduction
Contributions, Deferred Cash Contributions and/or Nondeductible Voluntary
Contributions.
(a) In the cases of the limitations discussed in Sections 6.05 and
6.07 below, if a Participant were to make such excess contributions and if
the Participant and Employer fail to promptly undertake appropriate
corrective action, the Employer would be subject to liability for a federal
excise tax under Code Section 4979 and the Plan would lose its qualified
status. Sections 6.03 and 6.04 below apply Code Section 402(g)'s requirements
with respect to the maximum permissible amount of elective deferrals made by
an individual for a single calendar year. Sections 6.05 and 6.06 below apply
Code Section 401(k)'s nondiscrimination rules to Participant's Salary
Reduction Contributions and Deferred Cash Contributions. Sections 6.07 and
6.08 below apply the requirements of Code Section 401(m)'s nondiscrimination
rules to allocations of Participant's Employer Matching Contributions and
Nondeductible Voluntary Contributions.
(b) The Sections of this Article should be applied in ascending
order. First, with respect to the calendar year ending coincident with, or
during a given Plan Year, the Administrator shall take all actions necessary
to ensure that the discrimination tests applicable to Employer Matching
Contributions and Nondeductible Voluntary Contributions (as discussed in
Sections 6.07 and 6.08 below) are satisfied.
6.02 DEFINITIONS. For the purposes of this Article, the following
terms shall be defined as follows:
(a) "ACTUAL DEFERRAL PERCENTAGE" shall be calculated for each
individual by dividing his or her (1) Salary Reduction Contributions, (2)
Deferred Cash Contributions, and (3) Qualified Matching Contributions and
Qualified Non-elective Contributions to be used in calculating the Actual
Deferral Percentage pursuant to Section 6.05(b) below for the Plan Year, by
the individual's Compensation.
For purposes of this calculation, the following rules shall apply:
(i) With respect to a Participant who is a Highly Compensated
Participant because he or she is a 5-percent owner or who is a Highly
Compensated Participant and one of the ten most highly compensated employees,
the Actual Deferral Percentage for such Highly Compensated Participant shall
be the greater of:
(A) The Actual Deferral Percentage determined by combining
(1) the Salary Reduction Contributions, (2) Deferred Cash Contributions, and
(3) Qualified Matching Contributions and Qualified Non-elective Contributions
used in the calculation of the Actual Deferral Percentage pursuant to Section
6.05 (b) below and combining the Compensation of such Highly Compensated
Participant and all Family Members of such Highly Compensated Participant
who are also Highly Compensated Participants and
(B) The Actual Deferral Percentage determined by combining
(1) the Salary Reduction Contributions, (2) Deferred Cash Contributions, and
(3) Qualified Matching Contributions and Qualified Non-elective Contributions
used in the calculation of the Actual Deferral Percentage pursuant to Section
6.05(b) below and combining the Compensation of such Highly Compensated
Participant and all Family Members of such Highly Compensated Participant.
(ii) Except as otherwise provided in regulations issued by the
Secretary of the Treasury, any Excess Deferrals made by an individual to the
Trust shall be treated as Salary Reduction Contributions or Deferred Cash
Contributions, as the case may be, regardless of whether such Excess
Deferrals are distributed pursuant to Section 6.04(c);
(iii) If two or more plans which include cash or deferred
arrangements are considered as one plan for purposes of satisfying the
nondiscrimination and eligibility requirements of Code Section 401(a)(4) or
410(b), such plans shall be treated as one plan for purposes of this
subsection; and
(iv) If the Employer adopts another qualified retirement plan which
includes a qualified cash or deferred arrangement (within the meaning of Code
Section 401(k)(2)) with respect to any Highly Compensated Participant who is
a participant under two or more such cash or deferred arrangements of the
Employer, such Participant's Actual Deferral Percentage shall be calculated
by taking into account relevant portion(s) of the Employer contributions for
such Participant under all such arrangements.
(b) "ACTUAL MATCHING/VOLUNTARY CONTRIBUTION PERCENTAGE" shall be
calculated for each individual by dividing the total of his or her (1)
Nondeductible Voluntary Contributions (including any Elective Deferrals
recharacterized as Nondeductible Voluntary Contributions pursuant to Section
606(c)), (2) subject to paragraph (vi) below, allocations of Employer
Matching Contributions for the Plan Year, and (3) Qualified Non-elective
Contributions to be used in calculating the Actual Matching/Voluntary
Contribution Percentage pursuant to Section 6.07(b) below, by the
individual's Compensation.
For purposes of this calculation the following rules shall apply:
(i) With respect to a Participant who is a Highly Compensated
Participant because he or she is a 5-percent owner or who is a Highly
Compensated Participant and one of the ten most highly compensated employees,
the Actual Matching/Voluntary Contribution Percentage for such Highly
Compensated Participant shall be the greater of:
(A) The Actual Matching/Voluntary Contribution Percentage
determined by combining the (1) Employer Matching Contributions, (2)
Nondeductible Voluntary Contributions, and (3) Qualified Non-elective
Contributions used in the calculation of the Actual Matching/Voluntary
Contribution Percentage pursuant to Section 6.07(b) below and combining the
Compensation of such Highly Compensated Participant and all Family Members of
such Highly Compensated Participant who are also Highly Compensated
Participants, and
(B) The Actual Matching/Voluntary Contribution Percentage
determined by combining the (1) Employee Matching Contributions, (2)
Nondeductible Voluntary Contributions, and (3) Qualified Non-elective
Contributions used in the calculation of the Actual Matching/Voluntary
Contribution Percentage pursuant to Section 6.07(b) below and combining the
Compensation of such Highly Compensated Participant and all Family Members of
such Highly Compensated Participant.
(ii) Allocations of Employer Matching Contributions (and Employer
Profit Sharing Contributions, if any) which represent reallocations of Excess
Matching/Voluntary Contributions which were forfeited pursuant to the
application of Section 6.08(d) below to contributions made for the previous
Plan Year, shall be considered for the Plan Year DURING which such
reallocations are made;
(iii) Allocations of Employer Matching Contributions which represent
reallocations of Employer Matching Contributions which were forfeited
pursuant to the application of Section 8.02 below shall be considered for
the Plan Year FOR which such reallocations are made;
(iv) In the event that this Plan satisfies the requirements of Code
Section 401(a)(4) or 410(b) only if aggregated with one or more other
tax-qualified plans maintained by the Employer, or if one or more other
tax-qualified plans of the Employer satisfy the requirements of Code Section
401(a)(4) or 410(b) only if aggregated with this Plan, such plan(s) shall be
considered to be parts of this Plan for the purposes of this subsection;
(v) If the Employer adopts another qualified retirement plan which
(A) allows a Highly Compensated Participant to make Nondeductible Voluntary
Contributions, (B) provides for allocations of employer matching
contributions on behalf of a Highly Compensated Participant, or (C) includes
a qualified cash or deferred arrangement with respect to a Highly Compensated
Participant, such Participant's Actual Matching/Voluntary Contribution
Percentage shall be calculated by taking into account relevant portion(s) of
the contributions by, or on behalf of, such Participant under all such plans;
and
(vi) To the extent that Employer Matching Contributions are
characterized and allocated as Qualified Matching Contributions pursuant to
Section 6.05(b)(ii) or (iii) below and are utilized by the Administrator for
purposes of satisfying the Section 6.05(a) nondiscrimination test applicable
to Salary Reduction Contributions, such allocations of Qualified Matching
Contributions shall not be included in the calculation of Participants'
Actual Matching/Voluntary Contribution Percentages.
(c) "AVERAGE ACTUAL DEFERRAL PERCENTAGE" shall mean, for the specified
group, the average of the Actual Deferral Percentages for all group members.
For purposes of calculating the Average Actual Deferral Percentage of
Non-Highly Compensated Participants, Family Members whose contributions and
compensation are aggregated with those of a Highly Compensated Participant
pursuant to Section 6.02(a)(i) above shall not be considered.
(d) "AVERAGE ACTUAL MATCHING/VOLUNTARY CONTRIBUTION PERCENTAGE" shall
mean, for the group of Highly Compensated Participants or Non-Highly
Compensated Participants, as the case may be, the average of the Actual
Matching/Voluntary Contribution Percentages for all members of the relevant
group. For purposes of calculating the Average Actual Matching/Voluntary
Contribution Percentage of Non-Highly Compensated Participants, Family
Members whose contributions and compensation are aggregated with those of a
Highly Compensated Participant pursuant to Section 6.02(b)(i) above and shall
not be considered.
(e) "ELECTIVE DEFERRALS" shall mean, for a given calendar year, the sum
of all contributions made on a Participant's behalf by an employer pursuant
to (i) a qualified cash or deferred arrangement (as defined in Code Section
401(k)), (ii) a cash or deferred arrangement under a simplified employee
pension plan (as defined in Code Section 402(h)(1)(B)), (iii) a Code Section
501(c)(18) trust, and (iv) a cash or deferral arrangement under a 403(b)
tax-sheltered annuity arrangement.
(f) "EXCESS DEFERRAL" shall mean:
(i) in the case of a Participant who has not made any other Elective
Deferrals for the calendar year, either:
(A) the amount, if any, by which the Participant's aggregate
Salary Reduction Contributions exceed the Salary Reduction Dollar Cap, or
(B) if applicable, the amount, if any, by which the
Participant's aggregate Deferred Cash Contributions exceed the Salary
Reduction Dollar Cap; and
(ii) in the case of all other Participants, the amount, if any, by
which the Participant's aggregate Salary Reduction Contributions or Deferred
Cash Contributions, when aggregated with the Participant's other Elective
Deferrals exceeds the Salary Reduction Dollar Cap.
(g) "EXCESS DEFERRAL NOTICE" shall mean a written notice given by a
Participant to the Administrator during the period beginning on January 1 and
ending on March 1 of a given calendar year. Such notice shall state that the
Participant has made an Excess Deferral for the previous calendar year and
shall specify the portion of the Participant's Salary Reduction Contribution
or Deferred Cash Contribution (which the Participant has not previously
elected to take in cash) which the Participant has elected to treat as an
Excess Deferral contribution made to the Plan.
(h) "EXCESS 401(k) CONTRIBUTIONS" shall mean the portion of a Highly
Compensated Participant's Salary Reduction Contributions (including
allocations of Qualified Matching Contributions and Qualified Non-elective
Contributions deemed to be Salary Reduction Contributions pursuant to the
provisions of Section 6.05(b) below) or Deferred Cash Contributions which
causes the Participant's Actual Deferral Percentage to exceed the Maximum
Deferral Percentage.
(i) "EXCESS MATCHING/VOLUNTARY CONTRIBUTIONS" shall mean the portion of a
Highly Compensated Participant's allocations of Employer Matching
Contributions and Nondeductible Voluntary Contributions which causes the
Participant's Actual Matching/Voluntary Contribution Percentage to exceed the
Maximum Matching/Voluntary Contribution Percentage.
(j) "MAXIMUM DEFERRAL PERCENTAGE" shall mean the highest permissible
Actual Deferral Percentage for the Highly Compensated Partici-
7
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pants who wish to ensure that they will make the highest possible amount of
Salary Reduction Contributions and/or leave the maximum amount of Deferred
Cash Contributions in the Trust. The Maximum Deferral Percentage shall be a
percentage which will not cause the Average Actual Deferral Percentage for
Highly Compensated Participants to exceed the applicable limitations discussed
in Section 6.05 below. (To the extent required under Section 6.06(b) below,
the Maximum Deferral Percentage shall be determined by reducing allocations
made on behalf of and contributions made by, Highly Compensated Participants
in order of their respective Actual Deferral Percentages beginning with the
highest such percentage.)
(k) "MAXIMUM MATCHING/VOLUNTARY CONTRIBUTIONS PERCENTAGE" shall mean the
highest permissible Actual Matching/Voluntary Contribution Percentage for the
Highly Compensated Participants who wish to ensure that the highest possible
aggregate allocation of Employer Matching Contributions and amount of
Nondeductible Voluntary Contributions are made to their respective Accounts.
The Maximum Matching/Voluntary Contribution Percentage shall be a percentage
which will not cause the Average Actual Matching/Voluntary Contribution
Percentage for Highly Compensated Participants to exceed the applicable
limitations discussed in Section 6.07(a) below. (To the extent required
pursuant to the provisions of Section 6.08 below, the Maximum
Matching/Voluntary Contribution Percentage shall be determined by reducing
allocations made on behalf of, and contributions made by, Highly Compensated
Participants in order of their respective Actual Matching/Voluntary
Contribution Percentages beginning with the highest such percentage.)
(l) "SALARY REDUCTION DOLLAR CAP" shall mean the dollar amount specified
in Code Section 402(g)(1) as adjusted to reflect increases in the cost of
living by the Secretary of the Treasury pursuant to Code Sections 402(g)(5)
and 415(d); for 1987, 1988, and 1989, the specified dollar amounts were
$7,000, $7,313 and $7,627, respectively. The Salary Reduction Dollar Cap shall
also be increased pursuant to Code Sections 402(g)(4) and (8), if applicable,
where a Participant has made Elective Deferrals under one or more 403(b)
tax-sheltered annuity arrangements.
6.03 DOLLAR CAP ON SALARY REDUCTION CONTRIBUTIONS.
(a) Unless the Employer has elected in the Adoption Agreement to further
limit Salary Reduction Contributions, for any calendar year, no Participant
may make (or elect to make) aggregate Salary Reduction Contributions in excess
of the Salary Reduction Dollar Cap. Similarly, unless the Employer has
elected in the Adoption Agreement to further limit Deferred Cash
Contributions, for any calendar year, the aggregate amount of Deferred Cash
Contributions which a Participant does not elect to take in cash may not
exceed the Salary Reduction Dollar Cap. Finally, if the Employer makes both
Salary Reduction Contributions and Deferred Cash Contributions for a given
calendar year, a Participant's aggregate Salary Reduction Contributions and
the aggregate amount of Deferred Cash Contributions the Participant elects
not to take in cash may not total to an amount in excess of the applicable
Salary Reduction Dollar Cap.
(b) In the case of a Participant who for a given calendar year makes an
Elective Deferral to a plan, trust or arrangement other than this Plan, for
such calendar year, the Participant is responsible for ensuring the
Participant's aggregate Elective Deferrals may not exceed the applicable
Salary Reduction Dollar Cap.
6.04 CORRECTIVE PROCEDURE WHEN DOLLAR CAP EXCEEDED.
(a) The Administrator shall determine as of the last day of each
calendar year (and as of such other dates, if any, during the calendar year
as the Administrator elects), each Participant's aggregate amount of Salary
Reduction Contributions and/or Deferred Cash Contributions for the calendar
year in question.
(b) Each Participant who has both elected to have a Salary Reduction
contribution made on his or her behalf for a calendar year and made an Excess
Deferral for the calendar year, may give an Excess Deferral Notice to the
Administrator. Similarly, each Participant on whose behalf the Employer has
elected to make a Deferred cash Contribution(s) and who has made an Excess
Deferral for the calendar year, may give an Excess Deferral Notice to the
Administrator.
(c) In the event the either
(i) the Administrator determines that a Participant has made an
Excess Deferral or
(ii) a Participant gives an Excess Deferral notice to the
Administrator, the Administrator shall distribute all or a portion of such
Excess Deferral (increased by any income attributable thereto) to the
Participant on or before April 15 of the calendar year next following the
calendar year for which the Excess Deferral was made.
(d) Subject to such further adjustment as is required pursuant to
subsection (e) below, the amount by which a distributed Excess Deferral is
increased on account of attributable income or decreased on account of
attributable loss shall be calculated by multiplying the preceding calendar
year's income or loss of the Participant's Salary Reduction Contribution
Account or Deferred Cash Contribution Account, as the case may be, by a
fraction, the numerator of which is the Participant's Excess Deferral amount
to be distributed, and the denominator of which is the Participant's Salary
Reduction Contribution Account balance (or Deferred Cash Contribution Account
balance, if applicable) as of the last day of the calendar year for which the
Excess Deferral was made.
(e) The attributable income or loss to be distributed must include
income and/or loss with respect to both the calendar year for which the
Excess Deferral was made and the period between December 31 of that calendar
year and the date of distribution (the "gap period"). For purposes of
calculating income or loss attributable to the gap period, the Administrator
must use a reasonable method of calculation and may deem, for each month
comprising the gap period (rounding up to a month any period of more than
fifteen days), that the attributable income or loss is equal to 10% of the
income or loss attributable to the Participant's Salary Reduction Contribution
Account or Deferred Cash Account, as the case may be, for the preceding
calendar year.
(f) Any amount distributed to a Participant pursuant to this Section
shall not be subject to any of the consent rules for Participants and Spouses
contained in Articles IX and X below. The Employer shall not be liable for
federal income tax withholding with respect to any amount distributed pursuant
to this Section. Similarly, any such distribution will not make the
Participant liable for the federal taxes applicable to early withdrawals
(Code Section 72(c)) and excess distributions (Code Section 4981A).
6.05 DISCRIMINATION TESTING OF SALARY REDUCTION CONTRIBUTIONS.
(a) Except as provided in subsection (b) below, for each Plan Year,
Participants' Salary Reduction Contributions and Deferred Cash Contributions
must satisfy one of the tests discussed in paragraphs (i) and (ii) below.
When determining whether Participants' contributions during the relevant Plan
Year satisfy the tests below, all Excess Deferrals attributable to
contributions made during the calendar year which ends coincident with, or
during, the Plan Year shall be included. The two tests are:
(i) The Average Actual Deferral Percentage for Highly Compensated
Participants shall not exceed the Average Actual Deferral Percentage for
Non-Highly Compensated Participants multiplied by 1.25.
(ii) The Average Actual Deferral Percentage for Highly Compensated
Participants shall not be more than the lesser of (A) twice the Average
Actual Deferral Percentage for Non-Highly Compensated Participants or (B) the
Average Actual Deferral Percentage for Non-Highly Compensated Participants
plus 2 percentage points or such lesser amount as the Secretary of the
Treasury shall prescribe to prevent the use of this paragraph's limitation
and the limitation discussed in Section 6.07(a)(ii) below. (The Secretary of
the Treasury may prescribe rules which provide that, under certain
circumstances, an amount less than 2 percentage points shall be used; these
rules will affect a plan if the Employer provides both (I) Salary Reduction
Contributions or Deferred Cash Contributions and (II) Employer Matching
Contributions and/or Nondeductible Voluntary Contributions.)
(b) If, as of the last day of a given Plan Year, the Plan is unable to
satisfy either of the tests in subsection (a), this subsection (b) shall
apply.
(i) The Administrator may elect to calculate the tests in
subsection (a) by treating all or a portion of the allocations of Employer
Profit sharing Contributions for the Plan Year as if they were Salary
Reduction Contributions (allocations of Employer Profit Sharing Contributions
so treated shall be considered "Qualified Non-elective Contributions"). The
administrator may only make such an election (A) if the Employer has elected
in the Adoption Agreement to make all Participants, as of the first day when
such contributions are allocated, immediately and fully vested in all
Employer Profit sharing Contributions allocated to their respective Employer
Profit Sharing Contribution Accounts, (B) if the employer subjects such
Qualified Non-elective Contributions to the distribution requirements
applicable to Elective Deferrals and (C) if required by regulations issued by
the Secretary of the Treasury, if the Administrator has not made the election
contained in Section 6.07(b)(i) below.
(ii) The Administrator may elect to calculate the tests in
subsection (a) by treating all or a portion of the allocations of Employer
Matching Contributions for the Plan Year as if they were Salary Reduction
Contributions made for the Plan Year (allocations of Employer Matching
Contributions so treated shall be considered "Qualified Matching
Contributions"). The Administrator may only make such an election if (A) the
Employer has elected in the Adoption Agreement to make all Participants, as
of the first day when such contributions are allocated, immediately and fully
vested in all Employer Matching contributions allocated to their respective
Employer Matching Contribution Accounts, (B) the Administrator separately
accounts for all such allocations by setting up a subaccount within
Participant's Employer Matching Contribution Account and (C) the Employer
subjects such Qualified Matching Contributions to the distribution
requirements applicable to Elective Deferrals.
(iii) If the Plan was eligible to utilize the provisions of
paragraphs (i) and (ii) above, the Administrator may simultaneously elect to
use these provisions.
6.06 CORRECTIVE PROCEDURE WHEN DISCRIMINATORY SALARY REDUCTION
CONTRIBUTIONS ARE MADE.
(A) The Administrator shall have responsibility of monitoring the
Plan's compliance with the limitations of the preceding Section throughout
the Plan Year. The Administrator shall have the discretionary power to take
any and all steps it deems necessary or appropriate to ensure compliance with
those limitations, including, without limitation,
(i) restricting the amount of Salary Reduction Contributions by
Highly Compensated Participants and their Family Members;
(ii) requiring that Highly Compensated Participants and their
Family Members elect to take a greater amount of their Deferred Cash
Contributions in cash than they would otherwise have elected;
(iii) paying amounts which would otherwise comprise an allocation of
the Deferred Cash Contribution to the respective Highly Compensated
Participant or Family Member in cash in lieu of depositing such amounts in
the Trust;
(iv) pursuant to subsection (c) below, recharacterizing all or a
portion of the Excess 401(k) Contributions on behalf of Highly Compensated
Participants (and their Family Members) as Nondeductible Voluntary
Contributions;
(v) pursuant to subsection (d) below, distributing the vested
portion of Excess 401(k) Contributions to the Highly Compensated Participants
and Family Members who made such contributions.
(b) Calculation and recharacterization of a Participant's Excess 401(k)
Contributions shall be made according to the procedure discussed below. The
procedure requires that contributions be reduced exclusively with respect to
those Highly Compensated Participants who, together with their Family
Members, received allocations of Qualified Matching Contributions or
Qualified Non-elective Contributions which, pursuant to Section 6.05(b), were
considered for the purposes of Section 6.05(a), or made Salary Reduction
Contributions or Deferred Cash Contributions, all of which when expressed as
a percentage of their respective Compensations for the Plan Year, were in
excess of the Maximum
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Deferral Percentage
(i) The Excess 401(k) Contributions of the Highly Compensated
Participant(s) (and Family Members(s)) with the highest Actual Deferral
Percentage shall be reduced first, such reduction shall continue, as
necessary, until such individual's (individuals') Actual Deferral Percentage
equal(s) those of the individual(s) with the second highest Actual Deferral
Percentage(s).
(ii) Following the application of paragraph (i), if it is still
necessary to reduce Highly Compensated Participants' (and their Family
Members') Excess 401(k) Contributions, the contributions of (or allocations
on behalf of, if applicable) Highly Compensated Participants (and Family
Member(s)) with the highest and second highest Actual Deferral Percentage
shall be reduced and amounts shall be distributed, as necessary, until such
individuals' Actual Deferral Percentage equal those of the individual(s)
with the third highest Actual Deferral Percentage.
(iii) Following the application of paragraph (iii), if it is still
necessary to reduce Highly Compensated Participants' (and their Family
Members') Excess 401(k) Contributions, the procedure, the beginning of which
is outlined in paragraphs (i) and (ii), shall continue until such time as no
further reductions are necessary.
(iv) The determination and correction of Excess 401(k)
Contributions of a Highly compensated Participant whose Actual Deferral
Percentage is determined by aggregating contributions with Family members
pursuant to Section 6.02(a)(i) shall be made as follows: If the Actual
Deferral Percentage of the Highly Compensated Participant is determined under
Section 6.02(a)(i)(A), then the Actual Deferral Percentage shall be reduced
as required under subsections (i) - (iii) above and the Excess 401(k)
Contributions for the aggregated group of Family Members shall be allocated
among the Family Members in proportion to the Salary Reduction Contributions,
Deferred Cash Contributions, and Qualified Matching Contributions and
Qualified Matching Contributions and Qualified Non-elective Contributions
used pursuant to Section 6.05(b) of each Family Member that are combined to
determine the Actual Deferral Percentage. If the Actual Deferral Percentage of
the Highly Compensated Participant is determined under Section 6.02(a)(i)(B),
then the Actual Deferral Percentage shall be reduced as required under
subsections (i) - (iii) above in two steps. First, the Actual Deferral
Percentage is reduced as required under subsections (i) - (iii) above, but
not below the Actual Deferral Percentage of the group of Family Members who
are not Highly Compensated Participants without regard to the aggregation
required by section 6.02(a)(i). Excess 401(k) Contributions shall be
determined by taking into account the contributions of the Family Members
whose contributions were combined to determine the Actual Deferral Percentage
of the Highly Compensated Participant under Section 6.02(a)(i), and shall be
allocated among such Family Members in proportion to each such Family
Member's Salary Reduction Contributions, Deferred Cash Contributions, and
Qualified Matching Contributions and Qualified Non-elective Contributions
used pursuant to Section 6.05(b). If further reduction of the Actual Deferral
Percentage is required under subsections (i) - (iii) above, Excess 401(k)
Contributions resulting from this reduction shall be determined by taking
into account the contributions of all the Family Members and shall be
allocated among such Family Members in proportion to the Salary Reduction
Contributions, Deferred Cash Contributions and Qualified Matching
Contributions and Qualified Non-elective Contributions used pursuant to
Section 6.05(b) of each Family Member.
(v) The Excess 401(k) Contributions of a Highly Compensated
Participant or Family Member shall be deemed to consist of contributions and
allocations as determined according to the following order of primacy:
(A) First, the Participant's Excess 401(k) Contributions
shall be deemed to consist of any Salary Reduction Contributions or Deferred
Cash Contributions which exceed the highest rate or amount at which Salary
Reduction Contributions or Deferred Cash Contributions are matched, provided,
such contributions shall be offset by any Excess Deferrals distributable to
the Participant pursuant to Section 6.04 above.
(B) Second, the Participant's Excess 401(k) Contributions
shall be deemed to consist of (1) any Salary Reduction Contributions and/or
Deferred Cash Contributions and (2) any Qualified Matching Contributions
(characterized by Section 6.05(b)) each in proportion to the Participant's
total Salary Reduction Contributions and Deferred Cash Contributions and
total Qualified Matching Contributions for the Plan Year; provided, any
Salary Reduction Contributions or Deferred Cash Contributions characterized
as Excess 401(k) Contributions by this subsection (B) shall be offset by any
Excess Deferrals distributable to the Participant pursuant to Section 6.04
above and not taken into account under Section 6.05(c)(v)(A) above.
(C) Third, the Participant's Excess 401(k) Contributions
shall be deemed to consist of any allocations of Employer Profit Sharing
Contributions which were characterized as Qualified Non-elective
Contributions and used to satisfy the Section 6.05(a) nondiscrimination tests
pursuant to Section 6.05(b)(i) or (iii) above.
(c) (i) If, pursuant to subsection (a)(iv) above, the Employer elects
to recharacterize Excess 401(k) Contributions made on behalf of Highly
Compensated Participants (and their Family Members) as Nondeductible
Voluntary Contributions (and their Family Members) as Nondeductible Voluntary
Contributions, the Administrator shall make such recharacterizations on or
before 2 1/2 months after the last day of the Plan Year for which such Excess
401(k) Contributions were made. Recharacterization will be deemed to have
occurred on the date on which the last Highly Compensated Participant (or
Family Member) with excess 401(k) Contributions to be recharacterized is
notified pursuant to subsection (c)(iii)(B).
(ii) Excess 401(k) Contributions may not be recharacterized with
respect to a Highly Compensated Participant to the extent that such
recharacterized Excess 401(k) Contributions, in combination with the
Nondeductible Voluntary Contributions actually made by such Highly
Compensated Participant, exceed the maximum amount of Nondeductible Voluntary
Contributions (determined before application of Section 6.07) that such
Highly Compensated Participant is permitted to make in the absence of
recharacterization.
(iii) Recharacterized Excess 401(k) Contributions shall be treated
as follows:
(A) Recharacterized Excess 401(k) Contributions shall be
included in the Employee's gross income on the earliest date any Salary
Reduction Contributions or Deferred Cash Contributions made on behalf of the
Participant during the Plan Year would have been received by the Employee had
he or she originally elected to receive the amounts in cash.
(B) The Administrator must report such recharacterized Excess
401(k) Contributions as Nondeductible Voluntary Contributions to the Internal
Revenue Service and the Participant by timely providing such forms as the
Internal Revenue Service may require to the Employer and the Participant and
taking any other action required by the Internal Revenue Service.
(C) The Administrator must account for such amounts as
contributions by the Participant for purposes of Code Sections 72 and 6047.
(D) For purposes of Code Section 401(a)(4) and 410(b),
recharacterized Excess 401(k) Contributions shall be treated as Nondeductible
Voluntary Contributions to the extent required in applicable regulations. For
all other purposes under the Code, however, recharacterized Excess 401(k)
Contributions shall continue to be treated as employer contributions which
are Salary Reduction Contributions which are Salary Reduction Contributions
or Deferred Cash Contributions.
(d) (i) If, pursuant to subsection (a)(v) above, the Employer elects
to distribute Excess 401(k) Contributions (increased by attributable income
and decreased by attributable losses) to Highly Compensated Participants (and
their Family Members), the Administrator shall make such distributions (A) on
or before the date which falls 2 1/2 months after the last day of the Plan
Year for which such Excess 401(k) Contributions were made, if the Employer
wishes to avoid liability for the federal excise tax (equal to 10% of the
undistributed Excess 401(k) Contributions) which will be imposed on Excess
401(k) Contributions distributed after such date, and (B) in any case, before
the last day of the Plan Year next following the Plan Year for which such
contributions were made.
(ii) After the Administrator has determined the aggregate amount,
and character, of Excess 401(k) Contributions to be distributed to a given
Highly Compensated Participant (and his or her Family Member(s), the amount
to be distributed shall be increased to reflect any attributable income, or
decreased to reflect any attributable losses.
The attributable income or loss to be distributed or reallocated must
include income and/or loss with respect to both the Plan Year for which the
Excess 401(k) Contributions were made and the period between the last day of
such Plan Year and the date of the distribution (the "gap period").
(A) For the preceding Plan Year, the income (or loss)
attributable to Excess 401(k) Contributions which were Salary Reduction
Contributions shall be equal to the amount produced by (A) multiplying the
total income (or loss) of the Participant's Salary Reduction Contribution
Account for the preceding Plan Year by the participant's Excess 401(k)
Contributions, and (B) dividing the result by the Participant's Salary
Reduction Contribution Account balance as of the end of the preceding Plan
Year and prior to any distribution of Excess 401(k) Contributions. For the
preceding Plan Year, the income (or loss) attributable to Excess 401(k)
Contributions which were allocations of Deferred Cash Contributions and
Qualified Matching Contributions or Qualified Non-Elective Contributions
deemed to be Salary Reduction Contributions pursuant to Section 6.05(b) above
shall be determined in a similar manner.
(B) For the purpose of calculating income or loss
attributable to the gap period, the Administrator must use a reasonable
method of calculation and may deem, for each month comprising the gap period
(rounding up to a month any period of more than fifteen days) that the
attributable income or loss is equal to 10% of the income or loss
attributable to the Participant's Salary Reduction Contribution Account for
the preceding Plan Year. Calculation of gap period income or loss with
respect to Excess 401(k) Contributions which consist of allocations of
Deferred Cash Contributions and Qualified Matching Contributions or Qualified
Non-Elective Contributions deemed to be Salary Reduction Contributions
pursuant to Section 6.05(b) above shall be determined in a similar manner.
(e) After calculation of an amount to be recharacterized or distributed
to a Participant pursuant to the procedure discussed in paragraphs (c) and
(d), if the Participant in question has also made Excess Deferrals during the
calendar year ended within or coincident with the Plan Year, the amount
actually distributed to the Participant shall be adjusted to take into
account such Excess Deferrals pursuant to paragraph (c)(v) above and any
relevant regulations issued by the Secretary of the Treasury.
(f) All actions taken by the Administrator under this Section shall be
pursuant to consistently applied procedures which do not arbitrarily
discriminate in favor of those Highly Compensated Participants (and their
Family Members) whose contribution percentages are nearest to the Maximum
Deferral Percentage.
(g) Any amount distributed to a Highly Compensated Participant or Family
Member pursuant to this Section shall not be subject to any of the consent
rules for Participants and Spouses contained in Articles IX, X, and XXIV
below. Similarly, any such distribution will not make the Participant liable
for the federal taxes applicable to early withdrawals (Code Section 72(c))
and excess distributions (Code Section 4981A).
6.07 DISCRIMINATION TESTING OF EMPLOYER MATCHING CONTRIBUTIONS AND
NONDEDUCTIBLE CONTRIBUTIONS.
(a) Except as provided in subsection (b) below, for each Plan Year,
Participants' allocations of Employer Matching Contributions and
Nondeductible Voluntary Contributions for each Plan Year must satisfy one of
the following tests:
(i) The Average Actual Matching/Voluntary Contribution Percentage
for Highly Compensated Participants shall not exceed the Average Actual
Matching/Voluntary Contribution Percentage for Non-Highly Compensated
Participants multiplied by 1.25.
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(ii) The Average Actual Matching/Voluntary Contribution Percentage
for Highly Compensated Participants shall not be more than the lesser of (A)
twice the Average Actual Matching/Voluntary Contribution Percentage for
Non-Highly Compensated Participants or (B) the Average Actual
Matching/Voluntary Contribution Percentage for Non-Highly Compensated
Participants plus 2 percentage points; or such lesser amount as the Secretary
of the Treasury may prescribe to prevent the simultaneous use of this
paragraph's limitation and the limitation discussed in Section 6.05(a)(ii)
above. (The Secretary of the Treasury may prescribe rules such as those on
Proposed Regulations Section 1.401(m)-2, which provide that, under certain
circumstances, an amount less than 2 percentage points shall be used; these
rules may affect a plan which includes both (I) Employer Matching
Contributions and/or Nondeductible Voluntary Contributions and (II) Salary
Reduction Contributions and/or Deferred Cash Contributions.)
For purposes of determining whether the tests of this subsection are
satisfied in a given Plan Year, Employer Matching Contributions and
Nondeductible Voluntary Contributions deemed to have been allocated to
Participants Accounts for such Plan Year shall be determined pursuant to
regulations issued by the Secretary of the Treasury. The regulations to be
issued by the Secretary of the Treasury will specify the date by which such
contributions must be made if they are to be included when calculating this
subsection's tests for a given Plan Year.
(b) If, as of the last day of a given Plan Year, the Plan is unable to
satisfy either of the tests in subsection (a), this subsection (b) shall
apply.
(i) The Administration may elect to calculate the tests in
subsection (a) by treating as allocations of Employer Matching Contributions
for the Plan Year, the portion, if any, of Employer Profit Sharing
Contributions for the Plan Year not utilized as Qualified Nonelective
Contributions pursuant to Section 6.05(b)(i) or (iii) above to enable the
Plan to meet the Section 6.05(a) nondiscrimination tests for Salary Reduction
Contributions. Allocations of Employer Profit Sharing Contributions so
treated shall be considered "Qualified Non-elective Contributions". The
Administrator may only make such an election if the Employer (A) has elected
in the Adoption Agreement to make all Participants, as of the first day when
such contributions are allocated, immediately and fully vested in all
Employer Profit Sharing Contributions allocated to their respective Employer
Profit Sharing Contribution Accounts and (B) subjects such Qualified
Nonelective Contributions to the distribution requirements applicable to
Elective Deferrals.
(ii) The Administrator may elect to calculate the tests in
subsection (a) by treating all or part of the Salary Reduction Contributions
and/or Deferred Cash Contributions made with respect to Participants for the
Plan Year as Employer Matching Contributions, provided:
(A) Participants' Salary Reduction Contributions and Deferred
Cash Contributions for the Plan Year, including those treated as Employer
Matching Contributions for the purposes of the test in subsection (a),
satisfy the test in Section 6.05(a);
(B) Participants' Salary Reduction Contributions and Deferred
Cash Contributions for the Plan Year, EXCLUDING those treated as Employer
Matching Contributions for purposes of the test in subsection (a), satisfy
the test in Section 6.05(a); and
(C) Except as provided in subsection (A) above, the Salary
Reduction Contributions and Deferred Cash Contributions for the Plan Year
which are treated as Employer Matching Contributions are not taken into
account in determining whether any other contribution or benefit satisfies
the test in Section 6.05(a) or is nondiscriminatory as required in Code
Section 401(a)(4).
(iii) If the Administrator was eligible to elect to utilize the
provisions of either subparagraph (i) or (ii) above, the Administrator may
elect to calculate the tests in subsection (a) by relying on the paragraphs
above in combination.
(c) Determination of whether Participants' allocations of Employer
Matching Contributions and Nondeductible Voluntary Contributions satisfy one
of the tests discussed in subsection (a) above shall be subject to any
requirements prescribed by the Secretary of the Treasury even if such
requirements are not reflected in the provisions of this Plan. Similarly,
determination of the Average Actual Matching/Voluntary Contribution
Percentages and a given individual's Actual Matching/Voluntary Contribution
Percentage shall be subject to such requirements as prescribed by the
Secretary of the Treasury even if such requirements are not reflected in this
Plan.
(d) If one or more Highly Compensated Employees participate in this Plan
and any other plan maintained by the Employer which provides for
contributions that are subject to the nondiscrimination test of Code Section
401(m)(2) and the sum of the actual deferral percentage (as defined in Code
Section 401(k)(3)(B)) and the contribution percentage (as defined in Code
Section 401(m)(3)) of those Highly Compensated Employees to whose Account or
accounts contributions subject to the discrimination tests of Code Sections
401(k)(3), 401(m)(2), or both are allocated exceeds the Aggregate Limit, then
the Actual Matching/Voluntary Contribution Percentage of those Highly
Compensated Employees who participate in this Plan will be reduced (beginning
with the Highly compensated Employee whose Actual Matching/Voluntary
Contribution Percentage is the highest) so that such sum does not exceed the
Aggregate Limit. The amount by which each Highly Compensated Employee's
Actual Matching/Voluntary Contribution Percentage is reduced shall be treated
as an Excess Matching/Voluntary Contribution. The determinations required by
the preceding sentence shall be made after any corrections required to meet
the nondiscrimination tests of Code Sections 401(k)(3) and 401(m)(2). This
paragraph shall not apply if both the actual deferral percentage (as defined
in Code Section 401(k)(3)(B)) and the contribution percentage (as defined in
Code Section 401(m)(2)) of the Highly Compensated Employees does not exceed
1.25 multiplied by the actual deferral percentage (as defined in Code Section
401(k)(3)(B)) and the contribution percentage (as defined in Code Section
401(m)(2)) of the Non-Highly Compensated Employees. For purposes of this
paragraph, "Aggregate Limit" shall mean the sum of (i) 125 percent of the
greater of the Average Actual Deferral Percentage of the Non-Highly
Compensated Employees for the Plan Year or the Average Actual
Matching/Voluntary Contribution Percentage of the Non-Highly-Compensated
Employees to whose Account or accounts contributions subject to the
nondiscrimination test of Code Section 401(m)(2) were allocated for the plan
year beginning with or within the Plan Year and (ii) the lesser of 200
percent or two plus the lesser of such Average Actual Deferral Percentage or
Average Actual Matching/Voluntary Contribution Percentage.
6.08 CORRECTIVE PROCEDURE WHEN DISCRIMINATORY MATCHING OR VOLUNTARY
CONTRIBUTIONS ARE MADE.
(a) The Administrator shall have responsibility of monitoring the Plan's
compliance with the limitations of the preceding Section throughout the Plan
Year. The Administrator shall have the discretionary power to take any and all
steps it deems necessary or appropriate to ensure compliance with those
limitations, including, without limitation,
(i) restricting the amount of Nondeductible Voluntary Contributions
by Highly Compensated Participants and their Family Members;
(ii) pursuant to subsection (c) below, distributing vested Excess
Matching/Voluntary Contributions to the Highly Compensated Participants and
Family Members who received such allocations or made such contributions;
(iii) treating as amounts to be reallocated pursuant to subsection
(d) below, the portion of Excess Matching/Voluntary Contributions which
consists of unvested allocations of Employer Matching Contributions to the
Employer Matching Contribution Accounts of Highly Compensated Participants
and their Family Members, and
(iv) limiting the amount of Employer Matching Contributions
allocated to the Employer Matching Contribution Accounts of Highly Compensated
Participants and their Family Members.
(b) Notwithstanding any other provisions in this Plan, if, pursuant to
subsection (a)(ii) or (iii) above, the Administrator elects to distribute or
reallocate Excess Matching/Voluntary Contributions (increased by attributable
income and decreased by attributable losses), the Administrator shall take
such action(s) (i) on or before the date which falls 2 1/2 months after the
last day of the Plan Year for which such Excess Matching/Voluntary
Contributions were made, if the Employer wishes to avoid liability for the
federal excise tax (equal to 10% of undistributed and unreallocated Excess
Matching/Voluntary Contributions), which will be imposed on Excess
Matching/Voluntary Contributions distributed or reallocated after such date,
and (ii) in any case, before the last day of the Plan Year next following the
Plan Year for which such contributions were made.
(c) Distributions and/or reallocations of Excess Matching/Voluntary
Contributions shall be made according to the procedure discussed below. The
procedure requires that allocations and contributions be reduced (and amounts
be distributed or reallocated) exclusively with respect to those Highly
Compensated Participants who, together with their Family Members, received
allocations of Employer Matching Contributions and/or made Nondeductible
Voluntary Contributions which, when expressed as a percentage of their
respective Compensations for the Plan Year, were in excess of the Maximum
Matching/Voluntary Contribution Percentage. The determination of the amount
of Excess Matching/Voluntary Contributions with respect to a Plan Year shall
be made after determining the amount of excess 401(k) contributions, if any,
to be recharacterized as Nondeductible Voluntary Contributions.
(i) The allocations of Employer Matching Contributions and
Nondeductible Voluntary Contributions of the Highly Compensated
Participant(s) (and Family Member(s)) with the highest percentage
contribution(s) shall be reduced first; such reduction shall continue, as
necessary, until such individual's (individuals') contribution percentage(s)
equal(s) those of the individual(s) with the second highest percentage
contribution percentage(s).
(ii) Following the application of paragraph (i), if it is still
necessary to reduce Highly Compensated Participants' (and their Family
Members') allocations of Employer Matching Contributions and Nondeductible
Voluntary Contributions, the contributions of Highly Compensated Participants
with the highest and second highest contribution percentages shall be
reduced, as necessary, until such individuals' contribution percentages equal
those of the individual(s) with the third highest contribution percentage.
(iii) Following the application of paragraph (iii), if it is still
necessary to reduce Highly Compensated Participants' (and their Family
Members') allocations of Employer Matching Contributions and Nondeductible
Voluntary Contributions, the procedure, the beginning of which is outlined in
paragraphs (i) and (ii), shall continue until such time as no further
reductions are necessary.
(iv) The determination and correction of Excess Matching/Voluntary
Contributions of a Highly Compensated Participant whose Actual
Matching/Voluntary Percentage is determined by aggregating contributions with
Family Members pursuant to Section 6.02(b)(i) shall be made as follows: If
the Actual Matching/Voluntary Percentage of the Highly Compensated
Participants is determined under Section 6.02(b)(i)(A), then the Actual
Matching/Voluntary Percentage shall be reduced as required under subsections
(i)-(iii) above and the Excess Matching/Voluntary Contributions for the
aggregated group of Family Members be allocated among the Family members in
proportion to the Employer Matching Contributions, Nondeductible
Contributions and Qualified Non-elective Contributions used pursuant to
Section 6.07(b) of each Family Member that are combined to determine the
Actual Matching/Voluntary Percentage. If the Actual Matching/Voluntary
Percentage of the Highly Compensated Participant is determined under Section
6.02(b)(i)(B), then the Actual Matching/Voluntary Percentage shall be reduced
as required under subsections (i)-(iii) above in two steps. First, the Actual
Matching/Voluntary Percentage is reduced as required under subsections
(i)-(iii) above, but not below the Actual Matching/Voluntary Percentage of
the group of Family Members who are not Highly Compensated Participants
without regard to the aggregation required by Section 6.02(b)(i). Excess
Matching/Voluntary Contributions shall be determined by taking into account
the contributions of the Family Members whose contributions were combined to
determine
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the Actual Matching/Voluntary Percentage of the Highly Compensated
Participant under Section 6.02(b)(i), and shall be allocated among such
Family Members in proportion to each such Family Member's Employer Matching
Contributions, Nondeductible Voluntary Contributions and Qualified
Nonelective Contributions used pursuant to Section 6.07(b). If further
reduction of the Actual Matching/Voluntary Percentage is required under
subsections (i)-(iii) above, Excess Matching/Voluntary Contributions
resulting from this reduction shall be determined by taking into account the
contributions of all the Family Members and shall be allocated among such
Family Members in proportion to the Employer Matching Contributions,
Nondeductible Voluntary Contributions and Qualified Nonelective Contributions
used pursuant to Section 6.07(b) of each Family Member.
(v) The Excess Matching/Voluntary Contributions of a Highly
Compensated Participant or Family Member shall be deemed to consist of
allocations and contributions as determined according to the following order
of primacy:
(A) First, the Participant's Excess Matching/Voluntary
Contributions shall be deemed to consist of any Excess Deferrals which both
are distributable to the Participant pursuant to Section 6.04 above and were
used to satisfy the Section 6.07(a) nondiscrimination tests pursuant to
Section 6.07(b)(ii) or (iii) above.
(B) Second, the Participant's Excess Matching/Voluntary
Contributions shall be deemed to consist of any Nondeductible Voluntary
Contributions (excluding any Salary Reduction Contributions or Deferred Cash
Contributions recharacterized pursuant to Section 6.06(a)(iv)) which exceed
the highest rate or amount at which Non-deductible Voluntary Contributions
are matched.
(C) Third, the Participant's Excess Matching/Voluntary
Contributions shall be deemed to consist of any Nondeductible Voluntary
Contributions (excluding any Salary Reduction Contributions or Deferred Cash
Contributions recharacterized pursuant to Section 6.06(a)(iv)) and any
Employer Matching Contributions used to satisfy the Section 6.07(a) tests
each in proportion to the Participant's Nondeductible Voluntary Contributions
(excluding any Salary Reduction Contributions or Deferred Cash Contributions
recharacterized pursuant to Section 6.06(a)(iv)) and Employer Matching
Contributions used to satisfy the Section 6.07(a) text for the Plan Year.
(D) Fourth, the Participant's Excess Matching/Voluntary
Contributions shall be deemed to consist of any allocations of Employer
Profit Sharing Contributions which were characterized as Qualified
Nonelective Contributions and used to satisfy the Section 6.07(a)
nondiscrimination tests pursuant to Section 6.07(b)(i) or (iii) above.
(E) Fifth, the Participant's Excess Matching/Voluntary
Contributions shall be deemed to consist of any allocations of Employer
Matching Contributions consisting of Salary Reduction Contributions
consisting of Salary Reduction Contributions or Deferred Cash Contributions
recharacterized pursuant to Section 6.06(a)(iv).
(vi) After the Administrator has determined the aggregate
amount, and character, of Excess Matching/Voluntary Contributions to be
distributed to, or in the case of nonvested Employer Matching Contributions,
reallocated from, the Account of a given Highly Compensated Participant or
Family Member; the amount to be distributed or reallocated shall be increased
to reflect any attributable income, or decreased to reflect any attributable
losses. The attributable income or loss to be distributed or reallocated must
include income and/or loss with respect to both the Plan Year for which the
Excess Matching/Voluntary Contributions were made and the period between the
last day of such Plan Year and the date of the distribution (the "gap
period").
(A) For the preceding Plan Year, the income (or loss)
attributable to Excess Matching/Voluntary Contributions which were
Nondeductible Voluntary Contributions shall be equal to the amount produced
by (A) multiplying the total income (or loss) of the Participant's
Nondeductible Voluntary Contribution Account for the preceding Plan Year by
the Participant's Excess Matching/Voluntary Contributions, and (B) dividing
the result by the Participant's Nondeductible Voluntary Account balance as of
the end of the preceding Plan Year and prior to any distribution of Excess
Matching/Voluntary Contributions. For the preceding Plan Year, the income (or
loss) attributable to Excess Matching/Voluntary Contributions which were
allocations of Employer Matching Contributions or Employer Profit Sharing
Contributions, Salary Reduction Contributions or Deferred Cash Contributions
shall be determined in a similar manner.
(B) For the purpose of calculating income or loss
attributable to the gap period, the Administrator must use a reasonable
method of calculation and may deem, for each month comprising the gap period
(rounding up to a month and any period of more than fifteen days) that the
attributable income or loss is equal to 10% of the income or loss
attributable to the Participant's Nondeductible Voluntary Contribution
Account for the preceding Plan Year. Calculation of gap period income or loss
with respect to Excess Matching/Voluntary Contributions which consist of
allocations of Employer Matching Contributions or Employer Profit Sharing
Contributions, Salary Reduction Contributions or Deferred Cash Contributions
shall be determined in a similar manner.
(vii) After calculation of an amount to be distributed and/or
reallocated to a Participant pursuant to the procedure discussed in
paragraphs (i) through (vi), if the Participant in question has also made
Excess Deferrals during the calendar year ended within or coincident with the
Plan Year, any Salary Reduction Contributions or Deferred Cash Contributions
scheduled to be distributed to the Participant shall be adjusted to take into
account any Excess Deferrals deemed to be Excess Matching/Voluntary
Contributions pursuant to paragraph (v) above and any relevant regulations
issued by the Secretary of the Treasury.
(d) After the procedure outlined in subsection (c) is completed,
all amounts of Excess Matching/Voluntary Contributions other than unvested
allocations of Employer Matching Contributions shall be distributed to the
respective Highly Compensated Participants and Family Members to whose
Accounts the Excess Matching/Voluntary Contributions were made. Subject to
the limitations of Article V above, forfeitable Employer Matching
Contributions which comprise Excess Matching/Voluntary Contributions shall be
reallocated, as of the last day of the Plan Year for which the discrimination
test is calculated, from the Employer Matching Contribution Account(s) of the
relevant Highly Compensated Participant(s) or Family Member(s) to the
Employer Matching Contribution Accounts of Non-Highly Compensated
Participants (other than Highly Compensated Participants' Family Members).
Such reallocation shall be as of the Valuation Date which is coincident with
the date of forfeiture, or, if none, as of the Valuation Date which next
follows the date of forfeiture, in the manner described in Section 4.04 above
applied exclusively with respect to Non-Highly Compensated Participants. All
amounts allocated to the Accounts of Non-Highly Compensated Participants
pursuant to this paragraph shall not be deemed to be Employer Contributions
for any purpose other than the purposes of Article V above.
(e) All actions taken by the Administrator under this Section shall
be pursuant to consistently applied procedures which do not arbitrarily
discriminate in favor of those Highly Compensated Participants whose
contribution percentages are nearest to the maximum Matching/Voluntary
Contribution Percentage.
(f) Any amount distributed to a Highly Compensated Participant or
Family Member pursuant to this section shall not be subject to any of the
consent rules for Participants and spouses contained in Articles IX, X, and
XXIV, below. Similarly, any such distribution will not make the Participant
liable for the federal taxes applicable to early withdrawals (Code Section
72(t)) and distributions (Code Section 4981 A).
ARTICLE VII.
TIME AND MANNER OF
MAKING CONTRIBUTIONS
7.01 MANAGER. Unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one
or more installments.
7.02 TIME. Employer Contributions (other than Salary Reduction
Contributions and Deferred Cash Contributions) with respect to a Plan Year
shall be made before the time limit, including extensions thereof, for filing
the Employer's federal income tax return for the Year with or within which
the particular Plan Year ends (or such later time as is permitted by
regulations authorized by the Secretary of the Treasury or delegate or such
earlier time as the Secretary of the Treasury or delegate prescribes with
respect to contributions used to satisfy the Section 6.05(a)
nondiscrimination tests pursuant to Section 6.05(b) above). Unless the
Secretary of the Treasury prescribes a later date in regulations, Salary
Reduction and Deferred Cash Contributions shall be made within 30 days after
the end of the Plan Year with respect to which they are made. Nondeductible
Voluntary Contributions for a given Limitation Year (as defined in Section
5.05(i) above) must be made during such Limitation year or within 30 days of
the end of the Limitation Year. Rollover Contributions may be made at any
time acceptable to the Administrator in accordance with Section 4.06 hereof.
All contributions shall be paid to the Administrator for transfer to the
Trustee, as soon as possible or, if acceptable to the Administrator and the
Trustee, such contributions may be paid directly to the Trustee. The
Administrator shall transfer such contributions to the Trustee as soon as
possible. The Administrator may establish a payroll deduction system or other
procedure to assist the making of Nondeductible Voluntary Contributions to
the Trust, and the Administrator may from time to time adopt rules or
policies governing the manner in which such contributions may be made so that
the Plan may be conveniently administered.
7.03 SEPARATE ACCOUNTS. For each Participant, a separate account shall
be maintained for each of the following types of contributions and the
income, expenses, gains and losses attributable thereto:
(a) Salary Reduction Contributions, if selected in the Adoption
Agreement;
(b) Deferred Cash Contributions, if selected in the Adoption
Agreement;
(c) Employer Profit Sharing Contributions, if selected in the
Adoption Agreement;
(d) Employer Matching Contributions (including two further separate
accounts if required pursuant to Section 6.05(b)(ii)(B) above), if selected
in the Adoption Agreement;
(e) Nondeductible Voluntary Contributions, if selected in the
Adoption Agreement;
(f) Deductible voluntary contributions, if Participants made such
contributions in past years;
(g) Rollover Contributions, if, pursuant to Section 4.06 hereof,
the Administrator directs the Trustee to accept such contributions; and
(h) funds directly or indirectly transferred from another qualified
retirement plan pursuant to Section 4.07 hereof, if the Administrator directs
the Trustee to accept such transfers.
In addition, pursuant to Section 7.03(d) hereof, separate accounts will
be maintained for the pre-break and post-break Employer Contributions made on
behalf of a Participant who has Service excluded from the calculations of
Vesting Years pursuant to Section 2.56(b) above. Notwithstanding the above,
if a Participant's rights to one or more types of contributions (other than
Employer Matching Contributions which are separately accounted for pursuant
to Section 6.05(b)(ii)(B) above, deductible voluntary contributions, Rollover
Contributions, and transferred amounts) are immediately and fully
nonforfeitable, such types of contributions may be maintained in a single
account.
ARTICLE VIII.
VESTING
8.01 WHEN VESTED. A participant shall always have a fully vested and
nonforfeitable interest in his or her Nondeductible Voluntary Contribution
Account, Deductible Voluntary Contribution Account, Salary Reduction
Contribution Account, Deferred Cash Contribution Account and Rollover
Account, and any transfer account established pursuant to Section 4.07 hereof
on his or her behalf. A Participant's interest in his or her Employer Profit
Sharing Contribution Account and Employer Matching Contribution Account shall
be vested
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and nonforfeitable at Normal Retirement Date, death while in Service,
Disability, upon termination (including a complete discontinuance of Employer
Contributions) or partial termination of the Plan and otherwise only to the
extent specified in the Adoption Agreement.
8.02 EMPLOYER PROFIT SHARING CONTRIBUTION AND EMPLOYER MATCHING
CONTRIBUTION FORFEITURES. If a Participant's employment with the Employer is
terminated before his or her Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account is (are) fully vested in
accordance with Section 8.01, this Section 8.02 shall apply.
(a) The portion(s) of the Participant's Employer Profit Sharing
Contribution Account and/or Employer Matching Contribution Account which is
to be forfeited pursuant to subsection (b) or (c) below shall be treated as
follows:
(i) if the Employer has not specified otherwise in the Adoption
Agreement, the forfeiture(s) shall be allocated as if it (they) were an
Employer Profit Sharing Contribution or Employer Matching Contribution, as the
case may be, for the Plan Year following the Plan Year in which such
forfeiture(s) occur(s), or
(ii) if the Employer so specifies in the Adoption Agreement, the
forfeiture(s) shall be applied to reduce the Employer's obligation to make
Employer Matching Contributions for the Plan Year during which the forfeiture
occurs, provided that if the amount of the forfeiture to be reallocated
exceeds the Employer's then unsatisfied obligation to make Employer Matching
Contributions for the Plan Year, the forfeiture shall be reallocated as if it
were an Employer Profit Sharing Contribution made as of the date of
forfeiture.
(b) If such a Participant completes a period of five consecutive
One-Year Breaks in Service before returning to employment with the Employer,
dying or becoming disabled, or receiving a distribution of his or her entire
vested interest in his or her Employer Profit Sharing Account and/or Employer
Matching Contribution Account, the portion(s) of such account(s) which was
(were) neither vested at the time of the Participant's termination nor
forfeited pursuant to subsection (c) below shall be forfeited and treated as
described in subsection (a) above. Following such a forfeiture, the
Participant shall be vested in all funds which remain in his or her Employer
Profit Sharing Account and/or Employer Matching Contribution Account
immediately after the forfeiture and in all Trust Earnings subsequently
attributed to such funds.
(c) If such Participant receives a distribution of all or a part of the
vested portion of his or her Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account in accordance with Section
10.02 or Section 10.04, this Section shall apply. For purposes of the
preceding sentence, if no portion of the Participant's Employer Profit
Sharing Contribution Account and/or Employer Matching Contribution Account is
vested at the time of his or her termination, such Participant shall be
deemed to have received a distribution under Section 10.04 of zero.
(i) If a Participant receives a distribution of the entire vested
portion of his or her Employer Profit Sharing Account and/or Employer
Matching Contribution Account, the portion(s) of such account(s) which was
(were) not vested at the time of his or her termination shall be forfeited
and treated as described in subsection (a) above.
(ii) If a Participant elects to have distributed less than the
entire portion of his or her Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account which is vested at the time of
his or her termination, the nonvested portion of such account(s) that will be
treated as a forfeiture is such nonvested portion multiplied by a fraction,
the numerator of which is that portion of the Participant's Employer Profit
Sharing Contribution Account and/or Employer Matching Contribution Account
that is distributed, and the denominator of which is the total value of the
vested portion of the Participant's Profit Sharing Employer Contribution
Account and/or Employer Matching Contribution Account. Following such a
forfeiture(s), the Administrator shall determine what percentage of each of
the remaining Employer Profit Sharing Contribution Account balance and/or
Employer Matching Contribution Account balance is vested. Thereafter, the
Participant shall be fully vested in such respective percentage of his or her
Employer Profit Sharing Contribution Account balance and/or Employer Matching
Contribution Account balance and in all Trust earnings subsequently
attributed to such vested portion of the Participant's Employer Profit
Sharing Contribution Account and/or Employer Matching Contribution Account.
(d) No forfeitures shall occur solely as a result of withdrawal of
Deductible Voluntary Contribution, Nondeductible Voluntary Contributions,
Rollover Contributions or amounts held in a transfer account.
(e) If the Participant is reemployed by the Employer after he or she
completes five consecutive One-Year Breaks in Service, an additional Employer
Profit Sharing Contribution Account and/or Employer Matching Contribution
Account, as appropriate, shall be maintained on the Participant's behalf;
provided that, at a subsequent time, the Trustee shall have the discretionary
authority to combine any number of Employer Profit Sharing Contribution
Accounts and/or Employer Matching Contribution Accounts maintained for a
Participant, so long as the Participant is 100% vested in each account so
combined. All subsequent Employer Profit Sharing Contributions and/or
Employer Matching Contributions made on the Participant's behalf shall be
credited to the Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account, as appropriate, which was established at the
time of his or her return to employment with the Employer (or such combined
Employer Profit Sharing Contribution Account(s) and/or Employer Matching
Contribution Account(s) which the Trustee has created pursuant to the powers
granted to the Trustee in the previous sentence). The extent to which the
Participant is vested in any additional Employer Profit Sharing Contribution
Account(s) and/or Employer Matching Contribution Account(s) established on
his or her behalf shall be determined independently in accordance with the
provisions of Section 2.56 above.
(f) If the Participant has received a distribution from his or her
Employer Profit Sharing Contribution Account and/or Employer Matching
Contribution Account pursuant to Article X hereof and if the Participant is
reemployed by the Employer before he or she completes five consecutive
One-Year Breaks in Service:
(i) the Participant's Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Accounts will be restored to the amount
on the date of distribution if the Participant repays to the Plan the full
amount of the distribution attributable to his or her Employer Contribution
Account before the earlier of 5 years after the first date on which the
Participant is subsequently re-employed by Employer, or the date the
Participant incurs 5 consecutive One-Year Breaks in Service following the
date of the distribution or with respect to a Participant who is deemed to
have received a distribution pursuant to this Section 7.02 upon the
reemployment of such Participant, the Employer Contributions Account balance
of the Participant will be restored to the amount on the date of such deemed
distribution; and
(ii) the portion(s) of the Employer Profit Sharing Contribution
Account and/or Employer Matching Contribution Account which is then vested
shall be determined by adding to the then value of the Employer Matching
Contribution Account, as the case may be, the amount, if any, previously
distributed and not repaid to the Trust, applying the vested percentage then
applicable, and then subtracting the amount previously distributed and not
repaid to the Trust.
(g) Each Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account established pursuant to subsection (e) hereof
shall be credited with its proportionate share of Trust earnings and losses.
For the purposes of the remaining Articles of this Plan, (i) all Employer
Profit Sharing Contribution Accounts established in the name of a Participant
shall be treated as if they comprised a single account and (ii) all Employer
Matching Contribution Accounts established in the name of a Participant shall
be treated as if they comprise a single account.
ARTICLE IX.
DISTRIBUTIONS UPON DEATH
9.01 DISTRIBUTIONS AT DEATH. If the Participant dies at a time when he
or she has a vested Account balance, this Section shall apply with respect to
such vested Account balance.
(a) With respect to any such vested Account balance, the Trustee shall,
at the direction of the Administrator, distribute the Participant's Account
in accordance with the provisions of this Section. The Administrator's
direction shall include notification of the Participant's or Beneficiary's
death; the existence or non-existence of a surviving Spouse; the amounts, or
method of calculating the amounts, to be distributed on given dates; the date
on which distribution should commence; and the dates on which any further
distribution should be made.
(b) If the Participant has validly named a Beneficiary or Beneficiaries
in the most recent Designation of Beneficiary filed with the Trustee before
the Participant's death in compliance with Article XVII, his or her vested
account balance shall be distributed to the Beneficiary or Beneficiaries so
named. To the extent that any portion of a vested Account balance of a
deceased Participant is not governed by an effective Designation of
Beneficiary which names at least one living Beneficiary, that portion of the
vested Account balance shall be distributed to the deceased Participant's
Spouse or if that is not possible, to the estate of the deceased Participant.
(c) If the Participant has validly elected a permissible form of
distribution (i.e., a form which complies with the applicable provisions of
subsection (e) below) with respect to his or her vested Account balance, his
or her vested Account balance shall be distributed in accordance with such
election. With respect to any portion of a deceased Participant's vested
Account balance for which the Participant had not validly elected a
permissible form of distribution prior to his or her death, distribution
shall be made in such permissible form as the Participant's Beneficiary (or
Beneficiaries) may elect in a written filing with the Trustee, provided that
the time elected satisfies the requirements of subsection (e) below. In the
absence of such an election:
(i) If the Beneficiary is the Spouse, in substantially equal or
more frequent installments over the Spouse's Life Expectancy.
(ii) If the Beneficiary is not the Spouse, in a lump sum, or
(iii) If distributions have commenced prior to the Participant's
death, in the form selected by the Participant.
(d) If the Participant has validly elected a permissible time for
commencement of distribution (i.e., a commencement date which complies with
the applicable provisions of subsection (e) below) with respect to his or her
vested Account balance, his or her vested Account balance shall be
distributed in accordance with such election. With respect to any portion of
a deceased Participant's vested Account balance for which the Participant has
not validly elected a permissible time for commencement of distribution,
distribution shall commence at such time as the Participant's Beneficiary (or
Beneficiaries) may elect in a written filing with the Trustee, provided that
the time elected satisifes the requirements of subsection (e) below. In the
absence of such a valid election of a time for commencement of distribution,
distribution shall commence: (i) if the Beneficiary is the Spouse, on the
later of (A) the first January 1 which follows the calendar year during which
the Participant would have attained age 70 1/2 or (B) the second January 1
which follows the Participant's death or (ii) if the Beneficiary is not the
Spouse, on the second January 1 which follows the Participant's death.
(e) Distribution to the Participant's Beneficiary shall be made
according to the following provisions:
(i) If the Participant dies before distributions had commenced on
account of the Participant's attainment of his or her First Required
Distribution Year and if the Spouse is not the Beneficiary, the Participant's
entire vested Account balance must be distributed to the Participant's
Beneficiary either (A) on or before December 31 of the calendar year during
which occurs the fifth anniversary of the Participant's death, or (B) in
substantially equal annual or more frequent installments over a period not
exceeding the life expect-
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<PAGE>
ancy of the oldest Beneficiary (as determined as of the date of the
Participant's death by using the return multiples contained in Section 1.72-9
of the Treasury Regulations) provided that such distributions commence before
the second January 1 which follows the Participant's death.
(ii) If the Participant dies before distributions had commenced on
account of the Participant's attainment of his or her First Required
Distribution Year and if the Spouse is the Beneficiary, the Participant's
entire vested Account balance must be distributed to the Participant's Spouse
either (A) in a lump sum payable, or in installments which will be completely
paid, on or before December 31 of the calendar year during which occurs the
fifth anniversary of the date of the Participant's death, or (B) in annual
installments over the Spouse's life or a period not longer than the Spouse's
Applicable Life Expectancy provided that such distribution is commenced
before the later of (I) the first January 1 following the calendar year
during which the Participant would have attained age 70 1/2 had the
Participant not died or (II) the second January 1 which follows the
Participant's death.
(iii) If a Participant dies after attaining his or her First
Required Distribution Year and distributions to the Participant had
commenced, distributions to the Participant's Spouse, Beneficiary or estate
shall continue over a period at least as rapid as the period selected by the
Participant.
(f) If a Participant's Beneficiary dies after the Participant and before
he or she receives full payment of the portion of the Participant's vested
Account balance to which he or she is entitled, the Trustee shall, upon
direction of the Administrator, distribute the funds to which the deceased
Beneficiary is entitled to the beneficiary or beneficiaries validly named on
the most recent Designation of Beneficiary filed by the Beneficiary with the
Trustee before the Beneficiary's death. To the extent that any portion of the
funds to which the deceased Beneficiary was entitled are not governed by an
effective Designation of Beneficiary, the funds shall be distributed to the
deceased Beneficiary's surviving spouse, or if that is not possible, to the
estate of the deceased Beneficiary. The Administrator's death and the
existence or non-existence of a direction shall include notification of the
Beneficiary's surviving spouse.
(i) If distributions had commenced before the Participant's death,
distribution to the beneficiary of a deceased Beneficiary shall continue over
a period at least as rapid as that selected by the Participant.
(ii) If the deceased Beneficiary was the surviving Spouse of the
Participant and the deceased Beneficiary had not begun to receive
distributions from the Participant's Account at the time of his or her death,
the Participant's vested Account balance shall be distributed to the deceased
Beneficiary's beneficiary according to the provisions of this Section applied
as if the Beneficiary were the Participant. In addition, the surviving
Spouse's beneficiaries shall be treated as Beneficiaries during any future
application of this Section.
(iii) If neither subparagraph (i) nor (ii) above apply, the
Participant's vested Account balance shall be distributed to the deceased
Beneficiary's beneficiary either (A) on or before December 31 of the calendar
year during which occurs the fifth anniversary of the Participant's death or
(B) in substantially equal annual or more frequent installments over the
remainder of the life expectancy of the oldest Beneficiary as that life
expectancy was determined at the Participant's death (by using the return
multiples contained in section 1.72-9 of the Treasury Regulations) provided
that distributions commence (or commenced) before the second January 1 which
follows (followed) the Participant's death.
(g) If a beneficiary of a Beneficiary (or a beneficiary) dies before he
or she has received full payment of the portion of the Participant's vested
Account balance to which he or she is entitled, the Trustee shall, after
notification by the Administrator of the beneficiary's death, distribute the
funds to which the deceased beneficiary is entitled to the beneficiary or
beneficiaries validly named on the most recent Designation of Beneficiary
filed by the deceased beneficiary with the Trustee before the beneficiary's
death. To the extent that any portion of the funds to which the deceased
beneficiary was entitled are not governed by an effective Designation of
Beneficiary, the funds shall be distributed to the deceased beneficiary's
surviving spouse, or if that is not possible, to the estate of the deceased
beneficiary.
(i) If distributions had commenced before the Participant's death,
distribution to the beneficiary of a deceased beneficiary shall continue over
a period at least as rapid as that selected by the Participant.
(ii) In all other cases, the Participant's Account shall be
distributed to the deceased beneficiary's beneficiary either (A) on or before
December 31 of the calendar year during which occurs the fifth anniversary of
the Participant's death or (B) in substantially equal annual or more frequent
installments over the remainder of the life expectancy of the oldest
Beneficiary as that life expectancy was determined at the Participant's death
(by using the return multiples contained in Section 1.72-9 of the Treasury
Regulations) provided that distributions commence (or commenced) before the
second January 1 which follows (followed) the Participant's death.
9.02 CHILDREN AS BENEFICIARIES. For the purposes of Section 9.01, any
distribution paid to a Participant's child shall be treated as paid to the
Participant's surviving Spouse if such amount becomes payable to the
surviving Spouse when the child reaches the age of majority.
9.03 NONCONSENSUAL DISTRIBUTIONS TO BENEFICIARIES. Notwithstanding any
provision of Article XI or Article XXIV to the contrary, the Administrator
may direct the entire vested Account Balance of a deceased Participant
(exclusive of his or her Rollover Account and Deductible Voluntary
Contribution Account) be distributed if the amount distributed will be equal
to $3,500 or less. The Administrator may make such direction without
obtaining the consent of any Beneficiary.
ARTICLE X.
OTHER DISTRIBUTIONS
10.01 TIMING OF NORMAL DISTRIBUTIONS. Payment of distributions pursuant to
the normal form of distribution discussed in the next Section shall commence
within 60 days after the close of the Plan Year during which occurs the later
of (a) the Participant's Normal Retirement Date or (b) the earlier of the
Participant's separation from Service or the end of his or her First Required
Distribution Year. Payment of benefits may, at the discretion of the Trustee,
be paid directly to the Participant or to the Administrator, as payee agent.
10.02 NORMAL FORM AND OPTIONAL TIMES AND FORMS OF DISTRIBUTION. The vested
Account balance of a Participant to which Article IX does not apply, shall be
distributed in a form determined according to this Section.
(a) The Participant's vested Account balance will normally be
distributed in monthly installments over a period equal to the shorter of 120
months or the Applicable Life Expectancy. The monthly amount shall normally
be the balance of the Participant's vested Account balance divided by the
remaining number of months in such period, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed and
adjusted from time to time no more frequently than monthly as the Trustee may
reasonably determine.
(b) The Participant may elect one or more of the following variations
from the normal pattern of distribution, provided that the distribution shall
otherwise comply with the requirements of this Plan:
(i) Distribution made or commencing before the Participant's Normal
Retirement Date and following the Participant's Disability or separation from
Service.
(ii) With respect to the portion of a Participant's Account which
is not comprised of the Participant's Salary Reduction Contribution Account,
Deferred Cash Contribution Account, Employer Profit Sharing Contribution
Account (to the extent that amounts in the employer Profit Sharing
Contribution Account are attributable to contributions not considered
pursuant to Section 6.05(b) above for purposes of satisfying either the
nondiscrimination test applicable to salary Reduction Contributions or
contributions considered pursuant to Section 6.07(b) above for purposes of
satisfying the nondiscrimination test applicable to Salary Reduction
Contributions or contributions considered pursuant to Section 6.07(b) above
for purposes of satisfying the nondiscrimination test applicable to Employer
Matching Contributions and Nondeductible Voluntary Contributions (Qualified
Non-elective Contributions)) AND the Employer Matching Contribution Account
(to the extent that amounts in the Employer Matching Contribution Account are
attributable to amounts not considered pursuant to Section 6.05(b) above for
purposes of satisfying the nondiscrimination test applicable to Salary
Reduction Contributions and/or Deferred Cash Contributions (Qualified
Matching Contributions)), distribution made or commencing before the
Participant's Normal Retirement Date. Distribution of amounts excluded from
the preceding sentence may be made or commence before Participant's Normal
Retirement Date and following the Participant's attainment of age 59 1/2.
(iii) Distributions made or commencing after the normal time of
distribution described in Section 9.01; provided, however, that any such
deferred distribution must commence no later than 60 days after the end of
the Participant's First Required Distribution Year.
(iv) Distribution of the Participant's entire vested Account
balance in a lump sum, provided that the Participant requests such
distribution in writing.
(v) Installment payments of a fixed amount, such payments to be
made until exhaustion of the Participant's vested Account balance.
(vi) Distribution in kind.
(vii) Any reasonable combination of the foregoing or any reasonable
time or manner of distribution within the above-stated limitations.
10.03 REQUIRED MINIMUM DISTRIBUTIONS. In the case of each Participant,
the annual distribution from his or her Account shall be determined in
accordance with the regulations under Code Section 401(a)(9) including the
minimum distribution incidental benefit requirement of Section 1.401(c)(9)-2
of such regulations and must equal or exceed the amounts described in (a) and
(b) below.
(a) For calendar years beginning before January 1, 1989, the minimum
distribution to be made for each calendar year beginning with the First
Required Distribution Year shall be the amount equal to the quotient obtained
by dividing the Participant's Account balance at the beginning of the
calendar year by the Applicable Life Expectancy. If the Participant's Spouse
is not the Beneficiary, the method of distribution used must ensure that at
least 50% of Present Value (as defined in Section 23.02(h) hereof) of the
Participant's vested Account balance at the time distributions commence is
paid within the life expectancy of the Participant.
(b) For calendar years beginning after December 31, 1988, the minimum
distribution to be made for each calendar year beginning with the First
Required Distribution Year shall be the amount equal to the quotient obtained
by dividing the Participant's Account balance at the beginning of the
calendar year by the lesser of (i) the Applicable Life Expectancy, or (ii) if
the Participant's Spouse is not the Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
regulations under Code Section 401(a)(9).
10.04 NONCONSENSUAL DISTRIBUTIONS. Notwithstanding any provision of
Article IX, this Article or Article XXIV to the contrary, the Administrator
may direct that the entire vested Account balance of a former Participant
(exclusive of his or her Rollover Account and Deductible Voluntary
Contribution Account) be distributed if the amount distributed will be equal
to $3,500 or less. The Administrator may make such direction (a) only if the
former Participant has not previously attained his or her Annuity Starting
Date and (b) regardless of whether the former Participant requests or
otherwise consents to such distribution.
10.05 DISTRIBUTION OF PARTICIPANT CONTRIBUTION ACCOUNTS.
(a) Nondeductible Voluntary Contribution Account. A Participant may
withdraw all or a
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portion of his or her Nondeductible Voluntary Contribution Account upon 30
days' written notice to the Administrator.
(b) Deductible Voluntary Contribution Account. A Participant may withdraw
all or a portion of his or her Deductible Voluntary Contribution Account upon
written application to the Administrator. However, if at the time the
Participant receives the withdrawal, he or she has not attained age 59 1/2
and is not disabled, the Participant will be subject to a federal income tax
penalty unless within 60 days of the date he or she receives it, he or she
rolls over the amount withdrawn to an individual retirement plan or, if the
Participant can satisfy the requirement contained in Section 4.06(b) above, a
qualified retirement plan.
(c) Rollover Account. A participant (or his or her beneficiary, if
applicable) may withdraw all or a portion of the Participant's Rollover Account
upon 30 days' written notice to the Administrator. However, if the
Participant has neither attained age 59 1/2 nor died before the date of the
withdrawal, the Participant will be subject to a federal income tax penalty
unless one of the following paragraphs apply:
(i) within 60 days of the date he or she receives it, he or she
rolls the amount withdrawn to an individual retirement plan or, if the
Participant can satisfy the applicable Code requirements, a qualified
retirement plan;
(ii) the withdrawal is attributable to the Participant's disability
(within the meaning of Code Section 72(m)(7));
(iii) the withdrawal is part of a series of annual or more
frequent, substantially equal, periodic payments over the life expectancy of
the Participant or the joint and last survivor life expectancy of such
Participant and a Beneficiary and such payments begin shortly after the
Participant separates from Service;
(iv) the withdrawal is made by the Participant after the
Participant has separated from Service at or after age 55; or
(v) the withdrawal (when aggregated with all other distributions the
Participant has received from qualified retirement plan trusts during the
calendar year) does not exceed the amount that the Participant can claim as a
Federal Income Tax deduction for amounts paid during the calendar year for
medical care.
10.06 SPECIAL ONE-TIME DISTRIBUTION ELECTION. Notwithstanding any Plan
provision to the contrary, distribution on behalf of any Employee, including
a 5-percent owner (as defined in Code Section 416(i)(1)(B)(i)), may be made in
accordance with the following requirements (regardless of when such
distribution commences):
(a) The distribution is one which would not have disqualified the Plan
under Code Section 401(a)(9) as it was in effect prior to its amendment by
the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being distributed
or, if the Participant has died, by a beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or
the beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of December
31, 1983.
(e) The method of distribution designated by the Participant or the
beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Participant's death, the Beneficiaries of the
Participant are listed in order of priority.
(f) If the distribution is one to which the provisions of Article XXIV
hereof would otherwise have applied and the Participant is married, the
Participant's Spouse consents to the election in a writing filed with the
Administrator.
A distribution upon death will not be covered by this Section unless the
information in the designation contains the required information described
above with respect to the distributions to be made upon the death of the
Participant.
For any distribution which commenced before January 1, 1984, but
continues after December 31, 1983, the Participant, or the Beneficiary, to
whom such distribution is being made, will be presumed to have designated
the method of distribution under which the distribution is being made if the
method of distribution was specified in writing and the distribution
satisfies the requirement in subsections (a) and (e) above.
If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) as amended. Any changes in the
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be considered to be
a revocation of the designation, so long as such substitution or addition
does not alter the period over which distributions are to be made under the
designation, directly or indirectly (for example, by altering the relevant
measuring life).
10.07 DISTRIBUTION ON ACCOUNT OF PLAN TERMINATION. If the Employer
terminates the Plan or completely discontinues making Employer Contributions
to the Trust, the Administrator has discretion pursuant to Section 20.03
below to distribute, or retain in the Trust, Participants' Account balances.
With respect to Participants' Salary Reduction Contribution Accounts and/or
Deferred Cash Contribution Accounts, however, the Administrator shall not
direct that distributions be made pursuant to this Section and Section 20.03
below, if a successor plan to the Plan is established.
ARTICLE XI.
DISTRIBUTION ON HARDSHIP
11.01 HARDSHIP DISTRIBUTION. If elected by the Employer in the Adoption
Agreement, the Trustee shall, upon the direction of the Administrator,
distribute all or a portion of a Participant's Salary Reduction Contribution
Account and/or Deferred Cash Contribution Account (but not earnings on such
account which accrue after December 31, 1988) prior to the time such accounts
are otherwise distributable in accordance with Articles IX and X hereof,
subject to the provisions of this Article.
11.02 HARDSHIP DEFINED. Any such distribution shall be made only if, and
the amount of such distribution shall be limited to the extent that, the
Participant demonstrates that he or she is suffering from "hardship." A
Participant shall be considered to be suffering from "hardship" only if the
distribution is both made on account of an immediate and heavy financial need
of the Participant and is necessary to satisfy such financial need,
determined in accordance with objective, nondiscretionary standards as set
forth in this Section.
(a) An "immediate and heavy financial need" shall be deemed to include,
and shall be limited to, the following:
(i) Medical expenses described in Code Section 213(d) incurred by
the Participant, his or her Spouse, or any dependents of the Participant (as
defined in Code Section 152);
(ii) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) Payment of tuition for the next semester or quarter of
post-secondary education for the Participant, his or her spouse, children, or
dependents; or
(iv) The need to prevent the eviction of the Participant from his
or her principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) A distribution will be created as "necessary" to satisfy an
immediate and heavy financial need of the Participant only if:
(i) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained
by the Employer;
(ii) All plans maintained by the Employer provide that the
Participant's Salary Reduction Contributions and/or Deferred Cash Contributions
(and Nondeductible Voluntary Contribution) will be suspended for twelve
months after the receipt of the hardship distribution;
(iii) The distribution is not in excess of the amount of an
immediate and heavy financial need; and
(iv) All plans maintained by the Employer provide that the
Participant may not make Salary Reduction Contribution and/or Deferred Cash
Contributions for the Participant's taxable year immediately following the
taxable year of the hardship distribution in excess of the applicable limit
under Code Section 402(g) for such taxable year less the amount of such
Participant's Salary Reduction Contributions and/or Deferred Cash Allocations
for the taxable year of the hardship distribution.
11.03 MANNER OF DISTRIBUTION. A distribution under this Article shall be
made in a lump-sum payment to the Participant.
ARTICLE XII.
LOANS
12.01 AVAILABILITY OF LOANS. If, in the Adoption Agreement, the Employer
has specified that loans to Participants are permitted, the Loan Trustee
shall, upon the direction of the Administrator, make one or more loans,
including any renewal thereof, to a Participant (other than a Participant who
is an Owner-Employee). Any such loan shall be subject to such terms and
conditions as the Administrator shall determine pursuant to a written uniform
policy adopted by the Administrator for this purpose, which policy shall be
incorporated herein as part of the Plan, at least as restrictive as required
by this Article, and, with respect to loans granted or renewed on or after
the last day of the first Plan Year beginning on or after January 1, 1989,
contain specific provisions setting forth: (a) the identity of the person or
postions authorized to administer the loan program; (b) a procedure for
applying for loans; (c) the basis upon which loans will be approved or
denied; (d) limitations, in addition to those described in this Section 10,
on the types and amount of loans offered; (e) the procedure under the program
for determining a reasonable rate of interest; (f) the types of collateral
which may secure a loan; and (g) the events constituting default and the
steps that will be taken to preserve plan assets in the event of such default.
12.02 SPOUSAL CONSENT REQUIRED. If this Plan is adopted as a plan which
is subject to the special annuity rules discussed in Article XXIV below, to
obtain a loan, a Participant must obtain the consent of his or her Spouse, if
any, within the 90-day period before the time his or her Account balance is
used as security for the loan. Furthermore, a new consent is required if an
increase in the amount of the security is necessary and any of the remaining
balance of the Account is used. A spousal consent to a loan must be in
writing, witnessed by a Plan representative or notary public, and acknowledge
that as a result of a default in repayment of the loan the Spouse may be
entitled to a lesser death benefit than he or she would otherwise receive
under the Plan. A Spouse shall be deemed to consent to any loan which is
outstanding at the time of his or her marriage to the Participant.
12.03 EQUIVALENT BASIS. No such loan may be made to a disqualified
person within the meaning of Code Section 4975(e), unless such loans are
available to all Participants and Beneficiaries on a reasonably equivalent
basis and are not made available to Highly Compensated Employees in an amount
which, when stated as a percentage of any such Participant's or Beneficiary's
Account, is greater than is available to any other Participants or
Beneficiaries.
12.04 LIMITATION ON AMOUNT. The amount of any such loan, when added to
the outstanding balance of all other loans from the Trust (and any other
qualified retirement plans of the Employer's) to the Participant or
Beneficiary, shall not exceed the lesser of:
(a) $50,000 reduced by the amount by which (i) the highest outstanding
balance of all such loans to the Participant or Beneficiary during the
one-year period ending on the day before the date on which the loan is made
exceeds (ii) the outstanding balance of such loans to the Participant or
Beneficiary on the date on which such loan is made; or
(b) with respect to loans granted or renewed on or before October 18,
1989, the amount determined pursuant to the following chart:
<TABLE>
<CAPTION>
VESTED MAXIMUM AMOUNT
ACCOUNT BALANCE OF LOAN
- --------------- --------------
<S> <C>
$0-$10,000 100% of vested Account balance
$10,000-$20,000 $10,000
$20,000-$100,000 50% of vested Account balance
over $100,000 $50,000
</TABLE>
14
<PAGE>
with respect to loans granted or renewed on or after October 19, 1989, the
amount determined pursuant to the following chart.
<TABLE>
<CAPTION>
Vested Maximum Amount
Account Balance of Loan
--------------- -------
<S> <C>
$0 - $100,000 50% of vested Account balance
over $100,000 $50,000.
</TABLE>
The value of the Participant's or Beneficiary's Account balance shall be
as determined by the Administrator; provided, however, that such
determination shall in no event take into account the portion of the
Participant's or Beneficiary's Account attributable to the Participant's
Deductible Voluntary Contribution Account.
12.05 MAXIMUM TERM. The term of any such loan shall not exceed 5 years;
provided, however, that such limitation shall not apply to any loan used for
the purchase of a 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.
12.06 PROMISSORY NOTE. Any such loan shall be evidenced by a promissory
note executed by the Participant and payable to the Loan Trustee, on the
earliest of (i) a fixed maturity date meeting the requirements of Section
12.05 above, but in no event later than the Participant's Normal Retirement
Date, (ii) the Participant's death, or (iii) when distribution hereunder is
to be made to the Participant (other than a withdrawal which will not reduce
the value of his or her Account to the extent that the aggregate amount owing
could not be made as a new loan within the limitation set forth in Section
12.04 above). Such promissory note shall evidence such terms as are required
by this Article.
12.07 ADEQUATE SECURITY. Each loan and related promissory note shall be
secured by an assignment of the Participant's Account to the Loan Trustee. A
Participant may also provide such other or additional security for the loan
as the Loan Trustee may require or permit; when determining whether to
require additional security, the Loan Trustee shall give special
consideration to whether the adequate security exists in light of Code
imposed restrictions which may limit the Loan Trustees ability, under certain
circumstances, to liquidate all or a portion of the Participant's vested
Account.
12.08 REPAYMENT. In addition to executing a promissory note, the
Participant who desires to take out a loan shall enter into a payroll
reduction agreement with the Employer or such other form of repayment
agreement with the Employer as the Administrator permits from time to time.
The Participant shall enter into such agreement on or before the date when
the loan is made. Such agreement shall provide that, if the Participant
defaults on the loan while he or she is still an Employee, the Employer shall
be entitled to reduce the Participant's pay in sufficient increments to
ensure that, over a reasonable period of time, the amount with respect to
which the Participant has defaulted plus any interest owed and any costs of
collection incurred by the Loan Trustee will be repaid to the Trust. The
Employer shall promptly pay to the Loan Trustee all amounts that the Employer
withholds from a Participant's pay pursuant to such a payroll reduction
agreement or other repayment agreement. The Administrator and/or Loan Trustee
shall credit all amounts withheld from a Participant's pay or collected
pursuant to a repayment agreement to the relevant Participant's Account as
payments of amounts owed on the note. The Administrator shall make such
arrangements with former Participants and Beneficiaries as he may, in his
discretion determine from time to time.
12.09 INTEREST. Any such loan shall be subject to a reasonable rate of
interest.
12.10 LEVEL AMORTIZATION. A Participant shall repay the principal of any
loan according to a schedule which shall provide for level amortization over a
period of the loan, with payments to be made no less frequently than quarterly.
12.11 REPAYMENT. If a Participant fails to make a payment in accordance
with the schedule developed in accordance with the requirements of Section
12.10 above or if at any time the Administrator determines that the aggregate
amount owing by a Participant upon such notes exceeds the vested value of the
Participant's Account, the Administrator shall notify the Participant in
writing that if the relevant loan principal and accumulated and unpaid
interest thereon is not paid within 30 days, action will be taken to collect
such amounts plus any cost of collection. When collecting such amounts, the
Loan Trustee may utilize any of the remedies available to it including those
provided by the promissory note, Section 12.08 above's payroll reduction
agreement and applicable law. If a note is not paid when the Participant's
benefits hereunder are to be distributed, then any unpaid portion of such
loan, and unpaid interest thereon, and any costs of collection incurred by
the Loan Trustee shall be deducted by the Loan Trustee from the Participant's
Account before benefits are paid from or purchased out of the Account. Such
deduction shall, to the extent thereof, cancel the indebtedness of the
Participant. Notwithstanding any implication of the preceding sentence to the
contrary, no attachment of the Participant's Salary Reduction Account,
Deferred Cash Contribution Account, Employer Profit Sharing Contribution
Account (to the extent that amounts in the Employer Profit Sharing
Contribution Account are attributable to contributions either considered
pursuant to Section 6.05(b)(i) or (iii) above for the purposes of satisfying
either the nondiscrimination test applicable to Salary Reduction
Contributions or contributions considered pursuant to Section 6.07(b)(i) or
(iv) above for the purposes of satisfying the nondiscrimination test
applicable for Employer Matching Contributions and Nondeductible Voluntary
Contributions) or Employer Matching Contribution Account (to the extent that
amounts in the Employer Matching Contribution Account are attributable to
amounts considered pursuant to Section 6.05(b)(ii) or (iii) above for
purposes of satisfying the nondiscrimination test applicable to Salary
Reduction Contributions and/or Deferred Cash Contributions shall occur until
a distributable event occurs under Articles IX or X (or if it is otherwise
applicable, Article XXIV) hereof.
12.12 ACCOUNTING. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the Account attributable to the
Participant's Deductible Voluntary Contribution Account) requesting the
loan, and shall be treated a an investment of such Account. All interest
payments made with respect to such loan shall be credited to the
Participant's Account.
12.13 PRECEDENCE. This Article overrides Section 18.01 below.
ARTICLE XIII
TRUST PROVISIONS
13.01 MANNER OF INVESTMENT. All contributions to the Account of a
Participant shall be held in trust by the Trustee designated in the Adoption
Agreement. Except to the extent that a Participant's Account is invested in a
loan pursuant to Article XII hereof, the Account of a Participant may only be
invested and reinvested in Designated Investments, unless the Distributor
permits less than 100% of the Trust assets to be so invested. If the
Administrator or the Participant, as the case may be, has elected to have a
portion of an Account invested in other than Designated Investments and the
Distributor has authorized the investment of less than 100% of Trust assets
in such investments, the Trustee shall invest such amount in such investments
as it is empowered to invest in under Section 13.03 hereof. Both the
Designated Investments and investments other than Designated Investments
available for investment may be limited by the Administrator. Investment in
more than one Designated Investment is not permitted unless the value of the
Participant's Account and the value of the investment in each additional
Designated Investment exceed amounts from time to time determined by the
Distributor.
If the Trustee invests in one or more collective investment funds
administered by the Trustee (or any affiliate of the Trustee) as trustee
thereof for the collective investment of assets of employee pension or
profit-sharing trusts, and such collective investment fund constitutes a
qualified trust under the applicable provisions of the Code, such collective
investment funds shall constitute part of the Plan, and the instrument
creating such funds shall constitute part of this Agreement of Trust while
any portion of the Trust is so invested.
13.02 INVESTMENT DECISION.
(a) The decision as to the investment of an Account shall be made by the
person designated in the Adoption Agreement, and the Trustee shall have no
responsibility for determining how an Account is to be invested or to see
that investment directions communicated to it comply with the terms of the
Plan. If the decision is made by the Participant, the Participant shall
convey investment instructions to the Administrator and the Administrator
shall promptly transmit those instructions to the Trustee. Further, if the
decision is to be made by the Participant, the right to make such a decision
shall remain with the Participant upon retirement and shall pass to the
Distributee upon death.
(b) The person designated to make the decision as to the investment of
an Account may direct that the investment medium of an Account be changed,
provided that no such change may be made from or to an investment other than
a Designated Investment except to the extent permitted under Section 13.01
above and by the terms of that other investment vehicle. Notwithstanding the
foregoing, the Administrator may from time to time establish uniform,
nondiscretionary rules with respect to the frequency or times at which
changes in the investment medium of the Account may be made. If the
Distributor determines in its own judgment that there has been trading of
Designated Investments in the Accounts of the Participants, any Designated
Investment may refuse to sell to such Accounts. When an investment is being
made or changed, the person designated to do so shall specify the type of
Account to which the change refers.
(c) If any decision as to investments is to be made by the
Administrator, it shall be made on a uniform basis with respect to all
Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the Trustee
or to the transfer agent for the Designated Investment or for any other
investment permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the decision
as to the investment of an Account, the Administrator shall ascertain that
the Participant has received a copy of the current prospectus relating to any
Designated Investment in which such Account is to be invested where required
by any state or federal law. With respect to contributions designated for
investment by a Participant, by remitting such a contribution to the Trustee,
the Administrator shall be deemed to warrant to the Trustee for the benefit
of the appropriate Designated Investment and its principal underwriter (if
applicable) that the Participant has received all such prospectuses. By
remitting any other contribution to the Trustee, the Administrator shall be
deemed to warrant to the Trustee for the benefit of the appropriate
Designated Investment and its principal underwriter (if applicable) that the
Administrator has received a current prospectus of any Designated Investment
in which the contribution is to be invested where required by any state or
federal law.
13.03 INVESTMENT POWERS. To the extent that a portion of the Trust
assets are invested other than in Designated Investments pursuant to Section
13.01 above, the Trustee is hereby granted full power and authority to invest
and reinvest the Trust assets in any property of any kind or nature
whatsoever (speculative or otherwise) or in any rights or interests therein,
or in any evidences or indicia thereof and whether real, personal or mixed,
or whether tangible or intangible (including for illustration but not to be
limited to the following or anything of a similar kind, character or class;
common or preferred stocks, evidences or ownership in so-called Massachusetts
business trusts, fees, beneficial interests, leaseholds, bonds, mortgages,
leases, notes or obligations, oil and gas payments, oil and gas contracts,
other securities, instruments or commodities, investments in property
yielding little or no income and shares of regulated investment companies)
without regard to any rule of law or statute of the state of the Trustee
designating investments eligible for trust funds, and without respect to any
custom or practice either as to types of investments or diversification of
investments, and to hold cash uninvested at any time and from time to time in
such amounts and to such extent as the Trustee in its own uncontrolled
discretion and judgement deems advisable; provided, however, that the Trustee
is to act with the care,
15
<PAGE>
skill and diligence, under the circumstances then prevailing which would
characterize the actions of a prudent man who is acting as such a Trustee and
who is familiar with duties of such a Trustee; further provided that the
Trustee shall diversify the investments of the Trust Fund so as to minimize
the risk of large losses unless, under the circumstances, such
diversification would not be prudent; further provided that the Trustee is
not empowered to enter into any investment which would be prohibited under
the Act or otherwise by the provisions of this Plan.
Notwithstanding the above, the following restrictions on the investment
of a Participant's Account shall apply:
(a) No part of a Participant's Deductible Voluntary Contribution Account
may be used to purchase life insurance.
(b) At most, less than one-half of the aggregate Employer Contributions
allocated to a Participant's Employer Contribution Account may be used to pay
premiums attributable to the purchase of ordinary life insurance contracts
(life insurance contracts with both nondecreasing death benefits and
non-increasing premiums).
(c) No more than one-quarter of aggregate Employer Contributions
allocated to a Participant's Employer Contribution Account may be used to pay
premiums on term life insurance contracts, universal life insurance
contracts, and all other life insurance contracts which are not ordinary life
insurance contracts.
(d) One-half of the amount used to pay premiums on ordinary life
insurance contracts plus the amount used to pay premiums on all other life
insurance contracts may not exceed an amount equal to one-quarter of the
aggregate Employer Contributions allocated to a Participant's Employer
Contribution Account.
(e) No part of a Participant's Account shall be applied towards the
purchase of any insurance contract unless (i) the Trustee applies for and is
the owner of such contract, (ii) the contract provides that all contract
proceeds shall be paid to the Trustee, and (iii) the contract provides for
distributions to the Participant's Spouse, as necessary to ensure compliance
with the applicable requirements of Article IX, X and XXIV.
(f) Amounts used to pay premiums on, or purchase, any insurance
contract(s) on the life of a Participant shall be paid first from that
portion of the Participant's Nondeductible Voluntary Contribution Account
which represents Nondeductible Voluntary Contributions made by the
Participant prior to January 1, 1987, provided that the Plan, as of May 5,
1986, permitted withdrawal of Nondeductible Voluntary Contributions before
separation form Service. Amounts used to pay premiums on, or purchase, any
insurance contract(s) on the life of a Participant which exceed that portion
of the Participant's Nondeductible Voluntary Contribution Account described
in the preceding sentence shall be paid first from the portion of the
Participant's Nondeductible Voluntary Contribution Account which represents
the remaining Nondeductible Voluntary Contributions made by the Participant
and then, except as provided in paragraph (a) above, from such other of the
Participant's Accounts as the Administrator directs pursuant to the
Participant's election.
(g) Except as provided in Section 22.01, any insurance contract(s) on
the life of a Participant will be converted to cash or distributed to the
Participant as of the Participant's Annuity Starting Date, provided, that if
this Plan is adopted as a money purchase pension plan, such contract(s) may,
subject to Section 9.02, be converted to an annuity as of the Participant's
annuity Starting Date.
(h) Any dividends or credits earned on insurance contract(s) will be
allocated to the Employer Contribution Account of the Participant for whose
benefit the contract is held, provided, however, that if an insurance
contract was purchased with a Participant's Nondeductible Voluntary
Contributions, such dividends or credits which are attributable to the
Participant's Nondeductible Voluntary Contributions shall, to the extent
treated as a return of premium, be credited to the Participant's
Nondeductible Voluntary Contribution Account.
If a Participant's Account is invested in one or more insurance
contracts, the Trustee is required to pay over all proceeds of the
contract(s) to the Participant's Beneficiary or Beneficiaries in accordance
with the terms of this Plan and under no circumstances shall the Trust retain
any contract proceeds.
13.04 APPOINTMENT OF INVESTMENT MANAGER.
Subject to Sections 13.01 and 13.03 above, the Administrator may
designate, and the Employer may contract with, Scudder, Stevens & Clark Inc.,
or its successor or any affiliate, to act as investment manager (within the
meaning of the Act), and may at any time revoke such designation. If an
investment manager is so designated, the Trustee shall follow all investment
directions given by the investment manager with respect to the retention,
investment and reinvestment of the Plan assets to the extent they are under
the control of such investment manager. If permitted by the Trustee, the
investment manager may issue orders for the purchase and sale of securities,
including orders through any affiliate of such investment manager. Such an
investment manager is specifically allowed to direct or make investments in
any Designated Investment. The Trustee shall not be liable for following any
direction given by, or any actions of, an investment manager so appointed.
13.05 TRUSTEE: NUMBER, QUALIFICATIONS AND MAJORITY ACTION.
(a) The Employer shall designate one or more Trustees. Any natural
person and any corporation having power under applicable law to act as a
trustee of a pension or profit sharing plan may be a Trustee. No person shall
be disqualified from being a Trustee by being employed by the Employer, by
being the Administrator, by being a trustee under any other qualified
retirement plan of the Employer or by being a Participant in this Plan or
such other qualified plan.
(b) A Trustee holding office as sole Trustee hereunder shall have all
the powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. When there are two or more Trustees
hereunder, they may, by written instrument communicated to the Employer and
the Administrator, allocate among themselves the powers and duties herein
given to the Trustee hereunder. If such an allocation is made, to the extent
permitted by applicable law, no Trustee shall be liable either individually
or as a trustee for loss to the Plan from the acts or omissions of another
Trustee with respect to duties allocated to such other Trustee.
13.06 CHANGE OF TRUSTEE.
(a) Any Trustee may resign as Trustee upon notice in writing to the
Employer, and the Employer may remove any Trustee upon notice in writing to
each Trustee. The removal of a Trustee shall be effective immediately, except
that a corporation serving as a Trustee shall be entitled to 60 days' notice
which it may waive, and the resignation of a Trustee shall be effective
immediately, provided that, if the Trustee is the sole Trustee, neither a
removal nor a resignation of a Trustee shall be effective until a successor
Trustee has been appointed and has accepted the appointment. If within 60
days of the delivery of the written resignation or removal of a sole Trustee
another Trustee shall not have been appointed and have accepted, the
resigning or removed Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee or may terminate the Plan pursuant
to Section XVIII of the Prototype Plan. The Trustee shall not be liable for
the acts and omissions of any successor Trustee.
(b) At any time when the number of Trustees is one or two the Employer
may but need not appoint one or two additional Trustees. Such an appointment
and the acceptance thereof shall be in writing, and shall take effect upon the
delivery of written notice thereof to all the Trustees and the Administrator
and such acceptance by the appointed Trustee, provided that if a corporation
is a Trustee then in the absence of its consent, such an appointment of an
additional or successor Trustee shall not become effective until 60 days
after its receipt of notice.
(c) Although any Employer adopting the Plan may chose any Trustee who is
willing to accept the Trust, the Distributor or its successor may make or may
have made tentative standard arrangements with any bank or trust company with
the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be
obtained with a substantial volume of business, and that it may become
advisable to remove such bank or trust company as Trustee and substitute
another Trustee. Therefore, anything in the prior two subsections
notwithstanding each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice of at least 30 days to the
affected Employer received by the Distributor before such date, (i) remove
any such Trustee has resigned as to a group of Employers, (ii) appoint such a
successor Trustee, provided such action is taken with respect to all
Employers similarly circumstanced of which the Distributor has knowledge, and
provided such notice is given in writing mailed postage prepaid to the
Employer at the latest address furnished to the Distributor directly or
supplied to it by such Trustee which is to be succeeded. If within 60 days
after such Trustee's resignation or removal, the Employer has not appointed a
successor which has accepted such appointment (unless the appointment of a
successor Trustee is waiting for action by the Distributor pursuant to the
next preceding sentence according to notice which has been given), the
Trustee may petition an appropriate court for the appointment of its
successor. The Trustee shall not be liable for the acts and omissions of such
successor.
(d) Successor Trustees qualifying under this Section shall have all
rights and powers and all the duties and obligations of original Trustees.
13.07 VALUATION. Annually, on the Valuation Date, or more frequently in
the discretion of the Trustee, the assets of the Trust shall be revalued at
fair market value and the accounts of the Trust shall be proportionately
adjusted to reflect income, gains, losses or expenses, if the system of
accounting does not directly accomplish all such adjustments. Each account
shall share in income gains, losses, or expenses connected with an asset in
which it is invested according to the proportion which the account's
investment in the asset bears to the total amount of the Trust Fund invested
in the asset. Any dividends or credits earned on insurance contracts shall be
allocated to the specific account of the Participant from which the funds
originated for investment in the contract.
The Trust Fund shall be administered separately from, and shall not
include any assets being administered under, any other plan of an Employer.
Interim valuations, if any, shall be applied uniformly and in a
non-discriminatory manner for all Employees.
13.08 REGISTRATION. Any assets in the Trust Fund may be registered in
the name of the Trustee or any nominee designated by the Trustee.
13.09 CERTIFICATIONS AND INSTRUCTIONS.
(a) Any pertinent vote or resolution of the Board of Directors of the
Employer (if it is a corporation) shall be certified to the Trustee over the
signature of the Secretary or an Assistant Secretary of the Employer and
under its corporate seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and termination of the
individual or individuals serving as Administrator under Section 14.01 of the
Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures. All
requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
13.10 ACCOUNTS AND APPROVALS.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all books and records relating thereto shall be open at all reasonable times
to inspection and audit by any person or persons designated by the
Administrator or by the Employer.
(b) Within 90 days following the close of each Plan Year the Trustee
may, and upon the request of
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the employer or the Administrator shall, file with the Administrator and the
Employer a written report setting forth all securities or other investments
(including insurance contracts) purchased and sold, all receipts,
disbursements and other transactions effected by it during the period since
the date covered by the next prior report, and showing the securities and other
property held at the end of such period, and such other information about the
Trust Fund as the Administrator shall request. Unless the Employer or
Administrator, within 90 days from the date of mailing of such report,
objects to the contents of such report, the report shall be deemed approved.
Any such objections shall set forth the specific grounds on which they are
based.
13.11 TAXES. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator
shall in writing advise the Trustee that in the opinion of counsel for the
Employer such taxes are notlawfully assessed. In the event that the
Administrator shall so advise the Trustee, the Trustee, if so requested by
the Administrator and suitable provision for their indemnity having been
made, shall contest the validity of such taxes in any manner deemed
appropriate by the Administrator or counsel for the Employer. The word
"taxes" in this Article shall be deemed to include any interest or penalties
that may be levied or imposed in respect to any taxes assessed. Any taxes,
including transfer taxes incurred in connection with the investment or
reinvestment of the assets of the Trust Fund that may be levied or assessed
in respect to such assets shall, if allocable to the Accounts of specific
Participants, be charged to such Accounts, and if not so allocable, they
shall be equitably apportioned among all such Participants' Accounts.
13.12 EMPLOYMENT OF COUNSEL. The Trustee may employ legal counsel (who
may be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
13.13 COMPENSATION OF TRUSTEE. An individual Trustee who is an Employee
of the Employer shall not be compensated for services as Trustee. A
corporation, or an individual who is not an Employee of the Employer, serving
as a Trustee shall be entitled to reasonable compensation for services, such
compensation shall be paid in accordance with Article XV.
13.14 LIMITATION OF TRUSTEE'S LIABILITY.
(a) The Trustee shall have no duty to take any action other than as
herein specified, unless the Administrator shall furnish it with instructions
in proper form and such instructions shall have been specifically agreed to
by it, or to defend or engage in any suit unless it shall have first agreed
in writing to do so and shall have been fully indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected in
acting in good faith upon any written representation or order from the
Administrator or any other notice, request, consent, certificate or other
instrument or paper believed by the Trustee to be genuine and properly
executed, or any instrument or paper if the Trustee believes the signature
hereon to be genuine.
(c) The Trustee shall not be liable for interest on any reasonable
cash balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its discretion,
receive a contribution directly from a Participant.
13.15 SUCCESSOR TRUSTEE. Any corporation into which a corporation acting
as a Trustee hereunder may be merged or with which it may be consolidated, or
any corporation resulting from any merger, reorganization or consolidation to
which such Trustee may be a party, shall be the successor of the Trustee
hereunder, without the necessity of any appointment or other action, provided
the Trustee does not resign and is not removed.
13.16 ENFORCEMENT OF PROVISIONS. To the extent permitted by applicable
law, the Employer and the Administrator shall have the exclusive right to
enforce any and all provisions of this Agreement on behalf of all Employees
or former Employees of the Employer or their Beneficiaries or other persons
having or claiming to have an interest in the Trust Fund or under the Plan.
In any action or proceeding affecting the Trust Fund or any property
constituting a part or all thereof, or the administration thereof or for
instructions to the Trustee, the Employer and Administrator and the Trustee
shall be the only necessary parties and shall be solely entitled to any
notice of process in connection therewith; any judgment that may be entered
in such action or proceeding shall be binding and conclusive on all persons
having or claiming to have any interest in the Trust Fund or under the Plan.
13.17 VOTING. The Trustee shall deliver, or cause to be executed and
delivered, to the Administrator, or to such individual(s) designated by the
Administrator, all notices, prospectuses, financial statements, proxies and
proxy soliciting materials received by the Trustee relating to securities
held by the Trust. The Administrator shall deliver these to the individual(s)
entitled to make investment decisions pursuant to Section 13.02 hereof (if
the Adoption Agreement so provides this may be the Participant or the
Beneficiary of a deceased Participant). With respect to proxies, proxy
solicitation materials, and other voting matters, the Trustee shall vote
securities held by the Trust in accordance with the written instructions of
the individual(s) entitled to make investment decisions pursuant to Section
13.02. Such instructions shall be delivered to the Trustee by the
Administrator, or such person designated by the Administrator. If, however,
the Trustee has not receive instructions with respect to how to vote given
securities before five full business days prior to the meeting at which such
securities are to be voted, the Trustee may vote such securities.
Notwithstanding the foregoing, if the Trustee is Scudder Trust Company and it
has not received instructions with respect to how to vote given securities
before two full business days prior to the meeting at which such securities
are to be voted, (a) if such vote is in response to a tender offer, the
individual(s) entitled to make investment decisions pursuant to Section 13.02
will be deemed to have instructed the Trustee not to sell, offer to sell,
exchange or otherwise dispose of the securities and (b) if the vote is not
related to a tender offer, it shall vote such securities for or against each
proposal, or abstain from voting on each proposal, in the same proportion as
all other shares of such securities voted or abstain from voting at the
shareholder meeting either in person or by proxy. In applying the foregoing,
the Trustee is not required to vote particular shares in the manner specified
in the preceding sentence, so long as all of the shares as to which the
Trustee has not received instructions are voted in the aggregate in
accordance with the preceding sentence. Notwithstanding the foregoing, in
order for the Trustee to vote shares without instructions from the
individuals entitled to make investment decisions, the Trustee must receive
an opinion of its counsel that voting shares without instructions and in the
manner set forth is not contrary to the provisions of the Act and its rules
or regulations. The Trustee shall not be obligated to seek such counsel.
13.18 APPLICABILITY TO LOAN TRUSTEE. Where appropriate, the foregoing
provisions of this Article shall apply to the Loan trustee on the same basis
as if the Loan Trustee were the Trustee.
ARTICLE XIV.
ADMINISTRATION
14.01 APPOINTMENT OF ADMINISTRATOR. From time to time, the Employer may,
by identifying such person(s) in writing to both the Trustee and the
Participants, appoint one or more persons as Administrator (hereinafter
referred to in the singular). Such Administrator shall have all power and
authority necessary to carry out the terms of the Plan. A person appointed as
Administrator may also serve in any other fiduciary capacity, including that
of Trustee, with respect to the Plan. The Administrator may resign upon 15
days' advance written notice to the Employer, and the Employer may at any
time revoke the appointment of the Administrator with or without cause. The
Employer shall exercise the power and fulfill the duties of the Administrator
if at any time, an Administrator has not been properly appointed in
accordance with this Section or the position is otherwise vacant.
14.02 NAMED FIDUCIARIES. The "Named Fiduciaries" within the meaning of
the Act shall be the Administrator and the Trustee.
14.03 ALLOCATION OF RESPONSIBILITIES. Responsibilities under the Plan
shall be allocated among the Trustee, the Administrator and the Employer as
follows:
(a) Trustee: The Trustee shall have exclusive responsibility to hold,
manage and invest, pursuant to instructions communicated to it in accordance
with Section 13.02 above, the funds received by it subject to the powers
granted to it under Article XIII hereof. Notwithstanding the preceding
sentence, to the extent that loans are made to Participants in accordance
with Article XII hereof, the Trustee shall not be responsible for management
of the portion of Trust assets subject to such loans and the Loan Trustee
shall be responsible for administering such Trust assets in accordance with
provisions of Article XII.
(b) The Administrator. The Administrator shall have the responsibility
and authority to control the operation and administration of the Plan in
accordance with its terms including, without limiting the generality of the
foregoing, (i) any investment decisions assigned to it under the Adoption
Agreement or transmission to the Trustee of any Participant investment
decision under Section 13.02, (ii) interpretation of the Plan, conclusive
determination of all questions of eligibility, status, benefits and rights
under the Plan and certification to the Trustee of all benefit payments under
the Plan; (iii) hiring of persons to provide necessary services to the Plan
not provided by Employees; (iv) preparation and filing of all statements,
returns and reports required to be filed by the Plan with any agency of
Government; (v) compliance with all disclosure requirements of all state or
federal law; (vi) maintenance and retention of all Plan records as required
by law, except those required to be maintained by the Trustee, and (vii) all
functions otherwise assigned to it under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the
Plan, as adopted or amended, the designation of the Administrator and Trustee
(and, if appropriate, the Loan Trustee) as provided in the plan, the delivery
to the Administrator and the Trustee of employee information necessary for
operation of the Plan (including without limitation, dates of birth, hire,
and death; compensation amounts; and date of death of beneficiaries), the
timely making of the Employer Contributions pursuant to Articles IV and VII,
and the exercise of all functions provided in or necessary to the Plan except
those assigned in the Plan to other persons.
(d) This Section is intended to allocate individual responsibility for
the prudent execution of the functions assigned to each of the Trustees, the
Loan Trustee, the Administrator and the Employer and none of such
responsibilities or any other responsibility shall be shared among them
unless specifically provided in the Plan. Whenever one such person is
required by the Plan to follow the directions of another, the two shall not
be deemed to share responsibility, but the person who gives the direction
shall be responsible for giving it and the responsibility of the person
receiving the direction shall be to follow it insofar as it is on its face
proper under applicable law.
14.04 MORE THAN ONE ADMINISTRATOR. If more than one individual is
appointed as Administrator, such individuals shall either exercise the duties
of the Administrator in concert, acting by a majority vote or allocate such
duties among themselves by written agreement delivered to the Employer and the
Trustee. In such a case, the Trustee may rely upon the instruction of any one
of the individuals appointed as Administrator regardless of the allocation of
duties among them.
14.05 NO COMPENSATION. The Administrator shall not be entitled to
receive any compensation from the funds held under the Plan for its services
in that capacity unless so determined by the Employer or required by law.
14.06 RECORD OF ACTS. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the
Employer at any time. The Employer shall supply, and the Administrator may
rely on the accuracy of, all Employee data and other information needed to
administer the Plan.
14.7 BOND. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the
Act, the expense to be home by the Employer.
14.08 AGENT FOR SERVICE OF LEGAL PROCESS. The Administrator shall be
agent for service of legal process on the Plan.
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14.09 RULES. The Administrator may adopt or amend and shall publish to
the Employees such rules and forms for the administration of the Plan, and
may employ or retain such attorneys, accountants, physicians, investment
advisors, consultants and other persons to assist in the administration of
the Plan as it deems necessary or advisable.
14.10 DELEGATION. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder and
at any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
14.11 CLAIMS PROCEDURE. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the
original claim was filed. This notice of denial shall set forth in a manner
calculated to be understood by the claimant (i) the reason or reasons for
denial, (ii) specific reference to pertinent plan provisions on which the
denial is based, (iii) a description of any additional information needed to
perfect the claim and an explanation of why such information is necessary,
and (iv) an explanation of the Plan's claims procedure.
(c) The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review by the
Administrator. The Participant or Beneficiary may request that the review be
in the nature of a hearing. The Participant or Beneficiary shall have the
rights (i) to have representation, (ii) to review pertinent documents, and
(iii) to submit comments in writing.
(d) The Administrator shall issue a decision on such review within 60
days after receipt of an application for review, except that such period may
be extended for a period of time not to exceed an additional 60 days if the
Administrator determines that special circumstances (such as the need to hold
a hearing) requires such extension. The decision on review shall be in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific references
to the pertinent Plan provisions on which the decision is based.
ARTICLE XV.
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee
incurred in the performance of their duties hereunder or under the Trust
shall be paid by the Employer, and to the extent not so paid by the Employer,
said fees and expenses shall be deemed to be an expense of the Trust. In
addition, if the Plan permits Participant-directed investment of Accounts and
expenses are allocable to the Accounts of specific Participants, they shall
be charged against the respective Participants' Accounts.
ARTICLE XVI.
BENEFIT RECIPIENT INCOMPETENT OR
DIFFICULT TO ASCERTAIN OR LOCATE
16.01 INCOMPETENCY. If any portion of the Trust Fund becomes
distributable to a minor or to a Participant or Beneficiary who, as
determined in the sole discretion of the Administrator, is physically or
mentally incapable of handling his or her financial affairs, the
Administrator may direct the Trustee to make such distribution either to the
legal representative or custodian of, or any of the relatives and friends of,
the incompetent or to apply such distribution directly for the incompetent's
support and maintenance. Payments which are made in good faith shall
completely discharge the Employer, Administrator and Trustee from liability
therefor.
16.02 DIFFICULTY TO ASCERTAIN OR LOCATE. If it is impossible or
difficult to ascertain or locate the person who is entitled to receive any
benefit under the Plan, the Administrator in its discretion may direct that
such benefit (a) be retained in the Trust, (b) be paid to a court pending
judicial determination of the right thereto, or (c) be forfeited and
reallocated pursuant to the provisions of Section 8.02(a)(i) or (ii) above,
as the case may be, provided that as a result the Employer shall incur an
obligation to rebuild the individual's Account balance or otherwise pay the
individual his or her benefit if the individual is subsequently ascertained
or located.
ARTICLE XVII.
DESIGNATION OF
BENEFICIARY
Each Participant and beneficiary may submit a properly executed
Designation of Beneficiary to the person designated under this Article XVII
to keep such records. In order to be effective, such designation (a) must
have been properly executed and submitted to the appropriate person before
the death of the Participant or beneficiary, as the case may be, and (b) for
a Participant who is survived by his or her Spouse, unless the Participant
leaves 100% of his or her benefit to such Spouse, must be accompanied, or
preceded, by a consent of such Spouse. Such consent of the Spouse must (w) be
in writing; (x) acknowledge that the effect of such consent is that the
Spouse may receive no benefits under the Plan; (y) be witnessed by a Plan
representative or a notary public; (z) be either (i) a limited consent to the
payment of death benefits to a specific person or persons or (ii) expressly
permit the Participant to designate another person or other persons without
obtaining further consent of the Spouse. The last effective Designation
accepted by the appropriate person shall be controlling, and whether or not
fully dispositive of the Participant's Account, thereupon shall revoke all
Designations previously submitted by the Participant or beneficiary, as the
case may be. If a Participant's Beneficiary(ies) predeceases the Participant,
the remaining living Beneficiary(ies) shall receive their proportionate share
of the Participant's Account as if such deceased Beneficiary(ies) had never
been designated. Similar rules shall apply with respect to contingent
Beneficiaries. Each such executed Designation is hereby specifically
incorporated herein by reference and shall be construed and enforced in
accordance with the laws of the state in which the Trustee has its principal
place of business. The Administrator shall be the person responsible for
accepting and safekeeping Designation of Beneficiary Forms unless the Trustee
agrees in writing to accept and safekeep such Forms.
ARTICLE XVIII.
SPENDTHRIFT PROVISION AND
DISTRIBUTIONS PURSUANT TO QUALIFIED
DOMESTIC RELATIONS ORDERS
18.01 GENERAL SPENDTHRIFT RULE. No interest of any Participant or
Beneficiary shall be assigned, anticipated or alienated in any manner nor
shall it be subject to attachment, to bankruptcy proceedings or to any other
legal process or to the interference or control of creditors or others,
except (a) to the extent that Participants may secure loans from the Trust
with their Accounts pursuant to Article XII hereof and (b) pursuant to
Section 18.02 hereof.
18.02 ACCOUNT DIVISION AND DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC
RELATIONS ORDERS. The interest of a Participant may be assigned pursuant to a
qualified domestic relations order as defined in Code Section 414(p). The
Trustee shall make distributions of a Participant's interest as required
pursuant to such a qualified domestic relations order.
ARTICLE XIX.
NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under
Code Section 401(a) as that Section exists at the time the Plan is
established. If the Plan as adopted by the Employer fails to attain such
qualification, the Plan will no longer participate in the relevant sponsor's
prototype 401(k) plan and will be considered an individually designed plan.
If the Plan as adopted by the Employer fails to attain or retain such
qualification, the Employer shall promptly either amend the Plan under Code
Section 401(b) so that it does qualify, or direct the Trustee to terminate
the Trust, and distribute all the assets of the Trust equitably among the
contributors thereto in proportion to their contributions, and the Plan and
Trust shall be considered to be rescinded and of no force and effect.
ARTICLE XX.
AMENDMENT AND TERMINATION
20.01 AMENDMENT OR TERMINATION BY THE EMPLOYER. The Employer may at any
time, and from time to time amend this Prototype Plan and the Adoption
Agreement (including a change in any election it has made in the Adoption
Agreement), or suspend or terminate this Plan by giving written notice to the
Trustee, but the Trust may not thereby be diverted from the exclusive benefit
of the Participants, their Beneficiaries, survivors or estates, or the
administrative expenses of the Plan, nor revert to the Employer, nor may an
allocation or contribution theretofore made be changed thereby, nor may any
amendment directly or indirectly deprive a Participant of such Participant's
nonforfeitable rights to benefits accrued to the date of the amendment.
No amendment to the Plan shall be effective to the extent that it would
have the effect of decreasing a Participant's Account balance or eliminating
an optional form of distribution. Notwithstanding the preceding sentence, a
Participant's Account balance may be reduced to the extent permitted under
Code Section 412(c)(8). Furthermore, if the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of the later of
the date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such Employee's
right to his Employer-derived Account balance will not be less than his
percentage computed under the Plan without regard to such amendment.
The Employer may amend the Plan by adding overriding Plan language to
the Adoption Agreement where such language is necessary to satisfy Code
Sections 415 or 416 because of the required aggregation of multiple plans
under these Code Sections.
Any amendment by the Employer which is other than (a) a change in the
Employer's prior designation of an option in the Adoption Agreement, (b) an
amendment referred in the Adoption Agreement which will allow the Plan to
satisfy the requirements of Code Section 415 or to avoid duplication of
minimum benefits or accruals under Code Section 416 because of the required
aggregation of multiple plans, or (c) an amendment which adopts a model
amendment published by the Internal Revenue Service which specifically
provides that the adoption of such a model amendment will not cause the Plan
to be treated as an individually designed plan, will constitute a
substitution by the Employer of an individually designed plan for the
sponsor's prototype plan; thereafter, the Plan shall no longer participate in
the sponsor's prototype plan and the general amendment procedure of the
Internal Revenue Service governing individually designed plans will be
applicable.
If an amendment changing the vesting schedule is executed (including
execution of this Adoption Agreement as an amendment to an existing plan),
Participants with three or more Vesting Years (five or more Vesting Years for
Participants who have not been credited with an Hour of Service in a Plan
Year beginning after December 31, 1988) before the expiration of the election
period described in the next sentence shall have the right to elect the
vesting schedule in effect on the day before the election period. The
election period shall commence on the date the amendment is adopted and end
on the latest of (x) 60 days after the amendment is adopted, (y) 60 days
after the Effective Date, or (z) 60 days after the Participant is issued
written notice of the amendment by the Administrator. Failure to so elect
shall be created as a rejection and such election or rejection shall be final.
Nothing contained herein shall constitute an agreement or representation
by any Sponsor or the Distributor that it will continue to maintain its
sponsorship of the Plan indefinitely.
20.02 DELEGATION. The Employer hereby delegates to the Sponsor the
authority to amend so much of the Adoption Agreement and this Prototype
401(k) Plan as is in prototype form and, to the extent to
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which the Employer could effect such amendment, the Employer shall be deemed
to have consented to any amendment so made. When an election within the
prototype form has been made by the Employer it shall be deemed to continue
after amendment of the prototype form unless and until the Employer expressly
further amends the election, notwithstanding that the provision for the
election in the amended prototype form is in a different form or place;
provided, however, that if the amended form inadvertently fails to provide
means to duplicate exactly the earlier election, such earlier election shall
continue until such further amendment. The immediately preceding sentence is
subject to the qualification that each Employer hereby delegates to the
Sponsor, in the event of such an amendment of the prototype form, authority
to determine conclusively that such a continuation of an earlier election by
the Employer is not advisable and to make the election for the Employer in
the amended prototype form which in the judgment of the Sponsor most nearly
corresponds with the election made by the Employer before the amendment of
the prototype form, provided the following procedure is followed: the
election for the Employer may be made with respect to any specified Employers
as to whom it may be made applicable singly, or such election may be made
with respect to all Employers as to whom it may be made applicable as a
group; and the election shall be made as of an effective date which has been
specified in a notice mailed or delivered, at the last address(es) of the
Employer(s) on the records of the Distributor, to the Employer(s) at least 20
days before the end of the remedial amendment period. Such notice may be
mailed to Employers to whom it cannot be applicable by reason of a previous
election made by the Employer or otherwise, but it shall be effective only as
to those Employers who have received the notice and have not themselves made
a new election with respect to that item since the amendment of the prototype
form and previous to the effective date of such election by the Sponsor. In
the case of a mass submitter plan, the Sponsor delegates its authority to
make elections, or to make amendments, to the mass submitted who shall make
such elections or amendments on behalf of the Sponsor and the Sponsor shall
be deemed to have consented to any such election or amendment so made. The
foregoing delegations of authority to make elections, or to make amendments,
shall not impose any duty on the Sponsor or, if applicable, the mass
submitter to make a given election or amendment and shall not affect the
interpretation of the Plan if any so delegated authority is not used.
20.02 DISTRIBUTION OF ACCOUNTS UPON TERMINATION. Upon termination or
partial termination of the Plan or complete discontinuance of Employer
Contributions under it, the Administrator shall determine whether to pay the
interests of Participants, former Participants and Beneficiaries immediately,
to retain such interest in the Trust and pay them in the future according to
Article IX and X (or Article XXIV, if applicable) or to use what other
methods the Administrator deems advisable in order to furnish whatever
benefits the Trust will provide; provided any such distributions pursuant to
this Section shall comply with the requirements of Articles IX or X (or
Article XXIV, if applicable) hereof.
ARTICLE XXL.
TRANSFERS
Nothing contained herein shall prevent the merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to another plan
meeting the requirements of Code Section 401(a) or the transfer to the Plan
of assets or liabilities of another such plan so qualified under the Code.
Any such merger, consolidation or transfer shall be accompanied by the
transfer of such existing records and information as may be necessary to
properly allocate such assets among Participants, including any tax or other
information necessary for the Participants or persons administering the plan
which is receiving the assets. The terms of such merger, consolidation or
transfer must be such that if this Plan is then terminated, the requirements
of Section 20.01 hereof would be satisfied and each Participant would receive
a benefit immediately after the merger, consolidation or transfer equal to or
greater than the benefit he or she would have received if the Plan had
terminated immediately before the merger, consolidation or transfer. If this
Plan is a transferee plan with respect to all or a portion of a Participant's
Account, the optional forms of distribution described in Article X shall
include any optional form of distribution which the Participant could have
elected under the transferor plan and which would otherwise comply with the
provisions of this Plan.
ARTICLE XXII.
OWNER-EMPLOYEE
PROVISIONS
22.01 PURPOSE OF SECTION. This Section is intended to insure that the
Plan complies with Code Section 401(d). Any ambiguity herein will be
construed to that end, and this Article will override any other provision of
the Plan with which it may be inconsistent.
22.02 CONTROL. For purposes of this Article, "Control" means the
ownership directly or indirectly of the entire interest in an unincorporated
trade or business or more than 50% of either the capital interest or the
profits interest in a partnership. For the purposes of applying the preceding
sentence, an Owner-Employee, or two or more Owner-Employees shall be treated
as owning any interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or such two or more
Owner-Employees are considered to Control.
22.03 LIMITATIONS. No benefits shall be provided to an Owner-Employer
under this Plan unless:
(a) if an Owner-Employee or group of Owner-Employees Controls the
trade or business covered by this Plan and also Control as an Owner-Employer
or Owner-Employees one or more other trades or businesses, this Plan and the
plans established for such other trades or businesses, when taken together,
form a single plan which satisfies the requirements of Code Sections 401(a)
and (d) with respect to the employees of all the controlled trades or
businesses;
(b) if an Owner-Employee or group of Owner-Employees Controls
another trade or business but does not Control the trade or business covered
by this Plan, the employees of such other trades or businesses are included
in a plan which satisfies the requirements of Sections 401(a) and (d) of the
Code and which provides contributions and benefits for such employees which
are not less favorable than those provided for Owner-Employees under this
Plan; and
(c) if an Owner-Employee is covered under the qualified retirement
plans of two or more trades or businesses which he or she does not Control
and the Owner-Employee Controls a trade or business, contributions or
benefits for the employees under the plan of the trade or business which the
Owner-Employee Controls are not less favorable than those provided for the
Owner-Employee in the most favorable qualified retirement plan of the
trade(s) or business(es) which the Owner-Employee does not Control.
ARTICLE XXIII.
TOP-HEAVY PROVISIONS
23.01 PURPOSE OF SECTION. This Article is intended to insure that the
Plan complies with Code Section 416. If the Plan is or becomes Top-Heavy in
any Plan Year, the provisions of this Section will supersede any conflicting
provision in the Plan.
23.02 DEFINITIONS. The terms used in this Section shall have the
following meanings:
(a) KEY EMPLOYEE. Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination
period was (i) an officer of the Employer having an annual compensation
greater than fifty percent (50%) of the amount in effect under Code Section
415(b)(1)(A) for the Plan Year (subject to the limitation that no more than
the lesser of (A) 50 Employees or (B) the greater of 3 Employees or 10% of
the Employees shall be deemed to be officers); (ii) an owner (or considered
an owner under Code Section 318) of 1 of the 10 largest interests in the
Employer if both such individual was an owner of more than a 5% interest in
the Employer (aggregated with the Employer for this purpose are all members
of (A) a controlled group of corporations (as defined in Code Section 414(b)
as modified by Code Section 415(h)), (B) commonly controlled trades or
businesses (whether or not incorporated (as defined in Code Section 414(c) as
modified by Code Section 415(h)), or (C) affiliated service groups (as
defined in Code Section 414(m)) of which the Employer is a part) and such
individual's compensation exceeds the dollar limitation under Code Section
415(c)(1)(A), (iii) a 5-percent owner of the Employer, or (iv) a 1-percent
owner of the Employer who has an annual compensation of more than $150,000.
The determination period is the Plan Year containing the Determination Date
and the 4 preceding Plan Years. The determination of who is a Key Employee
will be made in accordance with Code Section 416(i)(1) and the regulations
thereunder.
(b) TOP-HEAVY PLAN. This Plan is Top-Heavy if any of the following
conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and this
Plan is not part of any Required Aggregation Group or Permissive Aggregation
Group of plans.
(ii) If this Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Required Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group and part of a Permissive
Aggregation Group of plans and the Top-Heavy Ratio for the Permissive
Aggregation Group exceeds 60%.
(c) TOP-HEAVY RATIO.
(i) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of
Code Section 408(k)) and the Employer has not maintained any defined benefit
plan which during the five-year period ending on the Determination Date(s)
has or has had accrued benefits, Top-Heavy Ratio for this Plan alone or for
the Required Aggregation Group or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances under all of the plans as of the Determination Date(s) (including
any part of any account balance distributed in the five-year period ending on
the Determination Date(s)) of all Key Employees who have received
compensation from the Employer (other than benefits under a qualified
retirement plan) at any time during the five-year period ending on the
Determination Date(s), and the denominator of which is the sum of all account
balances as of the Determination Date(s) (including any part of any account
balance distributed in the five-year period ending on the Determination
Date(s)), of all Participants who have received compensation from the
Employer (other than benefits under a qualified retirement plan) at any time
during the five-year period ending on the Determination Date(s). Both the
numerator and denominator of the fraction shall be computed in accordance
with Code Section 416 and the Treasury Regulations promulgated thereunder. In
addition, both the numerator and denominator of the Top-Heavy Ratio shall be
increased to reflect any contribution which is not actually made as of the
Determination Date(s), but which is required to be taken into account on that
date under Code Section 416 and the Treasury Regulations promulgated
thereunder.
(ii) If the Employer maintains one or more defined contribution
plans (including any Simplified Employer Pension Plan within the meaning of
Code Section 408(k)) and the Employer maintains or has maintained one or more
defined benefit plans which during the five-year period ending on the
Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for any Required Aggregation Group or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of (A) account
balances under the defined contribution plans as of the Determination Date(s)
(including any part of any account balance distributed in the five-year
period ending on the Determination Date(s)) of all Key Employees who have
received compensation from the Employer (other than benefits under a
qualified retirement plan) at any time during the five-year period ending on
the Determination Date(s) and (B) the present value of accrued benefits under
the defined benefit plans for all Key Employees, who have received
compensation from the Employer (other than benefits under a qualified
retirement plan) at any time during the five-year period ending on the
Determination Date(s) and the denominator of which is the sum of (A) the
account balances under the defined contribution plans as of the Determination
Date(s) (including any part of any account balance distributed in the
five-year period ending on the Determination Date(s)) of all participants who
have
19
<PAGE>
received compensation from the Employer (other than benefits under this Plan)
at any time during the five-year period ending on the Determination Date(s)
and (B) the present value of accrued benefits under the defined benefit plans
for all participants who have received compensation from the Employer (other
than benefits under this Plan) at any time during the five-year period ending
on the Determination Date(s). Both the numerator and denominator of the
fraction shall be computed in accordance with Code Section 416 and Treasury
Regulations promulgated thereunder. In addition, both the numerator and
denominator of the Top-Heavy Ratio shall be increased for aggregate
distribution(s) of an account balance or an accrued benefit made during the
five-year period ending on the Determination Date(s) and any contribution to
a defined contribution plan not actually made as of the Determination
Date(s), but which is required to be taken into account on that date under
Code Section 416 and the Treasury Regulations promulgated thereunder.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of
the most recent Valuation Date that falls within, or ends with, the 12-month
period ending on the Determination Date, except as provided in Code Section
416 and the Treasury Regulations promulgated thereunder for the first and
second plan years of a defined benefit plan. The account balances and accrued
benefits of a Participant who has not been credited with at least one Hour of
Service at any time during the five-year period ending on the Determination
Date, will be disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Code Section 416 and the Treasury
Regulations promulgated thereunder. Deductible employee contributions under
any qualified plan maintained by the Employer will not be taken into account
for purposes of computing the Top-Heavy Ratio. When aggregating plans the
value of the account balances and accrued benefits will be calculated with
reference to the Determination Dates that fall within the same calendar year.
For Plan Years commencing after December 31, 1986 for the purpose of
determining the Top-Heavy Ratio, if any target benefit or defined benefit
plan is included in the Required Aggregation Group, the accrued benefit of an
Employee other than a Key Employee shall be determined under the method that
uniformly applies for accrual purposes under all qualified retirement plans
maintained by the Employer, or if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code Section 411(b)(1)(C).
(d) PERMISSIVE AGGREGATION GROUP. The Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when considered
as a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) REQUIRED AGGREGATION GROUP. (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at
any time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Employer which enables
a plan described in (i) to meet the requirements of Code Sections 401(a)(4)
or 410.
(f) DETERMINATION DATE. For any Plan Year subsequent to the first
Plan Year, the Determination Date shall be the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the Determination Date shall be
the last day of that year.
(g) VALUATION DATE. Shall be the last day of the Plan Year.
(h) PRESENT VALUE. Present Value shall be based only on the
interest rate and the mortality table specified by the Employer in the
Adoption Agreement.
23.03 MINIMUM ALLOCATION.
(a) In any Plan Year in which this Plan is Top-Heavy, except as
otherwise provided in subsections (c) and (d) below, the Employer
Contributions and forfeitures allocated, or during a Plan Year which begins
after December 31, 1988, Employer Profit Sharing Contributions and
forfeitures allocated to the Participant's Employer Profit Sharing
Contribution Account, on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of 3% of such Participant's Compensation
or, in the case where the Employer has no defined benefit plan which
designates this Plan to satisfy Code Section 401, the largest percentage of
Employer Contributions and forfeitures stated as a percentage of a Key
Employee's Compensation, allocated on behalf of any Key Employee for that
Plan Year. The minimum allocation is determined without regard to any Social
Security contribution by the Employer. This minimum allocation shall be made
even though, under other provisions of this Plan, the Participant would not
otherwise be entitled to receive an allocation, or would have received a
lesser allocation for the year because (i) the Participant failed to complete
the minimum number of Hours of Service specified in the Adoption Agreement
for receiving an allocation, (ii) the Participant's Compensation was less
than a stated amount, or (iii) the Participant made insufficient mandatory
contributions to receive an Employer Matching Contribution.
(b) For purposes of computing the minimum allocation, "Compensation"
will have the same meaning as in Section 2.09 hereof, disregarding any exclusion
from Compensation specified by the Employer in the Adoption Agreement.
(c) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(d) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer, and the Employer has provided in the Adoption
Agreement that the minimum allocation or benefit requirement applicable to
Top-Heavy Plans will be met in such other plan or plans.
23.05 LIMITATION ON COMPENSATION. For Plan Years, beginning before
January 1, 1989, in which the Plan is Top-Heavy, only the first $200,000 (or
such larger amount as may be prescribed by the Secretary of the Treasury or
his or her delegate) of a Participant's Compensation for the Plan Year shall
be taken into account for purposes of allocating Employer Contributions under
the Plan.
23.06 MINIMUM VESTING SCHEDULE. Unless the Employer has specified a more
rapid vesting schedule in the Adoption Agreement, for any Plan Year in which
this Plan is Top-Heavy, the following minimum vesting schedule shall apply:
<TABLE>
<CAPTION>
Nonforfeitable Percentage
of Employer Profit Sharing
and Matching Contribution
Vesting Years Accounts
------------- --------------------------
<S> <C>
1 0%
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
The minimum vesting schedule applies to all benefits within the meaning
of Code Section 411(a)(7) attributable to Employer Contributions and
forfeitures, including benefits accrued before the effective date of Code
Section 416 and benefits accrued before the Plan became Top-Heavy. Further,
no reduction in a Participant's nonforfeitable percentage may occur in the
event the Plan's status as Top-Heavy changes for any Plan Year. If conversion
of the Plan into a Top-Heavy Plan has resulted in a change of the Plan's
vesting schedule to the minimum vesting schedule discussed above, the change
shall be treated as an amendment to the Plan and the election referred to in
Section 20.01 hereof shall apply.
This Section does not apply to the Employer Profit Sharing Contribution
Account and Employer Matching Contribution Account balances of any former
Participant who does not have an Hour of Service after the Plan has initially
become Top-Heavy and such former Participant's vested Employer Profit Sharing
Contribution Account and Employer Matching Contribution Account balance will
be determined without regard to this Section.
23.07 EFFECT ON CODE SECTION 415 LIMITATIONS. Notwithstanding anything to
the contrary in Article V above, the following provisions apply if the Plan
is Top-Heavy:
(a) In any Plan Year in which the Top-Heavy Ratio exceeds 90% (and
the Plan therefore becomes super Top-Heavy) the denominators of the Defined
Benefit Fraction (as defined in Section 5.05(c) above) and the Defined
Contribution Fraction (as defined in Section 5.05(d) above) shall be computed
using 100% of the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%, but
is less than 90%, the denominators of the Defined Benefit Fraction (as
defined in Section 5.05(c) above) and the Defined Contribution Fraction (as
defined in Section 5.05(d) above) shall be computed using 100% of the dollar
limitation described therein instead of 125%, unless the Employer has
specified in the Adoption Agreement that the minimum allocation provisions of
Section 23.03 above shall be computed using 4% of a Participant's
Compensation, in which case the dollar limitations of the Defined Benefit
Fraction (as defined in Section 5.05(c) above) and the Defined Contribution
Fraction (as defined in Section 5.05(d) above) shall continue to be computed
using 125% of the dollar limitations.
23.08 TERMINATION OF TOP-HEAVY STATUS. If the Plan ceases to be
Top-Heavy for any Plan Year and if the Employer has not specified otherwise
in the Adoption Agreement, the minimum vesting schedule described in Section
23.06 shall continue to apply. If the Employer has specified in the Adoption
Agreement that, upon conversion of the Plan to non-Top-Heavy status,
Participants' vested benefits are to be determined according to a schedule
other than the minimum vesting schedule described in Section 23.06 hereof,
such change in vesting schedules shall be treated as an amendment, and the
election referred to in Section 20.01 hereof shall apply.
ARTICLE XXIV.
SPECIAL DISTRIBUTION RULES
24.01 SPECIAL DISTRIBUTION RULES FOR CERTAIN PARTICIPANTS. If (a) it is
determined that this Plan is a direct or indirect transferee (where such
transfer occurred after December 31, 1984) of a defined benefit plan, money
purchase pension plan (including a target benefit plan), stock bonus or
profit sharing plan which would otherwise provide a life annuity form of
payment with respect to such Participant (including a plan which was amended
into this Plan), (b) the Plan is amended so as to allow a Participant to
elect to receive his or her benefits in the form of a life annuity and a
Participant elects to receive his or her benefits in such form, (c) the Plan
is amended to provide that absent a Qualified Election of a Participant's
surviving Spouse, someone other than the Participant's surviving Spouse
becomes entitled to the Participant's vested Account balance, or (d) if
someone other than the Participant's surviving Spouse is the beneficiary of
any insurance purchased with funds from the Participant's Account, then the
provisions of Sections 24.03 to 24.05 below shall apply in lieu of Article IX
above and Sections 10.01 and 10.02 above.
For the purposes of determining whether the provisions of this Article
apply, the Administrator shall be entitled to rely conclusively on written
instructions, if any, received by the Administrator concurrent with the
transfer. Furthermore, where the transfer is, or was, not accompanied by
written instructions specifying conditions under which specific provisions of
this Article would apply, the Administrator shall be entitled to conclusively
presume that this Article does not apply.
24.02 DEFINITIONS. For the purpose of this Section, the following terms
shall have the specified meanings:
(a) "ELECTION PERIOD" shall mean the period which begins on the
first day of the Plan Year in which the Participant attains age 35 and which
ends on the date of the Participant's death. If a Participant separates from
Service prior to the first day of the Plan Year in which he or she attains
age 35, the Election Period with respect to his or her Vested Account Balance
(as of his or her date of separation) shall begin on his or her date of
separation.
(b) "QUALIFIED ELECTION" shall mean a valid waiver of a Qualified
joint and Survivor Annuity, or
20
<PAGE>
Qualified Preretirement Survivor Annuity, as the case may be. To be valid,
the waiver must be in writing and Participant's Spouse must consent to it in
writing. The Spouse's consent is the waiver (i) must be witnessed by a Plan
representative or notary public and (ii) must be (A) a general consent to the
provision of a form (or forms) of distribution to any alternative person (or
alternative persons); (B) a limited consent to the provision of a specific
form (or specific forms) of distribution to a specific alternate person (or
specific alternate persons); or (iii) a limited consent which is specific
with respect to form or alternative payee. Notwithstanding the foregoing
consent requirement, if the Participant establishes to the satisfaction of a
Plan representative that such written consent may not be obtained because
there is no Spouse or the Spouse cannot be located, a waiver will nonetheless
be deemed a Qualified Election. Any consent necessary for a Qualified
Election will be valid only with respect to the Spouse who signs the consent,
or in the event of a deemed Qualified Election, the Spouse whose consent
could not be obtained or who could not be located. Additionally, a
revocation of a prior waiver may be made by a Participant without the consent
of the Spouse at any time before the commencement of distributions or
benefits. The number of revocations shall be unlimited. Each such
revocation shall once again make the Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity applicable, as the case may be. No
consent obtained pursuant to this Section shall be valid unless the
Participant has received the relevant notice as provided in Sections 24.09
and 24.10.
(c) "QUALIFIED JOINT AND SURVIVOR ANNUITY" shall mean, in the case of a
married Participant, an annuity which can be purchased with the Participant's
Vested Account Balance for the life of the Participant with a survivor annuity
for the life of the Spouse equal to 50% of the amount of the annuity which is
payable during the joint lives of the Participant and the Spouse. In the case
of an unmarried Participant, Qualified Joint and Survivor Annuity shall mean an
annuity which can be purchased with a Participant's Vested Account Balance for
the life of the Participant.
(d) "SPECIAL QUALIFIED ELECTION" shall mean a valid waiver of a Qualified
Preretirement Survivor Annuity for the period beginning on the date of such
election and ending on the first day of the Plan Year in which the Participant
attains age 35. To be valid, the waiver must be (i) in writing, (ii) made prior
to the first day of the Plan Year in which the Participant attains age 35, and
(iii) preceded by a written explanation to the Participant of the Qualified
Preretirement Survivor Annuity in such terms as are comparable to the
explanation required by Section 24.09 and 24.10. Any election made pursuant to
this Section shall be void as of the first day of the Plan Year in which the
Participant attains age 35 and Qualified Preretirement Survivor Annuity coverage
shall be automatically reinstated as of such date. Any future election to waive
the Qualified Preretirement Survivor Annuity must be a Qualified Election.
(e) "VESTED ACCOUNT BALANCE" shall mean the Participant's vested portion
of his or her Account consisting of the sum of the balances of Participant's
Nondeductible Voluntary Contributions Account and Deductible Voluntary
Contribution Account and the vested portions of a Participant's Employer Profit
Sharing Account and Employer Marching Account, reduced by any loans outstanding
on the Annuity Starting Date which are secured by the Participant's Account
Balance.
24.03 DISTRIBUTIONS UPON DEATH.
(a) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.
(i) Unless either paragraph (ii) below applies or the Participant
has selected an optional form of distribution within the Election Period
pursuant to a Qualified Election or a Special Qualified Election, if the
Participant dies before the earlier of (A) his or her Annuity Starting Date or
(B) his or her First Required Distribution Date, then the Trustee shall, upon
the direction of the Administrator, apply 50% of the Participant's Vested
Account Balance (i.e., 50% of each of the Participant's vested Employer Profit
Sharing Contribution Account, Employer Matching Contribution Account,
Nondeductible Voluntary Contribution Account, Deductible Voluntary Contribution
Account and Rollover Account) toward the purchase of an annuity contract for the
life of the Spouse.
(ii) Notwithstanding the provisions of paragraph (i) above, prior to
the earlier of (A) Spouse's Annuity Starting Date or (B) the Spouse's First
Required Distribution Year, the Spouse of a Participant may deliver a written
election to the Administrator whereby the Spouse elects not to have 50% of the
Participant's Vested Account Balance applied toward the purchase of an annuity
contract for the Spouse's life. Similarly, after the earlier of (A) the
Spouse's Annuity Starting Date or (B) the Spouse's First Required Distribution
Year, the Spouse may deliver a written election to the Administrator whereby the
Spouse elects to terminate distributions pursuant to the Qualified Preretirement
Survivor Annuity and to receive the liquidated value of the remainder of the
Qualified Preretirement Survivor Annuity in an alternative form. In the case
where a Spouse makes either of such elections, the portion of the deceased
Participant's Vested Account Balance which would otherwise have been distributed
pursuant to this subsection shall be distributed pursuant to the provisions of
subsection (b) below.
(iii) In the case of a Spouse of a deceased Participant who is
scheduled to receive a Qualified Preretirement Survivor Annuity and who does not
otherwise elect, at the instruction of the Administrator, the Trustee shall
apply 50% of the deceased Participant's Vested Account Balance toward an annuity
under which payments begin as of the later of the Participant's separation from
Service or (what would have been) the Participant's Normal Retirement Date. A
Spouse of a deceased Participant may elect a commencement date which is earlier
than the date discussed in the previous sentence by filing a written election to
that effect with the Administrator; the Trustee shall begin to make payments on
such earlier date upon instruction from the Administrator.
(b) OTHER DISTRIBUTIONS AT DEATH. If the Participant dies after
he or she has begun to receive distributions pursuant to Section 24.04 below,
this subsection shall apply with respect to the Participant's entire Vested
Account Balance. With respect to any Vested Account Balance, or portion
thereof, to which subsection (a) did not apply, if the Participant dies
before he or she has begun to receive distributions pursuant to Section 24.04
below, this subsection (b) shall apply with respect to such Vested Account
Balance, or portion thereof. With respect to a portion of the Participant's
Vested Account Balance to which subsection (a) applied, if either (1) the
Participant made a Qualified Election within the Election Period or a Special
Qualified Election not to receive a Qualified Preretirement Survivor Annuity
at his or her death and the Participant dies before his or her Annuity
Starting Date, or (2) the Spouse of a deceased Participant elects not to
receive, or to discontinue, receiving, a Qualified Preretirement Survivor
Annuity, this subsection shall apply with respect to the portion of the
Participant's Account which would otherwise have been distributed pursuant to
subsection (a)(i) above.
(i) With respect to any Vested Account Balance or portion thereof
to which this subsection applies, the Trustee shall, at the direction of the
Administrator, distribute the Participant's Account in accordance with the
provisions of this subsection. The Administrator's direction shall include
notification of the Participant's or Beneficiary's death; the existence or
non-existence of a surviving spouse; the amounts, or method of calculating the
amounts, to be distributed on given dates; the date on which distribution should
commence; and the dates on which any further distribution should be made.
(ii) If the Participant has validly named a Beneficiary or
Beneficiaries in the most recent Designation of Beneficiary form filed with
Trustee before the Participant's death in compliance with Article XVII, his or
her Vested Account Balance shall be distributed to the Beneficiary or
Beneficiaries so named. To the extent that any portion of a Vested Account
Balance of a deceased Participant is not governed by an effective Designation of
Beneficiary form which names at least one living Beneficiary, that portion of
the Vested Account Balance shall be distributed to the deceased Participant's
Spouse or if that is not possible, to the estate of the deceased Participant.
(iii) If the Participant has validly elected a permissible form of
distribution (i.e., a form which complies with the applicable provisions of
paragraph (iv) below) with respect to his or her Vested Account Balance, his or
her Vested Account Balance shall be distributed in accordance with such
election. With respect to any portion of a deceased Participant's Vested
Account Balance for which the Participant had not validly elected a permissible
form of distribution prior to his or her death, distribution shall be made in
such permissible form as the Participant's Beneficiary (or Beneficiaries) may
elect in a written filing with the Trustee, or in the absence of such an
election.
(A) If the Beneficiary is the Spouse, in substantially equal or
more frequent installments over the Spouse's life expectancy (as determined as
of the time distribution is commenced and recalculated annually, by using the
return multiples contained in Section 1.72-9 of the Treasury Regulations),
(B) If the Beneficiary is not the Spouse, in a lump sum, or
(C) If distributions have commenced prior to the Participant's
death, in the form selected by the Participant.
(iv) If the Participant has validly elected a permissible time for
commencement of distribution (i.e., a commencement date which complies with the
applicable provisions of paragraph (v) below) with respect to his or her Vested
Account Balance, his or her Vested Account Balance shall be distributed in
accordance with such election. With respect to any portion of a deceased
Participant's Vested Account Balance for which the Participant has not validly
elected a permissible time for commencement of distribution, distribution shall
commence at such time as the Participant's Beneficiary (or Beneficiaries) may
elect in a written filing with the Trustee, provided that the time elected
satisfies the requirements of subsection (v) below. In the absence of such a
valid election of a time for commencement of distribution, distribution shall
commence as follows.
(A) If the Participant dies before distributions had commenced
pursuant to Section 24.05 (a) or, if Section 24.03(a) does not apply, before
distributions had commenced pursuant to Section 24.05(b) and before the
Participant had attained his or her First Required Distribution Year,
distributions shall commence:
(I) if the Beneficiary is the Spouse, on the later of the
first January 1 which follows the calendar year during which the Participant
would have attained age 70 1/2 or the second January 1 which follows the
Participant's death; or
(II) if the Beneficiary is not the Spouse, on the second
January 1 which follows the Participant's death; or
(B) If subparagraph (A) does not apply, distributions to the
Participant's Spouse, Beneficiary or estate shall continue over a period at
least as rapid as the period selected by the Participant.
(v) Distribution to the Participant's Beneficiary shall be made
according to the following provisions:
(A) If the Participant dies (I) before distributions had
commenced pursuant to Section 24.05(a) or, if Section 24.05(a) does not apply
before distributions had commenced pursuant to Section 24.05(b) and before the
Participant had attained his or her First Required Distribution Year, (II)
during a Plan Year which began AFTER December 31, 1984, and (III) the Spouse is
not the Beneficiary, the Participant's entire Vested Account Balance must be
distributed to the Participant's Beneficiary either (I) on or before December 31
of the calendar year during which occurs the fifth anniversary of Participant's
death, or (II) in substantially equal annual or more frequent installments over
a period not exceeding the life expectancy of the oldest Beneficiary (as
determined as of the date of the Participant's death by using the return
multiples contained in Section 1.72-9 of the Treasury Regulations) provided that
such distributions commence before the second January 1 which follows the
Participant's death.
(B) If the Participant dies (I) before distributions had
commenced pursuant to Section 24.05(a) or, if Section 24.05(a) does not apply
before distributions had commenced pursuant to Section 24.05(b) and before the
Participant had attained his or her First Required Distribution Year, (II)
during Plan Year which began after December 31, 1984, and (III) the Spouse is
the Beneficiary, the Participant's entire Vested Account Balance must be
distributed to the Participant's Spouse either (I) in a
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<PAGE>
lump sum payable, or in installments which will be completely paid, on or
before December 31 of the calendar year during which occurs the fifth
anniversary of the date of the Participant's death, or (ii) in annual
installments over the Spouse's life or a period not longer than the Spouse's
life expectancy (as determined as of the time distribution is commenced and,
if the Trustee permits and the Participant has not otherwise elected,
recalculated annually) provided that such distribution is commenced before
the later of (1) the first January 1 following the calendar year during which
the Participant would have attained age 70 1/2 had the Participant not died
or (2) the second January 1 which follows the Participant's death.
(C) If a Participant dies either after distributions had commenced
pursuant to Section 24.05(a) or, if Section 24.05(a) does not apply after
attaining his or her First Required Distribution Year and after distributions
to the Participant had commenced pursuant to Section 24.05(b), distributions
to the Participant's Spouse, Beneficiary or estate shall continue over a
period at least as rapid as the period selected by the Participant.
(vi) If a Participant's Beneficiary dies after the Participant and
before he or she receives full payment of the portion of the Participant's
Vested Account Balance to which he or she is entitled, the Trustee shall,
upon direction of the Administrator, distribute the funds to which the
deceased Beneficiary is entitled to the beneficiary or beneficiaries validly
named on the most recent designation of beneficiary form filed by the
Beneficiary with the Trustee before the Beneficiary's death. To the extent
that any portion of the funds to which the deceased Beneficiary was entitled
are not governed by an effective designation of beneficiary, the funds shall
be distributed to the deceased Beneficiary's surviving spouse, or if that is
not possible, to the estate of the deceased Beneficiary. The Administrator's
direction shall include notification of the Beneficiary's death and the
existence or non-existence of a surviving spouse.
(A) If distributions had commenced before the Participant's death,
distribution to the beneficiary of a deceased Beneficiary shall continue over
a period at least as rapid as that selected by the Participant.
(B) If the deceased Beneficiary was the surviving Spouse of the
Participant and the deceased Beneficiary had not begun to receive
distributions from the Participant's Vested Account Balance at the time of
his or her death, the Participant's Vested Account Balance shall be
distributed to the deceased Beneficiary's beneficiary according to the
provisions of this subsection applied as if the Beneficiary were the
Participant. In addition, the surviving spouse's beneficiaries shall be
treated as Beneficiaries during any future application of this subsection.
(C) If neither clause (A) nor clause (B) above apply, the Participant's
Vested Account Balance shall be distributed to the deceased Beneficiary's
beneficiary either (I) on or before December 31 of the calendar year during
which occurs the fifth anniversary of the Participant's death or (II) in
substantially equal annual or more frequent installments over the remainder
of the life expectancy of the oldest Beneficiary as that life expectancy was
determined at the Participant's death (by using the return multiples
contained in Section 1.72-9 of the Treasury Regulations) provided that
distributions commence (or commenced) before the second January 1 which
follows (followed) the Participant's death.
(vii) If a beneficiary of a Beneficiary (or a beneficiary) dies before
he or she has received full payment of the portion of the Participant's
Vested Account Balance to which he or she is entitled, the Trustee shall,
after notification by the Administrator of the beneficiary's death,
distribute the funds to which the deceased beneficiary is entitled to the
beneficiary or beneficiaries validly named on that most recent Designation of
Beneficiary filed by the deceased beneficiary with the Trustee before the
beneficiary's death. To the extent that any portion of the funds to which the
deceased beneficiary's surviving spouse, or if that is not possible, to the
estate of the deceased beneficiary.
(A) If distributions had commenced before the Participant's death,
distribution to the beneficiary of a deceased Beneficiary shall continue over
a period at least as rapid as that selected by the Participant.
(B) In all other cases, the Participant's Vested Account Balance shall be
distributed to the deceased beneficiary's beneficiary either (I) on or before
December 31 of the calendar year during which occurs the fifth anniversary of
the Participant's death or (II) in substantially equal annual or more
frequent installments over the remainder of the life expectancy of the oldest
Beneficiary as that life expectancy was determined at the Participant's death
(by using the return multiples contained in Section 1.72-9 of the Treasury
Regulations) provided that distributions commence (or commenced) before the
second January 1 which follows (followed) the Participant's death.
(viii) For the purposes of this subsection, any distribution paid to a
Participant's child shall be treated as paid to the Participant's surviving
Spouse if such amount becomes payable to the surviving Spouse when the child
reaches the age of majority.
24.04 TIMING OF ANNUITY PAYMENTS AND NORMAL DISTRIBUTIONS. Payment of
benefits under the Qualified Joint and Survivor Annuity or distributions
pursuant to the normal form of distribution discussed in Section 24.05(b)
below shall commence within 60 days after the close of the Plan Year during
which occurs the later of (a) the Participant's Normal Retirement Date or (b)
the earlier of the Participant's separation from Service or the end of his or
her First Required Distribution Year.
24.05 FORM OF DISTRIBUTION AND OPTIONAL TIMES FOR COMMENCEMENT OF
DISTRIBUTION. The Vested Account Balance of a Participant to which Section
24.03 above does not apply, shall be distributed in a form determined
according to this Section.
(a) Unless the Participant elects an optional form of distribution
pursuant to a Qualified Election or a Special Qualified Election within 90
days before his or her Annuity Starting Date, the Participant's Vested
Account Balance shall be paid in the form of a Qualified Joint and Survivor
Annuity.
(b) If the Participant was eligible to receive a Qualified Joint and
Survivor Annuity and he or she elects an optional form of distribution
pursuant to a Qualified Election or a Special Qualified Election within 90
days before his or her Annuity Starting Date, then the Participant's Vested
Account Balance will normally be distributed in monthly installments over a
period equal to the shorter of 120 months or the joint life and last survivor
expectancy of the Participant and his or her Spouse (as calculated by using
the return multiples specified in Section 1.72-9 of the Treasury Regulations
at the time of the first distribution). The monthly amount shall normally be
the balance of the Participant's Vested Account Balance divided by the
remaining number of months in such period, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed and
adjusted from time to time no more frequently than monthly as the Trustee may
reasonably determine.
(c) Pursuant to this subsection, the Participant may elect one or more
of the following variations from the normal pattern of distribution, provided
that the distribution shall otherwise comply with the requirements of this
Plan:
(i) Distribution made or commencing before the Participant's Normal
Retirement Date and following the Participant's Disability or separation from
Service, if the applicable spousal consent requirements for a Qualified
Election are satisfied.
(ii) With respect to the portion of a Participant's Account which is
not comprised of the Participant's Salary Reduction Contributions Account,
Deferred Cash Contribution Account, Employer Profit Sharing Contribution
Account (to the extent that amounts in the Employer Profit Sharing
Contribution Account are attributable to contributions considered pursuant to
Section 6.05(b) above for purposes of satisfying either the nondiscrimination
test applicable to Salary Reduction Contributions or contributions considered
pursuant to Section 6.07(b) above for purposes of satisfying the
nondiscrimination test applicable to Employer Matching Contributions and
Nondeductible Voluntary Contributions (Qualified Nonelective Contributions)
and the Employer Matching Contribution Account (to the extent that amounts in
the Employer Matching Contribution Account are attributable to amounts
considered pursuant to Section 6.05(b) above for purposes of satisfying the
nondiscrimination test applicable to Salary Reduction Contributions and/or
Deferred Cash Contributions (Qualified Matching Contributions)), distribution
made or commencing before the Participant's Normal Retirement Date and
following the Participant's attainment of age 59 1/2.
(iii) Distributions made or commencing after the normal time of
distribution described in the preceding Section; provided, however, that any
such deferred distribution must commence no later than 60 days after the end
of the Participant's First Required Distribution Year.
(iv) Distribution of the Participant's entire Vested Account Balance in
a lump sum, provided that the Participant requests such distribution in
writing.
(v) Installment payments of a fixed amount, such payments to be made
until exhaustion of the Participant's Vested Account Balance.
(vi) Distribution in kind.
(vii) Any reasonable combination of the foregoing or any reasonable time
or manner of distribution within the above-stated limitations.
24.06 ELECTIONS FOR FORMER PARTICIPANTS. An opportunity to make the
applicable distribution elections discussed in this Section must be given to
any living former Participant who had not begun receiving benefits from this
Plan on August 23, 1984 and who would not otherwise receive the benefit forms
prescribed by Section 24.05 above.
(a) In the case of a former Participant who:
(i) would have been entitled to receive his or her benefits in the
form of a life annuity had he or she completed an Hour of Service during a
Plan Year commencing after December 31, 1984.
(ii) was credited with Service under this Plan or a predecessor plan
in a plan year beginning after December 31, 1975 and
(iii) had at least ten years of vesting Service when he or she
separated from Service, the former Participant must be given an opportunity
to elect to receive his or her benefits in accordance with the provisions of
Section 24.05 above.
(b) In the case of a former Participant:
(i) who was credited with service under this Plan or a predecessor
plan after September 1, 1974;
(ii) who was not credited with service under this plan or a
predecessor plan in a plan year beginning after December 31, 1975; and
(iii) whose benefits would have been payable in the form of a life
annuity the Participant must be given an opportunity to elect to receive his
or her benefits in accordance with the provisions of Section 24.08 below.
(c) In the case of a former Participant who:
(i) satisfies the requirements of subsection (a) but does not
exercise the election made available to him or her in subsection (a), or
(ii) satisfies the requirements of subsection (a) other than the
requirement of paragraph (iii), the former Participant shall have his or her
benefits distributed in accordance with the provisions of Section 24.08 below.
24.07 ELECTION PERIOD FOR CERTAIN ELECTIONS BY SEPARATED PARTICIPANTS. The
period during which a former Participant entitled to make an election
pursuant to Section 24.06 above shall commence on August 23, 1984 and end on
the earlier of the former Participant's death or the date benefits would
otherwise commence to said former Participant.
24.08 BENEFIT FORM FOR CERTAIN FORMER PARTICIPANTS. The benefits of a
former Participant who is entitled to elect, and has elected to have his or
her benefits distributed pursuant to this Section or a former Participant
whose benefits are required to be distributed in accordance with the
provisions of this Section shall be distributed in accordance with the
following provisions:
(a) If benefits in the form of a life annuity become payable to a married
former Participant who:
(i) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(ii) dies on or after Normal Retirement Age while still working for
the Employer; or
(iii) begins to receive payments prior to Normal Retirement Age; or
(iv) separates from Service on or after
22
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attaining Normal Retirement Age for the qualified early retirement age) after
satisfying the eligibility requirement for the payment of benefits under the
Plan and thereafter dies before beginning to receive such benefits; then such
benefits will be received under this plan in the form of a Qualified Joint
and Survivor Annuity, unless the former Participant has elected otherwise
during the election period. For this purpose, the election period must begin
at least six months before the Participant attains qualified early retirement
age and end not more than 90 days before the commencement of benefit
distributions. Any election hereunder must be in writing and delivered to the
Administrator; such election may be changed by the former Participant at any
time by delivery of written notification of such change and/or a separate
written election to the Administrator.
(b) A former Participant who is employed at the start of the election
period defined below will be given the opportunity to elect, during such
election period, to have a survivor annuity payable on death. If the former
Participant elects the survivor annuity, payments under such annuity must not
be less than the payments which would have been made to the Spouse under the
Qualified Joint and Survivor Annuity if the former Participant had retired on
the day before his or her death. Any election under this provision must be in
writing and delivered to the Administrator; such election may be changed by
the former Participant at any time by delivery of written notification of
such change and/or a separate written election to the Administrator. The
election period begins on the later of (i) the 90th day before the former
Participant attains the qualified early retirement age or (ii) the date on
which participation begins, and ends on the date the former Participant
terminates employment with the Employer.
(c) The qualified early retirement age referred to in this Section shall
mean the latest of:
(i) the earliest date, under the plan, on which the former
Participant may elect to receive retirement benefits.
(ii) the first day of the 120th month beginning before the former
Participant reaches Normal Retirement Age, or
(iii) the date the former Participant began participation.
24.09 NOTICE OF WAIVABILITY OF QUALIFIED PRERETIREMENT SURVIVOR ANNUITY.
(a) In the case of a Participant who is scheduled to receive Qualified
Preretirement Survivor Annuity coverage pursuant to Section 24.03 hereof, the
Administrator shall provide to the Participant within the applicable period
as determined pursuant to subsection (b) below, a written explanation of: (i)
the terms and conditions of a Qualified Preretirement Survivor Annuity; (ii)
the Participant's right to make, and the effect of, an election to waive
Qualified Preretirement Survivor Annuity coverage; (iii) the rights of a
Participant's Spouse; and (iv) the Participant's right to make, and the
effect of, a revocation of a previous election to waive Qualified
Preretirement Survivor Annuity coverage.
(b) The applicable period during which the Administrator shall provide
the written explanation described in subsection (a) above shall mean, with
respect to a given Participant, whichever of the following periods ends last:
(i) The period beginning when the individual becomes a Participant
and ending a reasonable period of time thereafter.
(ii) The period beginning on the first day of the Plan Year during
which the Participant attains age 32 and ending on the last day of the Plan
Year during which the Participant attains age 34.
(iii) The period that begins with a Participant's separation from
Service when the Participant separates from Service before attaining age 35
and ends a reasonable period of time after such separation from Service.
(iv) The period of time that begins on the effective date of a Plan
amendment which causes the Plan to no longer fully subsidize the cost of the
Qualified Preretirement Survivor Annuity and ends a reasonable period of time
after the effective date of such an amendment.
(v) The period of time which begins when Section 24.03(a) above
first applies in the case of the Participant and ends a reasonable period of
time thereafter.
24.10 NOTICE OF WAIVABILITY OF QUALIFIED JOINT AND SURVIVOR ANNUITY. In
the case of a Participant who is scheduled to receive a Qualified Joint and
Survivor Annuity pursuant to the provisions of Section 24.05 hereof, the
Administrator shall provide to the Participant, within a reasonable period
prior to the commencement of distributions, a written explanation of: (a) the
terms and conditions of a Qualified Joint and Survivor Annuity; (b) the
Participant's right to make, and the effect of, an election to waive
distribution in the form of a Qualified Joint and Survivor Annuity; (c) the
rights of the Participant's Spouse; and (d) the Participant's right to make,
and the effect of, a revocation of a previous election to waive distribution
in the form of the Qualified Joint and Survivor Annuity.
ARTICLE XXV
MISCELLANEOUS
25.01 MISREPRESENTATION. Notwithstanding any other provision herein, if
an Employee misrepresents his or her age or any other fact, any benefit
payable hereunder shall be the smaller of: (a) the amount that would be
payable if no facts had been misrepresented, or (b) the amount that would be
payable if the facts were as misrepresented.
25.02 NO ENLARGEMENT OF PLAN RIGHTS. It is a condition of the Plan, and
each Participant by participating herein expressly agrees, that he or she
shall look soley to the assets of the Trust for the payment of any benefit
under the Plan.
25.03 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. Nothing appearing in or done
pursuant to the Plan shall be construed (a) to give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, not against the Employer, except as expressly provided herein or
(b) to create or modify any contract of employment between the Employer and
any Employee or obligate the Employer to continue the services of any
Employee.
25.04 WRITTEN ORDERS. In taking or omitting to take any action under this
Plan, the Trustee may conclusively rely upon and shall be protected in acting
upon any written orders from or determinations by the Employer or the
Administrator as appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be genuine and
to have been properly executed, and so long as it acts in good faith, in
taking or omitting to take any other action.
25.05 NO RELEASE FROM LIABILITY. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the
Act. Subject thereto, neither Trustee, Loan Trustee, Administrator or
Distributor nor any other person shall have any liability under the Plan,
except as a result of negligence or wilful misconduct, and in any event the
Employer shall fully indemnify and save harmless all persons from any
liability except that resulting from their negligence or wilful misconduct.
25.06 DISCRETIONARY ACTION. Any discretionary action, including the
granting of a loan pursuant to Article XII hereof, to be taken by the
employer or the Administrator under this Plan shall be nondiscriminatory in
nature and all Employees similarly situated shall be treated in a uniform
manner.
25.07 HEADINGS. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
25.08 APPLICABLE LAW. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the state in which (a) if the
Trustee is a corporation, the Trustee has its principal place of business;
(b) if the Trustee is an individual, the Trustee resides; or (c) if the
Trustee is individuals, where a majority of the individuals serving as
Trustee reside. The Employer's execution of the Adoption Agreement may be
acknowledged where required by applicable law.
25.09 NO REVERSION. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Articles V and XVIII, no part of the assets
in the Trust shall revert to the Employer, and no part of such assets, other
than that amount required to pay taxes or administrative expenses, shall be
used for any purpose other than exclusive benefit of Employees or their
Beneficiaries. However, the Employer may request a return, and this Section
shall not prohibit return, of an amount to the Employer under any of the
following circumstances:
(a) if the amount was all or part of an Employer Contribution which was
made as a result of a mistake of fact and the amount contributed is returned
to the Employer within one year after the date on which the mistaken payment
of the contribution was made, or
(b) if the amount was all or part of an Employer contribution which was
conditioned on deductibility under Code Section 404 and this condition is not
satisfied, and the amount is returned to the employer within one year after
the date on which the deduction is disallowed, or
(c) if the amount was all or part of an Employer Contribution which was
conditioned on the initial qualification of the Plan under Code Section
401(a), this condition is not satisfied, and the amount is returned to the
Employer within one year after the date on which initial qualification is
denied.
For the purpose of this Section, all Employer Contributions are
conditioned on initial qualification of the Plan under Code Section 401(a),
qualification of the Plan as amended under Code Section 401(a), and
deductibility under Code Section 404.
25.10 NOTICES. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a
determination by the Secretary of the Treasury or his or her delegate with
respect to the qualification of the Plan.
25.11 CONFLICT. In the event of any conflict between the provisions of
this Plan and the terms of any contract or agreement issued thereunder or
with respect thereto, the provisions of the Plan shall control. In
particular, the proceeds of any life insurance contract purchased by the
Trustee and not governed by an effective Designation of Beneficiary form
shall be paid to the Participant's Spouse regardless of who is named as the
beneficiary or beneficiaries in the contract.
23
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EXHIBIT 5.01
UNDERTAKING RE: SUBMISSION OF PLAN
The registrant hereby undertakes that it will submit or has submitted
the TRO Learning, Inc. 401(K) Plan and any amendment thereto to the Internal
Revenue Services ("IRS") in a timely manner and has made or will make all
changes required by the IRS in order to qualify the plan.
<PAGE>
EXHIBIT 23.01
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We consent to the incorporation by reference in the registration statement of
TRO Learning, Inc. on Form S-8 (File No. 333- ) of our report dated
January 12, 1998, on our audits of the financial statements of TRO Learning,
Inc. appearing in TRO Learning, Inc.'s Annual Report on From 10-K for the
year ended October 31, 1997.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
August 11, 1998
<PAGE>
EXHIBIT 23.02
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the use of our report
included in this registration statement and to the incorporation by reference
in this registration statement of our report dated June 10, 1998, included in
the TRO Learning, Inc.'s Form 11-K for the year ended December 31, 1997, and
to all references to our firm included in this registration statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
July 31, 1998
