<PAGE>
As filed with the Securities and Exchange Commission on January 27, 1998
Registration No. 333-_________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MCLEODUSA INCORPORATED
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 42-1407240
-------- ----------
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
MCLEODUSA TECHNOLOGY PARK
6400 C Street, SW, P.O. Box 3177
Cedar Rapids, Iowa 52406-3177
--------------------------------------
(Address of principal executive offices)
McLeodUSA Incorporated 401(k) Profit Sharing Plan
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED
AND AFFILIATED EMPLOYEES
-------------------------------------------------------------
(Full title of the plans)
CLARK E. MCLEOD
Chairman and Chief Executive Officer
MCLEODUSA INCORPORATED
McLeodUSA Technology Park
6400 C Street, SW, P.O. Box 3177
CEDAR RAPIDS, IOWA 52406-3177
(319) 364-0000
-----------------------------------------------------------------------------
(Name, address and telephone number, including area code, of agent for service)
Copy to:
JOSEPH G. CONNOLLY, JR., ESQ.
HOGAN & HARTSON L.L.P.
555 THIRTEENTH STREET, N.W.
WASHINGTON, D.C. 20004
(202) 637-5600
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered price per share (1) offering price (1) registration fee (1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A COMMON STOCK, PAR
VALUE $.01 1,000,000 $ 36.80 $ 36,800,000 $ 10,856
========================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) and (h) solely for purposes of
calculating the amount of the registration fee, based on the average of the high
and low prices per share of McLeodUSA Incorporated Class A Common Stock, par
value $.01 per share, on January 22, 1998, as reported on the Nasdaq National
Market.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I will be
separately sent or given to employees as specified by Rule 428(b)(1) of the
Securities Act of 1933, as amended (the "Securities Act"). In accordance with
the instructions to Part I of Form S-8, such documents will not be filed with
the Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
McLeodUSA Incorporated (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents filed by it
with the Commission:
(a) The Registrant's prospectus, dated December 1, 1997, filed with
the Commission pursuant to Rule 424(b) under the Securities Act
and which contains audited financial statements for the fiscal
year ended December 31, 1996;
(b) All other reports filed with the Commission pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") since December 31, 1996; and
(c) The description of the Registrant's Class A Common Stock, $.01
par value per share (the "Class A Common Stock"), contained in
the Registrant's Registration Statement on Form 8-A filed with
the Commission on May 24, 1996.
In addition, all documents and reports filed by the Registrant
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, subsequent
to the date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities remaining unsold, shall be deemed to be incorporated by reference in
this Registration Statement and to be part hereof from the date of filing of
such documents or reports. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein 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.
To the extent that any proxy statement is incorporated by reference
herein, such incorporation shall not include any information contained in such
proxy statement which is not, pursuant to the Commission's rules, deemed to be
"filed" with the Commission or subject to the liabilities of Section 18 of the
Exchange Act.
<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable (the Class A Common Stock is registered under Section
12 of the Exchange Act).
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and its
former directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or threatened to be made parties by reason
of their serving or having served in such capacity. The DGCL provides, however,
that such person must have acted in good faith and in a manner such person
reasonably believed to be in (or not opposed to) the best interests of the
corporation and, in the case of a criminal action, such person must have had no
reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in any action or suit by or in the right of
the corporation, where such person has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that such person fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.
The Registrant's Amended and Restated Certificate of Incorporation
(the "Restated Certificate") provides that no director of the Registrant shall
be liable for breach of fiduciary duty as a director except for (1) any breach
of the directors' duty of loyalty to the Registrant or its stockholders; (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (3) liability under Section 174 of the DGCL; or
(4) any transaction from which the director derived an improper personal
benefit. The Restated Certificate also provides for the indemnification of
directors and officers to the fullest extent permitted by the DGCL. Under the
Amended and Restated Bylaws of the Registrant, the Registrant is required to
advance expenses incurred by an officer or director in defending any such action
if the director or officer undertakes to repay such amount if it is determined
that the director or officer is not entitled to indemnification. In addition,
the Registrant has entered into indemnity agreements with each of its directors
pursuant to which the Registrant has agreed to indemnify the directors as
permitted by the DGCL. The Registrant has obtained directors and officers
liability insurance against certain liabilities, including liabilities under the
Securities Act.
* * *
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
therefore is unenforceable. In the event that a claim for indemnification
against such liabilities (other than for
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<PAGE>
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of 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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
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<CAPTION>
Exhibit
Number Description
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<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Registrant (filed as Exhibit 3.1 to Registration Statement
on Form S-1, File No. 333-3112 (the "Initial Form S-1"), and
incorporated herein by reference).
4.2 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of the Registrant (filed as Exhibit 3.3 to
Registration Statement on Form S-4, File No. 333-27647 (the
"July 1997 Form S-4"), and incorporated herein by
reference).
4.3 Amended and Restated Bylaws of the Registrant (filed as
Exhibit 3.2 to Registration Statement on Form S-1, File No.
333-13885 (the "November 1996 Form S-1"), and incorporated
herein by reference).
4.4 Form of Class A Common Stock Certificate (filed as Exhibit
4.1 to the Initial Form S-1 and incorporated herein by
reference).
4.5 Investor Agreement dated as of April 1, 1996 by and among the
Registrant, IES Investments Inc., Midwest Capital Group
Inc., MWR Investments Inc., Clark E. and Mary E. McLeod, and
certain other stockholders named therein (filed as Exhibit
4.8 to the Initial Form S-1 and incorporated herein by
reference).
4.6 Amendment No. 1 to Investor Agreement dated as of October 23,
1996 by and among the Registrant, IES Investments Inc.,
Midwest Capital Group Inc., MWR Investments Inc. and Clark
E. and Mary E. McLeod (filed as Exhibit 4.3 to the November
1996 Form S-1 and incorporated herein by reference).
4.7 Stockholders' Agreement dated June 14, 1997 among the
Registrant, IES Investments Inc., Midwest Capital Group,
Inc., MWR Investments Inc., Clark E. McLeod, Mary E. McLeod
and Richard A.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Lumpkin on behalf of each of the shareholders of
Consolidated Communications Inc. listed in Schedule I
thereto (filed as Exhibit 4.12 to the July 1997 Form S-4 and
incorporated herein by reference).
4.8 Amendment No. 1 to Stockholders' Agreement dated as of
September 19, 1997 by and among the Registrant, IES
Investments Inc., Midwest Capital Group, Inc., MWR
Investments Inc., Clark E. McLeod, Mary E. McLeod and
Richard A. Lumpkin on behalf of each of the shareholders of
Consolidated Communications Inc. listed in Schedule I
thereto (filed as Exhibit 4.1 to the Quarterly Report on
Form 10-Q, File No. 0-20763, filed with the Commission on
November 14, 1997 and incorporated herein by reference).
4.9 McLeodUSA Incorporated 401(k) Profit Sharing Plan, effective
as of January 1, 1997.
4.10 Illinois Consolidated Telephone Company Long-Term Savings
Plan for Salaried and Affiliated Employees, as amended and
restated, effective January 1, 1989, First Amendment
thereto, effective March 7, 1995, Amendment II thereto,
effective March 5, 1996 and Amendment III thereto, effective
January 1, 1998.
5.1 Opinion of Hogan & Hartson L.L.P.
23.1 Consents of McGladrey & Pullen, LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
99.1 Form of Indemnity Agreement between the Registrant and
certain officers and directors of the Registrant (filed as
Exhibit 10.57 to the Initial Form S-1 and incorporated
herein by reference).
</TABLE>
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) 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 the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement;
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<PAGE>
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
Provided, however, that paragraphs (a)(i) and (a)(ii) do not
apply if the Registration Statement is on Form S-3 or Form S-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 the Registration Statement.
(b) That, for the purpose 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.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
The undertaking concerning indemnification is set forth under the
response to Item 6.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cedar Rapids, State of Iowa, on January 27, 1998.
McLEODUSA INCORPORATED
By: /s/ Clark E. McLeod
-------------------------------------
Clark E. McLeod
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Clark E. McLeod, Stephen C. Gray and
Blake O. Fisher, Jr., jointly and severally, each in his own capacity, as true
and lawful attorneys-in-fact, with full power of substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement (including post-effective amendments),
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitute or substitutes, may lawfully 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
below, on January 27, 1998.
SIGNATURE TITLE
/s/ Clark E. McLeod
- ----------------------------- Chairman, Chief Executive Officer
Clark E. McLeod and Director (Principal Executive
Officer)
/s/ Richard A. Lumpkin
- ----------------------------- Vice Chairman and Director
Richard A. Lumpkin
/s/ Stephen C. Gray
- ----------------------------- President, Chief Operating Officer
Stephen C. Gray and Director
-6-
<PAGE>
/s/ Blake O. Fisher, Jr.
- ----------------------------- Chief Financial Officer, Executive
Blake O. Fisher, Jr. Vice President, Corporate
Administration,
Treasurer and Director (Principal
Financial Officer)
/s/ Robert J. Currey
- ----------------------------- Group President, Telecommunications
Robert J. Currey Services and Director
/s/ Joseph H. Ceryanec
- ----------------------------- Vice President, Finance, Corporate
Joseph H. Ceryanec Controller and Principal
Accounting Officer(Principal
Accounting Officer)
/s/ Ronald W. Stepien
- ----------------------------- Director
Ronald W. Stepien
/s/ Thomas M. Collins
- ----------------------------- Director
Thomas M. Collins
- ----------------------------- Director
Paul D. Rhines
/s/ Lee Liu
- ----------------------------- Director
Lee Liu
-7-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the Registrant (filed as
Exhibit 3.1 to Registration Statement on Form S-1, File No. 333-3112 (the
"Initial Form S-1"), and incorporated herein by reference).
4.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of
the Registrant (filed as Exhibit 3.3 to Registration Statement on Form S-4, File
No. 333-27647 (the "July 1997 Form S-4"), and incorporated herein by reference).
4.3 Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.2 to
Registration Statement on Form S-1, File No. 333-13885 (the "November 1996 Form
S-1"), and incorporated herein by reference).
4.4 Form of Class A Common Stock Certificate (filed as Exhibit 4.1 to the Initial
Form S-1 and incorporated herein by reference).
4.5 Investor Agreement dated as of April 1, 1996 by and among the Registrant, IES
Investments Inc., Midwest Capital Group Inc., MWR Investments Inc., Clark E. and
Mary E. McLeod, and certain other stockholders named therein (filed as Exhibit
4.8 to the Initial Form S-1 and incorporated herein by reference).
4.6 Amendment No. 1 to Investor Agreement dated as of October 23, 1996 by and among
the Registrant, IES Investments Inc., Midwest Capital Group Inc., MWR Investments
Inc. and Clark E. and Mary E. McLeod (filed as Exhibit 4.3 to the November 1996
Form S-1 and incorporated herein by reference).
4.7 Stockholders' Agreement dated June 14, 1997 among the Registrant, IES Investments
Inc., Midwest Capital Group, Inc., MWR Investments Inc., Clark E. McLeod, Mary E.
McLeod and Richard A. Lumpkin on behalf of each of the shareholders of
Consolidated Communications Inc. listed in Schedule I thereto (filed as Exhibit
4.12 to the July 1997 Form S-4 and incorporated herein by reference).
4.8 Amendment No. 1 to Stockholders' Agreement dated as of September 19, 1997 by and
among the Registrant, IES Investments Inc., Midwest Capital Group, Inc., MWR
Investments Inc., Clark E. McLeod, Mary E. McLeod and Richard A. Lumpkin on
behalf of each of the shareholders of Consolidated Communications Inc. listed in
Schedule I thereto (filed as Exhibit 4.1 to the Quarterly Report on Form 10-Q,
File No. 0-20763, filed with the Commission on November 14, 1997 and incorporated
herein by reference).
4.9 McLeodUSA Incorporated 401(k) Profit Sharing Plan, effective as of January 1, 1997.
</TABLE>
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<TABLE>
<S> <C>
4.10 Illinois Consolidated Telephone Company Long-Term Savings Plan for Salaried and
Affiliated Employees, as amended and restated, effective January 1, 1989, First
Amendment thereto, effective March 7, 1995, Amendment II thereto, effective
March 5, 1996 and Amendment III thereto, effective January 1, 1998.
5.1 Opinion of Hogan & Hartson L.L.P.
23.1 Consents of McGladrey & Pullen, LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Hogan & Hartson L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature page).
99.1 Form of Indemnity Agreement between the Registrant and certain officers and
directors of the Registrant (filed as Exhibit 10.57 to the Initial Form S-1 and
incorporated herein by reference).
</TABLE>
<PAGE>
EXHIBIT 4.9
DIVERSIFIED INVESTMENT ADVISORS, INC.
DEFINED CONTRIBUTION PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
<TABLE>
<CAPTION>
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2.1 TOP HEAVY PLAN REQUIREMENTS........................ 17
2.2 DETERMINATION OF TOP HEAVY STATUS.................. 17
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER........ 21
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY............ 22
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES...... 22
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR............. 23
2.7 RECORDS AND REPORTS................................ 24
2.8 APPOINTMENT OF ADVISERS............................ 24
2.9 INFORMATION FROM EMPLOYER.......................... 24
2.10 PAYMENT OF EXPENSES................................ 24
2.11 MAJORITY ACTIONS................................... 24
2.12 CLAIMS PROCEDURE................................... 25
2.13 CLAIMS REVIEW PROCEDURE............................ 25
</TABLE>
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ARTICLE III
ELIGIBILITY
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<S> <C> <C>
3.1 CONDITIONS OF ELIGIBILITY.......................... 26
3.2 EFFECTIVE DATE OF PARTICIPATION.................... 26
3.3 DETERMINATION OF ELIGIBILITY....................... 26
3.4 TERMINATION OF ELIGIBILITY......................... 26
3.5 OMISSION OF ELIGIBLE EMPLOYEE...................... 27
3.6 INCLUSION OF INELIGIBLE EMPLOYEE................... 27
3.7 ELECTION NOT TO PARTICIPATE........................ 27
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE.............. 27
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION.... 29
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION......... 30
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND
EARNINGS........................................... 30
4.4 MAXIMUM ANNUAL ADDITIONS........................... 35
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.......... 42
4.6 TRANSFERS FROM QUALIFIED PLANS..................... 42
4.7 VOLUNTARY CONTRIBUTIONS............................ 44
4.8 DIRECTED INVESTMENT ACCOUNT........................ 45
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS......... 45
4.10 ACTUAL CONTRIBUTION PERCENTAGE TESTS............... 46
4.11 INTEGRATION IN MORE THAN ONE PLAN.................. 46
</TABLE>
<PAGE>
ARTICLE V
VALUATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
5.1 VALUATION OF THE TRUST FUND........................ 47
5.2 METHOD OF VALUATION................................ 47
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT.......... 48
6.2 DETERMINATION OF BENEFITS UPON DEATH............... 48
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY... 49
6.4 DETERMINATION OF BENEFITS UPON TERMINATION......... 50
6.5 DISTRIBUTION OF BENEFITS........................... 54
6.6 DISTRIBUTION OF BENEFITS UPON DEATH................ 58
6.7 TIME OF SEGREGATION OR DISTRIBUTION................ 62
6.8 DISTRIBUTION FOR MINOR BENEFICIARY................. 63
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN..... 63
6.10 PRE-RETIREMENT DISTRIBUTION........................ 63
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP.................. 64
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS.......... 64
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS................. 65
</TABLE>
<PAGE>
ARTICLE VII
TRUSTEE
<TABLE>
<CAPTION>
<S> <C> <C>
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE.............. 66
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE........ 66
7.3 OTHER POWERS OF THE TRUSTEE........................ 68
7.4 LOANS TO PARTICIPANTS.............................. 70
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS........... 72
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES...... 72
7.7 ANNUAL REPORT OF THE TRUSTEE....................... 73
7.8 AUDIT.............................................. 73
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE..... 74
7.10 TRANSFER OF INTEREST............................... 75
7.11 TRUSTEE INDEMNIFICATION............................ 75
7.12 EMPLOYER SECURITIES AND REAL PROPERTY.............. 75
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT.......................................... 76
8.2 TERMINATION........................................ 77
8.3 MERGER OR CONSOLIDATION............................ 77
</TABLE>
<PAGE>
ARTICLE IX
MISCELLANEOUS
<TABLE>
<CAPTION>
<S> <C> <C>
9.1 EMPLOYER ADOPTIONS................................. 78
9.2 PARTICIPANT'S RIGHTS............................... 78
9.3 ALIENATION......................................... 78
9.4 CONSTRUCTION OF PLAN............................... 79
9.5 GENDER AND NUMBER.................................. 79
9.6 LEGAL ACTION....................................... 79
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS............. 79
9.8 BONDING............................................ 80
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE......... 80
9.10 INSURER'S PROTECTIVE CLAUSE........................ 80
9.11 RECEIPT AND RELEASE FOR PAYMENTS................... 81
9.12 ACTION BY THE EMPLOYER............................. 81
9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY. 81
9.14 HEADINGS.......................................... 81
9.15 APPROVAL BY INTERNAL REVENUE SERVICE.............. 82
9.16 UNIFORMITY........................................ 82
9.17 PAYMENT OF BENEFITS............................... 82
</TABLE>
<PAGE>
ARTICLE X
PARTICIPATING EMPLOYERS
<TABLE>
<CAPTION>
<S> <C> <C>
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER.......... 83
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.............. 83
10.3 DESIGNATION OF AGENT................................. 83
10.4 EMPLOYEE TRANSFERS................................... 84
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND
FORFEITURES.......................................... 84
10.6 AMENDMENT............................................ 84
10.7 DISCONTINUANCE OF PARTICIPATION...................... 84
10.8 ADMINISTRATOR'S AUTHORITY............................ 85
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE.... 85
ARTICLE XI
CASH OR DEFERRED PROVISIONS
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION...... 86
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION.............. 87
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS. 91
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS..................... 93
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS....... 95
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS................. 98
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS... 101
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP.................... 104
</TABLE>
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the meanings
set forth herein unless a different meaning is clearly required by the context:
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
1.2 "Administrator" means the person(s) or entity designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the Employer.
1.3 "Adoption Agreement" means the separate Agreement which is executed by the
Employer and accepted by the Trustee which sets forth the elective
provisions of this Plan and Trust as specified by the Employer.
1.4 "Affiliated Employer" means the Employer and any corporation which is a
member of a controlled group of corporations (as defined in Code Section
414(b)) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section
414(c)) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Employer; and any other entity required
to be aggregated with the Employer pursuant to Regulations under Code
Section 414(o).
1.5 "Aggregate Account" means with respect to each Participant, the value of
all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section
2.2.
1.6 "Anniversary Date" means the anniversary date specified in C3 of the
Adoption Agreement.
1.7 "Beneficiary" means the person to whom a share of a deceased Participant's
interest in the Plan is payable, subject to the restrictions of Sections
6.2 and 6.6.
1.8 "Code" means the Internal Revenue Code of 1986, as amended or replaced from
time to time.
1.9 "Compensation" with respect to any Participant means one of the following
as elected in the Adoption Agreement. However, compensation for any Self-
Employed Individual shall be equal to his Earned Income.
(a) "Form W-2 Compensation" is information required to be reported under
Code Sections 6041, 6051 and 6052 (Wages, Tips and Other Compensation
Box on Form W-2). Compensation is wages as defined in Code Section
3401(a) and all other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a written statement
under Code Sections 6041(d) and 6051(a)(3). Compensation must be
determined without regard to any rules under Code Section 3401(a) that
limit the remuneration included in wages based on the nature or
location of the employment or the
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services performed (such as the exception for agricultural labor in
Code Section 3401(a)(2)).
(b) "Federal Income Tax Withholding Compensation" is wages within the
meaning of Code Section 3401(a) for the purposes of income tax
withholding at the source but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
(c) "415 Safe-Harbor Compensation" is wages, salaries, and fees for
professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer
maintaining the Plan to the extent that the amounts are includible in
gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of
profits, commission on insurance premiums, tips, bonuses, fringe
benefits and reimbursements or other expense allowances under a
nonaccountable plan (as described in Code Section 1.62-2(c)), and
excluding the following:
(1) Employer contributions to a plan of deferred compensation which
are not includible in the Employee's gross income for the taxable
year in which contributed, or Employer contributions under a
simplified employee pension plan to the extent such contributions
are deductible by the Employee, or any distributions from a plan
of deferred compensation;
(2) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(4) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code Section 403(b) (whether or not the
contributions are actually excludable from the gross income of
the Employee).
If, in connection with the adoption of this or any other amendment, the
definition of Compensation has been modified, then, for Plan Years prior to
the Plan Year which includes the adoption date of such amendment,
Compensation means compensation determined pursuant to the Plan then in
effect.
In addition, if specified in the Adoption Agreement, Compensation for all
Plan purposes shall also include compensation which is not currently
includible in the Participant's gross income by reason of the application
of Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b).
For Plan Years beginning on or after January 1, 1989, and before January 1,
1994, the annual compensation of each Participant taken into account for
determining all benefits provided under
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<PAGE>
the Plan for any Plan Year shall not exceed $200,000. This limitation shall
be adjusted by the Secretary of the Treasury at the same time and in the
same manner as under Code Section 415(d), except that the dollar increase
in effect on January 1 of any calendar year is effective for Plan Years
beginning in such calendar year and the first adjustment to the $200,000
limitation is effective on January 1, 1990.
Notwithstanding the above, for Plan Years beginning on or after January 1,
1994, the Compensation of each Employee taken into account under the Plan
shall not exceed the "OBRA '93 annual compensation limit". The "OBRA '93
annual compensation limit" is $150,000, as adjusted by the Commissioner of
the Internal Revenue Service for increases in the cost-of-living in
accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment
in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period)
beginning in such calendar year. If a determination period consists of
fewer than 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of months in
the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Code Section 401(a)(17) shall mean the "OBRA
'93 annual compensation limit" set forth in this Section.
In applying this limitation, the family group of a Highly Compensated
Participant who is subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five percent owner"
of the Employer or one of the ten (10) Highly Compensated Employees paid
the greatest 415 Compensation during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only
the affected Participant's spouse and any lineal descendants who have not
attained age nineteen (19) before the close of the year. If, as a result of
the application of such rules, the adjusted limitation is exceeded, then
(except for purposes of determining the portion of Compensation up to the
integration level if this plan is integrated), 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.
Compensation shall include only that compensation which is actually paid to
the Participant during the determination period.
For Plan Years beginning prior to January 1, 1989, a $200,000 limit
(without regard to Family Member aggregation) shall apply only for Top
Heavy Plan Years and shall not be adjusted.
1.10 "Contract" or "Policy" means any life insurance policy, retirement income
policy, or annuity contract (group or individual) issued by the Insurer. In
the event of any conflict between the terms of this Plan and the terms of
any insurance contract purchased hereunder, the Plan provisions shall
control.
1.11 "Deferred Compensation" means, with respect to any Participant, that
portion of the Participant's total Compensation which has been contributed
to the Plan in accordance with the Participant's deferral election pursuant
to Section 11.2.
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<PAGE>
1.12 "Early Retirement Date" means the date specified in the Adoption Agreement
on which a Participant or Former Participant has satisfied the age and
service requirements specified in the Adoption Agreement (Early Retirement
Age). A Participant shall become fully Vested upon satisfying this
requirement if still employed at his Early Retirement Age.
A Former Participant who terminates employment after satisfying the service
requirement for Early Retirement and who thereafter reaches the age
requirement contained herein shall be entitled to receive his benefits
under this Plan.
1.13 "Earned Income" means with respect to a Self-Employed Individual, the net
earnings from self-employment in the trade or business with respect to
which the Plan is established, for which the personal services of the
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. Net earnings are reduced by
contributions by the Employer to a qualified Plan to the extent deductible
under Code Section 404. In addition, for Plan Years beginning after
December 31, 1989, net earnings shall be determined with regard to the
deduction allowed to the taxpayer by Code Section 164(f).
1.14 "Elective Contribution" means the Employer's contributions to the Plan that
are made pursuant to the Participant's deferral election pursuant to
Section 11.2, excluding any such amounts distributed as "excess annual
additions" pursuant to Section 4.4. In addition, if selected in E3 of the
Adoption Agreement, the Employer's matching contribution shall or shall not
be considered an Elective Contribution for purposes of the Plan, as
provided in Section 11.1(b). Elective Contributions shall be subject to the
requirements of Sections 11.2(b) and 11.2(c) and shall further be required
to satisfy the discrimination requirements of Regulation 1.401(k)-1(b)(3),
the provisions of which are specifically incorporated herein by reference.
1.15 "Eligible Employee" means any Employee specified in D1 of the Adoption
Agreement.
1.16 "Employee" means any person who is employed by the Employer, but excludes
any person who is employed as an independent contractor. The term Employee
shall also include Leased Employees as provided in Code Section 414(n) or
(o).
Except as provided in the Non-Standardized Adoption Agreement, all
Employees of all entities which are an Affiliated Employer will be treated
as employed by a single Employer.
1.17 "Employer" means the entity specified in the Adoption Agreement, any
Participating Employer (as defined in Section 10.1) which shall adopt this
Plan, any successor which shall maintain this Plan and any predecessor
which has maintained this Plan.
1.18 "Excess Compensation" means, with respect to a Plan that is integrated with
Social Security, a Participant's Compensation which is in excess of the
amount set forth in the Adoption Agreement.
1.19 "Excess Contributions" means, with respect to a Plan Year, the excess of
Elective Contributions and Qualified Non-Elective Contributions made on
behalf of Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section 11.4(a).
4
<PAGE>
1.20 "Excess Deferred Compensation" means, with respect to any taxable year of a
Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section
11.2(f) actually made on behalf of such Participant for such taxable year,
over the dollar limitation provided for in Code Section 402(g), which is
incorporated herein by reference. Excess Deferred Compensation shall be
treated as an "annual addition" pursuant to Section 4.4 when contributed to
the Plan unless distributed to the affected Participant not later than the
first April 15th following the close of the Participant's taxable year.
1.21 "Expected Year of Service" means an eligibility computation period of
twelve (12) consecutive months during which an Eligible Employee is
expected to complete at least 1,000 Hours of Service. The eligibility
computation period shall be computed with reference to the date on which
the Employee first performs an Hour of Service and the succeeding
eligibility computation periods beginning on the anniversaries of that
date. If an Employee who is not expected to complete 1,000 Hours of Service
actually completes 1,000 Hours of Service during an applicable eligibility
computation period, he shall be deemed to have become an Eligible Employee
as of the first day of the eligibility computation period in which he first
works 1,000 hours for the Employer.
1.22 "Family Member" means, with respect to an affected Participant, such
Participant's spouse, and such Participant's lineal descendants and
ascendants and their spouses, all as described in Code Section
414(q)(6)(B).
1.23 "Fiduciary" means any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets,
(b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has
any authority or responsibility to do so, or (c) has any discretionary
authority or discretionary responsibility in the administration of the
Plan, including, but not limited to, the Trustee, the Employer and its
representative body, and the Administrator.
1.24 "Fiscal Year" means the Employer's accounting year as specified in the
Adoption Agreement.
1.25 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a Participant's
Account, or
(b) the last day of the Plan Year in which the Participant incurs five (5)
consecutive 1-Year Breaks in Service.
If a partial distribution of a Terminated Participant's total Vested
interest is permitted, as specified in the Adoption Agreement, and if a
Participant elects to have distributed less than his entire Vested
interest, the part of his non-Vested interest that will be treated as an
immediate Forfeiture is the total non-Vested portion multiplied by a
fraction, the numerator of which is the amount of the distribution
attributable to Employer contributions and the denominator of which is the
total value of the Vested Employer-derived Participant's account balance.
5
<PAGE>
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated
Participant shall be deemed to have received a distribution of his Vested
benefit upon his termination of employment. In addition, the term
Forfeiture shall also include amounts deemed to be Forfeitures pursuant to
any other provision of this Plan.
1.26 "Former Participant" means a person who has been a Participant, but who has
ceased to be a Participant for any reason.
1.27 "414(s) Compensation" with respect to any Employee means his Compensation
as defined in Section 1.9. However, for purposes of this Section, 414(s)
Compensation shall or shall not be recognized as of an Employee's effective
date of participation, as specified in the Adoption Agreement. If, in
connection with the adoption of this or any other amendment, the definition
of 414(s) Compensation has been modified, then, for Plan Years prior to the
Plan Year which includes the adoption date of such amendment, 414(s)
Compensation means compensation determined pursuant to the Plan then in
effect.
In addition, if specified in the Adoption Agreement, 414(s) Compensation
shall also include compensation which is not currently includible in the
Participant's gross income by reason of the application of Code Sections
125, 402(e)(3), 402(h)(1)(B), or 403(b), plus Elective Contributions
attributable to Deferred Compensation recharacterized as voluntary Employee
contributions pursuant to 11.5(a).
1.28 "415 Compensation" means a Participant's Compensation as elected in the
Adoption Agreement. However, regardless of any selection made in the
Adoption Agreement, 415 Compensation shall exclude compensation which is
not currently includible in the Participant's gross income by reason of the
application of Code Sections 125, 402(e)(3), 402(h)(1)(B), or 403(b).
415 Compensation is compensation that is used to determine the maximum
permissible annual additions under Code Section 415 pursuant to Section 4.4
of the Plan, the identities of a Highly Compensated Employee as described
in Code Section 414(q) pursuant to Section 1.29 of the Plan and a Key
Employee as described in Code Section 416(i)(1) pursuant to Section 1.36 of
the Plan, and the required minimum allocations under a Top Heavy Plan as
described in Code Section 416(c) pursuant to Section 4.3(f) of the Plan.
For limitation years beginning after December 31, 1991, for purposes of
applying the limitations of this Article, 415 Compensation for a limitation
year is the compensation actually paid or made available during such
limitation year.
Notwithstanding the preceding sentence, 415 Compensation for a Participant
in a defined contribution plan who is permanently and totally disabled (as
defined in Code Section 22(e)(3)) is the compensation such Participant
would have received for the limitation year if the Participant had been
paid at the rate of compensation paid immediately before becoming
permanently and totally disabled; such imputed 415 Compensation for the
disabled Participant may be taken into account only if the contributions
made on behalf of such Participant are nonforfeitable when made.
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<PAGE>
If, in connection with the adoption of this or any other amendment, the
definition of 415 Compensation has been modified, then, for Plan Years
prior to the Plan Year which includes the adoption date of such amendment,
415 Compensation means compensation determined pursuant to the Plan then in
effect.
1.29 "Highly Compensated Employee" means an Employee described in Code Section
414(q) and the Regulations thereunder and generally means an Employee who
performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year" or "look-
back year" were "five percent owners" as defined in Section 1.36(c).
If an Employee is, during a determination year or look-back year, a
Family Member of either a 5 percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most
Highly Compensated Employees ranked on the basis of 415 Compensation
paid by the Employer during such year, then the Family member and the
5 percent owner or top-ten Highly Compensated Employee shall be
aggregated. In such case, the Family Member and 5 percent owner or
top-ten Highly Compensated Employee shall be treated as a single
Employee receiving Compensation and Plan contributions or benefits
equal to the sum of such Compensation and contributions or benefits of
the Family Member and 5 percent owner or top-ten Highly Compensated
Employee.
(b) Employees who received 415 Compensation during the "look-back year"
from the Employer in excess of $75,000.
(c) Employees who received 415 Compensation during the "look-back year"
from the Employer in excess of $50,000 and were in the Top Paid Group
of Employees for the Plan Year.
(d) Employees who during the "look-back year" were officers of the
Employer (as that term is defined within the meaning of the
Regulations under Code Section 416) and received 415 Compensation
during the "look-back year" from the Employer greater than 50 percent
of the limit in effect under Code Section 415(b)(1)(A) for any such
Plan Year. The number of officers shall be limited to the lesser of
(i) 50 employees; or (ii) the greater of 3 employees or 10 percent of
all employees. If the Employer does not have at least one officer
whose annual 415 Compensation is in excess of 50 percent of the Code
Section 415(b)(1)(A) limit, then the highest paid officer of the
Employer will be treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100 Employees paid
the greatest 415 Compensation during the "determination year" and are
also described in (b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-back year".
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<PAGE>
The "determination year" shall be the Plan Year for which testing is being
performed, and the "look-back year" shall be the immediately preceding
twelve-month period. However, if the Plan Year is a calendar year, or if
another Plan of the Employer so provides, then the "look-back year" shall
be the calendar year ending with or within the Plan Year for which testing
is being performed, and the "determination year" (if applicable) shall be
the period of time, if any, which extends beyond the "look-back year" and
ends on the last day of the Plan Year for which testing is being performed
(the "lag period"). With respect to this election, it shall be applied on a
uniform and consistent basis to all plans, entities, and arrangements of
the Employer.
For purposes of this Section, the determination of 415 Compensation shall
be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections
125, 402(e)(3), 402(h)(1)(B) and, in the case of Employer contributions
made pursuant to a salary reduction agreement, Code Section 403(b).
Additionally, the dollar threshold amounts specified in (b) and (c) above
shall be adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar limits which
shall be applied are those for the calendar year in which the
"determination year" or "look back year" begins.
In determining who is a Highly Compensated Employee, Employees who are non-
resident aliens and who received no earned income (within the meaning of
Code Section 911(d)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into
account as a single employer and Leased Employees within the meaning of
Code Sections 414(n)(2) and 414(o)(2) shall be considered Employees unless
such Leased Employees are covered by a plan described in Code Section
414(n)(5) and are not covered in any qualified plan maintained by the
Employer. The exclusion of Leased Employees for this purpose shall be
applied on a uniform and consistent basis for all of the Employer's
retirement plans. In addition, Highly Compensated Former Employees shall be
treated as Highly Compensated Employees without regard to whether they
performed services during the "determination year".
1.30 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year" after attaining age 55. Notwithstanding the foregoing,
an Employee who separated from service prior to 1987 will be treated as a
Highly Compensated Former Employee only if during the separation year (or
year preceding the separation year) or any year after the Employee attains
age 55 (or the last year ending before the Employee's 55th birthday), the
Employee either received 415 Compensation in excess of $50,000 or was a
"five percent owner". For purposes of this Section, "determination year",
415 Compensation and "five percent owner" shall be determined in accordance
with Section 1.29. Highly Compensated Former Employees shall be treated as
Highly Compensated Employees. The method set forth in this Section for
determining who is a "Highly Compensated Former Employee" shall be applied
on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.31 "Highly Compensated Participant" means any Highly Compensated Employee who
is eligible to participate in the Plan.
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<PAGE>
1.32 "Hour of Service" means (1) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer for the
performance of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than performance
of duties (such as vacation, holidays, sickness, jury duty, disability,
lay-off, military duty or leave of absence) during the applicable
computation period; (3) each hour for which back pay is awarded or agreed
to by the Employer without regard to mitigation of damages. These hours
will be credited to the Employee for the computation period or periods to
which the award or agreement pertains rather than the computation period in
which the award agreement or payment is made. The same Hours of Service
shall not be credited both under (1) or (2), as the case may be, and under
(3).
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such
period occurs in a single computation period); (ii) an hour for which an
Employee is directly or indirectly paid, or entitled to payment, on account
of a period during which no duties are performed is not required to be
credited to the Employee if such payment is made or due under a plan
maintained solely for the purpose of complying with applicable worker's
compensation, or unemployment compensation or disability insurance laws;
and (iii) Hours of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically related
expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due
from the Employer directly, or indirectly through, among others, a trust
fund, or insurer, to which the Employer contributes or pays premiums and
regardless of whether contributions made or due to the trust fund, insurer,
or other entity are for the benefit of particular Employees or are on
behalf of a group of Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a Year of
Service, a year of participation for purposes of accrued benefits, a 1-Year
Break in Service, and employment commencement date (or reemployment
commencement date). The provisions of Department of Labor regulations
2530.200b-2(b) and (c) are incorporated herein by reference.
Hours of Service will be credited for employment with all Affiliated
Employers and for any individual considered to be a Leased Employee
pursuant to Code Sections 414(n) or 414(o) and the Regulations thereunder.
Hours of Service will be determined on the basis of the method selected in
the Adoption Agreement.
1.33 "Insurer" means any legal reserve insurance company which shall issue one
or more policies under the Plan.
1.34 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must
9
<PAGE>
be a person, firm, or corporation registered as an investment adviser under
the Investment Advisers Act of 1940, a bank, or an insurance company.
1.35 "Joint and Survivor Annuity" means an annuity for the life of a Participant
with a survivor annuity for the life of the Participant's spouse which is
not less than 1/2, nor greater than the amount of the annuity payable
during the joint lives of the Participant and the Participant's spouse. The
Joint and Survivor Annuity will be the amount of benefit which can be
purchased with the Participant's Vested interest in the Plan.
1.36 "Key Employee" means an Employee as defined in Code Section 416(i) and the
Regulations thereunder. Generally, any Employee or former Employee (as well
as each of his Beneficiaries) is considered a Key Employee if he, at any
time during the Plan Year that contains the "Determination Date" or any of
the preceding four (4) Plan Years, has been included in one of the
following categories:
(a) an officer of the Employer (as that term is defined within the meaning
of the Regulations under Code Section 416) having annual 415
Compensation greater than 50 percent of the amount in effect under
Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten Employees having annual 415 Compensation from the
Employer for a Plan Year greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year in which such
Plan Year ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent interest and the
largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner" means any
person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of
the Employer or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Employer or, in the
case of an unincorporated business, any person who owns more than five
percent (5%) of the capital or profits interest in the Employer. In
determining percentage ownership hereunder, employers that would
otherwise be aggregated under Code Sections 414(b), (c), (m) and (o)
shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual 415
Compensation from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers. However, in
determining whether an individual has 415 Compensation of more than
$150,000, 415 Compensation from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken
into account.
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<PAGE>
For purposes of this Section, the determination of 415 Compensation shall
be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections
125, 402(e)(3), 402(h)(1)(B) and, in the case of Employer contributions
made pursuant to a salary reduction agreement, Code Section 403(b).
1.37 "Late Retirement Date" means the date of, or the first day of the month or
the Anniversary Date coinciding with or next following, whichever
corresponds to the election made for the Normal Retirement Date, a
Participant's actual retirement after having reached his Normal Retirement
Date.
1.38 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient
(or for the recipient and related persons determined in accordance with
Code Section 414(n)(6)) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed
by employees in the business field of the recipient employer. Contributions
or benefits provided a leased employee by the leasing organization which
are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer.
A leased employee shall not be considered an Employee of the recipient if:
(i) such employee is covered by a money purchase pension plan providing:
(1) a nonintegrated employer contribution rate of at least 10 percent of
415 Compensation, as defined in Code Section 415(c)(3), but including
amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under Code Sections 125,
402(a)(8), 402(h), or 403(b), (2) immediate participation, and (3) full and
immediate vesting; and (ii) leased employees do not constitute more than 20
percent of the recipient's nonhighly compensated workforce.
1.39 "Net Profit" means with respect to any Fiscal Year the Employer's net
income or profit for such Fiscal Year determined upon the basis of the
Employer's books of account in accordance with generally accepted
accounting principles, without any reduction for taxes based upon income,
or for contributions made by the Employer to this Plan and any other
qualified plan.
1.40 "Non-Elective Contribution" means the Employer's contributions to the Plan
other than those made pursuant to the Participant's deferral election made
pursuant to Section 11.2 and any Qualified Non-Elective Contribution. In
addition, if selected in E3 of the Adoption Agreement, the Employer's
Matching Contribution made pursuant to Section 4.3(b) shall be considered a
Non-Elective Contribution for purposes of the Plan.
1.41 "Non-Highly Compensated Participant" means any Participant who is neither a
Highly Compensated Employee nor a Family Member.
1.42 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.43 "Normal Retirement Age" means the age specified in the Adoption Agreement
at which time a Participant shall become fully Vested in his Participant's
Account.
11
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1.44 "Normal Retirement Date" means the date specified in the Adoption Agreement
on which a Participant shall become eligible to have his benefits
distributed to him.
1.45 "1-Year Break in Service" means the applicable computation period during
which an Employee has not completed more than 500 Hours of Service with the
Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall
be recognized for "authorized leaves of absence" and "maternity and
paternity leaves of absence."
"Authorized leave of absence" means an unpaid, temporary cessation from
active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service,
or any other reason.
A "maternity or paternity leave of absence" means, for Plan Years beginning
after December 31, 1984, an absence from work for any period by reason of
the Employee's pregnancy, birth of the Employee's child, placement of a
child with the Employee in connection with the adoption of such child, or
any absence for the purpose of caring for such child for a period
immediately following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the absence
from work begins, only if credit therefore is necessary to prevent the
Employee from incurring a 1-Year Break in Service, or, in any other case,
in the immediately following computation period. The Hours of Service
credited for a "maternity or paternity leave of absence" shall be those
which would normally have been credited but for such absence, or, in any
case in which the Administrator is unable to determine such hours normally
credited, eight (8) Hours of Service per day. The total Hours of Service
required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501.
1.46 "Owner-Employee" means a sole proprietor who owns the entire interest in
the Employer or a partner who owns more than 10% of either the capital
interest or the profits interest in the Employer and who receives income
for personal services from the Employer.
1.47 "Participant" means any Eligible Employee who participates in the Plan as
provided in Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
A Participant is treated as benefiting under the Plan for any Plan Year
during which the Participant received or is deemed to receive an allocation
in accordance with Regulation Section 1.410(b)-3(a).
1.48 "Participant's Account" means the account established and maintained by the
Administrator for each Participant with respect to his total interest under
the Plan resulting from (a) the Employer's contributions in the case of a
Profit Sharing Plan or Money Purchase Plan, and (b) the Employer's Non-
Elective Contributions and Employer's matching contributions (pursuant to
Section 1.40), in the case of a 401(k) Profit Sharing Plan. In the case of
a 401(k) Profit Sharing Plan, a separate accounting record shall be
maintained with respect to that portion of the Participant's Account
attributable to Non-Elective Contributions and Employer's matching
contributions.
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1.49 "Participant's Combined Account" means the account established and
maintained by the Administrator for each Participant with respect to his
total interest under the Plan resulting from the Employer's contributions
maintained under the Participant's Account and, in the case of a 401(k)
Profit Sharing Plan, the Participant's Elective Account.
1.50 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his
total interest in the Plan and Trust resulting rom the Employer's Elective
Contributions and Qualified Non-Elective Contributions. A separate
accounting shall be maintained with respect to that portion of the
Participant's Elective Account attributable to Elective Contributions made
pursuant to Section 11.2, Employer matching contributions if they are
deemed to be Elective Contributions, and any Qualified Non-Elective
Contributions.
1.51 "Participant's Rollover Account" means the account established and
maintained by the Administrator for each Participant with respect to his
total interest in the Plan resulting from amounts transferred from another
qualified plan or "conduit" Individual Retirement Account in accordance
with Section 4.6.
1.52 "Plan" means this instrument (hereinafter referred to as Diversified
Investment Advisors, Inc. Defined Contribution Plan and Basic Plan Document
#01) including all amendments thereto, and the Adoption Agreement as
adopted by the Employer.
1.53 "Plan Year" means the Plan's accounting year as specified in C2 of the
Adoption Agreement.
1.54 "Pre-Retirement Survivor Annuity" means an immediate annuity for the life
of the Participant's spouse, the payments under which must be equal to the
actuarial equivalent of 50% or 100%, as specified by the Employer in the
Adoption Agreement, of the Participant's Vested interest in the Plan as of
the date of death.
1.55 "Qualified Non-Elective Account" means the account established hereunder to
which Qualified Non-Elective Contributions are allocated.
1.56 "Qualified Non-Elective Contribution" means the Employer's contributions to
the Plan that are made pursuant to E5 of the Adoption Agreement and Section
11.1(d) which are used to satisfy the "Actual Deferral Percentage" tests.
Qualified Non-Elective Contributions are nonforfeitable when made and are
distributable only as specified in Sections 11.2(c) and 11.8. In addition,
the Employer's contributions to the Plan that are made pursuant to Section
11.7(h) and which are used to satisfy the "Actual Contribution Percentage"
tests shall be considered Qualified Non-Elective Contributions.
1.57 "Qualified Voluntary Employee Contribution Account" means the account
established and maintained by the Administrator for each Participant with
respect to his total interest under the Plan resulting from the
Participant's tax deductible qualified voluntary employee contributions
made pursuant to Section 4.9.
1.58 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to
time.
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1.59 "Retired Participant" means a person who has been a Participant, but who
has become entitled to retirement benefits under the Plan.
1.60 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement
Date (see Section 6.1).
1.61 "Self-Employed Individual" means an individual who has Earned Income for
the taxable year from the trade or business for which the Plan is
established, and, also, an individual who would have had Earned Income but
for the fact that the trade or business had no Net Profits for the taxable
year. A Self-Employed Individual shall be treated as an Employee.
1.62 "Shareholder-Employee" means a Participant who owns more than five percent
(5%) of the Employer's outstanding capital stock during any year in which
the Employer elected to be taxed as a Small Business Corporation under the
applicable Code Section.
1.63 "Short Plan Year" means, if specified in the Adoption Agreement, that the
Plan Year shall be less than a 12 month period. If chosen, the following
rules shall apply in the administration of this Plan. In determining
whether an Employee has completed a Year of Service for benefit accrual
purposes in the Short Plan Year, the number of the Hours of Service
required shall be proportionately reduced based on the number of days in
the Short Plan Year. The determination of whether an Employee has completed
a Year of Service for vesting and eligibility purposes shall be made in
accordance with Department of Labor Regulation 2530.203-2(c). In addition,
if this Plan is integrated with Social Security, the integration level
shall also be proportionately reduced based on the number of days in the
Short Plan Year.
1.64 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.65 "Taxable Wage Base" means the contribution and benefit base in effect under
Section 230 of the Social Security Act at the beginning of the Plan Year.
1.66 "Terminated Participant" means a person who has been a Participant, but
whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.67 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.68 "Top Heavy Plan Year" means a Plan Year commencing after December 31, 1983
during which the Plan is a Top Heavy Plan.
1.69 "Top Paid Group" shall be determined pursuant to Code Section 414(q) and
the Regulations thereunder and generally means the top 20 percent of
Employees who performed services for the Employer during the applicable
year, ranked according to the amount of 415 Compensation (as determined
pursuant to Section 1.29) received from the Employer during such year. All
Affiliated Employers shall be taken into account as a single employer, and
Leased Employees shall be treated as Employees pursuant to Code Section
414(n) or (o). Employees who are non-resident aliens who received no Earned
Income (within the meaning of Code Section
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911(d)(2)) from the Employer constituting United States source income
within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, for the purpose of determining the number of
active Employees in any year, the following additional Employees shall also
be excluded; however, such Employees shall still be considered for the
purpose of identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during a year;
and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer are
covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer,
and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded
from both the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on a
uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.70 "Total and Permanent Disability" means 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
which has lasted or can be expected to last for a continuous period of not
less than 12 months. The disability of a Participant shall be determined by
a licensed physician chosen by the Administrator. However, if the condition
constitutes total disability under the federal Social Security Acts, the
Administrator may rely upon such determination that the Participant is
Totally and Permanently Disabled for the purposes of this Plan. The
determination shall be applied uniformly to all Participants.
1.71 "Trustee" means the person or entity named in B6 of the Adoption Agreement
and any successors.
1.72 "Trust Fund" means the assets of the Plan and Trust as the same shall exist
from time to time.
1.73 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.74 "Voluntary Contribution Account" means the account established and
maintained by the Administrator for each Participant with respect to his
total interest in the Plan resulting from the Participant's nondeductible
voluntary contributions made pursuant to Section 4.7.
1.75 "Year of Service" means the computation period of twelve (12) consecutive
months, herein set forth, and during which an Employee has completed at
least 1000 Hours of Service.
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For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an
Hour of Service (employment commencement date). The computation period
beginning after a 1-Year Break in Service shall be measured from the date
on which an Employee again performs an Hour of Service. The succeeding
computation periods shall begin with the first anniversary of the
Employee's employment commencement date. However, if one (1) Year of
Service or less is required as a condition of eligibility, then after the
initial eligibility computation period, the eligibility computation period
shall, if elected in the Adoption Agreement, either begin with the
anniversary(s) of the Employee's employment commencement date or shift to
the current Plan Year which includes the anniversary of the date on which
the Employee first performed an Hour of Service. If the initial eligibility
computation period shifts to the Plan Year, then an Employee who is
credited with 1,000 Hours of Service in both the initial eligibility
computation period and the first Plan Year which commences prior to the
first anniversary of the Employee's initial eligibility computation period
will be credited with two Years of Service for purposes of eligibility to
participate.
For vesting purposes, and all other purposes not specifically addressed in
this Section, the computation period shall be, as elected in the Adoption
Agreement, either (i) the Plan Year or (ii) an Employee's employment
commencement date or re-employment commencement date and anniversaries of
an Employee's employment commencement date or re-employment commencement
dates, as applicable. Such vesting computation periods shall include
periods prior to the Effective Date of the Plan unless specifically
excluded pursuant to the Adoption Agreement.
Years of Service and breaks in service will be measured on the same
computation period.
Years of Service with any predecessor Employer which maintained this Plan
shall be recognized. Years of Service with any other predecessor Employer
shall be recognized as specified in the Adoption Agreement.
Years of Service with any Affiliated Employer shall be recognized.
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ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c)
pursuant to Section 4.3(f) of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year beginning after
December 31, 1983, in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2) the sum of
the Aggregate Accounts of Key Employees under this Plan and all plans
of an Aggregation Group, exceeds sixty percent (60%) of the Present
Value of Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an Aggregation
Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy or Super Top Heavy Plan
(or whether any Aggregation Group which includes this Plan is a Top
Heavy Group). In addition, if a Participant or Former Participant has
not performed any services for any Employer maintaining the Plan at
any time during the five year period ending on the Determination Date,
any accrued benefit for such Participant or Former Participant shall
not be taken into account for the purposes of determining whether this
Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year beginning
after December 31, 1983, in which, as of the Determination Date, (1)
the Present Value of Accrued Benefits of Key Employees and (2) the sum
of the Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits and the Aggregate Accounts of all
Key and Non-Key Employees under this Plan and all plans of an
Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) his Participant's Combined Account balance as of the most recent
valuation occurring within a twelve (12) month period ending on
the Determination Date;
(2) for a Profit Sharing Plan, an adjustment for any contributions
due as of the Determination Date. Such adjustment shall be the
amount of any contributions actually made after the valuation
date but before the Determination Date, except for the first
Plan Year when such adjustment shall also reflect the
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amount of any contributions made after the Determination Date
that are allocated as of a date in that first Plan Year;
(3) for a Money Purchase Plan, contributions that would be allocated
as of a date not later than the Determination Date, even though
those amounts are not yet made or required to be made.
(4) any Plan distributions made within the Plan Year that includes
the Determination Date or within the four (4) preceding Plan
Years. However, in the case of distributions made after the
valuation date and prior to the Determination Date, such
distributions are not included as distributions for top heavy
purposes to the extent that such distributions are already
included in the Participant's Aggregate Account balance as of
the valuation date. In the case of a distribution of an annuity
Contract, the amount of such distribution is deemed to be the
current actuarial value of the Contract, determined on the date
of the distribution. Notwithstanding anything herein to the
contrary, all distributions, including distributions made prior
to January 1, 1984, and distributions under a terminated plan
which if it had not been terminated would have been required to
be included in an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because
of death shall be treated as a distribution for the purpose of
this paragraph.
(5) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified
voluntary employee contributions shall not be considered to be a
part of the Participant's Aggregate Account balance.
(6) with respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Employee and made from a
plan maintained by one employer to a plan maintained by another
employer), if this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or plan-to-
plan transfers as a distribution for the purposes of this
Section. If this Plan is the plan accepting such rollovers or
plan-to-plan transfers, it shall not consider such rollovers or
plan-to-plan transfers accepted after December 31, 1983 as part
of the Participant's Aggregate Account balance. However,
rollovers or plan-to-plan transfers accepted prior to January 1,
1984 shall be considered as part of the Participant's Aggregate
Account balance.
(7) with respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the
rollover or plan-to-plan transfer, it shall not be counted as a
distribution for purposes of this Section. If this Plan is the
plan accepting such rollover or plan-to-plan transfer, it shall
consider such rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance, irrespective of the
date on which such rollover or plan-to-plan transfer is
accepted.
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(8) For the purposes of determining whether two employers are to be
treated as the same employer in 2.2(c)(6) and 2.2(c)(7) above,
all employers aggregated under Code Sections 414(b), (c), (m)
and (o) are treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each qualified plan of the
Employer, including any Simplified Employee Pension Plan, in
which a Key Employee is a participant in the Plan Year
containing the Determination Date or any of the four preceding
Plan Years, and each other qualified plan of the Employer which
enables any qualified plan in which a Key Employee participates
to meet the requirements of Code Sections 401(a)(4) or 410, will
be required to be aggregated. Such group shall be known as a
Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include any
other plan of the Employer, including any Simplified Employee
Pension Plan, not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that
is part of the Required Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is a Top
Heavy Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group
is not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding Plan
Year, or (b) in the case of the first Plan Year, the last day of such
Plan Year.
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(f) Present Value of Accrued Benefit: In the case of a defined benefit
plan, the Present Value of Accrued Benefit for a Participant other
than a Key Employee shall be as determined using the single accrual
method used for all plans of the Employer and Affiliated Employers, or
if no such single method exists, using a method which results in
benefits accruing not more rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C). The determination of the
Present Value of Accrued Benefit shall be determined as of the most
recent valuation date that falls within or ends with the 12-month
period ending on the Determination Date, except as provided in Code
Section 416 and the Regulations thereunder for the first and second
plan years of a defined benefit plan.
However, any such determination must include present value of accrued
benefit attributable to any Plan distributions referred to in Section
2.2(c)(4) above, any Employee contributions referred to in Section
2.2(c)(5) above or any related or unrelated rollovers referred to in
Sections 2.2(c)(6) and 2.2(c)(7) above.
(g) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under all
defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Participants.
(h) "Top Heavy Ratio" means:
(1) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the
Employer has not maintained any defined benefit plan which
during the 5-year period ending on the "determination date(s)"
has or has had accrued benefits, the Top Heavy Ratio for this
Plan alone or for the Required or Permissive Aggregation Group
as appropriate is a fraction, the numerator of which is the sum
of the account balances of all Key Employees as of the
"Determination Date(s)" (including any part of any account
balance distributed in the 5-year period ending on the
"Determination Date(s)"), and the denominator of which is the
sum of all account balances (including any part of any account
balance distributed in the 5-year period ending on the
"Determination Date(s)"), both computed in accordance with Code
Section 416 and the Regulations thereunder. Both the numerator
and denominator of the Top Heavy Ratio are increased to reflect
any contribution not actually made as of the "Determination
Date", but which is required to be taken into account on that
date under Code Section 416 and the Regulations thereunder.
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(2) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the
Employer maintains or has maintained one or more defined benefit
plans which during the 5-year period ending on the
"Determination Date(s)" has or has had accrued benefits, the Top
Heavy Ratio for any Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of
the account balances under the aggregated defined contribution
plan or plans for all Key Employees, determined in accordance
with (1) above, and the Present Value of Accrued Benefits under
the aggregated defined benefit plan or plans for all Key
Employees as of the "Determination Date(s)", and the denominator
of which is the sum of the account balances under the aggregated
defined contribution plan or plans for all Participants,
determined in accordance with (1) above, and the Present Value
of Accrued Benefits under the defined benefit plan or plans for
all Participants as of the "Determination Date(s)", all
determined in accordance with Code Section 416 and the
Regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the Top
Heavy Ratio are increased for any distribution of an accrued
benefit made in the 5-year period ending on the "Determination
Date."
(3) For purposes of (1) and (2) above the value of account balances
will be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on the
"Determination Date," except as provided in Code Section 416 and
the Regulations thereunder for the first and second plan years
of a defined benefit plan. The account balances and accrued
benefits of a Participant (i) who is not a Key Employee but who
was a Key Employee in a prior year, or (ii) who has not been
credited with at least one (1) Hour of Service with any Employer
maintaining the Plan at any time during the 5-year period ending
on the "Determination Date" will be disregarded. The
determination of the Top Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account
will be made in accordance with Code Section 416 and the
Regulations thereunder. Deductible Employee contributions will
not be taken into account for purposes of computing the Top
Heavy Ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference
to the "Determination Dates" that fall within the same calendar
year.
The accrued benefit of a Participant other than a Key Employee
shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans
maintained by the Employer, or (b) if there is no such method,
as if such benefit accrued not more rapidly than the slowed
accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C).
(i) The Administrator shall determine whether this Plan is a
Top Heavy Plan on the Anniversary Date specified in the
Adoption Agreement. Such determination of the top heavy
ratio shall be in accordance with Code Section 416 and the
Regulations thereunder.
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2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the Trustee and
the Administrator from time to time as it deems necessary for the
proper administration of the Plan to assure that the Plan is being
operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the Code, and
the Act.
(b) The Employer shall establish a "funding policy and method," i.e., it
shall determine whether the Plan has a short run need for liquidity
(e.g., to pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current need, or
shall appoint a qualified person to do so. The Employer or its
delegate shall communicate such needs and goals to the Trustee, who
shall coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to investment of the
Trust Funds. Such "funding policy and method" shall be consistent with
the objectives of this Plan and with the requirements of Title I of
the Act.
(c) The Employer may, in its discretion, appoint an Investment Manager to
manage all or a designated portion of the assets of the Plan. In such
event, the Trustee shall follow the directive of the Investment
Manager in investing the assets of the Plan managed by the Investment
Manager.
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person,
including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator. Any person so appointed shall
signify his acceptance by filing written acceptance with the Employer. An
Administrator may resign by delivering his written resignation to the
Employer or be removed by the Employer by delivery of written notice of
removal, to take effect at a date specified therein, or upon delivery to
the Administrator if no date is specified.
The Employer, upon the resignation or removal of an Administrator, shall
promptly designate in writing a successor to this position. If the
Employer does not appoint an Administrator, the Employer will function as
the Administrator.
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2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer
and accepted in writing by each Administrator. In the event that no such
delegation is made by the Employer, the Administrators may allocate the
responsibilities among themselves, in which event the Administrators shall
notify the Employer and the Trustee in writing of such action and specify
the responsibilities of each Administrator. The Trustee thereafter shall
accept and rely upon any documents executed by the appropriate
Administrator until such time as the Employer or the Administrators file
with the Trustee a written revocation of such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the Plan
for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall
administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and determine all
questions arising in connection with the administration, interpretation,
and application of the Plan. Any such determination by the Administrator
shall be conclusive and binding upon all persons. The Administrator may
establish procedures, correct any defect, supply any information, or
reconcile any inconsistency in such manner and to such extent as shall be
deemed necessary or advisable to carry out the purpose of the Plan;
provided, however, that any procedure, discretionary act, interpretation
or construction shall be done in a nondiscriminatory manner based upon
uniform principles consistently applied and shall be consistent with the
intent that the Plan shall continue to be deemed a qualified plan under
the terms of Code Section 401(a), and shall comply with the terms of the
Act and all regulations issued pursuant thereto. The Administrator shall
have all powers necessary or appropriate to accomplish his duties under
this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the eligibility
of Employees to participate or remain a Participant hereunder and to
receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to the amount
and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust
Fund;
(d) to maintain all necessary records for the administration of the Plan;
(e) to interpret the provisions of the Plan and to make and publish such
rules for regulation of the Plan as are consistent with the terms
hereof;
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(f) to determine the size and type of any Contract to be purchased from
any Insurer, and to designate the Insurer from which such Contract
shall be purchased;
(g) to compute and certify to the Employer and to the Trustee from time to
time the sums of money necessary or desirable to be contributed to the
Trust Fund;
(h) to consult with the Employer and the Trustee regarding the short and
long-term liquidity needs of the Plan in order that the Trustee can
exercise any investment discretion in a manner designed to accomplish
specific objectives;
(i) to prepare and distribute to Employees a procedure for notifying
Participants and Beneficiaries of their rights to elect Joint and
Survivor Annuities and Pre-Retirement Survivor Annuities if required
by the Code and Regulations thereunder;
(j) to assist any Participant regarding his rights, benefits, or elections
available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall keep
all other books of account, records, and other data that may be necessary
for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by
law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the Administrator,
may appoint counsel, specialists, advisers, and other persons as the
Administrator or the Trustee deems necessary or desirable in connection
with the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer shall
supply full and timely information to the Administrator on all matters
relating to the Compensation of all Participants, their Hours of Service,
their Years of Service, their retirement, death, disability, or
termination of employment, and such other pertinent facts as the
Administrator may require; and the Administrator shall advise the Trustee
of such of the foregoing facts as may be pertinent to the Trustee's duties
under the Plan. The Administrator may rely upon such information as is
supplied by the Employer and shall have no duty or responsibility to
verify such information.
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2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless
paid by the Employer. Such expenses shall include any expenses incident to
the functioning of the Administrator, including, but not limited to, fees
of accountants, counsel, and other specialists and their agents, and other
costs of administering the Plan. Until paid, the expenses shall constitute
a liability of the Trust Fund. However, the Employer may reimburse the
Trust Fund for any administration expense incurred. Any administration
expense paid to the Trust Fund as a reimbursement shall not be considered
an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of administrative
authority pursuant to Section 2.5, if there shall be more than one
Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the application is filed.
In the event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be
understood by the claimant, pertinent provisions of the Plan shall be
cited, and, where appropriate, an explanation as to how the claimant can
perfect the claim will be provided. In addition, the claimant shall be
furnished with an explanation of the Plan's claims review procedure.
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2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section
2.12 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator a written
request for a hearing. Such request, together with a written statement of
the reasons why the claimant believes his claim should be allowed, shall
be filed with the Administrator no later than 60 days after receipt of the
written notification provided for in Section 2.12. The Administrator shall
then conduct a hearing within the next 60 days, at which the claimant may
be represented by an attorney or any other representative of his choosing
and expense and at which the claimant shall have an opportunity to submit
written and oral evidence and arguments in support of his claim. At the
hearing (or prior thereto upon 5 business days written notice to the
Administrator) the claimant or his representative shall have an
opportunity to review all documents in the possession of the Administrator
which are pertinent to the claim at issue and its disallowance. Either the
claimant or the Administrator may cause a court reporter to attend the
hearing and record the proceedings. In such event, a complete written
transcript of the proceedings shall be furnished to both parties by the
court reporter. The full expense of any such court reporter and such
transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim
shall be made by the Administrator within 60 days of receipt of the appeal
(unless there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day period).
Such communication shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons for the
decision and specific references to the pertinent Plan provisions on which
the decision is based.
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ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder on the
date he has satisfied the requirements specified in the Adoption
Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has become eligible to be a Participant shall
become a Participant effective as of the day specified in the Adoption
Agreement.
In the event an Employee who has satisfied the Plan's eligibility
requirements and would otherwise have become a Participant shall go from a
classification of a noneligible Employee to an Eligible Employee, such
Employee shall become a Participant as of the date he becomes an Eligible
Employee.
In the event an Employee who has satisfied the Plan's eligibility
requirements and would otherwise become a Participant shall go from a
classification of an Eligible Employee to a noneligible Employee and
becomes ineligible to participate and has not incurred a 1-Year Break in
Service, such Employee shall participate in the Plan as of the date he
returns to an eligible class of Employees. If such Employee does incur a
1-Year Break in Service, eligibility will be determined under the Break in
Service rules of the Plan.
In the event that the Plan is a TRA '86 amendment and restatement,
effective with the first day of the 1989 Plan Year, an Employee's
eligibility to make Elective Contributions shall not be conditioned upon
the completion of more than one (1) Year of Service. An Employee's
eligibility to receive any qualified matching contributions, matching
contributions, Qualified Non-Elective Contributions or Non-Elective
Contributions shall not be conditioned upon the completion of more than
two (2) Years of Service. No contributions or benefits (other than
matching contributions or qualified matching contributions) may be
conditioned upon Elective Contributions.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all
persons, as long as the same is made pursuant to the Plan and the Act.
Such determination shall be subject to review per Section 2.13.
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3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an Eligible
Employee to an ineligible Employee, such Former Participant shall continue
to vest in his interest in the Plan for each Year of Service completed
while a noneligible Employee, until such time as his Participant's Account
shall be forfeited or distributed pursuant to the terms of the Plan.
Additionally, his interest in the Plan shall continue to share in the
earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a Participant
in the Plan is erroneously omitted and discovery of such omission is not
made until after a contribution by his Employer for the year has been
made, the Employer shall make a subsequent contribution, if necessary
after the application of Section 4.3(e), so that the omitted Employee
receives a total amount which the said Employee would have received had he
not been omitted. Such contribution shall be made regardless of whether or
not it is deductible in whole or in part in any taxable year under
applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year
has been made, the Employer shall not be entitled to recover the
contribution made with respect to the ineligible person regardless of
whether or not a deduction is allowable with respect to such contribution.
In such event, the amount contributed with respect to the ineligible
person shall constitute a Forfeiture for the Plan Year in which the
discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to
participate must be communicated to the Employer, in writing, at least
thirty (30) days before the beginning of a Plan Year. For Standardized
Plans, a Participant or an Eligible Employee may not elect not to
participate. Furthermore, the foregoing election not to participate shall
not be available with respect to partners in a partnership.
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
(a) If this Plan provides contributions or benefits for one or more Owner-
Employees who control both the business for which this Plan is
established and one or more other entities, this Plan and the plan
established for other trades or businesses must, when looked at as a
single Plan, satisfy Code Sections 401(a) and (d) for the Employees of
this and all other entities.
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(b) If the Plan provides contributions or benefits for one or more Owner-
Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
(c) If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the benefits or
contributions of the employees under the plan of the trades or
businesses which are controlled must be as favorable as those provided
for him under the most favorable plan of the trade or business which
is not controlled.
(d) For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control an entity if the
Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated entity, or
(2) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
(e) For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee, or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
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ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan -
(1) The Employer shall make contributions over such period of years
as the Employer may determine on the following basis. On behalf
of each Participant eligible to share in allocations, for each
year of his participation in this Plan, the Employer shall
contribute the amount specified in the Adoption Agreement. All
contributions by the Employer shall be made in cash or in such
property as is acceptable to the Trustee. The Employer shall be
required to obtain a waiver from the Internal Revenue Service
for any Plan Year in which it is unable to make the full
required contribution to the Plan. In the event a waiver is
obtained, this Plan shall be deemed to be an individually
designed plan.
(2) For any Plan Year beginning prior to January 1, 1990, and if
elected in the non-standardized Adoption Agreement for any Plan
Year beginning on or after January 1, 1990, the Employer shall
not contribute on behalf of a Participant who performs less than
a Year of Service during any Plan Year, unless there is a Short
Plan Year or a contribution is required pursuant to 4.3(h).
(3) Notwithstanding the foregoing, the Employer's contribution for
any Fiscal Year shall not exceed the maximum amount allowable as
a deduction to the Employer under the provisions of Code Section
404. However, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even
if it exceeds the amount which is deductible under Code Section
404.
(b) For a Profit Sharing Plan -
(1) For each Plan Year, the Employer shall contribute to the Plan
such amount as specified by the Employer in the Adoption
Agreement. Notwithstanding the foregoing, however, the
Employer's contribution for any Fiscal Year shall not exceed the
maximum amount allowable as a deduction to the Employer under
the provisions of Code Section 404. All contributions by the
Employer shall be made in cash or in such property as is
acceptable to the Trustee.
(2) Except, however, to the extent necessary to provide the top
heavy minimum allocations, the Employer shall make a
contribution even if it exceeds current or accumulated Net
Profit or the amount which is deductible under Code Section 404.
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4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution to the
Plan for each Plan Year within the time prescribed by law, including
extensions of time, for the filing of the Employer's federal income tax
return for the Fiscal Year.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the name
of each Participant to which the Administrator shall credit as of each
Anniversary Date, or other valuation date, all amounts allocated to
each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the
Employer's contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) For a Money Purchase Plan:
(i) The Employer's Contribution shall be allocated to each
Participant's Combined Account in the manner set forth in
Section 4.1 herein and as specified in Section E2 of the
Adoption Agreement.
(2) For an Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account, except as provided in Section
4.3(f), in a dollar amount equal to 5.7% of the sum of each
Participant's total Compensation plus Excess Compensation.
If the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of
the contribution in the same proportion that his total
Compensation plus his total Excess Compensation for the
Plan Year bears to the total Compensation plus the total
Excess Compensation of all Participants for that year.
Regardless of the preceding, 4.3% shall be substituted for
5.7% above if Excess Compensation is based on more than 20%
and less than or equal to 80% of the Taxable Wage Base. If
Excess Compensation is based on less than 100% and more
than 80% of the Taxable Wage Base, then 5.4% shall be
substituted for 5.7% above.
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(ii) The balance of the Employer's contribution over the amount
allocated above, if any, shall be allocated to each
Participant's Combined Account in the same proportion that
his total Compensation for the Year bears to the total
Compensation of all Participants for such year.
(iii)Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized
Adoption Agreement for any Plan Year beginning on or after
January 1, 1990, a Participant who performs less than a
Year of Service during any Plan Year shall not share in the
Employer's contribution for that year, unless there is a
Short Plan Year or a contribution is required pursuant to
Section 4.3(h).
(3) For a Non-Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
(ii) Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized
Adoption Agreement for any Plan Year beginning on or after
January 1, 1990, a Participant who performs less than a
Year of Service during any Plan Year shall not share in the
Employer's contribution for that year, unless there is a
Short Plan Year or a contribution is required pursuant to
Section 4.3(h).
(c) As of each Anniversary Date or other valuation date, before allocation
of Employer contributions and Forfeitures, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund shall be allocated
in the same proportion that each Participant's and Former
Participant's nonsegregated accounts bear to the total of all
Participants' and Former Participants' nonsegregated accounts as of
such date. If any nonsegregated account of a Participant has been
distributed prior to the Anniversary Date or other valuation date
subsequent to a Participant's termination of employment, no earnings
or losses shall be credited to such account. Notwithstanding the
above, with respect to contributions made to a 401(k) Plan after the
previous Anniversary Date or allocation date, the method specified in
the Adoption Agreement shall be used.
(d) Participants' Accounts shall be debited for any insurance or annuity
premiums paid, if any, and credited with any dividends or interest
received on insurance contracts.
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(e) As of each Anniversary Date, any amounts which became Forfeitures
since the last Anniversary Date shall first be made available to
reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 6.4(g)(2) or be used
to satisfy any contribution that may be required pursuant to Section
3.5 and/or 6.9 or be used to reduce expenses of the Employer incurred
in the operation of the Plan, as applicable. The remaining
Forfeitures, if any, shall be treated in accordance with the Adoption
Agreement. Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition" (as
defined in Section 4.4) to any Participant's Account to exceed the
amount allowable by the Code, the excess shall be reallocated in
accordance with Section 4.5. Except, however, for any Plan Year
beginning prior to January 1, 1990, and if elected in the non-
standardized Adoption Agreement for any Plan Year beginning on or
after January 1, 1990, a Participant who performs less than a Year of
Service during any Plan Year shall not share in the Plan Forfeitures
for that year, unless there is a Short Plan Year or a contribution
required pursuant to Section 4.3(h).
(f) Minimum Allocations Required for Top Heavy Plan Years: Notwithstanding
the foregoing, for any Top Heavy Plan Year, the sum of the Employer's
contributions and Forfeitures allocated to the Participant's Account
of each Non-Key Employee shall be equal to at least three percent (3%)
of such Non-Key Employee's 415 Compensation (reduced by contributions
and forfeitures, if any, allocated to each Non-Key Employee in any
defined contribution plan included with this Plan in a Required
Aggregation Group). However, if (i) the sum of the Employer's
contributions and Forfeitures allocated to the Participant's Combined
Account of each Key Employee for such Top Heavy Plan Year is less than
three percent (3%) of each Key Employee's 415 Compensation and (ii)
this Plan is not required to be included in an Aggregation Group to
enable a defined benefit plan to meet the requirements of Code Section
401(a)(4) or 410, the sum of the Employer's contributions and
Forfeitures allocated to the Participant's Combined Account of each
Non-Key Employee shall be equal to the largest percentage allocated to
the Participant's Combined Account of any Key Employee.
However, for each Non-Key Employee who is a Participant in a paired
Profit Sharing Plan or 401(k) Profit Sharing Plan and a paired Money
Purchase Plan, the minimum 3% allocation specified above shall be
provided in the Money Purchase Plan.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows:
(1) An amount equal to 3% multiplied by each Participant's
Compensation for the Plan Year shall be allocated to each
Participant's Account. If the Employer does not contribute such
amount for all Participants, the amount shall be allocated to
each Participant's Account in the same proportion that his total
Compensation for the Plan Year bears to the total Compensation
of all Participants for such year.
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(2) The balance of the Employer's contribution over the amount
allocated under subparagraph (1) hereof shall be allocated to
each Participant's Account in a dollar amount equal to 3%
multiplied by a Participant's Excess Compensation. If the
Employer does not contribute such amount for all Participants,
each Participant will be allocated a share of the contribution
in the same proportion that his Excess Compensation bears to the
total Excess Compensation of all Participants for that year.
(3) The balance of the Employer's contribution over the amount
allocated under subparagraph (2) hereof shall be allocated to
each Participant's Account in a dollar amount equal to 2.7%
multiplied by the sum of each Participant's total 415
Compensation plus Excess Compensation. If the Employer does not
contribute such amount for all Participants, each Participant
will be allocated a share of the contribution in the same
proportion that his total 415 Compensation plus his total Excess
Compensation for the Plan Year bears to the total 415
Compensation plus the total Excess Compensation of all
Participants for that year.
Regardless of the preceding, 1.3% shall be substituted for 2.7%
above if Excess Compensation is based on more than 20% and less
than or equal to 80% of the Taxable Wage Base. If Excess
Compensation is based on less than 100% and more than 80% of the
Taxable Wage Base, then 2.4% shall be substituted for 2.7%
above.
(4) The balance of the Employer's contributions over the amount
allocated above, if any, shall be allocated to each
Participant's Account in the same proportion that his total 415
Compensation for the Plan Year bears to the total 415
Compensation of all Participants for such year.
For each Non-Key Employee who is a Participant in this Plan and
another non-paired defined contribution plan maintained by the
Employer, the minimum 3% allocation specified above shall be
provided as specified in F3 of the Adoption Agreement.
(g) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key Employee
divided by the 415 Compensation for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set forth in this
Section shall be allocated to the Participant's Combined Account of
all Non-Key Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Non-Key Employees
who have (1) failed to complete a Year of Service; or (2) declined to
make mandatory contributions (if required) or, in the case of a cash
or deferred arrangement, Elective Contributions to the Plan.
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(i) Notwithstanding anything herein to the contrary, in any Plan Year in
which the Employer maintains both this Plan and a defined benefit
pension plan included in a Required Aggregation Group which is top
heavy, the Employer shall not be required to provide a Non-Key
Employee with both the full separate minimum defined benefit plan
benefit and the full separate defined contribution plan allocations.
Therefore, if the Employer maintains both a defined benefit and a
defined contribution plan that are a Top Heavy Group, the top heavy
minimum benefits shall be provided as follows:
(1) Applies if F1b of the Adoption Agreement is Selected -
(i) The requirements of Section 2.1 shall apply except that
each Non-Key Employee who is a Participant in the Profit
Sharing Plan or Money Purchase Plan and who is also a
Participant in the defined benefit plan shall receive a
minimum allocation of five percent (5%) of such
Participant's 415 Compensation from the applicable defined
contribution plan(s).
(ii) For each Non-Key Employee who is a Participant only in the
defined benefit plan the Employer will provide a minimum
non-integrated benefit equal to 2% of his highest five
consecutive year average 415 Compensation for each Year of
Service while a Participant in the plan, in which the plan
is top heavy, not to exceed ten.
(iii) For each Non-Key Employee who is a Participant only in this
defined contribution plan, the Employer shall provide a
contribution equal to 3% of his 415 Compensation.
(2) Applies if F1c of the Adoption Agreement is Selected -
(i) The minimum allocation specified in Section 4.3(i)(1)(i)
shall be 7 1/2% if the Employer elects in the Adoption
Agreement for years in which the Plan is top heavy, but not
super top heavy.
(ii) The minimum benefit specified in Section 4.3(i)(1)(ii)
shall be 3% if the Employer elects in the Adoption
Agreement for years in which the Plan is top heavy, but not
super top heavy.
(iii) The minimum allocation specified in Section 4.3(i)(1)(iii)
shall be 4% if the Employer elects in the Adoption
Agreement for years in which the Plan is top heavy, but not
super top heavy.
(j) For the purposes of this Section, 415 Compensation shall be limited to
the same dollar limitation that is in Section 1.9 (unless adjusted in
such manner as permitted under Code Section 415(d)). However, for Plan
Years beginning prior to January 1, 1989, the $200,000 limit shall
apply only for Top Heavy Plan Years and shall not be adjusted.
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(k) Notwithstanding anything herein to the contrary, any Participant who
terminated employment during the Plan Year for reasons other than
death, Total and Permanent Disability, or retirement shall or shall
not share in the allocations of the Employer's Contributions and
Forfeitures as provided in the Adoption Agreement. Notwithstanding the
foregoing, for Plan Years beginning after 1989, if this is a
standardized Plan, any such terminated Participant shall share in the
allocations as provided in this Section provided such Participant
completed more than 500 Hours of Service.
(l) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent
Disability, or retirement shall share in the allocations as
provided in this Section regardless of whether they completed a
Year of Service during the Plan Year.
(m) If a Former Participant is reemployed after five (5) consecutive
1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing his Employer derived account
balance in the Plan attributable to post-break service.
4.4 MAXIMUM ANNUAL ADDITIONS
(a)(1) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer,
or a welfare benefit fund (as defined in Code Section 419(e)),
maintained by the Employer, or an individual medical account (as
defined in Code Section 415(l)(2)) maintained by the Employer, or a
simplified employee pension as defined in Code Section 408(k)
maintained by the Employer, which provides Annual Additions, the
amount of Annual Additions which may be credited to the
Participant's accounts for any Limitation Year shall not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's accounts
would cause the Annual Additions for the Limitation Year to exceed
the Maximum Permissible Amount, the amount contributed or allocated
will be reduced so that the Annual Additions for the Limitation
Year will equal the Maximum Permissible Amount.
(2) 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.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
compensation for such Limitation Year.
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(4) If there is an excess amount pursuant to Section 4.4(a)(2) or Section
4.5, the excess will be disposed of in one of the following manners,
as uniformly determined by the Plan Administrator for all Participants
similarly situated:
(i) Any unmatched voluntary Employee contributions (with any gains
thereon), to the extent they would reduce the Excess Amount,
will be returned to the Participant;
(ii) Any unmatched Elective Contributions (with any gains thereon) to
the extent they would reduce the Excess Amount, will be returned
to the Participant;
(iii) Any matched voluntary Employee contributions (with any gains
thereon), to the extent they would reduce the Excess Amount,
will be returned to the Participant. Simultaneously, any
Employer matching contributions (with any gains thereon) that
relate to these voluntary contributions, to the extent they
would reduce the Excess Amount, will be treated as follows: if
the Participant is covered by the Plan at the end of the
Limitation Year, such Excess Amount in the Participant's Account
will be used to reduce Employer contributions for such
Participant in the next Limitation Year, and succeeding
Limitation Years, as necessary. If the Participant is not
covered by the Plan at the end of the Limitation Year, such
Excess Amount will be held unallocated in a suspense account and
used to reduce Employer contributions for the next Limitation
Year (and succeeding Limitation Years, as necessary) for all of
the remaining Participants in the Plan;
(iv) Any matched Elective Contributions (with any gains thereon), to
the extent they would reduce the Excess Amount, will be returned
to the Participant. Simultaneously, any Employer matching
contributions (with any gains thereon) that relate to these
Elective Contributions, to the extent they would reduce the
Excess Amount, will be treated in accordance with the same
procedure which is applied to the Employer matching
contributions (and gains thereon) under the preceding
subparagraph (iii).
(v) If, after the application of subparagraphs (i), (ii), (iii) and
(iv), an Excess Amount still exists, and the Participant is
covered by the Plan at the end of the Limitation Year, the
Excess Amount in the Participant's Account will be used to
reduce Employer contributions for such Participant in the next
Limitation Year, and each succeeding Limitation Year, as
necessary;
(vi) If, after the application of subparagraphs (i), (ii), (iii) and
(iv), an Excess Amount still exists, and the Participant is not
covered by the Plan at the end of the Limitation Year, the
Excess Amount will be held unallocated in a suspense account and
used to reduce Employer contributions for the next Limitation
Year (and succeeding Limitation Years, as necessary) for all of
the remaining Participants in the Plan.
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(5) If a suspense account is in existence at any time during a Limitation
Year pursuant to this Section, it will not participate in the
allocation of investment gains and losses. If a suspense account is in
existence at any time during a particular limitation year, all amounts
in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer contributions or any
Employee contributions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or Former
Participants.
(b)(1) This subsection applies if, in addition to this Plan, the
Participant is covered under another qualified prototype defined
contribution plan maintained by the Employer, or a welfare benefit
fund (as defined in Code Section 419(e)) maintained by the Employer,
or an individual medical account (as defined in Code Section
415(l)(2)) maintained by the Employer, or a simplified employee
pension maintained by the Employer, which provides Annual Additions,
during any Limitation Year. The Annual Additions which may be credited
to a Participant's accounts under this Plan for any such Limitation
Year shall not exceed the Maximum Permissible Amount reduced by the
Annual Additions credited to a Participant's accounts under the other
qualified prototype defined contribution plans, welfare benefit funds,
individual medical accounts and simplified employee pensions for the
same Limitation Year. If the Annual Additions with respect to the
Participant under other qualified prototype defined contribution
plans, welfare benefit funds, individual medical accounts and
simplified employee pensions maintained by the Employer are less than
the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated to the Participant's
accounts under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or
allocated will be reduced so that the Annual Additions under all such
plans and funds for the Limitation Year will equal the Maximum
Permissible Amount. If the Annual Additions with respect to the
Participant under such other qualified defined contribution plans,
welfare benefit funds, individual medical accounts and simplified
employee pensions 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.
(2) Prior to determining the Participant's actual 415 Compensation for
the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in
Section 4.4(a)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual 415
Compensation for the Limitation Year.
(4) If as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's annual 415 Compensation, a reasonable error
in determining the amount of elective deferrals (within the meaning of
Code Section 402(g)(3)) that may be made with respect to any
Participant under the limits of Section 4.1, or other facts and
circumstances to which Regulation 1.415-6(b)(6) shall be applicable, a
Participant's Annual Additions under this Plan and such other plans
would result in an Excess Amount for a Limitation Year, the Excess
Amount will be deemed to consist of the
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Annual Additions last allocated, except that Annual Additions
attributable to a simplified employee pension will be deemed to have
been allocated first, followed by annual additions to a welfare
benefit fund or individual medical account, regardless of the actual
allocation date.
(5) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product
of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
and all the other qualified prototype defined contribution
plans.
(6) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 4.4(a)(4).
(c) If the Participant is covered under another qualified defined contribution
plan maintained by the Employer which is not a Prototype Plan, Annual
Additions which may be credited to the Participant's Account under this
Plan for any Limitation Year will be limited in accordance with Section
4.4(b), unless the Employer provides other limitations in the Adoption
Agreement.
(d) 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 Additions
which may be credited to the Participant's Account under this Plan for any
Limitation Year will be limited in accordance with the Limitation on
Allocations Section of the Adoption Agreement.
Except, however, if the Plans are standardized paired plans, the rate of
accrual in the defined benefit plan will be reduced to the extent
necessary so that the sum of the Defined Contribution Fraction and Defined
Benefit Fraction will equal 1.0.
(e) For purposes of applying the limitations of Code Section 415, the transfer
of funds from one qualified plan to another is not an "annual addition."
In addition, the following are not Employee contributions for the purposes
of Section 4.4(f)(1)(2): (1) rollover contributions (as defined in Code
Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of
loans made to a Participant from the Plan; (3) repayments of distributions
received by an Employee pursuant to Code Section 411(a)(7)(B) (cash-outs);
(4) repayments of distributions received by an Employee pursuant to Code
Section 411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from gross
income under Code Section 408(k)(6).
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(f) For purposes of this Section, the following terms shall be defined as
follows:
(1) Annual Additions means the sum credited to a Participant's
accounts for any Limitation Year of (1) Employer contributions,
(2) effective with respect to "limitation years" beginning after
December 31, 1986, Employee contributions, (3) forfeitures, (4)
amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2), which is
part of a pension or annuity plan maintained by the Employer and
(5) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined
in Code Section 419A(d)(3)) under a welfare benefit fund (as
defined in Code Section 419(e)) maintained by the Employer.
Except, however, the 415 Compensation percentage limitation
referred to in paragraph (a)(2) above shall not apply to: (1)
any contribution for medical benefits (within the meaning of
Code Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition", or (2) any amount
otherwise treated as an "annual addition" under Code Section
415(l)(1). Notwithstanding the foregoing, for "limitation years"
beginning prior to January 1, 1987, only that portion of
Employee contributions equal to the lesser of Employee
contributions in excess of six percent (6%) of 415 Compensation
or one-half of Employee contributions shall be considered an
"annual addition".
For this purpose, any Excess Amount applied under Sections
4.4(a)(4) and 4.4(b)(6) in the Limitation Year to reduce
Employer contributions shall be considered Annual Additions for
such Limitation Year.
(2) 415 Compensation is compensation defined in Section 1.28.
(3) Defined Benefit Fraction means a fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits
under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the
lesser of 125 percent of the dollar limitation determined for
the Limitation Year under Code Sections 415(b) and (d) or 140
percent of his Highest Average 415 Compensation including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant
as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans
maintained by the Employer which were in existence on May 6,
1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which
the Participant had accrued as of the end of the close of the
last Limitation Year beginning before January 1, 1987,
disregarding any changes in the terms and conditions of the plan
after May 5, 1986. The preceding sentence applies only if the
defined benefit plans individually and in the aggregate
satisfied the
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requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100
shall be substituted for 125 unless the extra minimum allocation
is being made pursuant to the Employer's election in F1 of the
Adoption Agreement. However, for any Plan Year in which this
Plan is a Super Top Heavy Plan, 100 shall be substituted for 125
in any event.
(4) Defined Contribution Dollar Limitation means $30,000, or, if
greater, one-fourth of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation
Year.
(5) Defined Contribution Fraction means 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 voluntary
employee contributions to any defined benefit plans, whether or
not terminated, maintained by the Employer and the annual
additions attributable to all welfare benefit funds, as defined
in Code Section 419(e), and individual medical accounts, as
defined in Code Section 415(l)(2), maintained by the Employer),
and the denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of
Service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the lesser of 125
percent of the Defined Contribution Dollar Limitation or 35
percent of the Participant's 415 Compensation for such year. For
Limitation Years beginning prior to January 1, 1987, the "annual
addition" shall not be recomputed to treat all Employee
contributions as an Annual Addition.
If the Employee was a Participant as of the end of the first day
of the first Limitation Year beginning after December 31, 1986,
in one or more defined contribution plans maintained by the
Employer which were in existence on May 5, 1986, the numerator
of this fraction will be adjusted if the sum of this fraction
and the Defined Benefit Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount
equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this fraction,
will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as
they would be computed as of the end of the last Limitation Year
beginning before January 1, 1987, and disregarding any changes
in the terms and conditions of the plan made after May 5, 1986,
but using the Code Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
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<PAGE>
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100
shall be substituted for 125 unless the extra minimum allocation
is being made pursuant to the Employer's election in F1 of the
Adoption Agreement. However, for any Plan Year in which this
Plan is a Super Top Heavy Plan, 100 shall be substituted for 125
in any event.
(6) Employer means the Employer that adopts this Plan and all
Affiliated Employers, except that for purposes of this Section,
Affiliated Employers shall be determined pursuant to the
modification made by Code Section 415(h).
(7) Excess Amount means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible
Amount.
(8) Highest Average Compensation means the average Compensation for
the three consecutive Years of Service with the Employer that
produces the highest average. A Year of Service with the
Employer is the 12 consecutive month period defined in Section
E1 of the Adoption Agreement which is used to determine
Compensation under the Plan.
(9) Limitation Year means the Compensation Year (a 12 consecutive
month period) as elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must
use the same Limitation Year. If the Limitation Year is amended
to a different 12 consecutive month period, the new Limitation
Year must begin on a date within the Limitation Year in which
the amendment is made.
(10) Master or Prototype Plan means a plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
(11) Maximum Permissible Amount means the maximum Annual Addition
that may be contributed or allocated to a Participant's account
under the plan for any Limitation Year, which shall not exceed
the lesser of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent of the Participant's 415 Compensation for the
Limitation Year.
The 415 Compensation limitation referred to in (ii) shall not
apply to any contribution for medical benefits (within the
meaning of Code Sections 401(h) or 419A(f)(2)) which is
otherwise treated as an annual addition under Code Sections
415(l)(1) or 419A(d)(2).
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If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12 consecutive month
period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Contribution multiplied by the
following fraction:
number of months in the short Limitation Year
---------------------------------------------
12
(12) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if
such benefit is expressed in a form other than a straight life
annuity or qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of the plan
assuming:
(i) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(ii) the Participant's 415 Compensation for the current
Limitation Year and all other relevant factors used to
determine benefits under the Plan will remain constant for
all future Limitation Years.
For purposes of this Section, straight life annuity means an
annuity payable in equal installments for the life of the
Participant that terminates upon the Participant's death.
(g) Notwithstanding anything contained in this Section to the contrary,
the limitations, adjustments and other requirements prescribed in this
Section shall at all times comply with the provisions of Code Section
415 and the Regulations thereunder, the terms of which are
specifically incorporated herein by reference.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
If as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's annual 415 Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of Code
Section 402(g)(3)) that may be made with respect to any Participant under
the limits of Section 4.4, or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual additions" under
this Plan would cause the maximum provided in Section 4.4 to be exceeded,
the Administrator shall treat the excess in accordance with Section
4.4(a)(4).
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4.6 TRANSFERS FROM QUALIFIED PLANS
(a) If specified in the Adoption Agreement and with the consent of the
Administrator, amounts may be transferred from other qualified plans,
provided that the trust from which such funds are transferred permits
the transfer to be made and the transfer will not jeopardize the tax
exempt status of the Plan or create adverse tax consequences for the
Employer. The amounts transferred shall be set up in a separate
account herein referred to as a "Participant's Rollover Account." Such
account shall be fully Vested at all times and shall not be subject to
forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in Paragraphs (c) and (d) of this Section.
(c) Amounts attributable to elective contributions (as defined in
Regulation 1.401(k)-1(g)(4)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d).
(d) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market
value of the Participant's Rollover Account shall be used to provide
additional benefits to the Participant or his Beneficiary. Any
distributions of amounts held in a Participant's Rollover Account
shall be made in a manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited to, all notice
and consent requirements of Code Sections 411(a)(11) and 417 and the
Regulations thereunder. Furthermore, such amounts shall be considered
as part of a Participant's benefit in determining whether an
involuntary cash-out of benefits without Participant consent may be
made.
(e) The Administrator may direct that employee transfers made after a
valuation date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at which time they may remain segregated or be
invested as part of the general Trust Fund, to be determined by the
Administrator.
(f) For purposes of this Section, the term "qualified plan" shall mean any
tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (i) amounts
transferred to this Plan directly from another qualified plan; (ii)
lump-sum distributions received by an Employee from another qualified
plan which are eligible for tax free rollover to a qualified plan and
which are transferred by the Employee to this Plan within sixty (60)
days following his receipt thereof; (iii) amounts transferred to this
Plan from a conduit individual retirement account provided that the
conduit individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by another
qualified plan as a lump-sum distribution (B) were eligible for tax-
free rollover to a qualified plan and (C) were deposited in such
conduit individual retirement account within sixty (60) days of
receipt thereof and other than earnings on said assets; and (iv)
amounts distributed to the
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Employee from a conduit individual retirement account meeting the
requirements of clause (iii) above, and transferred by the Employee to
this Plan within sixty (60) days of his receipt thereof from such
conduit individual retirement account.
(g) Prior to accepting any transfers to which this Section applies, the
Administrator may require the Employee to establish that the amounts
to be transferred to this Plan meet the requirements of this Section
and may also require the Employee to provide an opinion of counsel
satisfactory to the Employer that the amounts to be transferred meet
the requirements of this Section.
(h) Notwithstanding anything herein to the contrary, a transfer directly
to this Plan from another qualified plan (or a transaction having the
effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 411(d)(6)
protected benefit" as described in Section 8.1.
4.7 VOLUNTARY CONTRIBUTIONS
(a) If this is an amendment to a Plan that had previously allowed
voluntary Employee contributions, then, except as provided in 4.7(b)
below, this Plan will not accept voluntary Employee contributions for
Plan Years beginning after the Plan Year in which this Plan is adopted
by the Employer.
(b) For 401(k) Plans, if elected in the Adoption Agreement, each
Participant may, at the discretion of the Administrator in a
nondiscriminatory manner, elect to voluntarily contribute a portion of
his compensation earned while a Participant under this Plan. In
addition, if specified in the Adoption Agreement, a voluntary
contribution shall be eligible for a matching contribution. Such
contributions shall be paid to the Trustee within a reasonable period
of time but in no event later than 90 days after the receipt of the
contribution.
(c) The balance in each Participant's Voluntary Contribution Account shall
be fully Vested at all times and shall not be subject to Forfeiture
for any reason.
(d) A Participant may elect to withdraw his voluntary contributions from
his Voluntary Contribution Account and the actual earnings thereon in
a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder. If the Administrator maintains sub-accounts with respect
to voluntary contributions (and earnings thereon) which were made on
or before a specified date, a Participant shall be permitted to
designate which sub-account shall be the source for his withdrawal. No
Forfeitures shall occur solely as a result of an Employee's withdrawal
of Employee contributions.
If applicable, and in the event that a Participant elects to make a
withdrawal of any portion of his matched voluntary contributions, such
Participant will be subject to a suspension period of three months
duration from the date of such withdrawal, during which time such
Participant will not be eligible to make any voluntary contributions.
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In the event a Participant has received a hardship distribution
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any plan
maintained by the Employer, then such Participant shall be barred from
making any voluntary contributions for a period of twelve (12) months
after receipt of the withdrawal or distribution.
(e) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market
value of the Voluntary Contribution Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
(f) The Administrator may direct that voluntary contributions made after a
valuation date be segregated into a separate account until such time
as the allocations pursuant to this Plan have been made, at which time
they may remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
4.8 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants may direct the
Trustee as to the investment of all or a portion of any one or more of
their individual account balances. Participants may direct the Trustee
in writing to invest their account in specific assets as permitted by
the Administrator provided such investments are in accordance with the
Department of Labor regulations and are permitted by the Plan. That
portion of the account of any Participant so directing will thereupon
be considered a Directed Investment Account.
(b) A separate Directed Investment Account shall be established for each
Participant who has directed an investment. Transfers between the
Participant's regular account and their Directed Investment Account
shall be charged and credited as the case may be to each account. The
Directed Investment Account shall not share in Trust Fund Earnings,
but it shall be charged or credited as appropriate with the net
earnings, gains, losses and expenses as well as any appreciation or
depreciation in market value during each Plan Year attributable to
such account.
(c) The Administrator shall establish a procedure, to be applied in a
uniform and nondiscriminatory manner, setting forth the permissible
investment options under this Section, how often changes between
investments may be made, and any other limitations that the
Administrator shall impose on a Participant's right to direct
investments.
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted deductible
voluntary contributions, then each Participant who made a "Qualified
Voluntary Employee Contribution" within the meaning of Code Section
219(e)(2) as it existed prior to the enactment of the Tax Reform Act
of 1986, shall have his contribution held in a separate Qualified
Voluntary Employee Contribution Account which shall be fully Vested at
all times. Such contributions, however, shall not be permitted if they
are attributable to taxable years beginning after December 31, 1986.
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<PAGE>
(b) A Participant may, upon written request delivered to the
Administrator, make withdrawals from his Qualified Voluntary Employee
Contribution Account. Any distribution shall be made in a manner which
is consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent requirements of
Code Sections 411(a)(11) and 417 and the Regulations thereunder.
(c) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market
value of the Qualified Voluntary Employee Contribution Account shall
be used to provide additional benefits to the Participant or his
Beneficiary.
(d) Unless the Administrator directs Qualified Voluntary Employee
Contributions made pursuant to this Section be segregated into a
separate account for each Participant, they shall be invested as part
of the general Trust Fund and share in earnings and losses.
4.10 ACTUAL CONTRIBUTION PERCENTAGE TESTS
In the event this Plan previously provided for voluntary or mandatory
Employee contributions, then, with respect to Plan Years beginning after
December 31, 1986, such contributions must satisfy the provisions of Code
Section 401(m) and the Regulations thereunder.
4.11 INTEGRATION IN MORE THAN ONE PLAN
If the Employer and/or an Affiliated Employer maintain qualified
retirement plans integrated with Social Security such that any Participant
in this Plan is covered under more than one of such plans, then such plans
will be considered to be one plan and will be considered to be integrated
if the extent of the integration of all such plans does not exceed 100%.
For purposes of the preceding sentence, the extent of integration of a
plan is the ratio, expressed as a percentage, which the actual benefits,
benefit rate, offset rate, or employer contribution rate, whatever is
applicable under the Plan bears to the limitation applicable to such Plan.
If the Employer maintains two or more standardized paired plans, only one
plan may be integrated with Social Security.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Anniversary Date,
and at such other date or dates deemed necessary by the Administrator,
herein called "valuation date," to determine the net worth of the assets
comprising the Trust Fund as it exists on the "valuation date." In
determining such net worth, the Trustee shall value the assets comprising
the Trust Fund at their fair market value as of the "valuation date" and
shall deduct all expenses for which the Trustee has not yet obtained
reimbursement from the Employer or the Trust Fund.
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5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust Fund
which are listed on a registered stock exchange, the Administrator shall
direct the Trustee to value the same at the prices they were last traded
on such exchange preceding the close of business on the "valuation date."
If such securities were not traded on the "valuation date," or if the
exchange on which they are traded was not open for business on the
"valuation date," then the securities shall be valued at the prices at
which they were last traded prior to the "valuation date." Any unlisted
security held in the Trust Fund shall be valued at its bid price next
preceding the close of business on the "valuation date," which bid price
shall be obtained from a registered broker or an investment banker. In
determining the fair market value of assets other than securities for
which trading or bid prices can be obtained, the Trustee may appraise such
assets itself, or in its discretion, employ one or more appraisers for
that purpose and rely on the values established by such appraiser or
appraisers.
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ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on or after his Normal Retirement Date or
Early Retirement Date. Upon such Normal Retirement Date or Early
Retirement Date, all amounts credited to such Participant's Combined
Account shall become distributable. However, a Participant may postpone
the termination of his employment with the Employer to a later date, in
which event the participation of such Participant in the Plan, including
the right to receive allocations pursuant to Section 4.3, shall continue
until his Late Retirement Date. Upon a Participant's Retirement Date, or
as soon thereafter as is practicable, the Administrator shall direct the
distribution of all amounts credited to such Participant's Combined
Account in accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or other
termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. The
Administrator shall direct, in accordance with the provisions of
Sections 6.6 and 6.7, the distribution of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall
direct, in accordance with the provisions of Sections 6.6 and 6.7, the
distribution of any remaining amounts credited to the accounts of such
deceased Former Participant to such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of
the account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(d) Unless otherwise elected in the manner prescribed in Section 6.6, the
Beneficiary of the Pre-Retirement Survivor Annuity shall be the
Participant's spouse. Except, however, the Participant may designate a
Beneficiary other than his spouse for the Pre-Retirement Survivor
Annuity if:
(1) the Participant and his spouse have validly waived the Pre-
Retirement Survivor Annuity in the manner prescribed in Section
6.6, and the spouse has waived his or her right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a
court order to such effect (and there is no
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"qualified domestic relations order" as defined in Code Section
414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the
Administrator. However, the Participant's spouse must again consent in
writing to any change in Beneficiary unless the original consent
acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. If a 50% Pre-Retirement Survivor Annuity is
specified in the Adoption Agreement, the Participant may, at any time,
designate a Beneficiary for death benefits payable under the Plan that
are in excess of the Pre-Retirement Survivor Annuity. In the event no
valid designation of Beneficiary exists at the time of the
Participant's death, the death benefit shall be payable to his estate.
(e) If the Plan provides an insured death benefit and a Participant dies
before any insurance coverage to which he is entitled under the Plan
is effected, his death benefit from such insurance coverage shall be
limited to the standard rated premium which was or should have been
used for such purpose.
(f) In the event of any conflict between the terms of this Plan and the
terms of any Contract issued hereunder, the Plan provisions shall
control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to
his Retirement Date or other termination of his employment, all amounts
credited to such Participant's Combined Account shall become fully Vested.
In the event of a Participant's Total and Permanent Disability, the
Administrator, in accordance with the provisions of Sections 6.5 and 6.7,
shall direct the distribution to such Participant of all amounts credited
to such Participant's Combined Account as though he had retired.
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6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date, or other valuation date, coinciding
with or subsequent to the termination of a Participant's employment
for any reason other than retirement, death, or Total and Permanent
Disability, the Administrator may direct that the amount of the Vested
portion of such Terminated Participant's Combined Account be
segregated and invested separately. In the event the Vested portion of
a Participant's Combined Account is not segregated, the amount shall
remain in a separate account for the Terminated Participant and share
in allocations pursuant to Section 4.3 until such time as a
distribution is made to the Terminated Participant. The amount of the
portion of the Participant's Combined Account which is not Vested may
be credited to a separate account (which will always share in gains
and losses of the Trust Fund) and, at such time as the amount becomes
a Forfeiture, shall be treated in accordance with the provisions of
the Plan regarding Forfeitures.
Regardless of whether distributions in kind are permitted, in the
event that the amount of the Vested portion of the Terminated
Participant's Combined Account equals or exceeds the fair market value
of any insurance Contracts, the Trustee, when so directed by the
Administrator and agreed to by the Terminated Participant, shall
assign, transfer, and set over to such Terminated Participant all
Contracts on his life in such form or with such endorsements, so that
the settlement options and forms of payment are consistent with the
provisions of Section 6.5. In the event that the Terminated
Participant's Vested portion does not at least equal the fair market
value of the Contracts, if any, the Terminated Participant may pay
over to the Trustee the sum needed to make the distribution equal to
the value of the Contracts being assigned or transferred, or the
Trustee, pursuant to the Participant's election, may borrow the cash
value of the Contracts from the Insurer so that the value of the
Contracts is equal to the Vested portion of the Terminated
Participant's Combined Account and then assign the Contracts to the
Terminated Participant.
At the election of the Terminated Participant, distribution of the
funds due to the Terminated Participant shall be made on the
occurrence of an event which would result in the distribution had the
Terminated Participant remained in the employ of the Employer (upon
the Participant's death, Total and Permanent Disability, Early or
Normal Retirement). However, at the election of the Participant, the
Administrator shall direct that the entire Vested portion or, if
selected in the Adoption Agreement, a partial Vested portion of the
Terminated Participant's Combined Account to be payable to such
Terminated Participant provided the conditions, if any, set forth in
the Adoption Agreement have been satisfied. Any distribution under
this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5 including, but not limited to,
all notice and consent requirements of Code Sections 411(a)(11) and
417 and the Regulations thereunder.
Notwithstanding the above, if the value of a Terminated Participant's
Vested benefit derived from Employer and Employee contributions does
not exceed, and at the time of any prior distribution, has never
exceeded $3,500 or such lesser amount, as specified in the Adoption
Agreement, the Administrator shall direct that the entire Vested
benefit be
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paid to such Participant in a single lump-sum without regard to the
consent of the Participant or the Participant's spouse. A
Participant's Vested benefit shall not include Qualified Voluntary
Employee Contributions within the meaning of Code Section 72(o)(5)(B)
for Plan Years beginning prior to January 1, 1989.
(b) The Vested portion of any Participant's Account shall be a percentage
of such Participant's Account determined on the basis of the
Participant's number of Years of Service according to the vesting
schedule specified in the Adoption Agreement.
(c) For any Top Heavy Plan Year, one of the minimum top heavy vesting
schedules as elected by the Employer in the Adoption Agreement will
automatically apply to the Plan. The minimum top heavy vesting
schedule applies to all benefits within the meaning of Code Section
411(a)(7) except those attributable to Employee contributions,
including benefits accrued before the effective date of Code Section
416 and benefits accrued before the Plan became top heavy. Further, no
decrease in a Participant's Vested percentage may occur in the event
the Plan's status as top heavy changes for any Plan Year. However,
this Section does not apply to the account balances of any Employee
who does not have an Hour of Service after the Plan has initially
become top heavy and the Vested percentage of such Employee's
Participant's Account shall be determined without regard to this
Section 6.4(c).
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plan, the Administrator shall continue to use the vesting schedule in
effect while the Plan was a Top Heavy Plan.
(d) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any
full or partial termination of the Plan, all amounts credited to the
account of any affected Participant shall become 100% Vested and shall
not thereafter be subject to Forfeiture.
(e) If this is an amended or restated Plan, then notwithstanding the
vesting schedule specified in the Adoption Agreement, the Vested
percentage of a Participant's Account shall not be less than the
Vested percentage attained as of the later of the effective date or
adoption date of this amendment and restatement. The computation of a
Participant's nonforfeitable percentage of his interest in the Plan
shall not be reduced as the result of any direct or indirect amendment
to this Article, or due to changes in the Plan's status as a Top Heavy
Plan.
(f) If the Plan's vesting schedule is amended, or if the Plan is amended
in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage or if the Plan is deemed
amended by an automatic change to a top heavy vesting schedule, then
each Participant with at least 3 Years of Service as of the expiration
date of the election period may elect to have his nonforfeitable
percentage computed under the Plan without regard to such amendment or
change. Notwithstanding the foregoing, for Plan Years beginning before
January 1, 1989, or with respect to Employees who fail to complete at
least one (1) Hour of Service in a Plan Year beginning after December
31, 1988, five (5) shall be substituted for three (3) in the
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preceding sentence. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of
the amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(g)(1)If any Former Participant shall be reemployed by the Employer before a
1-Year Break in Service occurs, he shall continue to participate in
the Plan in the same manner as if such termination had not occurred.
(2)If any Former Participant shall be reemployed by the Employer before
five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received a distribution of his entire Vested interest
prior to his reemployment, his forfeited account shall be reinstated
only if he repays the full amount distributed to him before the
earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of
the first period of 5 consecutive 1-Year Breaks in Service commencing
after the distribution. If a distribution occurs for any reason other
than a separation from service, the time for repayment may not end
earlier than five (5) years after the date of separation. In the event
the Former Participant does repay the full amount distributed to him,
the undistributed portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring
subsequent to the Anniversary Date or other valuation date preceding
his termination. If an Employee receives a distribution pursuant to
this section and the Employee resumes employment covered under this
Plan, the Employee's Employer-derived account balance will be restored
to the amount on the date of distribution if the Employee repays to
the Plan the full amount of the distribution attributable to Employer
contributions before the earlier of 5 years after the first date on
which the Participant is subsequently re-employed by the Employer, or
the date the Participant incurs 5 consecutive 1-Year Breaks in Service
following the date of the distribution. If a non-Vested Former
Participant was deemed to have received a distribution and such Former
Participant is reemployed by the Employer before five (5) consecutive
1-Year Breaks in Service, then such Participant will be deemed to have
repaid the deemed distribution as of the date of reemployment.
(3)If specified in the Adoption Agreement, if any Former Participant is
reemployed after a 1-Year Break in Service has occurred, Years of
Service shall include Years of Service prior to his 1-Year Break in
Service subject to the following rules:
(i) Any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from
Employer contributions shall lose credits if his consecutive 1-
Year Breaks in Service equal or exceed the
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greater of (A) five (5) or (B) the aggregate number of his pre-
break Years of Service;
(ii) After five (5) consecutive 1-Year Breaks in Service, a Former
Participant's Vested account balance attributable to pre-break
service shall not be increased as a result of post-break
service;
(iii) A Former Participant who is reemployed and who has not had his
Years of Service before a 1-Year Break in Service disregarded
pursuant to (i) above, shall participate in the Plan as of his
date of reemployment;
(iv) If a Former Participant completes a Year of Service (a 1-Year
Break in Service previously occurred, but employment had not
terminated), he shall participate in the Plan retroactively from
the first day of the Plan Year during which he completes one (1)
Year of Service.
(4) If specified in the Adoption Agreement, if any Former Participant is
reemployed after a 1-Year Break in Service has occurred, Years of
Service shall include Years of Service prior to his 1-Year Break in
Service subject to the following rules:
(i) If a Former Participant subsequently resumes his employment with
the Employer, his prior Years of Service shall be used in
computing his Years of Service;
(ii) After five (5) consecutive 1-Year Breaks in Service, a Former
Participant's Vested account balance attributable to pre-break
service shall not be increased as a result of post-break
service;
(iii) A Former Participant shall be eligible to become a Participant
on the day on which he resumes service with the Employer
provided he is an Eligible Employee;
(iv) An Eligible Employee who was not previously a Participant and
who has had a 1-Year Break in Service and who, prior to that
break, had satisfied the service requirement, pursuant to the
Adoption Agreement, shall become a Participant on the first
Entry Date, as specified in the Adoption Agreement, provided he
has satisfied any age requirement specified in the Adoption
Agreement.
(h) If the Terminated Participant elects to have distributed less than the
entire Vested portion of his account balance that is derived from
Employer contributions, the part of the non-Vested portion that will
be treated as a Forfeiture is the total non-Vested portion multiplied
by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the
denominator of which is the total value of the Vested Employer-derived
Participant's account balance.
(i) In determining Years of Service for purposes of vesting under
the Plan, Years of Service shall be excluded as specified in the
Adoption Agreement.
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6.5 DISTRIBUTION OF BENEFITS
(a)(1) Unless otherwise elected as provided below, a Participant who is
married on the "annuity starting date" and who does not die before the
"annuity starting date" shall receive the value of all of his benefits
in the form of a Joint and Survivor Annuity. The Joint and Survivor
Annuity is an annuity that commences immediately and shall be equal in
value to a single life annuity. Such joint and survivor benefits
following the Participant's death shall continue to the spouse during
the spouse's lifetime at a rate equal to 50% of the rate at which such
benefits were payable to the Participant. This Joint and Survivor
Annuity shall be considered the designated qualified Joint and
Survivor Annuity and automatic form of payment for the purposes of
this Plan. However, the Participant may elect to receive a smaller
annuity benefit with continuation of payments to the spouse at a rate
of seventy-five percent (75%) or one hundred percent (100%) of the
rate payable to a Participant during his lifetime which alternative
Joint and Survivor Annuity shall be equal in value to the automatic
Joint and 50% Survivor Annuity. An unmarried Participant shall receive
the value of his benefit in the form of a single life annuity. Such
unmarried Participant, however, may elect in writing to waive the
single life annuity. The election must comply with the provisions of
this Section as if it were an election to waive the Joint and Survivor
Annuity by a married Participant, but without the spousal consent
requirement. The Participant may elect to have any annuity provided
for in this Section distributed upon the attainment of the "earliest
retirement age" under the Plan. The "earliest retirement age" is the
earliest date on which, under the Plan, the Participant could elect to
receive retirement benefits.
(2) Any election to waive the Joint and Survivor Annuity must be made by
the Participant in writing during the election period and be consented
to by the Participant's spouse. If the spouse is legally incompetent
to give consent, the spouse's legal guardian, even if such guardian is
the Participant, may give consent. Such election shall designate a
Beneficiary (or a form of benefits) that may not be changed without
spousal consent (unless the consent of the spouse expressly permits
designations by the Participant without the requirement of further
consent by the spouse). Such spouse's consent shall be irrevocable and
must acknowledge the effect of such election and be witnessed by a
Plan representative or a notary public. Such consent shall not be
required if it is established to the satisfaction of the Administrator
that the required consent cannot be obtained because there is no
spouse, the spouse cannot be located, or other circumstances that may
be prescribed by Regulations. The election made by the Participant and
consented to by his spouse may be revoked by the Participant in
writing without the consent of the spouse at any time during the
election period. The number of revocations shall not be limited. Any
new election must comply with the requirements of this paragraph. A
former spouse's waiver shall not be binding on a new spouse.
(3) The election period to waive the Joint and Survivor Annuity shall be
the 90 day period ending on the "annuity starting date."
(4) For purposes of this Section and Section 6.6, the "annuity starting
date" means the first day of the first period for which an amount is
paid as an annuity, or, in the case of a
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benefit not payable in the form of an annuity, the first day on which
all events have occurred which entitles the Participant to such
benefit.
(5) For purposes of this Section and Section 6.6, a "single life annuity"
means an annuity paid in equal installments for the life of a
Participant that terminates upon the Participant's death.
(6) With regard to the election, the Administrator shall provide to the
Participant no less than 30 days and no more than 90 days before the
"annuity starting date" a written explanation of:
(i) the terms and conditions of the Joint and Survivor Annuity, and
(ii) the Participant's right to make and the effect of an election to
waive the Joint and Survivor Annuity, and
(iii) the right of the Participant's spouse to consent to any election
to waive the Joint and Survivor Annuity, and
(iv) the right of the Participant to revoke such election, and the
effect of such revocation.
(b) In the event a married Participant duly elects pursuant to
paragraph (a)(2) above not to receive his benefit in the form of a
Joint and Survivor Annuity, or if such Participant is not married, in
the form of a single life annuity, the Administrator, pursuant to the
election of the Participant, shall direct the distribution to a
Participant or his Beneficiary any amount to which he is entitled
under the Plan in one or more of the following methods which are
permitted pursuant to the Adoption Agreement:
(1) One lump sum payment in cash or in property;
(2) One or more partial distributions in cash or in property;
(3) Payments over a period certain in monthly, quarterly,
semiannual, or annual cash installments. In order to provide
such installment payments, the Administrator may direct that the
Participant's interest in the Plan be segregated and invested
separately, and that the funds in the segregated account be used
for the payment of the installments. The period over which such
payment is to be made shall not extend beyond the Participant's
life expectancy (or the life expectancy of the Participant and
his designated Beneficiary);
(4) Purchase of or providing an annuity. However, such annuity may
not be in any form that will provide for payments over a period
extending beyond either the life of the Participant (or the
lives of the Participant and his designated Beneficiary) or the
life expectancy of the Participant (or the life expectancy of
the Participant and his designated Beneficiary).
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(c) The present value of a Participant's Joint and Survivor Annuity
derived from Employer and Employee contributions may not be paid
without his written consent if the value exceeds, or has ever exceeded
at the time of any prior distribution, $3,500 (or such lesser amount,
as specified in the Adoption Agreement). Further, the spouse of a
Participant must consent in writing to any immediate distribution not
paid in the form of a Joint and Survivor Annuity; however, if the
value of the Participant's Vested benefit derived from Employer and
Employee contributions does not exceed $3,500 (or such lesser amount,
as specified in the Adoption Agreement) and has never exceeded such
dollar limit at the time of any prior distribution, the Administrator
may immediately distribute such benefit without any consent. No
distribution may be made under the preceding sentence after the
"annuity starting date" unless the Participant and his spouse consent
in writing to such distribution. Any written consent required under
this paragraph must be obtained not more than 90 days before
commencement of the distribution and shall be made in a manner
consistent with Section 6.5(a)(2).
(d) Any distribution to a Participant who has a benefit which exceeds, or
has ever exceeded at the time of any prior distribution, $3,500 (or
such lesser amount, as specified in the Adoption Agreement) shall
require such Participant's consent if such distribution commences
prior to the later of his Normal Retirement Age or age 62. With regard
to this required consent:
(1) No consent shall be valid unless the Participant has received a
general description of the material features and an explanation
of the relative values of the optional forms of benefit
available under the Plan that would satisfy the notice
requirements of Code Section 417.
(2) The Participant must be informed of his right to defer receipt
of the distribution. If a Participant fails to consent, it shall
be deemed an election to defer the commencement of payment of
any benefit. However, any election to defer the receipt of
benefits shall not apply with respect to distributions which are
required under Section 6.5(e).
(3) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before
the "annuity starting date."
(4) Written consent of the Participant to the distribution must not
be made before the Participant receives the notice and must not
be made more than 90 days before the "annuity starting date."
(5) No consent shall be valid if a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution.
(e) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits, made on or after January 1,
1985, whether under the Plan or through the purchase of an annuity
Contract, shall be made in accordance with the following requirements
and shall otherwise comply with Code Section 401(a)(9) and the
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Regulations thereunder (including Regulation Section 1.401(a)(9)-2),
the provisions of which are incorporated herein by reference:
(1) A Participant's benefits shall be distributed to him not later
than April 1st of the calendar year following the later of (i)
the calendar year in which the Participant attains age 70 1/2 or
(ii) the calendar year in which the Participant retires,
provided, however, that this clause (ii) shall not apply in the
case of a Participant who is a "five (5) percent owner" at any
time during the five (5) Plan Year period ending in the calendar
year in which he attains age 70 1/2 or, in the case of a
Participant who becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer apply and the
required beginning date shall be the April 1st of the calendar
year following the calendar year in which such subsequent Plan
Year ends. Alternatively, distributions to a Participant must
begin no later than the applicable April 1st as determined under
the preceding sentence and must be made over the life of the
Participant (or the lives of the Participant and the
Participant's designated Beneficiary) or, if benefits are paid
in the form of a Joint and Survivor Annuity, the life expectancy
of the Participant (or the life expectancies of the Participant
and his designated Beneficiary) in accordance with Regulations.
For Plan Years beginning after December 31, 1988, clause (ii)
above shall not apply to any Participant unless the Participant
had attained age 70 1/2 before January 1, 1988, and was not a
"five (5) percent owner" at any time during the Plan Year ending
with or within the calendar year in which the Participant
attained age 66 1/2 or any subsequent Plan Year.
(2) Distributions to a Participant and his Beneficiaries shall only
be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
Additionally, for calendar years beginning before 1989,
distributions may also be made under an alternative method which
provides that the then present value of the payments to be made
over the period of the Participant's life expectancy exceeds
fifty percent (50%) of the then present value of the total
payments to be made to the Participant and his Beneficiaries.
(f) For purposes of this Section, the life expectancy of a Participant and
a Participant's spouse (other than in the case of a life annuity)
shall be redetermined annually in accordance with Regulations if
permitted pursuant to the Adoption Agreement. If the Participant or
the Participant's spouse may elect whether recalculations will be
made, then the election, once made, shall be irrevocable. If no
election is made by the time distributions must commence, then the
life expectancy of the Participant and the Participant's spouse shall
not be subject to recalculation. Life expectancy and joint and last
survivor expectancy shall be computed using the return multiples in
Tables V and VI of Regulation 1.72-9.
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(g) All annuity Contracts under this Plan shall be non-transferable when
distributed. Furthermore, the terms of any annuity Contract purchased
and distributed to a Participant or spouse shall comply with all of
the requirements of this Plan.
(h) Subject to the spouse's right of consent afforded under the Plan, the
restrictions imposed by this Section shall not apply if a Participant
has, prior to January 1, 1984, made a written designation to have his
retirement benefit paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax Equity
and Fiscal Responsibility Act of 1982.
(i) If a distribution is made at a time when a Participant who has not
terminated employment is not fully Vested in his Participant's Account
and the Participant may increase the Vested percentage in such
account:
(1) A separate account shall be established for the Participant's
interest in the Plan as of the time of the distribution, and
(2) At any relevant time the Participant's Vested portion of the
separate account shall be equal to an amount ("X") determined by
the formula:
X equals P(AB plus (RxD)) - (R x D)
For purposes of applying the formula: P is the Vested percentage at
the relevant time, AB is the account balance at the relevant time, D
is the amount of distribution, and R is the ratio of the account
balance at the relevant time to the account balance after
distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested Participant who
dies before the annuity starting date and who has a surviving spouse
shall have the Pre-Retirement Survivor Annuity paid to his surviving
spouse. The Participant's spouse may direct that payment of the Pre-
Retirement Survivor Annuity commence within a reasonable period after
the Participant's death. If the spouse does not so direct, payment of
such benefit will commence at the time the Participant would have
attained the later of his Normal Retirement Age or age 62. However,
the spouse may elect a later commencement date. Any distribution to
the Participant's spouse shall be subject to the rules specified in
Section 6.6(h).
(b) Any election to waive the Pre-Retirement Survivor Annuity before the
Participant's death must be made by the Participant in writing during
the election period and shall require the spouse's irrevocable consent
in the same manner provided for in Section 6.5(a)(2). Further, the
spouse's consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elects to relinquish such right.
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(c) The election period to waive the Pre-Retirement Survivor Annuity shall
begin on the first day of the Plan Year in which the Participant
attains age 35 and end on the date of the Participant's death. An
earlier waiver (with spousal consent) may be made provided a written
explanation of the Pre-Retirement Survivor Annuity is given to the
Participant and such waiver becomes invalid at the beginning of the
Plan Year in which the Participant turns age 35. In the event a Vested
Participant separates from service prior to the beginning of the
election period, the election period shall begin on the date of such
separation from service.
(d) With regard to the election, the Administrator shall provide each
Participant within the applicable period, with respect to such
Participant (and consistent with Regulations), a written explanation
of the Pre-Retirement Survivor Annuity containing comparable
information to that required pursuant to Section 6.5(a)(6). For the
purposes of this paragraph, the term "applicable period" means, with
respect to a Participant, whichever of the following periods ends
last:
(1) The period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the
Participant attains age 35;
(2) A reasonable period after the individual becomes a Participant.
For this purpose, in the case of an individual who becomes a
Participant after age 32, the explanation must be provided by
the end of the three-year period beginning with the first day of
the first Plan Year for which the individual is a Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity with
respect to the Participant;
(4) A reasonable period ending after Code Section 401(a)(11) applies
to the Participant; or
(5) A reasonable period after separation from service in the case of
a Participant who separates before attaining age 35. For this
purpose, the Administrator must provide the explanation
beginning one year before the separation from service and ending
one year after separation.
(e) The Pre-Retirement Survivor Annuity provided for in this Section shall
apply only to Participants who are credited with an Hour of Service on
or after August 23, 1984. Former Participants who are not credited
with an Hour of Service on or after August 23, 1984 shall be provided
with rights to the Pre-Retirement Survivor Annuity in accordance with
Section 303(e)(2) of the Retirement Equity Act of 1984.
(f) If the value of the Pre-Retirement Survivor Annuity derived from
Employer and Employee contributions does not exceed $3,500, or such
lesser amount as specified in the Adoption Agreement, and has never
exceeded $3,500, or such lesser amount as specified in the Adoption
Agreement, at the time of any prior distribution, the
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Administrator shall direct the immediate distribution of such amount
to the Participant's spouse. No distribution may be made under the
preceding sentence after the annuity starting date unless the spouse
consents in writing. If the value exceeds, or has ever exceeded at the
time of any prior distribution, $3,500, or such lesser amount as
specified in the Adoption Agreement, an immediate distribution of the
entire amount may be made to the surviving spouse, provided such
surviving spouse consents in writing to such distribution. Any written
consent required under this paragraph must be obtained not more than
90 days before commencement of the distribution and shall be made in a
manner consistent with Section 6.5(a)(2).
(g)(1) In the event there is an election to waive the Pre-Retirement Survivor
Annuity, and for death benefits in excess of the Pre-Retirement
Survivor Annuity, such death benefits shall be paid to the
Participant's Beneficiary by either of the following methods, as
elected by the Participant (or if no election has been made prior to
the Participant's death, by his Beneficiary) subject to the rules
specified in Section 6.6(h) and the selections made in the Adoption
Agreement:
(i) One lump sum payment in cash or in property;
(ii) One or more partial distributions in cash or in property;
(iii) Payment in monthly, quarterly, semi-annual, or annual cash
installments over a period to be determined by the Participant
or his Beneficiary. After periodic installments commence, the
Beneficiary shall have the right to reduce the period over which
such periodic installments shall be made, and the cash amount of
such periodic installments shall be adjusted accordingly.
(iv) If death benefits in excess of the Pre-Retirement Survivor
Annuity are to be paid to the surviving spouse, such benefits
may be paid pursuant to (i), (ii), or (iii) above, or used to
purchase an annuity so as to increase the payments made pursuant
to the Pre-Retirement Survivor Annuity;
(2) In the event the death benefit payable pursuant to Section 6.2 is
payable in installments, then, upon the death of the Participant, the
Administrator may direct that the death benefit be segregated and
invested separately, and that the funds accumulated in the segregated
account be used for the payment of the installments.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant made on or after January
1, 1985, shall be made in accordance with the following requirements
and shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder.
(1) If it is determined, pursuant to Regulations, that the
distribution of a Participant's interest has begun and the
Participant dies before his entire interest has been distributed
to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
distribution selected pursuant to Section 6.5 as of his date of
death.
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(2) If a Participant dies before he has begun to receive any
distributions of his interest in the Plan or before
distributions are deemed to have begun pursuant to Regulations,
then his death benefit shall be distributed to his Beneficiaries
in accordance with the following rules subject to the selections
made in the Adoption Agreement and Subsections 6.6(h)(3) and
6.6(i) below:
(i) The entire death benefit shall be distributed to the
Participant's Beneficiaries by December 31st of the
calendar year in which the fifth anniversary of the
Participant's death occurs;
(ii) The 5-year distribution requirement of (i) above shall not
apply to any portion of the deceased Participant's interest
which is payable to or for the benefit of a designated
Beneficiary. In such event, such portion shall be
distributed over the life of such designated Beneficiary
(or over a period not extending beyond the life expectancy
of such designated Beneficiary) provided such distribution
begins not later than December 31st of the calendar year
immediately following the calendar year in which the
Participant died;
(iii) However, in the event the Participant's spouse (determined
as of the date of the Participant's death) is his
designated Beneficiary, the provisions of (ii) above shall
apply except that the requirement that distributions
commence within one year of the Participant's death shall
not apply. In lieu thereof, distributions must commence on
or before the later of: (1) December 31st of the calendar
year immediately following the calendar year in which the
Participant died; or (2) December 31st of the calendar year
in which the Participant would have attained age 70 1/2. If
the surviving spouse dies before distributions to such
spouse begin, then the 5-year distribution requirement of
this Section shall apply as if the spouse was the
Participant.
For purposes of Section 6.5(h)(2) above, if the surviving spouse
dies after the Participant, but before any payments to such
spouse begin, the provisions of this section, with the exception
of paragraph (ii) therein, shall be applied as if the surviving
spouse were the Participant.
(3) Notwithstanding subparagraph (2) above, or any selections made
in the Adoption Agreement, if a Participant's death benefits are
to be paid in the form of a Pre-Retirement Survivor Annuity,
then distributions to the Participant's surviving spouse must
commence on or before the later of: (1) December 31st of the
calendar year immediately following the calendar year in which
the Participant died; or (2) December 31st of the calendar year
in which the Participant would have attained age 70 1/2.
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(i) For purposes of Section 6.6(h)(2), the election by a designated
Beneficiary to be excepted from the 5-year distribution requirement
(if permitted in the Adoption Agreement) must be made no later than
December 31st of the calendar year following the calendar year of the
Participant's death. Except, however, with respect to a designated
Beneficiary who is the Participant's surviving spouse, the election
must be made by the earlier of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died
or, if later, the calendar year in which the Participant would have
attained age 70 1/2; or (2) December 31st of the calendar year which
contains the fifth anniversary of the date of the Participant's death.
An election by a designated Beneficiary must be in writing and shall
be irrevocable as of the last day of the election period stated
herein. In the absence of an election by the Participant or a
designated Beneficiary, the 5-year distribution requirement shall
apply.
(j) For purposes of this Section, the life expectancy of a Participant and
a Participant's spouse (other than in the case of a life annuity)
shall or shall not be redetermined annually as provided in the
Adoption Agreement and in accordance with Regulations. If the
Participant or the Participant's spouse may elect, pursuant to the
Adoption Agreement, to have life expectancies recalculated, then the
election, once made shall be irrevocable. If no election is made by
the time distributions must commence, then the life expectancy of the
Participant and the Participant's spouse shall not be subject to
recalculation. Life expectancy and joint and last survivor expectancy
shall be computed using the return multiples in Tables V and VI of
Regulation Section 1.72-9.
(k) In the event that less than 100% of a Participant's interest in the
Plan is distributed to such Participant's spouse, the portion of the
distribution attributable to the Participant's Voluntary Contribution
Account shall be in the same proportion that the Participant's
Voluntary Contribution Account bears to the Participant's total
interest in the Plan.
(l) Subject to the spouse's right of consent afforded under the Plan, the
restrictions imposed by this Section shall not apply if a Participant
has, prior to January 1, 1984, made a written designation to have his
death benefits paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax Equity
and Fiscal Responsibility Act of 1982.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a distribution is to
be made, or a series of payments are to commence, on or as of an
Anniversary Date, the distribution or series of payments may be made or
begun on such date or as soon thereafter as is practicable, but in no
event later than 180 days after the Anniversary Date. However, unless a
Former Participant elects in writing to defer the receipt of benefits
(such election may not result in a death benefit that is more than
incidental), the payment of benefits shall begin not later than the 60th
day after the close of the Plan Year in which the latest of the following
events occurs: (a) the date on which the Participant attains the earlier
of age 65 or the Normal Retirement Age specified herein; (b) the 10th
anniversary of the year in which the Participant commenced participation
in the Plan; or (c) the date the Participant terminates his service with
the Employer.
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Notwithstanding the foregoing, the failure of a Participant and, if
applicable, the Participant's spouse, to consent to a distribution
pursuant to Section 6.5(d), shall be deemed to be an election to defer the
commencement of payment of any benefit sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal
guardian, or if none, to a parent of such Beneficiary or a responsible
adult with whom the Beneficiary maintains his residence, or to the
custodian for such Beneficiary under the Uniform Gift to Minors Act or
Gift to Minors Act, if such is permitted by the laws of the state in which
said Beneficiary resides. Such a payment to the legal guardian, custodian
or parent of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain
unpaid solely by reason of the inability of the Administrator, after
sending a registered letter, return receipt requested, to the last known
address, and after further diligent effort, to ascertain the whereabouts
of such Participant or his Beneficiary, the amount so distributable shall
be treated as a Forfeiture pursuant to the Plan. In the event a
Participant or Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored, first from Forfeitures, if
any, and then from an additional Employer contribution if necessary.
6.10 PRE-RETIREMENT DISTRIBUTION
For Profit Sharing Plans and 401(k) Profit Sharing Plans, if elected in
the Adoption Agreement, at such time as a Participant shall have attained
the age specified in the Adoption Agreement, the Administrator, at the
election of the Participant, shall direct the distribution of up to 100%
of his Vested accounts, as specified in the Adoption Agreement, valued as
of the last Anniversary Date or other valuation date. However, no such
distribution from the Participant's Account shall occur prior to 100%
Vesting. In the event that the Administrator makes such a distribution,
the Participant shall continue to be eligible to participate in the Plan
on the same basis as any other Employee. Any distribution made pursuant to
this Section shall be made in a manner consistent with Section 6.5,
including, but not limited to, all notice and consent requirements of Code
Sections 411(a)(11) and 417 and the Regulations thereunder.
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6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans, the Administrator, at the election of the
Participant, shall direct the distribution to any Participant in any
one Plan Year up to the lesser of 100% of his Vested accounts, as
specified in the Adoption Agreement, valued as of the last Anniversary
Date or other valuation date or the amount necessary to satisfy the
immediate and heavy financial need of the Participant. Such amount of
an immediate and heavy financial need may include any amounts
necessary to pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the distribution. Any
distribution made pursuant to this Section shall be deemed to be made
as of the first day of the Plan Year or, if later, the valuation date
immediately preceding the date of distribution, and the account from
which the distribution is made shall be reduced accordingly.
Withdrawal under this Section shall be authorized only if the
distribution is on account of:
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of
his dependents (as defined in Code Section 152) or necessary for
those persons to obtain medical care as described in Code
Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
(4) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his
spouse, children, or dependents; or
(5) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) Distributions may be made from the Participant's Vested accounts.
(c) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
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6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a Participant in
this Plan shall be subject to the rights afforded to any "alternate payee"
under a "qualified domestic relations order." Furthermore, a distribution
to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under the Plan.
For the purposes of this Section, "alternate payee," "qualified domestic
relations order" and "earliest retirement age" shall have the meaning set
forth under Code Section 414(p).
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
If elected in the Adoption Agreement, the following shall apply to a
Participant in a Profit Sharing Plan or 401(k) Profit Sharing Plan and to
any distribution, made on or after the first day of the first plan year
beginning after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible employee contributions, as
defined in Code Section 72(o)(5)(B), and maintained on behalf of a
participant in a money purchase pension plan, (including a target benefit
plan):
(a) Under this Section 6.13, the automatic form of distribution is a lump
sum. If specified in the Adoption Agreement, the Participant may elect
an annuity as an optional form of distribution, in which case the
Joint and Survivor Annuity rules will apply.
(b) Upon the death of the Participant, the Participant's entire Vested
account balances will be paid to his or her surviving spouse, or, if
there is no surviving spouse or the surviving spouse has already
consented to waive his or her benefit, in accordance with Section 6.6,
to his designated Beneficiary;
(c) If a distribution is one to which Code Sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
notice required under Regulation Section 1.411(a)-11(c) is given,
provided that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a particular
distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
(d) Except to the extent otherwise provided in this Section and Section
6.5(h), the other provisions of Sections 6.2, 6.5 and 6.6 regarding
spousal consent and the forms of distributions shall be inoperative
with respect to this Plan.
This Section shall not apply to any Participant if it is determined
that this Plan is a direct or indirect transferee of a defined benefit
plan or money purchase plan, or a target benefit plan, stock bonus or
profit sharing plan which would otherwise provide for a life annuity
form of payment to the Participant.
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ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities.
However, if elected in the Adoption Agreement, a separate trust document
shall apply in lieu of this Article VII. Moreover, if the Plan's assets
are invested solely in group annuity contracts and there is no separate
trust document, then, if elected in the Adoption Agreement, the terms of
the group annuity contract(s) shall apply in lieu of this Article.
(a) Consistent with the "funding policy and method" determined by the
Employer to invest, manage, and control the Plan assets subject,
however, to the direction of an Investment Manager if the Employer
should appoint such manager as to all or a portion of the assets of
the Plan;
(b) At the direction of the Administrator, to pay benefits required under
the Plan to be paid to Participants, or, in the event of their death,
to their Beneficiaries;
(c) To maintain records of receipts and disbursements and furnish to the
Employer and/or Administrator for each Plan Year a written annual
report per Section 7.7; and
(d) If there shall be more than one Trustee, they shall act by a majority
of their number, but may authorize one or more of them to sign papers
on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep the Trust
Fund invested without distinction between principal and income and in
such securities or property, real or personal, wherever situated, as
the Trustee shall deem advisable, including, but not limited to,
mutual funds, stocks, common or preferred, bonds and other evidences
of indebtedness or ownership, and real estate or any interest therein.
The Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs
of the Plan on the basis of information furnished by the Employer. In
making such investments, the Trustee shall not be restricted to
securities or other property of the character expressly authorized by
the applicable law for trust investments; however, the Trustee shall
give due regard to any limitations imposed by the Code or the Act so
that at all times this Plan may qualify as a qualified Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the terms
of its usual and customary bank agency agreement, under which the
duties of such bank or trust company shall be of a custodial, clerical
and record-keeping nature.
(c) The Trustee may from time to time transfer to a common, collective, or
pooled trust fund maintained by any corporate Trustee hereunder
pursuant to Revenue Ruling 81-100, all or such part of the Trust Fund
as the Trustee may deem advisable, and such part or all of
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the Trust Fund so transferred shall be subject to all the terms and
provisions of the common, collective, or pooled trust fund which
contemplate the commingling for investment purposes of such trust
assets with trust assets of other trusts. The Trustee may withdraw
from such common, collective, or pooled trust fund all or such part of
the Trust Fund as the Trustee may deem advisable.
(d) The Trustee, at the direction of the Administrator and pursuant to
instructions from the individual designated in the Adoption Agreement
for such purpose and subject to the conditions set forth in the
Adoption Agreement, shall ratably apply for, own, and pay all premiums
on Contracts on the lives of the Participants. Any initial or
additional Contract purchased on behalf of a Participant shall have a
face amount of not less than $1,000, the amount set forth in the
Adoption Agreement, or the limitation of the Insurer, whichever is
greater. If a life insurance Contract is to be purchased for a
Participant, the aggregate premium for ordinary life insurance for
each Participant must be less than 50% of the aggregate contributions
and Forfeitures allocated to a Participant's Combined Account. For
purposes of this limitation, ordinary life insurance Contracts are
Contracts with both non-decreasing death benefits and non-increasing
premiums. If term insurance or universal life insurance is purchased
with such contributions, the aggregate premium must be 25% or less of
the aggregate contributions and Forfeitures allocated to a
Participant's Combined Account. If both term insurance and ordinary
life insurance are purchased with such contributions, the amount
expended for term insurance plus one-half of the premium for ordinary
life insurance may not in the aggregate exceed 25% of the aggregate
Employer contributions and Forfeitures allocated to a Participant's
Combined Account. The Trustee must distribute the Contracts to the
Participant or convert the entire value of the Contracts at or before
retirement into cash or provide for a periodic income so that no
portion of such value may be used to continue life insurance
protection beyond retirement. Notwithstanding the above, the
limitations imposed herein with respect to the purchase of life
insurance shall not apply, in the case of a Profit Sharing Plan, to
the portion of a Participant's Account that has accumulated for at
least two (2) Plan Years.
Notwithstanding anything hereinabove to the contrary, amounts credited
to a Participant's Qualified Voluntary Employee Contribution Account
pursuant to Section 4.9, shall not be applied to the purchase of life
insurance contracts.
(e) The Trustee will be the owner of any life insurance Contract purchased
under the terms of this Plan. The Contract must provide that the
proceeds will be payable to the Trustee; however, the Trustee shall be
required to pay over all proceeds of the Contract to the Participant's
designated Beneficiary in accordance with the distribution provisions
of Article VI. A Participant's spouse will be the designated
Beneficiary pursuant to Section 6.2, unless a qualified election has
been made in accordance with Sections 6.5 and 6.6 of the Plan, if
applicable. Under no circumstances shall the Trust retain any part of
the proceeds. However, the Trustee shall not pay the proceeds in a
method that would violate the requirements of the Retirement Equity
Act, as stated in Article VI of the Plan, or Code Section 401(a)(9)
and the Regulations thereunder. In the event of any conflict between
the terms of this Prototype Plan and the terms of any insurance
Contract(s) purchased hereunder, the Prototype Plan provisions shall
control.
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(f) Notwithstanding anything in this Section 7.2, if this Plan is used in
conjunction with a separate trust, the separate trust shall control
with respect to the powers and duties of the Trustee.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of this Plan,
shall have the following powers and authorities to be exercised in the
Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or other property and to
retain the same. In conjunction with the purchase of securities,
margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to purchase, or
otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing
with the Trustee shall be bound to see to the application of the
purchase money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or without
advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give general
or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other
property;
(d) To cause any securities or other property to be registered in the
Trustee's own name or in the name of one or more of the Trustee's
nominees, and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such amount,
and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash balances as the
Trustee may, from time to time, deem to be in the best interests of
the Plan, without liability for interest thereon;
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(g) To accept and retain for such time as it may deem advisable any
securities or other property received or acquired by it as Trustee
hereunder, whether or not such securities or other property would
normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims, debts, or
damages due or owing to or from the Plan, to commence or defend suits
or legal or administrative proceedings, and to represent the Plan in
all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation, and such agent or counsel may or may not be
agent or counsel for the Employer;
(k) To apply for and procure from the Insurer as an investment of the
Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper; to exercise, at
any time or from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect, receive,
and settle for the proceeds of all such annuity, or other Contracts as
and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings accounts
bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To sell, purchase and acquire put or call options if the options are
traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or,
if the options are not traded on a national securities exchange, are
guaranteed by a member firm of the New York Stock Exchange;
(o) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(p) To pool all or any of the Trust Fund, from time to time, with assets
belonging to any other qualified employee pension benefit trust
created by the Employer or any Affiliated Employer, and to commingle
such assets and make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or trusts,
allocating undivided shares or interests in such investments or
accounts or any pooled assets of the two or more trusts in accordance
with their respective interests;
(q) To do all such acts and exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may deem
necessary to carry out the purposes of the Plan.
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(r) Directed Investment Account. The powers granted to the Trustee shall
be exercised in the sole fiduciary discretion of the Trustee. However,
if elected in the Adoption Agreement, each Participant may direct the
Trustee to separate and keep separate all or a portion of his interest
in the Plan; and further each Participant is authorized and empowered,
in his sole and absolute discretion, to give directions to the Trustee
in such form as the Trustee may require concerning the investment of
the Participant's Directed Investment Account, which directions must
be followed by the Trustee subject, however, to restrictions on
payment of life insurance premiums. Neither the Trustee nor any other
persons including the Administrator or otherwise shall be under any
duty to question any such direction of the Participant or to review
any securities or other property, real or personal, or to make any
suggestions to the Participant in connection therewith, and the
Trustee shall comply as promptly as practicable with directions given
by the Participant hereunder. Any such direction may be of a
continuing nature or otherwise and may be revoked by the Participant
at any time in such form as the Trustee may require. The Trustee may
refuse to comply with any direction from the Participant in the event
the Trustee, in its sole and absolute discretion, deems such
directions improper by virtue of applicable law, and in such event,
the Trustee shall not be responsible or liable for any loss or expense
which may result. Any costs and expenses related to compliance with
the Participant's directions shall be borne by the Participant's
Directed Investment Account.
Notwithstanding anything hereinabove to the contrary, the Trustee
shall not, at any time after December 31, 1981, invest any portion of
a Directed Investment Account in "collectibles" within the meaning of
that term as employed in Code Section 408(m).
7.4 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee (or, if loans are
treated as Directed Investment pursuant to the Adoption Agreement, the
Administrator) may, in the Trustee's (or, if applicable, the
Administrator's) sole discretion, make loans to Participants or
Beneficiaries under the following circumstances: (1) loans shall be
made available to all Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made
available to other Participants; (3) loans shall bear a reasonable
rate of interest; (4) loans shall be adequately secured; and (5) shall
provide for periodic repayment over a reasonable period of time.
(b) Loans shall not be made to any Shareholder-Employee or Owner-Employee
unless an exemption for such loan is obtained pursuant to Act Section
408 and further provided that such loan would not be subject to tax
pursuant to Code Section 4975.
(c) Loans shall not be granted to any Participant that provide for a
repayment period extending beyond such Participant's Normal Retirement
Date.
(d) Loans made pursuant to this Section (when added to the outstanding
balance of all other loans made by the Plan to the Participant) shall
be limited to the lesser of:
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(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant
during the one year period ending on the day before the date on
which such loan is made, over the outstanding balance of loans
from the Plan to the Participant on the date on which such loan
was made, or
(2) the greater of (A) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Employee under the Plan,
or (B), if permitted pursuant to the Adoption Agreement,
$10,000.
For purposes of this limit, all plans of the Employer shall be
considered one plan. Additionally, with respect to any loan made prior
to January 1, 1987, the $50,000 limit specified in (1) above shall be
unreduced.
(e) No Participant loan shall take into account the present value of such
Participant's Qualified Voluntary Employee Contribution Account.
(f) Loans shall provide for level amortization with payments to be made
not less frequently than quarterly over a period not to exceed five
(5) years. However, loans used to acquire any dwelling unit which,
within a reasonable time, is to be used (determined at the time the
loan is made) as a principal residence of the Participant shall
provide for periodic repayment over a reasonable period of time that
may exceed five (5) years. Notwithstanding the foregoing, loans made
prior to January 1, 1987 which are used to acquire, construct,
reconstruct or substantially rehabilitate any dwelling unit which,
within a reasonable period of time is to be used (determined at the
time the loan is made) as a principal residence of the Participant or
a member of his family (within the meaning of Code Section 267(c)(4))
may provide for periodic repayment over a reasonable period of time
that may exceed five (5) years. Additionally, loans made prior to
January 1, 1987, may provide for periodic payments which are made less
frequently than quarterly and which do not necessarily result in level
amortization.
(g) An assignment or pledge of any portion of a Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any
insurance Contract purchased under the Plan, shall be treated as a
loan under this Section.
(h) Any loan made pursuant to this Section after August 18, 1985 where the
Vested interest of the Participant is used to secure such loan shall
require the written consent of the Participant's spouse in a manner
consistent with Section 6.5(a) provided the spousal consent
requirements of such Section apply to the Plan. Such written consent
must be obtained within the 90-day period prior to the date the loan
is made. Any security interest held by the Plan by reason of an
outstanding loan to the Participant shall be taken into account in
determining the amount of the death benefit or Pre-Retirement Survivor
Annuity. However, no spousal consent shall be required under this
paragraph if the total accrued benefit subject to the security is not
in excess of $3,500.
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(i) With regard to any loans granted or renewed on or after the last day
of the first Plan Year beginning after December 31, 1988, a
Participant loan program shall be established which must include, but
need not be limited to, the following:
(1) the identity of the person or positions authorized to administer
the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered,
including what constitutes a hardship or financial need if
selected in the Adoption Agreement;
(5) the procedure under the program for determining a reasonable
rate of interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken
to preserve plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by
reference and made a part of this plan. Furthermore, such Participant
loan program may be modified or amended in writing from time to time
without the necessity of amending this Section of the Plan.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the
Trust Fund. The Trustee shall not be responsible in any way for the
application of such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in the
Trustee's fee schedule (if the Trustee has such a schedule) or as agreed
upon in writing by the Employer and the Trustee. An individual serving as
Trustee who already receives full-time pay from the Employer shall not
receive compensation from this Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid
from the Trust Fund unless paid or advanced by the Employer. All taxes of
any kind and all kinds whatsoever that may be levied or assessed under
existing or future laws upon, or in respect of, the Trust Fund or the
income thereof, shall be paid from the Trust Fund.
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7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary Date
or receipt of the Employer's contribution for each Plan Year, the Trustee,
or its agent, shall furnish to the Employer and Administrator a written
statement of account with respect to the Plan Year for which such
contribution was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales or other
disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator deems
appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be
deemed an approval thereof. The approval by the Employer of any
statement of account shall be binding as to all matters embraced
therein as between the Employer and the Trustee to the same extent as
if the account of the Trustee had been settled by judgment or decree
in an action for a judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties;
provided, however, that nothing herein contained shall deprive the
Trustee of its right to have its accounts judicially settled if the
Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be required by the Act and the
regulations thereunder for any Plan Year, the Administrator shall
direct the Trustee to engage on behalf of all Participants an
independent qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of the Plan
in accordance with generally accepted auditing standards, within a
reasonable period after the close of the Plan Year, furnish to the
Administrator and the Trustee a report of his audit setting forth his
opinion as to whether any statements, schedules or lists, that are
required by Act Section 103 or the Secretary of Labor to be filed with
the Plan's annual report, are presented fairly in conformity with
generally accepted accounting principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and may, at
the election of the Administrator, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution,
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regulated and supervised and subject to periodic examination by a
state or federal agency, it shall transmit and certify the accuracy of
that information to the Administrator as provided in Act Section
103(b) within one hundred twenty (120) days after the end of the Plan
Year or such other date as may be prescribed under regulations of the
Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the Employer, at
least thirty (30) days before its effective date, a written notice of
his resignation.
(b) The Employer may remove the Trustee by mailing by registered or
certified mail, addressed to such Trustee at his last known address,
at least thirty (30) days before its effective date, a written notice
of his removal.
(c) Upon the death, resignation, incapacity, or removal of any Trustee, a
successor may be appointed by the Employer; and such successor, upon
accepting such appointment in writing and delivering same to the
Employer, shall, without further act, become vested with all the
estate, rights, powers, discretions, and duties of his predecessor
with like respect as if he were originally named as a Trustee herein.
Until such a successor is appointed, the remaining Trustee or Trustees
shall have full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to the death,
resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally named as
Trustee herein immediately upon the death, resignation, incapacity, or
removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he shall
furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which he
served as Trustee. This statement shall be either (i) included as part
of the annual statement of account for the Plan Year required under
Section 7.7 or (ii) set forth in a special statement. Any such special
statement of account should be rendered to the Employer no later than
the due date of the annual statement of account for the Plan Year. The
procedures set forth in Section 7.7 for the approval by the Employer
of annual statements of account shall apply to any special statement
of account rendered hereunder and approval by the Employer of any such
special statement in the manner provided in Section 7.7 shall have the
same effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty
or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by
Section 7.7 and this subparagraph.
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7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee at
the direction of the Administrator shall transfer the Vested interest, if
any, of such Participant in his account to another trust forming part of a
pension, profit sharing, or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided that the trust
to which such transfers are made permits the transfer to be made.
Notwithstanding the above, with respect to distributions made after
December 31, 1992, if the distributee of any "eligible rollover
distribution" (as defined in Code Section 402(f)(2)(A))(1)) elects to have
such distribution paid directly to an "eligible retirement plan", and (2)
specifies the "eligible retirement plan" to which such distribution is to
be paid (in such form and at such time as the Administrator may
prescribe), then the distribution shall made in the form of a direct
trustee-to-trustee transfer and shall be limited to the amount of the
distribution that would be includible in gross income if not transferred
in accordance with the preceding (determined without regard to Code
Sections 402(c) and 403(a)(4)).
For purposes of this section, the term "eligible retirement plan" has the
meaning given such term by Code Section 402(c)(8)(B), except that a
qualified trust shall be considered an eligible retirement plan only if it
is a defined contribution plan, the terms of which permit the acceptance
of rollover distributions.
7.11 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and save harmless the Trustee against any
and all claims, losses, damages, expenses and liabilities the Trustee may
incur in the exercise and performance of the Trustee's powers and duties
hereunder, unless the same are determined to be due to gross negligence or
willful misconduct.
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying Employer
securities" and "qualifying Employer real property," as those terms are
defined in the Act. However, no more than 100%, in the case of a Profit
Sharing Plan or 401(k) Plan, or 10%, in the case of a Money Purchase Plan,
of the fair market value of all the assets in the Trust Fund may be
invested in "qualifying Employer securities" and "qualifying Employer real
property".
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ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this Plan
subject to the limitations of this Section. Any such amendment shall
be adopted by formal action of the Employer's board of directors and
executed by an officer if the Employer is a corporation, partners of
the Employer and executed by such if the Employer is a partner, owner
of the Employer and executed by such person or an Employee if the
Employer is a sole proprietor. However, any amendment which affects
the rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and Administrator's
written consent. Any such amendment shall become effective as provided
therein upon its execution. The Trustee shall not be required to
execute any such amendment unless the amendment affects the duties of
the Trustee hereunder.
(b) The Employer may (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement when
such language is necessary to satisfy Code Sections 415 or 416 because
of the required aggregation of multiple plans, and (3) add certain
model amendments published by the Internal Revenue Service which
specifically provide that their adoption will not cause the Plan to be
treated as an individually designed plan. An Employer that amends the
Plan for any other reason, including a waiver of the minimum funding
requirement under Code Section 412(d), will no longer participate in
this Prototype Plan and will be considered to have an individually
designed plan.
(c) The Employer expressly delegates authority to the sponsoring
organization of this Plan, the right to amend this Plan by submitting
a copy of the amendment to each Employer who has adopted this Plan
after first having received a ruling or favorable determination from
the Internal Revenue Service that the Plan as amended qualifies under
Code Section 401(a) and the Act. For purposes of this Section, the
mass submitter shall be recognized as the agent of the sponsoring
organization. If the sponsoring organization does not adopt the
amendments made by the mass submitter, it wil no longer be identical
to or a minor modifier of the mass submitter plan.
(d) No amendment to the Plan shall be effective if it authorizes or
permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(e) Except as permitted by Regulations (including Regulation 1.411(d)-4),
no Plan amendment or transaction having the effect of a Plan amendment
(such as a merger, plan transfer or similar transaction) shall be
effective if it eliminates or reduces any "Section
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411(d)(6) protected benefit" or adds or modifies conditions relating
to "Section 411(d)(6) protected benefits" the result of which is a
further restriction on such benefit unless such protected benefits are
preserved with respect to benefits accrued as of the later of the
adoption date or effective date of the amendment. "Section 411(d)(6)
protected benefits" are benefits described in Code Section
411(d)(6)(A), early retirement benefits and retirement-type subsidies,
and optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination all amounts credited
to the affected Participants' Accounts shall become 100% Vested and
shall not thereafter be subject to forfeiture, and all unallocated
amounts shall be allocated to the accounts of all Participants in
accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall direct the
distribution of the assets to Participants in a manner which is
consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash (or in property
if permitted in the Adoption Agreement) or through the purchase of
irrevocable nontransferable deferred commitments from the Insurer.
Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411(d)(6) protected benefits"
as described in Section 8.1.
8.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would
have received if the Plan had terminated immediately before the transfer,
merger or consolidation and such merger or consolidation does not
otherwise result in the elimination or reduction of any "Section 411(d)(6)
protected benefits" as described in Section 8.1(e).
In the event that a money purchase plan of the Employer is merged or
restated as a profit sharing plan, monies accrued under the money purchase
plan shall continue to be subject to the distribution restrictions
contained in the money purchase plan prior to its merger or restatement as
a profit sharing plan.
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ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer hereunder by executing the
Adoption Agreement in form satisfactory to the Trustee, and it shall
provide such additional information as the Trustee may require. The
consent of the Trustee to act as such shall be signified by its
execution of the Adoption Agreement.
(b) Except as otherwise provided in this Plan, the affiliation of the
Employer and the participation of its Participants shall be separate
and apart from that of any other employer and its participants
hereunder.
9.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for
the employment of any Participant or Employee. Nothing contained in this
Plan shall be deemed to give any Participant or Employee the right to be
retained in the service of the Employer or to interfere with the right of
the Employer to discharge any Participant or Employee at any time
regardless of the effect which such discharge shall have upon him as a
Participant of this Plan.
9.3 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall be
payable to any person (including a Participant or his Beneficiary)
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void; and no such benefit shall in any manner
be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and the same
shall not be recognized except to such extent as may be required by
law.
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, for any reason, under any
provision of this Plan. At the time a distribution is to be made to or
for a Participant's or Beneficiary's benefit, such proportion of the
amount to be distributed as shall equal such indebtedness shall be
paid to the Plan, to apply against or discharge such indebtedness.
Prior to making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such
indebtedness is to be so paid in whole or part from his Participant's
accounts. If the Participant or Beneficiary does not agree that the
indebtedness is a valid claim against his Vested Participant's
accounts, he shall be entitled to a review of the validity of the
claim in accordance with procedures provided in Sections 2.12 and
2.13.
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(c) This provision shall not apply to a "qualified domestic relations
order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Administrator under
the provisions of the Retirement Equity Act of 1984. The Administrator
shall establish a written procedure to determine the qualified status
of domestic relations orders and to administer distributions under
such qualified orders. Further, to the extent provided under a
"qualified domestic relations order", a former spouse of a Participant
shall be treated as the spouse or surviving spouse for all purposes
under the Plan.
9.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act
and the laws of the State or Commonwealth in which the Employer's
principal office is located, other than its laws respecting choice of law,
to the extent not pre-empted by the Act.
9.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are
used herein in the singular or plural form, they shall be construed as
though they were also used in the other form in all cases where they would
so apply.
9.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee or the
Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee or Administrator, they shall be entitled
to be reimbursed from the Trust Fund for any and all costs, attorney's
fees, and other expenses pertaining thereto incurred by them for which
they shall have become liable.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by law,
it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any
other means, for any part of the corpus or income of any Trust Fund
maintained pursuant to the Plan or any funds contributed thereto to be
used for, or diverted to, purposes other than the exclusive benefit of
Participants, Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make a contribution under a mistake of
fact pursuant to Section 403(c)(2)(A) of the Act, the Employer may
demand repayment of such contribution at any time within one (1) year
following the time of payment and the Trustees shall return such
amount to the Employer within the one (1) year period. Earnings of the
Plan attributable to the contributions may not be returned to the
Employer but any losses attributable thereto must reduce the amount so
returned.
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(c) If this Plan is a nontrusteed, then no Contract will be purchased
under the Plan unless such Contract or a separate definite written
agreement between the Employer and the Insurer provides that: (1) no
value under Contracts providing benefits under the Plan or credits
determined by the Insurer (on account of dividends, earnings, or other
experience rating credits, surrender or cancellation credits) with
respect to such Contracts may be paid or returned to the Employer or
diverted to or used for other than the exclusive benefit of the
Participants or their Beneficiaries. However, any contribution made by
the Employer because of a mistake of fact must be returned to the
Employer within one year of the contribution.
If this Plan is funded by individual Contracts that provide a
Participant's benefit under the Plan, such individual Contracts shall
constitute the Participant's account balance. If this Plan is funded
by group contracts, under the group annuity or group insurance
contract, premiums or other consideration received by the insurance
company must be allocated to Participants' accounts under the Plan.
9.8 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted by
the Act and regulations thereunder, shall be bonded in an amount not less
than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond,
$500,000. The amount of funds handled shall be determined at the beginning
of each Plan Year by the amount of funds handled by such person, group, or
class to be covered and their predecessors, if any, during the preceding
Plan Year, or if there is no preceding Plan Year, then by the amount of
the funds to be handled during the then current year. The bond shall
provide protection to the Plan against any loss by reason of acts of fraud
or dishonesty by the Fiduciary alone or in connivance with others. The
surety shall be a corporate surety company (as such term is used in Act
Section 412(a)(2)), and the bond shall be in a form approved by the
Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the cost of such bonds shall be an expense of and may, at the election of
the Administrator, be paid from the Trust Fund or by the Employer.
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors, shall be
responsible for the validity of any Contract issued hereunder or for the
failure on the part of the Insurer to make payments provided by any such
Contract, or for the action of any person which may delay payment or
render a Contract null and void or unenforceable in whole or in part.
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9.10 INSURER'S PROTECTIVE CLAUSE
The Insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal
aspects of this Plan. The Insurer shall be protected and held harmless in
acting in accordance with any written direction of the Trustee, and shall
have no duty to see to the application of any funds paid to the Trustee,
nor be required to question any actions directed by the Trustee.
Regardless of any provision of this Plan, the Insurer shall not be
required to take or permit any action or allow any benefit or privilege
contrary to the terms of any Contract which it issues hereunder, or the
rules of the Insurer.
9.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or
to any guardian or committee appointed for such Participant or Beneficiary
in accordance with the provisions of this Plan, shall, to the extent
thereof, be in full satisfaction of all claims hereunder against the
Trustee and the Employer.
9.12 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required
to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted
authority.
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9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator, (3) the Trustee, and (4) any Investment Manager appointed
hereunder. The named Fiduciaries shall have only those specific powers,
duties, responsibilities, and obligations as are specifically given them
under the Plan. In general, the Employer shall have the sole
responsibility for making the contributions provided for under Section
4.1; and shall have the sole authority to appoint and remove the Trustee
and the Administrator; to formulate the Plan's "funding policy and
method"; and to amend the elective provisions of the Adoption Agreement or
terminate, in whole or in part, the Plan. The Administrator shall have the
sole responsibility for the administration of the Plan, which
responsibility is specifically described in the Plan. The Trustee shall
have the sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been assigned to
an Investment Manager, who shall be solely responsible for the management
of the assets assigned to it, all as specifically provided in the Plan.
Each named Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the
provisions of the Plan, authorizing or providing for such direction,
information or action. Furthermore, each named Fiduciary may rely upon any
such direction, information or action of another named Fiduciary as being
proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended
under the Plan that each named Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and
obligations under the Plan. No named Fiduciary shall guarantee the Trust
Fund in any manner against investment loss or depreciation in asset value.
Any person or group may serve in more than one Fiduciary capacity.
9.14 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.15 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, if, pursuant to a
timely application filed by or in behalf of the Plan, the Commissioner
of Internal Revenue Service or his delegate should determine that the
Plan does not initially qualify as a tax-exempt plan under Code
Sections 401 and 501, and such determination is not contested, or if
contested, is finally upheld, then if the Plan is a new plan, it shall
be void ab initio and all amounts contributed to the Plan, by the
Employer, less expenses paid, shall be returned within one year and
the Plan shall terminate, and the Trustee shall be discharged from all
further obligations. If the disqualification relates to an amended
plan, then the Plan shall operate as if it had not been amended and
restated.
(b) Except as specifically stated in the Plan, any contribution by the
Employer to the Trust Fund is conditioned upon the deductibility of
the contribution by the Employer under the Code and, to the extent any
such deduction is disallowed, the Employer may within one (1) year
following a final determination of the disallowance, whether by
agreement with
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the Internal Revenue Service or by final decision of a court of
competent jurisdiction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
(1) year following the disallowance. Earnings of the Plan attributable
to the excess contribution may not be returned to the Employer, but
any losses attributable thereto must reduce the amount so returned.
9.16 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner.
9.17 PAYMENT OF BENEFITS
Benefits under this Plan shall be paid, subject to Section 6.10 and
Section 6.11 only upon death, Total and Permanent Disability, normal or
early retirement, termination of employment, or upon Plan Termination.
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ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any Affiliated Employer may adopt this Plan and all
of the provisions hereof, and participate herein and be known as a
Participating Employer, by a properly executed document evidencing said
intent and will of such Participating Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to select the same
Adoption Agreement provisions as those selected by the Employer other
than the Plan Year, the Fiscal Year, and such other items that must,
by necessity, vary among employers.
(b) Each such Participating Employer shall be required to use the same
Trustee as provided in this Plan.
(c) The Trustee may, but shall not be required to, commingle, hold and
invest as one Trust Fund all contributions made by Participating
Employers, as well as all increments thereof.
(d) The transfer of any Participant from or to an Employer participating
in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights
under the Plan, and all amounts credited to such Participant's
accounts as well as his accumulated service time with the transferor
or predecessor, and his length of participation in the Plan, shall
continue to his credit.
(e) Any expenses of the Plan which are to be paid by the Employer or borne
by the Trust Fund shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to
the credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this Plan;
provided, however, that with respect to all of its relations with the
Trustee and Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer as
its agent. Unless the context of the Plan clearly indicates the contrary,
the word "Employer" shall be deemed to include each Participating Employer
as related to its adoption of the Plan.
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10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the
Employee involved shall carry with him his accumulated service and
eligibility. No such transfer shall effect a termination of employment
hereunder, and the Participating Employer to which the Employee is
transferred shall thereupon become obligated hereunder with respect to
such Employee in the same manner as was the Participating Employer from
whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during each Plan Year
shall be allocated among all Participants of all Participating Employers
in accordance with the provisions of this Plan. On the basis of the
information furnished by the Administrator, the Trustee shall keep
separate books and records concerning the affairs of each Participating
Employer hereunder and as to the accounts and credits of the Employees of
each Participating Employer. The Trustee may, but need not, register
Contracts so as to evidence that a particular Participating Employer is
the interested Employer hereunder, but in the event of an Employee
transfer from one Participating Employer to another, the employing
Employer shall immediately notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of
each and every Participating Employer and with the consent of the Trustee
where such consent is necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a Standardized Plan, any Participating Employer
shall be permitted to discontinue or revoke its participation in the Plan
at any time. At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions imposed
shall be delivered to the Trustee. The Trustee shall thereafter transfer,
deliver and assign Contracts and other Trust Fund assets allocable to the
Participants of such Participating Employer to such new Trustee as shall
have been designated by such Participating Employer, in the event that it
has established a separate pension plan for its Employees provided,
however, that no such transfer shall be made if the result is the
elimination or reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(e). If no successor is designated, the Trustee
shall retain such assets for the Employees of said Participating Employer
pursuant to the provisions of Article VII hereof. In no such event shall
any part of the corpus or income of the Trust Fund as it relates to such
Participating Employer be used for or diverted for purposes other than for
the exclusive benefit of the Employees of such Participating Employer.
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10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary rules
or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from making
a contribution which it would otherwise have made under the Plan by reason
of having no current or accumulated earnings or profits, or because such
earnings or profits are less than the contribution which it would
otherwise have made, then, pursuant to Code Section 404(a)(3)(B), so much
of the contribution which such Participating Employer was so prevented
from making may be made, for the benefit of the participating employees of
such Participating Employer, by other Participating Employers who are
members of the same affiliated group within the meaning of Code Section
1504 to the extent of their current or accumulated earnings or profits,
except that such contribution by each such other Participating Employer
shall be limited to the proportion of its total current and accumulated
earnings or profits remaining after adjustment for its contribution to the
Plan made without regard to this paragraph which the total prevented
contribution bears to the total current and accumulated earnings or
profits of all the Participating Employers remaining after adjustment for
all contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a contribution is
made under this paragraph shall not be required to reimburse the
contributing Participating Employers.
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ARTICLE XI
CASH OR DEFERRED PROVISIONS
Notwithstanding any provisions in the Plan to the contrary, the provisions
of this Article shall apply with respect to any 401(k) Profit Sharing
Plan.
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all Participants
made pursuant to Section 11.2(a), which amount shall be deemed an
Employer's Elective Contribution, plus
(b) If specified in E3 of the Adoption Agreement, a matching contribution
equal to a percentage or amount in the Adoption Agreement of the
Participant's Compensation, plus
(c) If specified in E4 of the Adoption Agreement, a discretionary amount,
if any, which shall be deemed an Employer's Non-Elective Contribution,
plus
(d) If specified in E5 of the Adoption Agreement, a Qualified Non-Elective
Contribution.
(e) Notwithstanding the foregoing, however, the Employer's contributions
for any Fiscal Year shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
All contributions by the Employer shall be made in cash or in such
property as is acceptable to the Trustee.
(f) Except, however, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even if it
exceeds current or accumulated Net Profit or the amount which is
deductible under Code Section 404.
(g) Employer Elective Contributions accumulated through payroll deductions
shall be paid to the Trustee as of the earliest date on which such
contributions can reasonably be segregated from the Employer's general
assets, but in any event within ninety (90) days from the date on
which such amounts would otherwise have been payable to the
Participant in cash. The provisions of Department of Labor regulations
2510.3-102 are incorporated herein by reference. Furthermore, any
additional Employer contributions which are allocable to the
Participant's Elective Account for a Plan Year shall be paid to the
Plan no later than the twelve-month period immediately following the
close of such Plan Year.
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11.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) If selected in the Adoption Agreement, each Participant may elect to
defer his Compensation which would have been received in the Plan
Year, but for the deferral election, subject to the limitations of
this Section and the Adoption Agreement. A deferral election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election, or if later, the latest of the
date the Employer adopts this cash or deferred arrangement, or the
date such arrangement first became effective. Any elections made
pursuant to this Section shall become effective as soon as is
administratively feasible.
Additionally, if elected in the Adoption Agreement, each Participant
may elect to defer and have allocated for a Plan Year all or a portion
of any cash bonus attributable to services performed by the
Participant for the Employer during such Plan Year and which would
have been received by the Participant on or before two and one-half
months following the end of the Plan Year but for the deferral. A
deferral election may not be made with respect to cash bonuses which
are currently available on or before the date the Participant executed
such election. Notwithstanding the foregoing, cash bonuses
attributable to services performed by the Participant during a Plan
Year but which are to be paid to the Participant later than two and
one-half months after the close of such Plan Year will be subjected to
whatever deferral election is in effect at the time such cash bonus
would have otherwise been received.
The amount by which Compensation and/or cash bonuses are reduced shall
be that Participant's Deferred Compensation and be treated as an
Employer Elective Contribution and allocated to that Participant's
Elective Account.
Once made, a Participant's election to reduce Compensation shall
remain in effect until modified or terminated. Modifications may be
made as specified in the Adoption Agreement, and terminations may be
made at any time. Any modification or termination of an election will
become effective as soon as is administratively feasible.
(b) The balance in each Participant's Elective Account shall be fully
Vested at all times and shall not be subject to Forfeiture for any
reason.
(c) Amounts held in the Participant's Elective Account and Qualified Non-
Elective Account may be distributable as permitted under the Plan, but
in no event prior to the earlier of:
(1) a Participant's separation from service, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the proven financial hardship of a Participant, subject to the
limitations of Section 11.8;
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(4) the termination of the Plan without establishment or maintenance
of another defined contribution plan, other than an employee
stock ownership plan (as defined in Code Section 4975(e) or 409)
or a simplified employee pension plan (as defined in Code
Section 408(k));
(5) the date of the sale by the Employer to an entity that is not an
Affiliated Employer of substantially all of the assets (within
the meaning of Code Section 409(d)(2)) with respect to a
Participant who continues employment with the corporation
acquiring such assets; or
(6) the date of the sale or other disposition by a corporation of
its interest in a subsidiary (within the meaning of Code Section
409(d)(3)) if such corporation continues to maintain the Plan,
but only with respect to a Participant who continues employment
with such subsidiary.
All distributions that may be made pursuant to one or more of
the foregoing events are subject to the spousal and Participant
consent requirements (if applicable) contained in Code Sections
401(a)(11) and 417. In addition, distributions after March 31,
1988, that are triggered by any of the events enumerated in
subparagraphs (4), (5) and (6) above shall be made in a lump
sum.
(d) In any Plan Year beginning after December 31, 1987, a
Participant's Deferred Compensation made under this Plan and all
other plans, contracts or arrangements of the Employer
maintaining this Plan shall not exceed the limitation imposed by
Code Section 402(g), as in effect for the calendar year in which
such Plan Year began. If such dollar limitation is exceeded
solely from elective deferrals made under this Plan or any other
Plan maintained by the Employer, a Participant will be deemed to
have notified the Administrator of such excess amount which
shall be distributed in a manner consistent with Section
11.2(f). This dollar limitation shall be adjusted annually
pursuant to the method provided in Code Section 415(d) in
accordance with Regulations.
(e) In the event a Participant has received a hardship distribution
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other
plan maintained by the Employer or from his Participant's
Elective Account pursuant to Section 11.8, then such Participant
shall not be permitted to elect to have Deferred Compensation
contributed to the Plan on his behalf for a period of twelve
(12) months following the receipt of the distribution.
Furthermore, the dollar limitation under Code Section 402(g)
shall be reduced, with respect to the Participant's taxable year
following the taxable year in which the hardship distribution
was made, by the amount of such Participant's Deferred
Compensation, if any, made pursuant to this Plan (and any other
plan maintained by the Employer) for the taxable year of the
hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation
1.402(g)-1(b)) under another
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qualified cash or deferred arrangement (as defined in Code
Section 401(k)), a simplified employee pension (as defined in
Code Section 408(k)), a salary reduction arrangement (within the
meaning of Code Section 3121(a)(5)(D)), a deferred compensation
plan under Code Section 457, or a trust described in Code
Section 501(c)(18) cumulatively exceed the limitation imposed by
Code Section 402(g) (as adjusted annually in accordance with the
method provided in Code Section 415(d) pursuant to Regulations)
for such Participant's taxable year, the Participant may, not
later than March 1st following the close of his taxable year,
notify the Administrator in writing of such excess and request
that his Deferred Compensation under this Plan be reduced by an
amount specified by the Participant. In such event, the
Administrator shall direct the Trustee to distribute such excess
amount (and any Income allocable to such excess amount) to the
Participant not later than the first April 15th following the
close of the Participant's taxable year. Distributions in
accordance with this paragraph may be made for any taxable year
of the Participant which begins after December 31, 1986. Any
distribution of less than the entire amount of Excess Deferred
Compensation and Income shall be treated as a pro rata
distribution of Excess Deferred Compensation and Income. The
amount distributed shall not exceed the Participant's Deferred
Compensation under the Plan for the taxable year. Any
distribution on or before the last day of the Participant's
taxable year must satisfy each of the following conditions:
(1) the Participant shall designate the distribution as Excess
Deferred Compensation;
(2) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution
of Excess Deferred Compensation.
Any distribution under this Section shall be made first from
unmatched Deferred Compensation and, thereafter, simultaneously
from Deferred Compensation which is matched and matching
contributions which relate to such Deferred Compensation.
However, any such matching contributions which are not Vested
shall be forfeited in lieu of being distributed.
For the purpose of this Section, "Income" means the amount of
income or loss allocable to a Participant's Excess Deferred
Compensation and shall be equal to the sum of the allocable gain
or loss for the taxable year of the Participant and the
allocable gain or loss for the period between the end of the
taxable year of the Participant and the date of distribution
("gap period"). The income or loss allocable to each such period
is calculated separately and is determined by multiplying the
income or loss allocable to the Participant's Deferred
Compensation for the respective period by a fraction. The
numerator of the fraction is the Participant's Excess Deferred
Compensation for the taxable year of the Participant. The
denominator is the balance, as of the last day of the
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respective period, of the Participant's Elective Account that is
attributable to the Participant's Deferred Compensation reduced
by the gain allocable to such total amount for the respective
period and increased by the loss allocable to such total amount
for the respective period.
In lieu of the "fractional method" described above, a "safe
harbor method" may be used to calculate the allocable income or
loss for the "gap period." Under such "safe harbor method,"
allocable income or loss for the "gap period" shall be deemed to
equal ten percent (10%) of the income or loss allocable to a
Participant's Excess Deferred Compensation for the taxable year
of the Participant multiplied by the number of calendar months
in the "gap period." For purposes of determining the number of
calendar months in the "gap period," a distribution occurring on
or before the fifteenth day of the month shall be treated as
having been made on the last day of the preceding month and a
distribution occurring after such fifteenth day shall be treated
as having been made on the first day of the next subsequent
month.
Income or loss allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of
the Participant shall be calculated from the first day of the
taxable year of the Participant to the date on which the
distribution is made pursuant to either the "fractional method"
or the "safe harbor method".
Notwithstanding the above, for any distribution under this
Section which is made after August 15, 1991, such distribution
shall not include any income for the "gap period". Further
provided, for any distribution under this Section which is made
after August 15, 1991, the amount of Income may be computed
using a reasonable method that is consistent with Section
4.3(c), provided such method is used consistently for all
Participants and for all such distributions for the Plan Year.
Notwithstanding the above, for the 1987 calendar year, Income
during the "gap period" shall not be taken into account.
(g) Notwithstanding the above, a Participant's Excess Deferred
Compensation shall be reduced, but not below zero, by any
distribution and/or recharacterization of Excess Contributions
pursuant to Section 11.5(a) for the Plan Year beginning with or
within the taxable year of the Participant.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair
market value of the Participant's Elective Account shall be used
to provide benefits to the Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to this Section
may be segregated into a separate account for each Participant
in a federally insured savings account, certificate of deposit
in a bank or savings and loan association, money market
certificate, or other short-term debt security
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acceptable to the Trustee until such time as the allocations
pursuant to Section 11.3 have been made.
(j) The Employer and the Administrator shall adopt a procedure
necessary to implement the salary reduction elections provided
for herein.
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the name
of each Participant to which the Administrator shall credit as of each
Anniversary Date, or other valuation date, all amounts allocated to
each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the
Employer's contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) With respect to the Employer's Elective Contribution made
pursuant to Section 11.1(a), to each Participant's Elective
Account in an amount equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer's Matching Contribution made
pursuant to Section 11.1(b), to each Participant's Account, or
Participant's Elective Account as selected in E3 of the Adoption
Agreement, in accordance with Section 11.1(b).
Except, however, a Participant who is not credited with a Year
of Service during any Plan Year shall or shall not share in the
Employer's Matching Contribution for that year as provided in E3
of the Adoption Agreement. However, for Plan Years beginning
after 1989, if this is a standardized Plan, a Participant shall
share in the Employer's Matching Contribution regardless of
Hours of Service.
(3) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 11.1(c), to each Participant's Account in
accordance with the provisions of Sections 4.3(b)(2) or
4.3(b)(3), whichever is applicable, 4.3(k) and 4.3(l).
(4) With respect to the Employer's Qualified Non-Elective
Contribution made pursuant to Section 11.1(d), to each
Participant's Qualified Non-Elective Contribution Account in the
same proportion that each such Participant's Compensation for
the year bears to the total Compensation of all Participants for
such year. However, for any Plan Year beginning prior to January
1, 1990, and if elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or after January 1,
1990, a Participant who is not credited with a Year of Service
during any Plan Year shall not share in the Employer's Qualified
Non-Elective Contribution for that year, unless required
pursuant to
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Section 4.3(h). In addition, the provisions of Sections 4.3(k)
and 4.3(l) shall apply with respect to the allocation of the
Employer's Qualified Non-Elective contribution.
(c) Notwithstanding anything in the Plan to the contrary, for Plan Years
beginning after December 31, 1988, in determining whether a Non-Key
Employee has received the required minimum allocation pursuant to
Section 4.3(f) such Non-Key Employee's Deferred Compensation and
matching contributions used to satisfy the "Actual Deferral
Percentage" test pursuant to Section 11.4(a) or the "Actual
Contribution Percentage" test of Section 11.6(a) shall not be taken
into account.
(d) Notwithstanding anything herein to the contrary, participants who
terminated employment during the Plan Year shall share in the salary
reduction contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
(e) Notwithstanding anything herein to the contrary (other than Sections
11.3(d) and 11.3(g)), any Participant who terminated employment during
the Plan Year for reasons other than death, Total and Permanent
Disability, or retirement shall or shall not share in the allocations
of the Employer's Matching Contribution made pursuant to Section
11.1(b), the Employer's Non-Elective Contributions made pursuant to
Section 11.1(c), the Employer's Qualified Non-Elective Contribution
made pursuant to Section 11.1(d), and Forfeitures as provided in the
Adoption Agreement. Notwithstanding the foregoing, for Plan Years
beginning after 1989, if this is a standardized Plan, any such
terminated Participant shall share in such allocations provided the
terminated Participant completed more than 500 Hours of Service.
(f) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent Disability, or
retirement shall share in the allocation of the Employer's Matching
Contribution made pursuant to Section 11.1(b), the Employer's Non-
Elective Contributions made pursuant to Section 11.1(c), the
Employer's Qualified Non-Elective Contribution made pursuant to
Section 11.1(d), and Forfeitures as provided in this Section
regardless of whether they completed a Year of Service during the Plan
Year.
(g) Notwithstanding any election in the Adoption Agreement to the
contrary, if this is a non-standardized Plan that would otherwise fail
to meet the requirements of Code Sections 401(a)(26), 410(b)(1), or
410(b)(2)(A)(i) and the Regulations thereunder because Employer
matching Contributions made pursuant to Section 11.1(b), Employer Non-
Elective Contributions made pursuant to Section 11.1(c) or Employer
Qualified Non-Elective Contributions made pursuant to Section 11.1(d)
have not been allocated to a sufficient number or percentage of
Participants for a Plan Year, then the following rules shall apply:
(1) The group of Participants eligible to share in the respective
contributions for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be
eligible as are necessary to satisfy the
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applicable test specified above. The specific participants who
shall become eligible under the terms of this paragraph shall be
those who are actively employed on the last day of the Plan Year
and, when compared to similarly situated Participants, have
completed the greatest number of Hours of Service in the Plan
Year.
(2) If after application of paragraph (1) above, the applicable test
is still not satisfied, then the group of Participants eligible
to share for the Plan Year shall be further expanded to include
the minimum number of Participants who are not actively employed
on the last day of the Plan Year as are necessary to satisfy the
applicable test. The specific Participants who shall become
eligible to share shall be those Participants, when compared to
similarly situated Participants, who have completed the greatest
number of Hours of Service in the Plan Year before terminating
employment.
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year beginning after December
31, 1986, the annual allocation derived from Employer Elective
Contributions and Qualified Non-Elective Contributions to a
Participant's Elective Account and Qualified Non-Elective Account
shall satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group
multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group
shall not be more than two percentage points. Additionally, the
"Actual Deferral Percentage" for the Highly Compensated
Participant group shall not exceed the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group
multiplied by 2. The provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-1(b) are incorporated herein by reference.
However, for Plan Years beginning after December 31, 1988, to
prevent the multiple use of the alternative method described in
(2) above and Code Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals pursuant to
Section 11.2 and to make Employee contributions or to receive
matching contributions under this Plan or under any other plan
maintained by the Employer or an Affiliated Employer shall have
his actual deferral ratio reduced pursuant to Regulation
1.401(m)-2, the provisions of which are incorporated herein by
reference.
(b) For the purposes of this Section "Actual Deferral Percentage" means,
with respect to the Highly Compensated Participant group and Non-
Highly Compensated Participant group for a Plan Year, the average of
the ratios, calculated separately for each Participant in
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such group, of the amount of Employer Elective Contributions and
Qualified Non-Elective Contributions allocated to each Participant's
Elective Account and Qualified Non-Elective Account for such Plan
Year, to such Participant's 414(s) Compensation for such Plan Year.
The actual deferral ratio for each Participant and the "Actual
Deferral Percentage" for each group, for Plan Years beginning after
December 31, 1988, shall be calculated to the nearest one-hundredth of
one percent of the Participant's 414(s) Compensation. Employer
Elective Contributions allocated to each Non-Highly Compensated
Participant's Elective Account shall be reduced by Excess Deferred
Compensation to the extent such excess amounts are made under this
Plan or any other plan maintained by the Employer.
(c) For the purpose of determining the actual deferral ratio of a Highly
Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) because such Participant
is either a "five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest 415 Compensation
during the year, the following shall apply:
(1) The combined actual deferral ratio for the family group (which
shall be treated as one Highly Compensated Participant) shall be
the greater of: (i) the ratio determined by aggregating Employer
Elective Contributions and 414(s) Compensation of all eligible
Family Members who are Highly Compensated Participants without
regard to family aggregation; and (ii) the ratio determined by
aggregating Employer Elective Contributions and 414(s)
Compensation of all eligible Family Members (including Highly
Compensated Participants). However, in applying the adjusted
$150,000 limit to 414(s) Compensation for Plan Years beginning
after December 31, 1988, Family Members shall include only the
affected Employee's spouse and any lineal descendants who have
not attained age 19 before the close of the Plan Year.
(2) The Employer Elective Contributions and 414(s) Compensation of
all Family Members shall be disregarded for purposes of
determining the "Actual Deferral Percentage" of the Non-Highly
Compensated Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of
more than one family group in a plan, all Participants who are
members of those family groups that include the Participant are
aggregated as one family group in accordance with paragraphs (1)
and (2) above.
(d) For the purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), if two or more plans which include cash or
deferred arrangements are considered one plan for the purposes
of Code Section 401(a)(4) or 410(b) (other than Code Section
401(b)(2)(A)(ii) as in effect for Plan Years beginning after
December 31, 1988), the cash or deferred arrangements included
in such plans shall be treated as one arrangement. In addition,
two or more cash or deferred arrangements may be considered as a
single arrangement for purposes of determining whether or not
such arrangements satisfy Code Sections
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401(a)(4), 410(b) and 401(k). In such a case, the cash or
deferred arrangements included in such plans and the plans
including such arrangements shall be treated as one arrangement
and as one plan for purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k). For plan years beginning after
December 31, 1989, plans may be aggregated under this paragraph
(e) only if they have the same plan year.
Notwithstanding the above, for Plan Years beginning after
December 31, 1988, an employee stock ownership plan described in
Code Section 4975(e)(7) may not be combined with this Plan for
purposes of determining whether the employee stock ownership
plan or this Plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(k).
(e) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two (2) or more cash or
deferred arrangements (other than a cash or deferred arrangement
which is part of an employee stock ownership plan as defined in
Code Section 4975(e)(7) for Plan Years beginning after December
31, 1988) of the Employer or an Affiliated Employer, all such
cash or deferred arrangements shall be treated as one cash or
deferred arrangement for the purpose of determining the actual
deferral ratio with respect to such Highly Compensated
Participant. However, for Plan Years beginning after December
31, 1988, if the cash or deferred arrangements have different
Plan Years, this paragraph shall be applied by treating all cash
or deferred arrangements ending with or within the same calendar
year as a single arrangement.
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's Elective
Contributions and Qualified Non-Elective Contributions do not satisfy one
of the tests set forth in Section 11.4, for Plan Years beginning after
December 31, 1986, the Administrator shall adjust Excess Contributions
pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following the end of
each Plan Year, the Highly Compensated Participant having the highest
actual deferral ratio shall have his portion of Excess Contributions
distributed to him and/or at his election recharacterized as a
voluntary Employee contribution pursuant to Section 4.7 until one of
the tests set forth in Section 11.4 is satisfied, or until his actual
deferral ratio equals the actual deferral ratio of the Highly
Compensated Participant having the second highest actual deferral
ratio. This process shall continue until one of the tests set forth in
Section 11.4 is satisfied. For each Highly Compensated Participant,
the amount of Excess Contributions is equal to the Elective
Contributions and Qualified Non-Elective Contributions made on behalf
of such Highly Compensated Participant (determined prior to the
application of this paragraph) minus the amount determined by
multiplying the Highly Compensated Participant's actual deferral ratio
(determined after application of this paragraph) by his 414(s)
Compensation. However, in determining the amount of Excess
Contributions to be distributed and/or recharacterized with respect to
an affected
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Highly Compensated Participant as determined herein, such amount shall
be reduced by any Excess Deferred Compensation previously distributed
to such affected Highly Compensated Participant for his taxable year
ending with or within such Plan Year. Any distribution and/or
recharacterization of Excess Contributions shall be made in accordance
with the following:
(1) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close of the Plan
Year following the Plan Year to which they are allocable;
(ii) shall be made first from unmatched Deferred Compensation
and, thereafter, simultaneously from Deferred Compensation
which is matched and matching contributions (even if
qualified) which relate to such Deferred Compensation.
However, any such matching contributions shall be forfeited
in lieu of being distributed;
(iii)shall be made from Qualified Non-Elective Contributions
only to the extent that Excess Contributions exceed the
balance in the Participant's Elective Account attributable
to Deferred Compensation and Employer matching
contributions.
(iv) shall be adjusted for Income; and
(v) shall be designated by the Employer as a distribution of
Excess Contributions (and Income).
(2) With respect to the recharacterization of Excess Contributions
pursuant to (a) above, such recharacterized amounts:
(i) shall be deemed to have occurred on the date on which the
last of those Highly Compensated Participants with Excess
Contributions to be recharacterized is notified of the
recharacterization and the tax consequences of such
recharacterization;
(ii) for Plan Years ending on or before August 8, 1988, may be
postponed but not later than October 24, 1988;
(iii)shall not exceed the amount of Deferred Compensation on
behalf of any Highly Compensated Participant for any Plan
Year;
(iv) shall be treated as voluntary Employee contributions for
purposes of Code Section 401(a)(4) and Regulation 1.401(k)-
1(b). However, for purposes of Sections 2.2 and 4.3(f),
recharacterized Excess Contributions continue to be treated
as Employer contributions that are Deferred Compensation.
For Plan Years beginning after December 31, 1988,
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Excess Contributions recharacterized as voluntary Employee
contributions shall continue to be nonforfeitable and
subject to the same distribution rules provided for in
Section 11.2(c);
(v) which relate to Plan Years ending on or before October 24,
1988, may be treated as either Employer contributions or
voluntary Employee contributions and therefore shall not be
subject to the restrictions of Section 11.2(c);
(vi) are not permitted if the amount recharacterized plus
voluntary Employee contributions actually made by such
Highly Compensated Participant, exceed the maximum amount
of voluntary Employee contributions (determined prior to
application of Section 11.6) that such Highly Compensated
Participant is permitted to make under the Plan in the
absence of recharacterization;
(vii) shall be adjusted for Income.
(3) Any distribution and/or recharacterization of less than the
entire amount of Excess Contributions shall be treated as a pro
rata distribution and/or recharacterization of Excess
Contributions and Income.
(4) Excess Contributions of Participants who are subject to the
family member aggregation rules shall be allocated among the
family members in proportion to the Elective Contributions (and
amounts treated as Elective Contributions) of each family member
that is combined to determine the combined actual deferral
percentage.
(b) Within twelve (12) months after the end of the Plan Year, the Employer
shall make a special Qualified Non-Elective Contribution on behalf of
any or all Non-Highly Compensated Participants in an amount sufficient
to satisfy one of the tests set forth in Section 11.4(a).
(c) For purposes of this Section, "Income" means the income or loss
allocable to Excess Contributions which shall equal the sum of the
allocable gain or loss for the Plan Year and the allocable gain or
loss for the period between the end of the Plan Year and the date of
distribution ("gap period"). The income or loss allocable to Excess
Contributions for the Plan Year and the "gap period" is calculated
separately and is determined by multiplying the income or loss for the
Plan Year or the "gap period" by a fraction. The numerator of the
fraction is the Excess Contributions for the Plan Year. The
denominator of the fraction is the total of the Participant's Elective
Account attributable to Elective Contributions and the Participant's
Qualified Non-Elective Account as of the end of the Plan Year or the
"gap period," reduced by the gain allocable to such total amount for
the Plan Year or the "gap period" and increased by the loss allocable
to such total amount for the Plan Year or the "gap period."
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In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap
period". Under such "safe harbor method", allocable Income for the
"gap period" shall be deemed to equal ten percent (10%) of the Income
allocable to Excess Contributions for the Plan Year of the Participant
multiplied by the number of calendar months in the "gap period". For
purposes of determining the number of calendar months in the "gap
period", a distribution occurring on or before the fifteenth day of
the month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth day
shall be treated as having been made on the first day of the next
subsequent month.
Notwithstanding the above, for Plan Years which began in 1987, Income
during the "gap period" shall not be taken into account.
(d) Any amounts not distributed or recharacterized within 2 1/2 months
after the end of the Plan Year shall be subject to the 10% Employer
excise tax imposed by Code Section 4979.
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage," for Plan Years beginning after
the later of the Effective Date of this Plan or December 31, 1986, for
the Highly Compensated Participant group shall not exceed the greater
of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group; or
(2) the lesser of 200 percent of such percentage for the Non-Highly
Compensated Participant group, or such percentage for the Non-
Highly Compensated Participant group plus 2 percentage points.
However, for Plan Years beginning after December 31, 1988, to
prevent the multiple use of the alternative method described in
this paragraph and Code Section 401(m)(9)(A), any Highly
Compensated Participant eligible to make elective deferrals
pursuant to Section 11.2 or any other cash or deferred
arrangement maintained by the Employer or an Affiliated Employer
and to make Employee contributions or to receive matching
contributions under any plan maintained by the Employer or an
Affiliated Employer shall have his actual deferral ratio reduced
pursuant to Regulation 1.401(m)-2. The provisions of Code
Section 401(m) and Regulations 1.401(m)-1(b) and 1.401(m)-2 are
incorporated herein by reference.
(b) For the purposes of this Section and Section 11.7, "Actual
Contribution Percentage" for a Plan Year means, with respect to the
Highly Compensated Participant group and Non-Highly Compensated
Participant group, the average of the ratios (calculated separately
for each Participant in each group) of:
(1) the sum of Employer matching contributions made pursuant to
Section 11.1(b) (to the extent such matching contributions are
not used to satisfy the tests set
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forth in Section 11.4), and voluntary Employee contributions
made pursuant to Section 4.7 and Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 on behalf of each such Participant for such Plan
Year; to
(2) the Participant's "414(s) Compensation" for such Plan Year.
(c) For purposes of determining the "Actual Contribution Percentage" and
the amount of Excess Aggregate Contributions pursuant to Section
11.7(d), only Employer matching contributions (excluding matching
contributions forfeited pursuant to Section 11.2(f), 11.5(a) or
11.7(a)) contributed to the Plan prior to the end of the succeeding
Plan Year shall be considered. In addition, the Administrator may
elect to take into account, with respect to Employees eligible to have
Employer matching contributions made pursuant to Section 11.1(b) or
voluntary Employee contributions made pursuant to Section 4.7
allocated to their accounts, elective deferrals (as defined in
Regulation 1.402(g)-1(b)) and qualified non-elective contributions (as
defined in Code Section 401(m)(4)(C)) contributed to any plan
maintained by the Employer. Such elective deferrals and qualified non-
elective contributions shall be treated as Employer matching
contributions subject to Regulation 1.401(m)-1(b)(2) which is
incorporated herein by reference. However, for Plan Years beginning
after December 31, 1988, the Plan Year must be the same as the plan
year of the plan to which the elective deferrals and the qualified
non-elective contributions are made.
(d) For the purpose of determining the actual contribution ratio of a
Highly Compensated Employee who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) because such Employee is
either a "five percent owner" of the Employer or one of the ten (10)
Highly Compensated Employees paid the greatest 415 Compensation during
the year, the following shall apply:
(1) The combined actual contribution ratio for the family group
(which shall be treated as one Highly Compensated Participant)
shall be the greater of: (i) the ratio determined by aggregating
Employer matching contributions made pursuant to Section 11.1(b)
(to the extent such matching contributions are not used to
satisfy the tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and 414(s) Compensation of all eligible Family
Members who are Highly Compensated Participants without regard
to family aggregation; and (ii) the ratio determined by
aggregating Employer matching contributions made pursuant to
Section 11.1(b) (to the extent such matching contributions are
not used to satisfy the tests set forth in Section 11.4),
voluntary Employee contributions made pursuant to Section 4.7,
Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and 414(s) Compensation
of all eligible Family Members (including Highly Compensated
Participants). However, in applying the adjusted $150,000 limit
to 414(s) Compensation for Plan Years beginning after December
31, 1988, Family Members shall include only the affected
Employee's spouse and any
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lineal descendants who have not attained age 19 before the close
of the Plan Year.
(2) The Employer matching contributions made pursuant to Section
11.1(b) (to the extent such matching contributions are not used
to satisfy the tests set forth in Section 11.4), voluntary
Employee contributions made pursuant to Section 4.7, Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and 414(s) Compensation
of all Family Members shall be disregarded for purposes of
determining the "Actual Contribution Percentage" of the Non-
Highly Compensated Participant group except to the extent taken
into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of
more than one family group in a plan, all Participants who are
members of those family groups that include the Participant are
aggregated as one family group in accordance with paragraphs (1)
and (2) above.
(e) For purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(m), if two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made are treated
as one plan for purposes of Code Sections 401(a)(4) or 410(b) (other
than the average benefits test under Code Section 410(b)(2)(A)(ii) as
in effect for Plan Years beginning after December 31, 1988), such
plans shall be treated as one plan. In addition, two or more plans of
the Employer to which matching contributions, Employee contributions,
or both, are made may be considered as a single plan for purposes of
determining whether or not such plans satisfy Code Sections 401(a)(4),
410(b) and 401(m). In such a case, the aggregated plans must satisfy
this Section and Code Sections 401(a)(4), 410(b) and 401(m) as though
such aggregated plans were a single plan. For plan years beginning
after December 31, 1989, plans may be aggregated under this paragraph
only if they have the same plan year.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section
4975(e)(7) may not be aggregated with this Plan for purposes of
determining whether the employee stock ownership plan or this Plan
satisfies this Section and Code Sections 401(a)(4), 410(b) and 401(m).
(f) If a Highly Compensated Participant is a Participant under two or more
plans (other than an employee stock ownership plan as defined in Code
Section 4975(e)(7) for Plan Years beginning after December 31, 1988)
which are maintained by the Employer or an Affiliated Employer to
which matching contributions, Employee contributions, or both, are
made, all such contributions on behalf of such Highly Compensated
Participant shall be aggregated for purposes of determining such
Highly Compensated Participant's actual contribution ratio. However,
for Plan Years beginning after December 31, 1988, if the plans have
different plan years, this paragraph shall be applied by treating all
plans ending with or within the same calendar year as a single plan.
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(g) For purposes of Section 11.6(a) and 11.7, a Highly Compensated
Participant and a Non-Highly Compensated Participant shall include any
Employee eligible to have matching contributions made pursuant to
Section 11.1(b) (whether or not a deferred election was made or
suspended pursuant to Section 11.2(e)) allocated to his account for
the Plan Year or to make salary deferrals pursuant to Section 11.2 (if
the Employer uses salary deferrals to satisfy the provisions of this
Section) or voluntary Employee contributions pursuant to Section 4.7
(whether or not voluntary Employee contributions are made) allocated
to his account for the Plan Year.
(h) For purposes of this Section, "Matching Contribution" shall mean an
Employer contribution made to the Plan, or to a contract described in
Code Section 403(b), on behalf of a Participant on account of an
Employee contribution made by such Participant, or on account of a
participant's deferred compensation, under a plan maintained by the
Employer.
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that for Plan Years beginning after December 31, 1986,
the "Actual Contribution Percentage" for the Highly Compensated
Participant group exceeds the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group pursuant to Section 11.6(a),
the Administrator (on or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than the
close of the following Plan Year) shall direct the Trustee to
distribute to the Highly Compensated Participant having the highest
actual contribution ratio, his portion of Excess Aggregate
Contributions (and Income allocable to such contributions) or, if
forfeitable, forfeit such non-Vested Excess Aggregate Contributions
attributable to Employer matching contributions (and Income allocable
to such Forfeitures) until either one of the tests set forth in
Section 11.6(a) is satisfied, or until his actual contribution ratio
equals the actual contribution ratio of the Highly Compensated
Participant having the second highest actual contribution ratio. This
process shall continue until one of the tests set forth in Section
11.6(a) is satisfied. The distribution and/or Forfeiture of Excess
Aggregate Contributions shall be made in the following order:
(1) Employer matching contributions forfeited pursuant to Section
11.5(a)(1);
(2) Any unmatched voluntary Employee contributions shall be
distributed;
(3) Unmatched Deferred Compensation taken into account under the
actual contribution percentage test shall be distributed;
(4) Matched voluntary Employee contributions shall be distributed
and, simultaneously, matching contributions that relate to such
voluntary contributions shall be forfeited;
(5) Matched Deferred Compensation taken into account under the
actual contribution percentage test shall be distributed and,
simultaneously, matching contributions that relate to such
Deferred Compensation shall be forfeited;
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(6) Any remaining Employer matching contributions shall be
distributed;
(7) Qualified Non-Elective Contributions taken into account under
the actual contribution percentage test shall be distributed.
(b) Any distribution or Forfeiture of less than the entire amount of
Excess Aggregate Contributions (and Income) shall be treated as a pro
rata distribution of Excess Aggregate Contributions and Income.
Distribution of Excess Aggregate Contributions shall be designated by
the Employer as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall be
treated in accordance with Section 4.3. However, no such Forfeiture
may be allocated to a Highly Compensated Participant whose
contributions are reduced pursuant to this Section.
(c) Excess Aggregate Contributions attributable to amounts other than
voluntary Employee contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes
of Code Sections 404 and 415 even if distributed from the Plan.
(d) For the purposes of this Section and Section 11.6, "Excess Aggregate
Contributions" means, with respect to any Plan Year, the excess of:
(1) the aggregate amount of Employer matching contributions made
pursuant to Section 11.1(b) (to the extent such contributions
are taken into account pursuant to Section 11.6(a)), voluntary
Employee contributions made pursuant to Section 4.7, Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified Non-
Elective Contributions or elective deferrals taken into account
pursuant to Section 11.6(c) actually made on behalf of the
Highly Compensated Participant group for such Plan Year, over
(2) the maximum amount of such contributions permitted under the
limitations of Section 11.6(a).
(e) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the total Employer matching
contributions made pursuant to Section 11.1(b) (to the extent taken
into account pursuant to Section 11.6(a)), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section 11.6(c) on behalf of
the Highly Compensated Participant (determined prior to the
application of this paragraph) minus the amount determined by
multiplying the Highly Compensated Participant's actual contribution
ratio (determined after application of this paragraph) by his 414(s)
Compensation. The actual contribution ratio must be rounded to the
nearest one-hundredth of one percent for Plan Years beginning after
December 31, 1988. In no case shall the amount of Excess Aggregate
Contribution with respect to any Highly Compensated Participant exceed
the amount of Employer
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matching contributions made pursuant to Section 11.1(b) (to the extent
taken into account pursuant to Section 11.6(a)), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section 11.6(c) on behalf of
such Highly Compensated Participant for such Plan Year.
(f) The determination of the amount of Excess Aggregate Contributions with
respect to any Plan Year shall be made after the first determining the
Excess Contributions, if any, to be treated as voluntary Employee
contributions due to recharacterization for the plan year of any other
qualified cash or deferred arrangement (as defined in Code Section
401(k)) maintained by the Employer that ends with or within the Plan
Year or which are treated as voluntary Employees contributions due to
recharacterization pursuant to Section 11.5.
(g) Excess Aggregate Contributions of Participants who are subject to the
family member aggregation rules shall be allocated among the family
members in proportion to the voluntary Employee contributions, if
applicable, and matching contributions (or amounts treated as matching
contributions) of each family member that is combined to determine the
combined actual contribution percentage.
(h) Notwithstanding the above, within twelve (12) months after the end of
the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution on behalf of any or all Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the tests set
forth in Section 11.6. A separate accounting shall be maintained for
the purpose of excluding such contributions from the "Actual Deferral
Percentage" tests pursuant to Section 11.4.
(i) For purposes of this Section, "Income" means the income or loss
allocable to Excess Aggregate Contributions which shall equal the sum
of the allocable gain or loss for the Plan Year and the allocable gain
or loss for the period between the end of the Plan Year and the date
of distribution ("gap period"). The income or loss allocable to Excess
Aggregate Contributions for the Plan Year and the "gap period" is
calculated separately and is determined by multiplying the income or
loss for the Plan Year or the "gap period" by a fraction. The
numerator of the fraction is the Excess Aggregate Contributions for
the Plan Year. The denominator of the fraction is the total
Participant's Account and Voluntary Contribution Account attributable
to Employer matching contributions subject to Section 11.6, voluntary
Employee contributions made pursuant to Section 4.7, and any Qualified
Non-Elective Contributions and elective deferrals taken into account
pursuant to Section 11.6(c) as of the end of the Plan Year or the "gap
period", reduced by the gain allocable to such total amount for the
Plan Year or the "gap period" and increased by the loss allocable to
such total amount for the Plan Year or the "gap period".
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap
period". Under such "safe harbor method", allocable Income for the
"gap period" shall be deemed to equal ten percent (10%) of the
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<PAGE>
Income allocable to Excess Aggregate Contributions for the Plan Year
of the Participant multiplied by the number of calendar months in the
"gap period". For purposes of determining the number of calendar
months in the "gap period", a distribution occurring on or before the
fifteenth day of the month shall be treated as having been made on the
last day of the preceding month and a distribution occurring after
such fifteenth day shall be treated as having been made on the first
day of the next subsequent month.
The Income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contributions shall be determined and
distributed as if such recharacterized Elective Contributions had been
distributed as Excess Contributions.
Notwithstanding the above, for Plan Years which began in 1987, Income
during the "gap period" shall not be taken into account.
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall direct
the Trustee to distribute to any Participant in any one Plan Year up
to the lesser of (1) 100% of his Vested accounts, as specified in the
Adoption Agreement, valued as of the last Anniversary Date or other
valuation date or (2) the amount necessary to satisfy the immediate
and heavy financial need of the Participant. Any distribution made
pursuant to this Section shall be deemed to be made as of the first
day of the Plan Year or, if later, the valuation date immediately
preceding the date of distribution, and the account from which the
distribution is made shall be reduced accordingly. Withdrawal under
this Section shall be authorized only if the distribution is on
account of one of the following or any other items permitted by the
Internal Revenue Service:
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of
his dependents (as defined in Code Section 152) or necessary for
those persons to obtain medical care as described in Code
Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his
spouse, children, or dependents; or
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) Distributions may be made from the Participant's Vested accounts.
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<PAGE>
(c) No distribution shall be made pursuant to this Section unless the
Administrator, based upon the Participant's representation and such
other facts as are known to the Administrator, determines that all of
the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant. The amount of the
immediate and heavy financial need may include any amounts
necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the
distribution.
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and voluntary
Employee contributions will be suspended for at least twelve
(12) months after receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals for
the Participant's taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable
limit under Code Section 402(g) for such next taxable year less
the amount of such Participant's elective deferrals for the
taxable year of the hardship distribution.
(d) Notwithstanding the above, distributions from the Participant's
Elective Account and Qualified Non-Elective Account pursuant to this
Section shall be limited solely to the Participant's Deferred
Compensation and any income attributable thereto credited to the
Participant's Elective Account as of December 31, 1988.
(e) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
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ADOPTION AGREEMENT FOR
DIVERSIFIED INVESTMENT ADVISORS, INC.
NON-STANDARDIZED 401(K) PROFIT SHARING PLAN
The undersigned Employer adopts the Diversified Investment Advisors, Inc. Non-
Standardized 401(k) Profit Sharing Plan for those Employees who shall qualify as
Participants hereunder, to be known as the
A1 McLeod, Inc. 401(k) Profit Sharing Plan
-------------------------------------------------------
(Enter Plan Name)
It shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may
result in disqualification of the Plan.
EMPLOYER INFORMATION
B1 Name of Employer McLeod, Inc.
-----------------------------------------------------
-----------------------------------------------------
B2 Address 6400 C Street, SE
-----------------------------------------------------
Cedar Rapids , IA 52406
---------------- ---------------- ---------------
City State Zip
Telephone (319) 366-1100
-----------------------------------------------------
B3 Employer Identification Number 42 - 1407240
---- ----------------------------------
B4 Date Business Commenced November 20, 1990
B5 TYPE OF ENTITY
a. ( ) S Corporation
b. ( ) Professional Service Corporation
c. (X) Corporation
d. ( ) Sole Proprietorship
e. ( ) Partnership
f. ( ) Other
----------------------------------------
AND, is the Employer a member of...
g. a controlled group? ( ) Yes (X) No
h. an affiliated service group? ( ) Yes (X) No
Copyright 1994-N Diversified Investment Advisors, Inc.
1
<PAGE>
B6 (X) NAME(S) OF TRUSTEE(S) a. Investors Bank & Trust Company
----------------------------------
b.
----------------------------------
c.
----------------------------------
( ) Not applicable. Plan assets invested solely in group annuity
Contract(s).
B7 TRUSTEE(S) ADDRESS
a. ( ) Not applicable. Plan assets invested solely in Contract(s).
b. ( ) Use Employer Address
c. (X) 200 Clarendon Street
----------------------------------------------------------
Street
Boston , MA 02116
------------------------- ---------------- ---------------
City State Zip
B8 LOCATION OF EMPLOYER'S PRICIPAL OFFICE:
a. (X) State b. ( ) Commonwealth of c. Iowa and this Plan and,
------
if applicable, Trust shall be governed under the same.
B9 EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Commencing on a. January 1st (e.g., January 1st) and
--------- -------------------
month day
ending on b. December 31st .
------------------------ --------------
month day
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement of the Diversified Investment Advisors, Inc. Non-
Standardized 401(k) Profit Sharing Plan shall:
a. ( ) establish a new Plan and, if applicable, Trust effective as of
_____(hereinafter called the "Effective Date").
2
<PAGE>
b. (X) constitute an amendment and restatement in its entirety of a
previously established qualified Plan and, if applicable, Trust
of the Employer which was effective November 21, 1990
--------------------
(hereinafter called the "Effective Date"). Except as otherwise
provided in the Plan, the effective date of this amendment and
restatement is April 1, 1997 .
---------------
( ) Tax Reform Act of 1986 (TRA '86).
NOTE: Check the above TRA '86 box (as well as the first box in C1b
above) for amendments and restatements which are bringing the
Plan into compliance with all applicable provisions of TRA '86
(and related laws and Regulations subject to the TRA '86 remedial
amendment period) retroactive to the initial effective dates
provided by TRA '86 and such laws and Regulations. Complete only
the first box in C1b. above for all other amendments and
restatements.
C2 PLAN YEAR means the 12 consecutive month period:
Commencing on a. January 1st (e.g., January 1st)
--------------------------------
and ending on b. December 31st .
--------------------------------
IS THERE A SHORT PLAN YEAR?
c. ( ) No
d. (X) Yes, beginning November 21, 1990
-------------------
and ending. December 31, 1990 .
-------------------
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date)
a. December 31st
-------------------------------
month day
C4 PLAN NUMBER assigned by the Employer (select one)
a. ( ) 001 b. (X) 002 c. ( ) 003 d. ( ) Other
C5 NAME OF PLAN ADMINISTRATOR (Document provides for the Employer to appoint
an Administrator. If none is named, the Employer will become the
Administrator.)
a. (X) Employer (Use Employer address)
3
<PAGE>
b. ( ) Name
Address
,
-------------------------- ------------------ -----------
City State Zip
Telephone
Administrator's I.D. Number - -
--------- --------------------
C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS
a. (X) Employer (Use Employer address)
b. ( ) Name
Address
,
-------------------------- ------------------ -----------
City State Zip
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean:
a. (X) all Employees who have satisfied the eligibility requirements.
b. ( ) all Employees who have satisfied the eligibility requirements except
those checked below:
1. ( ) Employees paid by commissions only.
2. ( ) Employees hourly paid.
3. ( ) Employees paid by salary.
4. ( ) Employees whose employment is governed by a collective bargaining
agreement between the Employer and "Employee representatives"
under which retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives"
does not include any organization more than half of whose members
are Employees who are owners, officers, or executives of the
Employer.
5. ( ) Highly Compensated Employees.
6. ( ) Employees who are non-resident aliens who received no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employer which constitutes income from sources within the United
States (within the meaning of Code Section 861(a)(3)).
7. ( ) Other .
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NOTE: For purposes of this section, the term Employee shall include all
Employees of this Employer and any leased employees deemed to be
Employees under Code Section 414(n) or 414(o).
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D2 EMPLOYEES OF AFFILIATED EMPLOYERS (Plan Section 1.16)
Employees of Affiliated Employers:
a. ( ) all will not or N/A
b. (X) some will
c. ( ) all will
be treated as Employees of the Employer adopting the Plan.
NOTE: If D2b is elected, each Affiliated Employer that adopts the Plan
should execute this Adoption Agreement as a Participating
Employer. If D2c is elected, each Affiliated Employer should
execute this Adoption Agreement as a Participating Employer.
D3 HOURS OF SERVICE (Plan Section 1.32) will be determined on the basis of the
method selected below. Only one method may be selected. The method selected
will be applied to all Employees covered under the Plan.
a. (X) On the basis of actual hours for which an Employee is paid or
entitled to payment.
b. ( ) On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under the Plan such Employee would
be credited with at least one (1) Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be credited with
forty-five (45) Hours of Service if under the Plan such Employee
would be credited with at least one (1) Hour of Service during
the week.
d. ( ) On the basis of semi-monthly payroll periods. An Employee will be
credited with ninety-five (95) Hours of Service if under the Plan
such Employee would be credited with at least one (1) Hour of
Service during the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be credited with
one hundred ninety (190) Hours of Service if under the Plan such
Employee would be credited with at least one (1) Hour of Service
during the month.
D4 YEARS OF SERVICE (Plan Section 1.75) will be based on the applicable
computation periods selected below. The computation periods will be applied
to all Employees covered under the Plan (check either 1 or 2 in a and b
below).
a. Eligibility Computation Period
1. (X) Plan Years after initial eligibility computation period.
2. ( ) Begins on employment commencement date or re-employment
commencement date and anniversaries of employment commencement
date or re-employment commencement date, as applicable.
b. Vesting Computation Period
1. (X) Begins on first day of Plan Year.
2. ( ) Begins on employment commencement date or re-employment
commencement date and anniversaries of employment commencement
date and re-employment commencement date, as applicable.
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D5 BREAK IN SERVICE
a. ( ) Pre-break and post-break in service contingent on number of years
of break in service (Plan Section 6.4(g)(3)).
b. (X) All Years of Service counted for vesting and eligibility (Plan
Section 6.4(g)(4)).
D6 CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
(Check either a OR b, c, and, if applicable, d)
Any Eligible Employee will be eligible to participate in the Plan if such
Eligible Employee has satisfied the service and age requirements, if any,
specified below:
a. ( ) NO AGE OR SERVICE REQUIRED.
b. (X) SERVICE REQUIREMENT (may not exceed 1 year)
1. ( ) None
2. ( ) 1/2 Year of Service
3. (X) 1 Expected Year of Service. May enter the Plan after the
following actual months of service:
(a.) ( ) 6 months
(b.) (X) Other 3 months (must be less than one year)
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4. ( ) 1 Year of Service
5. ( ) Other
NOTE: If the Year(s) of Service selected is or includes a fractional
year (other than Expected Year of Service), an Employee will not
be required to complete any specified number of Hours of Service
to receive credit for such fractional year. If expressed in
months of service, an Employee will not be required to complete
any specified number of Hours of Service in a particular month.
c. (X) AGE REQUIREMENT (may not exceed 21)
1. ( ) N/A. No age requirement
2. ( ) 20 1/2
3. (X) 21
4. ( ) Other
------------------------------------
d. ( ) FOR NEW PLANS ONLY - Regardless of any of the above age or
service requirements, any Eligible Employee who was employed on
the Effective Date of the Plan shall be eligible to participate
hereunder and shall enter the Plan as of such date.
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D7 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee shall become a Participant as of:
a. ( ) the first day of the Plan Year in which he met the requirements.
b. ( ) the first day of the Plan Year in which he met the requirements,
if he met the requirements in the first 6 months of the Plan
Year, or as of the first day of the next succeeding Plan Year if
he met the requirements in the last 6 months of the Plan Year.
c. (X) the earlier of the first day of the seventh month or the first
day of the Plan Year coinciding with or next following the date
on which he met the requirements.
d. ( ) the first day of the Plan Year next following the date on which
he met the requirements. (Eligibility must be 1/2 Year of Service
or less and age 20 1/2 or less.)
e. ( ) the first day of the month coinciding with or next following the
date on which he met the requirements.
f. ( ) Other: __________________________________________, provided that
an Employee who has satisfied the maximum age and service
requirements that are permissible in Section D6 above and who is
otherwise entitled to participate, shall commence participation
no later than the earlier of (1) 6 months after such requirements
are satisfied, or (2) the first day of the first Plan Year after
such requirements are satisfied, unless the Employee separates
from service before such participation date.
D8 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
The vesting schedule, based on number of Years of Service, shall be as
follows:
a. ( ) 100% upon entering Plan (required if eligibility requirement is
greater than one (1) Year of Service).
b. ( ) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. ( ) 0-1 year 0% e. (X) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. ( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
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h. ( ) Other (must be at least as liberal as either c or g above).
Years of Service Percentage
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
i. ( ) Not applicable. All contributions are 100% Vested by definition.
D9 FOR AMENDED PLANS (Plan Section 6.4(f))
a. (X) Vesting schedule has not been amended.
b. ( ) Vesting schedule has been amended and amended vesting schedule
is more favorable in all years.
1.( ) Amended effective for all Employees who have at least one Hour
of Service in any Plan Year beginning after December 31, 1988.
2.( ) Other effective date .
----------------
c. ( ) Vesting schedule has been amended to a less favorable schedule.
1.( ) Effective date .
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2.( ) Pre-amended schedule
Years of Service Percentage
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
D10 TOP HEAVY VESTING (Plan Section 6.4(c)). If this Plan becomes a Top
Heavy Plan, the following vesting schedule, based on number of Years of
Service, for such Plan Year and each succeeding Plan Year, whether or not
the Plan is a Top Heavy Plan, shall apply and shall be treated as a Plan
amendment pursuant to this Plan. Once effective, this schedule shall also
apply to any contributions made prior to the effective date of Code Section
416 and/or before the Plan became a Top Heavy Plan.
a. (X) N/A (D8a, b, d, e or f was selected)
b. ( ) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
d. ( ) Other (must be at least as liberal as either b or c above).
Years of Service Percentage
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
%
------------- --------
NOTE: This section does not apply to the account balances of any
Participant who does not have an Hour of Service after the Plan
has initially become top heavy. Such Participant's account balance
attributable to Employer contributions and Forfeitures will be
determined without regard to this section.
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D11 VESTING (Plan Section 6.4(h)). In determining Years of Service for vesting
purposes, Years of Service attributable to the following shall be EXCLUDED:
a. ( ) Service prior to the Effective Date of the Plan or a predecessor
plan.
b. (X) N/A.
c. ( ) Service prior to the time an Employee attained age 18.
d. (X) N/A.
D12 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER
a. ( ) No.
b. (X) Yes. Years of Service with any of the McLeod USA, Inc. Companies
-------------------------------------
shall be recognized for the purpose of this Plan.
NOTE: If the predecessor Employer maintained this qualified Plan, then
Years of Service with such predecessor Employer shall be
recognized pursuant to Plan Section 1.75 and b must be marked.
D13 NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.43) means:
a. (X) the date a Participant attains his 62nd birthday (not to exceed
------
65th).
b. ( ) the later of the date a Participant attains his birthday
-----
(not to exceed 65th) or the c. (not to exceed 5th)
-----
anniversary of the first day of the Plan Year in which
participation in the Plan commenced.
D14 NORMAL RETIREMENT DATE (Plan Section 1.44) shall commence:
a. (X) as of the Participant's "NRA".
OR (must select b or c AND 1 or 2)
b. ( ) as of the first day of the month...
c. ( ) as of the Anniversary Date...
1. ( ) coinciding with or next following the Participant's
"NRA".
2. ( ) nearest the Participant's "NRA".
D15 EARLY RETIREMENT DATE (Plan Section 1.12) means the:
a. (X) No Early Retirement provision provided.
b. ( ) date on which a Participant...
c. ( ) first day of the month coinciding with or next following the
date on which a Participant...
d. ( ) Anniversary Date coinciding with or next following the date on
which a Participant...
AND, if b, c or d was selected...
1. ( ) attains his birthday and has
----------
2. ( ) completed at least Years of Service.
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CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.9) with respect to any Participant means:
1. (X) Form W-2 Compensation
2. ( ) Federal Income Tax Withholding Compensation
3. ( ) 415 Safe Harbor Compensation
AND Compensation
1. (X) shall
2. ( ) shall not
exclude (even if includible in gross income) reimbursements or other
expense allowances, fringe benefits (cash or noncash), moving
expenses, deferred compensation, and welfare benefits.
NOTE: If Plan has Self-Employed Individuals, Standard 415
Compensation must be checked.
b. HOWEVER, FOR NON-INTEGRATED PLANS, Compensation shall exclude (select
all that apply):
1. (X) N/A. No exclusions
2. ( ) overtime
3. ( ) bonuses
4. ( ) commissions
5. ( ) other
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NOTE: If b1 is selected, it satisfies a 414(s) safe harbor.
c. FOR PURPOSES OF THIS SECTION E1, Compensation shall be based on the
following determination period:
1. (X) the Plan Year
2. ( ) the calendar year coinciding with or ending within the Plan
Year
NOTE: The Limitation Year shall be the same as the year on which
Compensation is based.
d. HOWEVER, for an Employee's first year of participation, Compensation
shall be recognized as of:
1. ( ) the first day of the Plan Year
2. (X) the date the Participant entered the Plan
e. (X) IN ADDITION, Compensation and 414(s) Compensation shall include
compensation which is not currently includible in the
Participant's gross income by reason of the application of Code
Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b).
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E2 SALARY REDUCTION ARRANGEMENT - ELECTIVE CONTRIBUTION
(Plan Section 11.2). Each Employee may elect to have his Compensation
reduced by:
a. ( ) %
---------
b. ( ) up to %
---------
c. (X) from 1 % to 15 %
------- -------
d. ( ) up to the maximum percentage allowable not to exceed the limits
of Code Sections 401(k), 404 and 415.
AND...
e. (X) A Participant may elect to January 1st and July 1st (ENTER AT
------------------------
LEAST ONE DATE commence salary reductions as OR PERIOD). A
Participant may modify the amount of salary reductions as of
January 1st and July 1st (ENTER AT LEAST ONE DATE OR PERIOD).
------------------------
AND...
Shall cash bonuses paid within 2 1/2 months after the end of the
Plan Year be subject to the salary reduction election?
f. ( ) Yes
g. (X) No
E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION
(Plan Section 11.1(b))
a. ( ) N/A. There shall be no matching contributions.
b. ( ) The Employer shall make matching contributions equal
to % (e.g., 50%) of the Participant's
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1. ( ) Elective Contributions.
2. ( ) Elective Contributions and Voluntary Contributions.
c. (X) The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of
the Participant's
1. (X) Elective Contributions.
2. ( ) Elective Contributions and Voluntary Contributions.
d. ( ) The Employer shall make matching contributions equal to the
sum of _____% of the portion of the Participant's salary
Compensation plus _____% (can not be an increasing percentage)
of the portion of the Participant's salary reduction which
exceeds _____% of the Participant's Compensation, but does not
exceed _____% of the Participant's Compensation.
e. ( ) Matching Contributions shall be determined on the last day
of each...
1. ( ) Plan Year quarter
2. ( ) Six month period
3. ( ) Month
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FOR PLANS WITH MATCHING CONTRIBUTIONS
f. (X) Matching contributions g. ( ) shall h. (X) shall not be used in
satisfying the deferral percentage tests. (If used, full vesting
and restrictions on withdrawals will apply and the match will be
deemed to be an Elective Contribution).
i. (X) Shall a Year of Service be required in order to share in the
matching contributions?
With respect to Plan Years beginning after 1989...
1. (X) Yes (could cause Plan to violate minimum participation and
coverage requirements under Code Sections 401(a)(26) and
410)
2. ( ) No
With respect to Plan Years beginning before 1990...
1. ( ) N/A. New Plan or same as years beginning after 1989
2. (X) Yes
3. ( ) No
j. ( ) The matching contribution made on behalf of a Participant for any
Plan Year shall not exceed ___________% of the Participant's
Compensation.
k. ( ) The matching contribution made on behalf of a Participant for any
Plan Year shall not exceed $_________________.
l. (X) For purposes of allocating the matching contribution,
Compensation shall be defined as Compensation paid by the Employer
each ______during the Plan Year.
NOTE: Complete the blank with the time period for which the
matching contribution is being allocated (e.g., payroll period).
m. (X) Matching contributions shall be made on behalf of
1. (X) all Participants.
2. ( ) only Non-Highly Compensated Employees.
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E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED (OTHER THAN A
DISCRETIONARY MATCHING OR QUALIFIED NON- ELECTIVE CONTRIBUTION)? (Plan
Section 11.1(c))
a. ( ) No.
b. ( ) Yes, the Employer may make a discretionary contribution out of
its current or accumulated Net Profit.
c. (X) Yes, the Employer may make a discretionary contribution which is
not limited to its current or accumulated Net Profit.
IF YES (b or c is selected above), the Employer's discretionary
contribution shall be allocated as follows:
d. (X) FOR A NON-INTEGRATED PLAN
The Employer's discretionary contribution for the Plan Year shall be
allocated in the same ratio as each Participant's Compensation bears to the
total of such Compensation of all Participants.
e. ( ) FOR AN INTEGRATED PLAN
The Employer's discretionary contribution for the Plan Year shall be
allocated in accordance with Plan Section 4.3(b)(2) based on a
Participant's Compensation in excess of:
1. ( ) The Taxable Wage Base
2. ( ) The greater of $10,000 or 20% of the Taxable Wage Base
3. ( ) % of the Taxable Wage Base (see Note below)
----
4. ( ) $ (see Note below)
---------
5. ( ) Effective (for TRA '86 restatements, if applicable)
--------
NOTE: The integration percentage of 5.7% shall be reduced to:
1. 4.3% if 3 or 4 above is more than 20% and less than or equal to
80% of the Taxable Wage Base.
2. 5.4% if 3 or 4 above is less than 100% and more than 80% of
the Taxable Wage Base.
E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1(d))
a. (X) N/A. There shall be no Qualified Non-Elective Contributions except
as provided in Section 11.5(b) and 11.7(h).
b. ( ) The Employer shall make a Qualified Non-Elective Contribution equal
to ___% of the total Compensation of all Participants eligible to
share in the allocations.
c. ( ) The Employer may make a Qualified Non-Elective Contribution in an
amount to be determined by the Employer.
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E6 FORFEITURES (Plan Section 4.3(e))
a. Forfeiture of contributions other than matching contributions shall
be...
1. ( ) N/A. Contributions are fully Vested.
2. ( ) added to the Employer's contribution under the Plan.
3. (X) allocated to all Participants eligible to share in the
allocations in the same proportion that each Participant's
Compensation for the year bears to the Compensation of all
Participants for such year.
4. ( ) used to reduce the Employer's contributions.
5. ( ) allocated to all Non-Highly Compensated Employees eligible
to share in the allocations in proportion to each such
Participant's Compensation for the year.
b. Forfeiture of matching contributions shall be...
1. ( ) N/A. Matching contributions are fully Vested.
2. ( ) added to the Employer's matching contribution under the
Plan.
3. (X) allocated to all Participants eligible to share in the
allocations in the same proportion that each Participant's
Elective Contributions for the year bears to the Elective
Contributions of all Participants for such year.
4. ( ) used to reduce Employer's contributions.
5. ( ) allocated to all Non-Highly Compensated Employees eligible
to share in the allocations in proportion to each such
Participant's Elective Contributions for the year.
E7 ALLOCATIONS TO ACTIVE PARTICIPANTS (Plan Section 4.3)
With respect to Plan Years beginning after 1989, a Participant
a. (X) shall (Plan may become discriminatory)
b. ( ) shall not
be required to complete a Year of Service in order to share in any Non-
Elective Contributions (other than matching contributions) or Qualified
Non-Elective Contributions.
E8 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4.3(k))
Any Participant who terminated employment during the Plan Year for reasons
other than death, Total and Permanent Disability or retirement:
a. With respect to Employer Non-Elective Contributions (other than matching
contributions), Qualified Non-Elective Contributions, and applicable
Forfeitures:
1. For Plan Years beginning after 1989,
i. ( ) N/A. Plan does not provide for such contributions.
ii. ( ) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in the allocations provided such Participant
completed more than 500 Hours of Service.
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iv. (X) shall share in such allocations provided such Participant
completed a Year of Service.
v. (X) shall share in such allocations provided such Participant
is actively employed on the last day of the Plan Year
vi. ( ) shall not share in such allocations, regardless of Hours
of Service.
2. For Plan Years beginning before 1990,
i. (X) N/A. New Plan, or same as for Plan Years beginning after
1989.
ii. ( ) shall share in such allocations provided such Participant
completed a Year of Service.
iii. ( ) shall not share in such allocations, regardless of Hours
of Service.
NOTE: If a1iv, v or vi is selected, the Plan could violate minimum
participation and coverage requirements under Code Sections
401(a)(26) and 410.
b. With respect to the allocation of Employer matching contributions and
applicable Forfeitures, a Participant:
1. For Plan Years beginning after 1989,
i. ( ) N/A. Plan does not provide for matching contributions.
ii. ( ) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in the allocations provided such Participant
completed more than 500 Hours of Service.
iv. (X) shall share in such allocations provided such Participant
completed a Year of Service.
v. (X) shall share in such allocations provided such Participant
is actively employed on the last day of the Plan Year.
vi. ( ) shall not share in such allocations, regardless of Hours
of Service.
vii. ( ) shall not share in allocations for a Plan quarter if such
Participant is not actively employed on the last day of
such Plan quarter.
2. For Plan Years beginning before 1990,
i. (X) N/A. New Plan, or same as years beginning after 1989.
ii. ( ) shall share in the allocations, regardless of Hours of
Service.
iii. ( ) shall share in such allocations provided such Participant
completed a Year of Service.
iv. ( ) shall not share in such allocations, regardless of Hours
of Service.
NOTE: If b1iv, v, vi or vii is selected, the Plan could violate minimum
participation and coverage requirements under Code Sections
401(a)(26) and 410.
16
<PAGE>
E9 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Participant is or was covered under another qualified defined
contribution plan maintained by the Employer, other than a Master or
Prototype Plan, or if the Employer maintains a welfare benefit fund,
as defined in Code Section 419(e), or an individual medical account,
as defined in Code Section 415(l)(2), or a simplified employee
pension, as defined in Code Section 408(k), under which amounts are
treated as Annual Additions with respect to any Participant in this
Plan:
1. (X) N/A.
2. ( ) The provisions of Plan Section 4.4(b) will apply as if the
other plan were a Master or Prototype Plan.
3. ( ) Provide the method under which the Plans will limit total
Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that
precludes Employer discretion.
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
b. If any Participant is or ever has been a Participant in a defined
benefit plan maintained by the Employer:
1. (X) N/A.
2. ( ) In any Limitation Year, the Annual Additions credited to
the Participant under this Plan may not cause the sum of
the Defined Benefit Plan Fraction and the Defined
Contribution Fraction to exceed 1.0. If the Employer's
contribution that would otherwise be made on the
Participant's behalf during the limitation year would
cause the 1.0 limitation to be exceeded, the rate of
contribution under this Plan will be reduced so that the
sum of the fractions equals 1.0. If the 1.0 limitation
is exceeded because of an Excess Amount, such Excess
Amount will be reduced in accordance with Plan Section
4.4(a)(4).
3. ( ) Provide the method under which the plans involved will
satisfy the 1.0 limitation in a manner that precludes
Employer discretion.
------------------------------------------------------
------------------------------------------------------
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17
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E10 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h))
Distributions upon the death of a Participant prior to receiving any
benefits shall...
a. (X) be made pursuant to the election of the Participant or
Beneficiary.
b. ( ) begin within 1 year of death for a designated Beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such Beneficiary, except that if the Beneficiary is
the Participant's spouse, begin within the time the Participant
would have attained age 70 1/2.
c. ( ) be made within 5 years of death for all Beneficiaries.
E11 LIFE EXPECTANCIES (Plan Section 6.5(f)) for minimum distributions required
pursuant to Code Section 401(a)(9) shall
a. (X) be recalculated at the Participant's election.
b. ( ) be recalculated.
c. ( ) not be recalculated.
E12 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION
Distributions upon termination of employment pursuant to Plan Section
6.4(a) shall not be made unless the following conditions have been
satisfied:
a. (X) N/A. Immediate distributions may be made at Participant's
election.
b. ( ) The Participant has incurred 1-Year Break(s) in Service.
--------
c. ( ) The Participant has reached his or her Early or Normal Retirement
Age.
d. ( ) Distributions may be made at the Participant's election on or
after the Anniversary Date following termination of employment.
E13 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6)
Distributions under the Plan may be made (check all options that are
applicable):
a. 1. ( ) in lump sums.
2. (X) in lump sums or installments.
3. ( ) in partial distributions.
b. AND,
1. ( ) no annuities are allowed. (Plan Section 6.13 shall apply.
Avoids Joint and Survivor rules.)
2. (X) annuities are allowed as an optional form of distribution.
(Plan Section 6.13 shall apply. Avoids Joint and Survivor
rules unless the Participant elects to receive his
distribution in the form of an annuity.)
3. ( ) annuities are allowed as the automatic form of distribution.
(Plan Section 6.13 shall not apply. Joint and Survivor rules
shall apply.)
NOTE: b1 or b2 above may not be elected if this is an amendment to a plan
which permitted annuities as a form of distribution or if this Plan
has accepted a plan to plan transfer of assets from a plan which
permitted annuities as a form of distribution.
18
<PAGE>
c. AND may be made in
1. ( ) cash only (except for insurance or annuity contracts).
2. (X) cash or property.
d. An immediate lump sum distribution will be paid pursuant to Plan
Subsections 6.4(a), 6.5(c) and 6.6(f) if the Participant's Vested
account balance is:
1. (X) $3,500 (or less).
2. ( ) $ or less (dollar limit specified must be less than
-------
$3,500).
e. The Pre-Retirement Survivor Annuity (Plan Section 1.54) shall be the
following percentage of a Participant's Vested interest in the Plan
as of the date of death:
1. (X) 100%
2. ( ) 50%
NOTE: Do not complete e if you checked E13b1.
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS (Plan Section 4.3(i)). When a Non-Key Employee is a
Participant in this Plan and a defined benefit plan maintained by the
Employer, indicate which method shall be utilized to avoid duplication of
top heavy minimum benefits.
a. (X) The Employer does not maintain a defined benefit plan.
b. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (The Defined Benefit and Defined
Contribution Fractions will be computed using 100% if this choice
is selected.)
c. ( ) A minimum, non-integrated contribution of 7 1/2% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (If this choice is selected, the
Defined Benefit and Defined Contribution Fractions will be
computed using 125% for all Plan Years in which the Plan is top
heavy, but not super top heavy.)
d. ( ) Specify the method under which the plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions, including any
adjustments required under Code Section 415(e):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
19
<PAGE>
F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for top heavy purposes
where the Employer maintains a defined benefit plan in addition to this
Plan, shall be based on...
a. (X) N/A. The Employer does not maintain a defined benefit plan.
b. ( ) Interest Rate:
-----------------------------------------------
Mortality Table:
---------------------------------------------
F3 TOP HEAVY DUPLICATIONS: Employer maintaining two (2) or more defined
contribution plans.
a. (X) N/A.
b. ( ) A minimum, non-integrated contribution of 3% of each Non-Key
Employee's total Compensation shall be provided in the money
purchase plan (or other plan subject to Code Section 412), where
the Employer maintains two (2) or more non-paired defined
contribution plans.
c. ( ) Specify the method under which the plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude
Employer discretion and avoid inadvertent omissions, including
any adjustments required under Code Section 415(e):
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.4)
a. (X) Yes, loans may be made up to $50,000 or 1/2 Vested interest.
b. ( ) No, loans may not be made.
If YES, (check all that apply)..
c. (X) loans shall be treated as a directed investment.
d. ( ) loans shall only be made for hardship or financial necessity.
e. (X) the minimum loan shall be
1. (X) $1,000.
2. ( ) $_________(specify a dollar limit which is not less than $500
but is less than $1,000).
f. ( ) $10,000 de minimis loans may be made regardless of Vested
interest. (If selected, plan may need security in addition to
Vested interest.)
NOTE: Department of Labor Regulations require the adoption of a
SEPARATE written loan program setting forth the requirements
outlined in Plan Section 7.4.
20
<PAGE>
G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are permitted for the
interest in any one or more accounts.
a. ( ) Yes, regardless of the Participant's Vested interest in the Plan.
b. (X) Yes, but only with respect to the Participant's voluntary,
rollover and Elective Contributions.
c. ( ) Yes, but only with respect to the Participant's voluntary,
rollover, matching and Elective Contributions.
d. ( ) No directed investments are permitted.
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6)
a. (X) Yes, transfers from qualified plans (and rollovers) will be
allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not be
allowed.
AND, transfers shall be permitted...
c. (X) from any Employee who is not excluded from participating in the
Plan, even if not a Participant.
d. ( ) from Participants only.
G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7)
a. ( ) Yes, voluntary contributions are allowed subject to the limits of
Plan Section 4.10.
b. (X) No, voluntary contributions will not be allowed.
NOTE: TRA '86 subjects voluntary contributions to strict discrimination
rules.
G5 HARDSHIP DISTRIBUTIONS (Plan Section 6.11 and 11.8)
a. (X) Yes, from the Vested account balance attributable to the following
contributions:
(X) Elective Contributions
( ) Employer matching contributions (not qualified)
( ) Non-Elective Contributions
(X) Rollover contributions
b. ( ) No
NOTE: Distributions from a Participant's Elective Account are limited to
the portion of such account attributable to such Participant's
Deferred Compensation and earnings attributable thereto up to
December 31, 1988. Also hardship distributions are not permitted
from a Participant's Qualified Non-Elective Account.
21
<PAGE>
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
a. (X) If a Participant has reached the age of 59 1/2 , distributions
---------
may be made, at a Participant's election, from the Vested account
balance attributable to the following contributions:
(X) Elective Contributions
( ) Qualified matching contributions
( ) Qualified Non-Elective Contributions
(X) Matching contributions
(X) Non-Elective Contributions
(X) Rollover Contributions
( ) All contributions
b. ( ) No pre-retirement distribution may be made.
NOTE: Distributions (under Plan Section 6.10) which are attributable to
a Participant's Elective Contributions, qualified matching
contributions and Qualified Non-Elective Contributions are not
permitted prior to age 59 1/2.
G7 LIFE INSURANCE (Plan Section 7.2(d)) may be purchased with Plan
contributions.
a. (X) No life insurance may be purchased.
b. ( ) Yes, at the option of the Administrator.
c. ( ) Yes, at the option of the Participant.
AND, the purchase of initial or additional life insurance shall be subject
to the following limitations (select all that apply):
d. ( ) N/A. No limitations.
e. ( ) each initial Contract shall have a minimum face amount of
$__________.
f. ( ) each additional Contract shall have a minimum face amount of
$__________.
g. ( ) the Participant has completed _____ Years of Service.
h. ( ) the Participant has completed _____ Years of Service while a
Participant in the Plan.
i. ( ) the Participant is under age _____ on the Contract issue date.
j. ( ) the maximum amount of all Contracts on behalf of a Participant
shall not exceed $__________.
k. ( ) the maximum face amount of life insurance shall be $__________.
22
<PAGE>
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the Plan is qualified
under Code Section 401. In order to obtain reliance with respect to Plan
qualification, the Employer must apply to the appropriate Key District Office
for a determination letter.
This Adoption Agreement may be used only in conjunction with basic Plan document
#01. This Adoption Agreement and the basic Plan document shall together be known
as Diversified Investment Advisors, Inc. Non-Standardized 401(k) Profit Sharing
Plan #01-003.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
If the Employer's Plan fails to attain or retain qualification, the Plan will no
longer participate in this Prototype Plan and will be considered an individually
designed plan.
Diversified Investment Advisors, Inc. will notify the Employer of any amendments
made to the Plan or of the discontinuance or abandonment of the Plan provided
this Plan has been acknowledged by Diversified Investment Advisors, Inc. or its
authorized representative. Furthermore, in order to be eligible to receive such
notification, we agree to notify Diversified Investment Advisors, Inc. of any
change in address.
IN WITNESS WHEREOF, the Employer and, if applicable, the Trustee hereby cause
this Plan to be executed on this 24th day of November, 1997. Furthermore, this
Plan may not be used unless acknowledged by Diversified Investment Advisors,
Inc. or its authorized representative.
EMPLOYER:
McLeod, Inc. ( )
- ------------------------------ ------------------------------
(enter name) TRUSTEE
By: /s/ Blake O. Fisher, Jr.
--------------------------- ------------------------------
TRUSTEE
PARTICIPATING EMPLOYER:
- ------------------------------ (X) Trustee appears on a separate
(enter name) Trust Agreement attached to the
Plan pursuant to B6 of the
Adoption Agreement.
By: ( ) The Plan assets are invested
--------------------------- solely in group annuity
Contract(s). There is no Trustee
and the terms of the Contract(s)
will apply.
23
<PAGE>
This Plan may not be used, and shall not be deemed to be a Prototype Plan,
unless an authorized representative of Diversified Investment Advisors, Inc.
(the sponsor) has acknowledged the use of the Plan. Such acknowledgment is for
administerial purposes only. It acknowledges that the Employer is using the Plan
but does not represent that this Plan, including the choices selected on the
Adoption Agreement, has been reviewed by a representative of the sponsor or
constitutes a qualified retirement plan.
Diversified Investment Advisors, Inc.
By: /s/ Gina M. Acri
-----------------
If the Employer has any questions regarding the provisions of the Plan, adoption
of the Plan, or the effect of an opinion letter from the IRS, call or write:
Name: Diversified Investment Advisors, Inc.
Attn: Corporate Defined Contribution Plans Group
Address: 4 Manhattanville Road
Purchase, NY 10577
Telephone: (914) 697-8000
24
<PAGE>
Amendment No. 1 to the
Adoption Agreement of
McLeod, Inc. 401(k) Profit Sharing Plan
Pursuant to the provisions of Section 8.1(b) (1) of Article VII of the Plan, the
adoption agreement is hereby amended effective January 1, 1998 by the following:
1. By the substitution of the following for Sections A1:
"A1 McLeodUSA Inc. 401(k) Profit Sharing Plan
------------------------------------------------------------
(Enter Plan Name)
It shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may
result in disqualification of the Plan."
2. By the substitution of the following for Sections B1:
EMPLOYER INFORMATION
"B1 Name of Employer: McLeodUSA Incorporated"
----------------------
3. By the substitution of the following for Section E3l.:
"E3L. [X] For purposes of allocating the matching contribution,
Compensation shall be defined as Compensation paid by the
Employer each quarter during the Plan Year."
4. By the substitution of the following for Section E8b.v.:
" "E8B.V. [X] shall share in such allocations provided such Participant is
actively employed on the last day of the Plan Year [ONLY FOR
PURPOSES OF ADDITIONAL, NON-QUARTERLY DISCRETIONARY MATCHING
CONTRIBUTIONS]."
In witness whereof, the Employer hereby causes this amendment to be executed on
this 19th day of January, 1998.
Employer: McLeodUSA Incorporated
----------------------
By: /s/ Blake O. Fisher
-------------------
1
<PAGE>
EXHIBIT 4.10
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
---------------------------------------
LONG-TERM SAVINGS PLAN FOR SALARIED AND AFFILIATED EMPLOYEES
------------------------------------------------------------
As Amended and Restated
Effective January 1, 1989
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS....................................... 2
1.1 "Account"........................................... 2
1.2 "Actual Contribution Percentage".................... 2
1.3 "Actual Deferral Percentage"........................ 3
1.4 "Adjusted Balance".................................. 3
1.5 "Annual Additions".................................. 3
1.6 "Beneficiary"....................................... 4
1.7 "Board"............................................. 4
1.8 "Break in Service".................................. 4
1.9 "Code".............................................. 4
1.10 "Committee"......................................... 4
1.11 "Company"........................................... 4
1.12 "Compensation"...................................... 5
1.13 "Earnings".......................................... 9
1.14 "Eligible Employee"................................. 9
1.15 "Employee".......................................... 9
1.16 "Entry Date"........................................ 10
1.17 "ERISA"............................................. 10
1.18 "Highly Compensated"................................ 10
1.19 "Hour of Service"................................... 11
1.20 "Investment Fund" or "Fund"......................... 12
1.21 "Limitation Year"................................... 12
-i-
<PAGE>
1.22 "Long-Term Savings Agreement"....................... 12
1.23 "Matching Contribution"............................. 12
1.24 "Maximum Permissible Amount"........................ 12
1.25 "Normal Retirement Date"............................ 13
1.26 "Participant"....................................... 13
1.27 "Period of Severance"............................... 13
1.28 "Plan".............................................. 14
1.29 "Plan Year"......................................... 14
1.30 "Related Company"................................... 14
1.31 "Related Plan"...................................... 15
1.32 "Rollover Contribution"............................. 15
1.33 "Salary Deferral Contributions"..................... 15
1.34 "Savings Account"................................... 15
1.35 "Service"........................................... 15
1.36 "Severance Date".................................... 16
1.37 "Surviving Spouse".................................. 17
1.38 "Transfer Account".................................. 17
1.39 "Trust" or "Trust Fund"............................. 18
1.40 "Trust Agreement"................................... 18
1.41 "Trustee"........................................... 18
1.42 "Valuation Date".................................... 18
1.43 "Valuation Period".................................. 18
1.44 "Voluntary Contributions"........................... 18
1.45 "Voluntary Contribution Account".................... 18
1.46 "Wage Payment Date"................................. 19
ii
<PAGE>
1.47 "Wage Payment Period"............................... 19
ARTICLE II PARTICIPATION.................................... 19
-------------
2.1 Eligibility Requirement............................. 19
-----------------------
2.2 Reemployment of a Participant....................... 20
-----------------------------
2.3 Election to Participate............................. 20
-----------------------
ARTICLE III SALARY DEFERRAL CONTRIBUTIONS................... 21
-----------------------------
3.1 Salary Deferral Contributions....................... 21
-----------------------------
3.2 Administrative Rules Governing Long-Term Savings
------------------------------------------------
Agreements.......................................... 23
----------
3.3 Suspension of Long-Term Savings Agreements.......... 24
------------------------------------------
3.4 Limitations on Salary Deferral Contributions........ 25
--------------------------------------------
3.5 Recharacterization and Return of Certain Salary
-----------------------------------------------
Deferral Contributions.............................. 30
----------------------
ARTICLE IV MATCHING CONTRIBUTIONS........................... 32
----------------------
4.1 Matching Contributions.............................. 32
ARTICLE V VOLUNTARY CONTRIBUTIONS, ROLLOVERS AND
--------------------------------------
TRANSFERS FROM OTHER PLANS............................... 36
--------------------------
5.1 Voluntary Contributions............................. 36
-----------------------
5.2 Rules Governing Voluntary Contributions............. 36
---------------------------------------
5.3 Rollovers and Transfers to and from Other Plans..... 38
-----------------------------------------------
ARTICLE VI SPECIAL RULES APPLICABLE TO MATCHING
-------------------------------------
CONTRIBUTIONS AND VOLUNTARY CONTRIBUTIONS................ 41
-----------------------------------------
6.1 Limitations......................................... 41
-----------
6.2 Multiple Use Test................................... 44
-----------------
ARTICLE VII ALLOCATIONS TO PARTICIPANTS' ACCOUNTS........... 47
-------------------------------------
7.1 Separate Accounts................................... 47
-----------------
iii
<PAGE>
7.2 Suspense Account.................................... 47
----------------
7.3 Allocation of Matching Contributions................ 47
------------------------------------
7.4 Allocations of Salary Deferral Contributions........ 48
--------------------------------------------
7.5 Allocation of Voluntary and Rollover Contributions.. 48
--------------------------------------------------
7.6 Maximum Allocation.................................. 49
------------------
7.7 Vesting............................................. 52
-------
7.8 Allocations and Adjustments to Account.............. 52
--------------------------------------
ARTICLE VIII PAYMENT OF BENEFITS............................ 55
-------------------
8.1 Payments on Termination for Reasons Other Than
----------------------------------------------
Death............................................... 55
-----
8.2 Payments on Death................................... 55
-----------------
8.3 Manner and Timing of Payment........................ 59
----------------------------
8.4 Hardship Distributions.............................. 66
----------------------
8.5 Non-Hardship In-Service Distributions............... 69
-------------------------------------
8.6 Withdrawals from Voluntary Contribution and
-------------------------------------------
Transfer Accounts................................... 70
-----------------
8.7 Rules Governing In-Service Distributions............ 70
----------------------------------------
8.8 Distribution of Unallocated Contributions........... 71
-----------------------------------------
8.9 Administrative Powers Relating to Payments.......... 72
------------------------------------------
8.10 Distributions From Savings Accounts................. 72
-----------------------------------
ARTICLE IX PLAN ADMINISTRATION.............................. 75
-------------------
9.1 Company Responsibility and Establishment of
-------------------------------------------
Committee........................................... 75
---------
9.2 Powers and Duties of Committee...................... 77
------------------------------
9.3 Records and Reports of Committee.................... 77
--------------------------------
9.4 Claims Procedure.................................... 78
----------------
9.5 Expenses............................................ 79
--------
iv
<PAGE>
ARTICLE X TRUST AGREEMENT................................... 80
---------------
10.1 Establishment of Trust.............................. 80
----------------------
ARTICLE XI LOANS TO PARTICIPANTS............................ 80
---------------------
11.1 Loans to Participants............................... 80
---------------------
11.2 Maximum Loan Amount................................. 81
-------------------
11.3 Repayment of Loans.................................. 82
------------------
11.4 Terms............................................... 83
-----
ARTICLE XII INVESTMENT FUNDS................................ 90
----------------
12.1 Investment Funds.................................... 90
----------------
12.2 Initial-Investment.................................. 90
------------------
12.3 Selection of Investment Funds....................... 90
-----------------------------
ARTICLE XIII AMENDMENT AND TERMINATION...................... 93
-------------------------
13.1 Amendment of Plan................................... 93
-----------------
13.2 Voluntary Termination of or Permanent
-------------------------------------
Discontinuance of Contributions to the Plan......... 93
-------------------------------------------
13.3 Involuntary Termination of Plan..................... 94
-------------------------------
13.4 Payments on Termination of or Permanent
---------------------------------------
Discontinuance of Contributions to the Plan......... 95
-------------------------------------------
ARTICLE XIV MISCELLANEOUS................................... 96
-------------
14.1 Duty to Furnish Information and Documents........... 96
-----------------------------------------
14.2 Statements and Available Information................ 96
------------------------------------
14.3 No Enlargement of Employment Rights................. 97
-----------------------------------
14.4 Applicable Law...................................... 97
--------------
14.5 No Guarantee........................................ 97
------------
14.6 Unclaimed Funds..................................... 98
---------------
v
<PAGE>
14.7 Merger or Consolidation of Plan..................... 99
-------------------------------
14.8 Interest Non-Transferable........................... 99
-------------------------
14.9 Prudent Man Rule.................................... 100
----------------
14.10 Limitations on Liability............................ 101
------------------------
14.11 Headings............................................ 102
--------
14.12 Gender and Number................................... 102
-----------------
14.13 ERISA and Approval Under Internal Revenue Code...... 103
----------------------------------------------
14.14 Exclusive Benefit of Employees...................... 103
------------------------------
14.15 Adoption of Plan by Related Companies............... 105
-------------------------------------
14.16 Severability........................................ 106
------------
ARTICLE XV TOP-HEAVY PROVISIONS............................. 107
--------------------
15.1 Top-Heavy Status.................................... 107
----------------
15.2 Definitions......................................... 107
-----------
15.3 Determination of Top-Heavy Status................... 108
---------------------------------
15.4 Minimum Contribution................................ 110
--------------------
15.5 Compensation........................................ 111
------------
15.6 Limit on Annual Additions: Combined Plan - Limit.... 111
------------------------------------------------
15.7 Safe-Harbor Rule.................................... 112
----------------
Schedule A
vi
<PAGE>
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED AND AFFILIATED EMPLOYEES
As Amended and Restated Effective January 1, 1989
The Illinois Consolidated Telephone Company Long-Term Savings Plan for
Salaried Employees (the "Plan") was adopted by Illinois Consolidated Telephone
Company (the "Company"), effective October 1, 1984 to permit certain employees
to defer the Federal income tax on certain portions of their salaries as
provided by the Internal Revenue Code, to increase certain of its employees'
interest in the Company by providing a medium through which they may share in
the profitable operations of the Company and to furnish additional security to
certain of its employees who become permanently disabled. The Plan was
subsequently amended to provide for the adoption of the Plan by Related
Companies (as defined below). The Plan was further amended, and restated,
effective January 1, 1985, to make changes required to comply with the Code and
ERISA, both as amended by the Retirement Equity Act of 1984, and to change the
name of the Plan to reflect its adoption by certain Related Companies. The Plan
is hereby further amended and restated, as set forth below, to comply with the
requirements of the Tax Reform Act of 1986, the Omnibus Budget Reconciliation
Acts of 1986 and 1987, the Technical and Miscellaneous Revenue Act of 1988, the
Revenue Reconciliation Acts of 1989 and 1990, the Unemployment Compensation
Amendments of 1992, the Omnibus Budget Reconciliation Act of 1993 and certain
governmental rules and regulations, and to make certain other changes. Except
where otherwise indicated herein, this
-1-
<PAGE>
restatement of the Plan is effective as of January 1, 1989 with respect to each
Employee who earns an Hour of Service on or after January 1, 1989. Except as may
be required by ERISA or the Code, the rights of any person whose status as an
Employee has terminated shall be determined pursuant to the Plan as in effect on
the date such employment status terminated, unless a subsequently adopted
provision of the Plan is made specifically applicable to such person.
ARTICLE I
---------
DEFINITIONS
-----------
Whenever used herein the following words and phrases shall have the
meanings stated below unless a different meaning is plainly required by the
context:
1.1 "Account" means all or any one of the Savings Account, Transfer
Account and/or Voluntary Contribution Account maintained by the Trustee for an
individual Participant or Beneficiary pursuant to the terms of the Plan.
1.2 "Actual Contribution Percentage" for a specified group of
Eligible Employees for a given Plan Year means the average of the ratios,
calculated separately for each Eligible Employee in such group, of: (a) the
Voluntary Contributions, if any, contributed by the Eligible Employee to the
Plan for any Plan Year beginning prior to January 1, 1993 and the Matching
Contribution, if any,
-2-
<PAGE>
contributed by the Company on behalf of each such Eligible Employee for such
Plan Year, to (b) the Eligible Employee's Earnings for such Plan Year.
1.3 "Actual Deferral Percentage" for a specified group of Eligible
Employees for a given Plan Year means the average of the ratios, calculated
separately for each Eligible Employee in such group, of: (a) the sum of the
Salary Deferral Contribution, if any, contributed by the Company on behalf of
each such Eligible Employee for the Plan Year; to (b) the Eligible Employee's
Earnings for such Plan Year.
1.4 "Adjusted Balance" means the balance in a Participant's Savings
Account, Transfer Account or Voluntary Contribution Account, as adjusted in
accordance with Article VI of the Plan as of the applicable Valuation Date.
1.5 "Annual Additions" means the total of: (a) Company contributions
allocated to a Participant's accounts under this Plan and any Related Plan
during any Limitation Year; (b) the amount of employee contributions made by the
Participant under this Plan and any Related Plan; and (c) forfeitures allocated
to a Participant's Accounts under any Related Plan. Clauses (a) and (b) above
include excess contributions under Sections 3.5 and 6.1, but do not include
excess deferrals returned to a Participant under Section 3.1(c).
1.6 "Beneficiary" means the person, persons, or entity designated
or determined pursuant to the provisions of Section 8.2(b) of the Plan.
-3-
<PAGE>
1.7 "Board" means the Board of Directors of the Company.
1.8 "Break in Service" means a Period of Severance of at least
twelve (12) consecutive months. A Break in Service will be deemed to commence
on the first day of the Period of Severance and shall be deemed to end on the
day on which the Employee again performs an Hour of Service.
1.9 "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to a section of the Code shall include that section and
any comparable section or sections of any future legislation that amends,
supplements or supersedes said section.
1.10 "Committee" means the Benefit Committee appointed by the
Company as described in Section 9.1.
1.11 "Company" means Illinois Consolidated Telephone Company, an
Illinois corporation, or any successor corporation resulting from a merger or
consolidation of the Company or transfer of substantially all of the assets of
the Company, if such successor or transferee shall adopt and continue the Plan
by appropriate corporate action pursuant to Section 13.3 of the Plan. All
employees of a Related Company shall be treated as employed by the Company, on
or after the date it becomes a Related Company, only for purposes of determining
Hours of Service under Section 1.19 and Service under Section 1.35; provided
that a person simultaneously employed by both the Company and a Related Company
shall not receive duplicate credit for such purposes because he is so employed.
Except as
-4-
<PAGE>
otherwise specified by resolution of the Board, employees of a Related Company
shall not be treated as employed by the Company, prior to the date it becomes a
Related Company, for any purpose, including but not limited to for purposes of
determining Hours of Service under Section 1.19, Service under Section 1.35 and
eligibility to participate under Sections 2.1 and 2.2. If the Board specifies by
resolution that employees of a Related Company shall be treated as employed by
the Company for greater periods of time than are specifically set forth in this
Section, the Company shall reflect such Board action on Schedule A to the Plan.
Nothing in this Section shall be construed or interpreted to require the Company
to make a contribution under the Plan for any individual who is not an Employee.
1.12 "Compensation" means (a) for Plan Years beginning prior to
January 1, 1992, a Participant's regular basic cash compensation paid to him
during a Plan Year by the Company or a Related Company for services rendered;
provided, however, that Compensation shall not include bonuses, commissions,
incentives, awards, moving allowances and moving expense reimbursements, non-
cash compensation, group life insurance, educational assistance reimbursements,
interest reimbursements, automobile allowances and expenses, severance pay and
other similar types of reimbursements, amounts treated as contributions pursuant
to a Long-Term Savings Agreement, any other contributions or benefits under this
Plan or any other pension, profit sharing, deferred compensation, insurance,
hospitalization or other plan or policy maintained by the Company or a Related
Company for the benefit of such Participant, and all other
-5-
<PAGE>
extraordinary and unusual payments. Notwithstanding the foregoing, a
Participant's Compensation shall include (i) any amount paid to him under the
Company's short-term disability plan, and (ii) any contributions made on his
behalf to a plan or policy governed by Section 125 of the Code or any successor
Section.
(b) For Plan Years beginning on and after January 1, 1992, and in the
case of a salaried Participant, Compensation shall have the meaning described in
(a) above, but shall include the bonuses, commissions, incentives, awards, and
moving allowances and similar types of earnings paid to the Participant during
the Plan Year by the Company or a Related Company.
(c) For Plan Years beginning on and after January 1, 1993, and in the
case of an hourly paid Participant, Compensation means the Participant's total
earnings from the Company or a Related Company paid during a Plan Year for
services rendered, including bonuses, overtime and commissions, and also
including payments made by the Company or a Related Company to or on behalf of
the Participant in connection with (i) vacations, holidays and personal days,
(ii) premium time for Sundays and holidays, (iii) shift differential, (iv)
split-shift differential, (v) periods of jury duty service, (vi) authorized
absences, (vii) authorized travel time to work-related education, and (viii)
contributions made to a plan or policy governed by Section 125 of the Code or
any successor Section, but excluding amounts treated as contributions pursuant
to a Long-Term Savings Agreement, any other contributions or benefits under this
Plan or any other
-6-
<PAGE>
pension, profit sharing, insurance, hospitalization or other plan or policy
maintained by the Company for the benefit of such Participant, and all other
extraordinary and unusual payments.
(d) Notwithstanding the preceding provisions of this Section 1.12, for
purposes of Section 1.24 and Article XV, "Compensation" shall have the meaning
set forth in Section 1.24.
(e) Notwithstanding anything to the contrary contained herein, in no
event shall the Compensation of a Participant taken into account under the Plan
for any Plan Year commencing on and after January 1, 1989 and prior to January
1, 1994 exceed $200,000 (or such greater amount provided pursuant to Section
401(a)(17) of the Code).
(f) In addition to other applicable limitations set forth in the Plan
and notwithstanding any other provision of the Plan to the contrary, for the
Plan Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation limit is $150,000,
as adjusted by the Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-
of-living adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which Compensation is determined (determination
period) beginning in such calendar year. If a determination period consists of
fewer than 12 months, the
-7-
<PAGE>
OBRA '93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
(g) For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth in this provision.
(h) If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan Year,
the Compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
1.13 "Earnings" means an Eligible Employee's Compensation paid to
him during a Plan Year while he was an Eligible Employee, increased by the
amount subject to any Long-Term Savings Agreement entered into by the
Participant for such Year. An Eligible Employee's Earnings for any Plan Year
for any purpose of the Plan shall be limited in accordance with the provisions
of subsections 1.12(d) through (g) of the Plan.
1.14 "Eligible Employee" means any Employee who has met the
eligibility requirements contained in Section 2.1 or 2.2.
-8-
<PAGE>
1.15 "Employee" means an individual employed by the Company;
provided, however, that "Employee" does not include any individual covered under
the terms and conditions of a collective bargaining agreement to which the
Company is a party (unless such agreement provides for the participation of such
individual in the Plan) if retirement benefits were the subject of good faith
bargaining between employee representatives and the Company. A person who is
not an Employee of the Company and who performs services for the Company
pursuant to an agreement between the Company and a leasing organization shall be
considered a "leased employee" after such person performs such services for a
year provided that the services are a type historically performed by Employees.
A person who is considered a "leased employee" of the Company shall not be
considered an Employee for purposes of the Plan. If a leased employee
subsequently becomes an Employee, and thereafter participates in the Plan, he
shall be given credit for Hours of Service and Service for his period of
employment for purposes of Section 2.1 as a leased employee, except to the
extent that Section 414(n)(5) of the Code was satisfied with respect to such
Employee while he was a leased employee.
1.16 "Entry Date" means for each Plan Year ending on or before
December 31, 1985, each April 1 and October 1, and for each Plan Year commencing
on and after January 1, 1986, each January 1, April 1, July 1 and October 1.
1.17 "ERISA" means Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended from time to time.
-9-
<PAGE>
1.18 "Highly Compensated" Eligible Employee means an Eligible
Employee who during the Plan Year or preceding Plan Year:
(a) was at any time a five percent owner of the Company or a Related
Company;
(b) received Compensation from the Company or a Related Company in
excess of $99,000 (or such other amount provided by the Secretary of the
Treasury pursuant to Section 414(q) of the Code);
(c) received Compensation from the Company or a Related Company in
excess of $66,000 (or such other amount provided by the Secretary of the
Treasury pursuant to Section 414(q) of the Code) and was in the top paid group
of employees for each Year (as defined in Section 414(g)(4) of the Code); or
(d) was at any time an officer of the Company or a Related Company (as
defined in Section 414(g)(5) of the Code) and received Compensation from the
Company or a Related Company greater than 50% of the amount in effect under
Section 415(b)(1)(A) of the Code as adjusted and in effect for such Plan Year.
The provisions of Section 414(q) of the Code shall apply in
determining whether a Participant is a Highly Compensated Participant. The
Company, for any Plan Year, may elect to identify Highly Compensated
Participants based upon only the current Plan Year to the extent permitted by
Section 414(q) of the Code and regulations issued thereunder.
-10-
<PAGE>
A "Highly Compensated Participant" means a Highly Compensated Eligible
Employee who has elected to participate in the Plan for the relevant plan year.
The provisions of Section 414(q) of the Code shall apply in determining whether
an Employee or a former Employee is a Highly Compensated Eligible Employee or a
Highly Compensated Participant.
1.19 "Hour of Service" means each hour for which an Employee is
paid or entitled to payment for the performance of duties for the Company or a
Related Company.
1.20 "Investment Fund" or "Fund" means any fund as described on the
schedule attached to the Trust Agreement.
1.21 "Limitation Year" means the twelve (12) consecutive month
period to be used in determining the Plan's compliance with Code Section 415
and the regulations thereunder. The Company shall take all actions necessary
to ensure that the Limitation Year is the same twelve (12) month period as the
Plan Year.
1.22 "Long-Term Savings Agreement" - means a written agreement
entered into by a Participant pursuant to the provisions of Section 3.1 of the
Plan.
1.23 "Matching Contribution" means a contribution made by the
Company pursuant to the provisions of Section 4.1 of the Plan.
-11-
<PAGE>
1.24 "Maximum Permissible Amount" means the lesser of: (a) 25% of a
Participant's Compensation; or (b) thirty thousand (30,000) dollars (or, if
greater, one quarter (1/4) of the dollar limitation in effect pursuant to
Section 415(b)(1)(A) of the Code). For purposes of this Section 1.24 and
Article XV, Compensation shall mean wages, salaries, fees for professional
services and other amounts received for personal services actually rendered in
the course of employment with the Company (including, but not limited to
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, tips and bonuses); shall include all compensation
actually paid or made available to a Participant for an entire Limitation Year
(other than amounts subject to the Long-Term Savings Agreement of such
Participant); and shall not include any other items or amounts paid to or for
the benefit of a Participant.
1.25 "Normal Retirement Date" means the date a Participant attains
age 65.
1.26 "Participant" means an Eligible Employee who becomes a
Participant under the provisions of Section 2.3 of the Plan. However, an
Employee who has made a Rollover Contribution pursuant to Section 5.3 of the
Plan shall be deemed a Participant for purposes of the Plan to the extent that
the provisions of the Plan apply to the Transfer Account of such Employee.
1.27 "Period of Severance" means a continuous period of time during
which an Employee is not employed by the Company or a Related Company. Such a
-12-
<PAGE>
period shall begin on the Employee's Severance Date and end, if at all, on the
date on which the Employee again performs an Hour of Service for the Company or
a Related Company. An Employee is considered employed by the Company or a
Related Company if he is on a leave of absence granted by the Company or a
Related Company on or after August 5, 1993 pursuant to the Family and Medical
Leave Act, if he returns to work for the Company or a Related Company at the end
of such leave of absence.
1.28 "Plan" means the Illinois Consolidated Telephone Company Long-
Term Savings Plan For Salaried And Affiliated Employees, as Amended and Restated
Effective January 1, 1989. For purposes of Section 401(a)(27)(B) of the Code,
the Plan shall constitute a profit sharing plan.
1.29 "Plan Year" means the twelve month period from January 1
through December 31 of each year; provided that the first Plan Year shall be the
period from October 1 through December 31, 1984.
1.30 "Related Company" means (a) any corporation that is a member
of a controlled group of corporations (as defined in Section 414(b) of the Code)
that includes the Company; (b) any trade or business, whether or not
incorporated, that is under common control (as defined in Section 414(c) of the
Code) with the Company; (c) any member of an affiliated service group (as
defined in Section 414(m) of the Code) that includes the Company; and (d) any
member of the same group of associated organizations (as defined in Section
414(o) of the Code).
-13-
<PAGE>
For purposes of applying the limitations of Section 415 of the Code referred to
in Section 1.22, "Related Company" is determined in accordance with Sections
414(b) and (c) of the Code, as modified by Section 415(h) therein.
1.31 "Related Plan" means any other defined contribution Plan (as
defined in Section 415 of the Code) maintained by the Company or by any Related
Company.
1.32 "Rollover Contribution" means an amount received by the
Trustee pursuant to the provisions of Section 5.3 of the Plan.
1.33 "Salary Deferral Contributions" means amounts contributed by
the Company pursuant to the provisions of Section 3.1 of the Plan.
1.34 "Savings Account" means the record of money and assets held by
the Trustee for an individual Participant or Beneficiary pursuant to the
provisions of the Plan, derived from Salary Deferral Contributions and Matching
Contributions.
1.35 "Service" means an aggregated period of time commencing with
an Employee's first day of employment or reemployment with the Company or a
Related Company and ending on the first day of a Period of Severance.
Fractional periods of less than a year shall be expressed in terms of days.
Notwithstanding anything to the contrary contained in the Plan, Service shall
include, to the extent required by law, (a) a period of time during which an
Employee is absent from the
-14-
<PAGE>
Company or a Related Company to serve in the armed forces of the United States,
for as long as his reemployment rights are guaranteed by law, if he returns or
offers to return to work for the Company or a Related Company prior to the
expiration of such reemployment rights, and (b) a leave of absence granted to
the Employee by the Company or a Related Company on or after August 5, 1993
pursuant to the Family and Medical Leave Act, if the Employee returns to work
for the Company or a Related Company at the end of such leave of absence. An
Employee shall receive credit under this Section for a Period of Severance
commenced by a Severance Date described in Section 1.36(a) if the Employee
returns to employment with the Company or a Related Company before the
expiration of twelve (12) consecutive months after such Severance Date. If an
Employee's employment with the Company or a Related Company terminates other
than under circumstances described in Section 1.36(a) and he incurs a Severance
Date described in Section 1.36(a) prior to the first anniversary of the date on
which his employment terminates, such Employee shall receive credit under this
Section for his period of absence if he returns to employment with the Company
or a Related Company prior to the expiration of twelve (12) consecutive months
after the date on which his employment terminates.
1.36 "Severance Date" means the earlier of (a) the date on which an
Employee quits, retires, is discharged, or dies; or (b) the first anniversary of
the Employee's termination for any other reason, such as vacation, holiday,
sickness, disability, leave of absence or layoff. Notwithstanding the
foregoing, for purposes of
-15-
<PAGE>
determining the Period of Severance of an Employee solely for purposes of
determining whether such Employee has incurred a Break in Service, "Severance
Date" means the second anniversary of the first date of the Employee's
termination: (i) by reason of the pregnancy of the Employee, (ii) by reason of
the birth of a child of the Employee, (iii) by reason of the placement of a
child with the Employee in connection with the adoption of such child by such
Employee, or (iv) for purposes of caring for such child for a period beginning
immediately following such birth or placement (provided that this sentence shall
not apply unless the Employee furnishes to the Company such timely information
that the Company may reasonably require to establish that the absence from work
is for one of the reasons specified in clauses (i)-(iv)).
1.37 "Surviving Spouse" means the person to whom a Participant is
married throughout the twelve (12) month period ending on the date of his death.
1.38 "Transfer Account" means the record of money and assets held
by the Trustee for an individual Participant or Beneficiary pursuant to the
provisions of the Plan, derived from a Rollover Contribution.
1.39 "Trust" or "Trust Fund" means all money, securities and other
property held under the Trust Agreement for the purposes of the Plan.
1.40 "Trust Agreement" means the agreement between the Company and
the Trustee governing the administration of the Trust, as it may be amended
from time to time.
-16-
<PAGE>
1.41 "Trustee" means the corporation or individuals appointed by
the Board of Directors of the Company to administer the Trust.
1.42 "Valuation Date" means a date on which the Investment Funds
are valued and the Accounts of Participants are adjusted. Valuation Dates
shall be the last day of each month.
1.43 "Valuation Period" means each calendar month.
1.44 "Voluntary Contributions" means contributions made pursuant
to the provisions of Section 5.1 of the Plan.
1.45 "Voluntary Contribution Account" means the record of money and
assets held by the Trustee for an individual Participant or Beneficiary pursuant
to the provisions of the Plan, derived from Voluntary Contributions.
1.46 "Wage Payment Date" means a date on which an Employee receives
Compensation from the Company with respect to services performed for the Company
during the applicable Wage Payment Period.
1.47 "Wage Payment Period" means the period of time ending on or
including the Wage Payment Date for which a Participant is paid Compensation.
-17-
<PAGE>
ARTICLE II
----------
PARTICIPATION
-------------
2.1 Eligibility Requirement. Each Employee who was an Eligible
-----------------------
Employee on December 31, 1988 shall continue to be an Eligible Employee from and
after January 1, 1989. Each other Employee who is in a covered classification
(as described in the next sentence) shall become an Eligible Employee on the
Entry Date coinciding with or next following: (a) on and after January 1, 1986
and before July 1, 1989, the date he has attained the age of 21; and (b) on and
after July 1, 1989, the date he has completed six (6) months of Service without
a Break in Service and has attained the age of 21. In the case of the Company,
the covered classification of Employees shall be all Employees compensated on a
salaried basis. In the case of any Related Company that adopts the Plan
pursuant to Section 14.15, the covered classification shall be set forth in the
resolution pursuant to which such Related Company adopts the Plan (which covered
classification is subject to approval by the Board) and shall be reflected on
Schedule A hereto.
2.2 Reemployment of a Participant. If an Employee whose employment
-----------------------------
with the Company terminates is reemployed by the Company before he incurs a
Break in Service, his Service with the Company or a Related Company before and
after his date of reemployment shall be counted for purposes of Section 2.1. If
an Eligible Employee shall incur a Break in Service and shall thereafter be
reemployed in a covered classification (as described in Section 2.1), he shall
again become an Eligible Employee as of the Entry Date coinciding with or next
following
-18-
<PAGE>
the date of his resumption of employment. If an Employee who is not an Eligible
Employee shall incur a Break in Service and shall thereafter be reemployed in a
covered classification, he shall be treated as a new Employee for purposes of
Section 2.1.
2.3 Election to Participate. (a) An Eligible Employee may become a
-----------------------
Participant by executing and filing with the Company a Long-Term Savings
Agreement, and such other forms as may be required by the Company, which will be
provided by the Company.
(b) An Eligible Employee who was a Participant under the Plan as in
effect on December 31, 1988 shall continue to be a Participant from and after
January 1, 1989. Each other Eligible Employee shall become a Participant on the
first day of any Wage Payment Period coincident with or following any Entry Date
designated by him if such Entry Date coincides with or follows the date on which
he becomes an Eligible Employee and if he executes and files with the Company a
Long-Term Savings Agreement and any other forms required by the Company no later
than (i) the tenth day of the month that contains the applicable Entry Date in
the case of a salaried Eligible Employee, or (ii) the tenth day of the month
preceding the month that contains the applicable Entry Date, in the case of an
hourly paid Eligible Employee.
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<PAGE>
ARTICLE III
-----------
SALARY DEFERRAL CONTRIBUTIONS
-----------------------------
3.1 Salary Deferral Contributions.
-----------------------------
(a) Each Participant shall elect, by entering into a Long-Term Savings
Agreement with the Company, to reduce his Earnings from the Company by a whole
percentage between one percent (1%) and fifteen percent (15%) (in increments of
one percent), as elected by the Participant; provided that fractional reductions
shall be permitted where necessary to comply with the $9,240 limit, as adjusted,
imposed by Section 402(g)(3) of the Code. Reductions to a Participant's Earnings
pursuant to his Long-Term Savings Agreement shall be effected through payroll
deductions, commencing as of the first Wage Payment Date after he becomes a
Participant pursuant to Section 2.3(b), in accordance with procedures
established by the Company. Long-Term Savings Agreements shall be subject to the
special rules set forth in this Article III.
(b) Amounts subject to Long-Term Savings Agreements effective for a
given Plan Year shall be reduced proportionately to the extent that they and
Matching Contributions under Section 4.1, in the aggregate, exceed the maximum
deduction allowable for such Plan Year under Section 404 of the Code. All
amounts so reduced, adjusted for earnings, gains and losses allocable thereto,
shall be returned to the Company and immediately thereafter paid by the Company
directly to the applicable Participants.
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<PAGE>
(c) Notwithstanding any provision of the Plan to the contrary, the
elective deferrals (as defined in Section 402(g)(3) of the Code) of any
Participant for any taxable year of the Participant shall not exceed $9,240 (or
such other amount provided by the Secretary of the Treasury pursuant to Sections
402(g)(5) and 415(d) of the Code. Prior to January 1, 1993, any amount
authorized by a Participant pursuant to his Long-Term Savings Agreement to be
contributed to the Plan by the Company on his behalf during any Plan Year in
excess of the limitation set forth in this paragraph shall instead be allocated
to his Voluntary Contribution Account and shall be treated, for all purposes of
the Plan, as Voluntary Contributions contributed by such Participant to the Plan
pursuant to Section 5.1. From and after January 1, 1993, any Salary Deferral
Contributions contributed to the Plan by the Company on behalf of a Participant
during any Plan Year, pursuant to the Participant's Long-Term Savings Agreement,
in excess of the limitation set forth in this paragraph, adjusted for earnings,
gains and losses allocable thereto for such Plan Year, shall be returned to such
Participant in accordance with the procedures and within the time period set
forth in Section 402(g)(2) of the Code. No reduction shall be made, however,
with respect to the Company Matching Contributions contributed on behalf of the
Participant.
(d) The Company shall contribute to the Trust for each Valuation
Period a Salary Deferral Contribution equal to the amounts designated by
Participants pursuant to Long-Term Savings Agreements and deducted
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<PAGE>
from payroll during such Valuation Period and not reduced pursuant to paragraph
(b) or (c) of this Section 3.1.
3.2 Administrative Rules Governing Long-Term Savings Agreements.
-----------------------------------------------------------
(a) A Participant may change the percentage by which his Earnings have been
reduced pursuant to a Long-Term Savings Agreement, within the percentage limits
set forth in Section 3.1(a) of the Plan, effective as of his first Wage Payment
Date designated by him if such Participant executes and delivers an amendment to
such Long-Term Savings Agreement designating such change, and any other forms
required by the Company, no later than (i) the tenth day of the month that
contains the applicable Wage Payment Date, in the case of a salaried
Participant, or (ii) the tenth day of the month preceding the month that
contains the applicable Wage Payment Date, in the case of an hourly paid
Participant.
(b) Salary Deferral Contributions shall be held in trust uninvested by
the Company and shall be remitted to the Trustee as of the earliest date on
which said Contributions can reasonably be segregated from the Company's general
assets, not to exceed ninety (90) days from the Wage Payment Date to which said
contributions relate. In any event the Company shall pay to the Trustee its
Salary Deferral Contribution with respect to a particular Plan Year within the
period of time prescribed by law for filing the Company's Federal income tax
return for such Plan Year, including extensions duly granted.
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<PAGE>
3.3 Suspension of Long-Term Savings Agreements. (a) A Participant
------------------------------------------
may voluntarily suspend a Long-Term Savings Agreement for an indefinite period
of time. If a notice of suspension, on such forms as shall be required by the
Company, is received on or before (i) the tenth day of the month that contains
the applicable Wage Payment Date, in the case of a salaried Participant, or (ii)
the tenth day of the month preceding the month that contains the applicable Wage
Payment Date, in the case of an hourly paid Participant, such suspension shall
be effective as of the applicable Wage Payment Date. If such notice is received
after the tenth day of the applicable month, such suspension shall be effective
as of the first Wage Payment Date that occurs in the following month. A
Participant will not be permitted to make up amounts subject to a Long-Term
Savings Agreement for any period of suspension. A Participant who makes an
election to suspend a Long-Term Savings Agreement pursuant to this Section may
reinstate such Agreement effective as of his first Wage Payment Date following
any subsequent Entry Date designated by him if such Participant again executes
and files with the Company a Long-Term Savings Agreement, and any other forms
required by the Company, no later than the tenth day of the month preceding the
month that contains the applicable Wage Payment Date.
(b) The Company, at its election, may amend, suspend or revoke a Long-
Term Savings Agreement with a Participant at any time if the Company determines
that such amendment or revocation is necessary to ensure that the Annual
Additions to the Accounts of a Participant do not exceed the Maximum
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<PAGE>
Permissible Amount for such Participant for that Year or to ensure that the
requirements of Section 3.1(c), 3.4 or 6.2 are met for such Year.
3.4 Limitations on Salary Deferral Contributions.
--------------------------------------------
(a) Notwithstanding anything to the contrary contained elsewhere in
the Plan or contained in any Long-Term Savings Agreement, all Long-Term Savings
Agreements entered into with respect to any Plan Year shall be valid only if one
of the tests set forth in paragraph (b) next below is satisfied for such Plan
Year. In determining whether such tests are satisfied, all Salary Deferral
Contributions and excess Salary Deferral Contributions under Section 3.1(c) of
Highly Compensated Participants, if any, made with respect to such Plan Year
shall be considered.
(b) For each Plan Year the Actual Deferral Percentage for Highly
Compensated Eligible Employees shall bear to the Actual Deferral Percentage for
all other Eligible Employees a relationship that satisfies either of the
following tests:
(i) The Actual Deferral Percentage for Highly Compensated Eligible
Employees is not more than the Actual Deferral Percentage of all
other Eligible Employees multiplied by 1.25; or
(ii) The Actual Deferral Percentage for Highly Compensated Eligible
Employees is not more than the Actual Deferral Percentage for all
other Eligible Employees multiplied by two
-24-
<PAGE>
and the excess of the Actual Deferral Percentage for the group of
Highly Compensated Eligible Employees over that of all other
Eligible Employees is not more than two percentage points.
The Actual Deferral Percentage of any Eligible Employee or group of Eligible
Employees shall be calculated to the nearest 1/100 of one percent (.0001). The
Actual Deferral Percentage of an Eligible Employee who is not credited with any
Salary Deferral Contributions for a Plan Year is zero.
(c) If at the end of any Plan Year neither of the tests set forth in
paragraph (b) next above is satisfied for such Year, then:
(i) Long-Term Savings Agreements entered into for such Year by Highly
Compensated Participants shall be valid only to the extent
permitted by one of the tests set forth in paragraph (b) next
above and Salary Deferral Contributions made by the Company for
such Year for Highly Compensated Participants shall be reduced in
the manner set forth in paragraph (ii) next below to the extent
necessary to comply with one of the tests set forth in paragraph
(b) next above. All Salary Deferral Contributions so reduced,
adjusted for earnings, gains and losses allocable thereto,
pursuant to Section 401(k)(8) of the Code, shall be allocated and
distributed in the manner provided in Section 3.5.
-25-
<PAGE>
(ii) Reductions pursuant to paragraph (i) next above shall be
effected with respect to Highly Compensated Participants
pursuant to the following procedure: (A) the Actual Deferral
Percentage of the Highly Compensated Participant with the
highest Actual Deferral Percentage shall be reduced to the
extent necessary to cause such Highly Compensated Participant's
Actual Deferral Percentage to equal the Actual Deferral
Percentage of the Highly Compensated Participant with the next
highest Actual Deferral Percentage. The process shall be
repeated until the Plan satisfies one of the tests set forth
in (i) or (ii) of paragraph (b) for such Plan Year.
(iii) Long-Term Savings Agreements entered into by all Participants
who are not Highly Compensated shall be valid and Salary
Deferral Contributions made by the Company for such Participants
shall not be changed.
The calculations, reductions and allocations required by this Section 3.4(c) and
Section 3.5 shall be made by the Company with respect to a Plan Year at any time
prior to the close of the following Plan Year.
(d) It at any time during a Plan Year the Company, in its sole
discretion, determines that neither of the tests set forth in paragraph (b) of
this
-26-
<PAGE>
Section 3.4 may be met for such Plan Year, the Company shall have the unilateral
right during the Plan Year to do either of the following:
(i) require the prospective reduction, for the balance of such Year
or any part thereof, of the percentage by which all Highly
Compensated Participants have elected to reduce their Earnings
pursuant to Long-Term Savings Agreements. Such reductions shall
be made to the extent necessary, in the discretion of the
Company, to assure that one of the tests set forth in paragraph
(b) of this Section 3.4 shall be met for the Plan Year, shall be
based upon estimates made from data available to the Company at
any time during the Plan Year and shall be made in accordance
with such nondiscriminatory procedures as the Company shall
select. Reductions pursuant to the preceding sentence shall be
effected with respect to Highly Compensated Participants pursuant
to the following procedure: the Actual Deferral Percentage of the
Highly Compensated Participant with the highest Actual Deferral
Percentage shall be reduced to the extent necessary to cause such
Highly Compensated Participant's Actual Deferral Percentage to
equal the Actual Deferral Percentage of the Highly Compensated
Participant with the next highest Actual Deferral Percentage.
This process shall be repeated to the extent necessary to assure
that one of
-27-
<PAGE>
the tests set forth in (i) or (ii) of paragraph (b) of this
Section shall not be exceeded for such Plan Year. Long-Term
Savings Agreements made by all Participants who are not Highly
Compensated Participants shall be valid and Salary Deferral
Contributions for such Participants shall not be changed.
(ii) make an optional contribution for any Plan Year with respect to
Participants who are not Highly Compensated Participants to the
extent necessary to assure that one of the tests set forth in
paragraph (b) of this Section 3.4 shall be met for the Plan Year,
starting with the lowest paid such Participant and continuing
with such Participants in the inverse order of their Compensation
until the optional contribution has been entirely allocated.
Contributions made pursuant to the preceding sentence shall be
deemed to be Salary Deferral Contributions for all purposes of
the Plan, other than for purposes of Section 8.4 of the Plan and
for purposes of determining the amount of Matching Contributions
made on such Participant's behalf, and shall be included in the
value of the Participant's Savings Account attributable to Salary
Deferral Contributions as of the last day of the Plan Year for
which they were made. The Company shall pay to the Trustee such
contributions with
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<PAGE>
respect to a particular Plan Year within 90 days after the end of
such Plan Year.
3.5 Recharacterization and Return of Certain Salary Deferral
--------------------------------------------------------
Contributions. If a Salary Deferral Contribution made by the Company for a
- -------------
Highly Compensated Participant is reduced pursuant to Section 3.4(c), the amount
so reduced shall be allocated and distributed as follows:
(a) Prior to January 1, 1993, and to the extent permitted by
Regulations issued by the Secretary of the Treasury and as elected by the Highly
Compensated Participant, if the Highly Compensated Participant has not made
Voluntary Contributions equal to the maximum amount permitted under Sections 5.1
and 6.1 of the Plan for the entire time that he has been a Participant in the
Plan, the amount reduced pursuant to Section 3.4(c), adjusted for earnings,
gains and losses allocable thereto for the Plan Year shall be deemed to be
Voluntary Contributions made by the Participant and shall (within the limit
contained in Section 5.1) be allocated to the Participant's Voluntary
Contribution Account; and
(b) To the extent that the procedure set forth in paragraph (a) above
is not permitted, is no longer applicable, or is not elected by a Highly
Compensated Participant, or if the Highly Compensated Participant makes or is
deemed to have made Voluntary Contributions equal to the maximum amount
permitted by Section 5.1 or Section 6.1 (through contributions made pursuant to
Articles V and VI of the Plan, through the operation of paragraph (a) next
above, or both) any portion of the
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<PAGE>
amount so reduced pursuant to Section 3.4(c) that is not allocated to the
Participant's Voluntary Contribution Account pursuant to paragraph (a) next
above, adjusted for earnings, gains and losses allocable thereto for the Plan
Year, pursuant to Section 401(k)(8) of the Code, shall be returned to the
Company and as soon as practicable thereafter paid by the Company directly to
the applicable Highly Compensated Participant.
(c) In all cases, Salary Deferral Contributions made by a Highly
Compensated Participant on and after January 1, 1993 that are reduced pursuant
to Section 3.4(c) shall be returned to such Highly Compensated Participant
pursuant to paragraph (b) above.
(d) Notwithstanding anything to the contrary contained elsewhere in
the Plan, if a Participant's Salary Deferral Contributions are recharacterized
or returned pursuant to paragraph (a), (b) or (c) above, any Matching
Contributions attributable thereto shall, subject to Article VI, be forfeited
and used to offset the amount of Matching Contributions to be made for the next
Wage Payment Period by the Company and shall be allocated among the Matching
Contributions Account of Participants pursuant to the provisions of Section 7.3.
-30-
<PAGE>
ARTICLE IV
----------
MATCHING CONTRIBUTIONS
----------------------
4.1 Matching Contributions. (a) As of each Wage Payment Date prior
----------------------
to April 1, 1990, the Company shall contribute to the Trust for each Participant
for whom Earnings have been deducted a Matching Contribution in an amount equal
to the lesser of: (i) twenty-five percent (25%) of the amount deducted from his
Earnings through a payroll deduction as of such Wage Payment Date pursuant to a
Long-Term Savings Agreement; and (ii) 1 1/4% of his Earnings payable on such
Wage Payment Date.
(b) Effective as of April 1, 1990 and continuing through December 31,
1991, as of each Wage Payment Date, the Company shall contribute to the Trust
for each Participant for whom Earnings have been deducted through payroll
deductions pursuant to a Long-Term Savings Agreement, a Matching Contribution
equal to a percentage of his Earnings, as set forth in the following table:
<TABLE>
<CAPTION>
Salary Deferral Contribution Matching Contribution
as a Percentage of Earnings as a Percentage of Earnings
---------------------------- ---------------------------
<S> <C>
1% 0.75%
2% 1.00%
3% 1.25%
4% 1.50%
5% 1.75%
6% to 15% 2.00%
</TABLE>
-31-
<PAGE>
(c) For the Plan Year commencing on January 1, 1992 and ending on
December 31, 1992, as of each Wage Payment Date, the Company shall contribute to
the Trust for each Participant for whom Earnings have been deducted through
payroll deductions during the applicable Wage Payment Period pursuant to a Long-
Term Savings Agreement, a Matching Contribution equal to a percentage of his
Earnings for the Wage Payment Period ending on such Wage Payment Date, as set
forth in the following table:
<TABLE>
<CAPTION>
Salary Deferral Contribution Matching Contribution
as a Percentage of Earnings as a Percentage of Earnings
----------------------------- ---------------------------
<S> <C>
1% 0.75%
2% 1.00%
3% 1.25%
4% 1.50%
5% 1.75%
6% to 15% 2.00%
</TABLE>
(d) For each Plan Year commencing on or after January 1, 1993, as of
each Wage Payment Date, the Company shall contribute to the Trust for each
Participant for whom Earnings have been deducted through payroll deductions
during the applicable Wage Payment Period pursuant to a Long-Term Savings
Agreement, a Matching Contribution equal to a percentage of his Earnings for the
-32-
<PAGE>
Wage Payment Period ending on such Wage Payment Date, as set forth in the
following table:
<TABLE>
<CAPTION>
Salary Deferral Contribution Matching Contribution
as a Percentage of Earnings as a Percentage of Earnings
----------------------------- ---------------------------
<S> <C>
1% 1.00%
2% 1.50%
3% 2.00%
4% 2.50%
5% 2.75%
6% or more 3.00%
</TABLE>
(e) Matching Contributions shall be held uninvested by the Company and
shall not accrue interest or earnings until remitted to the Trustee, which shall
be no later than ten days after the end of each Valuation Period.
(f) Matching Contributions made with respect to a Plan Year or any
part thereof pursuant to this Section 4.1 shall in no event be made later than
the time prescribed by law for filing the income tax return of the Company for
the fiscal year of the Company (including extensions thereto) which corresponds
to such Plan Year.
-33-
<PAGE>
ARTICLE V
---------
VOLUNTARY CONTRIBUTIONS, ROLLOVERS
----------------------------------
AND TRANSFERS FROM OTHER PLANS
------------------------------
5.1 Voluntary Contributions. For each Plan Year commencing prior
-----------------------
to January 1, 1993, each Eligible Employee may elect, by executing a form
provided by the Company, to contribute to the Plan a percentage of his Earnings
on an after-tax basis, between one percent (1%) and six percent (6%) (in
increments of one percent (1%)), as elected by the Eligible Employee. Voluntary
Contributions shall be effected through payroll deductions, commencing as of the
first Wage Payment Date designated by him if such Eligible Employee executes and
delivers to the Company any forms required by the Company, in accordance with
procedures established by the Company, no later than the tenth day of the month
that contains the applicable Wage Payment Date. Voluntary Contributions shall
be subject to the special rules set forth in this Article V. Notwithstanding
any provision of the Plan to the contrary, the sum of Voluntary Contributions
made on behalf of an Eligible Employee under this Section, and amounts deemed to
be Voluntary Contributions under Sections 3.1(c) and 3.5(a), shall not exceed
six percent (6%) of the Eligible Employee's Earnings for any Plan Year.
5.2 Rules Governing Voluntary Contributions. (a) For each Plan
---------------------------------------
Year commencing prior to January 1, 1993, a Participant may change the
percentage of his Earnings contributed to the Trust Fund as Voluntary
-34-
<PAGE>
Contributions, within the percentage limits set forth in Section 5.1 of the
Plan, effective as of the first Wage Payment Date designated by him if such
Participant executes and delivers any form required by the Company to designate
such change no later than the tenth day of the month that contains the
applicable Wage Payment Date. If the Participant executes and delivers such form
later than the tenth day of a month, such change shall be effective as of the
first Wage Payment Date that occurs in the following month.
(b) For each Plan Year commencing prior to January 1, 1993, a
Participant may voluntarily suspend his Voluntary Contributions for an
indefinite period of time. If a notice of suspension, on such forms as shall be
required by the Company, is received on or before the tenth day of a month, such
suspension shall be effective as of the next Wage Payment Date that occurs in
that month. If such notice is received after the tenth day of a month, such
suspension shall be effective as of the first Wage Payment Date that occurs in
the following month. For each Plan Year commencing prior to January 1, 1993, a
Participant who makes an election to suspend Voluntary Contributions pursuant to
this Section may reinstate such Voluntary Contributions effective as of his
first Wage Payment Date designated by him if such Participant files with the
Company an executed reinstatement form, in accordance with procedures
established by the Company, no later than the tenth day of the month that
contains the applicable Wage Payment Date.
-35-
<PAGE>
(c) Voluntary Contributions shall be held uninvested by the Company
and shall be remitted to the Trustee as of the earliest date on which such
Contributions can reasonably be segregated from the Company's general assets,
but not to exceed ninety (90) days from the Wage Payment Date to which such
Contributions relate.
5.3 Rollovers and Transfers to and from Other Plans. (a) An
-----------------------------------------------
Employee in a covered classification (as described in Section 2.1) who has
received a distribution of his interest in a qualified plan of the Company or a
former employer under circumstances meeting the requirements of Section
402(c)(4) of the Code relating to distributions from qualified plans may elect
to deposit all or any portion (as designated by such Employee in writing to the
Committee) of the amount of such distribution as a Rollover Contribution to this
Plan. A Rollover Contribution may be made only within sixty (60) days following
the date such Employee receives the distribution from the plan of the Company or
his former employer (or within such additional period as may be provided under
Section 408 of the Code if the Employee shall have made a timely deposit of the
distribution in an individual retirement account). Subject to paragraph (b)
next below, the Trustee may also receive a Rollover Contribution directly from
the trustee under the plan of the Company or former employer of all or any
portion (as designated by such Employee in writing to the Committee) of the
amount that would otherwise be distributable to an Employee in a covered
classification from such plan. The Committee shall establish rules and
procedures to implement this Section 5.3, including, without
-36-
<PAGE>
limitation, such procedures as may be appropriate to permit the Committee to
verify the tax qualified status of the plan of the former employer or the
Company and compliance with any applicable provisions of the Code relating to
Rollover Contributions. The amount contributed or transferred to the Trustee
pursuant to this Section shall be placed in the Employee's Transfer Account for
the benefit of the Employee. Each Transfer Account shall share in the earnings,
gains and losses of the Trust Fund as set forth in Section 7.8 of the Plan and
shall be distributed at the same times and in the manner set forth in Article
VII below. Notwithstanding the preceding provisions of this Section, the
Trustee shall not accept any transfer of an Employee's interest in a qualified
plan of the Company or of a former employer if it is determined that such
acceptance would render this Plan a direct or indirect transferee of a defined
benefit plan, money purchase pension plan (including a target benefit plan),
stock bonus or profit sharing plan that provides for a life annuity form of
payment to the Employee (except to the extent that such transfer is made
pursuant to Section 401(a)(31) of the Code).
(b) As of any Entry Date, at the written request of a Participant who
is or was a participant under the Illinois Consolidated Telephone Company Long-
Term Savings Plan for Hourly-Paid Employees (the "Hourly Plan"), filed with the
Committee, the Trustee may also receive directly from the trustee under the
Hourly Plan all or any portion (as designated by such Participant in writing to
the Committee) of the vested amount credited to the accounts of such Participant
under the Hourly Plan. Amounts so transferred shall be placed in the
Participant's
-37-
<PAGE>
Savings Account, Voluntary Contribution Account or Transfer Account, in this
Plan, as the case may be, in the same proportions that such amounts were
credited to the Savings Account, Voluntary Contributions Account, or
attributable to Rollover Contributions, in the Hourly Plan, respectively,
immediately prior to such transfer and shall be held for the benefit of the
Participant. If the Participant has a loan outstanding under the Hourly Plan at
the time of the transfer, such loan shall be transferred to and assumed by the
Trustee and shall thereafter be treated as a loan made pursuant to Article XI of
this Plan. Unless otherwise specified by a Participant in writing to the
Committee, a transfer to the Trustee of amounts from the Hourly Plan shall be
governed by this paragraph (b) and not by paragraph (a) next above.
(c) As of any Entry Date, with respect to each Participant in this
Plan who becomes a participant under the Hourly Plan at any time during the
immediately preceding three months and who makes a written request pursuant to
the terms of the Hourly Plan, the Trustee shall transfer directly to the trustee
of the Hourly Plan, all of the Adjusted Balance of the Savings Account,
Voluntary Contribution Account and Transfer Account of the Participant, as well
as any outstanding loan made to such Participant pursuant to Article XI of the
Plan, to be held and assumed in accordance with the provisions of the Hourly
Plan for the benefit of the Participant.
-38-
<PAGE>
ARTICLE VI
----------
SPECIAL RULES APPLICABLE TO MATCHING
------------------------------------
CONTRIBUTIONS AND VOLUNTARY CONTRIBUTIONS
-----------------------------------------
6.1 Limitations. (a) Notwithstanding any provisions of the Plan to
-----------
the contrary, the Actual Contribution Percentage of Highly Compensated Eligible
Employees shall bear to the Actual Contribution Percentage for all other
Eligible Employees a relationship that satisfies either of the following tests:
(i) The Actual Contribution Percentage for Highly Compensated
Eligible Employees is not more than the Actual Contribution
Percentage for all other Eligible Employees multiplied by 1.25;
or
(ii) The Actual Contribution Percentage for Highly Compensated
Eligible Employees is not more than the Actual Contribution
Percentage for all other Eligible Employees multiplied by two and
the excess of the Actual Contribution Percentage for the group
of Highly Compensated Eligible Employees over that of all other
Eligible Employees is not more than two percentage points.
The Actual Contribution Percentage of any Eligible Employee or group of Eligible
Employees shall be calculated to the nearest 1/100 of one percent (.0001). The
-39-
<PAGE>
Actual Contribution Percentage of an Eligible Employee who is not credited with
any Matching Contributions or Voluntary Contributions for a Plan Year is zero.
(b) If, at the end of any Plan Year, neither of the tests set forth in
paragraph (a) above is satisfied for such Year, then the Matching Contributions
and Voluntary Contributions made for such Year by or on behalf of Highly
Compensated Participants shall be reduced to the extent necessary to comply with
one of the tests set forth in paragraph (a). Reductions pursuant to the
preceding sentence shall be effected with respect to Highly Compensated
Participants pursuant to the following procedure: the Actual Contribution
Percentage of the Highly Compensated Participant with the highest Actual
Contribution Percentage shall be reduced to the extent necessary to cause such
Highly Compensated Participant's Actual Contribution Percentage to equal the
Actual Contribution Percentage of the Highly Compensated Participant with the
next highest Actual Contribution Percentage. This process shall be repeated
until one of the tests set forth in paragraph (a) is satisfied for such Plan
Year. In making such reductions, Voluntary Contributions shall be reduced first
and Matching Contributions shall be reduced last.
(c) Voluntary Contributions and Matching Contributions made by
Participants who are not Highly Compensated Participants shall be valid and
shall not be changed or affected by this Section.
-40-
<PAGE>
(d) If at any time during a Plan Year the Company determines that both
of the tests set forth in paragraph (a) of this Section 6.1 may not be met for
such Plan Year, then:
(i) The Company shall have the unilateral right during any Plan Year
commencing prior to 1993 to require the prospective reduction,
for the balance of such Plan Year or any part thereof, of the
percentage of the Earnings of Highly Compensated Participants
that may be subject to an election pursuant to Section 5.1 to
make Voluntary Contributions during the Plan Year. Such
reductions shall be made to the minimum extent necessary to
assure that one of the tests in paragraph (a) of this Section 6.1
shall be met for the Plan Year and shall be based upon estimates
made from data available to the Company at any time during the
Plan Year;
(ii) Reductions pursuant to subsection (i) next above shall be
effected with respect to Highly Compensated Participants pursuant
to the following procedure: The Actual Contribution Percentage of
the Highly Compensated Participant with the highest Actual
Contribution Percentage shall be reduced by the extent necessary
to cause such Highly Compensated Participant's Actual
Contribution Percentage to equal the
-41-
<PAGE>
Actual Contribution Percentage of the Highly Compensated
Participant with the next highest Actual Contribution Percentage.
This process shall be repeated to the extent necessary to assure
that one of the tests set forth in paragraph (a) of this Section
6.1 shall not be exceeded for such Plan Year.
(e) Matching Contributions and Voluntary Contributions that are
reduced pursuant to the preceding provisions of this Article for a Plan Year,
adjusted for earnings, gains and losses allocable thereto for such Plan Year
pursuant to Section 401(m) of the Code, shall be returned to the Company and as
soon as practicable thereafter paid by the Company directly to the applicable
Participant.
(f) The calculations, reductions and payments required by this Article
shall be made by the Company with respect to a Plan Year at any time prior to
the close of the following Plan Year.
6.2 Multiple Use Test. If a "Multiple Use of the Alternative
-----------------
Limitation" occurs in a Plan Year, then, notwithstanding any other provision of
Section 3.4 or of Section 6.1, the test in paragraph (a)(ii) of Section 6.1
shall not be used to satisfy the requirements of this Section for Matching
Contributions and Voluntary Contributions in the same Plan Year that the test
contained in Section 3.4(b)(ii) is used to satisfy the requirements of Section
3.4 with respect to Salary Deferral Contributions. If the preceding sentence
shall be applicable for a Plan
-42-
<PAGE>
Year, then the Company shall determine whether to use the test in paragraph
(a)(ii) of Section 6.1 to satisfy the requirements of this Section 6.2 or to use
the test in paragraph (b)(ii) of Section 3.4 to satisfy the requirements of
Section 3.4 for such Plan Year.
A Multiple Use of the Alternative Limitation shall occur in any Plan
Year if all of the following conditions are satisfied in the Plan Year:
(a) At least one Highly Compensated Eligible Employee is eligible to
authorize Salary Deferral Contributions to be made on his behalf and to make
Voluntary Contributions or to have Matching Contributions allocated to his
Savings Account pursuant to the Plan during such Plan Year;
(b) The sum of the Actual Deferral Percentage of the entire group of
Highly Compensated Eligible Employees and of the Actual Contribution Percentage
of the entire group of Highly Compensated Eligible Employees for such Plan Year
exceeds the greater of (i) or (ii) below:
(i) The sum of:
(A) 125% of the greater of (I) the Actual Deferral Percentage of
the group of Eligible Employees who are not Highly Compensated
Eligible Employees for such Plan Year, or (II) the Actual Contribution
Percentage of the group of Eligible Employees who are not Highly
Compensated Eligible Employees for such Plan Year, and
-43-
<PAGE>
(B) Two plus the lesser of (i)(A)(I) or (i)(A)(II) above. In no
event, however, shall this amount exceed 200% of the lesser of
(i)(A)(I) or (i)(A)(II) above;
(ii) The sum of:
(A) 125% of the lesser of (I) the Actual Deferral Percentage of the
group of Eligible Employees who are not Highly Compensated Eligible
Employees for such Plan Year, or (II) the Actual Contribution
Percentage of the group of Eligible Employees who are not Highly
Compensated Eligible Employees for such Plan Year, and
(B) Two plus the greater of (ii)(A)(I) or (ii)(A)(II) above. In no
event, however, shall this amount exceed 200% of the greater of
(ii)(A)(I) or (ii)(A)(II) above;
(c) The Actual Deferral Percentage of the entire group of Highly
Compensated Eligible Employees exceeds the amount described in Section
3.4(b)(i); and
(d) The Actual Contribution Percentage of the entire group of Highly
Compensated Eligible Employees exceeds the amount described in Section
6.1(a)(i).
-44-
<PAGE>
ARTICLE VII
-----------
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
-------------------------------------
7.1 Separate Accounts. The Company shall create and maintain a
-----------------
separate Account for each Participant as shall be needed. Such Account shall
consist of such of the following as shall be applicable to the Participant: a
Savings Account, a Transfer Account and a Voluntary Contribution Account.
Participants' Accounts are primarily for accounting purposes and do not require
a segregation of the Trust Fund. The Company may delegate the responsibility
for the maintenance of the Accounts to the Trustee or any agent or agents.
7.2 Suspense Account. The Company shall maintain a Suspense
----------------
Account, if necessary, pursuant to the provisions of Section 7.6. The
investment of the balance in the Suspense Account shall be within the sole
discretion of the Company.
7.3 Allocation of Matching Contributions. As of each Valuation
------------------------------------
Date there shall be allocated to the Savings Account of each Participant the
Matching Contribution made by the Company for such Participant pursuant to
Section 4.1 for the Valuation Period ending on such Date. Subject to Section
3.5(c), an allocation pursuant to this Section shall be made only to the Savings
Account of a Participant whose Earnings were reduced through payroll deductions
pursuant to a Long-Term Savings Agreement during the Valuation Period ending on
such Valuation Date.
-45-
<PAGE>
7.4 Allocations of Salary Deferral Contributions. (a) As of each
--------------------------------------------
Valuation Date, there shall be allocated to the Savings Account of each
Participant a Salary Deferral Contribution equal to (a) the amount by which the
Participant's Earnings were reduced by payroll deductions during the Valuation
Period ending on such Valuation Date pursuant to such Participant's Long-Term
Savings Agreement, reduced by (b) any applicable amounts pursuant to the
provisions of Sections 3.1(b), 3.1(c) and 3.4(c).
(b) In the event that the Company elects to make an optional
contribution pursuant to Section 3.4(d)(ii) of the Plan with respect to any Plan
Year, such contribution shall be allocated to the Savings Accounts of the
applicable Participants as of the last day of such Plan Year (even though
receipt of the optional contribution is not received by the Trustee until after
the close of such Plan Year).
7.5 Allocation of Voluntary and Rollover Contributions. Voluntary
--------------------------------------------------
Contributions made by a Participant shall be allocated to his Voluntary
Contribution Account as of the Valuation Date coinciding with or next following
receipt of such Contributions by the Trustee. Rollover Contributions made by or
for an Employee shall be allocated to his Transfer Account as of the Valuation
Date coinciding with or next following receipt of such Contributions by the
Trustee.
7.6 Maximum Allocation. (a) Except as provided in paragraph (b)
------------------
below, the allocations to the Account of any Participant in any Limitation Year
-46-
<PAGE>
shall be limited so that the Participant's Annual Additions for such Year do not
exceed the Maximum Permissible Amount.
(b) If the foregoing limitation on allocations would be exceeded in
any Limitation Year for any Participant as a result of (i) the allocation of
forfeitures; (ii) reasonable error in estimating a Participant's Compensation;
(iii) reasonable error in determining the amount of elective deferrals (within
the meaning of Section 402(g)(3) of the Code) that may be made with respect to a
Participant; or (iv) under such other limited facts and circumstances that the
Commissioner of the Internal Revenue Service, pursuant to Treasury Regulation
1.415-6(b)(6), finds justify the availability of this Section 7.6, the Voluntary
Contributions and Salary Deferral Contributions made by or with respect to such
Participant shall be distributed to him to the extent that any such distribution
would reduce the amount in excess of the limits of this Section 7.6 and any
amount in excess of the limits of this Section 7.6 remaining after such
distribution shall be placed, unallocated to any Participant, in a Suspense
Account. If a Suspense Account is in existence at any time during a particular
Limitation Year, other than the Limitation Year described in the preceding
sentence, all amounts in the Suspense Account must be allocated to Participants'
Accounts (subject to the limits of this Section 7.6) before any contributions
that would constitute Annual Additions may be made to the Plan for that
Limitation Year. The excess amount allocated pursuant to this Section 7.6(b)
shall be used to reduce Matching Contributions for the next Limitation Year (and
succeeding Limitation Years, as necessary) for that
-47-
<PAGE>
Participant. However, if that Participant is not covered by the Plan as of the
end of the applicable Limitation Year, then the excess amounts must be held
unallocated in the Suspense Account for the Limitation Year and allocated and
reallocated in the next Limitation Year to all of the remaining Participants in
the Plan. The Suspense Account shall not share in the valuation of Participants'
Accounts and the allocation of earnings set forth in Section 7.8 of the Plan,
and the change in fair market value and allocation of earnings attributable to
the Suspense Account shall be allocated to the remaining Accounts hereunder as
set forth in Section 7.8.
(c) Any reduction in contributions and allocations made under this
Plan for a Participant's Account required pursuant to this Section 7.6 and
Section 415 of the Code shall be effected, to the extent necessary, in the
following manner: (i) first, Voluntary Contributions made by such Participant
shall be reduced; (ii) next, the Salary Deferral Contribution made by the
Company for the applicable Limitation Year with respect to such Participant
shall be reduced; and (iii) next, the Matching Contribution made by the Company
for the applicable Limitation Year with respect to such Participant shall be
reduced. The amount of any reductions in Voluntary Contributions and Salary
Deferral Contributions, pursuant to clauses (i) and (ii) of this paragraph (c),
adjusted for gains, earnings and losses allocable thereto, shall be paid by the
Company directly to the affected Participant pursuant to paragraph (b) of this
Section, and any reduction in Matching Contributions pursuant to clause (iii),
adjusted for gains, earnings and losses allocable thereto, shall be treated
pursuant to paragraph (b) of this Section.
-48-
<PAGE>
(d) Upon termination of the Plan, any amounts in a Suspense Account at
the time of such termination shall revert to the Company.
(e) In the event that any Participant under this Plan is also a
Participant in a defined benefit plan (as defined in Section 415(k) of the Code)
maintained by the Company, the sum of the defined benefit plan fraction and the
defined contribution plan fraction (as such terms are defined in Section 415(e)
of the Code) for any Limitation Year with respect to such Participant shall not
exceed one (1). If such sum exceeds one (1), the contributions and allocations
to the Participant's Account under this Plan shall be reduced (prior to the
reduction of any benefit of such Participant under such defined benefit plan),
as necessary, to obtain compliance with Section 415(e) of the Code. Any such
reduction under this Plan shall be made only to the extent necessary so that the
sum of such fractions shall equal one (1). For purposes of this Section 7.6, a
plan is deemed to be maintained by the Company if the plan is maintained by any
Related Company.
(f) If a Participant is entitled to receive an allocation under this
Plan and any Related Plan and, in the absence of the limitations contained in
this Section 7.6, the Company would contribute or allocate to the Account of
that Participant an amount for a Limitation Year that would cause the Annual
Additions to the Account of the Participant to exceed the Maximum Permissible
Amount for such Year, then the contributions and
-49-
<PAGE>
allocations made with respect to the Participant under this Plan shall not be
reduced until the contributions and allocations under the Related Plan have been
reduced to the extent necessary so that the allocation of such Annual Additions
does not exceed the Maximum Permissible Amount.
(g) The provisions of this Section shall be interpreted by the
Company, in the administration of the Plan, to reduce allocations (as required
by this Section) only to the minimum extent necessary to reflect the
requirements of Section 415 of the Code, as amended and in force from time to
time, and Treasury Regulations promulgated pursuant to said Section, which are
incorporated by reference herein.
7.7 Vesting. Subject to subsection 3.5(d), each Participant shall
-------
at all times be fully vested in the Adjusted Balance of his Account under the
Plan.
7.8 Allocations and Adjustments to Account. As of each Valuation
--------------------------------------
Date, and subject to Section 11.4(e), the Company shall determine, on an accrual
basis of accounting, the Adjusted Balance of each Account of each Participant in
the following manner:
(a) As soon as practicable after each Valuation Date, the Company
shall determine the earnings and the amount of any realized or unrealized
appreciation or depreciation in the fair market value of each of the Investment
Funds, determined as of the Valuation Date or the next previous business day if
the Valuation Date falls on Saturday, Sunday or holiday. In determining such
value
-50-
<PAGE>
the Company shall use such generally accepted methods and bases as the Company,
in its discretion, shall deem advisable. The judgment of the Company as to the
fair market value of any asset shall be presumptively conclusive and binding on
all persons.
(b) The earnings on all contributions made hereunder that have been
initially invested in short term investment obligations selected by the Trustee
from time to time pending allocation to one or more of the Investment Funds
shall be allocated to a Participant's applicable Account in the same proportion
as such contributions are allocated. The amount of such earnings on such
contributions shall be determined by multiplying the total amount of such
earnings by a fraction the numerator of which is the amount of such
contributions allocated to a Participant's Account for that Valuation Period and
the denominator of which is the total amount of such contributions allocated to
all Participants' Accounts for that Valuation Period.
(c) The earnings and market appreciation or depreciation of each
Investment Fund for a Valuation Period (including earnings and appreciation or
depreciation attributable to the investment of any Suspense Account in such
Investment Fund) shall be allocated to each applicable Account (excluding any
Suspense Account) that is invested in such Investment Fund on the current
Valuation Date by multiplying the earnings and market appreciation or
depreciation of such Fund by a fraction the numerator of which is the Adjusted
-51-
<PAGE>
Balance of such Account invested in the applicable Fund as of the prior
Valuation Date and the denominator of which is the total of the Adjusted
Balances of all such Accounts (excluding any Suspense Account) invested in such
Fund as of the prior Valuation Date (subtracting for purposes of determining
such fraction all distributions, withdrawals and loans made from any such
Account during such Valuation Period). Each such Account (excluding any Suspense
Account) shall be adjusted by adding thereto or subtracting therefrom its share
of the earnings and market appreciation or depreciation of each Investment Fund
as determined by the preceding sentence.
(d) Each Account shall then be further adjusted by adding to it the
amount of contributions allocable thereto for each Participant pursuant to
Sections 7.3, 7.4 and 7.5 during the Valuation Period ending on that Valuation
Date, and subtracting therefrom all distributions, withdrawals and loans from
such Account during such Valuation Period.
ARTICLE VIII
------------
PAYMENT OF BENEFITS
-------------------
8.1 Payments on Termination for Reasons Other Than Death. A
----------------------------------------------------
Participant who attains his Normal Retirement Date and continues to be an
Employee in a covered classification (as described in Section 2.1) thereafter
shall continue to share in the allocation of Matching Contributions and Salary
Deferral Contributions and may elect or continue to enter into Long-Term Savings
-52-
<PAGE>
Agreements. Upon the termination of employment with the Company and all Related
Companies of a Participant for any reason other than death, the Company shall
notify the Trustee in writing of the Participant's termination and shall direct
the Trustee to make payment in a method provided in the Plan of the Adjusted
Balance (reduced by any security interest held by the Plan by reason of a loan
outstanding to the Participant as of the date of his termination of employment
pursuant to Article XI) of the Participant's Account as of the Valuation Date
immediately preceding the date of payment, in accordance with Section 8.3.
8.2 Payments on Death. (a) Upon the death of a Participant the
-----------------
Company shall promptly notify the Trustee in writing of the Participant's death
and the name of his Beneficiary (or Surviving Spouse if paragraph (c) is
applicable) and shall direct the Trustee to make payment, in a method provided
in the Plan, of the Adjusted Balance (reduced by any security interest held by
the Plan by reason of a loan outstanding to the Participant as of the date of
his death pursuant to Article XI) of the Participant's Account as of the
Valuation Date immediately preceding the date of payment to his Beneficiary or
Surviving Spouse, as the case may be, in accordance with Section 8.3.
(b) Each Participant who is not married to a Surviving Spouse at the
date of his death, or each married Participant whose Surviving Spouse has
consented to an alternate Beneficiary designation or alternate method of payment
as provided in paragraph (c) shall have the right to designate, by giving a
written
-53-
<PAGE>
designation to the Company, (i) a person or persons or entity as Beneficiary to
receive the death benefit provided under this Section 8.2 and (ii) the method of
payment of such death benefit to his Surviving Spouse or Beneficiary pursuant to
Section 8.3. Successive designations may be made, and the last designation
received by the Company prior to the death of the Participant shall be effective
and shall revoke all prior designations. If a designated Beneficiary shall die
before the Participant, his interest shall terminate and, unless otherwise
provided in the Participant's designation, if such designation named more than
one Beneficiary, such interest shall be paid in equal shares to those
Beneficiaries, if any, who survive the Participant. A Participant to whom this
paragraph applies shall have the right to designate different Beneficiaries to
receive the Adjusted Balance in the Participant's Savings Account, Transfer
Account and Voluntary Contribution Account under the Plan. The Participant shall
have the right to revoke the designation of any Beneficiary without the consent
of the Beneficiary.
(c) The Beneficiary of each married Participant shall be the Surviving
Spouse of each Participant and the death benefits of any Participant who is
married at the date of his death shall be paid in full to his Surviving Spouse
in a single lump sum. Notwithstanding the preceding sentence, the death benefits
provided pursuant to paragraph (a) shall be distributed to any other Beneficiary
designated by a married Participant as provided in paragraph (b) and pursuant to
the method, if any, designated by the Participant as provided in paragraph (b),
if the Participant's Surviving Spouse consented to such designation by the
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Participant, prior to the date of the Participant's death, in writing. Such
consent must acknowledge the effect of such an election, the identity of any
non-Surviving Spouse Beneficiary, including any class of Beneficiaries or
contingent Beneficiaries, and the consent must be witnessed by a Plan
representative or a notary public. The consent of a Participant's Surviving
Spouse shall not be required if the Participant establishes to the satisfaction
of the Company that consent may not be obtained because there is no Surviving
Spouse, the Surviving Spouse cannot be located, or because of such other
circumstances as the Secretary of the Treasury may prescribe by regulations. The
Participant may not subsequently change the method of distribution elected by
the Participant or the designation of his Beneficiary unless his Surviving
Spouse consents to the new election or designation in accordance with the
requirements set forth in the preceding sentence, or unless the Surviving
Spouse's consent permits the Participant to change the election of method of
payment or the designation of his Beneficiary without the Spouse's further
consent. A Surviving Spouse's consent shall be irrevocable. Any consent by a
Surviving Spouse, or establishment that the consent of the Surviving Spouse may
not be obtained, shall be effective only with respect to that Surviving Spouse.
(d) If a Participant shall fail to designate a Beneficiary, or if such
designation shall for any reason be illegal or ineffective, or if no Beneficiary
shall survive the Participant, his death benefits otherwise payable pursuant to
this Section shall be paid:
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(i) to his Surviving Spouse;
(ii) if there is no Surviving Spouse, to his descendants (including
legally adopted children or their descendants) per stirpes;
-----------
(iii) if there is neither Surviving Spouse nor surviving descendants,
to the duly appointed and qualified executor or other personal
representative of the Participant to be distributed in accordance
with the Participant's will or applicable intestacy law; or
(iv) in the event that there shall be no such representative duly
appointed and qualified within six (6) months after the date of
death of such deceased Participant, then to such persons as, at
the date of his death, would be entitled to share in the
distribution of such deceased Participant's personal estate under
the provisions of the applicable statute then in force governing
the descent of intestate property, in the proportions specified
in such statute.
(e) The Company may determine the identity of the distributees and in
so doing may act and rely upon any information that it may deem reliable upon
reasonable inquiry, and upon any affidavit, certificate, or other paper believed
by it to be genuine, and upon any evidence believed by it sufficient.
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8.3 Manner and Timing of Payment. (a) Whenever the Company shall
----------------------------
direct the Trustee to make payment to a Participant, his Beneficiary, or his
Surviving Spouse upon termination of the Participant's employment (whether by
reason of death, or for other reasons), the Company shall direct the Trustee to
pay the Adjusted Balance (reduced by any security interest held by the Plan by
reason of a loan outstanding to the Participant as of the date of his
termination of employment or death pursuant to Article XI) of his Account,
determined as of the Valuation Date immediately preceding the date of payment,
to or for the benefit of the Participant, his Beneficiary, or his Surviving
Spouse, in cash or wholly or partly in kind, in either of the following ways as
the Participant (or, if a deceased former Participant shall have failed to
select a method of payment, as his Beneficiary or Surviving Spouse) shall
determine:
(i) In a lump sum; provided that distributions in kind shall be
valued at the fair market value of the assets distributed on the
date of such distribution; or
(ii) In monthly installments payable in substantially equal amounts,
continuing over a period not longer than the lesser of (A) ten
(10) years, or (B) the maximum period permitted under paragraph
(c) below.
(b) Payment under paragraph (a) next above shall be made or commence
not more than sixty (60) days after the close of the Plan Year in which
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the employment of the Participant terminates. Notwithstanding the foregoing, if
on the last day of the Plan Year corresponding to or following the date of a
Participant's termination of employment, the total amount payable under
paragraph (a) (excluding amounts distributable from his Transfer Account)
exceeds $3,500, no part of such amount may be distributed prior to the earlier
of (i) April 1 following the year in which the Participant attains age 70 1/2,
or (ii) the date of his death without the written consent of the Participant.
(c) Notwithstanding anything to the contrary contained elsewhere in
the Plan:
(i) The payment of benefits under the Plan to any Participant will:
(A) be distributed to him not later than the Required
Distribution Date (as defined in paragraph (c)(iii)), or
(B) be distributed commencing not later than the Required
Distribution Date in accordance with regulations prescribed by the
Secretary of the Treasury over a period not extending beyond the life
expectancy of the Participant or the life expectancy of the Participant and
his Beneficiary.
(ii) (A) If the Participant dies after distribution to him has
commenced pursuant to paragraph (c)(i)(B) but before his entire interest in
the Plan has been distributed to him, then the remaining portion of that
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interest will be distributed at least as rapidly as under the method of
distribution being used under paragraph (c)(i)(B) at the date of his death.
(B) If the Participant dies before distribution to him has commenced
pursuant to paragraph (c)(i)(B), then, except as provided in paragraphs
(c)(ii)(C) and (c)(ii)(D), his entire interest in the Plan will be distributed
within five years after his death.
(C) Notwithstanding the provisions of paragraph (c)(ii)(B), if the
Participant dies before distribution to him has commenced pursuant to paragraph
(c)(i)(B) and if any portion of his interest in the Plan is payable (I) to or
for the benefit of a Beneficiary, (II) in accordance with regulations prescribed
by the Secretary of the Treasury over a period not extending beyond the life
expectancy of the Beneficiary, and (III) beginning not later than one year after
the date of the Participant's death or such later date as the Secretary of the
Treasury may prescribe by regulations, then the portion of his interest referred
to in this paragraph (c)(ii)(C) shall be treated as distributed on the date on
which such distributions begin.
(D) Notwithstanding the provisions of paragraphs (c)(ii)(B) and
(c)(ii)(C), if the Beneficiary referred to in paragraph (c)(ii)(C) is the
Surviving Spouse of the Participant, then
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(I) the date on which the distributions are required
to begin under paragraph (c)(ii)(C)(III) of this
Section shall not be earlier than the date on which
the Participant would have attained age 70 1/2, and
(II) if the Surviving Spouse dies before the distributions
to that Spouse begin, then this paragraph (c)(ii)(D)
shall be applied as if the Surviving Spouse were the
Participant.
(iii) For purposes of this paragraph (c), the Required Distribution
Date means April 1 of the calendar year following the calendar
year in which the Participant attains age 70 1/2; provided,
however, that in the case of a Participant who attained age
70 1/2 during calendar year 1988 or 1989, the Required
Distribution Date means April 1, 1990, and further provided that,
if the Participant attained age 70 1/2 prior to January 1, 1988,
distribution shall commence on the April 1 following the later of
the calendar year in which he (A) attained age 70 1/2 or (B)
terminated employment with the Company, unless he was a
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five percent owner (as defined in Section 416 of the Code) of the
Company with respect to the Plan Year ending in the calendar year
in which he attained age 70 1/2, in which case clause (B) shall
not apply.
(iv) For purposes of this paragraph (c), the life expectancy of a
Participant and his Surviving Spouse may be redetermined, but not more
frequently than annually.
(v) A Participant may not elect a form of distribution providing for
payments after the Participant's death to a Beneficiary who is other than his
Surviving Spouse unless the actuarial value of the payments expected to be made
to the Participant during his lifetime is more than 50% of the actuarial value
of the total payments expected to be made under such form of distribution.
(d) (i) This subsection (d) applies to distributions made from the
Plan on or after January 1, 1993. Notwithstanding any provision
of the Plan to the contrary that would otherwise limit a
Distributee's election under this subsection, a Distributee may
elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover.
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(ii) Definitions.
(A) "Eligible Rollover Distribution" is any distribution of all or
any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any distribution that is one of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section 401(a)(9)
of the Code; and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(B) "Eligible Retirement Plan" is an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section 401(a) of the
Code, that accepts the Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to the Surviving Spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
(C) "Distributee" includes an Employee or former Employee. In
addition, the Employee's or former Employee's Surviving Spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
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payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
(D) "Direct Rollover" is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(iii) Notwithstanding the above, no Direct Rollover shall be made
pursuant to this subsection (d) (A) if the Eligible Rollover
Distributions made during the Plan Year with respect to a
Participant are reasonably expected to total less than $200; or
(B) if only a portion of the Eligible Rollover Distribution is to
be distributed as a Direct Rollover, the amount of such Direct
Rollover is less than $500.
(e) If a distribution is one to which Sections 401(a)(11) and 417 of
the Code do not apply, such distribution may commence less than 30 days after
the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:
(i) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not
to elect a distribution (and, if applicable, a particular
distribution option), and
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(ii) the Participant, after receiving the notice, affirmatively elects
a distribution.
8.4 Hardship Distributions. The Company may, in its sole
----------------------
discretion, upon the request of a Participant at any time prior to his
termination of employment, direct the Trustee to make a lump sum distribution of
a portion of the balance of the Participant's Savings Account, for the purposes
set forth below, subject to the following rules:
(a) Each request for a distribution must be made by written
application to the Company supported by such evidence as the Company may
require;
(b) The amount distributed to a Participant in accordance with this
Section 7.4 shall not exceed that portion of the Adjusted Balance of his Savings
Account that (i) is not derived from optional contributions under Section
3.4(d)(ii), and (ii) is not being used as security for a loan made under Article
XI, determined as of the Valuation Date coinciding with or immediately following
the date a request is made hereunder, less earnings allocated to the
Participant's Savings Account on or after December 31, 1988; provided, however,
that in no event shall the amount available for distribution pursuant to this
Section 8.4 be less than the Adjusted Balance of the Participant's Savings
Account on December 31, 1988, less the amount being used as security for a loan
made under Article XI, determined as
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of the Valuation Date coinciding with or immediately following the date a
request is made hereunder;
(c) The Company shall direct the Trustee to make a distribution to a
Participant in accordance with this Section 8.4 only in the event of the
Participant's "hardship." For purposes of this Section, a hardship shall be
limited to:
(i) Medical expenses described in Code Section 213(d) previously
incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Code Section 152) or
necessary for any of these persons to obtain medical care
described in Code Section 213(d);
(ii) Purchase (excluding mortgage payments) of a principal residence
for the Participant;
(iii)Payment of tuition and related educational fees for the next
twelve months of post-secondary education for the Participant,
his spouse, children or dependents;
(iv) The need to prevent eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence; and
(v) Funeral expenses of a family member of the Participant.
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(d) The amount distributed shall not be in excess of the immediate and
heavy financial need of the Participant which need shall be deemed to include
any amounts reasonably anticipated by the Participant to be necessary to pay
federal, state or local income taxes and penalties incurred as a result of the
distribution;
(e) The Participant shall first obtain all distributions, other than
those on account of hardship, and all nontaxable loans available under the Plan
and all other plans maintained by the Company;
(f) The Participant's Salary Deferral Contributions and Voluntary
Contributions under the Plan, and elective contributions and employee
contributions (as defined in Treasury Regulation Section 1.401(k)) under all
other deferred compensation plans maintained by the Company, shall be suspended
for twelve (12) months after receipt of the hardship distribution (except for
mandatory employee contributions to a defined benefit plan); and
(g) The Participant may not make Salary Deferral Contributions under
the Plan, or elective contributions under any other plan maintained by the
Company, for the Participant's taxable year immediately following the taxable
year of the hardship distribution in excess of the applicable limit under
Section 402(g) of the Code for such next taxable year, decreased by the Salary
Deferral Contributions to the Plan and elective contributions to such other
plans for the taxable year of the hardship distribution.
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8.5 Non-Hardship In-Service Distributions. (a) A Participant who
-------------------------------------
has attained the age of 59 1/2 may elect, by written instrument given to the
Company, to withdraw from his Savings Account an amount not in excess of (i) if
he has completed five (5) years of participation in the Plan, then the Adjusted
Balance thereof, determined as of the Valuation Date coinciding with or
immediately following the date the written instrument is delivered to the
Company; or (ii) if he has not completed five (5) years of participation in the
Plan, then that portion of the Adjusted Balance thereof, determined as of the
Valuation Date coinciding with or immediately following the date the written
instrument is delivered to the Company, attributable to (A) all Salary Deferral
Contributions, and (B) the portion of the Matching Contributions allocated to
such Account more than two (2) years prior to the date of the election.
(b) The amount distributed in accordance with this Section 8.5 shall
not exceed that portion of the Adjusted Balance of the Participant's Savings
Account that is not being used as security for a loan made under Article XI,
determined as of the Valuation Date coinciding with or immediately following the
date the written instrument is delivered to the Company.
8.6 Withdrawals from Voluntary Contribution and Transfer Accounts.
-------------------------------------------------------------
As of any Valuation Date, a Participant may elect by written instrument given to
the Company, to withdraw from his Voluntary Contribution Account and Transfer
Account an amount not in excess of the Adjusted Balance thereof
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determined as of the Valuation Date coinciding with or immediately following the
date the written instrument is delivered to the Company.
8.7 Rules Governing In-Service Distributions. (a) In the event a
----------------------------------------
Participant requests to receive a distribution pursuant to Sections 8.4, 8.5 or
8.6, the distribution shall be paid to the Participant as soon as is reasonably
practicable after receipt of the written request for such distribution. If a
Participant's termination of employment occurs after an election is made in
accordance with those Sections, but prior to distribution of the full amount
elected, such election shall be automatically void and the benefits he or his
Surviving Spouse or Beneficiary are entitled to receive under the Plan shall be
distributed in accordance with the other provisions of this Article.
(b) No distribution made pursuant to Sections 8.4, 8.5 or 8.6 may be
for an amount which is less than the lesser of: (i) $200; or (ii) that portion
of the Adjusted Balance of the Participant's Savings Account, Voluntary
Contribution Account or Transfer Account (whichever is applicable) which is
subject to withdrawal pursuant to such Section.
(c) A Participant may not make more than two withdrawals pursuant to
each of Sections 8.4, 8.5 and 8.6 in any Plan Year.
8.8 Distribution of Unallocated Contributions. (a) If on the date
-----------------------------------------
of termination of a Participant's employment, the Company shall be holding
Voluntary Contributions or a Rollover Contribution made by the Participant, but
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not yet allocated to his Voluntary Contribution Account or Transfer Account
(whichever is applicable), the Company shall pay such amounts either directly to
the Participant (or his Beneficiary or Surviving Spouse, as the case may be) or
to the Trustee, to be distributed by the Trustee in accordance with Section 8.3.
(b) If on the date of termination of a Participant's employment, a
Participant's Earnings have been reduced by any amount pursuant to a Long-Term
Savings Agreement, or a Matching Contribution has been made on behalf of such
Participant pursuant to Section 4.1(a), and any such amount has not yet been
allocated to his Savings Account, the Company shall pay such amounts to the
Trustee to be credited to the Participant's Savings Account, to be distributed
by the Trustee in accordance with Section 8.3.
8.9 Administrative Powers Relating to Payments. If a Participant,
------------------------------------------
Beneficiary, or Surviving Spouse, is under a legal disability or, by reason of
illness or mental or physical disability, is in the opinion of the Company
unable properly to attend to his personal financial matters, the Trustee may
make such payments in such of the following ways as the Company shall direct:
(a) directly to such Participant, Beneficiary, or Surviving Spouse;
(b) to the legal representative of such Participant, Beneficiary, or
Surviving Spouse; or
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(c) to some relative by blood or marriage, or friend, for the benefit
of such Participant, Beneficiary or Surviving Spouse.
Any payment made pursuant to this Section shall be in complete discharge of the
obligation therefor under the Plan.
8.10 Distributions From Savings Accounts. Notwithstanding anything
-----------------------------------
to the contrary contained elsewhere in the Plan, a Participant's Savings Account
shall not be distributable other than upon:
(a) the Participant's separation from service, death or disability;
(b) termination of the Plan without establishment or maintenance of
another defined contribution plan (other than an employee stock ownership plan
as defined in Section 4975(e)(7) of the Code);
(c) the date of the sale or other disposition by the Company to an
unrelated entity of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used by the Company in a trade or business of the
Company, where (i) the Participant is employed by such trade or business and
continues employment with the entity acquiring such assets, and (ii) the Company
continues to maintain the Plan after the sale or other disposition. The sale of
85% of the assets used in a trade or business shall be deemed to be a
disposition of "substantially all" of the assets used in such trade or business;
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(d) the date of the sale or other disposition by the Company of the
Company's interest in a subsidiary (within the meaning of Section 409(d)(3) of
the Code) to an unrelated entity, where (i) the Participant is employed by such
subsidiary and continues employment with such subsidiary following such sale or
other disposition, and (ii) the Company continues to maintain the Plan after the
sale or other disposition;
(e) the Participant's attainment of age 59 1/2; or
(f) the Participant's hardship (as defined in, and in accordance with
the provisions of, Section 8.4).
Notwithstanding anything to the contrary contained herein, an event
shall not be treated as described in clause (b), (c) or (d) above unless the
Participant receives a lump sum distribution (as defined in Section
401(k)(10)(B)(ii) of the Code) by reason of the event. Nothing in this Section
is intended to expand the instances in which distributions may be made to
Participants. This Section is included in the Plan solely to set forth the
restrictions of Section 401(k) of the Code.
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ARTICLE IX
----------
PLAN ADMINISTRATION
-------------------
9.1 Company Responsibility and Establishment of Committee. (a) The
-----------------------------------------------------
Company shall be responsible for and shall control and manage the operation and
administration of the Plan. It shall be the "Plan Administrator" and "Named
Fiduciary" for purposes of ERISA and shall be subject to service of process on
behalf of the Plan.
(b) The Company may, in its discretion, appoint or designate employees
or agents as the Committee to act on behalf of the Company in performing its
duties. The members of the Committee shall serve at the pleasure of the Board of
Directors of the Company and may be officers, directors or Employees of the
Company or any other individuals. The members of the Committee shall serve
without compensation for such. Any member may resign by delivering his written
resignation to the Board and to the Committee. Vacancies in the Committee
arising by resignation, death, removal or otherwise shall be filled by the
Board. The Company shall advise the Trustee in writing of the names of the
Committee and of changes in membership from time to time.
(c) The Committee shall act by majority vote of its members at the
time in office, and such action may be taken either by a vote at a meeting or in
writing without a meeting. The signatures of a majority of the members will be
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sufficient to authorize Committee action. The Committee may authorize any of
its members or any other person to execute any document or documents on behalf
of the Committee, in which event the Committee shall notify the Trustee in
writing of such action and the name or names of such member or person. The
Trustee thereafter shall accept and rely upon any document executed by such
members or persons as representing action by the Committee, until the Committee
shall file with the Trustee a written revocation of such designation.
(d) The Committee may adopt such bylaws and regulations as it deems
desirable for the conduct of its affairs and may appoint such accountants,
counsel, specialists, and other persons as it deems necessary or desirable in
connection with the administration of the Plan. The Committee shall be entitled
to rely conclusively upon, and shall be fully protected in any action taken by
it in good faith in relying upon, any opinions or reports which shall be
furnished to it by any such accountant, counsel, specialist or other person.
(e) If the Company shall designate an Employee who is a Participant to
act on behalf of the Company in administering the Plan and exercising fiduciary
responsibilities with respect to the Plan, such Participant shall not in such
capacity participate in discussions of, or in decisions relating to, matters
pertaining to his own participation in the Plan or to any distributions or loans
made to him under the Plan.
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9.2 Powers and Duties of Committee. The Committee shall administer
------------------------------
the Plan in accordance with its terms and shall have all powers necessary to
carry out the provisions of the Plan. The Committee shall direct the Trustee
concerning all payments that shall be made out of the Trust pursuant to the
Plan. The Committee shall interpret the Plan and shall determine all questions
arising in the administration, interpretation, and application of the Plan all
in the sole discretion of the Committee, including but not limited to, questions
of eligibility and the status and rights of Participants, Beneficiaries,
Surviving Spouses and other persons. Any such determination by the Committee
shall presumptively be conclusive and binding on all persons. The regularly
kept records of the Committee shall be conclusive and binding upon all persons
with respect to an Employee's age, date and length of employment, time and
amount of Compensation and Earnings and the manner of payment thereof', type and
length of any absence from work and all other matters contained therein relating
to Employees. All rules and determinations of the Committee shall be uniformly
and consistently applied to all persons in similar circumstances.
9.3 Records and Reports of Committee. The Committee shall keep all
--------------------------------
such books of account, records, and other data as may be necessary for proper
administration of the Plan. The Committee shall notify the Trustee of any
action taken by the Committee and, when required, shall notify any other
interested person or persons.
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9.4 Claims Procedure. Claims for benefits under the Plan shall be
----------------
made in writing to the Committee. In the event a claim for benefits is wholly or
partially denied by the Committee, the Committee shall, within a reasonable
period of time, but no later than ninety (90) days after receipt of the claim,
notify the claimant in writing of the denial of the claim. If the claimant shall
not be notified in writing of the denial of the claim within ninety (90) days
after it is received by the Committee, the claim shall be deemed denied. A
notice of denial shall be written in a manner calculated to be understood by the
claimant, and shall contain (a) the specific reason or reasons for denial of the
claim, (b) a specific reference to the pertinent Plan provisions upon which the
denial is based, (c) a description of any additional material or information
necessary for the claimant to perfect the claim, together with an explanation of
why such material or information is necessary, and (d) an explanation of the
Plan's review procedure. Within sixty (60) days of the receipt by the claimant
of the written notice of denial of the claim, or within sixty (60) days after
the claim is deemed denied as set forth above, if applicable, the claimant may
file a written request with the Committee that it conduct a full and fair review
of the denial of the claimant's claim for benefits, including the conducting of
a hearing, if deemed necessary by the Committee. In connection with the
claimant's appeal of the denial of his benefit, the claimant may review
pertinent documents and may submit issues and comments in writing. The Committee
shall render a decision on the claim appeal promptly, but not later than sixty
(60) days after the receipt of the claimant's request for review, unless special
circumstances (such as the need to hold a hearing, if necessary), require an
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extension of time for processing, in which case the sixty (60) day period may be
extended to one hundred and twenty (120) days. The Committee shall notify the
claimant in writing of any such extension. The decision upon review shall (a)
include specific reasons for the decision, (b) be written in a manner calculated
to be understood by the claimant and (c) contain specific references to the
pertinent Plan provisions upon which the decision is based.
9.5 Expenses. All proper expenses incurred by the Committee
--------
incident to the functioning of the Plan shall be paid by the Company; provided,
however, that expenses and fees incurred in connection with the investment of
Plan assets, unusual costs and expenses of litigation involving the Plan and
losses, if any, of the Plan of any kind or character, shall be deemed expenses
of the Plan and shall be borne by the Plan, and paid out of the Plan assets,
except to the extent the Board elects to have such expenses paid directly by the
Company.
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ARTICLE X
---------
TRUST AGREEMENT
---------------
10.1 Establishment of Trust. A Trust has been created and will be
----------------------
maintained for the purposes of the Plan. All contributions under the Plan will
be paid into the Trust. The Trust Fund will be held, invested and disposed of
by the Trustee from time to time acting in accordance with the Trust Agreement.
All withdrawals and distributions payable under the Plan will be paid solely
from the Trust Fund.
ARTICLE XI
----------
LOANS TO PARTICIPANTS
---------------------
11.1 Loans to Participants. The Committee shall direct the Trustee
---------------------
to make a loan or loans to active Participants, and, to the extent not
inconsistent with Section 401(a) of the Code, to former Participants who are
Parties in Interest (as defined in Section 3(14) of ERISA) and who retain
Account balances in the Plan following termination of employment ("Former
Participants"), applied for pursuant to the terms of this Article XI. Such loan
or loans shall be in an amount or amounts that do not in the aggregate exceed
the amount set forth in Section 11.2 below. No more than one such loan may be
outstanding from the Plan and the Hourly Plan (as defined in Section 5.3(b)) to
any Participant at any time. Loans shall be made on the written application of
the Participant to the Committee and on such terms and
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conditions as are set forth in this Article. In making such loans, the Committee
shall pursue uniform policies and shall not discriminate in favor of or against
any Participant or group of Participants.
(b) Each borrowing Participant or Former Participant shall, as a
condition to receiving a loan hereunder, specify in his loan application the
Investment Funds in which his Savings Account is invested from which such loan
shall be paid and the allocation of the loan proceeds among such Investment
Funds; provided, that such allocation shall be in increments of one percent
(1%). Each such loan shall be made in accordance with the specification of the
borrowing Participant or Former Participant except that, if any Investment Fund
imposes any restriction or penalty on a distribution as a loan, the loan shall
be paid from the Investment Funds in such manner as will comply with such
restriction and avoid such penalty.
(c) The Committee may impose such additional uniform and
nondiscriminatory requirements upon Participants and Former Participants
applying for loans as the Committee may determine.
11.2 Maximum Loan Amount. (a) In no event shall any loan made
-------------------
pursuant to this Article to any Participant or Former Participant be in an
amount that shall cause the outstanding aggregate balance of all loans made to
such Participant or Former Participant under this Plan and all other qualified
plans (as defined in Section 72(p)(4)(A) of the Code without regard to
subparagraph (2)(D)
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<PAGE>
thereof) maintained by the Company or any Related Company to exceed the lesser
of:
(i) $50,000, reduced by the excess (if any) of:
(A) the highest outstanding balance of loans from the Plan and such
other qualified plans to the Participant or Former Participant during the one-
year period ending on the day before the date such loan is made, over
(B) the outstanding balance of loans from the Plan and such other
qualified plans to the Participant or Former Participant on the date on which
such loan is made; or
(ii) fifty percent (50%) of the Adjusted Balance of the Participant's
or Former Participant's Savings Account.
(b) For purposes of this Article, the Adjusted Balance of the Savings
Account of the Participant or Former Participant shall be determined as of the
Valuation Date for which a valuation of his Savings Account is most recently
available on the date on which the proceeds of a loan made under this Article
are disbursed to the borrowing Participant.
11.3 Repayment of Loans. Any loan made under this Article shall
------------------
mature and be payable in full within five (5) years from the date such loan is
made, except that a loan to a Participant or a Former Participant used to
acquire any dwelling unit that within a reasonable time after the loan is made
is to be used
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(determined at the time the loan is made) as the principal residence of the
Participant or Former Participant shall mature and be payable in full within ten
(10) years after the date such loan is made.
11.4 Terms. (a) Loans to Participants and Former Participants
-----
shall be made according to the following terms:
(i) the minimum principal amount of any loan, at the time it is made,
shall be $ 1,000.
(ii) proceeds of the loan shall be disbursed to a Participant or
Former Participant no later than sixty (60) days after he has
applied for the loan in accordance with procedures established by
the Committee;
(iii)the loan shall be adequately secured, provided that such
minimum security for such loans shall be (A) not more than 50% of
the Adjusted Balance of the Savings Account of the borrowing
Participant or Former Participant, plus (B) a security interest
in such other property, determined by the Committee, that would
be required in the case of an otherwise identical transaction in
a normal commercial setting between unrelated parties on arm's-
length terms;
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<PAGE>
(iv) interest shall he determined by the Committee at the time the
loan is made and shall be charged at a rate that is commensurate
with the interest rate charged by persons in the business of
lending money for a loan that would be made under similar
circumstances in the local geographical area;
(v) payments of principal and interest by an active Participant shall
be made through payroll deductions, which deductions shall be
irrevocably authorized by the borrowing Participant in writing on
a form supplied by the Committee at the time the loan is made to
him, and such payroll deductions shall be sufficient to amortize
the principal and interest payable pursuant to the loan during
the term thereof in equal quarterly (or more frequent)
installments. In the case of a Former Participant, payments of
principal and interest shall be made by personal payment in
quarterly or more frequent installments according to procedures
established by the Committee. All payments of principal and
interest shall be allocated to the Savings Account of the
Participant or Former Participant to whom the loan was made;
(vi) the borrowing Participant or Former Participant shall have the
right to prepay all (but not a portion) of the interest and
principal of such loan without penalty;
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(vii) the loans shall be evidenced by such forms of obligations, and
shall be made upon such additional terms as to default,
prepayment, security and otherwise as the Committee shall
determine;
(viii) the Committee may charge a borrowing Participant or Former
Participant such reasonable administrative fees with respect to
each loan as the Committee shall, in its discretion, decide; and
(ix) if the borrowing Participant or Former Participant is married at
the time for disbursement of the loan proceeds, disbursement may
not be made unless such Participant's or Former Participant's
spouse consents in writing to the loan and the terms thereof
pursuant to procedures established by the Committee.
(b) The entire unpaid balance of any loan made under this Article and
all interest due thereon, including all arrearages thereon, shall, at the option
of the Committee, immediately become due and payable without further notice or
demand, if, with respect to the borrowing Participant or Former Participant, any
of the following events of default occurs:
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(i) any payment of principal and/or accrued interest on the loan
remains due and unpaid for a period of thirty (30) days after the
same becomes due and payable under the terms of the loan;
(ii) a proceeding in bankruptcy, receivership or insolvency is
commenced by or against the borrowing Participant or Former
Participant;
(iii) an active Participant's employment with the Company is
terminated for any reason and he does not become a Former
Participant (except to the extent inconsistent with Section
401(a) of the Code);
(iv) the borrowing Participant becomes a Former Participant and
thereafter receives a final distribution of the Adjusted Balance
of his Savings Account (except to the extent inconsistent with
Section 401(a) of the Code);
(v) the borrowing Participant or Former Participant attempts to make
an assignment, for the benefit of creditors of the Adjusted
Balance of his Savings Account under the Plan or of any other
Security for the loan; or
(vi) the borrowing Participant or Former Participant marries or
remarries and his new spouse does not consent in writing to the
loan and the terms thereof pursuant to procedures established by
the Committee within thirty days after marrying the Participant.
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<PAGE>
Any payments of principal and/or interest on the loan not paid when due shall
bear interest thereafter, to the extent permitted by law, at the rate specified
by the terms of the loan. The payment and acceptance of any sum or sums at any
time on account of the loan after an event of default, or any failure to act or
enforce the rights granted hereunder upon an event of default, shall not be a
waiver of the right of acceleration set forth in this paragraph.
(c) If an event of default and an acceleration of the unpaid balance
of the loan and interest due thereon shall occur, the Committee shall have the
right to direct the Trustee to pursue any remedies available to a creditor at
law or under the terms of the loan, including the right to execute on the
security for the loan; provided, however, that neither the Trustee nor the
Committee may reduce the amount in the Participant's Savings Account at any time
prior to the first to occur of the termination of the Participant's employment
with the Company or the Participant's attainment of age 59 1/2.
(d) Each such loan shall be a first lien against the Savings Account
of the borrowing Participant or Former Participant. If: (i) any portion of a
loan shall be outstanding; and (ii) an event occurs pursuant to which the
Participant, Former Participant, or his estate, or his Surviving Spouse or
Beneficiaries will
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receive a distribution from the Savings Account of such Participant or Former
Participant under the provisions of the Plan, then such Participant or Former
Participant, if living, shall pay to the Trustee an amount equal to the portion
of the loan or loans then outstanding, including all accrued interest thereon,
and such Participant or Former Participant shall then receive the full amount of
the distribution under the provisions of the Plan to which he is otherwise
entitled. If such Participant or Former Participant is not then living, or if
such Participant or Former Participant does not make full payment of the portion
of the loan or loans then outstanding by the next date repayment would have been
made through payroll deduction had the event pursuant to which the distribution
is to be made not occurred, or in the case of a Former Participant, within 30
days after the date of such event, then such distribution shall, to the extent
necessary to liquidate the unpaid portion of the loan or loans, be made to the
Trustee as payment on the loan or loans. No distribution shall be made to a
Participant, or Former Participant, or his estate or his Surviving Spouse or
Beneficiaries from his Savings Account in an amount greater than the excess of
the portion of his Savings Account otherwise distributable over the aggregate of
the amounts owing with respect to such loan or loans plus interest, if any,
thereon, taking into consideration any portion of the loan or loans paid by the
Participant or Former Participant pursuant to the provisions of this paragraph
(d).
(e) All loans made pursuant to this Article shall be funded from the
borrowing Participant's or Former Participant's Savings Account as set forth in
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Section 11.1(b). The Savings Account of a Participant or Former Participant
shall, to the extent used to fund such loan, not participate in the allocation
of earnings and losses pursuant to Section 7.8. All interest paid by a
Participant or Former Participant with respect to a loan shall be credited to
the borrowing Participant's or Former Participant's Savings Account and shall
not be allocated pursuant to Section 6.8 as earnings of the Investment Funds.
All payments of principal and interest made by a Participant or Former
Participant with respect to a loan shall be allocated to one or more of the
Investment Funds based upon the form relating to the selection of Investment
Funds which is in effect, at the time such payment is received by the
Trustee, with respect to the Participant's or Former Participant's Salary
Deferral Contributions. If such a form is not in effect at the time such
payment is received, the payments shall be allocated based upon the last such
form that was in effect for such Participant or Former Participant. If no such
form was in effect at any time, such payment shall be allocated equally among
all of the Investment Funds described in the schedule attached to the Trust
Agreement.
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ARTICLE XII
-----------
INVESTMENT FUNDS
----------------
12.1 Investment Funds. The Adjusted Balance of each Participant's
----------------
Savings Account, Transfer Account and Voluntary Contribution Account will be
invested in the various Investment Funds as described in the schedule attached
to the Trust Agreement.
12.2 Initial Investment. All Salary Deferral Contributions,
------------------
Matching Contributions, Voluntary Contributions, and Rollover Contributions
received by the Trustee will be initially invested, from the date received until
the date invested under Section 12.3, in such short term investment obligations
as selected by the Trustee from time to time. These deposits and earnings will
be allocated among the Investment Funds as of the Valuation Date next following
receipt by the Trustee of such deposits and earnings in accordance with
Participants' selection of Investment Funds pursuant to Section 12.3.
12.3 Selection of Investment Funds. (a) Each Participant shall
-----------------------------
file a form with the Committee directing that his Salary Deferral Contributions,
Matching Contributions, Voluntary Contributions and Rollover Contributions be
invested, in specified multiples of 10%, in any one of the Investment Funds. No
election to participate made pursuant to Section 2.3 of the Plan shall be
effective until the investment form described in this Section 12.3 has been
completed and delivered to the Committee.
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(b) Each Participant shall have the right to modify the direction made
in paragraph (a) above (in specified multiples of 10%) with respect to
subsequent Salary Deferral Contributions, Matching Contributions, Voluntary
Contributions and Rollover Contributions under the Plan.
(c) Each Participant shall have the right to file a written form with
the Committee directing that the portion of his Savings Account, Transfer
Account and Voluntary Contribution Account held in any one Investment Fund be
transferred, in whole or in part, to any other Investment Fund. This direction
shall be made by designating the percentage, number of shares or amount of the
Adjusted Balance of such Accounts that is to be divided among the various
applicable Funds (in percentages, numbers of shares or amounts) as of the date
set forth in paragraph (d) next below.
(d) Any form filed by a Participant pursuant to this Section shall be
filed with the Committee pursuant to rules it establishes. A form filed
pursuant to subsection (a) of this Section shall be filed at the same time as
the Long-Term Savings Agreement required pursuant to Section 2.3. A form filed
pursuant to subsection (b) of this Section shall be filed no later than (i) the
tenth day of the month in which the Wage Payment Date as of which it is to be
effective occurs, in the case of a salaried Participant or (ii) the tenth day of
the month preceding the month in which the Wage Payment Date as of which it is
to be effective occurs, in the case of an hourly paid Participant. A form filed
pursuant to paragraph (c) of
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this Section, subject to the last sentence of this paragraph (d), may be filed
on any business day, shall be forwarded by the Committee to the Trustee within
five business days after receipt thereof, and shall be effective on the next
business day following the day on which it is received by the Trustee. A
modification pursuant to paragraph (b) may be made only once in each month. A
transfer pursuant to paragraph (c) may be made only once in each calendar
quarter and shall be subject to any additional nondiscriminatory restrictions
that are imposed by the Trustee.
(e) The Company will separately account for the interests of each
Participant in the several Investment Funds. Each Investment Fund may be
invested as a single fund, however, without segregation of Fund assets to
represent the interests of Participants.
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ARTICLE XIII
------------
AMENDMENT AND TERMINATION
-------------------------
13.1 Amendment of Plan. The Company shall have the right to amend
-----------------
the Plan at any time and from time to time by resolution of the Board, and the
Company and all persons claiming any interest hereunder shall be bound thereby;
provided, however, that no amendment shall have the effect of: (i) directly or
indirectly divesting the interest of any Participant in any amount that he would
have received had he terminated his employment with the Company immediately
prior to the effective date of such amendment, or the interest of any
Beneficiary or Surviving Spouse as such interest existed immediately prior to
the effective date of such amendment; (ii) directly or indirectly affecting the
vested interest of a Participant under the Plan as determined by Section 7.7
unless the conditions of Section 203(c) of ERISA are satisfied; (iii) vesting in
the Company any right, title or interest in or to any Trust assets; (iv) causing
or effecting discrimination in favor of officers, shareholders, or highly
compensated Employees; or (v) causing any part of the Plan assets to be used for
any purpose other than for the exclusive benefit of the Participants and their
Beneficiaries and Surviving Spouse.
13.2 Voluntary Termination of or Permanent Discontinuance of
-------------------------------------------------------
Contributions to the Plan. The Company expects the Plan to be permanent, but
- -------------------------
since future conditions affecting the Company cannot be anticipated, the Company
shall have the right to terminate the Plan in whole or in part, or to
permanently
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discontinue contributions to the Plan, at any time by resolution of its Board
and by giving written notice of such termination or permanent discontinuance to
the Trustee. Such resolution shall specify the effective date of termination or
permanent discontinuance, which shall not be earlier than the first day of the
Plan Year that includes the date of the resolution.
13.3 Involuntary Termination of Plan. The Plan shall automatically
-------------------------------
terminate if the Company is legally adjudicated a bankrupt, makes a general
assignment for the benefit of creditors, or is dissolved. In the event of the
merger or consolidation of the Company into or with any other corporation,
respectively, or in the event substantially all of the assets of the Company
shall be transferred to another corporation, the successor corporation resulting
from the consolidation or merger, or transfer of such assets, as the case may
be, shall have the right to adopt and continue the Plan and succeed to the
position of the Company hereunder. If, however, the Plan is not so adopted
within ninety (90) days after the effective date of such consolidation, merger
or sale, the Plan shall automatically be deemed terminated as of the effective
date of such transaction. Nothing in this Plan shall prevent the dissolution,
liquidation, consolidation or merger of the Company, or the sale or transfer of
all or substantially all of its assets.
13.4 Payments on Termination of, or Permanent Discontinuance of
----------------------------------------------------------
Contributions to, the Plan. If the Plan is terminated as herein provided, or
- --------------------------
if it should be partially terminated, or upon the complete discontinuance of
Company contributions to the Plan, the following procedure shall be followed,
except that in
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the event of a partial termination it shall be followed only in case of those
Participants, Beneficiaries and Surviving Spouses directly affected:
(a) The Company may continue to administer the Plan, but if it fails
to do so, its records, books of account and other necessary data shall be turned
over to the Trustee and the Trustee shall act on its own motion as hereinafter
provided.
(b) Notwithstanding any other provisions of the Plan all interests of
Participants shall continue to be fully vested and nonforfeitable.
(c) The value of the Trust Fund and the Accounts of all Participants,
Beneficiaries and Surviving Spouses shall be determined as of the date of
termination or discontinuance.
(d) Distribution to Participants, Beneficiaries and Surviving Spouses
shall be made at such time after termination of or discontinuance of
contributions to the Plan as provided in Section 8.3 above and not later than
the time specified in Section 8.3.
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ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 Duty to Furnish Information and Documents. Participants and
-----------------------------------------
their Beneficiaries and Surviving Spouses must furnish to the Company and the
Trustee such evidence, data or information as the Company considers necessary or
desirable for the purpose of administering the Plan, and the provisions of the
Plan for each person are upon the condition that he will furnish promptly full,
true, and complete evidence, data, and information requested by the Company.
All parties to, or claiming any interest under, the Plan hereby agree to perform
any and all acts, and to execute any and all documents and papers, necessary or
desirable for carrying out the Plan and the Trust.
14.2 Statements and Available Information. The Company shall
------------------------------------
advise its Employees of the eligibility requirements and benefits under the
Plan. As soon as practicable after the end of each calendar quarter, the
Company shall provide each Participant, and each former Participant and
Beneficiary or Surviving Spouse with respect to whom an Account is maintained,
with a statement reflecting the current status of his Accounts including the
Adjusted Balance thereof. No Participant, except a member of the Board or the
Committee, shall have the right to inspect the records reflecting the Account of
any other Participant. The Company shall make available for inspection at
reasonable times by Participants and Beneficiaries or Surviving Spouses, copies
of the Plan, any amendments thereto, Plan summary, and all reports of Plan and
Trust operations required by law.
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14.3 No Enlargement of Employment Rights. Nothing contained in the
-----------------------------------
Plan shall be construed as a contract of employment between the Company and any
person, nor shall the Plan be deemed to give any person the right to be retained
in the employ of the Company or limit the right of the Company to employ or
discharge any person with or without cause, or to discipline any Employee.
14.4 Applicable Law. All questions pertaining to the validity,
--------------
construction and administration of the Plan shall be determined in conformity
with the laws of Illinois to the extent that such laws are not preempted by
ERISA and valid regulations published thereunder.
14.5 No Guarantee. None of the Trustee the Company nor the
------------
Committee in any way guarantees the Trust Fund from loss or depreciation or the
payment of any benefits which may be or become due to any person from the Trust
Fund. No Participant or other person shall have any recourse against the
Trustee, the Company or the Committee if the Trust Fund is insufficient to
provide Plan benefits in full. Nothing herein contained shall be deemed to give
any Participant, former Participant, Beneficiary or Surviving Spouse an interest
in any specific part of the Trust Fund or any other interest except the right to
receive benefits out of the Trust Fund in accordance with the provisions of the
Plan and Trust.
14.6 Unclaimed Funds. Each Participant shall keep the Company
---------------
informed of his current address and the current address of his Surviving Spouse,
Beneficiary or Beneficiaries. None of the Company, the Committee or the Trustee
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shall be obligated to search for the whereabouts of any person. If the location
of a Participant is not made known to the Company within three (3) years after
the date on which distribution of the Participant's accounts may first be made,
distribution may be made as though the Participant had died at the end of the
three-year period. If, within one additional year after such three year period
has elapsed, or, within three years after the actual death of a Participant, the
Company is unable to locate any individual who would receive a distribution
under the Plan upon the death of the Participant pursuant to Section 8.2 of the
Plan, the Adjusted Balance in the Participant's Account shall be deemed a
forfeiture and shall be used to reduce Matching Contributions to the Plan for
the Plan Year next following the year in which the forfeiture occurs and for
succeeding years to the extent necessary; provided, however, that in the event
that the Participant or a Beneficiary or Surviving Spouse makes a valid claim
for any amount that has been forfeited, the benefits which have been forfeited
shall be reinstated.
14.7 Merger or Consolidation of Plan. Any merger or consolidation
-------------------------------
of the Plan with another plan, or transfer of Plan assets or liabilities to any
other plan, shall be effected in accordance with such regulations, if any, as
may be issued pursuant to Section 208 of ERISA, in such a manner that each
Participant in the Plan would receive, if the merged, consolidated or transferee
plan were terminated immediately following such event, a benefit that is equal
to or greater than the benefit he would have been entitled to receive if the
Plan had terminated immediately before such event.
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14.8 Interest Non-Transferable. (a) Except as provided in Article
-------------------------
XI of the Plan, no interest of any person or entity in, or right to receive
distributions from, the Trust Fund shall be subject in any manner to sale,
transfer, assignment, pledge, attachment, garnishment, or other alienation or
encumbrance of any kind; nor may such interest or right to receive distributions
be taken, either voluntarily or involuntarily, for the satisfaction of the debts
of, or other obligations or claims against, such person or entity, including
claims for alimony, support, separate maintenance and claims in bankruptcy
proceedings. The Account of any Participant, however, shall be subject to and
payable in accordance with the applicable requirements of any qualified domestic
relations order, as that term is defined in Section 414(p) of the Code, and the
Company shall direct the Trustee to provide for payment from a Participant's
Account in accordance with such order and with the provisions of Section 414(p)
of the Code and any regulations promulgated thereunder. A payment from a
Participant's Account may be made to an alternate payee (as defined in Section
414(p)(8) of the Code) prior to the date the Participant reaches his earliest
retirement age (as defined in Section 414(p)(4)(B) of the Code) if such payments
are made pursuant to a qualified domestic relations order. All such payments
pursuant to a qualified domestic relations order shall be subject to reasonable
rules and regulations promulgated by the Company respecting the time of payment
pursuant to such order and the valuation of the Participant's Account from which
payment is made; provided, that all such payments are made in accordance with
such order and Section 414(p) of the Code. The balance of an
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Account that is subject to any qualified domestic relations order shall be
reduced by the amount of any payment made pursuant to such order.
(b) Notwithstanding paragraph (a) next above, if any Participant
borrows money pursuant to Article X of the Plan, the Trustee and the Company
shall have all rights to collect upon such indebtedness as are granted pursuant
to Article XI of the Plan and any agreements or documents executed in connection
with such loan.
14.9 Prudent Man Rule. Notwithstanding any other provision of the
----------------
Plan and the Trust Agreement, the Trustee and the Company shall exercise their
powers and discharge their duties under the Plan and the Trust Agreement for the
exclusive purpose of providing benefits to Employees and their Beneficiaries and
Surviving Spouses, and shall act with the care, skill, prudence and diligence
under the circumstances that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims. Subject to the terms of the preceding sentence
and the provisions of Article XII, the Trustee shall diversify investments of
the Trust Fund so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so.
14.10 Limitations on Liability. Notwithstanding any other
------------------------
provisions of the Plan or the Trust, none of the Trustees, the Committee, any
member thereof, the Company or a Related Company, or any individual acting as an
employee or
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agent of any of them, shall be liable to any Participant, former Participant,
Beneficiary, or Surviving Spouse for any claim, loss, liability or expense
incurred in connection with the Plan or the Trust, except when the same shall
have been judicially determined to be a result of liability under Part 4 of
Title I of ERISA or due to the gross negligence or willful misconduct of such
person. The Company shall indemnify and hold harmless each Trustee, Committee
member, employee of the Company, or any individual acting as an employee or
agent of any of them or the Company (to the extent not indemnified or held
harmless under any liability insurance or any other indemnification arrangement
with respect to the Plan or the Trust) from any and all claims, losses,
liabilities, costs and expense (including attorneys' fees) arising out of any
actual or alleged act or failure to act with respect to the administration of
the Plan or the Trust, except that no indemnification or defense shall be
provided to any person with respect to conduct which has been judicially
determined, or agreed by the parties, to have constituted bad faith or willful
misconduct on the part of such person, or to have resulted in his receipt of
personal profit or advantage to which he is not entitled. In connection with the
indemnification provided by the preceding sentence, expenses incurred in
defending a civil or criminal action, suit or proceeding, or incurred in
connection with a civil or criminal investigation, may be paid by the Company in
advance of the final disposition of such action, suit, proceeding, or
investigation, as authorized by the Board in the specific case, upon receipt of
an undertaking by or on behalf of the party to be indemnified to repay such
amount, unless it shall ultimately be
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determined that he is entitled to be indemnified by the Company pursuant to this
Section. The preceding provisions of this Section shall not apply to any claims,
losses, liabilities, costs and expenses arising out of any actual or alleged act
or failure to act of a Participant, or any individual acting as an employee or
agent of a Participant, in the selection of investment media for his Account, or
the investment of the assets in his Account.
14.11 Headings. The headings in this Plan are inserted for
--------
convenience of reference only and are not to be considered in construction of
the provisions hereof.
14.12 Gender and Number. Except when otherwise required by the
-----------------
context, any masculine terminology in this document shall include the feminine,
and any singular terminology shall include the plural.
14.13 ERISA and Approval Under Internal Revenue Code. This Plan is
----------------------------------------------
intended to qualify as a Plan and Trust meeting the requirements of Sections 401
and 501(a) of the Code, as now in effect or hereafter amended, so that the
income of the Trust Fund may be exempt from taxation under Section 501(a) of the
Code, contributions of the Company under the Plan may be deductible for Federal
income tax purposes under Section 404 of the Code, and amounts subject to Long-
Term Savings Agreements are not treated as distributed to Participants for
Federal income tax purposes under Section 402(a)(8) of the Code, all as now in
effect or hereafter amended. Any modification or amendment of the Plan and/or
Trust may
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be made retroactively, as necessary or appropriate, to establish and maintain
such qualification and to meet any requirement of the Code or ERISA.
14.14 Exclusive Benefit of Employees. All contributions made
------------------------------
pursuant to the Plan shall be held by the Trustee in accordance with the terms
of the Trust Agreement for the exclusive benefit of those Employees who are
Participants under the Plan, including former Participants and their
Beneficiaries and Surviving Spouses, and shall be applied to provide benefits
under the Plan and to pay expenses of administration of the Plan and the Trust,
to the extent that such expenses are not otherwise paid. At no time prior to
the satisfaction of all liabilities with respect to such Employees and their
Beneficiaries shall any part of the Trust Fund (other than such part as may be
required to pay administration expenses and taxes), be used for, or diverted to,
purposes other than for the exclusive benefit of such Employees and their
Beneficiaries and Surviving Spouses. However, without regard to the provisions
of this Section 14.14:
(a) If any contribution under the Plan is conditioned on initial
qualification of the Plan under Section 401(a) of the Code and if the Plan
receives an adverse determination with respect to its initial qualification, the
Trustee shall, upon written request of the Company, return to the Company the
amount of such contribution (increased by earnings attributable thereto and
reduced by losses attributable thereto) within one calendar year after the date
that qualification of the Plan is denied, provided that the application for the
determination is made by
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<PAGE>
the time prescribed by law for filing the Company's return for the taxable year
in which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe;
(b) If a contribution is conditioned upon the deductibility of the
contribution under Section 404 of the Code, then, to the extent the deduction is
disallowed, the Trustee shall, upon written request of the Company, return the
contribution (to the extent disallowed) to the Company within one year after the
date the deduction is disallowed;
(c) If a contribution or any portion thereof is made by the Company by
a mistake of fact, the Trustee shall, upon written request of the Company,
return the contribution or such portion to the Company within one year after the
date of payment to the Trustee; and
(d) Earnings attributable to amounts to be returned to the Company
pursuant to paragraph (b) or (c) above shall not be returned, and losses
attributable to amounts to be returned pursuant to paragraph (b) or (c) above
shall reduce the amount to be so returned.
14.15 Adoption of Plan by Related Companies. (a) With the approval
-------------------------------------
of the Company, any Related Company may adopt the Plan and qualify its employees
to become Participants hereunder by taking proper corporate action to adopt the
Plan (which action shall designate the class or classes of such employees
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<PAGE>
to be covered by the Plan) and making such contributions to the Trust Fund as
the Board of Directors of the Related Company may require.
(b) The Plan will terminate with respect to any Related Company that
has adopted the Plan pursuant to this Section if the Related Company ceases to
be a Related Company, revokes its adoption of the Plan by appropriate corporate
action, permanently discontinues its contributions for its Employees, is
judicially declared bankrupt, makes a general assignment for the benefit of
creditors, or is dissolved. If the Plan is terminated or contributions are
discontinued with respect to any Related Company, the provisions of Section 13.4
shall apply to the interest in the Plan of the Employees of such Related
Company, and their Beneficiaries and Surviving Spouses.
(c) The references to "Company" and "Employee" in the Plan shall
include any Related Company that has adopted the Plan pursuant to this Section
14.15 and such Related Company's Employees; provided, however, that the
references to "Company" and "Employee" shall not include any such Related
Company or its Employees in Section 2.1 (except in the first and second
sentences of such Section) and references to "Company" shall not include any
such Related Company in Articles IX or XIII of the Plan. The Company shall act
as the agent for each Related Company that adopts the Plan for all purposes of
administration thereof.
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<PAGE>
14.16 Severability. Each of the Sections contained in the Plan,
------------
and each provision in each Section, shall be enforceable independently of every
other Section or provision in the Plan, and the invalidity or nonenforceability
of any Section or provision shall not invalidate or render nonenforceable any
other Section or provision contained herein. If any Section or provision in a
Section is found invalid or unenforceable, it is the intent of the parties that
a court of competent jurisdiction shall reform the Section or provision to
produce its nearest enforceable economic equivalent.
ARTICLE XV
----------
TOP-HEAVY PROVISIONS
--------------------
15.1 Top-Heavy Status. The provisions of this Article shall not
----------------
apply to the Plan with respect to any Plan Year for which the Plan is not Top-
Heavy. If the Plan is or becomes Top-Heavy in any Plan Year, the provisions of
this Article XV will supersede any conflicting provisions elsewhere in the Plan.
15.2 Definitions. For purposes of this Article XV, the following
-----------
words and phrases shall have the meanings stated below unless a different
meaning is plainly required by the context:
(a) "Determination Date" means, with respect to any Plan Year: (i) the
last day of the preceding Plan Year, or (ii) in the case of the first Plan Year
of the Plan, the last day of such Plan Year.
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<PAGE>
(b) "Key Employee" means an Employee meeting the definition of "key
employee" contained in Section 416(i)(1) of the Code and the Treasury
Regulations interpreting that Section. For purposes of determining whether an
Employee is a Key Employee, the definition of Compensation set forth in Section
15.5 shall apply.
(c) "Non-key Employee" means any Employee who is not a Key Employee.
(d) "Valuation Date" means with respect to a particular Determination
Date, the most recent Valuation Date (as defined in Section 1.41) occurring
within a twelve-month period ending on the applicable Determination Date.
15.3 Determination of Top-Heavy Status. (a) The Plan will be
---------------------------------
"Top-Heavy" with respect to any Plan Year if, as of the Determination Date
applicable to such Year, the ratio of the Adjusted Balances in the Accounts of
Key Employees (determined as of the Valuation Date applicable to such
Determination Date) to the Adjusted Balances in the Accounts of all Employees
(determined as of such Valuation Date) exceeds 60%. For purposes of computing
such ratio, and for all other purposes of applying and interpreting this
paragraph (a): (i) the amount of the Account of any Employee shall be increased
by the aggregate distributions made with respect to such Employee under the Plan
during the five-year period ending on any Determination Date; (ii) benefits
provided under all plans that are
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<PAGE>
aggregated pursuant to (b) of this Section must be considered; and (iii) the
provisions of Section 416 of the Code and all regulations and other governmental
releases interpreting that Section shall be applied. If any Employee has not
performed services for the Company or any Related Company at any time during the
five-year period ending on any Determination Date, the balance of the Account of
such Employee shall not be taken into consideration for purposes of determining
whether the Plan is Top-Heavy with respect to the Plan Year to which such
Determination Date applies.
(b) For purposes of determining whether the Plan is Top-Heavy, all
qualified retirement plans maintained by the Company and each Related Company
shall be aggregated to the extent that such aggregation is required under the
applicable provisions of Section 416 of the Code and the Treasury Regulations
and other governmental releases interpreting that Section. All other qualified
retirement plans maintained by the Company and each Related Company shall be
aggregated only to the extent permitted by Section 416 of the Code and such
Treasury Regulations and other governmental releases and elected by the Company.
(c) For purposes of determining whether the Plan is Top-Heavy, the
Adjusted Balance of a Participant's Account shall not include (i) the amount of
a Rollover Contribution (or similar transfer) and earnings thereon attributable
to a Rollover Contribution (or similar transfer) accepted after December 31,
1983,
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<PAGE>
initiated by the Participant and derived from a plan not maintained by the
Company or any Related Company, or (ii) a distribution made with respect to an
Employee that is a tax-free Rollover Contribution (or similar transfer) that is
either not initiated by the Employee or that is made to a plan maintained by the
Company or any Related Company.
(d) Solely for purposes of determining whether the Plan is Top-Heavy,
the accrued benefit of any Non-key Employee shall be determined (i) under the
method, if any, that uniformly applies for accrual purposes under all plans of
the Company or any Related Company, or (ii) if there is no such method, as if
such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional accrual rule of Section 411(b)(1)(C) of the Code.
15.4 Minimum Contribution. For each Plan Year that the Plan is
--------------------
Top-Heavy, the Company will contribute and allocate to the Savings Account of
each Eligible Employee who is a Non-key Employee and is employed by the Company
on the last day of such Plan Year an amount equal to the lesser of (i) 3% of
such Participant's Compensation (as defined in Section 15.5) for such Plan Year
and (ii) the largest percentage of Company contributions and forfeitures, as a
percentage of the Key Employee's Compensation (as defined in Section 15.5),
allocated to the Savings Account of any Key Employee for such Plan Year. The
minimum contribution allocable pursuant to this Section 15.4 will be determined
without regard to any contributions by the Company for any Employee under the
Federal Social Security Act. A Non-key Employee will not be excluded from an
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<PAGE>
allocation pursuant to this Section merely because his compensation is less than
a stated amount. A Non-key Employee who has become a Participant but who fails
to complete at least 1,000 Hours of Service in a Plan Year in which the Plan is
Top-Heavy shall not be excluded from an allocation pursuant to this Section. A
Non-key Employee who is a Participant in the Plan and who declined to elect to
have Salary Deferral Contributions made to his Account for the Plan Year shall
receive an allocation for that Plan Year pursuant to this Section. For purposes
of clause (ii) of the first sentence of this Section, the amount of Company
contribution allocated to the Savings Account of a Key Employee for a Plan Year
shall include Salary Deferral Contributions allocated to the Savings Account of
such Key Employee for such Year.
15.5 Compensation. For any Plan Year in which the Plan is Top-
------------
Heavy, annual Compensation for the purposes of this Article shall have the
meaning set forth in Section 414(q)(7) of the Code. The Compensation of a
Participant taken into account for purposes of this Article XV for the Plan
Years commencing on and after January 1, 1989 shall be limited in accordance
with the provisions of subsections 1.12(e) through (h) of the Plan.
15.6 Limit on Annual Additions: Combined Plan - Limit. (a) If
-------------------------------------------------
the Plan is determined to be Top-Heavy under Section 15.3, Section 7.6(d) shall
be applied by substituting "1.0" for "1.25" in applying Section 415(e) of the
Code to the Plan.
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<PAGE>
(b) Paragraph (a) above shall not apply if:
(i) Section 15.4 is applied by substituting "4%" for "3%," and
(c) If, but for this paragraph (c), paragraph (a) would begin to apply
with respect to the Plan, the operation of paragraph (a) shall be suspended with
respect to an Employee as long as there are:
(i) no Company contributions, forfeitures or voluntary non-
deductible contributions allocated with respect to such
Employee, and
(ii) no accruals under a qualified defined benefit plan for such
Employee.
15.7 Safe-Harbor Rule. If this Plan is Top-Heavy in any Plan
----------------
Year, each Non-Key Employee covered under both a Top-Heavy defined benefit plan
and a Top-Heavy defined contribution plan maintained by the Company or any
Related Company, and under this Plan, shall receive the defined benefit minimum
(as defined in Section 416(c)(1) of the Code) under the provisions of the
defined benefit plan, and shall not receive the minimum contribution under
Section 15.4 of this Plan, for such Year.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused the Plan to be executed in
its name by a duly authorized officer this 27th day of December, 1994, effective
as of the first day of January, 1989.
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
By /s/ S L Grissom, Treasurer
--------------------------
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<PAGE>
Schedule A
----------
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED
AND AFFILIATED EMPLOYEES
<TABLE>
<CAPTION>
RELATED COMPANIES
- ------------------------------------------------------------------------------------------------------------------------------------
Starting Date of Employment with
Related Company to be Treated as
Covered Employment With Company for
Classifications Purpose of Determining
Related Company of Employees* Eligibility, Hours of Service and Service
--------------- --------------- -----------------------------------------
<S> <C> <C>
Central Communications Company Salaried December 15, 1984**
Consolidated Communications Directories Inc. Salaried February 11, 1985
Non-Bargaining January 1, 1994
Hourly January 1, 1994
OHA Salaried
Consolidated Network Inc. Salaried October 18, 1985
Non-Bargaining October 1, 1993
Hourly
Consolidated Telemarketing of America Inc. Salaried December 19, 1988
Non-Bargaining May 1, 1994
Hourly
Consolidated Communications Operator Services Inc. Salaried January 1, 1989
Consolidated Communications Systems & Services Inc. Salaried
Non-Bargaining ***
Hourly ***
</TABLE>
- -----------------------------------
*Provided that a person simultaneously employed by both the Company and a
Related Company shall not receive duplicate credit for purposes of the Plan
because he is so employed.
**Became a Related Company on May 31, 1985. Nonetheless, by virtue of Section
1.35, the participation and Service of any Employee of the Company who
transferred to employment with this Related Company after May 31, 1984 and who
was employed by this Related Company on May 31, 1985 shall be deemed continuous
for all purposes of the Plan.
***The earliest of (1) date of hire by SRG, Inc., (2) date of hire by
Consolidated Communications Systems & Services, Inc., and (3) date of hire by
Illinois Consolidated Telephone Company or any other Related Company.
-110-
<PAGE>
FIRST AMENDMENT TO
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED AND AFFILIATED
EMPLOYEES AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1989
WHEREAS, Illinois Consolidated Telephone Company (the "Company") has
adopted the Illinois Consolidated Telephone Company Long-Term Savings Plan For
Salaried And Affiliated Employees, as Amended and Restated Effective January 1,
1989 (the "Plan") and has reserved the right to amend the Plan; and
WHEREAS, the Company deems it appropriate to amend the Plan in certain
respects;
NOW THEREFORE, the Plan is hereby amended, effective as of January 1,
1995, in the following respects:
1. Paragraph (d) of Section 3.5 is amended to read as follows:
(d) Notwithstanding anything to the contrary contained elsewhere
in the Plan, if a Participant's Salary Deferral Contributions are
recharacterized or returned pursuant to paragraphs (a), (b), or (c) of
this Section, or pursuant to paragraph (c) of Section 3.1, any
Matching Contributions attributable thereto shall, subject to Article
VI, be forfeited and used to offset the amount of Matching
Contributions to be made for the next Wage Payment Period by the
Company and shall be allocated among the Matching Contributions
Accounts of Participants pursuant to the provisions of Section 7.3.
2. Clause (iii) of paragraph (c) of Section 8.4 is amended to read as
follows:
(iii) Payment of tuition, related educational fees and room and board
expenses, for the next 12 months of post-secondary education for the
Participant, his spouse, children or dependents (as defined in Section
152 of the Code);
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<PAGE>
3. Schedule A attached to the Plan shall be revised in the form
attached hereto.
IN WITNESS WHEREOF, this First Amendment has been executed on behalf
of the Company, this 7th day of March, 1995.
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
By: /s/ Richard A. Lumpkin
----------------------
Chairman
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<PAGE>
AMENDMENT II
TO
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED AND AFFILIATED
--------------------------------------------------
EMPLOYEES
---------
WHEREAS, Illinois Consolidated Telephone Company ("Company") adopted the
Illinois Consolidated Telephone Company Long-Term Savings Plan for Salaried and
Affiliated Employees, as amended and restated effective January 1, 1989
("Plan"); and
WHEREAS, the Company has reserved the right to amend the Plan, and now
deems it appropriate to amend the Plan in certain respects;
NOW THEREFORE, BE IT RESOLVED, that the Plan is amended, effective January
1, 1996, as follows:
1. The portion of paragraph (d) of Section 4.1 preceding the table
contained therein is amended to read as follows:
(d) For each Plan Year commencing on or after January 1, 1993, and
ending on or before December 31, 1995, as of each Wage Payment
Date, the Company shall contribute to the Trust for each
Participant for whom Earnings have been deducted through payroll
deductions during the applicable Wage Payment Period, pursuant to
a Long-Term Savings Agreement, a Matching Contribution equal to a
percentage of his Earnings for the Wage Payment Period ending on
such Wage Payment Date, as set forth in the following table:
2. Paragraphs (e) and (f) of Section 4.1 are redesignated as paragraphs
(f) and (g) respectively, and the following new paragraph (e) is added
to Section 4.1:
(e) For each Plan Year commencing on or after January 1, 1996, as of
each Wage Payment Date, the Company shall contribute to the Trust
for each Participant for whom Earnings have been deducted through
payroll deductions during the applicable Wage
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<PAGE>
Payment Date pursuant to a Long-Term Savings Agreement, a
Matching Contribution equal to a percentage of his Earnings for
the Wage Payment Period ending on such Wage Payment Date as set
forth in the following table:
<TABLE>
<CAPTION>
Salary Deferral Contribution Matching Contribution
as a Percentage of Earnings as a Percentage of Earnings
---------------------------- ---------------------------
<S> <C>
1 % 1.00%
2% 2.00%
3% 2.50%
4% 3.00%
5% 3.50%
6% to 15% 4.00%
</TABLE>
3. The first sentence of paragraph (b) of Section 11.1 is amended to read
as follows:
(b) Each borrowing Participant or Former Participant shall, as a
condition to receiving a loan hereunder, specify in his loan
application the Investment Funds in which his Savings Account and
Transfer Account are invested from which such loan shall be paid,
and the allocation of a loan proceeds among such Investment
Funds; provided that such allocation shall be in increments of
1%.
4. Clause (ii) of paragraph (a) of Section 11.2 is amended to read as
follows:
(ii) Fifty percent (50%) of the Adjusted Balance of the Participant's
or Former Participant's Savings Account and Transfer Account.
5. Paragraph (b) of Section 11.2 is amended to read as follows:
(b) For purposes of this Article, the Adjusted Balance of the Savings
Account and Transfer Account of the Participant or Former
Participant shall be determined as of the Valuation Date for
which a valuation of his Savings Account and Transfer Account is
most recently available on the date on which the proceeds of a
loan made under this Article are disbursed to the borrowing'
participant or Former Participant.
6. Clause (iii) of paragraph (a) of Section 11.4 is amended to read as
follows:
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<PAGE>
(iii) the loan shall be adequately secured, provided that such
minimum security for such loan shall be (a) not more than 50% of
the Adjusted Balance of the Savings Account and Transfer Account
of the borrowing Participant or Former Participant, plus (b) a
security interest in such other property, determined by the
Committee, that would be required in the case of an otherwise
identical transaction in a normal commercial setting between
unrelated parties on arm's-length terms;
7. The last sentence of clause (v) of paragraph (a) of Section 11.4 is
amended to read as follows:
All payments of principal and interest shall be allocated to
the Savings Account and Transfer Account of the Participant or
Former Participant to whom the loan was made.
8. Clauses (iv) and (v) of paragraph (b) of Section 11.4 are amended to
read as follows:
(iv) the borrowing Participant becomes a Former Participant and
thereafter receives a final distribution of the Adjusted Balance
of his Savings Account and Transfer Account (except to the extent
consistent with Section 401 (a) of the Code);
(v) the borrowing Participant or Former Participant attempts to make
an assignment for the benefit of creditors of the Adjusted
Balance of his Savings Account or Transfer Account under the Plan
or of any other security for the loan; or
9. Paragraphs (d) and (e) of Section 11.4 are amended to read as follows:
(d) Each such loan shall be a first lien against the Savings Account
and Transfer Account of the borrowing Participant or Former
Participant. If: (i) any portion of a loan shall be outstanding,
and (ii) an event occurs pursuant to which the Participant,
Former Participant or his estate, or his Surviving Spouse or
Beneficiaries will receive a distribution from the Savings
Account or Transfer Account of such Participant or Former
Participant under the provisions of the Plan, then such
Participant or Former Participant, if living, shall pay to the
Trustee an amount equal to the portion of the loan or loans then
outstanding, including all accrued interest thereon, and such
Participant or Former Participant shall then receive the full
amount of the distribution under the provisions of the Plan to
which he is otherwise entitled. If such Participant or Former
Participant is not then living, or if such Participant or Former
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<PAGE>
Participant does not make full payment of the portion of the loan
or loans then outstanding by the next date repayment would have
been made through payroll deductions had the event pursuant to
which the distribution is to be made not occurred, or in the case
of a Former Participant within 30 days after the date of such
event, then such distribution shall, to the extent necessary to
liquidate the unpaid portion of the loan or loans, be made to the
Trustee as payment on the loan or loans. No distribution shall
be made to a Participant or Former Participant, or his estate or
a Surviving Spouse or Beneficiaries from his Savings Account or
Transfer Account in an amount greater than the excess of the
portion of his Savings Account and Transfer Account otherwise
distributable over the aggregate of the amounts owing with
respect to such loan or loans, plus interest, if any, thereon,
taking into consideration any portion of the loan or loans paid
by the Participant or Former Participant pursuant to the
provisions of this paragraph (d).
(e) All loans made pursuant to this Article shall be funded from the
borrowing Participant's or Former Participant's Savings Account
and Transfer Account as set forth in Section 11.1(b). The
Savings Account and Transfer Account of a Participant or a Former
Participant shall, to the extent used to fund such loan, not
participate in the allocation of earnings and losses pursuant to
Section 7.8. All interest paid by a Participant or Former
Participant with respect to a loan shall be credited to the
borrowing Participant's or Former Participant's Savings Account
and Transfer Account, and shall not be allocated pursuant to
Section 6.8 as earnings of the Investment Fund. All payments of
principal and interest made by a Participant or Former
Participant with respect to a loan shall be allocated to any one
or more of the Investment Funds based upon the form relating to
the selection of Investment Funds which is in effect at the time
such payment is received by the Trustee, with respect to the
Participant's or Former Participant's Salary Deferral
Contributions. If such a form is not in effect at the time such
payment is received, the payment shall be allocated based upon
the last form that was in effect for such Participant or Former
Participant. If no such form was in effect at any time, such
payment shall be allocated equally among all of the Investment
Funds described in the schedule attached to the Trust Agreement.
IN WITNESS WHEREOF, the Company has caused this Amendment I to the Plan to
be executed in its name by a duly authorized officer, this 5 day of March, 1996,
effective as of the 1st day of January, 1996.
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
By: /s/ R A Lumpkin
---------------
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<PAGE>
Schedule A
----------
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED
AND AFFILIATED EMPLOYEES
<TABLE>
<CAPTION>
RELATED COMPANIES
- ------------------------------------------------------------------------------------------------------------------------
STARTING DATE OF EMPLOYMENT WITH
RELATED COMPANY TO BE TREATED AS
EMPLOYMENT WITH COMPANY FOR
COVERED PURPOSE OF DETERMINING
CLASSIFICATIONS ELIGIBILITY, HOURS OF
RELATED COMPANY OF EMPLOYEES* SERVICE AND SERVICE
--------------- --------------------- --------------------------------
<S> <C> <C>
Central Communications Company Salaried December 15, 1984**
Consolidated Communications Directories Inc. Salaried February 11, 1985
Non-Bargaining Hourly January 1, 1994
OHA Salaried January 1, 1994
Consolidated Network, Inc. Salaried October 18, 1985
Non-Bargaining Hourly October 1, 1993
Consolidated Telemarketing of America Inc. Salaried December 19, 1988
Non-Bargaining Hourly May 1, 1994
Consolidated Communications Operator Services Inc. Salaried January 1, 1989
</TABLE>
*Provided that a person simultaneously employed by both the Company and a
Related Company shall not receive duplicate credit for purposes of the Plan
because he is so employed.
**Became a Related Company on May 31, 1985. Nonetheless, by virtue of Section
1.35, the participation and Service of any Employee of the Company who
transferred to employment with this Related Company after May 31, 1984 and who
was employed by this Related Company on May 31, 1985 shall be deemed continuous
for all purposes of the Plan.
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<PAGE>
AMENDMENT III
TO
ILLINOIS CONSOLIDATED TELEPHONE COMPANY
LONG-TERM SAVINGS PLAN FOR SALARIED AND AFFILIATED
EMPLOYEES
WHEREAS, Illinois Consolidated Telephone Company (the "Company")
adopted the Illinois Consolidated Telephone Company Long-Term Savings Plan for
Salaried and Affiliated Employees, as amended and restated effective January 1,
1989 ("Plan");
WHEREAS, the Company wishes to amend the Plan to authorize the
contribution of McLeodUSA Incorporated Class A common stock as a matching
contribution under the Plan;
WHEREAS, the Company having the power to amend the Plan, now deems it
appropriate to amend the Plan in certain respects;
NOW THEREFORE, BE IT RESOLVED, that the Plan is amended, effective
January 1, 1998 as follows:
1. Section 4 is amended by the addition of a new Section 4.l(g) to
read as follows:
(g) Effective January 1, 1998, the Company may from time to time make
Matching Contributions to the Trust in the form of McLeodUSA Incorporated Class
A common stock (or other securities of the Company or Related Company). The
securities contributed to the Plan under this Section 4.l(g) shall be held in a
separate Fund and shall be adjusted for gains, incomes, losses and expenses in
accordance with Section 7.8. Notwithstanding any other provision of the Plan to
the contrary, distribution of the Adjusted Balance of a Participant's Account
under the Plan shall not include a distribution of the securities contributed
under this Section 4.1(g). Whenever a Participant, his Beneficiary or his
Surviving Spouse become entitled to a distribution under Article 8, the Trustee
shall sell, at no less
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<PAGE>
than fair market value, the portion of the Participant's Account attributable to
the contributions (including allocable earnings) made under this Section 4.1(g)
and distribute the proceeds in accordance with Article 8.
2. In all other respects not amended, the Plan is ratified.
IN WITNESS WHEREOF, the Company has caused this Amendment III to the
Plan to be executed in its name by a duly authorized officer, this 8th day of
January, 1998, effective as of January 1, 1998.
By: /s/ S L Grissom
-------------------
S. L. GRISSOM
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<PAGE>
[Hogan & Hartson L.L.P. Letterhead]
January 27, 1998
Board of Directors
McLeodUSA Incorporated
McLeodUSA Technology Park
6400 C Street, S.W., P.O. Box 3177
Cedar Rapids, IA 52406-3177
Members of the Board of Directors:
This firm has acted as special counsel to McLeodUSA Incorporated (the
"Company"), a Delaware corporation, in connection with its registration,
pursuant to a registration statement on Form S-8 filed on or about the date
hereof (the "Registration Statement"), of 1,000,000 shares of common stock, par
value $.01 per share, of the Company (the "Shares"), issuable pursuant to grants
of common stock under the 401(k) Profit Sharing Plan of McLeodUSA Incorporated
(the "401(k) Plan") and the Illinois Consolidated Telephone Company Long-Term
Savings Plan for Salaried and Affiliated Employees (the "Savings Plan,"
collectively with the 401(k) Plan, the "Stock Plans"). This letter is furnished
to you pursuant to the requirements of Item 601(b)(5) of Regulation S-K, 17
C.F.R. (S) 229.601(b)(5), in connection with such registration.
For purposes of this opinion letter, we have examined copies of the
following documents:
1. An executed copy of the Registration Statement.
2. The Amended and Restated Certificate of Incorporation of the
Company, as certified by the Secretary of State of the State of
Delaware on August 28, 1997 and by the Secretary of the Company on
the date hereof as then being complete, accurate and in effect.
<PAGE>
Board of Directors
January 27, 1998
Page 2
3. The Amended and Restated Bylaws of the Company, as certified by
the Secretary of the Company on the date hereof as then being
complete, accurate and in effect.
4. A copy of the 401(k) Plan, as certified by the Secretary of the
Company on the date hereof as then being complete, accurate and
in effect.
5. Resolutions of the Board of Directors of the Company adopted on
March 27, 1997, June 13, 1997 and December 19, 1997, as
certified by the Secretary of the Company on the date hereof as
then being complete, accurate and in effect.
6. A copy of the Savings Plan, as certified by the Secretary of the
Company on the date hereof as then being complete, accurate and
in effect.
7. The Amended and Restated Certificate of Incorporation of
Consolidation Communication Inc. ("CCI"), as certified by the
Secretary of State of the State of Illinois on September 22,
1997 and by the Secretary of the Company on the date hereof as
then being complete, accurate and in effect.
8. The Bylaws of Illinois Consolidated, as certified by the
Secretary of Illinois Consolidated on the date hereof as then
being complete, accurate and in effect.
9. The Agreement and Plan of Reorganization, dated as of June 14,
1997, between the Company, Eastside Acquisition Co. and CCI.
<PAGE>
Board of Directors
January 27, 1998
Page 3
We have not, except as specifically identified above, made any
independent review or investigation of factual or other matters, including the
organization, existence, good standing, assets, business or affairs of the
Company or its subsidiaries. In our examination of the aforesaid certificates,
records, and documents, we have assumed the genuineness of all signatures, the
legal capacity of natural persons, the authenticity, accuracy and completeness
of all documents submitted to us as originals, and the authenticity, accuracy
and completeness and conformity with the original documents of all documents
submitted to us as certified, telecopied, photostatic, or reproduced copies. We
have assumed the authenticity and accuracy of the foregoing certifications of
corporate officers, on which we are relying, and have made no independent
investigations thereof. This opinion is given in the context of the foregoing.
This opinion letter is based as to matters of law solely on the
General Corporation Law of the State of Delaware. We express no opinion herein
as to any other laws, statutes, regulations, or ordinances.
Based upon, subject to, and limited by the foregoing, we are of the
opinion that the Shares, when issued and delivered in the manner and on the
terms contemplated in the Registration Statement and the Stock Plans (with the
Company having received the consideration therefor, the form of which is in
accordance with applicable law), will be validly issued, fully paid and non-
assessable by the Company.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion letter. This opinion letter has been
prepared solely for your use in connection with the filing of the Registration
Statement on the date of this letter, and should not be quoted in whole or in
part or otherwise be referred to, nor be filed with or furnished to any
governmental agency or other person or entity, without the prior written consent
of this firm.
We hereby consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement. In giving this consent, we do not thereby admit
that we are an "expert" within the meaning of the Securities Act of 1933, as
amended.
Very truly yours,
/s/ Hogan & Hartson L.L.P.
HOGAN & HARTSON L.L.P.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
McLeodUSA Incorporated
(Formerly McLeod, Inc.)
Cedar Rapids, Iowa
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 31, 1997, except for the first
paragraph of Note 4, as to which the date is March 4, 1997, with respect to the
consolidated financial statements of McLeodUSA Incorporated and subsidiaries,
included in its prospectus, dated December 1, 1997, filed with the Securities
and Exchange Commission pursuant to Rule 424(b) under the Securities Act.
/s/ McGLADREY & PULLEN LLP
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McGLADREY & PULLEN LLP
Cedar Rapids, Iowa
January 27, 1998
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Ruffalo, Cody & Associates, Inc.
Cedar Rapids, Iowa
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 9, 1996, with respect to the
consolidated financial statements of Ruffalo, Cody & Associates, Inc. and
subsidiary, included in McLeodUSA Incorporated's prospectus, dated December 1,
1997, filed with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act.
/s/ McGLADREY & PULLEN LLP
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McGLADREY & PULLEN LLP
Cedar Rapids, Iowa
January 27, 1998
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
TelecomUSA Publishing Group, Inc.
Cedar Rapids, Iowa
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated September 27, 1996, with respect to
the consolidated financial statements of TelecomUSA Publishing Group, Inc. and
subsidiaries, included in its prospectus, dated December 1, 1997, filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the Securities
Act.
/s/ McGLADREY & PULLEN LLP
--------------------------
McGLADREY & PULLEN LLP
Cedar Rapids, Iowa
January 27, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated March 14, 1997, on the consolidated financial
statements of Consolidated Communications, Inc. and Subsidiaries for the year
ended December 31, 1996, and to all references to our Firm included in this Form
S-8 Registration Statement.
/s/ Arthur Andersen LLP
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ARTHUR ANDERSEN LLP
Chicago, Illinois
January 27, 1998
